Infrastructure: moderate progress

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Structural reform

As with energy, reforms in the infrastructure sectors are complicated, given that tariff adjustments can impact widely on the various sections of the population. Railway reforms, for example, have proven to be a particular challenge. There is often scope, however, to improve service delivery by bringing in private sector finance and expertise, while also easing the fiscal burden on the state. Experience suggests that reforms at municipal level – which tend to be less politicised – are often more successful than those at national level.

There were one-notch transition upgrades in the roads sector for Kazakhstan and the Slovak Republic.

In Kazakhstan a road agency was formally established in 2013 and steps towards the introduction of performance-based contracts have been initiated. Amendments to legislation on public-private partnerships (PPPs) were approved by parliament in July 2013, and progress has already been made with a pilot PPP. In the Slovak Republic the commissioning and subsequent refinancing of the R1 motorway PPP is an indicator of the growing sophistication of the tool in that country, which has the potential to serve as a template for other countries in the region. By contrast, there was little progress in the railways sector across the transition region in 2013.

In urban transport the only change in 2013 has been a downgrade for one of the top performers – Estonia – from 4- to 3+ following the decision to introduce free travel for all residents of the capital, Tallinn. While less damaging than, for example, the under-pricing of energy or water, this is not an efficient approach to providing transport services.

In the water and wastewater sector there have been upgrades for the Kyrgyz Republic and Romania. Kyrgyz residential water and wastewater tariffs have been increased significantly towards cost-recovery levels in large cities. Also, a first public service contract (PSC) has been signed with the capital city, Bishkek. Other PSCs are in preparation in three other cities. Romania's upgrade reflects cumulative progress in regionalisation and restructuring of water utilities. The number of sector operators has fallen from 260 to 42, prompting greater efficiency and improved financial performance.

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