Library on Infrastructure Regulation Ppiaf

8/13/2019 Library on Infrastructure Regulation Ppiaf

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Topic TitleChAuthor Date Publisher Summary Sec

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1. REGULATION OVERVIEW

a. General Re ferences

1 Current Debates on Infrastructure Policy. WorldBank Policy Research Working Paper No. 4410.

Estache, Antonioand MarianneFay

Nov-07 Wor ld BankPolicyResearchWorkingPaper No.

4410

World Bank,Washington DC

This paper provides an overview of the major currentdebates on infrastructure policy. It reviews the evidence onthe macroeconomic significance of the sector in terms ofgrowth and poverty alleviation. It also discusses the majorinstitutional debates, including the relative comparative

advantage of the public and the private sector in the variousstages of infrastructure service delivery as well as the mainoptions for changes in the role of government (i.e. regulationand decentralization).

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2 25 years in regulation: a revolution in pipes, cablesand tracks. Oxera Agenda.

Holt, Derek. Nov-07 Agenda Oxera In this brief article, the author looks back at the key eventsand ideas that have shaped todays regulatory landscape,and considers what might lie ahead.

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3 Handbook for Evaluating Infrastructure RegulatorySystems. Handbook.

Brown, Ashley,Jon Stern,BernardTenenbaum, andDefne Gencer

2006 Handbook World Bank,Washington DC

This handbook provides an analytical framework andsupporting instruments for evaluating the performance ofnew infrastructure regulators in developing countries. Itargues that an evaluation must examine both regulatorygovernance (the "how" of regulation) as well as regulatory

substance (the "what" of regulation). If the evaluation is toproduce useful "second generation" reforms, it mustexamine how formal elements of the regulatory system havebeen implemented in practice and the effect of these

elements on sector performance. It describes how to"operationalize" the independent regulator model andelements of possible transitional regulatory systems.Examples are generally drawn from electricity regulation but

the analytical framework, questionnaires and interviewprotocols can be easily adapted to other infrastructuresectors.

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4 Regulation and Development Laffont, Jean-Jacques.

Mar-05 Feder icoCaffeLectureSeries.

Cambridge, UK:CambridgeUniversityPress.

This book represents an effort to deal with issues ofregulatory governance and substance for infrastructureregulatory institutions in developing countries. Written by aneconomic theorist who traveled extensively throughout

Africa, it pays special attention to utility pricing. Much of thebook is highly mathematical, although the key results in

each chapter are set out and discussed in nontechnical

language. The most relevant chapters for readers of thishandbook are likely to be the overview (chapter 1) and thechapter on the development of regulatory institutions

(chapter 7). A central thesis of the book is that regulatoryinstitutions and policies cannot be blindly transferred fromdeveloped countries. A similar conclusion was reached inLevy and Spiller (1994) and is expanded on in the

discussion of possible transitional regulatory systems inchapter 4. . (Summary adapted from Brown et al. 2006) .

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5 Economic Appraisal of Regulatory Reform: Checklistof issues. Transport Note No. TRN-24 (Applicableto all sectors, not only transport)

Jan-05 TransportNote No.TRN-24


The purpose of this brief note is to set out a checklist ofissues which need to be considered when assessing thelikely economic impact of regulatory reform. There is a greatdeal of relevant world literature, but a note of caution is

appropriate when considering the transferability ofexperience, and especially outcome, from one country toanother. Circumstances alter cases. Applicable for allsectors, not only transport.

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6 The Body of Knowledge on Utility Regulation.Website

Jamison, Mark,Sanford Berg,Farid Gasmi andJose Tavara

2004 Website PPIAF, WorldBank andPURC WebSite.

This site provides summaries of and links to more than 300references, an 80+ page glossary and self-testing featuresto facilitate learning. The references include publicationsand decisions by regulatory agencies and othergovernmental bodies; policy advisories by think tanks,

consultants, donor agencies, and others; and research byacademics, consultants, and other experts (Website).

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7 Reforming infrastructure: privatization, regulation,and competition. (Note: There is also an originalversion from 2001). World Bank Policy ResearchReport

Kessides, IoannisN.

Jan-04 Wor ld BankPolicyResearchReport


This report indicates that although privatization, competitiverestructuring, and regulatory reforms improve infrastructureperformance, several issues must be considered andconditions met for these measures to achieve their publicinterest goals. First, reforms have significantly improvedperformance, leading to higher investment, productivity, and

service coverage and quality. Second, effective regulation-including the setting of adequate tariff levels-is the mostcritical enabling condition for infrastructure reform.Regulation should clarify property rights, and assure private

investors that their investments will not be subject toregulatory opportunism. Third, for privatization to generatewidely shared social benefits, infrastructure industries mustbe thoroughly restructured and able to sustain competition.

Thus restructuring, to introduce competition should be donebefore privatization, and regulation should be in place toassure potential buyers of both competitive, and monopolyelements.

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8 Private Participation in Infrastructure in DevelopingCountries: Trends, Impacts, and Policy Lessons.World Bank Working Paper No. 5

Harris, Clive Apr-03 World BankWorkingPaper No. 5


This paper explains the rise and fall of both public sectormonopolies and private participation in infrastructure. It alsodescribes when private sector participation improves results

and how important regulatory issues, such as pricing andcompetition, need to be addressed if private participation ininfrastructure is to succeed. (Summary taken from theRegulation Body of Knowledge Website, 2004).

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9 Sustainable Regulatory Systems: Laws, Resources,and Values. Utilities Policy 9: 15970.

Berg, Sanford V. 2000 Uti li tiesPolicy 9:15970.

Elsevier The article identifies organizational resources, the legalmandate, and core agency values as the three main factorsthat will affect regulatory performance. It describes each ofthese factors and explains how they affect the functioning of

a regulatory agency. According to Berg, for the work of aregulatory agency to move forward, the agency must haveadequate resources to perform its functions, a legalmandate that legitimizes its activities, and values oroperational principles that uphold those activities. He notes

that each of these factors are, in turn, shaped by thepolitical and institutional forces that influence the associatedreform process. Defining the overlap of all three factors asthe ideal state for the realization of a regulatory agencys

objectives, Berg proceeds to describe different situationsthat involve various permutations of the three factors andtheir impact on regulatory performance. (Summary adaptedfrom Brown et al. 2006 ).

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b. Regulation by Sectori. Electricity

1 Regulation of Power Markets. Chapter 6 in"Reforming Power Markets in Developing Countries:What have we learned?" (2006). Energy and MiningSector Board Discussion Paper No. 19.

Ch6Besant-Jones,

John E.Sep-06 Energy and

MiningSector BoardDiscussion

Paper No.19..


This chapter covers regulation of power markets for alltypes of market structure. These structures range from asingle integrated power supplier responsible for all publiclysupplied electricity to a decentralized competitive wholesale

power market with many participants. The structure of theregulatory system is linked to the market structure, sinceregulation is an important component of power marketgovernance. In particular, the need for a separate,

autonomous regulatory agency operating under transparentprocesses is much stronger with private sector participantsin a power market than when all public power supply isunder state ownership. Even in large middle-income

countries, various forms of contractual arrangements andthird party guarantees against regulatory risk are needed forattracting large amounts of private investment in the powersystems with a new regulatory agency that has not had time

to develop a track record for credibility. In small low incomecountries, contracting out of regulatory functions is an option

under their weak institutional capacity.

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2 Electricity Sectors in CAREC Member Countries: ADiagnostic Review of Regulatory Approaches andChallenges.

2005 CAREC, PPIAF,ADB.

This study was undertaken to provide a foundation uponwhich the CAREC (Central Asia Regional EconomicCooperation) Members Electricity Regulators Forum(CMERF) would be established, and to identify the key

challenges that this Forum must address. CMERF and thisstudy serve both regional and domestic objectives.

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3 Infrastructure in East Asia and the Pacific - TheWay Forward. Background for the ADB-JBIC-WorldBank East Asia and Pacific Infrastructure FlagshipStudy.

Besant-Jones,John E.

Oct -04 Backgroundfor the ADB-JBIC-WorldBank East

Asia andPacificInfrastructureFlagshipStudy.

This paper addresses the theme "Lessons from experienceon the appropriate roles of the public and private sectors ininfrastructure planning, regulation, financing, risk bearingand operations". Especially, Section 3 presents lessons

and their contexts for sector governance and regulation.The lessons are organized into the following themes: waysto improve governance in the power sector, alternativearrangements for regulating the power market, the extent towhich power markets should be liberalized and the scope for

introducing competition into the power markets ofdeveloping countries, and power sector reform and the poor.

