38621 2006 Annual Report Helping to eliminate poverty and achieve sustainable development through public-private partnerships in infrastructure Contents PPIAF at a glance  1 Message from the program manager  4 Overview of operations in 2006  7 Geographic focus  7 Sector focus  7 Outcomes of PPIAF-funded activities  8 Regional and global activities in 2006  11  Sub-Saharan Africa  11 South Asia  14 East Asia and Pacific  17 Central Asia and Europe  21 Latin America and the Caribbean  25 Middle East and North Africa  27 Global knowledge management  28 Finances and resource mobilization  31 Funding and expenditure structure  31 Single audit process  34 Annexes  35 1 Governance structure  36 2 Activities funded by PPIAF in fiscal 2006  41 Acronyms and abbreviations  58 2006 Annual Report Helping to eliminate poverty and achieve sustainable development through public-private partnerships in infrastructure © 2007 The International Bank for Reconstruction and Development / The World Bank All rights reserved. The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of Public-Private Infrastructure Advisory Facility (PPIAF) or the Board of Executive Directors of the World Bank or the governments they represent. Neither PPIAF nor the World Bank guarantees the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of PPIAF or the World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. The material in this work is copyrighted. Copyright is held by the World Bank on behalf of both the World Bank and PPIAF. No part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical, including copying, recording, or inclu- sion in any information storage and retrieval system, without the prior written permission of the World Bank. The World Bank encourages dissemination of its work and will normally grant permission promptly. For all other queries on rights and licenses, including subsidiary rights, please contact the Office of the Publisher, World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail pubrights@worldbank.org. Photo credits Cover, from left: Curt Carnemark/World Bank, Dominic Sansoni/World Bank, Curt Carne- mark/World Bank, Eric Miller/World Bank. Text: page 4, Tomas Sennett/World Bank; page 7, Yosef Hadar/World Bank; pages 9 and 11, Curt Carnemark/World Bank; page 15, iStockphoto; page 16, Dominic Sansoni/World Bank; page 18, Curt Carnemark/World Bank; page 19, Dominc Sansoni/World Bank; page 21, Nicholas Van Pragg/World Bank; page 22, Anatoliy Ralhimbayev/World Bank; page 23, Yosef Hadar/World Bank; page 24, Bunyad Dinc/World Bank; page 30, iStockphoto; page 31, Eric Miller/World Bank. PPIAF at a glance The Public-Private Infrastructure Advisory Facility (PPIAF) is a multidonor technical assistance facility that works with developing countries to improve the quality of their infrastructure through public-private partnerships (PPPs). Launched in July 1999, PPIAF was developed as a joint initiative of the govern- ments of Japan and the United Kingdom, working closely with the World Bank. It was built on the World Bank Group’s Infrastructure Action Program and designed to reinforce the actions of all participating donors. Today PPIAF has 15 participating members, which include bilateral and multilateral development agencies and international financial institutions. Owned and directed by its participating donors, PPIAF is governed by a Program Council made up of representatives of these donors, and managed by the World Bank through a Program Management Unit. How PPIAF pursues its mission PPIAF helps developing countries improve their infrastructure through two main mechanisms: • It offers governments technical assistance on strategies and measures they can use to tap the full potential of public-private partnerships in infrastructure. • It identifies, disseminates, and promotes best practices on matters relating to public-private partnerships in infrastructure. What support is available PPIAF can finance a range of advisory and related activities in a single country or across multiple countries. These activities include the following: • Framing infrastructure development strategies to take full advantage of the potential for private involvement. • Building consensus on appropriate policy, regulatory, and institutional reforms. • Designing and implementing specific policy, regulatory, and institutional re- forms. • Supporting the design and implementation of pioneering projects and transactions.  • Building government capacity to design and execute private infrastructure arrangements and regulate private service providers. PPIAF support can facilitate public-private partnerships for financing, owning, operating, rehabilitating, maintaining, or managing eligible infrastructure ser- vices in a variety of sectors: roads, ports, airports, railways, electricity, tele- communications, solid waste, water and sewerage, and gas transmission and distribution. Countries eligible for PPIAF-financed assistance are developing and transi- tion economies as classified by the Development Assistance Committee of the Organisation for Economic Co-operation and Development. How to apply for PPIAF support Applications for PPIAF support may come from any source. For country- specific activities, however, the beneficiary government must approve all re- quests for support. For multicountry activities designed to directly benefit a small number of easily identifiable countries, the relevant governments must also give written approval for the activity. An application form for PPIAF support can be downloaded from the PPIAF Web site (www.ppiaf.org) or requested from the Program Management Unit. Proposals are assessed against the criteria specified in PPIAF’s charter, available on the PPIAF Web site or on request from the Program Management Unit. How PPIAF delivers services PPIAF-financed activities make extensive use of consultants, with procurement governed by World Bank guidelines. More information about procurement ar- rangements and consultancy opportunities is available on the PPIAF Web site. How PPIAF ensures consistency with its mission PPIAF requires that all activities it finances be consistent with its overarching objective of helping to eliminate poverty and achieve sustainable development through private participation in infrastructure.  How to contact PPIAF PROGRAM MANAGEMENT UNIT c/o The World Bank 1818 H Street NW Washington, DC 20433 USA Tel: (+1) 202 458 5588 Fax: (+1) 202 522 7466 E-mail: ppiaf@ppiaf.org EAST AND SOUTHERN WEST AND CENTRAL AFRICA AFRICA REGIONAL MIDDLE EAST AND NORTH AFRICA COORDINATION OFFICE REGIONAL COORDINATION OFFICE Kenya Re Towers 15 avenue Nelson Mandela Upper Hill, P.O. Box 30577 BP 475 Nairobi, Kenya Dakar, Senegal Tel: (+254 20) 271 4095 Tel: (+221) 849 4690 Fax: (+254 20) 271 4275 Fax: (+221) 823 2447 E-mail: nairobirco@ppiaf.org E-mail: dakarrco@ppiaf.org EAST ASIA AND PACIFIC SOUTH ASIA REGIONAL COORDINATION OFFICE CENTRAL ASIA AND EUROPE World Bank Office Manila REGIONAL COORDINATION OFFICE Floor 23 Taipan Place 50M, Shantipath F. Ortigas Jr. Rd., Ortigas Center Chanakyapuri Pasig City, Metro Manila New Delhi 110 021 Philippines India Tel: (+63 2) 637 5855 Tel: (+91 11) 411 77 801 (+63 2) 917 3000 (+91 11) 411 77 850 Fax: (+63 2) 637 5870 Fax: (+91 11) 411 77 849 E-mail: manilarco@ppiaf.org E-mail: delhirco@ppiaf.org  Message from the program manager For most developing countries, gaps in infrastructure The essential role of the private sector continue to constrain efforts to achieve growth and pov- erty reduction goals. A few stark examples illustrate the Developing countries face annual investment needs in in- challenges: frastructure ranging from 5.5 percent to 9 percent of GDP, well beyond the financial capacity of the public sec- • Among the 6.3 billion people in the world today, tor. In recent years the private sector accounted for 1.6 billion—500 million of them in Sub-Saharan Af- roughly 20 percent of annual investment in developing rica—do not have access to basic energy services. countries—several times the financing provided by the • Some 2.4 billion people cook their daily meals using World Bank. In Africa, where infrastructure needs are wood, dung, or other biomass fuels. among the most pressing, foreign private capital has con- • Around 2.6 billion people lack access to water and tributed 10–15 percent of infrastructure investment since sanitation services. the mid-1980s. The challenges in infrastructure will grow as the world’s Worldwide, private financing dropped sharply after population grows. In the next 25 years another 2 billion 1997. But there is growing evidence that it is now re- people will be born—97 percent of them in developing emerging. In 2005, the most recent year for which data countries. These people too will need access to water, are available, investment flows to private infrastructure energy, and sanitation services. And they will need roads projects in developing countries grew by more than 30 to drive on, airports to fly from, and telephones to com- percent from the previous year, to $95.8 billion. In ad- municate with. dition, the profile of this investment is changing, with As developing countries strive to bridge gaps in in- a significant share now coming from local and regional frastructure, emerging experience and a growing body investors. A recent PPIAF-funded study showed that dur- of research are beginning to converge around a new ac- ing 1998–2004 such investors were the main sponsors in ceptance of a private as well as a public sector role in 44 percent of the projects reaching financial closure and infrastructure. While initial expectations may have been provided 42 percent of the investments. overly optimistic, private participation continues to be a Private participation brings benefits beyond invest- viable option to ensure reliable infrastructure services at ment funds. The private sector has played a key role in an affordable price for all people. efficiency gains by contributing management expertise and introducing new technologies. Recent empirical studies measuring the impact of privatization have con- cluded that the picture is generally positive, both in firm  performance and in macroeconomic and welfare contri- It is important to avoid casting the debate in terms butions.1 of public versus private sector, and instead to recognize Moreover, the alternatives to private participation are the vital contributions of both—and to work through a limited. Firms that have remained government owned of- broad range of public-private partnerships, choosing the fer few examples of sustained improvements in perfor- arrangement that best fits the infrastructure sector and mance. And among those that do, most tend to rely on the political and institutional context. instruments that mimic the commercial behavior of pri- Today, as governments continue their efforts to im- vate firms, often resulting in tradeoffs and conflicts simi- prove infrastructure services, three major trends are dis- lar to those of private participation as commercial goals cernible: collide with social ones.2 • Greater engagement across a range of public-private Even so, there is growing acknowledgment in the de- partnerships. Arrangements reflect greater diversity in velopment community that private participation did not risk allocations, ranging from concessions that allo- fulfill the high expectations of the early 1990s. This is cate significant risk to the private sector to nonequity particularly so for network services such as water sup- models such as leases and management contracts. ply, which have natural monopoly elements, and in low- income countries with weak institutional environments. • Recognition of transition costs and political economy. Not surprisingly, these are the same sectors and countries Reform efforts are increasingly taking into account that showed the poorest results under public ownership the need for building consensus and for managing the and management. transition costs of sector reform. For example, insis- Also recognized, however, is that countries often in- tence on full cost-recovering tariffs is being balanced troduced private participation in place of difficult sector by proactive efforts to include the poorest groups of reforms, with the result that when the problems were society in the benefits from reform. Blending public tackled, the impact of private participation was conflated money with revenues from user charges is beginning with that of the reforms. Moreover, the transition costs to gain traction as a way of providing targeted subsi- and political economy aspects of difficult reforms often dies, ideally to be paid only upon delivery, for im- were not appropriately addressed. As a result of all these proved access to services. issues, governments have become impatient, the interna- • Reinforcement of the basics of sector reform and proj- tional private sector has retreated, and public confidence ect preparation. Getting the basics right continues to in private participation has declined. be reinforced as key to realizing the full benefits of Difficulty in making private participation in infra- public-private partnerships. That means establishing a structure work in practice does not mean that it cannot sound policy, legal, and institutional framework. It work or that it was a mistake to try to shift from a tra- also means getting technical features, demand esti- ditional reliance on public enterprises. But it does make mates, and financial baselines and estimates right at it imperative to learn from the past and to take positive the outset—because failure to do so invariably leads to steps to promote smart infrastructure provision by both disputes along the way. the public and the private sector. All these issues provide the mandate and the rationale for the Public-Private Infrastructure Advisory Facility (PPIAF). Through its small technical assistance grants to 1. John Nellis, “Privatization: A Summary Assessment,” Center for Global Development Working Paper 87 (Washington, DC, 2006). Nellis uses the developing countries, it can facilitate a wide spectrum of term privatization broadly to include various forms of public-private part- possible arrangements for private participation in infra- nerships and so does not limit his analysis to divestiture or to infrastruc- ture sectors. structure. The grants give governments the resources to 2. Jose Gomez-Ibanez, “Alternatives to Privatization: The Options for Infra- consider their policy options, develop legal and regula- structure Revisited,” draft working paper (World Bank, Washington, tory frameworks, build consensus around the preferred D.C., 2006). options, and strengthen institutions. PPIAF also identifies  and disseminates lessons learned and emerging best prac- Another important management priority in fiscal 2006 tices in public-private partnerships. was to strengthen outreach and dissemination. PPIAF launched Gridlines, a series of four-page notes, to offer timely and accessible discussions of emerging trends and PPIAF in operation in fiscal 2006 experiences. The notes are widely disseminated to clients, Now in operation for six years, PPIAF has a portfolio donor members, and interested individuals. In addition, that by the end of fiscal 2006 consisted of $111 million in the field-based staff maintains strong links to regional technical assistance grants. Fiscal 2006 saw continued events to strengthen outreach and brand identity. strong demand for PPIAF assistance as the experience PPIAF has also strengthened its documentation of with private participation reinforced the critical impor- emerging outcomes from PPIAF activities, disseminating tance of sector reform, enabling environments, and gov- selected stories through print and other media. And it is ernment capacity to ensure effective results from public- strengthening its internal systems to correlate PPIAF in- private partnerships. In response to this demand, PPIAF terventions with established indicators of the business committed an additional $17.4 million in technical as- environment. sistance grants in fiscal 2006. Donor support to PPIAF has remained strong. Though PPIAF remains demand driven, its outreach We were particularly pleased to welcome the European activities have focused extensively on Sub-Saharan Af- Union as a new participating donor in fiscal 2006. Many rica, consistent with priorities identified by the Program other donors reaffirmed their confidence in PPIAF with Council. In fiscal 2006, 38 percent of new commitments multiyear commitments. were directed to that region, and in the coming years this Another change in governance occurred with the share is expected to grow to about half. Across regions, continued membership rotation on PPIAF’s Technical cross-sectoral activities accounted for the largest share of Advisory Panel. Jose Gomez Ibanez and Sergio PPIAF’s new commitments, reflecting its comparative ad- Mazzuchelli retired, and three new members—Anton Eb- vantage relative to other global programs managed by erhard, Eduardo Engel, and Robin Simpson—were ap- the World Bank and its commitment to gleaning and pointed to three-year terms by the Program Council. The transferring lessons across sectors. panel will be chaired in fiscal 2007 by Margaret Osius. On the operational side, PPIAF completed the restruc- Overall, PPIAF has had a good year. We thank our turing of the Program Management Unit. More than half Program Council members for their continued support of the staff is now based in the four field offices of Dakar, the program and look forward to working with develop- Manila, Nairobi, and New Delhi. The Washington, DC, ing country governments and the private sector in build- office largely oversees program management and admin- ing productive partnerships. istration and dissemination activities. Among the regional portfolios, only that for Latin America and the Caribbean is managed from Washington. PPIAF Program Manager Jyoti Shukla Before joining PPIAF in January 2004, Jyoti built up extensive experience at the World Bank in infrastructure strategies, regulatory reform, and private sector development and worked in China, India, and many countries of Latin America and the Caribbean.  