Transcript Jane Ebinger - Measuring Financial Performance in

Measuring Financial Performance
in Infrastructure
Jane Ebinger
Public Finance Course
May 4, 2006
Objective
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To estimate the level of hidden costs or implicit
subsidies in the power, natural gas and water
sectors
Various initiatives:
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QFD assessment for Azerbaijan’s energy sector
1999/2000
SAL 4 discussions in Russia 2000 – energy sector
IMF/ WB look at 6 CIS countries in 2003/2004 –
energy sector
Simple Model
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WB/ IMF agreement on need for simple model of
hidden costs in energy sector
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Single measure of hidden costs in power and gas sectors
Indication of combined effect of losses, poor collections and
tariffs below cost recovery
Provide insight to impact of reform policies and their
implementation
Easily calculated, tracked and reported
Recognize limitations in model – no attempt at in depth
analysis
Simple Model
Hidden Costs = Collection Failure + Unaccounted Losses + Tariffs Below Cost
Recovery
Where,
Collection Failure
= Q x Te x (1 – Rct)
Unaccounted Losses
= Q x Ce x (Lm – Ln) / (1 – Lm)
Tariffs Below Cost Recovery = Q x (Ce – Te)
And,
Q End user consumption
Ce Average Cost Recovery Price
Te Weighted average tariff
Rct Collection rate
Lm Total losses
Ln Normative losses
Simple Model
INDICATOR DEFINITION
Q
End user consumption, where end users include industry, commercial
enterprises, households, etc.
Ce
Average cost recovery price at the end user level defined as long run
O&M costs plus allowance for reasonable investment and normative
losses
Lm
Rate of actual losses in transmission/ transport, distribution, and due to a
lack of metering and theft
Ln
Rate of normative losses expected in a system of the given characteristics
Te
Weighted average end user tariff
Rct
Collection in cash, non cash (in cash equivalent terms), and offsets
Scope of Review
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Expand earlier efforts and estimate hidden costs in
power and natural gas sectors across ECA
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Extend methodology to the water sector
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22 countries with active programs included
2000 – 2003 estimates
16 countries for same period
Review financial performance in roads and railways
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Roads – budgetary expenditure
Rail - budgetary support
Data Sources
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Use known sources or existing data collection instruments
wherever possible:
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Data sources supplemented by:
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Enerdata (power and gas supply and demand)
Erranet (power and gas tariffs)
OECD EAP Task Force (water sector)
Ib-net (water sector)
International Union of Railways
International Road Federation Statistics
EuroStat (transport)
Information from Ministries and agencies
Existing WB publications and reports
Data from sector specialists, consultants, WB and IMF staff
Low cost exercise – no large scale field data collection efforts
Data Availability
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Information on the state of each sector
generally available
Data less available for:
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Financial performance in general – all sectors,
particularly rail and road sectors
Loss statistics in gas sector
Breakdown of residential/ industrial tariffs – power/
gas
Collection rates
Cost recovery tariffs
Data Quality
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Quality and consistency a major challenge
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Average cost recovery prices
Transport – multi year statistics, and cross country
comparisons
Trends – span 4 years period only
Checks with sector specialists, review for
consistency and outliers
No field audit or major data collection
Power sector data most robust
Energy Sector – Hidden Costs
Twenty two countries reviewed over the period 2000 to 2003.
Central and Eastern Europe
Hungary, Poland
South East Europe
Albania, Bosnia, Bulgaria, Croatia, Macedonia, Romania, Serbia and
Montenegro, Turkey
FSU – Low Income
Armenia, Azerbaijan, Georgia, Moldova, Kyrgyz Republic, Tajikistan,
Turkmenistan, Uzbekistan
FSU – Middle Income
Belarus, Kazakhstan, Russia, Ukraine
Electricity: Hidden Costs - Total
US$ million
(Constant 2001 US$)
4000
2003: 4232
3500
2002: 10579
2001: 10918
3000
2000: 14249
2500
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Average 2000
Average 2001
Average 2002
Average 2003
Power Sector
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Trends (2000 – 2003)
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Hidden costs declined across all countries
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8.6% of GDP to 4.4% of GDP
US$ 30.1 billion to US$ 15.9 billion (2001 constant US$)
Largest decline Russia (70% to US$ 4.2 billion) and Bosnia
(62% to US$ 96 million)
Tajikistan and Uzbekistan have high hidden costs
when compared with other countries, 16% and 12%
respectively in 2003
Power Sector
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Trend improved across the region on all 3
aspects of hidden costs
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Overall the WAET across the region rose by 26% to USc 4.15 per
kWh on average (more than ½ in last year)
WAET declined in only 3 countries: Armenia, Georgia and Macedonia
Residential tariffs remained higher than non residential tariffs but gap
decreased slightly (13%)
ACRP declined across sample by 5% to USc 5.1 per kWh; CEE group
faced an increase (57%)
Average losses remained around 21%
Collection rates rose from average of 78.3% to 87.9%. Bosnia, Kyrgyz
and Uzbekistan only showed declining trend
Natural Gas: Hidden Costs - Total
US$ billion
(Constant 2001 US$)
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
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Average 2000
Average 2001
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Natural Gas Sector
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Hidden costs lower than the power sector
Hidden costs remained below 2.3% GDP all
countries (Uzbekistan exception 8.5%)
Trend (2000 – 2003) - (2001 constant US$)
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US$ 6.8 billion (2000) to US$ 13.3 billion (2003)
Largest decline Ukraine (drop of US$ 690 million)
Largest increase Turkey (from US$ 0.2 billion to
US$ 4.2 billion)
Natural Gas Sector
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Trends
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Large variation in WAET – low in Uzbekistan 6.1 US$/km3 to high
US$ 154.5 US$/ km3 (2000)
All countries increased WAET except Azerbaijan and Moldova
Contrasting trends in terms of ACRP – FSU countries ACRP much
lower than other countries
Collection rates remained fairly stable over the period – also variation:
Georgia ~ 25%, Croatia, Moldova, Poland, Turkey from 78 % – 90%
Data on losses sketchy – cannot comment on trends
Water Sector – Hidden Costs
Sixteen countries reviewed over the period 2000 to 2003. Trends reflect
2000 to 2002 since the dataset for 2003 was not complete.
