Table of contents for The impact of private sector participation in infrastructure : lights, shadows, and the road ahead / Luis A. Andres ...[et al.].

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TABLE OF CONTENTS
ABBREVIATIONS	10
1.	INTRODUCTION	12
2.	SETTING THE STAGE	17
2.1	Why Infrastructure Matters	17
2.2	Trends in Infrastructure Financing	20
2.3	Distribution	27
2.3.1	Sectoral Distribution	27
2.3.2	Geographic Distribution	29
2.3.3	Modal Distribution	30
2.3.4	Investor Type: Geographic Location	35
2.4	Limitations	37
2.5	Achievements and Moving Forward	44
3.	LEARNING FROM THE EXISTING LITERATURE	47
3.1	Employment and wages	48
3.2	Prices of services	49
3.3	Quality of services	49
3.4	Access to services / coverage	49
3.5	Asset ownership	50
3.6	Impact on Investors	50
3.7	Fiscal flows	51
3.8	Productivity and financial solvency	52
3.9	Distributional Impact / Consumer welfare	53
4.	FILLING THE GAPS WITH NEW DATASETS AND METHODOLOGIES	58
4.1	Datasets	58
4.1.1	Performance Indicators Dataset	59
4.1.2	Contract and Regulatory Characteristics Dataset	62
4.1.3	LAC Electricity Benchmarking Database	63
4.2	New Methodology: Separating Transition vs. Long-Run Effects	65
4.3	New Methodology: Distinguishing Levels from Trends	67
4.4	Means and Medians Analysis	68
4.5	Econometric Analysis	69
5.	THE IMPACT ON ELECTRICITY DISTRIBUTION	73
5.1	Introduction	73
5.1.1	Description of the Privatization Process	73
5.1.2	Data	80
5.2	Impact on Output and Coverage	81
5.3	Impact on Employment	86
5.4	Impact on Labor Productivity and Efficiency	88
5.5	Impact on Prices	92
5.6	Impact on Quality	95
5.7	Conclusion	97
6.	THE IMPACT ON FIXED LINE TELECOMMUNICATIONS	99
6.1	Introduction	99
6.1.1	Description of the privatization process	99
6.1.2	Data	101
6.2	Impact on Output and Coverage	103
6.3	Impact on Employment	108
6.4	Impact on Labor Productivity and Efficiency	111
6.5	Impact on Prices	115
6.6	Impact on Quality	121
6.7	Liberalization and Competition	123
6.8	Conclusion	125
7.	THE IMPACT ON WATER AND SEWERAGE	127
7.1	Introduction	127
7.1.1	Description of the privatization process	127
7.1.2	Data	130
7.2	Impact on Output and Coverage	131
7.3	Impact on Employment	138
7.4	Impact on Labor Productivity and Efficiency	140
7.5	Impact on Prices	143
7.6	Impact on Quality	147
7.7	Conclusion	150
8.	AN ASSESSMENT OF THE ELECTRICITY DISTRIBUTION 
PERFORMANCE OF PRIVATE AND PUBLIC UTILITIES	152
8.1	Introduction	152
8.2	Main Findings:	152
8.2.1	Coverage	153
8.2.2	Output	154
8.2.3	Labor Productivity	154
8.2.4	Operating Performance	155
8.2.5	Tariffs	156
8.2.6	Quality of Service	157
8.3	Top ten and bottom ten percent performers	158
8.3.1	Output	158
8.3.2	Labor Productivity	159
8.3.3	Operating Performance	160
8.3.4	Quality of Service	160
8.4	Conclusions	161
9.	DETERMINANTS OF IMPACT: REGULATORY AND CONTRACT 
VARIABLES	162
9.1	Introduction	162
9.2	Sale Method	164
9.3	Autonomy of Regulatory Body	165
9.4	Duration of Regulatory Body Appointments	167
9.5	Investor Nationality	168
9.6	Award Criteria	170
9.7	Tariff Regulation	172
9.8	Conclusion	173
10.	CONCLUSIONS AND MOVING FORWARD	176
10.1	Key Methodological Contributions	176
10.2	Main Findings	176
10.3	Moving Forward	180
ANNEX 1: EXISTING LITERATURE	188
ANNEX 2: DETAILS OF ECONOMETRIC APPROACH	195
ANNEX 3: DETAILED RESULTS OF EMPIRICAL ANALYIS	200
ANNEX 4: A SUMMARY OF POWER MARKET REFORMS IN LATIN 