Overview of operations in 2006 PPIAF has provided 505 grants worth more than $111 Sector focus million since its inception in 1999. By June 30, 2006, the PPIAF activities help pave the way for private involve- PPIAF portfolio included activities in 108 countries as ment in the financing, ownership, operation, rehabilita- well as 90 regional activities. tion, maintenance, and management of an eligible infra- In fiscal 2006 PPIAF approved funding for 93 activi- structure service as well as support the regulation of such ties for a total of $17.4 million, maintaining its perfor- activities. PPIAF activities cover a broad spectrum of mance levels from the previous fiscal year. Additional contracting approaches—from management contracts cofinancing of $8.4 million was mobilized from other and leases to concessions and divestitures—across a donors and through contributions from governments. range of eligible infrastructure sectors: This funding supported activities for identifying and disseminating best practices in emerging public-private • Water and sanitation—water, sewerage, and solid partnerships—activities in Capacity Building, Consen- waste. sus Building, Pioneering Transactions, Infrastructure • Energy—electricity generation, transmission, and Development Strategies, and Policy, Regulatory, and In- distribution and natural gas transmission and distri- stitutional Reforms. bution. • Transport—roads, ports, airports, railways, and ur- Geographic focus ban transport. • Telecommunications. Countries eligible for PPIAF assistance are those classi- fied as developing and transition economies by the De- Reflecting PPIAF’s continued emphasis on systematic ap- velopment Assistance Committee of the Organisation proaches that transfer lessons and experience across sec- for Economic Co-operation and Development in its list tors, multisector activities (concentrated in Africa) again of aid recipients. PPIAF approved funding for projects in accounted for the largest share of both approvals and 43 countries in fiscal 2006. funding in fiscal 2006 (figure 2). Telecommunications Among the regions, Sub-Saharan Africa had the larg- has seen a declining share of funding as private activity est share of the program’s activities in fiscal 2006. In a in the sector has increased and PPIAF has been directing concerted effort to meet rising demand in Africa, PPIAF its efforts to other sectors. The water, transport, and en- directed 38 percent of its funding to projects in the re- ergy sectors all surpassed telecommunications in shares gion. Other regions received between 5 and 15 percent of both activities and funding in fiscal 2006, with water (figure 1). South Asia had the biggest increase in both projects in South Asia and energy projects in Central number of projects and amount of funding from the Asia and Europe receiving large amounts of funding. previous fiscal year. Across sectors, PPIAF’s activities continued to support  the attainment of the Millennium Figure 1  Distribution of PPIAF portfolio by region, fiscal 2005 and 2006 Development Goals. 7 6 Outcomes of 2005 2006 Funding (US$ millions) 5 PPIAF-funded activities 4 PPIAF donors continue to emphasize 3 the importance of monitoring and documenting the outcomes of PPIAF 2 activities. Yet the Independent Stra- 1 tegic Review in 2005 noted that 0 since PPIAF typically funds relatively Sub-Saharan South East Asia Global Central Latin Middle East small, upstream technical assistance Africa Asia & Pacific Asia & America & & North activities, measuring such impacts as Europe Caribbean Africa access to and quality of services or the quality and efficiency of regula- Figure 2  Distribution of PPIAF portfolio by sector, fiscal 2005 and 2006 tory decision making would be 9 unduly challenging and costly. At- tributing causality to PPIAF activi- 8 ties would be difficult, and the out- 7 comes of PPIAF assistance in support 2005 2006 6 Funding (US$ millions) of laws or transactions usually be- come apparent only two or three 5 years after an activity has been com- 4 pleted. 3 For these reasons the Program Council directed PPIAF to establish 2 more proximate outcome indicators 1 —such as transactions facilitated, 0 laws passed, institutions established Multisector Water & Transport Energy Telecommunications or strengthened, and sector strate- sanitation gies supported—for assessing the performance of the program (table Table 1  Outcomes of PPIAF activities from inception through fiscal 2006 1). (Cases illustrating outcomes in Outcome Completed Pending Total regions are highlighted throughout Transactions facilitated 83 19 102 the report, including in box 1.) Regulatory institutions established or PPIAF is nevertheless doing more strengthened 40 11 51 to strengthen the measurement of PPP laws and regulations passed 29 14 43 program performance. Viewing bet- PPP sector reform strategies supported 34 23 57 ter portfolio monitoring as an im- Workshops 176 portant means to do so, PPIAF Workshop attendees 15,583 throughout the past year continued  Box 1 Privatizing power in Kenya—emerging outcomes Kenya’s highly inefficient electricity system has severely In late 2004 PPIAF began funding work on the KPLC constrained its economic development. Per capita electric- management contract. In 2005, with continuing PPIAF ity use is only about a third of the average for low-income help, the government carried out a procurement process countries. Businesses routinely report losing nearly 10 per- to select a contractor. By early 2006 a contract was award- cent of sales revenue because of power outages that lead ed to a Canadian firm, Manitoba Hydro, which took over to lost production. Bringing the system up to minimal ef- operations in June 2006. ficiency, the government estimated, would require imme- In keeping with PPIAF recommendations on restructur- diate investments of more than $1.5 billion. ing power generation, the Ministry of Finance announced In 2001, PPIAF began helping the government develop in October 2005 that it had hired transaction advisers to a comprehensive framework for restructuring and priva- prepare for a stock market flotation of 30 percent owner- tizing the power sector. A stakeholder workshop re- ship of the Kenya Electricity Generating Company (Ken- viewed, and the government accepted, a recommenda- Gen). Completed in April 2006, the transaction was worth tion to initiate a management contract for Kenya Power $109 million—Kenya’s largest initial public offering (IPO) and Lighting Company (KPLC), the electricity distribution ever. The money will be used to diversify power genera- company. And in February 2004 a consensus building tion sources. workshop was held on broader power sector reforms. The ministry has since announced that it will launch This work has led to a slow but steady involvement of the more IPOs—to reduce the government’s stake in private sector. KPLC from 51 percent to 39 percent and eventually to 10 percent.  to improve its systems for monitoring activities during achievement of development objectives through sign-off implementation and for measuring outcomes after com- sheets. pletion. PPIAF has revamped all documents for moni- At the same time PPIAF monitors all completed activi- toring its portfolio to improve the links between inputs ties for progress in achieving outcomes. Going forward, and outcomes. All ongoing activities are reviewed and PPIAF plans to further expand its efforts to monitor com- rated every six months through a comprehensive portfo- pleted activities for progress toward outcomes, to docu- lio review. Activities considered to be at risk or unsatis- ment special successes, and to develop monitorable indica- factory are monitored more proactively. And upon con- tors for activities that lead to specific transactions. clusion, all activities are rated on implementation and Meet some of PPIAF’s Washington, DC–based team Left to right: Michael Awad, Amsale Bumbaugh, Katia Nemes, Amit Burman, Jyoti Shukla, and Patricia Roldan 10 Regional and global activities in 2006 The following sections offer an overview of PPIAF’s ac- from the recognition that Africa ranks last among the de- tivities by region as well as those in global knowledge veloping regions in investment in infrastructure projects management. Throughout these sections, boxes high- involving the private sector, garnering just 5 percent of the light specific project outcomes. developing world total over the past 15 years. Regional organizations have taken a leading role in championing this new view of private participation in Sub-Saharan Africa infrastructure and in driving the effort to make it a more Consistent with the focus on Sub-Saharan Africa, PPIAF realistic option for Africa. These include the New Part- activity in the region in fiscal 2006 continued the rapid nership for Africa’s Development (NEPAD), the African growth that began the previous year. PPIAF funding for Sub-Saharan Africa increased to $6,596,055 for 28 ac- Table 2  PPIAF activities in Sub-Saharan Africa, fiscal 2000–06 tivities (table 2). The largest share of funding for the re- gion (61 percent) went to multisector activities (figure Fiscal Number of Funding year activities ($ millions) 3). 2000 15 3.54 The growth in activity in Africa reflects PPIAF’s re- 2001 21 6.62 sponse to new demands in the region for services relat- 2002 22 5.21 ing to private participation in infrastructure. The de- 2003 19 4.33 mands appear to stem from several related factors. 2004 15 3.15 2005 23 4.40 First, African leaders have become more acutely 2006 28 6.60 aware of the importance of infrastructure in reducing Total 143 33.85 poverty and promoting sustained economic growth, in part as a result of the international focus on the Millen- Figure 3  PPIAF funding for Sub-Saharan Africa nium Development Goals. The new awareness has been by sector, fiscal 2006 paralleled by a sharper realization of how far behind Africa is in access to basic infrastructure services. Telecommunications 9% Second, African leaders have a new recognition of Energy 6% the potential role of the private sector in financing and managing infrastructure. Private investment by itself Transport 10% will not solve the infrastructure development problem in Africa, but African leaders increasingly understand Water & that it will be an essential part of the solution. sanitation Third, African leaders have gained a growing apprecia- 14% tion of the challenges of expanding private participation in infrastructure. This appreciation stems in large part Multisector 61% 11 Development Bank, and regional economic communities facilitate sustainable public-private partnerships (PPP such as the Economic Community of West African States units). It also underscores PPIAF’s willingness to support (ECOWAS), the Southern African Development Com- a wider range of public-private partnerships, including munity (SADC), and the Common Market for Eastern management contracts, transactions involving local op- and Southern Africa (Comesa). Also helping to drive erators and investors, and smaller projects that engage Africa’s new realism on private participation in infra- the community. structure is the Infrastructure Consortium for Africa The regional strategy continues PPIAF’s core focus on (ICA), which brings all these actors together in an ongo- supporting legal and regulatory reform and building ing dialogue with the G8 countries and the World Bank. consensus around basic strategies and techniques for pri- PPIAF has been able to proactively offer services that vate participation in infrastructure. These upstream ac- respond to the new demands in Africa thanks largely to tivities are more in demand than ever as project prepara- the strategy it developed for allocating outreach and dis- tion facilities established by donors, development finance semination resources in the region. Formalized in a stra- institutions, and regional economic communities realize tegic plan presented to the Program Council in 2005, the that their assistance is suited more to relatively mature strategy has since been amended several times as a result projects than to the upstream preparation of projects, of interactions with clients. The strategy emphasizes which is essential but often missing. working with key regional organizations, many of which The following PPIAF activities (completed or ongoing) are now PPIAF clients, including NEPAD, ECOWAS, are representative of the types of assistance in demand in and the ICA Secretariat. It adds a new focus on assisting fiscal 2006. And a project in the Nigerian transport sec- with project development facilities and with units to tor illustrates the kinds of outcomes achieved (box 2). Box 2 Privatizing ports in Nigeria In the late 1990s Nigeria’s seaports—burdened by over- force. Using criteria set by the study, reformers initially staffing, low productivity, and corruption—were perform- identified 21 concessions in 10 seaports. The duration of ing dismally, with long turnaround times, excessive port each contract, ranging from 10 to 25 years, was based on charges, and little security for cargo. In 2000 the country’s expected investment by the private partners. Initial adver- National Council on Privatization asked for help in devis- tising for the concessions, to be awarded through interna- ing a strategy to reform the port sector. PPIAF responded tional competitive bidding, attracted 110 expressions of with funding for a study by the Federal Ministry of Trans- interest. The bidding process was conducted by a Cana- port. Completed in June 2002, the study recommended a dian firm, CPCS Transcom, as transaction adviser. “landlord” port model with public ownership and man- By July 2006 much had been accomplished. Twenty agement of land and harbor but private provision of ser- long-term concessions had been awarded. Two new legis- vices under long-term concession contracts. The study lative acts governing the port sector were under final con- also proposed a concessioning strategy along with regula- sideration by the National Assembly. An act establishing tory and institutional reforms. an independent regulator for all modes of surface trans- The PPIAF-funded recommendations helped launch port had been drafted. And with support from the Cana- what has become one of the biggest infrastructure con- dian International Development Agency and the World cessioning programs in the developing world. In June Bank, an activity to build broad support for the reforms 2004 a presidential forum adopted virtually all the recom- had been successfully carried out. mendations, including cuts in the port authority work- 12 Supporting upstream project preparation Developing institutional capacity to oversee PPIAF’s assistance to the Tanzanian government in con- public-private partnerships ceptualizing infrastructure projects in the Mtwara De- In fiscal 2006 PPIAF added Kenya to the growing list of velopment Corridor in 2005 has become a model for countries where it is helping to establish legal and institu- similar activities in the other countries along the corridor tional frameworks—centered on PPP units—to ensure —Malawi, Mozambique, and Zambia. The Tanzanian the efficient design and implementation of public-private model calls for a small team of expert consultants to partnerships. Elsewhere