The Performance Assessment Framework for Economic Regulators (PAFER) was developed by the OECD to help regulators assess their own performance. The PAFER structures the drivers of performance along an input-process-output-outcome framework. This chapter applies the framework to the governance of Peru’s public transport infrastructure regulator (Organismo Supervisor de Inversión en Infrastructura de Uso Público, OSITRAN) and reviews the existing features, opportunities and challenges faced by OSITRAN in developing an effective performance assessment framework.
Driving Performance at Peru’s Transport Infrastructure Regulator
The Governance of Regulators
2. Governance of OSITRAN
Abstract
Peru’s public transport infrastructure regulator (Organismo Supervisor de Inversión en Infrastructura de Uso Público, OSITRAN) was created in 1998 private investment in transport infrastructure for public use.
Role and objectives
In 2000, Law No. 27332 Framework Law for Regulatory Bodies (Ley Marco de los Organismos Reguladores de Servicios Públicos, LMOR), recognised the technical, administrative, economic and financial autonomy of all four economic sector regulators1 and placed them under the Presidency of the Council of Ministers (PCM). This law grants regulators with functions to supervise, set tariffs, issue regulations, inspect the sector activity of regulated entities, as well as to solve conflicts and claims (see Table 2.1).
Table 2.1. Regulators functions according to LMOR
Source: article 3, LMOR.
Mandate
The Supervisory Agency for Investment in Public Use Transport Infrastructure (Organismo Supervisor de la Inversión en Infraestructura de Transporte de Uso Público) was created in 1998 by Law 26917 to oversee private investment in transport infrastructure for public use, under the Ministry of Transport. In 2000, the LMOR placed OSITRAN under the PCM.
Law 26917 aims to promote transport development and the supervision of transport infrastructure for public use. The text states that OSITRAN’s mission is to regulate transport infrastructure, as well as to verify compliance with concession contracts, while impartially protecting the interests of the Peruvian state, investors and users.
At its creation, OSITRAN was given a mandate in airports, ports, roads and railways sectors. It was granted powers to supervise concession contracts, set and review tariffs and provide non-binding technical opinions on transport infrastructure of national scope, manage and issue regulatory instruments and establish and impose sanctions and corrective measures.
OSITRAN’s role, mandate and structure have changed over the years. In 2011, Law 29754 granted OSITRAN additional powers to supervise public passenger transport services of the Lima Metro. This is the only sector in which OSITRAN regulates passenger services, but without the ability to set and review tariffs, a ministerial competence. In 2017, the supervision of the country’s first waterway, the Amazonian Waterway, was added to OSITRAN’s portfolio.
Functions and powers
Law 26917 defines the main functions of OSITRAN as follows:
Tariff-setting (with limitations).
Supervision of concession contracts.
Inspection and enforcement.
Advisory role (issuance of technical opinions).
Contract interpretation.
Regulatory functions.
Tariff-setting
OSITRAN tariff-setting function mainly depends on the provisions of concession contracts. Contracts establish service standards, procedures, tariffs as well as methodologies to review and adjust them. Only three concession contracts in the road sector require OSITRAN to set tolls.
OSITRAN sets and reviews transport infrastructure tariffs, in the following cases:
If there is no competition in the market, OSITRAN sets tariffs and establishes regulations to apply, review and modify them.
If tariffs and readjustment mechanisms are set in concession contracts, OSITRAN ensures compliance with contract provisions.
If there is competition in the market, and there are no tariff provisions, OSITRAN ensures the free functioning of the market.
OSITRAN analyses if there are competitive conditions in the market. In the case of setting tariffs for port infrastructure, the National Institute for the Defence of Competition and Intellectual Property (Instituto Nacional de Defensa de la Competencia y Protección de la Propiedad Intelectual, Indecopi) is charged with analysing competition conditions.
The regulator does not set tariffs for public passenger transport services, for transport infrastructure for private use and for municipal road infrastructure.
OSITRAN’s Board of Directors exercises the tariff-setting function. The Board bases its decisions on reports prepared jointly by the Regulation and Economic Studies Department (GRE) and the Legal Advise Department (GAJ). The GRE conducts tariff-related procedures, while GAJ evaluates legal issues.
Contract supervision
OSITRAN supervises compliance with the obligations of 32 concession contracts in five different sectors (see Table 2.2). This is one of the regulator’s core activities, representing 43% of its 2019 annual budget.
Table 2.2. Supervised contracts
Notes: Two railway contracts do not include value of committed investments. The information is updated as of June 2019.
Source: information provided by OSITRAN, 2019.
If during OSITRAN finds evidence of non-compliance with contract obligations, it can exercise its sanctioning powers. Regulated entities can challenge sanctions (see section Appeals). For more information related to supervision activities and sanctions see section Supervision, Enforcement and Inspections.
Advisory function (issuance of opinions)
Since 2018, OSITRAN is empowered to issue opinions on initial drafts of PPP contracts; previously, this was mandatory only ex post once contracts had been negotiated and finalised between Proinversión and the MTC. The OSITRAN Board of Directors must issue a prior technical opinion on concession contracts at the request of ProInversión, as well as on any contract amendments at the request of the MTC.
OSITRAN is given between ten and fifteen days to issue opinions (a delay not defined in law). It may be challenging for the regulator to comply in a timely manner and OSITRAN reports that it often needs to ask for extensions to be able to respond.
OSITRAN issues the following opinions:
Opinion on modifications of concession contracts (adendas).
Opinion on drafts of concession contract.
Opinion on draft laws related to transport concessions.
Ad-hoc opinions at the request of the MTC.
Stakeholders and OSITRAN aknowledge that its non-binding opinions are mostly taken into account.
Contract interpretation
OSITRAN has the exclusive power to interpret concession contracts should disputes arise. OSITRAN is the only Peruvian regulator that has this function. The regulator exercises this function through decisions of the Board of Directors (resoluciones de Consejo Directivo), as the sole administrative instance. The interpretation proceeding can be initiates ex officio or upon request of the grantor, concessionaire or other legitimate third parties.
OSITRAN interprets contractual clauses through various methods including literal, logical, systematic and historical methods. The interpretation function can be exercised on concession contracts (including annexes) and other binding rules. OSITRAN’s interpretation decision is final.
Regulatory function (función normativa)
OSITRAN issues regulations and norms under its competence. These regulations may define the rights and obligations of regulated entities and users. The regulatory function is of exclusive competence of the Board of Directors through the adoption of Board resolutions.
Institutional co-ordination
OSITRAN operates in a complex environment alongside many other public bodies. The regulator co-ordinates its technical work with other public administration bodies, such as the MTC and Congress. However, there are no overall regular and structured co-ordination mechanisms and interactions with other entities are often informal.
Given OSITRAN’s role in the management and supervision of public-private partnerships (PPPs), the regulator frequently interacts with the MTC and Proinversión. OSITRAN issues non-binding opinions on concession contracts. The MTC regularly (both formally and informally) requests technical support from the regulator. In addition, OSITRAN regularly interacts with CGR in matters relating to compliance with contract provisions and the oversight activities of the supreme audit authority. OSITRAN co-ordinates with Indecopi on aspects relating to tariff proposals submitted by APM Terminals (port infrastructure concessionaire) and for this purpose, Indecopi and OSITRAN have signed a co-operation agreement. In the case of legislative proposals submitted by Congress, there is no formal co-ordination mechanism in place. However, Congress may require OSITRAN to issue opinions or reports.
