Korea - Petroleum Distribution and Sector Management Improvement Project
Fox, M. Louise
The project outcome was unsatisfactory. The low utilization of the pipeline network, contributed mostly to the unsuccessful results, and low environmental benefits. This could have been counterbalanced by the energy conservation, - key value-added component - for this was the main justification for project implementation. However, given the appraisal focus, for a sound pricing policy for energy products, the intended sectoral development impact, could not have been achieved. The key lessons re-emphasize, the importance of a consistent government commitment, particularly in addressing sensitive sector issues. The absence of this commitment, did not facilitate any progress to the development of the Energy Conservation Study, while the structure of the loan, provided little, if any, incentive for its progress. Nevertheless, the provision of an additional component, specifically to the Ministry of Commerce, Industry and Energy, could potentially have been an incentive for the energy conservation program to progress. Secondly, the pipeline's network poor rate of return indicate that even the most apparently financially-viable projects can be undermined by unforeseen exogenous factors, namely, the regional financial crises, and to some extent, the oil low price. Possibly, the requirement of satisfactory transportation quantities, could have been agreed with the refineries, with direct government enforcement.
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