in Africa PPIAF is helping to set work closely with local officials to complete the pre-ap- up PPP units in Malawi, Mozambique, and Tanzania and praisals and legal and regulatory reforms needed to move supporting existing units in Botswana and South Africa. projects to a stage where other organizations can pro- Supporting project preparation facilities vide downstream assistance with transactions. Develop- ing capacity and building institutions are key elements of PPIAF is also supporting the establishment of a project the model. preparation facility in West Africa, to be set up in ECOWAS. Known as the Project Development and Im- Identifying best practices for project development plementation Unit, the facility will be designed to help In late 2005, in response to a request from NEPAD, member states prepare, package, and oversee the imple- PPIAF provided assistance in developing a succinct set of mentation of regional infrastructure projects. Many of generic, user-friendly guidelines for the analytical work these projects, though not all, are expected to involve needed in conceptualizing and appraising public-private private investment and management. PPIAF has also projects. The effort focused especially on the sophisti- provided advice on the final design of the SADC Project cated methodologies that industrial countries have ad- Preparation and Development Facility, a similar unit be- opted for such analyses, to determine how appropriate ing established in southern Africa. they would be for African countries with nascent markets Assisting the Infrastructure Consortium for Africa for such projects. This work was expanded in 2006. PPIAF has launched several activities in response to Continuing support for improved regulation requests from the Infrastructure Consortium for Africa. of utilities It has contributed to the Africa Infrastructure Country At the request of the African Forum of Utility Regula- Diagnostic Study, the first comprehensive effort to docu- tors, PPIAF supported an effort to assess the applicabil- ment the infrastructure financing gap in Africa. And it is ity of innovative and transitional approaches to regula- assisting the ICA Secretariat with several knowledge tory governance (such as limiting regulatory discretion products, beginning with a survey of donor-supported or outsourcing certain regulatory functions to external infrastructure project preparation facilities active in experts or technical panels) to circumstances and institu- Africa. tional environments in the region. Meet the two teams leading PPIAF’s efforts in Sub-Saharan Africa and the Middle East and North Africa To the left: Serah Njoroge, Njeri Gicheru, and James Leigland in PPIAF’s office in Nairobi To the right: Lorenzo Bertolini and Candy Jones in PPIAF’s office in Dakar 13 South Asia The other provided rapid analysis and documentation of the impact of selected leases, management contracts, PPIAF funding for South Asia more than doubled in fis- and concessions in the water sector in response to re- cal 2006, with $2,482,466 approved for 13 activities quests from clients in South Asia. (table 3). The funding was spread across all sectors, with Much of the growth in support to South Asia in fiscal the largest shares going to water and sanitation (45 per- 2006 reflected PPIAF’s response to increasing demand cent), multisector activities (29 percent), and transport from the governments of India, Pakistan, and Afghani- (20 percent; figure 4). stan to explore options for public-private partnerships The 13 activities approved in fiscal 2006 include 5 in to meet challenges in delivering infrastructure services. India, 3 in Pakistan, and 2 in Afghanistan. Another is This work focuses on creating enabling frameworks PPIAF’s first activity in Maldives—to assist the govern- and building governments’ capacity to implement infra- ment in evaluating locations for a new port at Male, structure projects with private participation. Proactive assess options for implementing public-private partner- interaction with governments in the region and active ships, and review the legal and regulatory framework collaboration with development partners helped ensure for private participation in the port sector. effective design of PPIAF-supported interventions. PPIAF also supported two regional activities focusing on disseminating best practices for consensus building. Supporting public-private partnerships in India One, a regional workshop, shared best practices in stra- In India, where the government has embarked on a tegic communication with stakeholders during design comprehensive program to implement public-private and implementation of infrastructure sector reforms. partnerships in infrastructure, PPIAF is providing $265,000 in technical assistance to the Planning Com- Table 3  PPIAF activities in South Asia, fiscal 2000–06 mission, which is leading the effort along with the Min- Fiscal Number of Funding istry of Finance. The government has set up the Com- year activities ($ millions) mittee on Infrastructure, a high-level committee chaired 2000 13 2.65 by the prime minister, and announced key initiatives to 2001 7 1.54 support public-private partnerships. These include es- 2002 8 1.24 2003 8 2.40 tablishing a viability gap fund and a special-purpose ve- 2004 3 1.15 hicle (the India Infrastructure Finance Company) to pro- 2005 7 1.10 vide long-term debt for commercial infrastructure 2006 13 2.48 projects. Total 59 12.56 The PPIAF-supported activity will provide advice on enabling policy, institutional, and regulatory frame- Figure 4  PPIAF funding for South Asia by sector, works and competition issues in infrastructure sectors; fiscal 2006 help develop model concession agreements and a frame- work for allocating risks; and assist in developing evalu- Telecommunications 1% ation and appraisal methodologies and frameworks for Energy 5% PPP projects. In all these tasks the activity will appropri- ately address the fiscal cost implications. Transport 20% Multisector 29% Facilitating competition in Pakistan’s gas sector Natural gas accounts for half the primary energy supply Water & in Pakistan, ranking it among the most gas-intensive sanitation countries in the world. To support the sustainable devel- 45% opment and growth of the critical natural gas sector, the 14 government has been pursuing a comprehensive pro- lack of leadership and weak institutions in the water gram of reforms since early 2000. The reforms are aimed supply and sanitation sector over the past three decades, at developing an efficient institutional framework and problems leading to ad hoc development with minimal economic regulation for the sector, commercializing gas investments in infrastructure. production and bringing in private participation, and in- Committed to developing affordable and sustainable troducing competition in gas transmission and supply. urban water supply and sanitation services, the new To support these efforts, PPIAF has funded a study to government of Afghanistan issued a new sector policy provide recommendations on policy, legal, institutional, and institutional development plan in October 2005 and tariff reforms needed to facilitate open access in (box 3). Both are aimed at achieving the government’s gas transmission and distribution networks and move vision for the sector—by reorganizing and strengthen- toward a competitive market. The study has recom- ing government institutions; increasing the involvement mended a phased approach to introducing a third-party of local governments, communities, and consumers access regime and competition in the gas industry, lay- through decentralization of operations and control; and ing out a road map to guide this process. involving private firms in developing the sector within an appropriate legal and regulatory framework. Aiding reforms to improve urban water supply As a first step toward commercializing the sector and and sanitation in Afghanistan improving service delivery, PPIAF is assisting the govern- In Afghanistan only about 20 percent of the urban popu- ment in corporatizing the existing national water utility lation has access to safe drinking water, among the low- and establishing the Afghanistan Urban Water Supply est levels in the developing world. This situation reflects and Sewerage Company. The PPIAF support includes Box 3 Reforming urban water supply in Afghanistan PPIAF provided early support to the Afghan government’s efforts to improve urban water supply and sanitation. It began in fiscal 2005 by assisting efforts to build consensus among government officials on adopting a management contract model for improving services. A market sounding report provided feedback on concerns and risk percep- tions among operators and their potential interest in man- agement contracts for urban water supply and sanitation in Afghanistan. And an Issues & Options Note mapped out the key elements of a reform path for the sector. This work supported development of the new sector policy and insti- tutional development plan approved by the government in October 2005. 15 and organization of stakeholder workshops to build con- sensus around the water sector reforms and institutional development. Sharing best practices in consulting and communicating with stakeholders In South Asia skepticism about reforms and the vested interests of entrenched stakeholder groups have often led to strong resistance and opposition to both reforms and private participation in infrastructure. In situations such as these, global experience has shown that strategic com- munications to inform stakeholders about reforms up front and address their concerns are critical to building support for change. To share international experiences and demonstrate the value of strategic communications to South Asian policymakers and practitioners, PPIAF organized a two- day workshop in Bangkok in February 2006. The work- shop presented case studies and experiences in energy, water, and transport from Africa and South and East Asia. The overwhelming attendance by senior officials from Bangladesh, India, and Pakistan reflected a clear recog- technical assistance for drafting legislative amendments, nition of the communication challenges faced by these new laws, and related statutes and for carrying out in- governments in implementing reforms. Participants ventories and analyses required to help the new company endorsed early and continued consultation with stake- begin operations. PPIAF assistance will also support de- holders as vital to ensuring the success of infrastructure velopment of an action plan for building capacity in com- reforms and projects. The workshop proceedings and a mercial, managerial, financial, and governance issues, communications toolkit will be widely disseminated. Meet the staff in our New Delhi office for South Asia and for Central Asia and Europe From left to right: Bernadette Nogueiro, Neeraj Gupta, and Bhavna Bhatia in PPIAF’s office in New Delhi 16 East Asia and Pacific years. In China and Vietnam, for example, strong eco- nomic growth sharpened the focus on infrastructure. PPIAF funding for East Asia and Pacific declined in fiscal Growth in China continued at an exceptional rate. 2006, with $2,068,500 approved for 11 activities (table Official estimates for the quarter ending June 2006 put 4). Funding for the fiscal year went to activities in all sec- annualized growth at 11.8 percent, exceeding the al- tors except telecommunications. Cross-cutting multisec- ready high earlier forecasts for the year of 8 percent. tor activities were the most prominent, accounting for 71 Nevertheless, significant areas of poverty remain, with percent of the funding for the region (figure 5). real infrastructure needs. While the fiscal 2006 funding represents a 33 percent Vietnam has sustained growth at more than 8 per- drop on fiscal 2005, this does not signify any reduction cent, putting significant pressure on electricity, trans- in PPIAF’s commitment to the region. Indeed, in fiscal port, and water supply. 2006 PPIAF established its regional office in Manila, Indonesia is showing heartening signs of beginning now operational, to help provide closer support and in- to move on from the lingering legacy of the Asian crisis teraction across the region. of 1997–98. While much remains to be done in devel- Fiscal 2006 was something of a bellwether year for oping effective governance and overcoming corruption, private participation in infrastructure in East Asia and the government has increasingly recognized the impor- Pacific. Though overall levels across the region remained tance of delivering new infrastructure to meet the huge flat, there was a renewed interest in and focus on the is- demands of the country’s large, dispersed population. sue after little overall growth in infrastructure in recent Moreover, it sees the private sector as playing a signifi- cant part in meeting electricity and transport needs, for Table 4  PPIAF activities in East Asia and Pacific, example. fiscal 2000–06 These developments have meant increased demand Fiscal Number of Funding for PPIAF support. In China PPIAF has already played year activities ($ millions) a part in helping to address the needs of communities 2000 11 2.64 through private participation in the delivery of piped 2001 11 3.26 water supply in Gansu, Hainan, and Yunnan Provinces 2002 17 3.58 2003 8 1.59 and water supply and sanitation in the municipality of 2004 16 3.80 Chongqing. In Vietnam, PPIAF has funded activities in 2005 15 3.09 most infrastructure sectors, supporting the emergence 2006 11 2.07 of an increasingly active private sector. In Indonesia, Total 89 20.03 PPIAF has supported the development and implementa- tion of a national PPP strategy as a tool for effectively Figure 5  PPIAF funding for East Asia and Pacific involving the private sector (box 4). by sector, fiscal 2006 Almost half the activities approved in fiscal 2006 have been aimed at building governments’ capacity in Energy 7% designing and executing private infrastructure arrange- Transport 3% ments, especially in managing (and allocating) risks. Multisector 71% One PPIAF-supported activity is providing advice to Water & the government of Indonesia on the prudent use of gov- sanitation 18% ernment support for infrastructure projects, including guarantees and subsidies. Another, in Vietnam, is giv- ing advice to several key local development investment funds on investment policies, appraisal procedures, in- vestment eligibility criteria, risk exposure policy, portfo- 17 lio monitoring, and related functions. These funds will for countries in the Greater Mekong subregion and on serve as a key vehicle for involving provincial govern- the use of performance-based maintenance contracts for ments in public-private partnerships for delivering in- the national road networks of Cambodia, Indonesia, frastructure. and the Philippines. Other PPIAF-assisted capacity building activities have PPIAF has also funded activities to develop strategies focused on improving governments’ planning, regulation, for financing water projects and developing geothermal and project preparation skills for future infrastructure energy in Indonesia and for managing solid waste and transactions involving the private sector. These include septage in Vietnam. These activities are expected to help training on the planning for cross-border infrastructure explore private participation in these sectors. Box 4 Strengthening public-private partnerships in Indonesia Indonesia faces a massive infrastructure backlog. It not an infrastructure risk management framework and on a only needs to develop new infrastructure to keep up with strategy for providing government support (including demand; it also must catch up with the maintenance guarantees and subsidies) to private infrastructure proj- backlog on existing infrastructure. Facing tight fiscal bud- ects where warranted and for managing the liabilities and gets, the government has recognized the need to attract fiscal risks this creates. Work is progressing well, and there private investment. That requires putting into place proper has been strong government commitment, as evidenced frameworks and policies for public-private partnerships by the establishment in the Ministry of Finance of the Risk (PPPs) as well as a structure for implementing them. Management Unit as the focus for implementation of the PPIAF has helped mobilize support for these PPP re- strategy. The activity complements the work recently un- forms through two complementary activities. The first dertaken by AusAID on initial training and other capacity helped set up a comprehensive PPP framework for the building activities for the new unit. newly established National Committee for the