Future tariff reform projects should identify disincentives and detractors to reform and ensure the right set of incentives and political will are in place for regulators to take up desired reforms. The evaluation found that the regulator resisted take-up of recommended reforms and the tariff model financed by the project. Absent the necessary political commitment to reform, the project’s ultimate objective of achieving a cost-reflective tariff was not achieved. While MCC often uses Conditions Precedents to drive commitment to reform, given the relative importance of other compact activities, MCC adjusted review of the Conditions Precedent for this project, which weakened the incentive for reform. MCC should not assume the regulator’s alignment with policy reform and should ensure there are viable off-ramps should commitment to reform dissipate.
Lesson Learned