Table 2.3. Public administration bodies involved in the transport infrastructure sector
Source: information provided by OSITRAN, 2019.
Independence
LMOR establishes OSITRAN as a public and decentralised body attached to the PCM with administrative, functional, technical, economic, and financial autonomy. OSITRAN produces its annual work programme independently. However, OSITRAN’s Strategic Institutional Plan (Plan Estratégico Institucional, PEI) has to follow the National Centre for Strategic Planning (Centro Nacional de Planeamiento Estratégico, CEPLAN) and the PCM general guidelines.
The regulator has technical independent to issue its regulatory decisions. Regulated entities can challenge the regulator’s decisions through administrative procedures. The only way to overturn final administrative decisions is through a judicial process. In addition, OSITRAN issues opinions on draft legislation, contracts and its modifications, based on its status of independent regulator. Independence and legitimacy in regulatory decisions is enhanced through the development of technical studies.
In June 2018, the Commission for Consumer Defence and Regulators of Public Utilities (Comisión de Defensa del Consumidor y Organismos Reguladores de los Servicios Públicos, CODECO) of Congress discussed a draft law to enhance aspects of institutional independence for economic regulators in Peru. As of August 2019, the draft law has not been proposed for discussion in Plenary.
Strategic and operational objectives
OSITRAN develops a four-year Strategic Institutional Plan (Plan Estratégico Institucional, PEI) that provides medium-term objectives. The current PEI is set for 2019-2022 and puts forward seven strategic institutional objectives (Objetivos Estratégicos Institucionales, OEI) (see Figure 2.1). The Board of Directors is charged with approving the PEI. The previous PEI (2016-18) had fifteen institutional objectives.
Figure 2.1. OSITRAN strategic institutional objectives, 2019-2022
Source: (OSITRAN, 2019[1]).
The PEI includes a “roadmap” (ruta estratégica) that prioritises strategic objectives and proposes indicators (see Table 2.4).
The National Centre for Strategic Planning (Centro Nacional de Planeamiento Estratégico, CEPLAN) establishes the process and methodology for developing the PEI. CEPLAN also oversees Peru’s National Development Plan. CEPLAN co-ordinates with OSITRAN and ensures that its methodology is followed. The last objective of the current PEI (Implement processes for disaster risk management) is mandatory for all public bodies as set by CEPLAN.
To achieve its institutional strategic objectives, OSITRAN develops Strategic Institutional Actions (Acciones Estratégicas Institucionales, AEI) and yearly operational plans (Plan Operativo Institucional, POI), which implement the PEI. The 2019-2022 PEI has 38 Strategic Institutional Actions, shown in Annex 2.A.
The OSITRAN Strategic Planning Commission sets the strategic objectives with inputs from external consultants. The members of the commission are: the President of the Board, General Manager, Supervision and Inspection Manager, Regulation and Economic Studies Manager, User Protection Manager, Legal Advisory Manager, and Planning and Budget Manager. Part-time Board members do not participate in the Strategic Planning Commission.
OSITRAN evaluates the fulfilment of the strategic objectives twice a year. Each department elaborates a report including indicators. The Planning and Budget Department (GPP) reviews this information and produces a final report, which is published on OSITRAN’s website.
Input
Financial resources
As defined by LMOR, all sector regulators are financed by regulatory contributions levied on the incomes of entities that are under their jurisdiction. Contributions from the industry constitute nearly 90% of OSITRAN’s total budget. The contribution rate from industry is approved by the Executive through a Supreme Decree endorsed by the President of the Council of Ministers and MEF. The rate cannot exceed 1% of the total annual income of regulated firms deducting Peruvian Value Added Tax (IGV) and the Municipal Promotion Tax (IPM).
For OSITRAN, the effective rate of 1% has been in force since 1 January 2004 and has not been reviewed since this date. The contribution rate applies to all sub-sectors except Line 1 of the Lima Metro, where OSITRAN perceives an additional 1% to fund inspection of the provision of services.
Additional revenue can be collected from (OECD, 2016[2]):
Financial interests (yielded by deposits).
Interests or late fees derived from the regulatory contribution.
Fines imposed on regulated entities for non-compliance with the concession contracts and regulations.
Fees from public information requests under Peruvian Transparency Law.
Sales of services.
In addition, additional revenues can be granted to OSITRAN by MEF if resources are considered insufficient. For example, the budget expenditure projection from January to December 2019 noted that the resources assigned for the year were insufficient. Therefore, two Presidential Resolutions incorporated additional funds to the regulator’s budget for a total of PEN 5 million, the maximum amount that can be added per year.
After an increase over the period 2015-17, the regulator’s budget declined by 14.8% in real terms between 2017 and 2018 (Table 2.5). According to OSITRAN, this is mainly due to the decrease in budget execution in previous years, taken into account by the MEF when deciding on budget allocations. Indeed, while budget execution was close to 100% in 2015 and 2018, it did not reach 80% in 2016 and 2017. The lower budget execution is explained by a change of the regulator’s leadership in 2017.
Table 2.5. OSITRAN annual budget and execution
Expressed in million PEN
Notes: Initial budget is sourced from funds collected from the regulatory contributions levied to regulated entities. Supplemental funds are provided by MEF.
Source: Information provided by OSITRAN, 2019.
Managing financial resources
In 2015, the Government of Peru, through MEF, implemented a performance budgeting system for some government entities. OSITRAN has begun implementing this new system, which requires budgets to be aligned with the goals and objectives established by the institution in their strategic institutional plans (PEI) and operational plans (POI).
The execution of expenditures is carried out by budget period from 1 January to 31 December, based on the institutional budget approved for each year and rules issued by MEF. The budget process is co-ordinated with the MEF through a digital system. OSITRAN submits information via the online integrated administrative financial system (Sistemas integrados de administación financiera, SIAF) every year as part of Peru’s administration-wide performance based budgeting system.
Table 2.6. OSITRAN Budgeting process
Source: Information provided by OSITRAN, 2019.
The General Management and the Planning and Budget department co-ordinate the budget process. OSITRAN uses expected revenue to determine how much will be available to carry out operational goals set in the POI. Indeed, OSITRAN’s budget is determined ex ante based on a percentage fixed by law of the revenue projections of the regulated sectors rather than determined with a cost recovery principle.
The budgets for each departments are allocated once the Multi-annual Budget Allocation is defined by MEF, taking into consideration the prioritisation of the activities according to the POI and the historical performance.
Table 2.7. OSITRAN budget by department: Modified Institutional Budget (PIM), 2019
Expressed in million PEN
Source: Information provided by OSITRAN, 2019.
OSITRAN is bound by several central government rules with regard to managing its financial resources:
The budget is approved yearly by MEF and relevant budget issues have to be reported to MEF, under the public budgeting system.
Staff members of OSITRAN are remunerated according to minimum and maximum limits fixed by Supreme Decree and endorsed by the Council of Ministers and the Minister of Economy and Finances. Current caps limit OSITRAN’s ability to attract and retain qualified professionals (see section Managing human resources).
The PCM has decision over some budgetary allocations, including approval of trips abroad for institutional representation. The latter are currently limited by austerity measures.