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ii. Telecom and ICT

1 Broadband for Africa: Policy for Promoting thedevelopment of backbone networks. GICTPublication.

Williams, Mark Jul-08 GICTPublication

Infodev andGICT, WorldBank,Washington DC

Increasing access to broadband connectivity is currentlyemerging as a high priority issue for policymakers across

Africa. This report focuses on one important part of thechallenge the lack of high-capacity backbone networks,

and identifies two main types of constraints to thedevelopment of high-bandwith backbone carrier networks inSub Saharan Africa: the first relates to the regulatoryenvironment, while the second relates to the stage of marketdevelopment. The document discusses how these two

factors result in very high prices and limited availability ofbroadband connectivity in that region, and providesrecommendations on how to address these problems .

ICT

2 Convergence in ICT services: Emerging regulatoryresponses to multiple play. GICT Publication.

Singh, Rajendraand SiddharthaRaja

Jun-08 GICTPublication

GICT, WorldBank,Washington DC

Multiple play in the information and communicationtechnology (ICT) sector refers to the provision of multipleservicessuch as voice telephony, broadcasting, andInternet accessby one operator over a single

communications network, typically telephone or cabletelevision. This offers numerous potential benefits tocustomers, including lower prices, better services, and morechoices among service providers. It enables new business

models and opportunities for increased competition andreduced costs. However, regulation is subject to complexchallenges in the face of multiple play. This report focuseson regulatory responses, typically by telecommunications

regulators, to market-driven multiple play over broadbandnetworks. It also examines how regulators can remove

obstacles to multiple play. It describes experiences andresponses from around the world, with the goal of deriving

principles for best practiceenabling countries to deviseresponses suited to their situationswithout beingprescriptive or offering a universal solution.

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3 Establishing an Enabling Legaland Regulatory Environment. Chapter 2 in "China'sInformation Revolution: Managing the Economic andSocial Transformation" (2007). Book No. 39975.

Ch2 2007 Book No.

39975TheInternationalBank forReconstruction

andDevelopment /The WorldBank,Washington DC

A key element in achieving the full potential of thecontribution of ICT to economic and social goals is acomprehensive and supportive environment. In particular,fostering ICT use and ICT-led growth requires implementing

credible, transparent, and nondiscriminatory policies, laws,and regulations. This book examines the fast-changingnature of ICT, including the convergence oftelecommunications and information technologies, and howit has posed challenges to some of Chinas policies, laws,

and regulations that may no longer fit the new environment.

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4 Regulatory trends in service convergence. WorldBank Working Paper No. 40828

Global ICTDepartment

Jun-07 Wor ld BankWorking

Paper No.40828


This report proposes a framework to analyze differentcountries' responses to regulatory challenges posed by

convergence. It proposes an analytical framework withinwhich to consider the specific issues related to serviceconvergence. It first discusses the genesis of the regulatorychallenge due to convergence and then proposes a

framework for the comparative analysis of the regulatoryresponses to convergence in different countries anddiscusses the different issues identified within thisframework. Finally, it discusses regulatory responses toconvergence regulation in specific areas such as the

institutional framework, service licensing, interconnection,universal service, and spectrum management.

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5 Interconnection challenges in a convergingenvironment : Policy implications for Africantelecommunications regulators. Working Paper No.33193.

Bezzina, Jerome Jun-05 WorkingPaper No.33193

GICT, WorldBank,Washington DC

The purpose of this paper is to show how interconnectionregimes can be adapted to the African specificities in acontext of convergence and increased competition. Itanalyzes how interconnection regulation in Africa has beendefined at the onset of the convergence phenomenon and

explores the issues related to new technologies (for exampleInternet protocol [IP] telephony) and interconnectionregulation policies.

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6 Regulating the Telecommunications Sector. Module1 in "Telecommunications Regulation Toolkit"(2004). Toolkit. .. M

odule1 2004 T oolkit Infodev Overview of telecommunications growth and innovation,

telecommunications and economic development, rationalefor regulation, principles for effective regulation, keysuccess factors and risk of failure, and institutionalresponsibilities.

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7 Telecommunications Regulation Handbook(Available in: English, Chinese, Arabic, Russian,

French, and Spanish). Handbook..

.

Intven, Hank andMcCarthy

Tetrault (editors)

Nov-00 Handbook Worl d Bank ,Washington DC

.

.

Provides an overview of reasons for regulation of privatetelecommunications operators.(Summary taken from the

Regulation Body of Knowledge Website, 2004).

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8 The Institutional Foundations of RegulatoryCommitment: A Comparative Analysis ofTelecommunications Regulation. Journal of Law,Economics, and Organisation.

Levy, Brian, andPablo Spiller.

1994 Journal of Law,Economics andOrganisation 10(2): 20146.

This seminal article provides an excellent introduction toissues of regulatory governance. Its particular strength is itsdiscussion of how the choice of effective regulatoryarrangements is affected by a countrys constitutional and

political condition, as well as available resources. Thearticle was written at a time of considerable optimism aboutthe prospects for private investment in infrastructure and theprospects for the establishment of effective regulatoryagencies for utilities. The article argues strongly for tightly

defined regulatory arrangements with little or no regulatorydiscretion in most developing countries. Whether or not thereaders agree with these views, this article is an essentialstarting point for considering the design of effective

regulatory agencies in developing countries. (Summarytaken from Brown et al. 2006).

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iii. Natural Gas

1 Regulatory Reform in Mexico's Natural GasIndustry: Liberalization in the Context of a DominantUpstream Incumbent. World Bank Working Paper2537.

Roselln, Juanand JonathanHalpern

Jan-01 Wor ld BankWorkingPaper No.2537.


Liberalization of the natural gas industry is complex becausethe sector combines naturally monopolistic activities withpotentially competitive ones. The challenges arecompounded when the state opts to retain verticallyintegrated monopolies in otherwise contestable segments of

the industry. In this paper, regulatory issues associated withpartial liberalization of natural gas markets are analyzedthrough a case study of Mexico. After a brief overview of theearly structural reform process, the paper describes the

reforms introduced in the natural gas industry, assesses thepolicy decisions made for the natural gas industry, andpresents results to date and future challenges associatedwith the continued development of the industry.

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iv. Trans ort1 Privatization and Regulation of Transport

Infrastructure: Guidelines for Policymakers and

Regulators (Available in: English and Spanish). WBIDevelopment Study.

Estache, Antonioand Gines de

Rus (Editors)

Jun-00 WBIDevelopment

Study


The first part of the book provides an overview of whateconomic theory has to say about why economic regulation

is important. Its objective is to introduce potential regulatorsto some of the key underlying concepts. It is a basic, butuseful overview for many professionals recruited to serveas the staff of regulatory bodies. It provides theoretical

support to the sector specific chapters that constitute thesecond part of the book. The second part covers four

subsectors: airports, ports, railways, and roads. Eachchapter can stand apart from the rest of the book and be

read on its own, but to facilitate comparisons acrosssubsectors, they all follow exactly the same structure. Thefirst section provides a snapshot of the key economiccharacteristics of the sector and discusses their relevance

from the viewpoint of a regulator. The second sectionsummarizes the main privatization and regulation trends thathave been observed in the sector.

Tr:AP,

P,Rw,Rd.

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Airplanes

1 Flying in the face of regulation: lessons inliberalisation for airlines. Oxera Agenda.

Holt, Derek(Contact).

Feb-07 Agenda Oxera The proli fe ra tion o f r egula tion underp inning many industr iessuch as international aviation has come under increasingscrutiny in recent times. Do excessively stringent regulations

contribute to low rates of return while simultaneouslyrestricting the flow of benefits to consumers? What lessonscan be learnt for this debate from cross-sectoralexperience?

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Air orts

1 The Airport Charges Directive: is more regulation inthe interests of passengers? Oxera Agenda.

Ho lt, Derek Feb-07 Agenda Oxera On January 2007 t he European Commi ss ion p roposed whatit calls a landmark regulatory package for airports in theEU. The author discusses the likely implications of this forthe future development of the aviation industry.

AP

2 Airport regulation: keeping up with an industry at fullthrottle? Oxera Agenda.

Toms, Mike(Contact)

Jan-07 Agenda Oxera T he year 2006 saw major changes in the global aviationindustry, with airports increasingly regarded as tradeableassetsindeed, the takeover of UK airport operator, BAA,by an international consortium has been the focus of

attention for many stakeholders. In this article, the authorasks whether regulation can keep pace with an industry influx.

AP

Ports1 Port Regulation: Overseeing the Economic Public

Interest in Ports. Module 6 in "Port Reform Toolkit"(2007).