AMERICA AND THE CARIBBEAN	213
BIBLIOGRAPHY	216
LIST OF FIGURES
Figure 1: Growth Improvement if Infrastructure Stocks and Quality Improved to Costa 
Rican Levels	17
Figure 2: Latin America Inventories to U.S. Inventories Ratios, All Industries, 1990s	18
Figure 3: Logistics Costs as a Percentage of Product Value, 2004	19
Figure 4: The rise and (fall of) private finance for infrastructure	21
Figure 5: Investment in Infrastructure Projects with Private Participation by Region, 
1990-2004	22
Figure 6a: Evolution of Private Participation in Electricity Distribution	23
Figure 7a: Public Infrastructure Investment (% of GDP)	25
Figure 8: Investment in LAC by Sector, 1990-2001	26
Figure 9: Sectoral Concentration of Private Participation (by value)	27
Figure 10: PPI in LAC by Country, 1990-2004	29
Figure 11: Types of Private Participation in Infrastructure	31
Figure 12: Modal breakdown by Sector in Latin America, 1990-2004 -	33
Figure 13: Modal Breakdown of Private Participation	34
Figure 14: Modal Trends for Private Participation, 1990-2004	35
Figure 15: Cumulative Private Investment in LAC by Investor Type and Sector (1998-
2004)	36
Figure 16: Private Investment in LAC by Investor Type	36
Figure 17: Population Expressing Dissatisfaction with Privatization in Latin America 
(percentage)	40
Figure 18: Probing Public Opinion	41
Figure 19: Negative Results of Privatization in Peru	43
Figure 20: Internal Rate of Return (IRR) and WACC	51
Figure 21: Fiscal Capture of Benefits	52
Figure 22: Increase in Household Earnings for Access to Infrastructure Public Services	54
Figure 23: Increase in Household Earnings from Access to Market trough Rehabilitated 
Rural Roads (in US$ annual)	54
Figure 24: Joint Welfare Effect of Price and Access Changes on Consumers Expressed as 
a Percentage of per Capita Total Household Expenditure	55
Figure 25:	55
Figure 26: Transitional Effects on Employment: Electricity Distribution	66
Figure 27: Transition vs. Non-Transition Period Comparison	66
Figure 28: Steady Trend	67
Figure 29: Electricity Distribution: Megawatt Hours (MWH)	82
Figure 30: Before and After Comparison of Electricity Distribution Levels: Gigawatt 
Hours (GWH)	82
Figure 31: Electricity Distribution: Connections	83
Figure 32: Before and After Comparison of Electricity Distribution Levels: Connections
	84
Figure 33: Electricity Distribution: Coverage	84
Figure 34: Before and After Comparison of Electricity Distribution: Coverage Levels	85
Figure 35: Electricity Distribution: Employment	86
Figure 36: Before and After Comparison of Electricity Distribution: Employment Levels
	87
Figure 37: Electricity Distribution: Labor Productivity	89
Figure 38: Before and After Comparison of Electricity Distribution: Labor Productivity 
Levels	90
Figure 39: Electricity Distribution: Distributional Losses	91
Figure 40: Before and After Comparison of Electricity Distribution: Distributional Losses
	91
Figure 41: Electricity Distribution: Average Prices	93
Figure 42: Before and After Comparison of Electricity Distribution: Prices	94
Figure 43: Electricity Distribution: Quality	95
Figure 44: Before and After Comparison of Electricity Distribution: Quality	96
Figure 45: Telecommunications: Number of connections	103
Figure 46: Before and After Comparison of Telecommunications: Number of 
Connections	105
Figure 47: Telecommunications: Number of Minutes	106
