Third Core Training Programme
Agra, 8-19 October 2001
Summary
| Themes | Programme
Summary
This two-week course was designed to
provide participants with a strong understanding of both the theory and practice of
infrastructure regulation and reform. A major feature of the course was the detailed
international and South Asian case studies, which are given in sectoral breakout sessions,
so that participants can understand the details of actual case studies of sector
restructuring and price reviews.
The course offered an opportunity for
a hands-on application of what has been learnt through a worked price control case study.
This covered the main building blocks of price regulation, including asset valuation, cost
of capital, the incorporation of measures of efficiency, and the incentive properties of
different techniques of price regulation.
Themes
Reforming the Infrastructure Sectors and Introducing
Competition: What are the main lessons from worldwide experience of infrastructure
sector reform? How does progress in South Asia stand up against that in other developing
countries? Where can more competition be introduced to benefit consumers, and how can the
impacts, such as the creation of stranded assets, be dealt with? How does competition
affect cross-subsidy programs, and how can genuine social objectives be accommodated? What
are the most effective methods for introducing competition for the market? How does market
structure and unbundling impact on the success of introducing competition? What is the
role of the regulator in introducing competition? How is convergence of technologies
impacting on competition?
Techniques of Price Regulation: which activities
should regulators not regulate? What is international experience in the usage of different
price regimes, and what are the main approaches tried in South Asia to date? What are the
main building blocks in calculating price controls and what are the key steps in
conducting a price review? How are perceptions of regulatory risk be reduced by different
approaches to pricing?
Financial Aspects of Regulation: What is the
appropriate cost of capital for the industry, and how can techniques used elsewhere be
applied to the situation of South Asia? What approaches can be taken towards the treatment
of depreciation and asset valuation? What financial techniques are available to help
regulators assess the viability of the businesses being regulated?
Non-price Aspects of Infrastructure Regulation: how
can concerns about service expansion, increasing access to the poor, performance standards
and environmental issues be addressed alongside price regulation? What useful regional and
international models exist to guide regulators in these areas?
Design and management of regulatory agencies and the
regulatory process: what have been successful design parameters for establishing
regulatory agencies? How can regulators establish their legitimacy with consumers,
government and regulated companies, and maintain their credibility? How do regulators
handle appeal and review of their decisions? What special challenges are involved in
regulating public sector entities?
Price Control Case Study: this will present
participants an opportunity to work in groups over a period of one week on a realistic
case study of setting price controls. The case study will incorporate the various concepts
covered in the course and culminate in the presentation to a panel of sitting or
ex-regulators from the region.
The faculty for the course reflects a strong bias towards
ex-regulators, or those currently in the profession, who can speak from their own personal
experiences.
Programme
| Monday,
8 October 2001: Regulation and Reform – An Overview |
| 9:00 – 10:30 |
Plenary Session 1: Regulation and
reform of the infrastructure sectors
This session will provide an overview of broad trends
in introducing regulation and reforms in infrastructure sectors and trend of private
investment throughout the world, and an assessment of the unfinished agenda facing
infrastructure regulators. |
| 10:30 –
11:00 |
Coffee/ Tea |
| 11:00 – 12:30 |
Plenary Session 2: Restructuring
and regulation of infrastructure in South Asia
This session will provide an overview of the main
trends in the restructuring of infrastructure in South Asia, the policy objectives being
followed by governments and their success in achieving these. |
| 12:30 –
14:00 |
Lunch |
| 14:00 – 15:30 |
Sectoral breakouts 1: Key Issues
on infrastructure reforms and regulation in South Asia
Participants will be split into groups to discuss the
rationale for infrastructure reform and regulation, and the constraints and main issues
likely to be encountered in introducing competition and establishing regulators. Each
group will make a short presentation for discussion in the plenary. |
| 15:30 –