Accelera- tion of Infrastructure Provision (KKPPI), which has taken on the role of policymaker, coordinator, and procurement regulator for all PPP projects. This activity helped the gov- ernment clarify and structure institutional arrangements for housing PPP institutional capacities under KKPPI and for interacting with stakeholders. It also helped provide institutional support for developing KKPPI as the govern- ment’s internal forum for PPP policy discussions and de- velopment. Legislation needed to make KKPPI fully operational has now been passed, and steps taken to establish a PPP unit under KKPPI. The Indonesia Infrastructure Summit, held in early November 2006, highlighted this framework and the process for future PPP projects. The second PPIAF activity, now under way, is providing advice to the Ministry of Finance on the development of 18 Box 5 Improving electricity supply in remote areas of the Philippines Electric cooperatives serving remote, off-grid areas in the A follow-on PPIAF activity supported public consulta- Philippines are supplied with electricity by the state-owned tion in the three initial pilot areas to allow end users to National Power Corporation through its Small Power Util- voice any concerns about the PSAs and subsidy agree- ities Group (SPUG). Power interruptions are frequent in ments. It also supported a workshop for electric coopera- these rural areas, and consumers lack the means to pay tives to create better understanding of the PSAs. For the the full cost of power. To improve reliability and reduce SPUG areas not covered in the first wave, this second ac- the cost of electricity to end users, the government de- tivity also drafted model PSAs and subsidy agreements. cided to open up SPUG’s service areas to competitive bid- In September 2005 power supply contracts in the three ding by independent power producers. initial pilot areas were successfully awarded to the private The government’s transaction advisory team, led by sector. These transactions will lead to investment of $28 the International Finance Corporation (IFC), developed a million, government savings of $6 million a year, and PPP structure under which investors would achieve full 100,000 new connections over the next 5–10 years. An- cost recovery and a level of profits through the power other eight first-wave areas have been successfully ten- supply agreements (PSAs) with electric cooperatives. They dered, and tenders for the last three are under way and would also receive a government output-based subsidy expected to be completed before the end of 2006. funded from a small national levy on electricity consum- Besides PPIAF and IFC, the SPUG project received ers. Through PPIAF assistance, legal consultants were support from the Global Partnership on Output-Based hired to help prepare PSAs, subsidy agreements, and Aid (GPOBA), the government of Norway, and the Infra- transaction documents for power generation in three ini- structure Development Collaboration Partnership Fund tial pilot areas. Another 11 pilot areas were identified as (DevCo). part of the first wave of 14 PPPs. 19 Completing the Philippines infrastructure study Regulatory Forum. This regional forum is aimed at giv- This past year saw the completion and dissemination ing regulators opportunities to share lessons learned, of the report Philippines: Meeting Infrastructure Chal- building the capacities of member agencies, and devel- lenges. Funded by the World Bank and PPIAF, the report oping and implementing collaborative approaches to has generated much discussion. It both assesses the these activities. country’s major infrastructure sectors and analyzes key The forum held its third meeting in Singapore on cross-sectoral issues. Most important, it recommends October 6–7, 2005. There the general assembly drafted immediate actions for visibly improving infrastructure in a strategic plan for 2006–08, aimed in part at building the near term. These include: the forum into a viable and effective regional organiza- tion. The assembly also elected the forum’s first execu- • Implementing a rigorous fiscal reform program. tive committee. • Pursuing reforms in key sectors—particularly power, roads, and water—to improve cost recovery, compe- Moving forward with the regional agenda tition, and institutional credibility and to sharply The vigorous growth and continued urbanization across reduce corruption. the region have put strong pressure on existing infra- • Improving central oversight of the planning and structure and further highlighted the need for more— coordination of investments. public and private. For many countries in the region the • Implementing a few focused investments through challenge remains to respond effectively to this expand- public-private partnerships to address key bottle- ing need. necks and achieve quick gains in service delivery. Much is expected from upcoming private infrastruc- Initiatives are already under way to engage with the Phil- ture transactions across the region. But the project pipe- ippine government on several of these (box 5), but con- line will need strong ongoing support to deliver projects tinued effort will be required to sustain progress and that help meet the region’s substantial infrastructure achieve better infrastructure delivery. needs as well as appropriate commercial requirements of the private sector. Continuing support will also be Supporting a regional regulatory forum needed for the development and use of robust com- At the regional level PPIAF is providing ongoing sup- petitive processes through which the private sector can port for private participation in infrastructure, such as participate. its assistance to the East Asia and Pacific Infrastructure Meet our East Asia and Pacific team Hope Gerochi and Paul Reddel in PPIAF’s office in Manila 20 Central Asia and Europe rum (primarily supported by the Asian Development Bank) for its efforts to foster the exchange of regulatory In fiscal 2006 PPIAF funded 10 activities in Central Asia decisions in the electricity sector. and Europe for a total of $1,856,940, representing a de- In the transport sector PPIAF approved four new ac- cline over the previous year (table 5). The energy sector tivities in fiscal 2006, responding to a growing demand received the largest share of funding at more than half, for infrastructure development strategies and policy, followed by the transport sector. No funding was re- regulatory, and institutional reforms to explore pri- quested for the telecommunications and water and sani- vate participation in highways and railways. tation sectors (figure 6). A key feature of PPIAF assis- These transport sector studies aim to tance to the region in fiscal 2006 was the high level of promote regional projects and cofinancing, up from 30 percent in fiscal 2005 to 82 per- integration with active in- cent, demonstrating greater commitment from both gov- volvement of the private ernment beneficiaries and partner donors. sector. The bulk of the support went to countries classified Several low- and as low income (Armenia, Georgia) and lower middle in- middle-income coun- come (FYR Macedonia). In addition, PPIAF funded a tries and postconflict study on an enabling legal and institutional framework economies in the re- for private participation in developing gas infrastruc- gion are striving to ture in Southeast Europe. And it provided support to improve the access the Central Asia Regional Economic Cooperation fo- to and quality of in- frastructure services. Table 5  PPIAF activities in Central Asia and Europe, fiscal 2000–06 Aspiration to join the European Union is also Fiscal Number of Funding year activities ($ millions) driving reforms, as well 2000 7 1.21 as a move to the basic insti- 2001 11 3.01 tutional framework of an open 2002 6 2.21 economy. 2003 8 2.76 All this points to a growing role for the 2004 8 1.61 2005 14 3.10 private sector in supplementing the resources from the 2006 10 1.86 government, from international financial institutions, Total 64 15.76 and from donors active in the region. Past PPIAF- funded studies aimed at helping to pave the way for Figure 6  PPIAF funding for Central Asia and Europe by this role have led to positive outcomes in many cases, sector, fiscal 2006 particularly in reformist countries such as Albania and Armenia (boxes 6 and 7). And recent PPIAF activities Multisector 4% reflect a wide range of initiatives for involving the pri- vate sector. Improving rural access to telecommunications in the South Caucasus Transport 39% Developing regional infrastructure in the South Caucasus Energy 57% —Armenia, Azerbaijan, and Georgia—is critical for en- hancing efficiency, enabling economic recovery, and sta- bilizing the region. Two key sectors are transport and 21 Box 6 Building support for public-private partnerships to improve water services in Albania In Albania the government is pursuing a comprehensive program of reforms in the water supply and sanitation sector. This includes de- centralizing services to municipalities and communities, implement- ing investments in strategic areas, and involving the private sector in service delivery with contractual requirements to provide service to the poor. In four cities, with support from the World Bank, the mu- nicipal governments have awarded contracts to the private sector for managing water supply and sanitation services. As the government well recognizes, communicating proactively with stakeholder groups is important for building political and social support for the reforms, including public-private partnerships. With PPIAF support, the government is implementing an extensive com- munication program. This includes assessing the socioeconomic impact of the reforms, preparing a communication strategy, and carrying out a plan for internal and external communication. A ca- pacity building program to train and equip the government to com- municate with stakeholders is under way. And the government has already set up a special public relations unit and Web site. telecommunications, which, given the right enabling en- ect for rural telecommunications has been designed for vironment, could help attract greater private capital. Azerbaijan. The telecommunications sector has attracted private Strengthening the framework for private power investment in all three countries. But rural networks investments in Georgia and access to services remain limited, with few pros- pects for improvement anytime soon given the scarce In Georgia the government launched energy sector re- public funds. A PPIAF-funded study assessed options forms in 1996 that included unbundling and partially for improving rural access to telecommunications in the privatizing the power sector. A new electricity law, ad- three countries. It analyzed the potential costs, the regu- opted in 1997, laid the foundation for the sector’s cur- latory implications, and the requirements for successful rent structure and established an independent regulator implementation, including the possible role of telecom- to oversee licensing and tariff setting. Today private op- munications development funds. erators are participating in most segments of the power This study, recently completed, has helped in devis- sector. ing a strategy for developing rural telecommunications. Yet despite having key ingredients in place for suc- Among the main recommendations are to create uni- cessful operation—an appropriate sector structure, versal service funds. Templates have been designed for transparent regulation, and private participation—the such funds, laying out policies, rules, regulations, and power sector remains in a severe financial crisis. Politi- organizational structures. In addition, a pilot PPP proj- cal intervention in sector operations, lack of clarity in 22 Box 7 Improving rail services through private participation in Armenia The railway sector is critical to Armenia’s economy. And for rural communities that lack access to roads, it provides vital transport. But the country’s railway company, Armenian Railways, suffers from a long history of underinvestment and inefficient operations. For the government this means a subsidy requirement projected at $325 million over the next 15 years. With the aim of improving rail services and reducing the fiscal impact, PPIAF funded a study in 2005–06 that examined restructur- ing options for railways and options for public-private partnership. On the basis of this study the government has decided to conces- sion the railways. It has set up a ministerial decisionmaking group and an intersectoral commission to guide and facilitate the process. And it has requested follow-up support from PPIAF to advise the government on an enabling legal framework, a regulatory regime, and a structure for the concession. laws and regulations, and a liquidity crunch all discour- and Herzegovina, Bulgaria, Croatia, Greece, Kosovo, age further private participation. FYR Macedonia, Romania, Serbia and Montenegro, To help overcome these constraints, a PPIAF-funded and Turkey. activity sought to strengthen the independent regula- To support this effort, an ongoing PPIAF-funded tory agency and expand its role. The activity focused study is assessing the potential for greater gasification on increasing harmonization among relevant laws and in Southeast Europe based on the scope for developing regulations to enable the regulator to operate indepen- a regional gas market. The study is evaluating the eco- dently; building the regulator’s capacity in tariff setting, nomics of increased gasification based on pipelines link- licensing, and technical fields; and assisting in transpar- ing Turkey with Western Europe and based on greater ent dissemination of information to and communication imports of liquefied natural gas (LNG). It is also out- with the public. lining reforms to support increased gasification in the region. Aiding the development of a regional gas market in Southeast Europe Developing a framework for private participation in roads in Albania Recognizing the potential benefits of greater competition in the gas sector, countries of Southeast Europe have Albania’s transport sector has changed radically since agreed to develop a regional gas market. Part of a wider 1991, reflecting the structural change in the economy movement to deepen regional integration, this agreement and the realignment of trade flows in the region. The is laid out in the Athens Memorandum 2002. The agree- country has made good progress in privatizing and de- ment was signed by the governments of Albania, Bosnia regulating transport operations. It has successfully 23 privatized intercity road freight and passenger transport. sector in transport is to increase private participation in And in 1996 it undertook a pilot privatization of 40 per- roads—for maintenance and for new investments. cent of Tirana’s Urban Transport Enterprise. To support efforts by the government to do so, a Road infrastructure is crucial to Albania’s economic PPIAF-funded activity is reviewing the economic viabil- development, especially given its proximity to member ity of Albania’s road program and developing options states of the European Union. Road transport accounts for maximizing private participation in the high-priority for 89 percent of all goods transported in the country, investments. It is also reviewing financial and institu- nearly a billion tons of cargo a year. But the current traf- tional arrangements for—and providing recommenda- fic demands follow patterns that the existing infrastruc- tions for implementing—public-private partnerships. ture was never meant to service. Roads and bridges are And through technical training, the activity is upgrading often unsafe—rough, too narrow, and lacking adequate the government’s capacity to analyze the feasibility of signage. So the next logical step in involving the private proposals for such partnerships. 