oa Journal of Economic and Financial Sciences - Infrastructure development within a regulated environment : concerns for regulators
|Article Title||Infrastructure development within a regulated environment : concerns for regulators|
|© Publisher:||University of Johannesburg|
|Journal||Journal of Economic and Financial Sciences|
|Affiliations||1 Rhodes University, 2 National Energy Regulator of South Africa, 3 National Energy Regulator of South Africa and 4 National Energy Regulator of South Africa|
|Publication Date||Oct 2014|
|Pages||569 - 586|
|Issue||Special issue 1|
|Keyword(s)||Allowable revenue, Financing, Funding, Project overruns, Regulated Asset Base and Weighted Average Cost of Capital|
Poor delivery of infrastructure leads to inefficient pricing of these assets, which is passed through to consumers. Inefficient pricing is caused by a poor selection of a funding and financing method as well as project overruns. This article used a case-study approach to investigate if South African (SA) infrastructure projects were executed efficiently. It was found that the procurement method was not a reason for inefficient infrastructure delivery. Further, SA projects overran significantly by between 5 and 58%. The case of Transnet's pipeline project was highlighted. Two case studies (Gautrain and e-tolls) are presented to highlight issues around funding. It was found that the user-pays mechanism of funding is efficient only if there is complete transparency and communication between the user of the infrastructure and other stakeholders. Given the findings, this paper ends with policy recommendations for regulators of utilities that will ensure that consumers are protected.
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