16:00 |
Coffee/ Tea |
| 16:00 – 17:30 |
Plenary Session 3: Regulation
from the viewpoint of regulated companies
What risk do private companies see in different
regulatory systems? How do they view the development of regulation and reform in the
region? A facilitated discussion involving representatives from private regulated
companies operating in the infrastructure sectors will give participants a chance to hear
their perspectives on regulation and regulators. |
| 17:30 – 1830 |
Sectoral workshops: Participants
discuss regional issues
This will be the first in a series of three workshops
at which participants can present their own activities and initiatives to their peers on
the course. |
| Tuesday,
9 October 2001: Competitive Provision of Infrastructure Services |
| 9:00 – 10:30 |
Plenary Session 4: Introducing
competition for infrastructure services
This session will analyse the special features of
network industries and why this presents challenges for introducing competition. It will
then examine selected examples to illustrate the extent to which competition has been
introduced, and the impact that this has had for prices, quality of service, and expansion
of the network in South Asia. |
| 10:30 –
11:00 |
Coffee/ Tea |
| 11:00 – 12:30 |
Plenary 5: The role of the
regulator in introducing competition
Regulators play a key role in introducing competition
within the markets they regulate. This session will look at the tools regulators have for
introducing competition in the markets they regulate. Using case studies, it will also
illustrate the role the regulator has in this area vis-à-vis the government. |
| 12:30 –
14:00 |
Lunch |
| 14:00 – 15:30 |
Plenary 6: Competition
for the market and auction design
In some situations, for example where scarce resources
are concerned, or where exclusive licenses are being awarded, it may not be possible to
introduce competition for service provision. This session will look at different
approaches to auction design and to introducing competition in the market. It will cover
the main concepts and illustrate these with two case studies to demonstrate some of the
pitfalls and the successful approaches to introducing competition in the market. |
| 15:30 –
16:00 |
Coffee/ Tea |
| 16:00 – 17:30 |
Plenary 7: Controlling access and
prices
A key function of regulators in ensuring competition is
to effectively regulate access to, and prices charged for, bottleneck facilities. This
session will review the conceptual issues involved and examples of how these have been
applied in practice within and outside the region. |
| 1730 – 1830 |
Sectoral workshops: participants
discuss regional issues
Participants present their own activities and
initiatives to their peers on the course. |
| Wednesday,
10 October 2001: Price Regulation – Concepts |
| 9:00 – 10:30 |
Plenary 8: How to run a price
review
Based upon the speaker’s personal experience, this
session will cover the main activities involved in undertaking a price review, including
both technical and economic aspects, interaction with regulated companies, consumers and
the government, managing the media and anticipating reactions to the results of the price
review, including appeal. This session will identify some of the main principles involved,
which will be used as a foundation when the case studies are examined. |
| 10:30 –
11:00 |
Coffee/ Tea |
| 11:00 – 12:30 |
Plenary 9: Price regulation
– price caps and incentives
This session will provide the rationale for
price-/revenue-cap approaches, highlight some of the initial problems in their use in
countries, which pioneered these techniques, and discuss their evolution and adaptation. |
| 12:30 –
14:00 |
Lunch |
| 14:00 – 15:30 |
Plenary 10: Other techniques for
price regulation
This session will review alternative methods of setting
prices, covering rate of return, sliding scale, hybrid approaches and other techniques,
which relate prices to measures of performance. |
| 15:30 –
16:00 |
Afternoon Tea |
| 1600-1730 |
Plenary 11: Measuring efficiency
and performance
An overview of how regulators can use efficiency
measures. Some of the techniques used for calculating efficiency, and the special problems
likely to be encountered in the South Asia region are reviewed in this session. |
| 1730 – 1830 |
Plenary 12: Implication for
regulation - data collection and sharing
Effective regulation requires quality data, as also the
sharing of such data. The session will review the nature and extent of data collection
required for such regulation, and examine the practices being adopted for sharing of such
data to various stakeholders. |
| Thursday,
11 October 2001: Price Regulation – Financial Techniques |
| 9:00 – 10:30 |
Plenary 13: Financial techniques
– accounting approaches and asset valuation
This session will look at key building blocks in the