24 Latin America and the Caribbean Improving regulation and strengthening the frame- work for public-private partnerships were key priorities PPIAF funding for Latin America and the Caribbean for the region in fiscal 2005. PPIAF supported several declined in fiscal 2006 even as the number of activities regional initiatives aimed at promoting the exchange of increased (table 6), reflecting a conscious decision to regulatory information among countries, including Reg- reduce grants to the largely middle-income countries ulatel, the regional association of telecommunications of this region. PPIAF approved funding of $1,646,560 regulators. The goal was to identify ways to foster re- for 13 activities across all sectors, with transport proj- gional sector regulatory schemes and to improve the tar- ects accounting for 44 percent of regional funding geting of infrastructure to the poor. Private activity has (figure 7). been on the upsurge in the transport sector (including Latin America and the Caribbean continues to have ports), and countries have been taking steps to improve more private infrastructure projects canceled or in regulatory capacity for promoting competition, dealing distress than any other region. Even so, strong indica- with incumbent operators, and consulting stakeholders. tions point toward growing investment in the region, Other regional activity includes assessing the impact especially for greenfield projects—mainly in energy, of infrastructure development on the economic perfor- telecommunications, and transport—and in Brazil and mance of different countries in the region. Mexico. As international investors have retreated, re- In Central America, where countries are seeking to gional players have taken on a more active role. Mean- capitalize fully on the year-old free trade agreement, while, governments have focused on strengthening the PPIAF has supported a number of activities laying the rules of engagement, improving regulation, and learning groundwork for public-private partnerships. In Hondu- from experience. ras it has supported the development of decentralized Table 6  PPIAF activities in Latin America and the water sector strategies seeking to attract private invest- Caribbean, fiscal 2000–06 ment, including for the capital, Tegucigalpa, where a Fiscal Number of Funding public-private partnership is envisaged (box 8). year activities ($ millions) Other countries in Central America also are strength- 2000 14 3.20 ening the framework for public-private partnerships. In 2001 12 1.67 Guatemala, for example, the government has been im- 2002 3 0.86 proving its concession law and developing approaches 2003 7 1.60 2004 9 2.14 for involving the private sector in roads, ports, and air- 2005 10 2.58 ports. El Salvador is continuing efforts to guide munici- 2006 13 1.65 palities in ways to expand private sector involvement Total 68 13.70 in the provision of infrastructure. Efforts throughout the region, such as those in Panama, recognize the need Figure 7  PPIAF funding for Latin America and the for greater consultation of stakeholders in developing Caribbean by sector, fiscal 2006 public-private partnerships. Energy 21% While fiscal 2006 funding for activities in Latin Amer- ica and the Caribbean fell relative to the previous year’s level, PPIAF has continued to play a significant role in the region and is well poised to continue its support for bet- Transport 44% Telecommunications ter design of public-private infrastructure transactions. 15% Balancing the interests of all stakeholders and developing sound transactions—those with both a robust commer- Multisector 5% cial and regulatory framework and enough flexibility to deal with changing circumstances—will be the key devel- Water & sanitation 15% opment challenges for the region in the coming year. 25 Box 8 Developing a national water and wastewater plan for Honduras In Honduras over the past year PPIAF has supported the develop- ment of a national plan for modernizing the water and waste- water sector—PEMAPS (its acronym in Spanish). The process in- volved extensive consultation with stakeholders ranging from municipalities to government agencies, nongovernmental organi- zations, and the broad population. Recognizing the sector’s importance to meeting the Millen- nium Development Goals in Honduras, the plan lays out a clear road map of the actions to be taken. These include decentralizing services by shifting responsibility for a range of functions from the central government to municipalities. The plan sets out objectives and a timeline for this transformation of the sector, identifying 19 projects for immediate, medium-term, and long-term action. A critical part of the process has been to ensure that the na- tional service provider, SANAA, transfers services to municipalities in an orderly way. That means ensuring that the municipalities have the necessary technical and managerial capacity. To make sure they do, SANAA will serve as a technical adviser. Another pillar of sector development is community participation through water associations, which take on responsibility for providing ser- vices and in some cases for financing infrastructure (with supple- mental resources from the central government). The plan also allows the introduction of the private sector through such mechanisms as mixed companies and management and service contracts. Finally, the plan calls for a financing mecha- nism for the sector that aligns national and municipal objectives and makes transfers conditional on meeting predefined targets. 26 Middle East and North Africa Thus while still relatively modest, demand for PPIAF activities in the region increased significantly in fiscal PPIAF funding for the Middle East and North Africa in- 2006. Going forward, PPIAF will continue to be a use- creased in fiscal 2006, with $797,700 approved for six ful resource and partner for governments intending to activities (table 7). The activities were limited to three pursue challenging infrastructure sector reforms, though sectors, however, with the energy sector accounting for demand for assistance is likely to remain limited. the largest share of funding (figure 8). The funding went to just four countries: the Arab Republic of Egypt, Iraq, Assisting power sector reform in Jordan Jordan, and Morocco. More than half the PPIAF funding to the region in fiscal Consistent with trends seen in recent years, progress 2006 went to activities in the electricity sector. The most in implementing infrastructure sector reforms in the prominent of these is in Jordan, where PPIAF is support- region continues to be slow. Confidence in the poten- ing the government’s efforts to reform the power sector, tial benefits of private participation in infrastructure encourage competition and private participation (par- remains limited, though governments are increasingly ticularly in generation and distribution), and develop a aware of the need to pursue reforms in this area to en- transition strategy for the National Electric Power Com- hance efficiency in the infrastructure sector and expand pany (NEPCO). PPIAF is helping the government tackle service delivery. a range of issues, including the structure of the power market and its legal framework, regulatory and pricing issues, power purchase agreements, benchmarking, and Table 7  PPIAF activities in the Middle East and North Africa, fiscal 2000–06 regional electricity trade. This effort is also designed to Fiscal Number of Funding bring best practices to bear in transforming the single- year activities ($ millions) buyer electricity market into a fully competitive whole- 2000 3 0.20 sale one, adapting lessons from successful efforts in other 2001 3 0.70 countries to conditions in Jordan. 2002 0 0.00 2003 3 0.27 Supporting public-private partnerships 2004 6 0.81 in irrigation in Egypt 2005 1 0.44 2006 6 0.80 In Egypt, PPIAF is supporting the development of an Total 22 3.22 innovative approach to involving the private sector in the design, operation, and financing of a surface water irrigation system in the West Delta Region. Centered on Figure 8 PPIAF funding for the Middle East and a design-build-lease transaction, the project is consid- North Africa by sector, fiscal 2006 ered to be at the forefront on many issues in the sector, including regulation, private participation, the alloca- Water & sanitation 19% tion of water rights, and cost recovery in irrigation. The success of this pioneering transaction depends on the robustness of the institutional and regulatory frame- Energy 56% work being developed with the support of PPIAF. The framework too is innovative, combining self-regulation by farmers—through water boards and user associa- Transport 25% tions—with other economic regulation approaches used in infrastructure sectors. 27 Global knowledge management clude the need for an understanding of the political econ- omy of private participation, the importance of ensuring PPIAF annually commits about 10 percent of its funding that regulatory environments fit country circumstances, to global knowledge management—the identification, and the revised thinking around the appropriate alloca- development, and dissemination of global best practice, tion of risks between the public and private sectors.3 Re- and research relating to emerging and important themes sources are thus being allocated to two main thematic in today’s environment for public-private partnerships. In areas. fiscal 2006 it allocated 11 percent of its funding to its First, PPIAF is providing ongoing support to activities global knowledge management portfolio, which account- aimed at improving regulatory systems for infrastructure ed for 13 percent of its technical assistance activities. provision. As part of this, it is supporting the develop- Overall funding for global activities amounted to ment of best practice materials focused on limiting regu- $1,968,005 for 12 activities, the same number as were latory discretion, enhancing regulatory transparency, approved in fiscal 2005 (table 8). Multisector and water and mitigating regulatory risk. PPIAF also continues and sanitation activities accounted for nearly 90 percent to provide support to the regional regulatory forums, of funding for the global portfolio (figure 9). viewed as key vehicles for building regulatory capacity Pursuing emerging lessons and disseminating best practices. In addition, in fiscal 2006 PPIAF supported an initial activity focusing on the The knowledge management portfolio continues to be regulatory and institutional requirements under differ- driven by the main lessons emerging in the private infra- ent contract regimes involving the private sector. The structure market in the past few years. These lessons in- intention is to follow this initial analytical work with more detailed analysis, using a sector-specific regulatory Table 8  PPIAF global activities, fiscal 2000–06 model, to quantify tradeoffs under different contractual Fiscal Number of Funding arrangements. year activities ($ millions) Second, PPIAF is directing resources to analysis of 2000 11 2.16 the increased activity by “nontypical” private investors 2001 9 1.89 and operators, to highlight the wider array of invest- 2002 3 0.14 ment approaches made apparent by this emerging trend. 2003 7 1.37 2004 6 1.57 In fiscal 2006 PPIAF provided support to the second 2005 12 2.69 phase of a study examining the policy and regulatory 2006 12 1.97 environment in which local and regional investors oper- Total 60 11.79 ate. This ongoing study aims to survey about 500 of these entities. It will also undertake 10–15 detailed case Figure 9  PPIAF funding for global activities by sector, studies of these companies to better understand what fiscal 2006 their key characteristics are and how they may differ Telecommunications 3% from investors from industrial countries. To highlight Energy 4% the changing nature of investors, PPIAF is also provid- Transport 4% ing ongoing support to an activity focusing on small- scale private service providers. This activity is now de- Water & veloping a database of such entities in Bangladesh, sanitation 20% Cambodia, Kenya, and the Philippines. 3. World Bank, “Infrastructure: Lessons from the Last Two Decades of World Bank Engagement,” vol. 1, Report 35199 (Infrastructure Network, Washing- Multisector 69% ton, DC, 2006). 28 Identifying best practices on common themes Continuing to break new ground Also driving the knowledge management portfolio is Going forward, the knowledge management PPIAF’s objective of providing examples of best practice portfolio will continue to focus on on themes that come up regularly in requests for techni- breaking new ground in explor- cal assistance—an objective supported by the newly ing emerging trends while launched Gridlines series (box 9). One such theme is the also providing examples appropriate role for central PPP units in managing coun- of best practice on try PPP programs. New global research is under way to themes that regularly support PPIAF activities aimed at helping to establish arise in the requests such units in Indonesia, Kenya, Malawi, Mozambique, from countries and and Nigeria as well as activities to support existing PPP practitioners. In the units in Botswana and South Africa. area of economic PPIAF is also conducting global research to document regulation PPIAF experience with management contracts and to test ap- will focus on sup- proaches for subsovereign entities. An important focus porting activities that has been how to make public-private partnerships work seek alternatives to the in the water sector, which remains the most challenging “independent regulator environment for sustaining private participation. In re- model” by examining hy- sponse to requests from several policymakers in Africa brid models and the role of and South Asia, PPIAF is supporting research to docu- expert panels in limiting regula- ment the performance of management, lease, and affer- tory discretion, enhancing regulatory mage contracts in improving water supply and sanita- transparency, and mitigating regulatory risk. In the tion services in developing countries (box 10). area of enabling environments for public-private part- Box 9 Launching a new series to disseminate results In fiscal 2006 PPIAF launched its Gridlines series as part of Is the public sector comparator right for developing 4. its efforts to disseminate emerging knowledge and best countries? practices in public-private partnership in infrastructure. Expanding the frontiers of telecom markets through 5. The initial launch included 11 notes, and the aim is to is- PPP and reforms sue new notes quarterly, with a global, regional, or sec- Lifting constraints to public-private partnerships 6. toral focus. Responding to surging demand for PPIAF assistance 7. Available at www.ppiaf.org, the first 11 notes are as in Africa follows: Reform, private capital needed to develop infrastructure 8. in Africa Transforming telecoms in Afghanistan 1. Reaching unserved communities in Africa 9. Armenia travels the bumpy road to all-day electricity 2. 10. Meeting water needs in Vietnam supply 1. How to improve regulatory transparency 1 The role of developing country firms in infrastructure 3. 29 nerships PPIAF will focus on developing best practice newcomers. PPIAF will also consider reviewing expe- rules and principles for drafting overarching PPP laws rience in monitoring PPP contracts with a view to de- and regulations. veloping practical guidelines on designing the process Additionally, in the area of transaction support PPIAF so as to minimize conflicts between contracting parties will consider activities to develop best practice bidding and maximize efficiency. And PPIAF will support the de- procedures for selecting private service providers— velopment of tools to improve the transparency of PPP procedures that discourage gaming, avoid unnecessary contracts and regulatory decisionmaking as part of its ef- risks, and guard against creating barriers for competent forts to disseminate best practices and share knowledge. Box 10 Documenting performance under management, lease, and affermage contracts As governments in developing countries seek to expand search of secondary sources and questionnaires for owners access to water supply and improve the quality of service, and operators. they may consider a range of options for public-private The study computed indicators of performance in five partnerships. Yet proposals to involve the private sector areas for the year before the private operator started op- have often met with concerns—about tariff hikes, staff erations and for either the last year of the contract (for cutbacks, and ability to reduce inefficiency and expand contracts that have lapsed) or the most recent year avail- access to service among the poor. able (for ongoing contracts): service coverage (including How well do water utilities perform under manage- for poor households where possible), quality of service, op- ment, lease, and affermage contracts with private opera- erating efficiency, employee productivity, and sustainability tors? To investigate, a PPIAF-funded study gathered infor- of service. mation on eight case studies—two each from Africa, The review found that while performance varies, the Eastern Europe, Latin America, and the Middle East. Most eight case studies show tangible gains in the quality and of the contracts were signed with private operators in the coverage of water service and in the efficiency and sustain- late 1990s. The study gathered the data through desk re- ability of operations. 