As explained early in this document, at the Construction and Operation and Maintenance stage of PPP contracts, a reference to oversight agencies is a reference, for the most part, to economic regulation agencies. However, Best Practice Regulation in the implementation of PPPs means flowing interaction with other oversight agencies, such as the PPP units, Ministries, community organizations and civil society. Interaction fosters consultation, participation and accountability.
As far as consumers are concerned, when properly informed, the active involvement of such groups may prove to be very useful to the regulator. For instance, such groups can assist the regulator in the oversight and service quality functions. They can also provide support to the regulator's decisions where such decisions entail rejecting prices that reflect potential inefficiencies. On the other hand, the involvement of consumer groups helps avoid regulatory capture.132
In this regard, it is useful to look at the United Kingdom's consumer-representation experience. Consumer representation agreements and all related aspects were defined at the time of the privatization.
BOX 23 : Consumer Representation in the United Kingdom
| Statutory consumer bodies - such as Energywatch and Postwatch - were established to represent consumer interests in those sectors. As a result of the Water Act (2003), a similar body is being set up in the water industry. Although formal separation of Ofwat and WaterVoice was in 2005, WaterVoice has operated largely independently from Ofwat, the industry regulator, since 2000. Different statutory arrangements apply in other regulated markets. The Financial Services and Markets Act 2000 and the Communications Act 2003 set up the Financial Services Consumer Panel and the OFCOM Consumer Panel respectively. These panels are different in nature to the statutory bodies established in postal and energy markets. They do not handle customer complaints, which are addressed through Ombudsman or Alternative Dispute 2002/121. UNU World Institute for Development Economics Research (UNU/WIDER). Resolution schemes. They also are more closely connected to the regulator, and play an advisory role. However, in practice, both Financial Service Authority and OFCOM have encouraged their consumer panels to operate with a high degree of autonomy, and their independence enjoys considerable protection. Consumer representation in regulated markets now has a higher profile and is better resourced than in 1998. Although each of the consumer bodies differs in its approach and practice, they each have an important role in delivering the Government's objectives for consumer policy and regulation. Alongside this, most consumer bodies engage with companies and handle consumer complaints. All, to varying degrees, undertake research to further their understanding of consumer needs and behavior in their respective markets. |
Source: HM Treasury, Department of Trade and Industry, "Consumer representation in regulated industries - Final Report." UK, July 2004.
As regards the Ministries, Australia's Utility Regulators Forum states that, in general, "regulatory model supports the separation of the role of the policy/regulation maker and policy/regulation implementer. For example, the Australian Competition and Consumer Commission implements regulations that have been established elsewhere in the Government. In the UK water industry, there is a separation between the standard setters, the quality regulators and the economic regulators (pricing)/customer champions (customer service)." Accordingly, interaction between all agencies is the rule. For instance, to set the infrastructure requirements, regulators usually submit potential projects for each sector to the ministries for approval.
As regards the PPP Units, as mentioned early in this presentation, the main interaction is found at the initial stage of PPP projects. For instance, the PPP units collaborate in the invitation to bid, contract design and definition of minimum requirements for approval. In certain cases, they also get involved in contract monitoring, as is the case with the PPP Centrum in the Czech Republic. However, as it is clearly defined in the agency's own rules: "Its role is mainly advisory. It will never dispose of such an amount of capacities and competence to have an executive role such as procuring authority".
BOX 24 : PPP Centrum in the Czech Republic
| A. Before advisers participation stage ■ Projects identification and inception ■ Preliminary documentation drafting including feasibility and financial analyses ■ Selecting and managing advisors to ensure that public sector represents an equivalent partner to private sector. B. During a preparation stage: ■ Project management ■ Bid evaluation ■ Tender strategy preparation ■ BAFO selection C. During post-completion stage: ■ Project monitoring and evaluation At the public sector side PPP Centrum will act as a knowledge centrum for procuring authorities support. Its role is mainly advisory. It will never dispose of such an amount of capacities and competence to have an executive role such as procuring authority. |
Source: http://www.pppcentrum.cz/index.php?lang=en&cmd=page&id=1011
____________________________________________________________________________________
132 Ugaz Cecilia, "Consumer Participation and Pro-Poor Regulation in Latin America." Discussion Paper No. 2002/121. UNU World Institute for Development Economics Research (UNU/WIDER).