financial analysis underpinning price regulation. It will cover the treatment of
depreciation and other key accounting issues, and will also look at different techniques
employed for asset evaluation. |
| 10:30 –
11:00 |
Coffee/ Tea |
| 11:00 – 12:30 |
Plenary 14: Cost of
capital-theory and concepts
This session will review the main theoretical
approaches to establishing the cost of capital, and the application of these to selected
examples in the infrastructure sectors. |
| 12:30 –
14:00 |
Lunch |
| 14:00 – 15:30 |
Plenary 15: Cost of capital
–regional approaches
Based on the work recently done for the Central
Electricity Regulatory Commission in India, this session will look at the difficulties in
implementing techniques for the measurement of cost of capital in South Asia, and the
judgements and approaches that regulatory agencies have to adopt in these situations. |
| 15:30 –
16:00 |
Coffee/ Tea |
| 16:00 – 17:30 |
Plenary 16: Introduction to the
price control review case study
This session will present participants an opportunity
to work in groups over a period of one week on a realistic case study of setting price
controls. The case study will incorporate the various concepts covered in the course and
culminate in the presentation to a panel of sitting or ex-regulators from the region. This
lecture will introduce the case study to the participants, and explain what the main goals
are, and how it will function. Participants will then be divided into groups to review the
work programme and prioritize tasks and allocate responsibilities amongst themselves. |
| 17:30 – 18:30 |
Sectoral workshops: participants
discuss regional issues
Participants present their own activities and
initiatives to their peers on the course. |
| Friday, 12 October 2001: Service Expansion and Serving the Poor |
| 9:00 – 10:30 |
Plenary Session 17:
USOs (universal service obligations) and incentives for system expansion
This session covers some of the main conceptual and
practical issues involved in addressing incentives for system expansion and meeting USOs
within network industries. |
| 10:30
– 11:00 |
Coffee/
Tea |
| 11:00 – 12:30 |
Plenary Session 18: Regulation and reform – small-scale service providers
Although the attention of most policy
makers is on the reform of the large network service providers, many people and businesses
in South Asia are served by small-scale service providers, either where network provision
does not exist or when it is inadequate. This session will review the extent of provision
of infrastructure services by small-scale service providers, their relationship with
various stakeholders, and the need for policy makers and regulators to understand the role
of these sectors and the impact that reform has upon them and their consumers. |
| 12:30
– 14:00 |
Lunch |
| 14:00 – 15:30 |
Sectoral breakout 2:
Small-scale service providers
Individual case studies of small-scale infrastructure
service providers will be presented in separate sectoral breakouts for telecommunications,
energy, transport, and water sectors. |
| 15:30
– 16:00 |
Coffee/
Tea |
| 16:00 – 17:30 |
Panel discussion on
small-scale service providers
A panel of experts in this area will discuss reform and
regulation of the infrastructure sectors as it impacts small-scale service providers, and
the issues this raises for regulators and policy makers. |
| 17:30 – 18:30 |
Introduction to the
price control case study – organizing group work |
| Saturday, 13
October and Sunday, 14 October 2001 (weekend break) |
| Monday,
15 October 2001: Sectoral Breakouts |
| 9:00 – 10:30 |
Sectoral breakout
4: Infrastructure regulation and reform – international and regional case studies
Separate sessions will be held for the
energy, telecommunications, water, and transportation infrastructure sectors. These
sessions will examine in detail the concepts of regulation and reform discussed in the
first week of the course. |
| 10:30 –
11:00 |
Coffee/ Tea |
| 11:00 – 12:30 |
Sectoral breakout 5:
Infrastructure regulation and reform – international and regional case studies
(Continued) |
| 12:30 –
14:00 |
Lunch |
| 14:00 – 15:00 |
Sectoral breakout
6: Infrastructure regulation and reform – international and regional case studies
(Continued) |
| 15:00 –
15:30 |
Coffee/ Tea |
| 15:30 – 17:30 |
Sectoral breakout
7: Infrastructure regulation and reform – international and regional case studies
(Continued) |
| 17:30 – 18:30 |
Price control review case study:
group work period |
| Tuesday,
16 October 2001: Sectoral Breakouts |
| 9:00 – 10:30 |
Sectoral breakout
8: Infrastructure regulation and reform – international and regional case studies
(Continued) |
| 10:30 –
11:00 |
Coffee / Tea |
| 11:00 – 12:30 |
Sectoral breakout 9:
Infrastructure regulation and reform – international and regional case studies
