The Role of Infrastructure in Development Cooperation a Norad Perspective

Bergen 14 June 2005

Morten Svelle, Director Department for Environment and Private Sector DevelopmentNorad

In Wealth of Nations, Adam Smith wrote that government should:

Construct public works when these works are "of such a nature, that the profit could never repay the expense of any individual or small number of individuals, and which it therefore cannot be expected that any individual or small number of individuals should erect or maintain."

Norwegian historical experience

• From a very poor nation to one of the worlds richest nations with a distribution of wealth that benefits the whole population

• A long term perspective management of natural resources.• Infrastructure development: roads, railways, energy, sea

transport, water has played a major role for Norways economic development.

• Early investments in infrastructure had a long term perspective based on political decisions.

• The development of the power sector, today a fully commercial sector, would not have been possible without public ownership.

Some Policy Principles in Norwegian development assistance

• Poverty focus, 40% LDC• Focus on Sub-Saharan Africa• Priority sectors as of today:

EducationHiv/AidsPrivate Sector Development and TradeSustainable DevelopmentGood Governance

• Harmonisation, alignment, concentration (Paris declaration)

• MDG• More emphasis on infrastructure (?)

Africa’s Infrastructural Gap

• Power - Less than 10% have access• Water - Less than 50% have access to clean water• Transport - Less than 17% of roads are paved• Telecommunications - One telephone line per 100 people• Ports – new regulations – trade hindrance• For every 1% growth in power generation GDP grows 2-

3%• Transport costs up to three times higher in Africa than in

Asia – landlocked countries - special challenges

Challenges in addressing the gaps in Africa

•Regional conflicts•Poverty•Institutional challenges

– Lack of institutional capacity– Lack of appropriate legislation and regulatory

frameworks– Un-appropriate financial systems and markets– Lack of integrated economic policies

•Inadequate planning and decision making processes (bureaucracy, lack of transparency)

Poverty reduction,Millennium dev. goals

Social sectors,Education & health

Industry, tourism, agriculturePrivate Sector Development

InfrastructureEconomic GrowthEmployment generation

Renewable energy on development agenda

From the Norwegian Development Policy (St.meld. 35 2003 – 2004)

• It is a important goal to increase the use of renewable energy as hydropower, wind, bio energy, solar energy and wave energy– new and climate friendly technology – development of renewable energy resources with

acceptable costs• It is a goal to work in a international context to increase

the use of renewable energy• Important to extend services for energy to the people in

the poorest regions• Emphasise on the recipient oriented cooperation within

the energy sector

MoF and Norad instruments

• Technical Assistance– Institutional development - Twinning cooperation– Capacity building– Education and Training– Feasibility studies– Procurement

• Investments– Energy (power, transmission, renewable energy)– Water and sanitation– Transport (road, rail, maritime)

Participation in International Initiatives/Processes

• EITI Extractive Industries Transparency Initiative• Gas Flaring Initiative• Development of Maritime Transport in Mekong River• Nile Basin Initiative• Formalisation of property rigths• Power trade SAPP –Nordpool

Power Trade SAPP - NordpoolTwinning arrangement

Same framework:• One region of several countries• Electricity legislation at national levels• National regulators• Different levels of market opening between the countries• Will be two of the few regional electricity markets in the world

Nord Pool

SAPP

Norwegian Competence on Infrastructure

• Hydro power generation and network• Sector restructuring and regulation• Water management and hydro master plans• Power Trade• Maritime transport and technology, education,

maritime safety and environmental safeguards• Resource management and offshore technology,

safety and environment• Road and transport, planning, technology (bridges,

tunnelling)

The Norwegian Competence base on Energy (2):

• ICH International Centre for Hydropower - hydropower training programs

• Nordpool exchange (Consultancy services)

• Norwegian consultant companies with extensive experience in: - Hydropower - Water management- Restructuring and regulation- Power trade

• Power Task Force (Norad)

• Renewable energy policy work