Central and Eastern Europe
Czech Republic, Estonia, Latvia, Poland
South East Europe
Bulgaria, Romania
FSU – Low Income
Armenia, Azerbaijan, Georgia, Moldova, Kyrgyz Republic, Tajikistan
FSU – Middle Income
Belarus, Kazakhstan, Russia, Ukraine
Water: Hidden Costs - Total
US$ million
(Constant 2001 US$)
1500
1200
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ra
in
Uk
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Average 2000
Average 2001
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Average 2003
Water Sector
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Trends (2000 – 2002)
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Hidden costs significantly lower than the energy
sector
Show improving trend over 2000 - 2002
Hidden costs declined across all countries
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On average declined from 0.5% of GDP to 0.4% of GDP
Below 1.6% of GDP in all countries except Moldova (2.9%)
US$ 2.1 billion to US$ 1.9 billion (2001 constant US$)
Russia, Poland and Ukraine have highest levels
Largest decline Russia (70% to US$ 0.4 billion)
Water Sector
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Other indicators reviewed
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Working ratio exceeded 1 in all countries except (Czech and Kyrgyz
Republic)
Labor costs remained largely unchanged exceeding 15% of revenues
in Russia and CIS, as high as 35% in Belarus and Tajikistan
Staffing remained high (> 3 x UK, employees per 1000 consumers)
Labor productivity rose on average 37% (water supplied per
employee)
Rail Sector
Statistics on the state of the sector span twenty two countries reviewed over
the period 2000 to 2003. Data on financial performance is more limited.
Central and Eastern Europe
Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland
South East Europe
Bosnia, Bulgaria, Croatia, Kosovo, Macedonia, Romania, Serbia, Slovakia,
Slovenia, Turkey
FSU – Low Income
Armenia, Azerbaijan, Georgia
FSU – Middle Income
Belarus, Russia, Ukraine
Rail: State Budget Support - Total
US$ million
(Constant 2001 US$)
350
300
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150
100
50
0
Azerbaijan
Bulgaria
2000
Croatia
2001
Estonia
2002
Georgia
Hungary
Average 2000
Kosovo
Poland
Romania
Average 2001
Serbia
Slovakia
Average 2002
Rail Sector
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State Budget Support (2000 – 2002)
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May not be best measure, variations in state public
budgeting and policy choices
State budget support (11 countries)
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On average increased 7.6% from US$ 775 million to US$
834 million
Remained unchanged at 0.4% of GDP or below
Average state budget support per traffic unit rose to US$
0.022 in 2003, operating costs and PSO support per TU
also rose to US$ 0.012 in 2003
Rail Sector
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Other indicators reviewed
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Working ratio was for CEE (0.74 average), FSU-LI (0.78 average) and
FSU-MI (0.5 average), but in SEE (1.78 average) - 2002
Operating costs (per TU) exceeded unit passenger and freight
revenues
In FSU country groups unit operating costs and revenues were
significantly below the regional average
Freight revenues exceeded passenger revenues in many countries
Labor costs as a % of total revenues rose on average from just under
60% to around 80%
Staffing reduced in all countries (average -11%) and staff productivity
rose by 16% (TU per employee)
Road Sector
Statistics on the state of the sector span fourteen countries reviewed over
the period 2000 to 2003.
Central and Eastern Europe
Hungary, Latvia, Lithuania
South East Europe
Bosnia, Bulgaria, Croatia, Romania, Serbia, Turkey
FSU – Low Income
Azerbaijan, Kyrgyz Republic, Moldova
FSU – Middle Income
Russia, Ukraine
Road: Actual Expenditure Total
US$ billion
Constant 2001
[Russia - US$ 6.12 billion (2000), US$ 5.52 billion (2001), US$ 5.58 billion (2002), US$ 5.72 billion (2003)]
1.20
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Road Sector
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Expenditure on the road sector (2000 – 2003)
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US$ 8.9 billion spent for sample countries
Rose 9% to an average of US% 681 million; heavily influenced by
Russia (64% of expenditure overall)
Average expenditure on FSU-LI significantly lower than other subregional groupings
Average expenditure represented 0.9% of GDP; FSU-MI (1.4% GDP)
above average
Most attention paid to routine maintenance and repair (16% increase),
followed by new construction and rehabilitation
Actual expenditure met or exceeded planned expenditure overall and
rose from an average of 100% to165% of planned expenditure
Going Forward
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Updates proposed for:
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Power and gas sectors – 2004 and 2005
Water sector – 2004 and 2005, and additional
countries as they become available through Ib-net
Access to Results of Review
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http://ecadata-worldbank.org
Report “Measuring Financial Performance in
Infrastructure”
Thank You
Jane Ebinger
Infrastructure Unit, Europe and Central Asia Region
May4, 2006
[email protected]
+1 202 473 0204