This is where the four economic roles of government mentioned above come into
play. Thus if the consumer wants a private sector BOT approach, he may end up in
paying less than before for the service, but might well end up paying more taxes for
the inefficient civil service created by a very efficient private sector.
Or conversely, the service provided by the BOT approach may be so expensive
that government may feel the need to subsidise the private company as part of the
conditions attached to the project. Again, taxes should increase.
Although it is not easy for governments to overturn the legacy of using infrastructure to control the distribution of resources and of allowing soft budget constraints for enterprises, it is more efficient to focus on policies for the distribution of
resources on households rather than on producers. Within the infrastructure sector
itself, it is possible to ensure access to basic services in the form of basic minimum or
lifeline services at subsidised rates for those households that cannot afford to pay
tariffs that reflect the costs of services. These expenditures, of course, must be
funded with taxes designed to create as few distortions as possible. In countries
enjoying more advanced stages of development, such complementary tax and social
expenditure reforms are under way. In some sectors such as telecommunications,
however, surveys indicate great willingness to pay for service access, particularly
among business-related users.
18.12.4 Hotels – The Foreign Tourist Pays
Thus, the BOT approach, in many ways, is bound to increase the consumer’s
expenditure, some way or the other - taxes to pay for an inefficient civil service, or
to subsidise the BOT operator or simply for a better service, which he did not
really need.
On the other hand, since tourism took off in Mauritius in the 1970’s, private
promoters have built most of the hotels on land leased from the Government. In fact,
this is BOO - well before the Concession Act came into force. However, since the
proclamation of this Act, if no other type of project has really seen the day (out of
apparently some thirty on the waiting list) through BOO-BOT, it is a sound proof
that the private sector looks for profitability, first and foremost.
Therefore, without trying to cast a doom spell, it would seem clear that unless the
Mauritian consumer is willing or can afford to pay for the service, BOT projects in
Mauritius are not for tomorrow.
532
18 Infrastructure Markets and the Private Sector
play. Thus if the consumer wants a private sector BOT approach, he may end up in
paying less than before for the service, but might well end up paying more taxes for
the inefficient civil service created by a very efficient private sector.
Or conversely, the service provided by the BOT approach may be so expensive
that government may feel the need to subsidise the private company as part of the
conditions attached to the project. Again, taxes should increase.
Although it is not easy for governments to overturn the legacy of using infrastructure to control the distribution of resources and of allowing soft budget constraints for enterprises, it is more efficient to focus on policies for the distribution of
resources on households rather than on producers. Within the infrastructure sector
itself, it is possible to ensure access to basic services in the form of basic minimum or
lifeline services at subsidised rates for those households that cannot afford to pay
tariffs that reflect the costs of services. These expenditures, of course, must be
funded with taxes designed to create as few distortions as possible. In countries
enjoying more advanced stages of development, such complementary tax and social
expenditure reforms are under way. In some sectors such as telecommunications,
however, surveys indicate great willingness to pay for service access, particularly
among business-related users.
18.12.4 Hotels – The Foreign Tourist Pays
Thus, the BOT approach, in many ways, is bound to increase the consumer’s
expenditure, some way or the other - taxes to pay for an inefficient civil service, or
to subsidise the BOT operator or simply for a better service, which he did not
really need.
On the other hand, since tourism took off in Mauritius in the 1970’s, private
promoters have built most of the hotels on land leased from the Government. In fact,
this is BOO - well before the Concession Act came into force. However, since the
proclamation of this Act, if no other type of project has really seen the day (out of
apparently some thirty on the waiting list) through BOO-BOT, it is a sound proof
that the private sector looks for profitability, first and foremost.
Therefore, without trying to cast a doom spell, it would seem clear that unless the
Mauritian consumer is willing or can afford to pay for the service, BOT projects in
Mauritius are not for tomorrow.
532
18 Infrastructure Markets and the Private Sector