Resources for

Infrastructure in Europe and Central Asia Region:

Approaches to Sustainable Services

Foreword This report presents an overview of the key developments in the energy and infrastructure sector of the countries in Europe and Central Asia region. It attempts to identify the critical factors for success in the provision of services of acceptable quality and reliability on a sustainable basis. It is being released as a departmental publication both in print and electronic versions for use as a reference material by the World Bank staff and others interested in the region. Peter D. Thomson Director Infrastructure Department Europe and Central Asia Region		Full text of the report (pdf, 1,076 kb)

Contents
Executive summary This study reviews the status and performance of the physical infrastructure in the transition economies of the Europe and Central Asia (ECA) region during the last 12 to 15 years and attempts to identify the challenges to be overcome to ensure sustainable provision of reliable infrastructural services at acceptable levels of quality. It basically deals with the transition economies consisting of 15 countries which were part of the former Soviet Union and 12 Eastern European states which were formerly part of the CEMA arrangements with the Soviet Union and refers to the data and experience of Turkey to provide a comparative perspective. ...read more (pdf, 36 kb)
1. Transition and infrastructure in ECA Chapter 1 defines the country groups in terms of which the further discussion is carried out and demonstrates how closely the developments in infrastructure followed the economic downturn and recovery in transition economies. ...read more (pdf, 82 kb)
2. Infrastructure scope, legacy and impact of transition An extensive stock of infrastructural assets did not prove an unmixed blessing to the newly independent states, especially during the first stage of transition. When GDP contracted by 15% in CEE and SEE, and by 44% in the CIS, the supply capacities in the region became quickly excessive in relation to the greatly reduced demand. The problem of excess capacity was much more acute in Russia, Ukraine, Georgia, Moldova and Tajikistan, where the GDP contraction was greater or the duration of the recession much longer than the average. The facilities designed in the central planning era during the Soviet regime became also unsuitable for the developments towards the market economy. ...read more (pdf, kb)
3. Quality of services and users’ perspective Some insight into the extent of infrastructure services deterioration (and signs of recent partial recovery) is available through the Household Budget Surveys, Living Standards Measurement Surveys and a few other similar surveys periodically undertaken in the ECA countries. Based on an analysis of the surveys carried out during 1998-2002 for 20 of the countries, a set of findings emerged. ...read more (pdf, 57 kb)
4. Financial sustainability of infrastructure services To ensure financial sustainability of the provision of infrastructure services, the cost of services have to be recovered fully and in a timely manner. Ultimately these costs have to be met by the consumers or by the state, if the services are provided by public sector agencies. Three key problems began to threaten the survival of the service-providing enterprises: (a) high levels of nonpayment and poor collection, (b) excessive technical and commercial losses, and (c) tariffs below cost. ...read more (pdf, kb)
5. Affordability of the infrastructure services Chapter 5 explores the questions whether the people can afford the level of infrastructural services and whether the transition economies can afford the investments needed to provide reliable services at acceptable quality levels. ...read more (pdf, 127 kb)
6. Regional approach and trade Three aspects of the trade related issues would be discussed in this chapter: regional approach to the operation of facilities, approach towards partially constructed projects, and the role of transit countries. ...read more (pdf, 441 kb)
7. Role of the private sector About 70% of the investments in the ECA region were in telecom, followed by energy (23%), transport (4%), and water and sewerage (3%). Bulk of the project investments involved divestiture (51%), followed by green field investments (43%), concessions (4%) and management contracts and leases (2%). The CEE countries had a share of 51% of the investments, followed by CIS (25%), Turkey (12.5%) and SEE (11.5%). The total privatization receipts at $42 billion amounted to less than 5% of the GDP of the region. Private participation in ECA infrastructure peaked in 2000 at around $25 billion and has declined subsequently to about half that level. ...read more (pdf, 87 kb)
8. Critical success factors for infrastructure reform Chapter 8 discusses the critical factors of success in the sector reform. Sustained financial viability of the sector entities is the key central objective. This may be achieved in several ways: public provision, private provision, regulated monopolies, competitive entities or a combination of all or some of these. Whatever be the route, the key critical factors of success are: a clear recognition of the problems, consistent ownership of the program to overcome them, transparency in all transactions to enable meaningful accountability, and governance adequate to ensure effective sector management and oversight to ensure that the sector agencies provide services to the consumers at acceptable levels of quality and reliability. ...read more (pdf, 90 kb)
Annex 1. BEEPS surveys and infrastructure The World Bank and EBRD have jointly conducted the Business Environment and Enterprise Performance Surveys (BEEPS) in 1999, 2002 and 2005 covering most of the countries in the ECA region. These surveys cover a wide range of businesses. The 1999 survey covered 3,000 enterprises in 20 countries. The 2002 survey covered 6,100 enterprises in 26 countries, and the 2005 survey covered 9,500 enterprises in 27 countries. ...read more (pdf, 92 kb) Bibliography (pdf, 40 kb)

The findings, interpretations and conclusions expressed in this paper are entirely those of the authors and do not necessarily reflect the views of the Board of the Executive Directors of the World Bank or the governments they represent.

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