Economic Development in Africa Report 2015
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Box 2. Typology of a regulatory and/or institutional framework for infrastructure services The key objectives of economic regulation involve regulation of the following: • Prices and/or rates of return on assets • Quality of services • Investment and/or development plans (regulatory investment plans in monopoly networks) A regulatory authority is typically responsible for implementing and developing the regulatory framework. In countries with regulatory best practice, there is usually a clear structure to the framework, comprising primary law, licenses and/or secondary legislation and detailed codes on services obligations, technical codes and performance standards. Each code and standard assists in regulation of a particular aspect of industry conduct. A regulatory authority also offers guidance and subjects licensed companies to checks and controls at a number of levels, for example planning, operations and customer service. In such a system, legal authority for issuing appropriate guidelines, codes and standards must be devolved to the regulatory body. For instance, a regulatory authority in the energy sector may thereby be permitted to perform the following actions: • Divide the regulatory task into manageable segments • Regulate purchase, distribution, supply and utilization of infrastructure services (e.g. electricity and gas) • Issue licenses for generation, transmission, distribution and supply of electricity and transportation and supply of gas and regulate licensed companies • Regulate tariffs • Identify problems that may appear • Monitor standards and performance A regulatory authority should be responsible for approving codes and standards applicable to the infrastructure services industry (e.g. electricity supply). In doing so, the authority would aim to ensure the following: • The scope of codes and standards is adequate to accomplish the task at hand • Standards are not unduly demanding or unduly lax but appropriate for the price of the service • Standards and codes are enforced • Consumers are kept aware of their rights (the authority should do its utmost to ensure that such rights are fulfilled) All consumers can access affordable and high-quality services The following six interrelated aspects of regulatory governance (at least) are essential to the development of an effective regulatory framework: 1. 2. 3.
Clarity of roles and objectives Autonomy Accountability