The Law of Financial Equilibrium (Ley de Equilibrio Financiero): Funds perceived directly from regulated entities are classified as “directly collected resources” (RDR), and not “ordinary resources” (OR) that mostly fund central government entities. Previously, agencies with RDR funds were allowed to keep surplus funds and carry them forward to the following year(s), while agencies with OR funds were required to return surpluses to the Treasury every year. Since 2017, the Law of Financial Equilibrium requires required surplus RDR funds to also be forwarded to the Treasury in order to promote higher budget execution across public entities. The law has been renewed for the 2018 and 2019 fiscal years. The funds transferred to Treasury may be re-incorporated into the entity’s budget the following year as additional public revenues (the latter is however capped at a maximum of PEN 5 million by MEF).
Managing human resources
Human resources
OSITRAN employs 310 staff as of September 2019. A breakdown of staff by job family can be found in Table 2.8, while a breakdown of senior and technical staff by department can be found in Table 2.9.
OSITRAN’s Handbook for Classification of Positions (Manual de Clasificación de Cargos) and a Job Description Manual outline the main functions and responsibilities of staff and describe the professional profile and skills required for each position. The job profiles are approved by the President of the Board.
OSITRAN’s public servants work under three different employment regimes (Laws 728, 1057 and 30057).2 As of September 2019, 45% staff (139 employees) work under labour regulations for the private sector, not commonly offered in public entities (Law 728 regime). Law 728 offers open-ended contracts with full benefits. The number of positions is fixed, meaning that recruitments under the 728 regime can only be made when a 728 position has been vacated. 55% of OSITRAN employees (171 employees) are hired under non-permanent contracts. Law 1057 regime for “Administrative Service Contracting” (Contratos Administrativos de Servicios, CAS) is a public sector regime that offers non-permanent employment on a fixed-term six-month contract that can be renewed without limit. The CAS regime also offers less employment benefits, such as insurance or pensions, in contrast to the 728 regime. A new labour regime was created (Law 30057, SERVIR Law) in 2013 as an administration-wide project to create a unified employment regime for all public officials. OSITRAN currently applies this new regime only to the President of the Board.
Table 2.8. OSITRAN staff by category, 2014-19
Source: Information provided by OSITRAN, 2019.
Table 2.9. OSITRAN staff by department, 2019
Source: Information provided by OSITRAN, 2019.
Table 2.10. OSITRAN Female/Male staff by category, 2019
Source: Information provided by OSITRAN, 2019.
Senior management recruitment
Twenty three senior management positions are appointed by the President of the Board or the General Manager with no public and competitive selection process and without term limits. The process is informed by OSITRAN’s Handbook for Classification of Positions (Manual de Clasificación de Cargos) and the Job Description Manual.
This figure includes 18 trusted positions that are limited to 5% of total staff, in application of the Supreme Decree 084-2016-PCM:
General Manager
Strategic Management Adviser
Legal Adviser
Legal Adviser Specialised in Concessions and PPPs
Administrative Management Adviser
Management Adviser
Technical Adviser
Co-ordinator of the Corporate Communications Office
Co-ordinator of the Security and National Defence
Legal Manager
Planning and Budget Manager
Administration Manager
Head of Human Resources Management
Head of Logistics and Equity Control
Chief Accountant
Head of Treasury
Regulation and Economic Studies Manager
Head of Railway and Metro de Lima Contracts
In addition, in application of article 4 of Law 28175, Public Employment Framework Law the following five positions are also freely appointed and removed by the President or the General Manager:
Assistant Manager of the General Management
Head of Information Technologies
Head of Regulation
Technical Secretary of OSITRAN Controversies Settlement Court
Technical Secretary of the Collegiate Bodies
Moreover, the Board of Directors appoints and removes the Controversies Settlement Court and Collegiate Bodies members upon the President’s proposal.3 Finally, the following categories of senior management are appointed by other entities:
The Head of the Institutional Control Body is appointed by the CGR
The “Procurador” and the Deputy “Procurador” are appointed by the Ministry of Justice
The remaining senior management positions undergo a regular recruitment process and are incorporated under the private labour regime (Law 728 regime). There is also the possibility of qualifying for these positions through promotions, except for the trusted positions.
Regular recruitment
In early 2019, OSITRAN approved new guidelines for recruiting professional staff. Job offers are publicly advertised and the selection process is handled by a Selection Committee composed of the Head of Human Resources, a representative from the recruiting department and a representative from the Administration Department (GA). The General Manager actively participates in the selection process for positions at manager, chief or co-ordinator levels.
Box 2.1. Main steps of a regular selection process
A department send a recruitment request to the GA and the Head of Human Resources for review.
A report is submitted to the General Management for approval.
The terms of the call are prepared by the Selection Committee.
Ten working days before the recruitment process begins, the job description and detailed requirements are published on several supports: OSITRAN website, LinkedIn, and when the recruiting department requests it, in newspapers, job boards and professional associations’ portals.
The selection process handled by the Selection Committee comprises the following stages:
review of the resume
knowledge test
psychological evaluation
interview
OSITRAN carries out all the stages of the process, except for the psychological evaluation, entrusted to a consultant. Each specific criterion has a score and the successful candidate is the person who achieves the highest score. Results are published on OSITRAN’s website together with the list of documents required for the incorporation of the selected candidate that must be submitted within five working days.
Source: Information provided by OSITRAN, 2019.
Remuneration
Staff members of OSITRAN are remunerated according to minimum and maximum limits fixed by Supreme Decree and endorsed by the Council of Ministers and the Minister of Economy and Finances. The current salaries were established in 2006 and are not indexed to inflation. OSITRAN does not keep track of salary gaps for comparable positions in the regulated sector. In 2018, the Government raised the salary of the President of the Board of Directors from PEN 15 600 to PEN 28 000 (USD 8 480 approximately) in order to be more competitive with industry. According to OSITRAN, migration to SERVIR regime would imply a decrease in salary for staff currently employed under the Law 728 regime.
Table 2.11. Remuneration scales at regulatory agencies in Peru
Expressed in PEN
Note: By Supreme Decree 172-2013-EF of 15 July 2013 and * Supreme Decree 024-2018-EF of 16 July 2018.
Source: Information provided by OSITRAN, 2019.
The SERVIR reform aims at gradually achieving a consolidated single employment framework, harmonising not only the employment terms but the remuneration of civil servants. However, as of 2018, no public entity has fully implemented the regime (the implementation is voluntary).
Talent recruitment, retention and training
Voluntary resignations have been the leading cause of staff turnover between 2015 and 2018. On average 21.5% staff left the organisation every year, including on average 18% of staff resigning each year. In 2019, staff turnover was above 15% across the Peruvian economy (Espinoza, 2019[3]) and 16% and 9% among, respectively, staff at Peru’s energy and mining regulator (Osinergmin) (OECD, 2019[4]) and staff at Peru’s telecommunications regulator (OSIPTEL) (OECD, 2019[5]). Such resignations are high among technical staff. A particularly high number of resignations was recorded in 2017 with 26% of staff resigning, including 21 senior managers and 48 technical staff.