Module6

.

.

.2007 Port Reform

Toolkit

PPIAF, World

Bank,Washington DC

This module is intended to assist public officials in designing

an economic regulatory framework that will keep ports cost-effective and responsive to changing demand. T he moduleprovides guidance on how to: Identify regulatoryrequirements and issues to be considered when developing

a port reform strategy, design a port regulatory system,formulate an institutional strategy for establishing theregulatory structure and capabilities to perform the relevantregulatory functions, select appropriate regulatory

techniques and instruments under a spectrum of port reformoptions and competitive conditions, prepare a checklist ofitems that need to be included in port reform concession oroperating agreements, and to specify operational and

financial information necessary for monitoring performanceof terminal operators. Public officials can use the modulewhen initially formulating a port reform strategy or forestablishing an effective post-reform port regulatory system.

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Rail1 Railways in Development: Global Round-up 1996-

2005. Transport Note No. TRN-36.Amos, Paul andLou Thompson

Sep-07 TransportNote No.TRN-36


The note provides a high level view of traffic, policy andregulatory developments. Particular emphasis is given to theBanks six regions of operations as the Banks TransportStrategy is being updated with the intention of increasingthe attention given to the role of railways in development.

For completeness, important policy developments in thehigher income countries are also summarized.

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2 Regulatory Reform of Railways in Russia. EuropeanConference of Ministers of Transport (ECMT).

2004 EuropeanConferenceof Ministersof Transport

OECDPublicationsService,France.

The report examines the fundamental issues of regulationand their relation with the structure of the sector and thedevelopment of competition in providing rail services. T his isthe first in-depth review of rail policy in ECMT member

countries in the light of the Resolution on the developmentof European railways agreed by Ministers in 2002.

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Urban Transport1 Institutional and regulatory framework self-

regulation by default. Chapter 4 in "Stuck In Traffic:Urban Transport in Africa" (2008).

Kumar, Ajay andFanny Barrett

Jan-08 Stuck inTraffic:UrbanTransport in

Africa

PPIAF, WorldBank, SSATP

This chapter reviews the main dimensions of the regulatoryframework. It covers: Route allocation and market entry,licensing of vehicles and operations, licensing of drivers,and fare control.

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2 A Framework for Urban Transport Projects:Operational Guidance for World Bank Staff. TheWB Group Transport Papers No. TP-15

Jan-08 T he WBGroupTransportPapers No.

TP-15

TransportSector Board,World Bank,Washington DC

This paper is meant to close the gap between nominalsector strategies and project design activities in urbantransport by presenting an operationally-oriented strategicapproach. Since a great majority of Bank-funded urban

transport projects consists of an investment programalongside specific policy, regulatory, and institutionalchanges under a set of common development objectives,the strategy laid out in this paper is made using these samecategories.

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3 A Study of Institutional, Financial and RegulatoryFrameworks of Urban Transport in Large Sub-Saharan African Cities. SSATP Working Paper No.82.

Prepared byAdam SmithInternational

Jul-05 SSAT PWorkingPaper No.82

Africa Region,World Bank,Washington DC

This study examines the existing institutional arrangementsin four Sub-Saharan African cities and identifiesopportunities and constraints for policy reform. The generalfocus is on identifying mechanisms suitable in different

cultural and political environments to organize planning,regulation and monitoring of urban transport services. Thearrangements for meeting financing needs of the sector inthe four cities are reviewed with a focus on processes,

performance, monitoring indicators, and outcomes.

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v. Water and Sanitation

1 Economic Regulation of Urban Water andSanitation Services: Some Practical Lessons .Water Sector Board Discussion Paper Series No. 9.

Ehrhardt, David,Eric Groom,JonathanHalpern, and

Seini OConnor

Apr-07 Water SectorBoardDiscussionPaper Series

No. 9


This paper aims to show how real experience supports thetheoretical principles of good design, and to present keyregulatory concepts in way that is accessible to policymakers, service providers, nongovernmental organizations,

and other stakeholders concerned with improving theprovision of water supply and sanitation services.

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2 Explanatory Notes on Key Topics in the Regulationof Water and Sanitation Services. Water Supply andSanitation Sector Board Discussion Paper SeriesNo. 6.

Groom, Eric,JonathanHalpern, andDavid Ehrhardt

Jun-06 WaterSupply andSanitationSector Board

DiscussionPaper SeriesNo. 6

PPIAF, WorldBank,Washington DC

Considerable confusion has arisen about what regulationmeans in the context of water supply and sanitation (WSS)services. In particular, there are questions about theapplication of the independent regulator model to WSS in

the developing world. What types of problems can it canaddress effectively? What is its relevance, especially asprovision and oversight of these services are often theresponsibility of subnational governments with limitedresources? These Notes provide a consistent set of

principles and practices that respond to these questions.Such information will be of interest to service providers,policy makers, and development practitioners interested inimproving the performance of WSS services in urban areas.

The notes draw upon current regulatory thinking andresearch, but are intended to be accessible to those whoare not regulatory experts. Each of the notes can be readseparately, and together the notes provide an integrated

framework for the development of practical approaches tothe regulation of WSS.

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3 Ten years of water service reform in Latin America:toward an Anglo-French model. Water Supply andSanitation Board Discussion Paper Series, Paper

No. 3.

Foster, V. Jan-05 WaterSupply andSanitation

BoardDiscussionPaperSeries,

Paper No. 3.

World Bank,WashingtonDC.

During the 1990s, most countries in the Latin Americanregion undertook major reforms of their water supplyindustries. Chile was the first to attempt to modernize its

water sector with new legislation passed as early as 1988.By 1991, both Argentina and Mexico were beginning toconduct a series of experiments with private sectorparticipation (PSP). In a second wave, Peru, Colombia, and

Bolivia enacted ambitious new legislation in the mid-1990s,and during the second half of the decade, reform began totake root in Brazil and Central America. By the end of the1990s, nearly all countries had completed reforms, had

major reforms in process, or were actively consideringreforms.

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c. Role of Regulator1 Telecommunications Regulations: Institutional

Structures and Responsibilities. Working Party onTelecommunication and Information ServicesPolicies.

Min, Wonki May-00 WorkingParty onTelecommunication andInformation

ServicesPolicies

OECD, Paris,France.

This report explains that there is a lot of variety amongnations on the roles of regulators, and describes typicalresponsibilities of the regulator (or ministry) which include:licensing, interconnection, spectrum management,numbering, price regulation, universal service, and service

quality.

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2 Utility Regulators: Roles and Responsibilities.Public Policy for the Private Sector Note No. 128.

Smi th, Warrick Oct -97 Public Pol icyfor thePrivateSector NoteNo. 128

.


Examines issues of sector coverage, relationships withministers, and relationships with other governmentagencies. (Summary adapted from the Regulation Body ofKnowledge Website, 2004).

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d. Regulating SOE's vs. Private Operators.

1 Governance Arrangements for State OwnedEnterprises. WB Policy Research Working PaperNo. 4542.

Vigliasindi, M. Mar-08 WB PolicyResearchWorking

Paper No.4542.


The aim of this paper is to shed new light on key challengesin governance arrangements for state owned enterprises(SOEs) in infrastructure sectors. Three policy

recommendations emerge: (1) Some of the structuresimplied by internationally adopted principles of corporategovernance for SOEs favoring a centralized ownershipfunction versus a decentralized or dual structure have notyet been sufficiently "tested" in practice and may not suit all

developing countries. (2) General corporate governanceguidelines (and policy recommendations) need to becarefully adapted to infrastructure sectors. Because themarket structure and regulatory arrangements in which

SOEs operate matters, governments may want todistinguish the SOEs operating in potentially competitivesectors from the ones under a natural monopoly structure.Competition provides not only formidable benefits, but also

unique opportunities for benchmarking, increasingtransparency and accountability. (3) Governments may wantto avoid partial fixes, by tackling both the internal andexternal governance factors.

2 How to Improve the Performance of InfrastructureService Providers: Workshop I.

Berg, S. May-07 World BankWorkshop.


Most of the infrastructure regulatory agenda has tended tofocus on the regulation of the newly privatized utilities.However, there is some evidence of the differentialresponses of privatized and public firms to regulatory

incentives (Berg: JRE, 2005) Does it make a difference tothe choice and design of regulation if governments look intooptions of public-private partnerships which do not requireprivate sector investment? If so, can you adjust the standard

tools normally used for privatized infrastructure enterprises?For instance, "sticks" (penalties) for SOEs are problematicand "carrots" may not translate into incentives within theorganization--given civil service salary constraints. For

example, who is hurt if the X factor is increased for a poorlyperforming utility? Since infrastructure revenue is in somecases not even covering OPEX, the result of weak cashflows is slower network expansion, reduced maintenance,

increased losses, and lower service quality. T his dilemmahas been inadequately addressed by scholars and by

analysts.

