Accounting for Poverty in Infrastructure Reform: Learning by Quentin Wodon

By Quentin Wodon

''During the 1990?s a couple of international locations in Latin the USA together with Argentina, Bolivia and Chile, constructed regulations interested in application region liberalization via elevated inner most zone participation. This concentration resulted from the popularity that total caliber and availability of companies have been insufficient. Infrastructure reform is inexorably associated with poverty relief and as a result has to be rigorously built and enacted.

This publication offers useful directions and innovations for infrastructure reform that lead to entry and affordability for the negative. Accounting for Poverty in Infrastructure Reform: studying from Latin America?s adventure contains research of the trade-offs that has to be made among potency, fairness, and monetary charges of the choices. It features a new version for reform that involves 3 major elements - rules, rules, and provision which while thoroughly balanced reduce the hazards linked to reform.''

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Relying on a private utility means having the operator go to the market and borrow to finance the expansion. Under such circumstances the operator must be granted the right to bill users for the amortization of the investment and the financing charges. Having the private operator act as credit provider has several advantages. First, the operator will have a lower cost of capital than low-income households, thereby reducing financing costs. Second, the operator can overcome the absence of collateral by using the threat of service disconnection to enforce loan repayment.

5). Experience suggests that the main concern is that the amortization period must be consistent with an affordable monthly amortization bill—the longer the amortization period, the lower the monthly connection repayment. In Colombia, the law requires that connection charges for customers from lower socioeconomic groups be spread over at least three years. While the operator may be a natural source of credit for connection costs, many households will also need loans to cover the costs of complementary installations within the household, such as wiring and plumbing.

One benefit of the household surveys is that they allow us to distinguish between urban and rural families. A number of lessons emerge from an analysis of the household surveys. First, access to electricity is nearly universal in urban areas, although some urban populations living in slums may not be well represented in the household surveys. In rural areas, the coverage rate increased from 60 to 70 percent between 1986 and 1996, still far from universal. 1 percent and an average household size of five people among the poor, the access deficit is about 10 million connections, mostly in rural areas.

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