Regulatory Reform and Privatisation: A vast European experience at Jordan’s disposal
01 Aug 2004There is much talk in Jordan and other countries, no exception made for EU member states, about the independence and role of Regulators, be it in telecommunications, energy, transport and other sectors.
But why are Regulators so important? And in what ways would a strong and independent Regulator benefit Jordanian consumers?
To borrow a quote by European Parliament Member Claude Turmes, “who would imagine a Champions League football match with a third class referee?”
The emergence of regulatory bodies in the utilities and transport sectors is a pre-requisite for Jordan’s transformation from a state-driven into an open, free-market economy.
The idea behind such transformation, which King Abdullah and the government have courageously embraced years ago, is that the public sector should redefine its role to concentrate on what it does best – providing social services, charting policies,
and addressing public concerns – and leave economic activities to the private sector, thus encouraging investments and spurring growth.
Here is where Regulators come into play: They are essential mediators between the consumers’ and industries’ needs. They protect citizens’ interests by enforcing the rules of the game and ensuring that fair play is in place, and protect the industry’s interests by making sure that a healthy competition prevails, and no player takes advantage of its dominant position in the market at the expense of other players.
In a nutshell, and very simplistically, wherever Regulators are strong and independent, fair competition will take place. And where fair competition takes place, consumers enjoy quality services at lower prices.
It is to promote effective regulation of infrastructure, strengthen the government’s capacity to encourage private participation in infrastructure and utilities, and increase competition in services that the EU in 2002 launched the Support for Regulatory Reform and Privatisation (SRRP) Programme.
The €20 million SRRP was designed with the ultimate objective of enhancing economic efficiency in infrastructure, by developing autonomous Regulators and increasing competition in infrastructure services.
It foresees long term and short term expertise and training for the Executive Privatisation Commission (EPC), the Electricity Regulatory Commission (ERC), the Telecommunications Regulatory Commission (TRC), the Civil Aviation Authority (CAA) and the Public Transportation Regulatory Commission (PTRC).
On 26 July, the Ministry of Transport, the European Commission Delegation to Jordan, and representatives of a consortium
headed by Lufthansa Consulting signed a €2.4 million contract for the restructuring of the CAA over the next four years.
“This contract will help the CAA improve the quality of its services, which in turn will lead to enhance aviation security, safety and efficiency,” Transport Minister Raed Abu Saud said at the signing. “It will also encourage private sector investments in air transport services,” the minister added.
The restructuring process will help the CAA meet EU and international standards and apply commercial practices to the civil aviation sector. The ultimate beneficiaries will be Jordanian travellers, who will enjoy higher quality services and more competitive prices.
In addition to the agreement for the CAA, a €4 million technical assistance contract was officially signed in mid-June for the upgrading of the Executive Privatisation Commission, while a similar, €3.7 million technical assistance contract was signed in late June for the Electricity Regulatory Reform and Privatisation
Commission.
The contract for the ERC was awarded to multinational consultant Atos Origin, formerly SchlumbergerSema, in consortium with Nexant Inc. and local partner Talal Abu-Ghazaleh International.
ERC Director General Rashad Aburas said the main objective of the agreement was to develop effective regulatory mechanisms in line with the best international practices, strengthen the state’s capacity to promote effective private sector’s participation in the power sector in a consistent and transparent manner, and increase competition in the power sector.
As for the contract for the EPC, it was awarded to a consortium led by Germany’s POHL Consulting & Associates and including
Rödl&Partner and Jordan’s MMIS and Khalifeh&Partners.
This technical assistance will enable the EPC to further enhance its efficiency in implementing Jordan’s privatisation strategy,
build capacity within all departments responsible for privatisation policies and transactions, develop and modernise the regulatory framework, and launch awareness campaigns for the general public and investors. “The SRRP was devised to assist Jordan’s efforts to provide all its citizens with accessible quality services, by liberalizing key infrastructure sectors in an independent
regulatory climate and by enhancing public-private sector partnership,” said the Head of the European Commission Delegation to Jordan, Ambassador Robert Van Der Meulen.
The SRRP programme reflects Jordan’s determination to boost the role of the private sector and make it a major economic player, moving away from obsolete models of state-driven economies and state-driven labour markets, Van Der Meulen added.
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