OSITRAN is aware of this challenge and is implementing measures to reverse this trend. OSITRAN has for instance developed a “Talent Management and Development Plan” 2019-2022 aimed at improving the attraction and the retention of talent through the “DREAMS” value proposal. The proposal contains six dimensions:
Development: Develop and promote skills development and career progression, to ensure that human assets meet organisational needs.
Retention: Strengthen and implement innovative retention tools enhancing recognition and development opportunities.
Equilibrium: Adopt measures enhancing well-being of staff and their families.
Attraction: Ensure effective recruitment and selection processes, from the definition of the candidates’ profile to the induction of the new staff, enhancing productivity and good management of the work environment.
Motivation: Create a work environment where individual objectives meet the organisation’s ones.
Service: Implement a culture of service and ensure a communication strategy strengthening the relationship between stakeholders.
In addition, OSITRAN has developed a “Cultural Alignment Plan” with the support of an external consultant aimed at defining and strengthening its organisational culture to support the achievement of its mission, objectives and values. This plan contains key recommendations dealing with human resource management, including recruitment and selection process, induction, performance management, trainings and social welfare of staff.
Performance assessment
The Performance Management Process (PPM) is still at a pilot stage. In December 2018, two presidential resolutions approved the Performance Management Handbook and the Guide for the development of performance targets in Performance Management. These new guidelines are being implemented since May 2019.
Process
OSITRAN is headed by a Board of Directors and its President, who make a wide variety of executive decisions. Its General Management plans, organises, leads, manages and supervises the administrative, operational, economic and financial progress of OSITRAN, implementing the policies established by the Board and the President.
OSITRAN supports the use of regulatory quality tools, such as RIA, ex post evaluation, and stakeholder engagement to improve the decision-making process.
Governing body and decision making
Board of Directors
The Board of Directors is the highest governing body of OSITRAN. Its main roles are:
To approve the strategic direction and policies proposed by the President.
To exert the tariff and regulatory functions via resolutions.
To approve the PEI, the POI, the Opening Institutional Budget, the General Balance Sheet and the audited Financial Statements, as well as the Accountability Report to be sent to the CGR.
To interpret concession contracts and instruments by which the regulated entities carry out their activities, as well as the provision of public services of rail passenger transportation of the Lima Metro.
To approve technical opinions prior to concession contract execution, or their renewal as well as the modification, renegotiation or revision of the concession term.
To issue technical opinions to the MTC or other public entities.
To participate in dispute resolution processes.
To determine the composition of User Councils.
The President of the Board holds a full-time executive position, while other four Board members only serve on a part-time basis. The part-time members (currently one engineer, a lawyer and one economist) are remunerated for two mandatory half-day board meetings per month (PEN 1 500 per session). Requests can be made to meet additionally under extraordinary circumstances by the President of the Board or a majority of Board members, but the law expressly forbids additional remunerations. There have been two women among Board members in the last ten years. In practice, a number of mandates have been terminated early (Ernesto López Mareovich, Jorge Genaro Cárdenas Bustíos, Sergio Fernando Pedro Salinas Rivas and Juan Carlos Paz Cárdenas), which shortened the effective duration of some mandates (see Table 2.12).
Table 2.12. Composition of the Board 2007-2019
Box 2.2. Selection and dismissal of members of the Board of Directors
The selection criteria for OSITRAN Board member are:
Be a professional with no less than ten years of practice.
Have recognised professional solvency and suitability, by way of no less than three years of experience in a position of executive management, with understanding of the decision making in public or private companies; or five years of experience in matters related to the competence of the regulatory body.
Have completed studies at the Master's level in subjects related to the competence of the regulatory body.
All members of the Board are selected by:
Review of candidates by a selection committee composed of one member proposed by the PCM, one member proposed by Indecopi, one member proposed by MEF and one member proposed by the sectoral ministry related to regulator activities.
The President of the Council of Ministers submits the final list of selected candidates to the President of the Republic.
The President of the Republic appoints the members of the Board by Supreme Resolution, whom will be endorsed by the President of the Council of Ministers, the Minister of Economy and Finance and the sectoral ministry related to the regulator activities.
Members of the Board of OSITRAN are designated for a five year term, renewable once. They are subject to incompatibilities and pre and post-employment restrictions provided in laws 27332 and 27588 (see section Integrity and conflicts of interest).
The Law establishes termination reasons for the members of the Board; they can only be removed due to serious misconduct that has to be communicated to the Congress.
In the event of a Board member leaving before the end of their term, the new member is only appointed for the remaining amount of time. Vacancies must be filled within 30 days of the expiration of a member’s term, though can be exceptionally extended by 60 days through Supreme Decree.
Source: Law 27332; Supreme Decree 103-2012-PCM; Law 29158, Supreme Decree 014-2008-PCM; (OECD, 2016[2]).
President of the Board of Directors
The Board of Directors is represented on a full-time basis by the President of the Board, who also holds the function of President of OSITRAN, the highest authority and head of OSITRAN. The President sets the strategic direction and functions of the Board, exerts executive and administrative functions, and reports on behalf of the regulator to the PCM and MEF. In the case of temporary impediment, the Vice‑president of the Board performs his functions.
The President of the Board is selected through a public contest. A selection committee composed of two members from the PCM, one member proposed by MEF and one by the MTC proposes a list of applicants to the PCM, who submits to the President of the Republic the proposed selected candidate. The President of the Board is then appointed for a five-year term (renewable once) by Supreme Decree signed by the President of the Republic and endorsed by the President of the Council of Ministers.
The President’s main roles are:
To set strategic direction, develop and lead the institutional policy and monitor performance.
To approve human resources, finance, as well as communication strategies and institutional relations policies, at the proposal of the General Manager.
To co-ordinate with institutions and organisations on matters related to the process of new concessions of public transportation infrastructure.
To convene, preside and set the Agenda of the sessions of the Board.
To appoint and remove trusted positions, including the GM.4
To represent OSITRAN before public entities, at national and international levels.5
General Manager (GM)
The GM is responsible for the implementation of policies established by the Board and the President. He can ensure legal representation of OSITRAN, and may hold other roles that can be delegated by the Board or the President. In addition, the GM overviews the budget process, as well as transparency measures and attention to the public. The GM attends sessions of the Board, but does not have a vote.
The GM main roles are:
To be responsible for the administrative, operational, economic and financial responsibilities of OSITRAN.
To present to the Board or the President, for approval, the strategic plan, the Institutional Budget, the General Balance Sheet, the Financial Statements, the Annual Contracting Plan, the Annual Training Plan, the management documents and instruments, as well as the Accountability Report to be submitted to the CGR.
To approve rules and other internal management documents related to the administrative operations of the institution.
To manage, co-ordinate and supervise OSITRAN departments.
Decision-making process
The functioning of the Board of Directors is defined by a Board Resolution. It sets the minimum content of documents that departments must submit to the Board before meetings, the roles and responsibilities of meeting participants, the process for debate and decision-making, and the preparation of the minutes. Main clauses include:
The meeting agenda is set by the President.
All matters to be discussed (tariffs, new concession contracts, addendum to concession contract, access mandates, draft regulations, POI, etc.) are supported by reports prepared by departments. The reports must be submitted three working days prior to the meeting. External opinions may be requested.
During the session, department representatives make a presentation and answer questions.
The Board deliberates and decides by unanimity or majority. Each member of the Board has one vote, and the President has a casting vote. Quorum for meetings is set at three members being present, including the President and the Vice-President.
