Transcript - Africa Infrastructure Knowledge Program

Cecilia Briceño-Garmendia and Nataliya Pushak
Republic of Congo’s Infrastructure:
A Continental Perspective
Africa Infrastructure Country Diagnostic:
a multi-stakeholder effort
Methodology and approach
 Methodology
 Data collection by local/international consultants and Bank staff
based on standardized methodology
 Baseline year for data is 2006, does not reflect subsequent
evolution
 Approach
 Focus on benchmarking Republic of Congo’s infrastructure
against African neighbors
 Benchmarking group includes Resource rich countries, DRC,
Benin, Nigeria and Cameroon
Why infrastructure matters
Headlines
 Historic contribution of infrastructure to growth
lower than in other SSA countries
 Most of that contribution to growth comes to
increased access to ICT. In contrast, ICT quality acts
like a constraint
 Quantity and quality of power supply has set a break
to the economy
Quantity and quality of power supply has set a
break to the economy
Changes in growth per capita due to changes in infrastructure
(2001-5 vs. 1991-5)
2.5
2.0
1.5
%
1.0
0.5
0.0
-0.5
-1.0
ICT
Power
Roads
Congo still has a lot to gain from improving its
infrastructure
Potential changes in growth per capita from improving infrastructure to
level of African leader (Mauritius)
4.5
4
3.5
3
2.5
%
2
1.5
1
0.5
0
-0.5
ICT
Power
Roads
Headlines
 If Congo’s infrastructure platform could be improved
to the level of the African leader – Mauritius – per
capita growth rates could increase by 3.7 percent
per annum.
 Substantial share of this impact would come from
improvements in the power sector.
 Quantity and quality roads would also have
significant contributions
The State of
Congo’s Infrastructure
Republic of Congo’s power network
Key findings for the power sector

Highly under-developed power sector in terms of generation
capacity, power consumption, access and reliability.

Installed capacity. National power system very small and
dependant on imports from DRC.

Reliability. Outages are quite frequent forcing firms to accumulate
a stock of self-generation capacity.

Access. Electrification rates very low particularly for rural areas.
Current investment program aims to create a national electricity
grid.

Quality of Network. Close to half of the energy produced is lost in
transmission and distribution.
Benchmarking indicates very poor reliability of power
provision, low capacity and high prices
Unit
Installed power generation capacity
Power generation
Power outages
Firms’ value lost due to power outages
Access to electricity
Urban access to electricity
Rural access to electricity
Revenue collection
System losses
Cost recovery of tariffs
Total hidden costs as % of revenue
Effective Power Tariff (US cents/kWh)
Residential at 100 kWh
Commercial at 900 kWh
Industrial at 50,000 kWh
Resource- Rich
MW/mil. people
kWH/capita
# in a typical month
% sales
% population
% population
% population
% billings
% production
% total cost
Rep. of
Congo
28.7
108.0
27.4
15.7
34.9
51.3
16.4
91.0
47.4
100.0
%
27.0
167.5
42.2
200.2
15.8
7.2
46.1
78.7
27.6
77.5
26.5
55.9
Predominantly Hydro Other Developing
Rep. of Congo
Generation
Regions
15.0
10.27
5.0 – 10.0
10.0
11.73
9.9
11.39
Source: Preliminary results AICD 2008
While costs of power utility inefficiencies are
relatively low, distribution losses are significant
Congo, Dem. Rep.
Nigeria
Ghana
Chad
Congo Rep
Ethiopia
Cameroon
Benin
0%
200%
400%
% of revenues
Unaccounted losses
Collection inefficiencies
Under-pricing
Over-manning
600%
0
Power tariffs in other
developing countries:
lower bound
Power tariffs in other
developing countries:
upper bound
Zambia
Nigeria
Malawi
Congo, DR
Ethiopia
Mozambique
South Africa
Lesotho
Ghana
Tanzania
Namibia
Côte d'Ivoire
Benin
Niger
Cameroon
Rwanda
Kenya
Congo, Rep.
Senegal
Burkina Faso
Uganda
Madagascar
Cape Verde
Chad
US cents
Congo’s power prices among the highest in Africa
35
30
25
20
15
10
5
Congo’s transport network
Key findings for the road sector
 Trunk road network. Low density, quality and road
condition major concern
 Rural road network. Poor coverage. No effective
network of rural roads
 Institutional framework. Second generation road
fund recently created but not fully functional.
 User charges. Fund replenished by collecting 50% of
taxes on forestry activity, 40% of VAT on fuel
products, and other taxes.
