A Fair Deal for Consumers?
Edited by Cecilia Ugaz
Chapter 2: Access by the poor in Latin America's utility reform: subsidies and service obligations
2. Access by the poor in Latin America’s utility reform: subsidies and service obligations Omar Chisari, Antonio Estache and Catherine Waddams Price 1. INTRODUCTION Any infrastructure reformers concerned with social issues in a developing country need to address two problems. The ﬁrst is increasing access by the poor, and the second is ensuring consumption aﬀordability, that is the ability of the poor to pay for both consumption and the amortization of the access charges.1 The two are related. The main concern of both policy makers and academics has been to identify options to cut costs so that coverage can be accelerated, focusing on cheaper technologies or on various ﬁnancing/lending schemes. Latin America has been a pioneer in many aspects of such reform. What regulatory reform experience has demonstrated is that many operators perceive poor ﬁnancial returns from supplying the poor and postpone such supply as long as possible, unless speciﬁc policy requirements force them to do otherwise. Hence governments often impose some type of service obligation or connection targets on operators as part of a multiple obligation public–private partnership. In Latin America, the inclusion of service obligations in ‘privatization’ transactions has been a recurring feature during the 1990s and is likely to continue in the foreseeable future to meet the needs of the rural population and the urban poor, particularly in telecommunications, water and sanitation. By 1996 only about 10 percent of the population in Latin America had access to telecoms services, 75 percent to safe water...
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