Data and information used by the Board to make decisions
Board meetings are behind closed doors. Minutes are published on the OSITRAN website within two days of the meeting.6 In addition, relevant information used by the Board to make decisions is published in the official gazette “El Peruano” and on the OSITRAN website.7 Confidentiality can be granted at the request of interested parties, to protect commercial or industrial secret. Some Board decisions, like the approval of regulations or the modification of tariffs, include a mandatory publication stage (see section Stakeholder and User Councils consultations). Other Board decisions can also be published, at the discretion of the Board.
Internal organisational management
OSITRAN is organised as follow (see Figure 2.2 for full organigram):
The strategic bodies include the Board of Directors, President of the Board and General Manager, described above.
The institutional control body carries out governmental control functions within OSITRAN and reports to Peru’s supreme audit institution. Its main goal is to ensure transparent management of the entity’s resources and assets. Following the National Control System regulations it scrutinises the legality and efficiency of OSITRAN’s activities and the achievement of its objectives.
The “Procurador” Office is the legal defence body. It represents OSITRAN in legal and administrative proceedings, arbitration and extrajudicial conciliations.
The advisory bodies are responsible for developing and proposing advice and initiatives to the General Management. The Legal Advise Department (GAJ) provides legal advice on contractual, regulatory and administrative matters. The Planning and Budget Department (GPP) develops, implements and monitors activities in the areas of strategic and operational planning and budgeting. The Department also promotes organisational development, supervises processes (including the Quality Management System) and co-ordinates technical co-operation with other entities.
The Administration Management Department (GA) regroups the support bodies that provide support in the areas of human and financial resources and IT services.
The Line bodies are responsible for developing regulations, supervising and protecting users. The Regulation and Economic Studies Department (GRE) oversees the tariff system and monitors tariff procedures. It also carries out studies, research and publications. The User Protection Department (GAU) oversees the rights of intermediate and final users related to the public transportation infrastructure under the scope of OSITRAN. It also promotes effective policies, processes and mechanisms for quality in consumer protection. The Enforcement and Supervision Department (GSF) co-ordinates and implements the supervision, inspection and enforcement activities of OSITRAN.
The dispute resolution bodies: The Controversies Settlement Court (TSC) decides in second and last administrative instance the disputes that arise between two regulated entities, between a regulated entity and an intermediate user, over the claims of users, as well as other matters established in regulations. The Administrative Affairs Tribunal (TAA) decides in second and last administrative instance the appeals against the Enforcement and Supervision Department decision.
The decentralised bodies of OSITRAN provide technical assistance in regulatory, inspection and enforcement matters, as well as dispute resolution and user service, in co-ordination with the competent OSITRAN bodies.
In addition, the Corporate Communications Office belongs to the Executive Presidency office and handles all media requests and the relationship with the national press, engages in outreach activities with companies, public bodies and citizens, produces the annual report and is in charge of the internal communication.
Most departments report to the General Manager (GM) with the exception of the Institutional Control Body, the “Procurador” Office, the Controversies Settlement Court (TSC), and the Collegiate Bodies.
Figure 2.2. OSITRAN’s organisational structure
Source: Information provided by OSITRAN, 2019.
Internal control mechanisms
OSITRAN first implemented an internal control system (ICS) and a quality management system in 2008, and the systems have been regularly updated. In 2016, OSITRAN put emphasis on risk-based preventive measures rather than an ex post corrective approach. The “Risk Management Handbook” issued in 2017 sets the internal risk management policy, based on guidance provided by the CGR and international best practices. The “Risk Management Plan” clarifies the implementation strategy of the policy. OSITRAN Internal Control Committee (ICC) meets regularly to promote actions for the effective implementation of the ICS. OSITRAN obtained the certification ISO 9001 (quality management systems) in May 2018 and is in the process of implementing ISO 27001 (information security management systems).
Regulatory quality tools
The Regulatory Quality Assessment (RQA) is a procedure to assess regulations that establish administrative procedures to identify, reduce and/or eliminate unnecessary, unjustified, disproportionate, or redundant procedures Ministerial Resolution 196-PCM-2017. Laws issued by PCM require all government entities to perform RQAs on all regulations establishing changes in administrative procedures. More specifically, the Decree establishes three actions: an ex ante evaluation of the RQA, a review of the regulatory stock, and a revision to the regulatory stock every three years to reduce burdens.
A Multi-Sectoral Commission on Regulatory Quality (MCRQ) was established as a permanent body that reports to the PCM. The MCRQ assesses and validates the RQAs conducted by public entities of the Executive branch following four principles: legality, necessity, effectiveness, and proportionality. The MCRQ share observations and suggestions for improving the measure with the public entity for consideration which in the end turns back to the MCRQ for validation. The MCRQ can also propose the dismissal of an administrative procedure submitted for analysis under the RQA if it does not meet the principles of legality or necessity.
Independently and in parallel to the development of the PCM RQA, three sector regulators – Osinergmin, OSIPTEL and OSITRAN – developed manuals and guidelines for assessing the impact of regulations. These manuals extend the scope of analysis and application of assessments to include a wider scope of regulations, and not just those affecting administrative procedures.
OSITRAN had conducted regulatory impact assessments (RIAs) on draft regulations before 2018, but not on a mandatory basis and had not made these assessments public. To date, the only formal experience in the elaboration of RIAs in OSITRAN has been for the amendment of the OSITRAN’s General Regulation on Tariffs (Reglamento General de Tarifas de OSITRAN, RETA). The Regulation of Access to Public Transport Infrastructure (Reglamento Marco de Acceso a la Infraestructura de Transporte de Uso Público, REMA) and the General Rules of Supervision are currently in the process of being modified following the RIA Handbook methodology.
Ex ante assessments
In 2016, OSITRAN adopted its Regulatory Improvement Policy and created the Regulatory Improvement Committee, aimed at ensuring regulatory quality and demonstrating its commitment to implementing the recommendations made by the OECD (OECD, 2016[2]).
In 2017, OSITRAN rolled out its own RIA process and issued a “Regulatory Impact Assessment Handbook” with the support of the OECD. This internal Handbook provides guidelines and criteria to carry out RIAs, following OECD RIA good practices.
The department that identifies the need to modify or approve a new regulation is responsible for the elaboration of the RIA. The Legal Advise Department (GAJ) provides support and reviews the legal quality of draft regulations. All RIAs drafted are overseen by the Board of Directors and the RIA Evaluation Committee. Regulations can be assessed using a cost-benefit analysis, cost-effectiveness analysis, or multi-criteria analysis. RIAs are then included among documents sent to the Board. A simplified version of the RIA is published online for public consultation.
In May 2018, OSITRAN approved Procedure PC-15-SGC “Elaboration and review of standards under the Regulatory Impact Analysis framework” outlining the different steps to draft or review general standards applying to regulated entities and users that implies the creation of additional obligations, requirements and procedures, as well as the steps to follow to conduct the corresponding RIA.
Ex post reviews
OSITRAN has been making efforts to improve regulations on an on-going basis. The Regulatory Improvement Policy provides that systematic and periodic review of the regulations is part of the Regulatory Quality Management System, with the aim to identify and remove inefficient burdens and requirements.