3 The economic regulation of publicly owned waterutilities: The case of Finland. Utilities Policy, Volume14, Issue 3, Pages 158-165.

Vinnari, Eija M. 2006 Uti li tiesPolicy,Volume 14,Issue 3,

September2006, Pages158-165.

The adoption of business management principles at publiclyowned water and wastewater utilities in Finland presentschallenges for the current system of economic regulation.This paper presents the results of empirical research on the

need for regulatory reform from the utilities' point of view.The interviewed utility managers supported widening thescope of regulation to include, in addition to fairness ofcustomer charges, the rate of return allowed for the owner

of a water utility. Further research is recommended on thedegree and scope of official regulation as well as on asystem based on self-regulation, benchmarking, and peerreviews.

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4 Is it possible to regulate State-Owned UtilitiesEffectively? Presentation prepared for the PURC19th International Training Program on UtilityRegulation and Strategy.

Eberhard, A. 2006 Presentationprepared forthe PURC19th

InternationalTrainingProgram onUtilityRegulation

andStrategy.

Presentation prepared for the PURC 19th InternationalTraining Program on Utility Regulation and Strategy. Thetopics covered include: confused governance roles,improved governance of SOEs, public entity management

legislation, performance contracts, corporatization,commercialization, structural reform, and improvedregulatory design.

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5 Regulating publicly-owned water and sanitationutilities in developing countries. A report for the

World Bank. NERA Economic Consulting

Houston, Gregand Adrian Kemp

(Project Team)

Jun-06 A report forthe World

Bank.

NERAEconomic

ConsultingReport financedby PPIAF.

The central question addressed in this paper is the natureand extent of the potential role for economic regulation in

improving the performance of publicly-owned water andsanitation utilities. The authors use examples from a varietyof developing and developed countries to illustrate thetopics that are addressed. On the strength of the authors

key conclusion that some form of economic regulation doeshave the potential to contribute to improved performance,the principal focus of the paper is to identify the mostimportant elements of a regulatory framework for achievingthat goal.

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6 Regulating Government-Owned Water Utilities.Note 6 in "Explanatory Notes on Key Topics in theRegulation of Water and Sanitation Services"(2006). Water Supply and Sanitation Sector Board

Discussion Paper Series No. 6.

Groom, Eric,JonathanHalpern, andDavid Ehrhardt


DiscussionPaper SeriesNo. 6


This note looks at the regulation of government-ownedwater utilities and poses the questions: Given that monopolypower can be controlled by the government (as owner), isthere a need for separate regulation of government-owned

utilities? If the governments can control their utilities for thepublic good, why are the outcomes often so poor? In somecountries, governments have established independentregulators for their water utilities. This can increase

transparency, reinforce the positive incentives for utilitiesoperating within a framework of good governance, andcreate more political space for tariff increases. But thehistory of these agencies shows the difficulty of the task.

Further work has been commissioned on this issue, and thenote highlights that a separate regulator is not a panacea.Whether a separate regulatory agency should beestablished and the extent of separation between the

governance, policy, and regulatory functions will depend onthe sector objectives, governance and incentive structures,

and institutional and capacity constraints within the country.

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7 Regulation of State-Owned and Privatized Utilities:Ukraine Electricity Distribution CompanyPerformance. Journal of Regulatory Economics.

Berg, S., C. Lin,and V. Tsaplin

Nov-05 Journal ofRegulatoryEconomics

SpringerNetherlands

Both ownership and regulation affect the behavior of utilitymanagers. Private ownership rewards managerial decisionsthat enhance shareholder value. Regulatory incentivesreward behavior that affects profits and costs. An empirical

analysis of 24 Ukraine electricity distribution companies from1998 to 2002 indicates that privately owned firms dorespond to incentives that add to net cash flows (associatedwith reducing commercial and non-commercial network

losses). However, they also respond more aggressively thando state-owned distribution utilities to mark-up (cost-plus)regulatory incentives that increase shareholder value butdecrease cost efficiency. (SSRN Abstract).

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8 Some Options for Improving the Governance ofState-Owned Electricity Utilities. Energy and MiningSector Board Discussion Paper No. 11.

Irwin, T. and C.Yamamoto

Feb-04 Energy andMiningSector BoardDiscussion

Paper No.11


This paper examines performance issues in state-ownedelectricity distributors and suggests options for improvingperformance. It covers the following topics: applying private-sector company law, legislation and contracts, public

reporting, corporate culture, pressure from lenders, listingminority shares, and techniques for alleviating thegovernment's conflict of interest as owner and policy-maker.(Summary adapted from the Regulation Body ofKnowledge Website, 2004).

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2. MARKET STRUCTUREa. General References

1 Fundamentals of Economic Regulation. PURC. Berg, Sanford Jun-05 PURC,Gainesville, FL

Explains that infrastructure industry networks consist oflinks, nodes, and branches, with heavy fixed costs

associated with each point. Competition may be feasible inthe market, but even with natural monopoly competition isfeasible for the market. (Summary taken from theRegulation Body of Knowledge Website, 2004.)

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2 How Concentrated are Global InfrastructureMarkets? World Bank Policy Research WorkingPaper 3513.

Benitez, Danieland AntonioEstache

Feb-05 Wor ld BankPolicyResearchWorkingPaper 3513


The main purpose of this paper is to provide a first set ofquantitative assessments of the degree of concentration ininfrastructure at the global and at the regional level. Theauthors find no correlation between the degree ofconcentration and the degree of reform adopted by a region

or a sector. In more general terms, they find no scope forsimple encompassing regional or sectoral statementsbecause issues are region- and sector-specific. Theyconclude by arguing that there are a few cases and regions

in which it would make sense for a supranationalcompetition or regulation agency to ensure that the interestsof the users are protected more effectively against the risksof collusion and other types of anti-competitive behaviors

local regulators would not be equipped to address.

MS P

3 PPI partnerships versus PPI divorces in LDCs (orare we switching from PPPI to PPDI?). World Bank

Policy Research Working Paper No. 3470.

Estache, Antonio. Jan-05 World BankPolicy

ResearchWorkingPaper No.3470

World Bank andECARES

(UniversitLibre deBruxelles)

In 1974, Chile launched the first large-scale privatization in adeveloping country. About 15 years later, Argentina

provided a new model of global infrastructure management.Since then a variety of public private partnerships ininfrastructure have been adopted throughout the developingand transition world. Because many of these experiences

are also turning sour and the privatization fad of the 1990sseems to be turning into an anti-privatization fad, it seems

important to separate facts from emotions. The paperargues that the wide differences in interpretations of the

facts can be explained by wide differences in theassessment criteria used by analysts, including thedefinition of the baseline data chosen to assess theincremental effect of reforms. It is also driven by the sectors,

the regions and probably most importantly the actors onwhich the analysis tends to focus. Once all these factorshave been considered, a relatively fair and quantitativeassessment of the prospects of the public-privaterelationship in infrastructure is possible.

MS

b. Market Structure by Sectori. Electricity


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1 Competition in Energy Markets: A consumerPerspective. Oxera Agenda.

Asher, Allan Apr-08 Agenda Oxera In this article, Allan Asher, Chief Executive of energywatch,the independent watchdog representing gas and electricityconsumers in Great Britain, suggests that competition inenergy markets may not be effective in practice. T his articleis in response to the March 2008 issue of Agenda.

.

E P

2 Energy Supply Markets: Are they competitive?.Oxera Agenda.

Brough, Martin(Contact)

Mar-08 Agenda Oxera Increasi ng energy re tai l p ri ces in Great Br ita in have ra isedconcerns about ineffective competition and possible anti-competitive behaviour in energy supply markets, with an

investigation into these markets being launched by Ofgem.In light of this inquiry, this article assesses the competitionconcerns that are likely to be discussed in relation to energyretailing, the methods that may be used to assess their

presence, and potential remedies.

E&G N

3 Power Sector Structure, Ownership, Regulation.Chapters 2 and 4.4 in "Energy sector reform:

strategies for growth, equity and sustainability"(2007). SIDA Studies No. 20.

Ljung, Per Aug-07 SIDA StudiesNo. 20

.