(Continued) |
| 12:30 –
14:00 |
Lunch |
| 14:00 – 15:30 |
Plenary session 19: Regulation of
public sector companies – the special challenges
The theory and much of the international practice of
economic regulation have largely been designed for situations where the regulator is
overseeing private companies. In South Asia, regulators may find themselves in the
position of regulating public sector companies, and overseeing their interaction with new
private entrants. This session draws upon experience from the power and telecommunication
sectors in looking at the special challenges this poses for regulators. |
| 15:30 –
16:00 |
Coffee / Tea |
| 16:00 – 17:30 |
Price control
case study – review session
This session will review the work done
thus far on the price control case study by the groups and discuss some of the key issues
and problems that the groups will have encountered in their work. |
| 17:30 – 18:30 |
Case study group work period |
| Wednesday,
17 October 2001: Non-price Aspects of Regulation |
| 9:00 – 10:30 |
Plenary session
20: Non-price approaches to setting prices: QoS and the environment
This session will review how concerns
about performance standards and environmental issues can be addressed alongside price
regulation. Selected international examples will be presented to illustrate the conceptual
issues. |
| 10:30 –
11:00 |
Coffee / Tea |
| 11:00 – 12:30 |
Plenary session 21:
Regional approaches to QoS
Drawing on the concepts and international models
presented in Plenary session 20, this session will use selected examples from South Asia
to illustrate regional approaches to specifying QoS and other standards. |
| 12:30 –
14:00 |
Lunch |
| 14:00 – 15:30 |
Plenary session
22: Stakeholder consultation – regional regulatory processes
Increasing the participation of
consumers in regulatory processes will be important for regulators to get proper feedback
and establish their legitimacy. This session will review the different methodology adopted
in the region for the stakeholder consultation process and their effectiveness, drawing on
case studies from the South Asia region. |
| 15:30 –
16:00 |
Coffee / Tea |
| 16:00 – 17:30 |
Plenary session 23: Price control
case study review session
This session will review the work done thus far on the
price control case study by the groups and discuss some of the key issues and problems
that the groups will have encountered in their work. |
| 17:30 – 18:30 |
Case study group work period |
| Thursday,
18 October 2001: Institutional Issues |
| 9:00 – 10:30 |
Plenary session 24: Regulatory
risk and regulatory commitment
This session will examine investor’s perceptions
of regulatory risk, how this may vary between countries, and how regulatory discretion can
and has been reduced. The session will also assess the issues this raises for regulators
in South Asia. |
| 10:30 –
11:00 |
Coffee / Tea |
| 11:00 – 12:30 |
Plenary session 25: Establishing
regulatory legitimacy
Based on the speaker’s experience of heading a
regulatory agency in Sri Lanka, the session will look at the challenges that the new
regulatory agencies face to their regulatory legitimacy, and the tactics they should adopt
to overcome these challenges and establish their legitimacy in the eyes of all
stakeholders. |
| 12:30 –
14:00 |
Lunch |
| 14:00 – 15:30 |
Plenary session 26: Institutional
designs in South Asia
With nearly 20 specialized regulatory bodies now
established in the South Asian infrastructure sectors, how have key issues related to
independence and transparency been established? Are there good practices emerging in the
institutional designs of these agencies? This session will review some of the models
adopted to date and provide an assessment of what lessons can be learnt in the region. |
| 15:30 –
16:00 |
Coffee / Tea |
| 16:00 – 17:30 |
Plenary session 27: Legal and
judicial processes in regulation in South Asia
This session will examine the existing appeal
mechanisms embodied in legislation establishing regulatory bodies in South Asia, as well
as the experience so far regarding judicial review of regulatory decisions. It will also
review appeal and review mechanisms found in other jurisdictions. |
| 17:30 – 18:30 |
Price control review case study:
group work period
Participants will finalize their presentations and
provide them to the regulatory panel. |
| Friday,
19 October 2001: Price Control Case Study |
| 8:30 – 10:30 |
Plenary session 28: Price control
review – regulatory hearing
Each group will present its case to the regulatory
panel. This will be followed by discussion from the panel and from other participants. |
| 10:30 –
11:00 |
Coffee/ Tea |
| 11:00 – 12:00 |
Plenary session 29: Price control
review – regulatory hearing (Continued) |
| 12:00 onwards |
Course round-up and
award of certificates to participants |
|