Enhancing Effective Regulation of

Infrastructure and Utility Services

Hamid Sharif

Assistant General Counsel

Office of the General Counsel

Regulatory Forum on Clean Energy,

Good Governance, and Regulation

16 - 18 Mar 2008, Singapore

Infrastructure Development

• Delivery of basic services

• Supports economic growth

• Encourages pro-poor development

• Promotes sustainable infrastructure

Effective regulation is needed for improved

infrastructure development

• Efficient delivery of quality infrastructure and utility services

• Lower tariffs rates

• Attractive investment opportunity

Regulatory Framework

• Regulatory governance

• Regulatory substance

Regulatory Governance

The “how” of regulation, this includes:

• design of regulatory system

• institutional arrangements

• process of decision making

Regulatory Substance

The “what” of regulation, this includes:

• decisions on tariffs

• quality

• accounting

• investment

• social obligations

Regulatory Framework

Formal aspects: laws, regulations, rules, structures, and tariff-setting

Informal attributes: how the formal aspects work in practice

Obstacles to Effective Regulation

• Information asymmetry

• Market failure

• Political capture

• Weak capacity

• Ineffective consumer participation

Actors and Beneficiaries of

Regulatory Reform• Policy makers

• Investors

• Consumers

• Environment

• Other stakeholders

Good governance is key

to effective regulation•Clarity of roles and

objectives

•Autonomy

•Participation

•Autonomy

•Transparency

•Predictability

•Non-discrimination

•Proportionality

•Requisite powers

•Appropriate institutional characteristics

•Integrity

Regulatory Reform Experience

• Singapore: Electricity Act 2001

• Malaysia: Energy Commission Act 2001

• Philippines: Electric Power Industry Reform Act 2002

• Indonesia: Electricity Reform Law 2002 (overturned by Constitutional Courts)

Reforms had mixed results

•Legal and policy reforms

•Establishment of an independent regulator

•Lower tariff rates

•More investors

•Slow implementation of laws

•Regulator not fully independent

•Higher tariffs

•Lack of investors

There is a need to evaluate regulatory reform to

improve infrastructure and utility services in developing countries.

Output

•Identification of successes and obstacles to effective infrastructure regulation

•Establishment of ASEAN regulatory forum

Benefits

• Best practices identified

• Develop sustainable practices

• Improved design of regulatory framework

• Improve operational procedures for more cost efficient and socially responsible outcomes

For More Information

Hamid Sharif

hsharif@adb.org

www.adb.org