Auditor General’s time is different from infrastructure builders’ time

Posted on April 8, 2015  /  0 Comments

In the early years of TRAI, the Authority had to defend itself against strictures from India’s Comptroller and Auditor General that it was not maximizing revenues to the government, connectivity be damned (relevant to present day debates on spectrum prices). I had to convince Sri Lanka’s Auditor General that we should pay replacement costs to those who vacated frequencies, not depreciated costs. They perform a valuable function, but they do not always inhabit the same universe as the reformer. This is additionally supported by the Kenyan AG wanting a nationwide fiber network to start covering operational costs in its first years. I do not know the details, but not it would be good if the Kenyan AG engages in conversation with infrastructure experts to see what a reasonable time frame would be.

I do see one possible valid point in the criticism: retail prices should have come down. But as we all know, the key to retail prices coming down is not decline in input costs, but the level of competition. Perhaps the AG should ask why Safaricom still enjoys massive marketshare, even if that may be outside his remit.

“NOFBI project is not generating sufficient revenue to maintain its own operating costs; taxpayers are also being subjected to repaying the concessional loans received from China to finance the project, totalling over $110 million ($37 million for Phase I and $72.5 million) for Phase II, plus additional loan management fees,” Auditor-General Edward Ouko said in a statement to Parliament.

Despite the billions spent on the project, the cost of the Internet in Kenya remained higher than the UN target for developing countries. County government offices are still using modems.

NOFBI Phase I was implemented between 2007 and 2009, covering 5,000 kilometres along major roads in central, western, coast and northeastern regions for use by the counties. The second phase is ongoing and entails adding 2,100 kilometres to improve network reliability, provide wider bandwidth and expand e-government services.


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