In accordance with the PCM RQA, OSITRAN has reviewed its entire stock of regulations to determine which need to be updated. The Technical Secretariat of Multi-sectoral Commission on Regulatory Quality validated twelve out of fifteen administrative procedures that were submitted for analysis under the RQA in November 2018.
Engagement and transparency of engagement process
Many governmental and non-governmental stakeholders are directly or indirectly involved in the public transport infrastructure sector. Stakeholders of a governmental nature include the MTC, MEF, and Congress among others. Stakeholders of a non-governmental nature include the intermediate and final users and business associations, such as the Association for the Promotion of National Infrastructure (AFIN), which groups public service infrastructure concessionaires.
User Councils
The LMOR requires regulators to have one or more User Councils for stakeholder participation that serves as a consultative mechanism for decision-making. The Councils can be local, regional or national. Regulators publish a call for potential candidates to the User Councils, as well as a provisional list of candidates and a final list of elected members. Members of User Councils come from consumer associations, universities, professional colleges, non-profit organisations and business organisations not related with the regulated entities. Members are not remunerated but regulators must finance the activities of the Councils.
The role of User Councils includes:
To issue opinions regarding OSITRAN’s functions and powers.
To participate in the public hearings concerning OSITRAN’s regulatory framework.
To hold academic events, in co-ordination with the Board of Directors.
To provide an effective forum allowing users to exchange ideas concerning OSITRAN policies and rules and to submit questions to the Board of Directors.
To contribute to improving the quality of transport infrastructure services for public use.
Box 2.3. OSITRAN User Councils
The Board of Directors determines the composition of the User Councils and approves their financing. Council members are appointed by the Board for a two-year period. OSITRAN User Council Operation Regulation establishes that OSITRAN provides all the logistical facilities necessary to carry out the User Councils sessions. A specific budget line covers the expenses needed for the Councils to carry out their activities, including visits to the infrastructures.
OSITRAN has eight User Councils, acting as mechanisms for stakeholder engagement in the regulatory activity of each sector involved.
There are four User Councils of national scope attached to the President of the Board, one each for Airports, Ports, Road Networks and Railways.
In addition there are Four User Councils of local scope, responding to the needs and specificities of local infrastructures, attached to the GM, one in each of the following localities: Arequipa, Cusco, Loreto-San Martín, and Piura.
OSITRAN provides information to the User Councils through:
expert presentations during consultation sessions
publication on OSITRAN’s website of the minutes of the User Councils sessions
publication of OSITRAN briefing notes in social media
publication of the Bulletin of the National Meetings of OSITRAN’s User Councils, addressing national and international good practices in public transport infrastructures
Source: Information provided by OSITRAN, 2019.
The regulator convenes at least two ordinary sessions per year to inform User Councils about its actions, provide relevant information on the implementation of the infrastructures under concession, and to collect the main proposals and information requests made by the Councils.
In 2018, OSITRAN held twenty-eight sessions of the User Councils:
Table 2.13. 2018 User Councils sessions
Source: Information provided by OSITRAN, 2019.
The User Protection Department acts as a Technical Secretariat for User Council sessions. OSITRAN prepares the Agenda based on User Councils’ proposals in co-ordination with the President of the Board or with the General Manager, or those required by the regulations of the sector.
Stakeholder engagement
In Peru, it is required by Law to publish every new laws and regulations in the Official Gazette, website or other instrument at least 30 days before its entry into force to receive comments (OECD, 2016[6]). In addition, prior to the publication of a tariff-setting decision, the regulator is required by Law 27838 to organise decentralised public hearings to expose to the stakeholders the criteria, methodology, studies, reports, economic models and opinions that justify the decision to modify the tariff.
OSITRAN has included the requirement to conduct stakeholder engagement into OSITRAN’s General Regulation on Tariffs (Reglamento General de Tarifas de OSITRAN, RETA) for tariff regulation and into the OSITRAN General Rules (Reglamento General del OSITRAN, REGO) for draft regulations. In addition, guidelines and criteria for public consultations to improve transparency, efficiency and effectiveness of regulations are provided in the OSITRAN RIA Handbook. These texts include the requirement to collect opinions from stakeholders and conduct public hearings.
Concerning tariffs, OSITRAN publishes relevant information related to the tariff revision proposal in the official gazette “El Peruano” and on its website:
the Board of Directors draft resolution approving the tariff proposal
the explanatory memorandum
the list of supporting documents
the date(s) and place(s) in which the public hearing(s) will be held
the deadline for sending written comments, that will not be less than fifteen days or more than thirty days, counted from the publication of the proposal for fixing or rate revision
In addition, OSITRAN invites users, members of the User Council, and interested parties with an anticipation not less than five days from the date of the public hearing. OSITRAN also sends the relevant documentation to the service-providing entity. Private hearings are held with the service-providing entities and users’ representative organisations at their request.
OSITRAN consulted the User Councils in all instances of tariff review carried out during 2018 as shown in Table 2.14.
Table 2.14. User Councils consultations on tariffs in 2018
Source: Information provided by OSITRAN, 2019.
Concerning stakeholder consultation for draft regulations, relevant information should be published in the official gazette “El Peruano”, on OSITRAN’s website and in any other media that guarantees its dissemination to interested parties. The publication is required to contain the text of the draft regulation and the explanatory memorandum (“exposición de motivos”). OSITRAN might also explain the regulatory background, the problems detected, the objective and the scope of the draft regulation. Since May 2018, regulatory proposals must be supported by a RIA report, which is also submitted to interested parties for consideration. Stakeholders may share their written and oral comments under a given deadline that cannot be less than fifteen calendar days from the date of publication of the project. In 2016, OSITRAN held one public hearing in Lima, one in Tarapoto, one in Iquitos, one in Arequipa, one in Cusco and one in Piura.
Feedback provided after consultations
OSITRAN prepares a matrix of stakeholders’ comments on tariff and regulatory proposals with a technical and legal evaluation of whether the comments will be considered. When a regulation is adopted or modified, the final regulation, the explanatory memorandum (“exposición de motivos”), the RIA Report and the matrix of consultation comments are again published on OSITRAN’s website. Similarly, once a tariff proposal is approved, the matrix of comments is published.
Appeals
OSITRAN has powers to solve controversies between regulated entities and users. The Board of Directors is ultimately responsible for solving appeals against tariff decisions. OSITRAN has three main administrative dispute resolution bodies governed by its internal regulations and supported by a technical secretariat:
Collegiate Bodies (Cuerpos Colegiados de Solución de Controversias)
Controversies Settlement Court (Tribunal de Solución de Controversias, TSC)
Administrative Affairs Tribunal (Tribunal de Asuntos Administrativos, TAA)
Table 2.15. OSITRAN’s administrative dispute resolution bodies
Source: Information provided by OSITRAN, 2019.
There have been delays in appointing members of the Controversies Settlement Court (Tribunal de Solución de Controversias, TSC) and the Administrative Affairs Tribunal (Tribunal de Asuntos Administrativos, TAA). According to LMOR, the TSC members are appointed by Supreme Decree issued by the PCM. Since 2013, the PCM has not appointed two out of five members of the TSC. On the other hand, the TAA was created to serve as second instance body for sanctioning procedures. The Board of Directors appoints its members at the proposal of OSITRAN’s President. As of August 2019, the TAA members have not been appointed and the General Management performs its functions.