Figure 48: Before and After Comparison of Telecommunications: Number of Minutes	106
Figure 49: Telecommunications: Coverage	107
Figure 50: Before and After Comparison of Telecommunications: Coverage Levels	108
Figure 51: Telecommunications: Employment	109
Figure 52: Before and After Comparison of Telecommunications: Employment Levels
	110
Figure 53: Telecommunications: Connections per Employee	112
Figure 54: Telecommunications: Minutes per Employee	112
Figure 55: Before and After Comparison of Telecommunications: Labor Productivity 
Levels	113
Figure 56: Telecommunications: Percentage of Incomplete Calls	114
Figure 57: Before and After Comparison of Telecommunications: Efficiency Levels	114
Figure 58: Telecommunications: 3 Minute Call Prices	116
Figure 59: Before and After Comparison of Telecommunications: Prices of a 3 Minute 
Call	117
Figure 60: Telecommunications: Residential Monthly Service Charges	118
Figure 61: Before and After Comparison of Telecommunications: Residential Monthly 
Service Charges	118
Figure 62: Telecommunications: Installation Charges	119
Figure 63: Before and After Comparison of Telecommunications: Installation Charges
	120
Figure 64: Telecommunications: Quality	122
Figure 65: Before and After Comparison of Telecommunications: Quality Levels	122
Figure 66: Water and Sewerage: Number of connections	132
Figure 67: Before and After Comparison of Water and Sewerage: Number of 
Connections	133
Figure 68: Water and Sewerage: Water Production	134
Figure 69: Before and After Comparison of Water and Sewerage: Cubic Meters per Year
	134
Figure 70: Water and Sewerage: Coverage	136
Figure 71: Before and After Comparison of Water and Sewerage: Coverage Levels	137
Figure 72: Water and Sewerage: Employment	139
Figure 73: Before and After Comparison of Water and Sewerage: Employment Levels
	139
Figure 74: Water and Sewerage: Connections per Employee	141
Figure 75: Before and After Comparison of Water and Sewerage: Labor Productivity 
Levels	141
Figure 76: Water and Sewerage: Distributional Losses	142
Figure 77: Before and After Comparison of Water and Sewerage: Distributional Losses
	142
Figure 78: Water and Sewerage: Water Prices	144
Figure 79: Before and After Comparison of Water and Sewerage: Water Prices	145
Figure 80: Water and Sewerage: Sewerage Prices	145
Figure 81: Before and After Comparison of Water and Sewerage: Sewerage Prices	146
Figure 82: Water and Sewerage: Service Continuity	148
Figure 83: Before and After Comparison of Water and Sewerage: Service Continuity	148
Figure 84: Water and Sewerage: Potability	149
Figure 85: Before and After Comparison of Water and Sewerage: Potability	149
LIST OF TABLES
Table 1: Concentration of Investment with Private Participation by Country (1990-2004)
	30
Table 2: Jurisdictions and Responsibilities under Different Types of Private Participation
	32
Table 3: Cancelled or Distressed Investments in Private Infrastructure Projects in Latin 
America	38
Table 4: Renegotiation Incidence and Average Time Until Renegotiation 1988-2001	38
Table 5: Common Outcomes of the Renegotiation Process	39
Table 6: Illustration of fiscal cost of guarantees from Colombia	40
Table 7: Genuine Concerns about Privatizations	41
Table 8: Civil Disturbances	42
Table 9: Summary of Expected Impacts of Private Participation	Error! Bookmark not 
defined.