SIDA, Sweden The power sector has a number of unique characteristicsthat affect the reform process in the sector. This process

involves three discrete, but interrelated, elements: modifyingthe structure of the industry to enhance the prospects forcompetition, changing ownership patterns and/or creatingvarious forms of public-private partnerships to providestronger incentives for efficiency and growth and

establishing a transparent regulatory framework to balanceprivate and public interests. Each of these reform elementsare discussed in Chapter 2. Chapter 4, section 4, describesMarket Structure Options (retail competition, bid-based

wholesale competition, and cost-based wholesalecompetition).

E&G N

4 Market Structure and Governance. Chapter 5 in"Reforming Power Markets in developing countries:What have we learned?" (2006). Energy and MiningSector Board Discussion Paper No. 19.

Ch5Besant-Jones,


MiningSector BoardDiscussionPaper No.

19..


This chapter shows how market structure and the form oftrading within the power market are linked to market sizeand income level. This relationship is clearly evident in theextent to which a power supply chain should be unbundledinto separate entities. Unbundling of generation from

distribution can be worthwhile even in small power systems,but forming numerous generation entities or distributionentities is only suited to introducing competition in largepower markets that are at least in the middle-income level.

Competition for the right to supply an incumbent supplierunder long-term agreements by independent power

producers, by contrast, can work in power markets of anysize and at any income level, whatever unbundling is

undertaken. These producers, however, are expected tocarry more investment risk in the large middle-incomecountries than in the small low-income countries.

E&G N

5 The California Power Crisis: Lessons forDeveloping Countries. Finance and Development.

Besant-Jones,John andBernardTenenbaum

Sep-01 Finance andDevelopment

IMF,Washington,DC.

A short updated article from the April 2001 report "Lessonsfrom the California Power Crisis."

E P


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6 Lessons from the California Power Crisis. Energyand Mining Sector Board Discussion Paper No. 1.

Besant-Jones,John andBernardTenenbaum

Apr-01 Energy andMiningSector BoardDiscussionPaper No. 1


This paper assesses whether the California Power crisiscould have been avoided through better market design andmanagement.

E P

ii. Telecom and ICT1 Developing Broadband with Non-competing

networks - The Case of Peru. WB 2007 ICTTraining Courses.

Tania Begazo(Speaker)

Mar-07 WB 2007TrainingCourses(ICT)

ApoyoConsultoria

This course presents the case of a country where mosttelecom infrastructure is owned by a single operator anddiscusses regulatory measures to reduce the market gap,promoting Internet penetration.

ICT P

2 Transforming telecoms in Afghanistan: Expandingaffordable access by introducing competition.Gridlines No. 1.

Bhatia, Bhavnaand NeerajGupta..

Apr-06 Gridlines No.1


Afghanistan has transformed its telecommunications from afragmented system serving few people to a modern oneputting Afghans in touch with one another and with theglobal economy. The government moved quickly to approvea Telecommunications and Internet Policy in 2003, and

identified telecommunications as one of the two lead sectorsfor attracting private and foreign investment. The experiencein Afghanistan shows that wireless communications can playa critical role as the primary telecommunicationsinfrastructure in a post-conflict country. The key factors in

Afghanistan's success in developing its telecommunicationssector have been strong government commitment, a pro-competitive reform agenda, early focus on regulatoryreforms and capacity building, and a transparent bidding

process.

T P

3 Fostering Pro-Competitive Regional Connectivity inSub-Saharan Africa. Newsletter No. 36234

Isabel, CecileNiang and Mavis

Ampah

Nov-05 NewsletterNo. 36234

ICTDepartment,


Africa lags the World in access to quality, affordableinternational connectivity. Building additional international

infrastructure will be an important part of meeting this need,but the ownership structure and policy and regulatoryenvironment under which capacity is built will determine thedevelopment impact of such projects. This paper discussesemerging best practice in the area of public support and

oversight of private and public-private ventures to developinternational connectivity in the region.

ICT P

4 Regulation and Competition: How Antitrust andSector Regulation Affect T elecom Competition.

Public Policy for the Private Sector Viewpoint No.296.

Kerf, Michel,Isabel Neto, and

Damien Gradin

Jan-05 Public Pol icyfor the

PrivateSectorViewpoint

No. 296.


Countries with fully liberalized telecommunications marketshave adopted different mixes of antitrust and sector-specific

regulatory instruments. Does the balance between the twoapproaches matter for competitiveness? Drawing on theexperiences of Australia, Chile, New Zealand, the United

Kingdom, and the United States, this Note finds that it doesmatter. Countries that get the balance right tend to havemore competitive telecommunications markets.

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5 Competition Policy. Module 5 in"Telecommunications Regulation Handbook"(2000). (Available in: English, Chinese, Arabic,Russian, French, and Spanish) M

odule5 Intven, Hank and

McCarthyTetrault (editors)

Nov-00 TelecommunicationsRegulationHandbook


(Available in: English, Chinese, Arabic, Russian, French,and Spanish). This module explains general principles forcompetition policy and how to define the market, identifybarriers to entry, define market power and marketdominance, and identify essential facilities. It also explains

remedies for anticompetitive conduct, such as abuse ofdominance, restricting access to essential facilities, andengaging in cross-subsidization, predatory pricing, and pricesqueezes. Finally, this module describes how to assess

mergers and joint ventures. (Summary adapted from theRegulation Body of Knowledge Website, 2004)

T N


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iii. Natural Gas

iv. TransportUrban Transport

1 Designing Competition in Urban Bus PassengerTransport: Lessons from Uzbekistan. TWU-41.

Gwilliam,Kenneth M., AjayKumar, RichardT. Meakin

Apr-00 TWU-41 This paper attempt three things: to summarize recent trendsby region, to collate that experience on a global basis in anumber of critical issue areas, and to elicit some lessons onhow best to assist developing countries to sustain theirpublic transport systems. The focus of this paper is on

examining the process of development of route franchisearrangements (in Uzbekistan), from the initial imperfectstage to an improved process, and identifying lessons ofexperience and areas for further improvements. The authors

conclude by listing nine conditions which, if present, shouldfacilitate a successful competition in urban bus transport.

UT P


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v. Water and Sanitation

1 Optimal Size for Utilities? Returns to Scale in Water:Evidence from Benchmarking. World Bank GroupPublic Policy for the Private Sector 283.

Tynan, Nicolaand Bill Kingdom

Jan-05 Wor ld BankGroup PublicPolicy for thePrivate

Sector 283.


Using data from 270 water and sanitation providers, thisNote investigates the relationship between a utility's sizeand its operating costs. The current trend towardtransferring responsibility for providing services to the

municipal level is driven in part by the assumption that thiswill make providers more responsive to customers' needs.But findings reported here suggest that smallermunicipalities may face higher per-customer costs and could

lower costs (and prices for consumers) by merging.

W&S

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c. Regional Regulation (see section 11)

3. REGULATORY PROCESS

a. Institutional Design1 Do Regulation and Institutional Design Matter for

Infrastructure Sector Performance? Policy Research

Working Paper No. 4378.

Andres, Luis,Guasch, Jose

Luis Guasch,Stephanie Straub

Oct-07 Po li cyResearch

WorkingPaper No.4378


This paper undertakes a benchmarking exercise of thedesign of regulatory agencies. The analysis uses an

extensive data set of about 1,000 infrastructure concessionsgranted in Latin America from the late 1980s to the early2000s. The analysis finds that as the theory indicates,regulation matters. It shows that institutions and proceduresof regulations matter in three relevant economic aspects:

aligning costs and tariffs; dissuading renegotiations; andimproving productivity, quality of service, coverage, andtariffs. Regulation matters for protecting both consumersand investors, for aligning closely financial returns and the

costs of capital, and for capturing higher levels of benefitsfrom the provision of infrastructure services by the privatesector.

MS P

2 What it takes to Lower Regulatory Risk inInfrastructure Industries: An Assessment andBenchmarking of Brazilian Regulators. Gridlines No.

29.

Correa, Paulo Sep-07 Gridl ines No.29


Regulatory governancehow regulators manageconcession contracts, or other public private contractualarrangements and sector lawscan affect the private

sectors perception of regulatory risk and thus theavailability of private capital for infrastructure projects. Fourkey elements of the regulatory governance structure canreduce the risk of regulatory failure: political and financialautonomy, decision-making structures that reduce

regulatory discretion, access to effective enforcement andother regulatory tools, and efficient rules of accountability.

This note presents an analytical framework based on thosefour elements and applies it in assessing regulatory

governance in Brazil.

MS P


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3 Regulatory Governance in Infrastructure Industries:Assessment and Measurement of BrazilianRegulators. Trends and Policy Options No. 3.