 Financing trends:
 Maintenance funding steadily increasing : doubled between
2005-07, and added additional 50% in 2008
 Investment program represents huge effort with strong focus
on multimodality
Benchmarking indicates low density and very
poor quality of roads
Paved road density
Unpaved road density
GIS Rural accessibility
Paved road traffic
Unpaved road traffic
Paved network condition
Unpaved network
condition
Over-engineering
Unit
Congo
km/1000 km2
of arable land
km/1000 km2
of arable land
% of rural pop within 2 km
from regional and national
roads
Average Annual
Daily Traffic, cars per day
Average Annual
Daily Traffic, cars per day
% in good or fair condition
% in good or fair condition
% of total network
SSA
25
Resource
Rich
111
11
287
340
34
21
23
850
1,570
1201
50
56
54
38
67
79
21
62
59
101
Roads funding aligned with maintenance and rehab
needs, however actual transfers of resources flawed
Optimal levy for
maintenance plus
rehabilitation
Congo, Rep.
Optimal levy for
maintenance
Cameroon
Implicit fuel levy
Actual Fuel Levy
Benin
$US cents per liter
0
50
100
% deviation of actual spending
from norms
Recent spike on roads fund spending sufficient to
fund maintenance and even rehabilitation
300
250
200
150
100
50
0
Congo, Rep.
Nigeria
-50
-100
-150
Maintenance
Maintenance&Rehabilitation
Benin
Key findings for the rail sector
 Rail Network. Operating below potential. One third of
the 885-km network out of operation
 Institutional Framework. Publicly owned and
administered. 2005-concession failed.
 Traffic and Usage. From 1987 to 1996 traffic reduced
by two thirds. Stop functioning due to conflict. Rail
never resumed to work at full capacity
 Tariffs. At 0.16 $/ton-km among the highest of the
region (up to 3 times as high as in southern Africa)
 Reliability. Very slow service and bad safety condition.
Among the worst in Africa in both accounts.
Benchmarking indicates poor unreliable service and
high cost for users
Railway
OCBN
CAMRAIL
CFCO
CFMK
SNCC
SETRAG
GRC
NRC
Country
BeninNiger
Cameroon
Congo
DRC
DRC
Gabon
Ghana
Nigeria
149
1,019
427
172
206
2,815
242
15
113
565
195
20
47
1,485
87
24
Coaches: 1000 passenger-km
per coach
1,015
4,718
2,202
76
595
1,961
447
1,684
Cars: 1000 ton-km per wagon
200
881
408
196
334
2,296
454
58
40
nav
40
32
33
75
nav
nav
45-35
45-35
40-30
25-35
30-40
45-30
0.001
0.05
0.03
0.03
0.01
Traffic Density, Freight, 1000
ton-km/km
Performance
Staff: 1000 UT per Staff
Locomotive Availability in %
Speed Passenger Traffic
(km/h)
Fatalities per Km Travelled
(%)
Pricing
Average Unit Tariff, Freight, US
cents/ton-km
5.8
5.2
16.0
12.5
13.7
2.5
4.4
nav
Average Unit Tariff, Passenger,
US cents/passenger-km
2.0
2.2
5.7
3.1
4.2
8.6
2.4
nav
Key findings for the ports sector
 Physical Infrastructure. One of the best natural deepwater ports in SSA in
good operational conditions
 Institutional Framework. Service port under a 27-year concession with a
target to expand port to receive large vessels (up to 6,000 TEU)
 Modernization plan: extend container terminal, rehabilitate wharfs and
warehouses, drainage and electricity supply networks, construct a timber yard.
