Viewpoint

doi:http://dx.doi.org/10.1596/39401

Report Series: Viewpoint

Viewpoint is an open forum to encourage dissemination of public policy innovations for private sector–led and market-based solutions for development.

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Private Participation in the Airport Sector : Recent Trends

(World Bank, Washington, DC, 1999-11) Silva, Gisele F.

During the 1990s private sponsors have participated in projects involving eighty-nine airports in twenty-three developing countries, with investment totaling US$5.4 billion. About three-fifths of this investment was carried out in 1998 alone, and about two-fifths related to the award of the Argentine airport system that year. Analysis of the investment patterns shows that Latin America leads in attracting private investors, operations and management contracts with major capital expenditure have been the main vehicle for investment, and governments are transferring networks to the private sector more often than single airports or stand-alone facilities.
International Power Trade : The Nordic Power Pool

(World Bank, Washington, DC, 1999-01) Carlsson, Lennart

Scandinavia, where countries have traded power for decades, has the world's most developed international market for electricity. Recently the trading system has changed dramatically, moving from the old model of cooperation among the leading vertically integrated utilities in each country, under the Nordel agreement, to competitive market rules. Norway and Sweden established a common power market, Nord Pool, in 1996, and Finland joined in June 1998. This Note examines why Nord Pool came into being, what conditions facilitated its development, and what lessons it provides for World Bank client countries.
Corporate Debt Restructuring-A Proposal for East Asia : Auctions Speak Louder than Words

(World Bank, Washington, DC, 1999-11) Hausch, Donald B. ; Ramachandran, S.

Auctions may be an appropriate way to reorganize the liabilities of some overindebted East Asian firms - those that are generally well run, for which there is merit in keeping the existing owners in place, but for which conventional bankruptcy procedures are proving too slow. This Note proposes an auction scheme dubbed Accord - for Auction-based Creditor Ordering by Reducing Debts. Firms pay creditors in sequence as their operating cash flows permit rather than on a promised schedule. Creditors bid for position in the queue by the proportion of debt they forgive, choosing between smaller or more deferred repayments. The outcome: a firm with serviceable debt, controlled by existing owners with an incentive to operate it efficiently.
Banking on Governance? Conflicts of Interest Facing Bank Owners and Supervisors

(World Bank, Washington, DC, 1999-10) Leechor, Chad

Banks fail with alarming frequency, resulting in large losses of taxpayer money. A key factor in the high failure rate is the flawed governance mechanism, which exacerbates the risks inherent in banking. Bankers control a lot of other people's money and have much discretion over the information they disclose. The temptation to engage in excessive risk taking is strong. Tightening banking supervision is seldom the solution. For their part, banking supervisors often face incentives at odds with those of taxpayers. At times they may prefer not to act to minimize taxpayer losses. These twin governance problems are further compounded by the common practice of disclosing banking information only to supervisors, not to markets. This Note explains the conflicts and proposes some solutions.
Mitigating Currency Convertibility Risks in High-Risk Countries : A New IDA Lending Approach

(World Bank, Washington, DC, 1999-04) Rasmussen, Karen

A proposed Currency Convertibility Fund, backstopped by a contingent credit from the International Development Association (IDA)-the World Bank's concessionary window for the world's poorest countries-has been designed for the Songo Songo Gas Development and Power Generation Project in Tanzania. The fund is a transitional mechanism aimed at supporting the Tanzanian government's efforts to attract foreign equity in circumstances where the private sector perceives a high level of risk and is otherwise unwilling to invest. The fund may be a replicable mechanism that, by mitigating sovereign risks that investors are unwilling to bear and unable to hedge against, could help catalyze foreign equity investment in other IDA countries and in projects that generate local currency.
Gas Reform in Ukraine : Monopolies, Markets, and Corruption

(World Bank, Washington, DC, 1998-12) Lovei, Laszlo

Reform of the natural gas industry in Ukraine started a year later than reform of the power industry. Because gas reform had no blueprint, its direction has remained ambiguous. That ambiguity is the result of a conflict between those who advocate vertically integrated, opaque, monopolistic structures and those who want a transparent, competitive gas market governed by stable rules. This conflict will likely continue for several years, making the ultimate outcome difficult to predict. More by accident than by design, the reform produced a number of innovative features that might be of interest for other countries planning to restructure and privatize their gas industries.
Regulation in New Natural Gas Markets : The Northern Ireland Experience

(World Bank, Washington, DC, 1999-04) Lehmann, Peter

So far gas market liberalization has generally occurred in mature markets-particularly where much of the pipeline system has already been laid, as in Argentina, Britain, and the United States. In these cases a competitive structure is appropriate. In new markets, however, it may be difficult to introduce a competitive regime from the outset, and a different approach and form of regulation, such as a period of exclusive licenses, may be needed. In 1997 the Northern Ireland authorities awarded Phoenix Natural Gas an exclusive license for a limited period to develop a new gas market from scratch in the greater Belfast area. This Note explains the rationale for a period of exclusivity and describes Northern Ireland's approach to gas market regulation.
A Scorecard for Energy Reform in Developing Countries

(World Bank, Washington, DC, 1999-04) Bacon, Robert

Only a handful of developing countries have fully reformed their energy sector - oil, gas, and power. A World Bank Survey of 115 developing countries shows that on average, in mid-1998 just 39 percent of key reform steps had been carried out. There are large variations among countries in the number of reform steps take, with most reforms concentrated in a small number of countries. In a great majority of countries, little or no reform has been done. This paper compares the results of the survey across regions and countries, and looks at how private investment has influenced the reforms.
Private Participation in the Transmission and Distribution of Natural Gas : Recent Trends

(World Bank, Washington, DC, 1999-04) Izaguirre, Ada Karina

This paper examines the increasing participation of the private sector in the transmission and distribution of natural gas in developing countries during the 1990s, resulting mainly from the growing demand for new gas transport facilities coinciding with a growing consensus in favor of private participation in infrastructure. This note, drawing on the bank's PPI (Private Participation in Infrastructure) Project database, provides an overview of the patterns and trends in the projects in the twenty six developing countries which introduced private participation in natural gas between 1990 and 1997. It concludes with the thought that growth in privately funded and operated export projects promise s to bring the economic and environmental benefits of natural gas to a larger number of countries.
Venture Capital Funds in Emerging Markets : Lessons from IFC's Investments

(World Bank, Washington, DC, 1996-09) Barger, Teresa ; Carter, Laurence ; Kuczynski, Irving

Venture capital funds pool and manage money from investors seeking private equity stakes in small and medium-size enterprises with strong growth potential. These investments tend to be long term, and the industry is relatively new in emerging markets. So only very recently has it been possible to draw some conclusions about the performance of these funds. The authors outline some of the lessons from IFC's portfolio.