Universal service obligations in utility concession contracts and the needs of the poor in Argentina's privatization
The authors summarize the main lessons emerging from Argentina's experience, including universal service obligations in concession contracts. They discuss free-riding risks, moral hazard problems, and other issues that arise when social concerns are delegated to private operators. After reporting on Argentina's experience, the authors suggest some guidelines: 1) Anticipate interjurisdictional externalities. Users'mobility makes targeting service obligations difficult. 2) Minimize the risks imposed by elusive demand. In providing new services, a gradual policy may work better than a"shock". 3) Realize that unemployment leads to delinquency and lower expected tariffs. Elasticity of fixed and usage charges is important. 4) Deal with the fact that the poor have limited access to credit. Ultimately, plans that included credit for the payment of infrastructure charges were not that successful. 5) Coordinate regulatory, employment, and social policy. One successful plan to provide universal service involved employing workers from poor families in infrastructure extension works. 6) Beware of the latent opportunism of users who benefit from special programs. Special treatment of a sector may encourage free-riding (for example, pensioners overused the telephone until a limit was placed on the number of subsidized phone calls they could make). 7) Fixed allocations for payment of services do not ensure that universal service obligations will be met. How do you deal with the problem that many pensioners do not pay their bills? 8) anticipate that operators will have more information than regulators do. If companies exaggerate supply costs in remote areas, direct interaction with poor users there may lead to the selection of more cost-effective technologies. 9)"Tailored"programs are often much more effective than standardized programs. They are clearly more expensive but, when demand-driven, are also more effective.
|Date of creation:||01 Nov 1991|
|Contact details of provider:|| Postal: 1818 H Street, N.W., Washington, DC 20433|
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:2250. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.