 Performance. Productivity could be increased by improving custom and
logistics procedures (particularly in Pointe Noire)
Benchmarking underscores port’s good
performance and competitive tariffs
Port
Luanda
Boma
Matadi
Pointe
Noir
Apapa
Cotonou
Tema
Country
Angola
DRC
DRC
Congo
Nigeria
Benin
Ghana
Traffic
Containers handled
(TEU/year)
377,208
10,000
200,000
150,000
430,000
158,201
420,000
General cargo
capacity (tons/year)
4,000,000
500,000
1,700,000
5,000,000
5,000,000
2,500,000
8,500,000
TARIFFS: handling charge (USD/ton)
General cargo
8.5
10
10
5.5
8
8.5
10
5
NA
8
2.8
NA
5
3
Container dwell time
(days)
12
NA
25
18
42
12
25
Truck processing time
(hours)
14
NA
18
12
6
6
8
Crane productivity
(containers/hour)
7
6
10
6.5
28
NA
39
Crane productivity
(tons/hour)
16
5
6
7.5
9
15
13.5
Dry bulk
EFFICIENCY:
Key findings for the air transport sector
Access. Domestic market is medium size and
international market small, with a declining
trend in traffic
Service. Seat capacity high for route served
Connectivity. Significant loss of connectivity
as measured in city pairs between 2004 and
2007
Safety concerns. recent ICAO audit found
Congo well below international standards in
safety oversight
Benchmarking suggest the market is well served though
poor connectivity, safety a source of concern
Country
Angola
DRC
Congo
Nigeria
Benin
Ghana
Traffic (2007)
Domestic Seats
11,990,16
327,988
443,633
9,304,568
N/A
144,183
Seats for
international travel
within Africa
484,178
468,216
351,882
1,373,745
323,132
909,819
Seats for
intercontinental travel
588,978
193,414
117,962
2,437,702
99,268
832,895
0.134
0.016
0.240
0.089
0.047
0.082
Percent of seat km in
older aircraft
0
25
22
20
7
3
Percent of seat km in
newer aircraft
60
74
73
71
89
96
Percent of seat km in
aircraft- unknown
age
40
1
6.5
9
4
1
Seats available per
capita
Quality:
Note: All data based on estimations and computations of scheduled advertised seats, as published by the Seabury
Aviation Data Group. This captures 98% of world-wide traffic, but a higher percentage of African traffic is not captured
by the data.
Republic of Congo’s ICT network
Key findings for the ICT sector
 Access.
Two-thirds of the population under GSM coverage
Competition in mobile market (3 operators)
 Fixed line market is monopolized by the incumbent
SOTELCO (la Société des Télécommunications du Congo)
Access is decreasing in fixed lines due to malfunctioning
incumbent
 Pricing.
Telecom prices are high, particularly for broadband services
Benchmarking indicates high coverage,
high mobile subscription and high prices
Unit
GSM coverage
International bandwidth
Internet
Landline
Mobile phone
% population
bps/capita
subscribers/100 people
subscribers/100 people
subscribers/100 people
Rep. of
Congo
Rep. of
Congo
75.0
0.29
0.03
0.41
35.4
ResourceRich
47.7
2.7
0.3
1.1
23.7
Other
Developing
Regions
9.9
Price of monthly mobile basket
18.8
With
Submarine
Cable
13.6
Price of monthly fixed line basket
nav
16.7
nav
Price of 20-hour Internet package
Price of a 3-min call to US
84.5
5.4
47.3
1.4
11.0
2.0
Source: Preliminary results AICD 2008
High international call charges driven both by
technology and market power
US$
Percent
cases
Call within
SSA
Call to
USA
Internet
dial-up
Internet
ADSL
Without submarine cable
67%
1.34
0.86
68
283
With submarine cable
33%
0.57
0.48
47
111
 monopoly on
international gateway
16%
0.70
0.72
37
120
 competitive
international gateway
16%
0.48
0.23
37
98
Key projects in the ICT sector
 Important infrastructure projects
WACS - Project West Africa System Cable
 financed and initiated as a partnership of 5 South-African operators
(MTN, Neotel, Telkom s.a., Infraco et Vodacom) to connect RoC to the
West Africa System
CAB2 -Central African Backbone
 The aim of the project is to improve transparency, governance and fair
competition
 PCN - Project de couverture national
 The purpose of the project is to extend access to remote areas and
increase affordability
 Pricing.
Telecom prices are high, particularly for broadband services
Key findings for the water and sanitation sectors
 Water.
 High proportion of people using piped water sharply contrast with
one third of the population using surface water, overall
 Coverage by improved water sources in rural areas a huge problem.
Two thirds of rural population use surface water
 Costs due to utility inefficiencies amount to 150% of the utility
turnover, mostly driven by under-pricing
 Sanitation.
 High reliance in traditional latrines but excellent progress in reducing
open defecation
Benchmarks indicates relatively high population share still
uses poorest water quality while tariffs are set low
Year 2005
Access to Water Supply (% pop)
Piped water
Stand posts
Wells/boreholes
Surface water
Access to Sanitation (% pop)
Flush toilets
Improved latrines
Traditional latrines
Open defecation
Domestic water consumption
(liter/capita/day) per pop. served
Performance
Revenue collection (%sales)
Distribution losses (%prod.)