Table 10: Variable Definitions	61
Table 11: Summary Statistics	62
Table 12: Contract and Regulatory Variables	63
Table 13: Example of Means and Medians Analysis in Levels Output-Electricity 
Distribution	68
Table 14: Example of Econometric Analysis-Electricity Distribution	70
Table 15: Power Sector Reform in LAC	74
Table 16: LAC Wholesale Electricity Markets: Extent of Unbundling and Retail 
Competition	75
Table 17: Electricity Market in LAC	76
Table 18: Chronology of the Privatizations of Electricity Distribution in LAC by Country
	79
Table 19: Description of Electricity Distribution Variables	80
Table 20: Electricity Distribution: Output and Coverage Results	85
Table 21: Electricity Distribution: Employment Results	88
Table 22: Electricity Distribution: Labor Productivity and Efficiency Results	92
Table 23: Electricity Distribution: Price Results	94
Table 24: Electricity Distribution: Quality Results	97
Table 25: Electricity Distribution Impact Summary	98
Table 26: Privatization Chronology of Fixed Telecommunications in LAC	100
Table 27: Privatizations Chronology of Fixed Telecommunications in LAC: 
Liberalization and Competition	100
Table 28: Description of Telecommunications Variables	102
Table 29: Telecommunications: Output and Coverage Results	108
Table 30: Telecommunications: Employment Results	110
Table 31: Telecommunications: Labor Productivity and Efficiency Results	115
Table 32: Telecommunications: Price Results	120
Table 33: Telecommunications: Quality Results	123
Table 34: Fixed Telecommunications Impact Summary	126
Table 35: Overview of water sector reform	128
Table 36: Privatization Chronology of Water and Sewerage inn LAC	129
Table 37: Description of Water and Sewerage Variables	130
Table 38: Water and Sewerage: Output Results	135
Table 39: Water and Sewerage: Coverage Results	138
Table 40: Water and Sewerage: Employment Results	140
Table 41: Water and Sewerage: Labor Productivity and Efficiency Results	143
Table 42: Water and Sewerage: Price Results	147
Table 43: Water and Sewerage: Quality Results	150
Table 44: Water and Sewerage Impact Summary	151
Table 45: Base Case for Regulatory and Contract Variables	164
Table 46: Impact of Sale Method	165
Table 47: Impact of Autonomy of Regulatory Body	167
Table 48: Impact of Duration of Regulatory Body Appointments	168
Table 49: Impact of Investor Nationality	170
Table 50: Impact of Award Criteria	172
Table 51: Impact of Tariff Regulation	173
Table 52: Selected Infrastructure Privatization Cross-Country and Latin America Country 
Studies	191
Table 53: Means and Medians Analysis in Levels - Electricity Distribution	200
Table 54: Means and Medians Analysis in Growth - Electricity Distribution	201
Table 55: Econometric Analysis-Electricity Distribution	202
Table 56: Means and Medians Analysis - In Levels - Fixed Telecommunications	203
Table 57: Means and Medians Analysis in Growths - Fixed Telecommunications	204
Table 58: Econometric Analysis - Fixed Telecommunications	205
Table 59: Econometric Analysis - Fixed Telecommunications - Liberalization	206
Table 60: Econometric Analysis - Fixed Telecommunications - Mobile Competition	207
Table 61: Econometric Analysis - Fixed Telecommunications - Instrumental Variables
	208
Table 62: Means and Medians Analysis in levels - Water and Sewerage	209
Table 63: Means and Medians Analysis in growth - Water and Sewerage	210
Table 64: Econometric Analysis - Water Distribution and Sewerage	211
Table 65: Summary of Minimum and Maximum Changes Disaggregated by Regulatory 
and Contract Variables	212

Library of Congress Subject Headings for this publication:

Infrastructure (Economics) -- Latin America.
Public-private sector cooperation -- Latin America.
Public utilities -- Finance.
Public utilities -- Latin America -- Finance.
Privatization -- Latin America.