30 Finances and resource mobilization A focused governance structure helps PPIAF channel re- though PPIAF may consider accepting contributions in sources to beneficiary governments in response to de- kind in limited cases. mand. These resources are used to help the beneficiaries Non-Core Funds are subject to donor restrictions re- design programs to involve the private sector in infra- lating to themes, regions, or activities. A donor may set structure. Supporting this approach to providing techni- up a Non-Core Fund after making the minimum Core cal assistance is PPIAF’s innovative financing structure. Fund contribution and with the consent of the Program Management Unit. Each donor enters into a trust fund agreement with Funding and expenditure structure the World Bank Group for its contributions to PPIAF. PPIAF has a two-tier financial structure consisting of a The World Bank Group recovers a small charge for Core Fund and Non-Core Funds. The Core Fund is used costs associated with administering the trust funds. for activities falling within PPIAF’s approved work pro- Member contributions gram and may be applied to governance costs as well as program activities. All donor contributions are desig- From PPIAF’s inception through June 30, 2006, donors nated for the Core Fund unless otherwise indicated. contributed a total of $122 million to PPIAF, including The Core Fund consists of funds that are not sub- more than $2.1 million of net investment income (table ject to donor restrictions, such as those relating to the 9). These donors include the present 15 members of the nationality of consultants hired for PPIAF-funded ac- Program Council (see annex 1). The European Union tivities. For regional development banks, however, the joined as a member in 2005. program charter, as amended, recognizes statutory pro- Expenditures curement requirements restricting the eligibility criteria for consultants bidding for PPIAF-funded activities that PPIAF’s expenditures fall into two main categories: pro- the banks sponsor. gram activities and program administration (Program Core Fund contributions by eligible organizations Management Unit). In fiscal 2006 (July 1, 2005–June start at $250,000 a year. All contributions are in cash, 30, 2006) total expenditures amounted to $18.6 million (table 10). 31 Table 9  Member contributions to PPIAF: confirmed receipts as of June 30, 2006 ($ thousands) Summary Type of funding Receipts Core 86,884 Non-Core 33,112 Net investment incomea 2,130 Total funding 122,126 Core funding Member Durationb Receipts Asian Development Bank January 2001–December 2005 1,250 Canada July 1999–June 2005 1,568 European Commission July 2005–June 2006 587 France July 2000–June 2006 1,310 Germany January 2001–December 2005 1,378 Italy July 2003–June 2004 250 Japan July 1999–June 2006 10,435c Netherlands July 2001–June 2006 2,500 Norway July 1999–June 2006 2,450 Sweden July 2000–June 2006 1,664 Switzerland July 1999–June 2006 3,173d United Kingdom July 1999–June 2006 43,289 United Nations Development Programmee July 1999–December 2002 n.a. United States July 2003–June 2005 750 World Bank July 1999–June 2006 16,280 Total Core funding 86,884 Non-Core funding Member Durationb Receipts Japan March 2001–June 2006 5,608f Sweden July 2002–June 2005 4,746g Switzerland July 1999–June 2005 3,082h United Kingdom July 1999–June 2004 19,676i Total Non-Core funding 33,112 n.a. Not applicable. Note: The figures in the table may vary slightly from those reported in previous annual reports because amounts are pledged in own currency and then converted to U.S. dollars at the time of transfer. a. Pursuant to annex 1, paragraph 4, of the trust fund agreements. This amount supersedes earlier references to net investment income in other reports. b. Refers to the period for which the received amount is allocated. c. Includes $1.4 million in unallocated cash from the Infrastructure Action Program. d. Excludes the Swiss government’s fiscal 2006 contribution of $1,620,000, received in August 2006. e. UNDP provided in-kind contributions by paying for the office space of the regional coordination office in Nairobi in 2000–02. f. Targeting countries in East Asia. g. Targeting countries in Sub-Saharan Africa. h. Targeting countries in Central Asia and Europe. i. Targeting selected low-income countries in Asia and Sub-Saharan Africa. 32 Table 10  PPIAF expenditures for program activities and Table 12  PPIAF Program Management Unit administration, fiscal 2005 and 2006 expenditures, fiscal 2005 and 2006 ($ thousands) ($ thousands) Expense category 2005 2006 Expense category 2005 2006 Program activities 13,575 15,594 Program Management Program Management Unit 2,036 2,780 Unit staff costsa 2,036 2,780 Regional coordination offices 847 1,425 Technical Advisory Panelb 94 77 Other program management Annual meeting costsc 27 34 expenses 199 205 Dissemination and outreachd 78 94 Total operational and Total 15,810 18,579 overhead expenses 2,235 2,985 a. Includes staff salaries, benefits, overhead, travel, office space, Of this amount, $15.6 million went to ongoing program administration, evaluation of proposals, and governance and coordination of donor relations. activities (table 11). This was a substantial increase from b. Includes fees paid to Technical Advisory Panel members for their time in the $13.6 million in fiscal 2005, reflecting a speeding up reviewing PPIAF activities, their travel to Washington, and their participation in the annual meeting of donors. of PPIAF’s project implementation. Similarly, Program c. Includes travel and per diem expenses of speakers and invited Management Unit expenditures increased as a result of participants and beneficiaries and other costs related to the annual the hiring of regional program leaders for the new re- meeting (food and conference services). d. Includes activities related to the marketing and branding of PPIAF gional coordination offices in Dakar and Manila, and a products (such as annual reports, brochures, newsletter, Gridlines, and communications officer to implement the outreach and the Web site). dissemination strategy presented to the donors during Sources and uses of funds the November 2005 Steering Group committee meeting (table 12). From PPIAF’s receipts of $122 million since inception, almost $111 million has been allocated to activities and Table 11  PPIAF program activity expenditures, slightly more than $16 million to the Program Manage- fiscal 2005 and 2006 ment Unit and regional coordination office expenditures. ($ thousands) Since fiscal 2000 residuals from closed and canceled ac- Expense category 2005 2006 tivities amounting to approximately $4.5 million have Consultant fees and been rechanneled to finance additional requests for tech- contractual services 11,126 13,347 nical assistance. Travel 1,039 1,115 Staff costs 1,119 916 PPIAF has confirmed cash pledges for the first half of Other expenses 291 215 fiscal 2007 amounting to $10.7 million (table 13). These Total operational and funds will allow PPIAF to commit resources for activi- overhead expenses 13,575 15,594 ties in the first and second quarters of fiscal 2007. Table 13  PPIAF uses of funds as of June 30, 2006 ($ thousands) Receipts 122,126 Less approved activities 110,866 Less Program Management Unit and regional 16,216 coordination office funds Plus residuals from closed and canceled activities 4,512 Subtotal: available cash –444 Plus confirmed fiscal 2007 pledges 10,738 Total expected funds 10,294 33 Single audit process The World Bank Group has instituted an annual “single that he or she has complied with all the terms set forth in audit” exercise for all trust funds. As part of this exercise the PPIAF award letter; has exercised due diligence with the PPIAF program manager signs a trust fund represen- respect to the administration, management, and moni- tation letter attesting to the correctness and complete- toring of the funds awarded for the activity; and has en- ness of the financial process for all PPIAF trust funds. sured that all expenses and disbursements accord with The task manager for each approved activity is re- World Bank procurement and administrative guidelines, quired to confirm to the program manager in writing which the PPIAF donors have agreed to follow. 34 Annexes Annex 1 Governance structure PPIAF is governed by the Program Council, laid out in PPIAF’s charter and in the annual made up of representatives of contributing do- work programs approved by the Program nors (figure A1.1). PPIAF remains open to re- Council. This governance structure is designed ceiving contributions from official donors, in- to ensure the quality of the activities of PPIAF ternational financial institutions, and other and its accountability to participating donors. official agencies. The Program Council is sup- ported by the independent Technical Advisory The Program Council Panel, made up of leading international ex- perts in different aspects of public-private As provided in PPIAF’s charter of July 1999, partnerships in infrastructure. amended in July 2000 and May 2001, mem- The Program Management Unit manages bership in the Program Council remains open PPIAF in accordance with a general strategy to eligible organizations contributing a mini- Figure A1.1  Organizational structure of PPIAF Technical Advisory Program Council Panel PPIAF HQ (Washington, D.C.) Program management Global knowledge management Latin America and the Caribbean Outreach and dissemination Administration Dakar office Nairobi office New Delhi office Manila office West and Central Africa East and South Asia East Asia Middle East and Southern Central Asia and North Africa Africa and Europe Pacific 36 mum of $250,000 a year to PPIAF’s Core Fund. istry for Economic Cooperation and Develop- Today there are 15 members (table A1.1). Mem- ment (BMZ) hosted the meeting in Bonn. bers may also contribute to Non-Core Funds, At the meeting Program Management Unit whose use is restricted to particular themes, re- staff presented overviews of PPIAF’s work in gions, or activities. East Asia and Pacific and in Kenya. The Pro- The Program Council meets once a year gram Management Unit also delivered a pre- to review the strategic direction of the PPIAF sentation on PPIAF program developments and program, its achievements, and its financing re- new areas of business. In reviewing program quirements. Chaired by the World Bank’s vice developments in fiscal 2006 the program man- president for infrastructure, the Program Coun- ager highlighted the continued strong demand cil is responsible for: • Considering and defining PPIAF policies and strategies. • Approving the annual work program and financial plan. • Reviewing PPIAF’s performance, including selecting activities for ex post evaluation by the Technical Advisory Panel. • Overseeing the Technical Advisory Panel and Program Management Unit. On May 23–24, 2006, the Program Council held its seventh annual meeting since PPIAF was launched in July 1999. Germany’s Federal Min- Seventh annual Program Council meeting, Bonn Table A1.1  Members of the PPIAF Program Council as of June 30, 2006 Bilateral Canada (Canadian International Development Agency) France (Ministry of Foreign Affairs) Germany (Federal Ministry for Economic Cooperation and Development, or BMZ) Italy (Ministry of Foreign Affairs) Japan (Ministry of Finance) Netherlands (Ministry of Foreign Affairs) Norway (Norwegian Agency for Development Cooperation) Sweden (Swedish International Development Cooperation Agency) Switzerland (State Secretariat for Economic Affairs) United Kingdom (Department for International Development) United States (U.S. Agency for International Development) Multilateral Asian Development Bank European Commission United Nations Development Programme World Bank 37 for PPIAF support, emphasizing especially the • Evaluating the impact of the PPIAF annual significant growth in the Sub-Saharan African work program through ex post evaluation of portfolio and the strong multisector dimension selected activities. of that support. The Program Council encour- The panel met twice in fiscal 2006, holding its aged PPIAF to continue its focus on Africa, re- eleventh meeting in Washington, D.C., on Janu- questing that 50 percent of its funding be di- ary 10–11, 2006. Panel members also partici- rected to the region. pated in the Program Council’s seventh annual The Program Council underscored the im- meeting in Bonn on May 23–24, 2006. After a portance of PPIAF’s commitment to its core review of selected activities from PPIAF’s port- mandate of supporting infrastructure services folio, the panel expressed an appreciation of the through public-private partnerships. But mem- quality, value, and impact of the projects re- bers also generally agreed that there is a need viewed. for flexibility—and that decisions on whether PPIAF’s Technical Advisory Panel presently to provide PPIAF support should rest on the consists of six members. likelihood that the form of private participation proposed will have a meaningful impact on the Margaret Osius, Chair, Technical Advisory Panel, behavior and performance of utilities. and President, MEO, Inc. The Program Council also welcomed PPIAF’s Meg Osius is an adviser to a variety of private increased focus on outreach and encouraged the investors, banks, public entities, and develop- Program Management Unit to continue its dis- ment banks on structuring and accessing suit- semination of emerging best practices and les- able funding for greenfield projects and facility sons learned. upgrades in the oil and gas, power, transport, and telecommunications sectors. She also de- The Technical Advisory Panel signs and delivers executive-level training ses- sions worldwide. The members of the Technical Advisory Panel are selected on the basis of their expertise in Anton Eberhard, Director, Management Program in matters relating to private involvement in infra- Infrastructure Reform and Regulation, University of structure in developing countries. They are ap- Cape Town pointed by the Program Council chair after con- Anton Eberhard is a professor at the University sultation with Program Council members. of Cape Town, where he directs the Manage- The Technical Advisory Panel is responsible ment Program in Infrastructure Reform and for: Regulation at the Graduate School of Business. • Providing advice, at the request of the Pro- His research and teaching focus on the restruc- gram Council, on issues relating to private turing and regulation of the electricity and wa- involvement in infrastructure in developing ter sectors, investment challenges, and links to countries. sustainable development, including widened ac- • Reviewing and commenting on the PPIAF cess to affordable services and programs in re- strategy as reflected in draft annual work newable energy and energy efficiency. He has programs prepared by the Program Manage- worked in the energy sector for more than 25 ment Unit. years and was the founding director of the En- ergy and Development Research Centre in South Africa. 