Correa, Paulo,Carlos Pereira,BernardoMueller, MarcusMello

2006 T rends andPolicyOptions No.3


The objective of this report is twofold: to provide acomprehensive assessment of the state of regulatorygovernance in infrastructure industries in Brazil and tosuggest possible indicators for future monitoring. After theintroduction, Section 2 sets up the analytical framework for

the report, identifying key components of regulatorygovernance, namely, autonomy (political and financial),procedures for decision making, instruments (includingpersonnel), and accountability. Section 3 assesses each of

these components in practice, reporting the results of asurvey with 21 regulatory agencies in Brazil. Section 4measures regulatory governance based on three relatedindexes, ranks the Brazilian regulators among themselves,

and compares the proposed indexes with two otherindicators available in the literature. Section 5 presents theconclusions.

MS P

4 Institutional Approaches to Power MarketRegulation. Chapter 6.2 in " Reforming PowerMarkets in developing countries: What have welearned?" (2006). Energy and Mining Sector BoardDiscussion Paper No. 19.

Ch6.2Besant-Jones,


MiningSector BoardDiscussionPaper No.19


This paper describes institutional approaches to PowerMarket Regulation. It includes an OECD list of threeframeworks used in developing countries and twoinstitutional approaches for achieving regulatory flexibilityand commitment.

E&G N

5 Controlling Market Power: Balancing Antitrust andSector Regulation in Telecoms. Public Policy for thePrivate Sector Viewpoint Note No. 294.

Kerf, Michel,Isabel Neto, andDamien Gradin

Jun-05 Public Pol icyfor thePrivate

SectorViewpointNote No.294


Among the countries fully liberalizing theirtelecommunications sector, some have chosen to relymainly on sector-specific rules, often applied by sector-

specific institutions, while others have depended oneconomywide antitrust rules and institutions to controlmarket power. This Note describes the choices made by fivenotable reformers: Australia, Chile, New Zealand, the United

Kingdom, and the United States. Drawing on theirexperiences, it then assesses whether antitrust or sector-specific processes have dealt more quickly and effectivelywith key regulatory issues.

T P

6 Interconnection Disputes: Antitrust or SectorRegulation and the Case of New Zealand. PublicPolicy for the Private Sector Viewpoint Note No. 295

Kerf, Michel,Isabel Neto, andDamien Gradin

Jun-05 Public Pol icyfor thePrivateSector

ViewpointNote No.

295


Full liberalization of telecommunications markets providesscope for relying largely on general antitrust rules andinstitutions for economic regulation. But at least for a timeafter liberalization, sector-specific rules and institutions are

likely to be needed in some areas, including interconnection.This Note draws lessons from the experience of New

Zealand. After fully liberalizing its telecommunicationsmarket in the late 1980s, the country relied primarily on

antitrust instruments to regulate interconnection until 2001,when it introduced a new regime putting heavier emphasison sector-specific regulation.

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7 New Tools for Studying Network Industry Reformsin Developing Countries: T he Telecommunicationsand Electricity Regulation Database. World BankPolicy Research Working Paper 3286.

Wallsten, Scott,George Clarke,Luke Haggarty,RosarioKaneshiro, Roger

Noll, Mary Shirleyand Colin XuLixin.

Mar-04 Wor ld BankPolicyResearchWorkingPaper 3286.


In the 1990s, hundreds of privatization transactions valuedat billions of dollars were completed in these sectors indeveloping and transition economies. While privatization hasreceived the most attention, reforms also included marketliberalization, structural changes like unbundling, and the

introduction of new laws and regulations. To date,regulations have received far less attention than theirpotential economic effects warrant, largely due to lack ofdata. In order to address this problem, the authors set out to

compile a comprehensive and consistent dataset through anextensive survey of telecommunications and electricityregulators in developing countries. The authors describe thesurveys and the resulting database.

T&E

8 Issues in Institutional Design of RegulatoryAgencies. Tata Energy Research Institute.

Srivastava,Leena.

2000 T ata EnergyResearchInstitute

New Delhi,India.

The publication provides a thoughtful discussion of theestablishment of the new regulatory frameworks in South

Asia, primarily India and Nepal. The description of the basic

institutional arrangements of regulatory agencies in thepower and telecommunications sectors of those twocountries is concise and informative. It is relevant both as asurvey of institutions and as a reminder of the political

realities faced by embryonic regulatory institutions. Its

methodology is largely that of statutory survey and analyticalthinking by an astute observer of the regulatory process.(Summary taken from Brown et al. 2006 ).

E&G, T

P

i. Regulatory Agency vs.Regulation by Contract

1 Infrastructure Regulation in Developing Countries:An Exploration of Hybrid and Transitional Models .Working Paper No. 4.

Eberhard , An ton 2007 Work ingPaper No. 4

PPIAF, WorldBank,Washington DC..

This paper summarizes the experiences of regulation indeveloping countries over the past 15 years and exploresways of improving the design and performance of regulatorysystems. It highlights some of the problems and challengeswith existing regulatory models, proposes a menu of

regulatory options and looks at various further ways ofstrengthening regulatory performance. The paper also looksat ways of mitigating regulatory risk through partial-riskguarantees and other investment protection instruments.Finally, the paper argues that whereas independent

regulation may in many instances be an appropriate model,the credibility and legitimacy of regulation depends on

judicious use of hybrid and transitional regulatory modelsincorporating varying degrees of regulatory discretion that

best fit the local country context of regulatory commitmentand institutional and human resource capacity.

MS N

2 Matching regulatory design to country cirumstances:The potential of hybrid and transitional models.Gridlines No. 23.

Eberhard, Anton May-07 Gridl ines No.23

PPIAF, WorldBank,Washington DC.

Developing countries attempting to implement the standardmodel of independent regulation have encountered manyproblems and challenges. These may arise when aregulatory system is incompatible with the country'sregulatory commitment and institutional and human resource

endowment. Selecting from a menu of regulatory options tocreate a hybrid model -- one that best fits a country's owncircumstances and challenges -- can improve regulatoryperformance. This issue is examined by this Gridline.

MS N


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3 Regulatory Credibility for Private investment andRegulation by contract to support a new regulationregime. Chapters 6.3 and 6.4 in "Reforming powermarkets in developing countries: What have welearned?" (2006). Energy and Mining Sector Board

Discussion Paper No. 19.

Ch6.3-6.4Besant-Jones,


MiningSector BoardDiscussionPaper No.

19..


Chapter 6.3 examines regulatory credibility for privateinvestments in the context of regulatory agencies. It states,among other things, that the principal means for developingcredibility is by establishing a designated regulatory agencythat discharges its duties in a neutral and depoliticized

manner. Chapter 6.4, on the other hand, examinesregulation by contract.

E&G N

4 Regulation and Private Participation contracts. Note4 in "Explanatory Notes on Key Topics in theRegulation of Water and Sanitation Services"(2006). Water Supply and Sanitation Sector Board

Discussion Paper No. 6.

Note4Groom, Eric,

JonathanHalpern, andDavid Ehrhardt


DiscussionPaper No. 6..


This note explores regulation of services provided byprivately operated utilities. There are two distinct traditions:one that relies on courts or arbitrators to fulfill the regulatoryfunctions when the parties cannot agree; and another that

relies upon government-established regulatory agencies. Inthe former, services are typically provided under contract tothe government, which retains ownership of the assets,whereas the latter approach arose in the context of investor-

owned utilities. This note outlines the range of contractualoptions available for delivery of WSS by privately ownedutilities and highlights the problems that have occurredwhere there are both contracts and an independentregulatory agency.

W&S

N

5 Regulation and Contracts for Utility Services:Substitutes or Complements? Lessons from UKRailway and Electricity History. Journal of PolicyReform.

Stern, Jon 2003 Journal ofPolicyReform 6 (4):193216

This article describes how regulatory systems evolved in theUK by providing different ways of monitoring, enforcing, andeventually revising concession contracts for the railway andelectricity sectors. The development of regulation in these

sectors started with dispute resolution and the monitoring ofconcession contracts, and then evolved to regulatoryinstitutions that were established with some powers toreview and revise contract terms (including prices).

However, these pre-1939 U.K. institutions for infrastructureindustry regulation were not well designed and did notprovide a stable solution to reconciling the needs ofconsumers with a reasonable rate of return to investors. The

discussion in the article relates to the economic theory ofincomplete contracts. It also provides support for theproposition that, effective infrastructure regulatory agenciescan promote better and simpler infrastructure concession

contracts, while also offering useful insights on stages ofregulatory development. (Summary adapted from Brown et

al. 2006).

Rw,E P

6 Regulation by Contract: A New Way to PrivatizeElectricity Distribution? Energy and Mining SectorBoard Discussion Paper No. 7.