The Judiciary can review administrative decisions through a “contentious administrative process” under Law 27584 (proceso contencioso administrativo). Judges can decide the case based on both the merit of the issue or procedural defects of the administrative proceeding.
Table 2.16. Appeals and outcomes
Note: The chart only considers judicial processes initiated against administrative decisions issued by OSITRAN between January 2015 and December 2018.
Source: Information provided by OSITRAN, 2019.
Moreover, OSITRAN can be involved in arbitration proceedings. There are two types of arbitration: arbitrations where the parties are the MTC and a regulated entity, and arbitrations where the parties are OSITRAN and the regulated entity. In the former, disputes occasionally involve OSITRAN’s decisions; thus, the regulator intervenes as a third party. In the latter, disputes involve OSITRAN’s decisions directly.
Supervision, inspections and enforcement
Enforcement and inspections are absorbing an increasing amount of resources – in 2019, 125 out of 310 staff work in the Enforcement and Supervision Department that also handles 43% of the regulator’s budget (Table 2.9 and Table 2.7). OSITRAN is in charge of supervising, inspecting and enforcing compliance with multiple obligations of 32 concession contracts. Activities are carried out by both permanent staff and external companies that provide specialised inspection services. There is little use of digital and electronic tools in the supervision and inspection activities.
Each concession contract include a risk-matrix mapping financial risks, political and force majeure risks, market risks, construction risks, etc. The regulator does not have a risk-based management approach to prioritise inspection activities. However, OSITRAN is making efforts to better use limited resources by implementing sample-based inspections (inspecciones por muestreo).
When finding non-compliance with contract obligations, OSITRAN can impose sanctions on regulated entities. The sanctioning process starts with a supervision report identifying evidence of non-compliance and continues with the communication and levying of fines or penalties. The regulator can give the opportunity to correct a defect or infraction, without applying sanctions or penalties. However, regulated entities perceive OSITRAN as a sanctioning authority.
OSITRAN carries out its supervision and inspection functions (supervision y fiscalización) based on the following documents:
general supervision rules
annual supervision plan
incentive, infringement and sanction regulations (Regulaciones de Incentivos, Infracciones y Sanciones, RIIS)
The general supervision rules establish four types of enforcement activities: working meetings with the regulated entities to gather information or to co-ordinate activities, supervisions to review information provided by the regulated entities, regular inspections (visits to infrastructure sites) and on-site permanent inspections (permanent OSITRAN staff in the infrastructure sites).
The annual supervision plan is published in OSITRAN’s website and it provides information related to concession contract obligations. It includes descriptions of the type of supervised activities shown in Table 2.17.
Table 2.17. Types of supervision
Source: OSITRAN’s annual supervision plan, 2019.
In 2018, the Board of Directors issued the incentive, infringement and sanction regulations (Regulaciones de Incentivos, Infracciones y Sanciones, RIIS). These regulations aim to promote voluntary compliance and prevention rather than reactive sanctioning processes. Through this change, the regulator wants to evolve from an entity perceived as a sanctioning authority to a proactive institution that promotes compliance. The RISS contains a new methodology to calculate sanctions that would improve predictability. OSITRAN explains this methodology through a guide that is published in its website (OSITRAN, 2018[7]).
OSITRAN prioritises inspections related to user complaints and sensitive breaches to contractual obligations. During 2018, the GAU received seventeen complaints which motivated inspection activities (Table 2.18).
Table 2.18. Complaints received by GAU
Source: Information provided by OSITRAN, 2019.
The regulator does not publish its inspection reports; however, they can be requested under the Peruvian Transparency Law. In addition, some information on inspections is made available through presentations to the User Councils.
Some matters require co-operation between divisions and departments and inter-institutional co-ordination with other entities (for example, the MTC, the APN and SUTRAN). OSITRAN co-ordinates with these bodies using ad-hoc and informal mechanisms.
Integrity and conflicts of interest
OSITRAN is governed by the Civil Service Ethics Code (Law 27815) that establishes ethics principles for civil servants and applies to all OSITRAN staff regardless of their contractual regime. These regulations govern relations between OSITRAN staff and the regulated sector.
The regulator also has to implement the institutional integrity model (modelo de integridad) and the Offices or Officers of Institutional Integrity as foreseen in the Anti-corruption Policy of the government (Decreto Supremo 092-2017-PCM) and the resolution n°001-2019-PCM/SIP of the Secretariat of Public Integrity of the Presidency of the Council of Ministers. OSITRAN does not have its own code of ethics. However, the regulator has recently adopted a number of initiatives demonstrating its commitment to accountability and integrity. In February 2019, OSITRAN adopted an Anti-Bribery Policy committing itself:
To ban bribery in the organisation.
To comply with the anti-bribery laws, regulations and rules applicable to the organisation.
To comply with the requirements of the anti-bribery management system.
To promote the reporting of bribery allegations in good faith or on the basis of a reasonable belief, and without fear of reprisals.
To designate a compliance officer, with the authority to supervise the design of the system, ensure compliance with applicable requirements and guide staff on relevant issues of the anti-bribery management system.
Failure to comply with these provisions will be subject to investigation and sanctioning procedure.
The same month OSITRAN also created a reporting mechanism for alleged acts of corruption accessible to staff and citizens, monitored by the Head of Human Resources. The report can be made in writing or orally through a dedicated website, e-mail address or by phone. The identity of the reporting person and the content of the report are confidential. Reports made in bad faith are subject to sanction. In parallel, another reporting mechanism has been put in place in 2019 for citizens to report allegations concerning the concessionaires. Both mechanisms are placed under the responsibility of the GM.
In April 2019, OSITRAN obtained the ISO 37001 certificate “Anti Bribery Management System”. The implementation of a solid anti-bribery management system aims at instilling an anti-bribery culture within the organisation and implementing appropriate controls, which in turn increase the possibility to mitigate corruption risks. A compliance officer has been appointed in May 2019. Awareness raising activities concerning the Code of Ethics in the Public Service and the anti-corruption policy include trainings for new employees, and information e-mails sent to staff.
According to Supreme Decree 138-2019-PCM, all public servants of the Executive Branch are required to declare potential conflicts of interests (“Declaración Jurada de Intereses”). In addition, the Directive for the functioning of the Board of Directors meeting provides that a member with a potential conflict of interest must refrain from voting in the session.
Post-employment restrictions are governed by Law 27588. Any board members, senior officials, advisors and members of administrative tribunals, as well as officers or public servants who have had access to privileged information or whose opinion has been determinant in decision-making, are subject to a one‑year post-employment restriction. This includes providing services under contractual arrangement, accepting remuneration, being part of the Board of Directors, directly or indirectly acquiring shares of a company associated with the sector, signing contracts with companies, or participating in employment with companies.
In addition, Law 26917 and the REGA provide that OSITRAN former staff may not provide services directly or indirectly to the service-providing entities for one year after leaving office.
OSITRAN carries out due diligence during the selection process of potential staff. To date, OSITRAN has not faced impediments in recruiting and retaining staff due to pre- or post-employment history.
Following OSITRAN General Regulation of Tariffs, regulated entities can request the organisation of private hearings to share comments on tariff proposal (see Stakeholder engagement). OSITRAN is required to publish on its website a list of all the meetings held with entities, detailing the names and roles of participants, aspects discussed and conclusions reached. However, explicit protection of engagement processes against potential conflict of interests of participants is lacking.