Cost recovery of Tariffs % on costs)
US cents per m3
Residential tariff
(at 30 m3)
Non-residential tariff
(at 100m3/mo)
RoC
Resource- Rich
SSA
25.8
23.5
15.3
30.3
12.8
12.6
49.0
23.7
16.6
15.6
41.5
32.7
5.3
15.1
69.8
9.5
11.2
6.4
54.8
27.6
9.8
9.2
52.4
34.2
21.0
78.9
102.9
88.0
27.7
53.9
42.8
89.6
33.5
51.6
RoC
48.6
59.3
Scarce water
resources
60.26
44.2
Other Developing
Regions
48.6
120.74
3.0 – 60.0
% of population
Access to piped water skewed to urban areas,
while rural relies on surface water
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Piped Supply
Public
Standposts
urban
Wells/boreholes Surface Water
rural
% of population
Traditional latrine main source of sanitation
across the board
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Septic tank
Improved latrine
Urban
Rural
Traditional
latrine
No facility
Water utility losses due to inefficiencies more than
double revenues, driven by huge under-pricing
Nigeria
Ghana
Ethiopia
Rep. of Congo
DRC
South Africa
Benin
0%
100%
200%
300%
400%
% of revenues
Unaccounted losses
Collection inefficiencies
Under-pricing
Financing Republic of
Congo’s Infrastructure
Key findings on infrastructure finance
 Spending needs of US$780 mln for infrastructure are skewed towards
capital expenditure and transport and power sectors
 Burden of 13% of GDP is not as daunting relative to Republic of Congo’s
economy
 Existing infrastructure spending of US$365 mln mainly on roads and
power
 Effort on infrastructure spending relatively high
 Public financing accounts for a lion share in both O&M and capital
funding
 Infrastructure financing gap of US$302* mln or 6% of GDP, mainly in
power investment
* assuming complete fungibility of funds across sectors
Possible infrastructure targets
over next ten years
ICT
Power
Transport
WSS
Economic target
Social target
Fiber optic links to neighboring
capitals and submarine
cables
Universal access to GSM signal and
public broadband facilities
1,689 MW new generation
498 MW inter-connectors
National and regional
connectivity
n.a.
Electricity coverage of 53%
(83% for urban zones)
GIS Rural Accessibility Index 80%
for land with highest agricultural
value already in production
MDG for water and sanitation
To meet these targets, Republic of Congo would need
to spend US$780 mln per year for next decade
$ mln/ year Capital
ICT
Power
Transport
WSS
Irrigation
Total
40
438
92
46
nav
615
O&M
Total
44
44
69
nav
7
164
84
482
160
46
7
780
Burden of financing needs not daunting
relatively to Congo’s economy
SSA
SSA
LIC-Fragile
MIC
LIC-NoFragile
Resource-Rich
Resource-Rich
LIC-NoFragile
MIC
LIC-Fragile
DRC Congo, Dem. Rep.
Nigeria
Benin
DRC Congo, Dem. Rep.
Congo, Rep.
Cameroon
Nigeria
Congo, Rep.
Cameroon
Benin
0
0 10 20 30 40 50 60 70 80
Capex
O&M
% GDP
Capex
O&M
20
40
$US bln
60
80
100
Existing infrastructure spending in addressing
needs is already substantial
SSA
SSA
LIC-NoFragile
MIC
MIC
Resource-Rich
LIC-Fragile
LIC-NoFragile
Resource-Rich
LIC-Fragile
Benin
Nigeria
Congo, Rep.
Cameroon
Nigeria
Benin
Cameroon
Congo, Rep.
DRC Congo, Dem. Rep.
DRC Congo, Dem. Rep.
0 1 2 3 4 5 6 7 8 9 10 11
% GDP
Capex
O&M
0
10
20
30
40
50
$US bln Thousands
Capex
O&M
Most of the existing spending directed to transport and
power
Existing financing flows to Republic of Congo,
(average over period 2004-07 US$ million per year)
O&M
Investment
Total
Public
Public
ODA
Non-OECD
PPI
Total
Investment
ICT
6
6
0
0
18
24
30
Power
44
69
28
7
154
33
78
19
10
150
2
8
0
nav
13
30
6
1
nav
30
0
0
0
nav
18
65
92
20
10
211
109
160
48
17
365
Transport
WSS
Irrigation
Total
Road public spending dramatically increased in
recent years
Existing budgetary flows to Republic of Congo, US$ million per year
year
2004
Roads
O&M O&M
Capex Central Road
Gov
Fund
Total
Non-Roads
O&M
Capex Central Total
Gov
2006
68
67
12
2
1
1
0
16
26
71
84
39
14
42
7
2
2
13
16
44
20
2007
208
1
35
245
91
8
99
Average
89
1
26
110
39
6
45
2008
276
3
54
333
73
7
80
2005
Millions $ US
Budget expenditures plummeted in 2006 but
increased dramatically in recent years,
notably in Roads
300
250
Power
Roads
200
Other transport
150
100
50
0
Other infrastructure
O&M is predominantly financed by SOEs and
the Road Fund in the case of transport, while
investments by central government
4.0
Central Gov
3.5
Off-budget
3.0
% of GDP
2.5
2.0
1.5
1.0
0.5
0.0
O&M
CAPEX
How much more can be done with existing resources?