Bakovic, Tonci,BernardTenenbaum, andFiona Woolf

May-03 Energy andMiningSector BoardDiscussionPaper No. 7


The specific focus of the paper is on how regulatorycontracts can be combined with independent regulatorycommissions to promote successful privatization ofelectricity distribution.

E N&P

ii. Outsourcing Regulation


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1 Outsourcing Regulation: When Does it Make Senseand How Do We Best Manage it? Working PaperNo. 5.

Trmolet, Sophie 2007 WorkingPaper No. 5

PPIAF, WorldBank,Washington DC..

Outsourcing regulatory functions or tasks can play asignificant role in improving the effectiveness of institutionsin charge of utility regulation, be they independentregulatory agencies or other types of institutions (includingline ministries or contract supervision units set up at the

level of the contract). The focus of this note is onoutsourcing regulatory functions, to understand when itmakes sense and how it can be best managed. Forillustration purposes, the note contains references to a

World Bank survey of outsourcing practices by existingregulators that was conducted in 2004 and had results from51 regulation agencies throughout the world.

MS N

2 Regulating Utilities: Contracting Out RegulatoryFunctions. Public Policy for the Private Sector NoteNo. 269.

Bertolini,Lorenzo

Apr-04 Public Policyfor thePrivateSector Note

No. 269


Regulating infrastructure utilities can be extremely complexand fraught with risks of political interference and capture byinterest groups, especially in countries with little tradition ofpolitically independent government agencies. To deal with

these challenges, policymakers and regulators havesometimes contracted third partiessuch as independentexperts and consultantsto provide advisory or bindinginput into the administration of regulatory functions. ThisNote examines international experience in this area and

explores the key implications for policymakers.

MS N

b. Consultations withStakeholders/Transparency

1 Ways To Improve Water Services By MakingUtilities More Accountable To Their Users : A

Review. Water Working Notes, Note No. 15.

Muller, Mike,Robin Simpson,

Meike vanGinneken

May-08 WaterWorking

Notes, NoteNo. 15


Using country studies and personal interviews tocomplement the available literature, this article provides an

overview, a structured analysis, practical guidance, andsources of further information for managers seeking todesign and apply tools to improve the performance ofutilities.

W&S

P

2 Fighting Corruption the Celtel Way: Lessons fromthe front line. African Region Findings No. 274.

May-07 AfricanRegionFindings No.274

OperationsResults andLearning Unit in

Africa Regionand World Bank

This note describes Celtel's approach to governance andcorruption.

T P

3 Unsolicited Infrastructure Proposals: How Some

Countries Introduce Competition and Transparency,an international experience review. Trends and

Policy Options No. 5.

Hodges, John T.

and GeorginaDellacha

Feb-07 Trends and

PolicyOptions No.

5

PPIAF, World

Bank,Washington DC

This paper assesses the major issues and impact of

unsolicited proposals which are not requested by agovernment and usually originate within the private sector. It

suggests that some unsolicited proposals, when subject tocompetition and transparency, may contribute to the overallinfrastructure goals of countries.

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4 Utilities reforms and corruption in developingcountries. World Bank Policy Research WorkingPaper 4081.

Estache, Antonioand AnaGoicoecha

Dec-06 Wor ld BankPolicyResearchWorkingPaper 4081.


This paper shows empirically that "privatization" in theenergy, telecommunications, and water sectors, and theintroduction of independent regulators in those sectors,have not always had the expected effects on access,affordability, or quality of services. It also shows that

corruption leads to adjustments in the quantity, quality, andprice of services consistent with the profit-maximizingbehavior that one would expect from monopolies in thesector. The results suggest that privatization and the

introduction of independent regulators have, at best, onlypartial effects on the consequences of corruption for access,affordability, and quality of utility services.

MS P

5 How to improve regulatory transparency: Emerginglessons from an international assessment. GridlinesNo. 11.

Bertolini, Lorenzo Jun-06 Gridlines No.11


Managing the different and often conflicting interests andexpectations of stakeholders-the government, consumers,service providers-is a demanding task for infrastructureregulators. Transparency can be a big help. A core principleof good regulatory governance, transparency creates

credibility for regulatory decisions and helps fostersustainable investment in infrastructure. This gridlineexamines how policymakers and regulators can bestimprove regulatory transparency through a recent Public-Private Infrastructure Advisory Facility (PPIAF)-funded

review of international experience while identifying emerginglessons.

MS P

6 Creating the Right Enabling Environment for ICT.ICT Regulation Toolkit Document.

Guermazi,Boutheina and

David Satola

2005 ICTRegulation

ToolkitDocument

infodev, ITU Based on success stories from a wide range of countries(both developed and developing), this chapter provides

pointers for policymakers on how to create the requisiteenvironment for promoting ICT-led growth. Such an enablingenvironment requires not only ICT-specific considerations,but macro-level improvements in the business and political

environment, among other factors. T his chapter focusesprimarily on the policy, legal and regulatory conditionsneeded to advance the e-development agenda at thenational level. The chapter follows a three-layered approach

to the enabling environment, which emphasizes improving:access to ICT tools (the access layer), access to e-development applications (the application layer); andconsumer confidence and trust (the trust layer).

ICT P

7 Consumer Participation in Infrastructure Regulation:

Evidence from the East Asia and Pacific Region.World Bank Working Paper No. 66.

Muzzin i, E lisa May-05 World B ank

WorkingPaper 66

World Bank,

Washington DC

Most East Asia and Pacific countries are in the process of

reforming their infrastructure industries, focusing onstrengthening the regulatory framework and making theinvestment climate more predictable. In this context,

assessing the status of consumer participation ininfrastructure regulation is essential to ascertain to whatextent regulatory reforms in the region are supported byadequate mechanisms to safeguard consumer interests.

MS P

8 Corruption. Chapter 7 in "Emerging InfrastructurePolicy Issues in Developing Countries: A Survey ofthe Recent Economic Literature" (2004). WorldBank Policy Research Working Paper No. 3442.

Ch7Estache, Antonio Oct-04 World Bank

PolicyResearchWorking

Paper 3442.


This section summarizes the literature on four policy issuesrelated to corruption: its level in infrastructure, its effects, itsdrivers, and what can done about it.

MS N&P


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9 Timing it all right: Information collection,consultation, and stakeholder engagement. Chapter6 in "New designs for water and sanitationtransactions" (2002).

Ch6 2002 Water and

SanitationProgram


This chapter outlines the key steps to be taken during thepreparation process and the tasks that should be specifiedin terms of reference for those supporting it. The topicsexamined are: Information to be collected and analyzed,consultation and stakeholder engagement, definition of

objectives and design intervention, and timing.

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c. Reviews and Appeals ofRegulatory Decisions

1 Experts Panels in Regulation of Infrastructure inChile. Working Paper No. 2.

Jadresic,Alejandro

2007 WorkingPaper No. 2


This paper sheds some light on the Chilean experience withexpert panels and presents some conclusions that couldeventually inspire regulatory improvements in Chile andother developing countries. Expert panels consist of

specialized, independent ad hoc entities that are enlisted asthird party experts or arbitrators on regulatory issues. T hepaper deals with the role of panels of experts in four areas:Power, Telecom, Water and sanitation, and Public works

(toll roads). Following a brief conceptual taxonomy of panelsof experts, the specific experiences are presented in broadchronological order, according to the time the institutionswere established as law.

MS P

2 Relying on expert panels to help settle regulatory

disputes: Lessons from Chilean experience.Gridlines No. 22.

Jadresic,

Alejandro andLorenzo Bertolini

May-07 Gridl ines No.

22

PPIAF, World

Bank,Washington DC

Starting in the 1980s Chile initiated wide-ranging economic

reforms, paving the way for private sector involvement inmajor infrastructure sectors. With these reforms came newregulatory rules, institutions, and processes to manage theinterests and expectations of such diverse stakeholders as

the government, consumers, and service providers. Oneinnovative feature is the use of expert panels -- specialized,independent, ad hoc entities affiliated with neither thegovernment nor the sector regulator -- to resolve disputes

arising from regulatory decisions. The Chilean experiencewith these panels offers useful lessons for policymakers.

MS P

3 Telecommunications and the WTO: The case ofMexico. Working Paper No. 33194

Wellenius, Bjrn ,Juan Galarza,and BoutheinaGuermazi

Jun-05 Work ingPaper No.33194

GICT, WorldBank,WashingtonDC.