38 Eduardo M. Engel, Professor of Economics, build the capacity of the regional Development Yale University Finance Institutions Network to engage in cross- Eduardo Engel came to Yale in 2001 after a de- border project lending, infrastructure develop- cade on the faculty at the University of Chile. ment, public-private partnerships, and support He has published widely in the areas of macro- to small and medium-size enterprises. economics, public finance, and regulation. He was awarded the Econometric Society’s 2002 The Program Management Unit Frisch Medal for the best applied article (em- pirical or theoretical) published in Econometrica The Program Management Unit is responsible in the previous five years. His current research for the day-to-day management of PPIAF in ac- interests include dynamic macroeconomic mod- cordance with the general strategy and the an- els and private participation in infrastructure. nual work program approved by the Program Council. Nasser Munjee The unit remains small, focusing on admin- Building on years of experience in infrastructure istering the PPIAF program rather than deliver- development and finance, Nasser Munjee serves ing activities. PPIAF relies extensively on exter- as an adviser to governments in South Asia in nal consultants to deliver activities, following the area of public-private partnerships. He was World Bank guidelines on procurement. managing director of India’s Infrastructure De- The Program Management Unit’s key re- velopment Finance Company and executive di- sponsibilities include: rector of the Housing Development Finance • Reviewing proposals for PPIAF assistance in Corporation. accordance with the criteria and process ap- proved by the Program Council (for activi- Robin Simpson, Senior Policy Adviser, Consumers International ties funded from the Core Fund) or by rele- vant contributors (for activities funded from With global expertise in policy development for Non-Core Funds). infrastructure provision, Robin Simpson is a se- • Arranging for delivery of PPIAF programs nior policy adviser for Consumers International, and activities. based in the United Kingdom. He has written • Providing secretariat services to the Program numerous papers and participated in many in- Council and Technical Advisory Panel. ternational symposia relating to infrastructure. • Maintaining effective relationships with con- Areas of particular interest include utility regu- tributors, recipient governments, the private lation and pricing, private participation, and the sector, and other stakeholders. development of consumer rights institutions. • Proposing and administering the PPIAF work plan and budget and managing the dis- Rosalind Thomas, Chief Executive Officer, SADC Development Finance Resource Centre bursement of funds. • Overseeing the operations of the field-based Rosalind Thomas has years of demonstrated regional coordination offices. leadership in African development finance. She is founding chief executive officer of the Devel- opment Finance Resource Centre of the South- ern African Development Community (SADC), established by the SADC ministers of finance to 39 The Regional Coordination The regional coordination offices have the fol- Offices lowing key responsibilities: As of fiscal 2006, PPIAF has four fully function- • Identifying opportunities for PPIAF assis- al regional offices: tance, supporting local requests for PPIAF interventions, and tailoring assistance strate- • East and Southern Africa Regional Coordi- gies to local priorities and conditions. nation Office, in Nairobi. • Working with recipient governments and • West and Central Africa, and Middle East contributors, international financial institu- and North Africa Regional Coordination tions, and other official agencies to promote Office, in Dakar. effective coordination of advisory activities. • East Asia and Pacific Regional Coordination • Consulting private sector representatives to Office, in Manila. ensure that their perspectives are reflected in • South Asia, and Central Asia and Europe PPIAF advice and activities. Regional Coordination Office, in New • Assisting in the supervision of PPIAF activi- Delhi. ties. • Fostering contacts and good working rela- tionships with key government officials and representatives of the donor, multilateral, and investor communities. 40 Annex 2 Activities funded by PPIAF in fiscal 2006 Table A2.1  PPIAF activities and funding by region, sector, and deliverable, fiscal 2006 Number Funding Share of Share of Region of activities ($ thousands) activities (%) funding (%) Sub-Saharan Africa 28 6,596 30 38 East Asia and Pacific 11 2,068 12 12 Latin America and the Caribbean 13 1,647 14 9 Central Asia and Europe 10 1,857 11 11 South Asia 13 2,482 14 14 Middle East and North Africa 6 798 6 5 Global 12 1,968 13 11 Total 93 17,416 100 100 Sector Multisector 37 7,750 41 45 Energy 19 2,559 20 15 Transport 16 2,972 17 17 Water 15 3,228 16 18 Telecommunications 6 907 6 5 Total 93 17,416 100 100 Deliverable Infrastructure Development Strategies 34 7,306 37 42 Policy, Regulatory, and Institutional Reforms 26 5,633 28 32 Capacity Building 11 2,014 12 12 Pioneering Transactions 3 221 3 1 Consensus Building 3 118 3 1 Emerging Best Practices 16 2,124 17 12 Total 93 17,416 100 100 41 Table A2.2  PPIAF activities by region, fiscal 2006 Sub-Saharan Africa: 28 activities Country Activity Description Cameroon Strategic Options and Framework for the Helping the government develop an enabling legal and Preparation of a Toll Bridge Concession in regulatory framework and evaluate strategic options for Douala concessioning the construction and operation of a second bridge over the Wouri River in Douala. Cape Verde Regulatory Strengthening and Capacity Helping the government strengthen the regulatory Building for Agência de Regulação framework in the electricity, water, and sanitation sectors Económica and implement a capacity building program for the multi- sector regulatory agency Agência de Regulação Económica. Pilot Private Sector Participation Strategy Democratic Republic Assisting the government in preparing a suitable option for and Institutional Framework for the Water of Congo piloting private participation in the water sector in the Sector Lubumbashi region, to improve service delivery and achieve the Millennium Development Goals. Ethiopia Public-Private Partnerships in Irrigation Preparing models and an action plan for public-private Infrastructure Development partnerships in developing irrigation infrastructure in Ethiopia. Ghana Public-Private Partnership for Property Developing an institutional and legal framework to encourage Development new local and foreign private sector actors to enter the property development sector. Kenya Public-Private Partnerships Unit Conducting a study to assist the government in consolidating, strengthening, and harmonizing the policy, legal, and institutional framework for public-private partnerships. Malawi Create the Enabling Policy and Legal Helping the government put into place the enabling policy, Environment for Improved Access to legal, and regulatory environment and carry out all upstream Information and Communications work needed to allow better private provision of tele- Technology Services in Rural and Remote communications services. Areas Malawi Legal and Regulatory Framework for Developing policies, laws, and regulations that define the Public-Private Partnerships scope of authority within various spheres of government to enter into contracts for public-private partnerships. Mozambique Design of a Framework for Public-Private Facilitating private operation of municipal services in Maputo Partnerships in Municipal Service Provision, through public-private partnerships in slum upgrading, Phase II sanitation, solid waste management, water supply in unserved areas, public transport improvement, and urban development. Mozambique Performance-Based Management and Strengthening the management capacity of both the public Maintenance of Roads and the private sector for planning, designing, and imple- menting road contracts using the performance-based management and maintenance concept. Mozambique Public-Private Partnership Framework for Assisting the Maputo City Council in developing a PPP Maputo, Phase I framework that will help it establish the institutional and financial arrangements for expanded and sustainable service delivery. Nigeria Final Design of the Nigeria Infrastructure Facilitating consultations among key stakeholders and other Advisory Facility interested parties on the design of the Nigeria Infrastructure Advisory Facility to achieve sufficient consensus for its management. Rwanda Financial Adviser for the Lake Kivu Gas Assisting the government in retaining the services of a Project financial adviser to help finalize the financial aspects of the Lake Kivu Gas Project. 42 Funding ($) Deliverable 295,500 Infrastructure Development Strategies 461,000 Capacity Building 508,500 Infrastructure Development Strategies 268,785 Infrastructure Development Strategies 74,100 Policy, Regulatory, and Institutional Reforms 312,500 Policy, Regulatory, and Institutional Reforms 365,000 Policy, Regulatory, and Institutional Reforms 269,000 Policy, Regulatory, and Institutional Reforms 420,650 Policy, Regulatory, and Institutional Reforms 222,300 Infrastructure Development Strategies 74,900 Policy, Regulatory, and Institutional Reforms 74,700 Infrastructure Development Strategies 74,250 Pioneering Transactions 43 Table A2.2  PPIAF activities by region, fiscal 2006  (continued) Sub-Saharan Africa, continued Country Activity Description Rwanda Legal advice for the Lake Kivu Gas Project Assisting the government in hiring legal advisers to advise on finalizing key project documents for the Lake Kivu Gas Project. Senegal Enhancing the Framework for Delegated Helping the government enhance the framework for Contract Management delegated contract management for infrastructure investment and maintenance by conducting a comparative study in selected countries and producing and disseminating strategic recommendations. South Africa Support for Municipal Public-Private Supplying a solid methodology for appraisal of municipal Partnerships public-private partnerships across sectors. Tanzania Implementation of Public-Private Assessing the policy framework and potential for public- Partnerships in the Road Sector private partnerships in the country’s road sector. Uganda Restructuring the Uganda Electricity Assisting the government in restructuring its electricity Distribution Concession distribution company and in reviewing the proposed terms for the restructuring of the concession. Zambia Policy Framework for the Electricity Sector Helping the Ministry of Energy and Water Development develop priorities and implementation strategies for the electricity sector. Zambia Public-Private Partnerships Awareness Holding a workshop with key government officials to help Workshop create awareness of and build capacity for public-private partnerships in Zambia’s infrastructure sectors. Regional Africa Infrastructure Country Diagnostic Providing an in-depth, cross-sectoral analysis of infrastructure Study (AICD) sectors in Sub-Saharan Africa. Regional African Business Roundtable: NEPAD Designing a private sector facility that will promote the Infrastructure Investment Facility involvement of small private companies in infrastructure projects in Africa. Regional African Forum of Utility Regulators Reviewing international experience in implementing Workshop: Exploring Innovative and innovative and hybrid regulatory governance models. Hybrid Regulatory Models Regional ECOWAS Business Plan Development for Translating the key goals and activities of the West Africa the West Africa Power Pool Organization Power Pool Organization into a comprehensive business plan. Regional ECOWAS Project Development and Supporting the establishment of the regional Project Implementation Unit Development and Implementation Unit to help ECOWAS member states prepare, package, and oversee implementation of regional infrastructure projects suitable for private participation. Regional Establishment of a Central African Preparing a study of the technical, commercial, and financial Broadband Network feasibility of establishing a broadband network between Cameroon, Chad, and the Central African Republic. Regional Infrastructure Consortium for Africa Carrying out a survey of donor-funded infrastructure Secretariat: Survey of Project Preparation project preparation facilities active in Africa. Facilities in Africa Regional Practitioners’ Workshop on “Mobilizing Developing lessons learned and recommendations for Resources from the Domestic Financial facilitating borrowing by water utilities in domestic financial Markets for Water Utilities in Africa” markets. 44 Funding ($) Deliverable 75,000 Pioneering Transactions 73,000 Policy, Regulatory, and Institutional Reforms 462,250 Policy, Regulatory, and Institutional Reforms 160,000 Policy, Regulatory, and Institutional Reforms 71,300 Pioneering Transactions 74,000 Infrastructure Development Strategies 33,000 Capacity Building 1,000,000 Infrastructure Development Strategies 75,000 Infrastructure Development Strategies 74,200 Capacity Building 72,500 Policy, Regulatory, and Institutional Reforms 575,900 Infrastructure Development Strategies 205,000 Infrastructure Development Strategies 73,720 Infrastructure Development Strategies 150,000 Infrastructure Development Strategies 45 Table A2.2  PPIAF activities by region, fiscal 2006  (continued) South Asia: 13 activities Country Activity Description Afghanistan Documentary Showcasing Reform Analyzing and documenting the policy initiatives and impact Developments in the Telecommunications of the telecommunications sector reforms, including the Sector licensing of four private GSM operators. Afghanistan Legal and Institutional Reforms in the Assisting the government in implementing the first step Urban Water Supply and Sanitation Sector under its institutional development plan (corporatization) for the urban water supply and sanitation sector. India Developing Policy, Regulatory, Institutional, Developing policy, regulatory, institutional, and financing and Financing Frameworks for the Port frameworks for implementing the National Maritime Sector Development Program for the port sector. India Facilitating Public-Private Partnerships in Initiating policies that ensure time-bound creation of Infrastructure Sectors world-class infrastructure, developing structures that maximize the role of public-private partnerships, and monitoring key infrastructure projects. India Financing of Infrastructure PPPs in India Identifying the constraints to mobilizing additional financing for public-private partnerships for infrastructure projects in India and proposing policy changes to reduce those constraints. India National Council of Applied Economic Supporting a two-day conference bringing together experts Research (NCAER) Workshop on Public- from India and abroad to discuss topics relating to public- Private Partnerships and Regulation in private partnerships and regulation. Infrastructure Services India Public-Private Partnership for Improving Developing an enabling framework and assessing PPP Service Delivery in Water Supply and options for water supply and sanitation in two urban Sanitation in Gujarat agglomerations—Gandhinagar and Western AUDA. Maldives Developing the Port of Male through Public- Assisting the government in selecting the location for a Private Partnership new port and the appropriate form of public-private partnership, and providing recommendations for an enabling policy, legal, and institutional framework. Pakistan Developing Performance Standards for the Identifying and designing performance indicators from a Regulation of Public and Private Generation regulator’s perspective, to enable benchmarking, and Licenses by the National Electric Power developing standards for regulating generation entities. Regulatory Authority (NEPRA) Pakistan Review of the Institutional and Regulatory Reviewing the institutional and regulatory regime in the gas Regime and Development of a Policy sector, developing a plan to introduce competition under Framework for Introducing Competition this regime in the short run, and outlining a policy framework in the Gas Sector for introducing a third-party access regime in the future. Pakistan Review of the Legal, Regulatory, and Reviewing the technical, legal, regulatory, and financial frame- Planning Framework for Solid Waste work for rationalizing and improving solid waste management Management in Punjab Province to Enable facilities, systems, and services in Punjab; reviewing PPP options; Public-Private Partnerships and developing model contract documents. Regional Documenting the Performance of Conducting selected case studies documenting the Management Contracts in the Water performance of management, lease, and affermage contracts Supply and Sanitation Sector in Developing in improving water supply and sanitation services in Countries developing countries. Regional Workshop for Infrastructure Policy- and Supporting a workshop aimed at helping infrastructure Decisionmakers on Applying Strategic policy- and decisionmakers internalize strategic Communications in Their Organizations, communications in their organizations and in the Reforms, and Public-Private Partnership implementation of infrastructure sector reforms for Activities public-private partnerships. 