Output and outcome
Assessing the performance of the regulated entities
OSITRAN collects a large amount of data and information from regulated entities in all sectors under its purview. As of August 2019, OSITRAN does not collect information related to the Amazon Waterway given that the project is in an early stage. OSITRAN publishes information related to investments, operations, exploitation, financial resources and management. Non-confidential sector information is posted on OSITRAN’s website. For example, the Regulation and Economic Studies Department (GRE) publishes monthly reports with sector information (boletines estadísticos) and the Enforcement and Supervision Department (GSF) publishes bi-monthly reports with information such as traffic, traffic accidents and environmental issues (reportes estadísticos).
The Statistical Declaration is a tool used to collect information from the regulated entities. Since September 2013, regulated entities must complete a monthly excel document and submit it by e-mail to declaracion.estadistica@ositran.gob.pe. To date, more than 16 000 forms of statistical declarations have been filed by the regulated entities. OSITRAN has the power to collect information from regulated entities through a compulsory process.
Table 2.19. Information requested in the Statistical Declaration
Source: Information provided by OSITRAN, 2019.
Regulation and Economic Studies Department (GRE) uses information provided by the regulated entities for benchmarking in tariff-setting procedures. In addition, GRE uses it to monitor market behaviour and to verify whether services where tariffs are deregulated continue to be provided under competitive conditions. Additionally it is used to inform users and third parties about the regulated entities performance in managing infrastructures.
OSITRAN acknowledges difficulties in managing, processing and using collected information. Human resources and budget are limited and the current tools are not efficient. OSITRAN is aware of these challenges and is aiming to enhance the use of information technologies to efficiently manage information linked to the performance of the sector and concession contracts.
Assessing the performance of the regulator
OSITRAN’s strategic framework is embodied in the Strategic Institutional Plan 2019-2022 (PEI), which sets out seven strategic objectives.
OSITRAN’s PEI has thirty-eight strategic actions (acciones estratégicas) and thirty-eight indicators. Each strategic goal has a matrix of strategic actions and indicators (see Annex 2.A). OSITRAN produces reports monitoring the implementation of the strategic objectives. The next evaluation of the 2019-2022 PEI is due in February 2020.
In addition, OSITRAN produces an Operational Institutional Plan (POI), which allocates responsibilities and budget to the departments. The POI is linked to the PEI through the strategic objectives and strategic actions. The plan is produced on a three-year basis (as the budget plan), but is updated annually. The POI is evaluated quarterly.
Reporting
OSITRAN is accountable to Congress, while being overseen by the PCM. The regulator can also be called upon by the MTC or other relevant government departments to provide information or opinions. The Peruvian Congress regularly invites the regulator to intervene on specific matters, or issue opinions on sectoral reforms and draft laws. Two ordinary committees of Congress are relevant to OSITRAN’s sectoral responsibilities: the Commission for Consumer Defence and Regulators of Public Utilities (CODECO) and the Transport and Communications Commission.
OSITRAN prepares an annual report on its main activities. There is no legal requirement to share annual reports with Congress or other body. However, the regulator has recently committed to voluntarily reports to the Commission for Consumer Defence and Regulators of Public Utilities (CODECO) to strengthen transparency and accountability (Presidential Resolution 009-2017-PD-OSITRAN). The submission must be completed yearly by the last working day of April. The first annual report (2017) was submitted in April 2018, with no plenary discussion. CODECO members did not raise questions on OSITRAN’s performance (OSITRAN, 2018[8]).
In July 2018, OSITRAN held a “public accountability hearing” (audiencia pública de rendición de cuentas) where the President presented the annual report to a wide range of stakeholders. OSITRAN published the call for this hearing in the official gazette El Peruano on 6 July 2018.
References
[3] Espinoza, E. (2019), Methodology for Reducing Staff Turnover in Service Companies Based on Employer Branding and Talent Management, http://dx.doi.org/10.1007/978-3-030-16053-1_56.
[4] OECD (2019), Driving Performance at Peru’s Energy and Mining Regulator, The Governance of Regulators, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264310865-en.
[5] OECD (2019), Driving Performance at Peru’s Telecommunications Regulator, The Governance of Regulators, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264310506-en.
[6] OECD (2016), OECD Public Governance Reviews: Peru: Integrated Governance for Inclusive Growth, OECD Public Governance Reviews, OECD Publishing, Paris, https://doi.org/10.1787/9789264265172-en.
[2] OECD (2016), Regulatory Policy in Peru: Assembling the Framework for Regulatory Quality, OECD Reviews of Regulatory Reform, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264260054-en.
[1] OSITRAN (2019), Plan Estratégico Institucional de OSITRAN PEI 2019-2022 (OSITRAN’s Strategic Institutional Plan 2019-2022), https://www.ositran.gob.pe/wp-content/uploads/2019/06/027CD2019.pdf (accessed on 2 July 2019).
[7] OSITRAN (2018), Guía Práctica para la Aplicación de la Metodología de Determinación de Multas de Ositran, Nuevo Reglamento de Incentivos, Infracciones y Sanciones, https://www.ositran.gob.pe/joomlatools-files/docman-.
[8] OSITRAN (2018), Reporte anual de desempeño del OSITRAN 2017, https://www.ositran.gob.pe/wp-content/uploads/2018/05/reporte_anual_desemp_ositran_20171.pdf (accessed on 28 October 2019).
Annex 2.A. OSITRAN strategic objectives and indicators
OSITRAN uses the indicators shown in the table below to measure compliance with the seven strategic objectives and 38 strategic institutional actions (PEI 2019-2022).
Annex Table 2.A.1. Matrix of the Strategic Institutional Plan (strategic objectives and strategic institutional actions)
PEI 2019-2022
Source: (OSITRAN, 2019[1]), Plan Estratégico Institucional de OSITRAN PEI 2019-2022 (OSITRAN’s Strategic Institutional Plan 2019-2022), https://www.ositran.gob.pe/wp-content/uploads/2019/06/027CD2019.pdf.
Notes
← 1. In addition to OSITRAN, these include: the Supervisory agency for investment in energy and mining (Organismo supervisor de inversion privada en energía yminas, Osinergmin), the Supervisory agency for private investment in telecommunications (Organismo supervisor de inversion privada en telecomunicaciones, OSIPTEL), and the National superintendency of sanitation services (Superintendencia nacional de servicios de saneamiento, SUNASS).
← 2. For more information, the 2016 OECD Public Governance Review of Peru, conducted as part of the OECD Country Programme for Peru, assessed, amongst other topics, the management of Peru’s professional civil service and public administration reform agenda through the SERVIR law (OECD, 2016[6]).
← 3. Supreme Decree 012-2015-PCM, article 7, provisions 16 and 17; article 9, provision 12.
← 4. Supreme Decree No. 012-2015-PCM, article 9, provision 12.
← 5. Supreme Decree No. 012-2015-PCM, articles 8 and 9, provision 8.
← 6. https://www.ositran.gob.pe/actas/consejo-directivo/.
← 7. For instance, information used in tariff procedures is available on Ositran’s website: https://www.ositran.gob.pe/consultas-publicas/consultas-tarifarias/.