The U.S.-Mexico case is the first (and so far only) case ofWorld Trade Organization (WTO) dispute resolution ontelecommunications services and, indeed, the first onservices generally. The findings of the Panel charged withresolving the dispute, formally adopted by the WT O

members, contain interpretations of the General Agreementon Trade in Services (GATS). This paper analyzes how the

findings from this case may have implications for othercountries that have made or intend to make market access

commitments on telecommunications.

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4. CONTRACTUALARRANGEMENTS

1 Infrastructure and law website. Website. 2008 Website. PPIAF, WorldBank,Washington DC

This Web site is designed for task team leaders and otheroperational staff of the World Bank group who are workingon the planning, design and legal structuring of

infrastructure projects, especially those involving the privatesector. It helps address legal and contractual issues relatedto infrastructure projects and provides practical guides andchecklists, sample legislation, regulations and agreements,

with annotations and practical drafting notes to help projectmanagers access an array of legal materials and othersample documents drawn from reform initiatives around theworld.

MS N

2 Resource Guide: Performance-based Contractingfor Preservation and Improvement of Road Assets(also available in English, French, Russian, andSpanish). Resource Guide.

UpdatedApril2008(Publishe

d March2006)

ResourceGuide

UK Departmentfor InternationalDevelopmentand the World

Bank

This Resource Guide is designed to assist national and sub-national road agencies in developing and transitioncountries to launch or enhance a performance-basedcontracting (PBC) program to manage and maintain their

road networks. The Guide contains information and practicaldocumentation to: identify a PBC approach to fit specificconditions in a given country; design bidding and contractdocumentation; and develop an efficient PBCimplementation strategy.

Rd N

3 Main forms of public-private partnership. Chapter2.2 in "Energy sector reform: strategies for growth,equity and sustainability" (2007).

2.2Ljung, Per Aug-07 SIDA Studies

No. 20..

SIDA, Sweden Depending on the circumstances, different models haveevolved that provide for sharing of risks and rewardsbetween the government, the consumers and the privatesector (Table 1). This chapter describes the main forms of

public-private partnership found in the power sector. T heseare: Service Contracts, Management Contracts, AffermageContract, Lease Contracts, Design-Build-Operate Contracts(DBO), Concessions, Build-Own-Operate-Transfer

Contracts (BOT), and Divestitures.

E N

4 Selecting an Operator. Chapter 9 in "Approaches toprivate participation in water service" (2006). C

h9 2006 Toolkit PPIAF, World

Bank,Washington DC

.

.

This chapter provides an overview of the key issues to beaddressed and the steps involved in selecting an operator. Itfocuses on selecting an operator for the main utility rather

than for alternative providers. For relatively small utilities,the steps in the selection process are the same, but theselection process is adapted to fit the requirements and tolimit expenses. In particular, the eligibility and selection

criteria could be relaxed in order to attract regionaloperators. The topics examined are: Choosing a selection

method, setting the selection criteria for competitive bidding,managing the bidding, and dealing with other issues.

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5 Allocating Responsibilities and Risk. Chapter 6 in"Approaches to Private Participation in WaterServices" (2006).

Ch6 2006 Toolkit PPIAF, World

Bank,Washington DC.

This chapter discusses how to best allocate businessresponsibilities and risks and how to design tariff adjustmentand other rules to achieve the desired allocation. Riskscome about because the world is unpredictable. Demand forwater services may be higher or lower than forecast. Costs

may be higher or lower than forecast. Exchange rates willchange. The question is, who should bear these risks? Whoshould bear the losses or experience the gains? If theoperator bears cost risks, for example, then the operator

makes bigger profits if costs fall and smaller profitsorlossesif costs rise. On the other hand, if customers bearcost risks, then customers lose if costs rise and win if theyfall; the operators profits are unaffected. It is useful to think

about responsibilities and risks together. Operators may begiven responsibility for the things they are able to do betterthan government, and may take the risks naturallyassociated with those responsibilities.

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6 Using Management and Lease Affermage Contractsfor Water Supply: How Effective Are They inImproving Service Delivery? Gridline No. 12.

Ringskog, Klas,Mary EllenHammond, and

Alain Locussol

..

.

Sep-06 Gridl ine No.12


As governments in developing countries seek to expandaccess to water supply and improve the quality of service,they are considering a range of options for public-privatepartnerships. Yet proposals to involve the private sector

have often been met with concerns - about tariff hikes, staffcutbacks, and ability to reduce inefficiency and expandaccess to service among the poor. Experiences with themore than 300 contracts bringing private operators into

water supply in 1990-2004 have been mixed. This studyexamines the performance of water utilities undermanagement and lease-affermage contracts, by looking ateight case studies across developing regions which show

that performance has generally improved-across a range ofmeasures.

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7 Centralized Purchasing Arrangements: InternationalPractices and Lessons Learned on Variations to the

Single Buyer Model. Energy and Mining SectorBoard Discussion Paper No. 16.

Arizu, Beatriz Mar-06 Energy andMining

Sector BoardDiscussionPaper No.16


Developing countries often pose the question of whether ornot the Single Buyer is the only remaining alternative to

attract private capital when a comprehensive restructuring oftheir power sectors is not technically feasible or politicallydesirable. This paper tries to give a fresh perspective andexamine how this concept was implemented, what

objectives it served, how it changed over time, and whatarrangements have been introduced to overcome its

drawbacks, while preserving its positive attributes.

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8 Improving the Regulation of Water and SanitationServices: Preliminary Review to Categorize,Describe and Assess Incentive Provisions inManagement Contracts. Paper prepared for theWorld Bank.

Smith, Bill Hume Feb-06 Paperprepared forthe WorldBank


This report has been prepared for the World Bank with theobjective of categorizing, describing and assessing thedifferent performance incentives that have been used in aselection of thirteen management contracts in the watersupply and sanitation (WSS) sector. The variety of

performance incentives outlined in this report demonstratesthat practitioners developing contracts face substantialchoices in designing incentives.

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9 Consumer Cooperatives: An Alternative InstitutionalModel for Delivery of Urban Water Supply andSanitation Services? Water Supply and SanitationWorking Notes. Note No. 5.

Fernando Ruiz-Mier and Miekevan Ginneken

Jan-06 WaterSupply andSanitationWorkingNotes. Note

No. 5.


This paper describes the essential characteristics ofconsumer cooperatives engaged in the provision of basicservices and discusses their applicability as a model forwater supply and sanitation service provision in urbanareas. A cooperative is an autonomous association of

persons united voluntarily to meet their common economic,social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. The paperfocuses on system-wide urban water supply cooperatives

and is thus not concerned with urban or peri-urbancooperatives that depend on either boreholes or bulkpurchases of water from a utility for distribution, nor does itrefer to rural water supply cooperatives that are generally

small. After a general overview of cooperatives and adiscussion of the main characteristics of utility cooperatives,the paper reviews the case of SAGUAPAC, a successfulurban WSS cooperative in Bolivia, from which it draws some

conclusions.

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10 Concesion y contrato de prestacion de servicios deplantas de tratamiento de aguas residuales enToluca: Lecciones Aprendidas. Chapter 2 in

"Esquemas de Financiamiento del Sector Agua"(2005).

Ch2Gulesserian,

HaigNov-05 PPIAF, World

Bank,Washington DC

.

.

.

This section summarizes the recent experience in water andsanitation plant concessions in Toluca, Mexico. With apayment guarantee from the country of Mexico, the

municipal organizations of Toluca Norte and Oriente grantedconcessions to private companies for the construction andoperation of two treatment plants. Lessons from thisexperience that stand out are: the establishment of minimum

capital requirements from investors with the purpose ofavoiding delays in the attainment of the required financing,the need to secure financing of complementary activities bythe government, and a clear definition of the responsabilities

of all the parties involved in the contract.

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11 Mobile license renewal. What are the issues? Whatis at stake? Working Paper No. 33190

Guermazi,Boutheina andIsabel Neto

Jun-05 Work ingPaper No.33190

GICT, WorldBank,Washington

DC.

This note provides an overview of mobile license renewalissues covering the legal regime of license renewal, therenewal process, the non-renewal context and the changes

in licensing conditions including spectrum implications of therenewal process. It draws best practices that started to

emerge in recent renewal practices, to ensure that therenewal process leads to the best outcome for all

stakeholders.

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12 Innovative Contracts, Sound Relationships: UrbanWater Sector Reform in Senegal. Water Supply andSanitation Sector Board Discussion Paper No. 1

Brocklehurst,Clarissa and JanG. Janssens

Jan-04 WaterSupply andSanitationSector BoardDiscussion

Paper No. 1..


This paper describes Senegal's Urban Water SectorReform. In 1995, the Government of Senegal launched wide-reaching reforms in the urban water sector. T he reformsconsisted of dissolving the state-

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