46 Funding ($) Deliverable 30,000 Emerging Best Practices 504,000 Policy, Regulatory, and Institutional Reforms 75,000 Policy, Regulatory, and Institutional Reforms 265,000 Policy, Regulatory, and Institutional Reforms 356,250 Infrastructure Development Strategies 13,886 Consensus Building 178,400 Infrastructure Development Strategies 424,000 Infrastructure Development Strategies 66,000 Capacity Building 49,000 Policy, Regulatory, and Institutional Reforms 400,000 Infrastructure Development Strategies 46,000 Emerging Best Practices 74,930 Emerging Best Practices 47 Table A2.2  PPIAF activities by region, fiscal 2006  (continued) East Asia and Pacific: 11 activities Country Activity Description China Building Consensus on Next Steps for Supporting consensus building among key stakeholders on Power Sector Reform and Regulation the need to revitalize the power sector reform program in China. China Reform of the Regulatory Environment for Moving toward engaging private operators in municipal Private Sector Participation for the Chongqing services in the water supply, wastewater, solid waste, and Municipal Government public transport sectors. Indonesia Assistance in the Implementation of the PPP Serving as a catalyst to a national, multisector program for Program in Indonesia public-private partnerships. Indonesia Design of a Financing Plan and the Issuance Enhancing access to capital markets for the municipality of of a Local Currency Credit Rating Pontianak through the design of a financing plan and the obtaining of a local currency credit rating. Indonesia Infrastructure Risk Management Providing advice to the Ministry of Finance on its strategy for providing government support, including guarantees and subsidies, to private infrastructure projects. Indonesia Private Participation in Geothermal Identifying the geothermal-specific barriers to investment Energy Development in geothermal energy development in the country. Mongolia Infrastructure Study Developing a comprehensive infrastructure strategy to provide policymakers with a pragmatic public policy framework to guide future infrastructure development. Vietnam Development of Investment Policy for Local Providing investment policy advice to the local development Development Funds for Infrastructure funds for infrastructure in the country. Vietnam Pilot Studies in Solid Waste and Sewage Proposing options for use of the private sector in solid waste Management collection and sewage management. Regional Capacity Building and Training for the Providing capacity building and training in the use of Application of Performance-Based performance-based contracting for the road sector in the Contracting in the Philippines and Indonesia Philippines and Indonesia, which are considering this option for new national road projects. Regional Cross-Border Infrastructure in a Market Preparing and providing specialized training on cross-border Economy infrastructure to key midlevel infrastructure policy planners and managers in the Greater Mekong subregion. 48 Funding ($) Deliverable 74,000 Consensus Building 300,000 Policy, Regulatory, and Institutional Reforms 75,000 Capacity Building 300,000 Infrastructure Development Strategies 445,000 Capacity Building 74,500 Infrastructure Development Strategies 350,000 Infrastructure Development Strategies 250,000 Capacity Building 75,000 Infrastructure Development Strategies 70,000 Capacity Building 55,000 Capacity Building 49 Table A2.2  PPIAF activities by region, fiscal 2006  (continued) Central Asia and Europe: 10 activities Country Activity Description Armenia Video on Lessons Learned from the Preparing a brief documentary video on lessons learned Privatization of Power Distribution from the successful experience of power sector reform and privatization of the distribution company in Armenia. Croatia Public-Private Partnerships to Enhance Reviewing the port master plan to propose alternative Private Participation in the Development development plans and developing an action plan for of the Port of Ploce various schemes for implementing private participation with the aim of providing potential investors with a medium-term framework. Georgia Implementing Railway Reform Using Supporting implementation of the railway reform by helping Long-Term Private Partnership Contracts Georgian Railway strengthen its capacity to negotiate with Freight Services long-term freight contracts with private sector customers. Georgia Structural Survey of the Rikoti Tunnel in Completing a structural survey of the Rikoti Tunnel before Support of a Pilot PPP Transaction inviting the private sector to tender for the concession. Kosovo Assessing the Viability of and Options for Assessing the potential for private participation in the Private Participation in the Highway Sector development of the highway sector in Kosovo. FYR Macedonia Facilitating Private Investments in Mini- Reviewing the legal and institutional framework for Hydropower Plants public-private partnerships in mini-hydropower projects, designing a licensing and regulatory framework, and identifying selected pilot projects that can be bid out as public-private partnerships. FYR Macedonia Framework for Public-Private Partnerships in Introducing the private sector under concessions for the Privatization of the Hydropower Sector hydropower plants to improve performance in hydro generation (maintenance, rehabilitation, new investment); improve performance in thermal generation; and raise revenue. Russian Federation Advisory Services for the Development of a Providing timely advisory services to the government Strategy for Public-Private Partnerships in authorities responsible for developing a PPP strategy Infrastructure for infrastructure. Regional Assisting the CAREC (Central Asia Regional Improving the capacity of regulators to analyze cost factors Economic Cooperation) Members Electricity for ancillary services and outlining a set of mechanisms Regulators Forum for ensuring the provision of ancillary services with reasonable certainty and at low cost. Regional Southeast Europe: Legal and Institutional Developing a legal and institutional framework to support Framework to Support Private Sector the development of a regional gas market and mobilization Participation in the Gas Sector of private capital for infrastructure finance. 50 Funding ($) Deliverable 5,000 Emerging Best Practices 250,000 Infrastructure Development Strategies 230,000 Capacity Building 75,000 Infrastructure Development Strategies 167,000 Infrastructure Development Strategies 250,000 Policy, Regulatory, and Institutional Reforms 250,000 Policy, Regulatory, and Institutional Reforms 75,000 Infrastructure Development Strategies 254,940 Capacity Building 300,000 Infrastructure Development Strategies 51 Table A2.2  PPIAF activities by region, fiscal 2006  (continued) Latin America and the Caribbean: 13 activities Country Activity Description Brazil Conceptual Framework for Public-Private Developing a comprehensive framework for implementing Partnerships in Irrigation public-private partnerships in the irrigation sector in the country’s semiarid region. Brazil Designing a New Transport Authority in Recife Assisting the state of Pernambuco and municipality of Recife in designing and implementing an organizational structure for the new public transport authority in the Recife Metropolitan Region. Colombia Port Modernization Program Supporting the government in undertaking a new wave of port reforms focused on increasing private investment. Costa Rica Drafting the Regulatory Framework for Providing advice to the government on the drafting of a Telecommunications comprehensive telecommunications sector reform strategy and the implementation of its short-term aspects. Ecuador Public-Private Partnerships in Urban Transport Designing a new regulatory framework for private for Cuenca and Quito participation in urban transport services and supporting consensus building within local authorities and among stakeholders. El Salvador Policy Note on Infrastructure Strategy Preparing policy notes based on results from a previous PPIAF-funded activity on small-scale infrastructure providers in the EL Salvador Program for Infrastructure. Guatemala Financing the Drafting of a General Supporting the drafting of a general concession law as a Concession Law follow-up to an earlier PPIAF-funded activity to prepare concessioning strategies for ports, airports, and roads. Panama Improving Bus Transportation in Panama Assisting in moving toward an improved public transport system by supporting consultations with bus operators and designing a transition strategy and action plan. Paraguay Strategy to Establish New Service Provider Assisting in developing a new water sector strategy, to allow Units in the Water Sector participation by local private operators, through the preparation of a business plan for the water utility and a communication strategy. Regional Flagship Report on Infrastructure Publishing a book, in English and Spanish, on recent developments in infrastructure in the region and preparing an accessible presentation on state-of-the-art research on topics relating to infrastructure. Regional Regional Electricity Sector Diagnostic and Providing technical assistance to review the electricity sectors Framework Analysis for Member Countries of and regulatory regimes of member countries of the the Organisation of Eastern Caribbean States Organisation of Eastern Caribbean States with a view to identifying changes that could allow a regional regulatory scheme for the electricity sector. Regional Regulatel Technical Assistance Assisting members of the Latin American Forum of Telecommunications Regulators (Regulatel) from 19 countries in developing more effective universal access and output-based programs so as to increase private investment in the sector. Regional Study of the Impact of Infrastructure Studying the impact of infrastructure development on Development on Economic Performance economic performance with a special focus on Latin America. 52 Funding ($) Deliverable 64,000 Infrastructure Development Strategies 100,000 Policy, Regulatory, and Institutional Reforms 130,000 Policy, Regulatory, and Institutional Reforms 70,000 Infrastructure Development Strategies 180,800 Policy, Regulatory, and Institutional Reforms 14,500 Infrastructure Development Strategies 32,420 Policy, Regulatory, and Institutional Reforms 320,000 Policy, Regulatory, and Institutional Reforms 175,000 Policy, Regulatory, and Institutional Reforms 30,000 Consensus Building 342,875 Policy, Regulatory, and Institutional Reforms 171,465 Infrastructure Development Strategies 15,500 Infrastructure Development Strategies 53 Table A2.2  PPIAF activities by region, fiscal 2006  (continued) Middle East and North Africa: 6 activities Country Activity Description Arab Republic of Development of Regulatory and Developing regulatory and institutional arrangements to Egypt Institutional Arrangements for Private implement a design-build-lease transaction for surface water Sector Participation in Irrigation in West Delta irrigation in the West Delta Region. Arab Republic of Introducing Performance-Based Maintenance Conducting a seminar and preparing a study to develop a Egypt Contracts in the Road Sector framework for introducing output- and performance-based maintenance contracts in the country’s road sector and identifying the legal, institutional, and policy changes required. Options for Public-Private Partnerships in Arab Republic of Helping the Ministry of Water Resources and Irrigation Operating and Maintaining Irrigation and Egypt identify a blueprint for engaging the private sector in Drainage Infrastructure operating and maintaining water resources such as irrigation and drainage. Iraq Private Sector Participation in Electricity Assessing existing laws and regulations and advising the Generation government on emerging best practices in engaging private providers in a build-operate-own scheme, to ensure that the scheme is conducted properly and to send a signal to potential private providers of electricity. Jordan Transition Strategy for a Competitive Preparing a transition strategy for the National Electric Power Electricity Market Company (NEPCO) for the move from a single-buyer power market to a competitive wholesale one. Morocco Seminar on Electricity Market Liberalization Supporting a two-day seminar to kick off power sector liberalization by analyzing alternative models for market liberalization based on international experience, examining aspects particularly relevant to Morocco, and proposing a concrete road map for implementing the reform. 54 Funding ($) Deliverable 75,000 Infrastructure Development Strategies 197,400 Infrastructure Development Strategies 75,000 Infrastructure Development Strategies 75,000 Infrastructure Development Strategies 325,000 Policy, Regulatory, and Institutional Reforms 50,300 Policy, Regulatory, and Institutional Reforms 55 Table A2.2  PPIAF activities by region, fiscal 2006  (continued) Global: 12 activities Country Activity Description Global Building a Partnership for the Private Enhancing and developing the PPI Project Database to Participation in Infrastructure (PPI) Project increase its usefulness by improving the accuracy of Database information in the database, expanding the information collected for each transaction, and enhancing the dissemination of information through short notes. Global Building a Partnership for the Private Continuing to update, improve, and maintain the PPI Participation in Infrastructure (PPI) Project Project Database according to the business plan, in the Database, Year 2 second year of partnership between PPIAF and the World Bank’s Infrastructure Economics and Finance Department. Global Developing a Policy Framework for Reviewing experience with unsolicited proposals for private Management of Unsolicited Proposals participation in infrastructure in a set of key countries. Global Developing Country Investors and Exploring the actual and potential role of regional and local Operators in Infrastructure, Phase II investors and operators in different size categories. Global Guidance Note on Risk Mitigation Instruments Compiling a guidance note on the availability of risk mitigation instruments, within and outside the World Bank Group, that facilitate the mobilization of private capital (debt and equity, local and international) for developing country infrastructure. Global Improving Urban Water Supply and Drawing the multiple lessons from a decade of water Sanitation Utilities in Developing Countries: projects with private participation in developing countries, Drawing the Lessons of the Last Decade of consolidating the wealth of material available in a Private Sector Participation and Expanding comprehensive scoping paper, and providing a solid basis Its Scope, Phase I for building consensus with stakeholders. Global Model Methodology for Geothermal Risk Conducting a study to help overcome and remove geology- Mitigation Instruments related risk as one of the major barriers to geothermal energy development projects. Global Pilot Phase for a Searchable, Web-Based Implementing a searchable, Web-based learning tool to Learning Tool for Legal and Contractual provide guidance on the key legal and contractual issues Structuring of Public-Private Partnerships underpinning infrastructure projects. Global Research on Regulatory Requirements of Conducting a study and preparing a concise report to Different Forms of Utility Service Delivery clarify regulatory requirements under different types of contracts involving private participants in delivering infrastructure services. Global Research to Determine the Role of Centralized Reviewing global experience with centralized PPP units, PPP Units in Facilitating Successful Public- with a focus on country PPP projects and programs that Private Partnerships in Developing Countries have been successful and on the institutional characteristics distinguishing them from others. Global Road Transport Finance Study Reviewing the effectiveness of alternative governance arrangements in road transport, particularly for optimizing private investment. Global Searchable, Web-Based, Multilingual Tool Undertaking the first phase of implementing a searchable, for Accessing Decisions of National Web-based, multilingual tool for accessing decisions of Communications Regulators, Pilot Phase national communications regulators. 56 Funding ($) Deliverable 301,800 Emerging Best Practices 299,732 Emerging Best Practices 157,500 Emerging Best Practices 340,328 Emerging Best Practices 75,000 Emerging Best Practices 394,000 Emerging Best Practices 75,000 Emerging Best Practices 74,820 Emerging Best Practices 36,500 Emerging Best Practices 72,325 Emerging Best Practices 75,000 Emerging Best Practices 66,000 Emerging Best Practices 57 Acronyms and abbreviations Comesa Common Market for Eastern and Southern Africa ECOWAS Economic Community of West African States GDP Gross domestic product ICA Infrastructure Consortium for Africa NEPAD New Partnership for Africa’s Development OECD Organisation for Economic Co-operation and Development PPI Private participation in infrastructure PPIAF Public-Private Infrastructure Advisory Facility PPP Public-private partnership SADC Southern African Development Community 58 How to contact PPIAF PROGRAM MANAGEMENT UNIT c/o The World Bank 1818 H Street NW Washington, DC 20433 USA Tel: (+1) 202 458 5588 Fax: (+1) 202 522 7466 E-mail: ppiaf@ppiaf.org EAST AND SOUTHERN WEST AND CENTRAL AFRICA AFRICA REGIONAL MIDDLE EAST AND NORTH AFRICA COORDINATION OFFICE REGIONAL COORDINATION OFFICE Kenya Re Towers 15 avenue Nelson Mandela Upper Hill, P.O. 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