75809 May 2011 PPIAF Assistance in Niger Niger is one of the ten poorest countries in the world. Recurrent periods of severe droughts and frequent political coups have undermined various efforts to reduce poverty in the country. Currently, 92.3% of 1 Niger’s population lives below the poverty line (on less than $2 a day) . For many decades, an important priority for the government of Niger was improving food security programs, which unfortunately did not leave much time or many resources to focus on developing infrastructure. Consequently, almost all infrastructure sectors face dire problems in Niger. This situation is reflected in the poor quality and very limited access to basic infrastructure services, particularly in rural areas. For example, in the energy sector, only 7% of households have access to electricity. Similarly, the transport system remains largely inadequate and highly degraded due to poor maintenance and lack of investments in the sector. In addition, most of the roads outside of the capital city, Niamey, are unpaved. To improve key infrastructure sectors and foster economic growth, the government of Niger created in 1999 the Autorité de Régulation Multisectorielle (ARM), a multi-sector regulatory agency to oversee regulatory issues in the water, electricity, and telecommunication sectors. Niger’s experience of private sector participation in infrastructure started with the divestiture of the national water company, Société Nationale des Eaux (SNE), in March 2001. The government of Niger signed a ten-year affermage contract with Vivendi, a French water company. Under this public-private partnership arrangement, the company is owned by Vivendi (51%), local private investors (34%), the workers of the company (10%), and the government of Niger (5%). In 1998, the Nigerien government, with World Bank assistance, embarked on a vast program to privatize 12 state-owned companies. To date, seven have been fully privatized, including the water and telecommunications utilities. The national telecommunications company Société Nigérienne des Télécommunications (SONITEL) was privatized in December 2001. Discussions are ongoing to finalize the process for the privatization of two other state- owned companies—the electricity company Société Nigérienne d’Electricité (NIGELEC) and the oil and petroleum products company Société Nigérienne de Distribution des Produits Pétroliers (SONIDEP). In light of the increasing role of private operators in the management and operation of national utilities, the government of Niger requested donor assistance, including from the World Bank and PPIAF, to strengthen key institutions such as the ARM. Improving the Regulatory Environment for Infrastructure Development in Niger In 2004 PPIAF provided technical assistance to the ARM for the development of two economic and financial models for the water and electricity sectors and a set of regulatory accounting guidelines to provide a transparent and common framework for discussions between the regulator and the operator, more specifically during the tariff setting and revision processes. This activity was fourfold and aimed to develop:  Economic and financial models for the multi-sector regulatory agency in Niger, with a focus on 1) water, as there was an on-going water affermage contract, and 2) electricity, as the regulator was preparing an important reform in this sector  A set of regulatory accounting guidelines and processes to ensure the proper use and update of the models  A five-day training session on the financial and economic models  A workshop with relevant ministries, the incumbent operator, and consumers’ associations to ensure that the model’s objectives are commonly understood and shared by all parties and that the model reflects all of their concerns All but one of the outputs listed above were delivered. Due to budget constraints, the training session could not be organized. The ARM agreed to seek funding from other partners to carry out the capacity building activities. 1 Data from the 2010 Human Development Report, accessible at http://hdr.undp.org/en/reports/global/hdr2010/ The final report of the activity presented a diagnostic of the legal and institutional frameworks of the water and electricity sectors in Niger, issues with the existing water and electricity regulations, recommendations to resolve these issues, and drafts of regulatory accounting guidelines and processes for the two sectors. Four country cases (Senegal, Mali, Morocco, and France) were also included in the final report. The main recommendations formulated in the report were:  Set up technical working groups to follow the activities implemented in the water and electricity sectors  Strengthen the capacities of ARM to better regulate infrastructure sectors and enforce regulations, in particular in the electricity sector These recommendations were approved by the ARM and the water and electricity companies during the restitution workshop held in Niamey on March 19–23, 2007. Results of PPIAF’s Regulatory Environment for Infrastructure Development Activity in Niger Category Outputs Enabling environment reform  Assessment of regulatory framework in the water and electricity sectors, November 2006 Plans/strategies prepared  Financial and economic models for the water and energy sectors, November 2006  Workshop in Niamey to present the final financial and economic Workshops/seminars models for the multi-sector regulatory agency, March 19–23, 2007 Category Outcomes Enabling environment reform  Accounting guidelines for the regulation of water and electricity services, adopted in March 2007 Plans/strategies adopted  The financial and economic models were approved by the ARM and key actors in the electricity and water sectors; the models were also validated by World Bank peer reviewers, March 2007 Institutions created or  ARM able to better regulate infrastructure sectors and enforce strengthened regulations, March 2007 Looking Ahead: Moving the Public-Private Partnership Agenda in Niger Forward After many years of political instability, Niger organized transparent elections in 2010. The new regime has shown high interest in developing key infrastructure projects as a way to unleash economic potential in Niger. The Kandadji hydroelectric power plant, currently under construction with support from the World Bank and the African Development Bank, is expected to reduce the country’s deficit of energy . The planned projects in the water, energy, and transport sectors will require strong support from technical and financial partners to leverage private investment. The effective implementation of these projects will contribute to ensuring sustainable economic growth in Niger by improving the socio-economic conditions of 12 million Nigeriens. 2 In this favorable context, PPIAF may play an important role to help strengthen institutional frameworks for the development of public-private partnerships in key infrastructure sectors. Other areas of interest for PPIAF are advisory assistance on the current privatization program to help the government of Niger understand the stakes and challenges of different public-private partnership options for the national companies slated to be privatized. Such assistance would help the government make sound decisions on the optimal contractual arrangements related to the scope of private participation in the most strategic infrastructure sectors in Niger. 3