Potential efficiency gains:
 Potential gains from inefficiencies amount to $US 113
million per year or 1.9% of GDP
 Substantial scope for improving cost recovery in water
and improving operational efficiency and budget
execution in the power sector
Scope for reallocation of public funds across sectors of
1.7% of GDP
Over manning amounts to $US 20 annually, chiefly in
power sector
Potential efficiency gains: Composition and details
ICT
Power Transport
WSS
Irrigation
Total
Over manning
nav
17
nav
3
nav
20
Losses
nav
20
nav
2
nav
23
Under-collection
nav
7
0
1
nav
7
Under-maintenance
nav
nav
0
nav
nav
0
2
0
33
2
4
41
nav
0
5
17
nav
22
2
45
38
25
4
113
Budget Execution
Tariff Cost Recovery
Total
The funding math
Power Transport
WSS
Irrigation
Total
(84)
(482)
(160)
(46)
(7)
(780)
Spending
30
109
160
48
17
365
Potential
Efficiency Gains
2
45
38
25
4
113
(GAP) or surplus
(52)
(328)
-
-
-
(302)*
US$m pa
Needs
ICT
* assuming complete fungibility of funds across sectors
Overall financing gap of only US$302 mln or
around 6% of GDP, mainly in power
investment
7
6
% of GDP
5
4
3
2
1
0
ICT
Power
Transport
CAPEX financing gap
WSS
Irrigation
O&M financing gap
Total
Absent any spending increase, efficiency gains
can accelerate progress by over 50 years
Variation in resources needed (% deviation
from current envelope)
100
80
60
40
20
0
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
-20
-40
-60
Number of years needed to attain funding targets
a. Existing resource envelope plus potential efficiency gains
b. Existing resource envelope
The funding math using 2004-2005
levels of public spending
Power Transport
WSS
Irrigation
Total
(84)
(482)
(160)
(46)
(7)
(780)
Spending
24
95
60
39
12
330
Potential
Efficiency Gains
0
45
29
23
2
100
(GAP) or surplus
(60)
(342)
(71)
-
-
(350)*
US$m pa
Needs
ICT
* assuming complete fungibility of funds across sectors
The funding math using 2008-2009
levels of public spending
Power Transport
WSS
Irrigation
Total
(84)
(482)
(160)
(46)
(7)
(780)
Spending
50
226
390
76
51
564
Potential
Efficiency Gains
6
45
29
29
15
183
(GAP) or surplus
(28)
(211)
-
-
-
(33)*
US$m pa
Needs
ICT
* assuming complete fungibility of funds across sectors
Main achievements and challenges
Achievements
Power
•Rapid expansion of
generation capacity
Transport
•Pointe-Noire concession on
track, CFCO concession
planned
•Establishment of secondgeneration road fund
Challenges
•Accomplish institutional reform
for efficient regional integration
and power costs reduction
•Rehabilitate the national road
network
•Improve rural connectivity
ICT
•Good GSM coverage
•Reduce the service costs via
increased competition, especially
when connected to submarine
cable
Water
•Reasonably good coverage
in urban areas
•Reform water tariffs to achieve
financial viability
Summary
Bad news
• The state of RoC infrastructure is well below the
benchmark for other Resource rich countries in SSA.
• Power and road infrastructures put the major contraints
on the economy.
Good news
• The country has the means to rectify the bottlenecs
• The funding gap that persisted for several years is
greatly reduced by recent budget increases
The way forward
• Sustain the level of recent spending during the next
decade
• Improve sector effectiveness:
–
–
–
–
Budget execution for roads ($33m pa)
Distibution losses in power ($20m pa)
Over-manning in power ($17m pa)
Increase water tariffs to cost-recovery level ($17m pa).
• Tackle other sectoral challenges
– Finish the rehabilitation of PN-CFCO corridor
– Seek better regional integration in transport and power (in the
context of CAPP)
– Link the strategy of rural infrastructure with the agriculture
sector development plan