6. Peruvian case studies
This chapter is aimed to make a recount and analysis of the existing efforts to implement the RIA in Peru. On one hand, it shows the work of the central government, mainly by means of the Presidency of the Council of Ministers and the Ministry of Economy and Finance. The chapter also shows three case studies detailing the work of three independent regulators: Ositran, Osiptel, and Osinergmin. The purpose of the chapter is to allow Sunass to learn some lessons and best practices of their peers.
In 2016, under the Country Programme, the OECD conducted a review of Peru's regulatory policy to assess the policies, institutions and tools used by the government and regulatory bodies in Peru for the design, implementation and implementation of high-quality regulations. The report provides an overview of the political context of regulatory reform by surveillance agencies and regulatory agencies (OCDE, 2016[1]).
This section describes the legal framework for regulatory production in Peru in the entities of the Executive Branch that precede the implementation of the Regulatory Impact Assessment (RIA), as well as the actions that have been taken with a view to achieving this objective.
Legal framework for the regulatory production of the executive branch
At a general level, the Executive Branch has the following rules that establish mandatory provisions for the entities of this branch for regulatory production:
Organic Law of the Executive Branch (LOPE, for its Spanish acronym). It establishes the principles and basic rules for organisation, jurisdiction, and roles of the Executive Branch,1 including the Presidency of the Council of Ministers (PCM, for its Spanish acronym), the ministries, and regulators. The LOPE also sets forth, among other functions, regulatory functions of the Executive Branch.2
Unique Ordered Text of the General Administrative Procedure Law (TUO LPAG, for its Spanish acronym). It establishes the regulations that must be followed by the instances of the Executive Branch in their administrative functions. The TUO LPAG regulates the administrative procedures developed by the public bodies and establishes the legal regimen applicable in order that their proceedings serve for protecting the public interest.3
Transparency and Public Information Access Law (LMPSL, for its Spanish acronym). It requires that all legislative proposals include an explanation of their purposes, by appointing the rationale supporting them (explanatory memorandum). The Regulation of this law detail thoroughly the content of the explanatory memorandum (description of reasons for dictating the regulation), which must include the information of the reviewed technical reports. The Regulation of the LMPSL also requires that the Supreme Decrees on economic and financial matters include a cost/benefit analysis,4 and an impact assessment of the proposal on the national legislation.5
Guide of Legislative Technique for the elaboration of normative projects of the entities of the Executive Power, which aims to guide the entities of the Peruvian public administration in the elaboration of normative projects of general character.6
Likewise, participation and consultation case, the entities of the Executive Branch are governed by the following rules:
(OECD, 2019[2])Political Constitution of Peru. It is the most important legal instrument of the Peruvian ordinance and prevails over any other legal regulation. This regulation sets the importance of the publicity for the enforcement of all State regulations.7 According to it, the LMPSL establishes the guidelines for the preparation, denomination, and publication of laws.
The TUO LPAG also contains important provisions for public consultation, ordering authorities to open a period of public information, especially before approving any administrative regulation affecting the rights or interests of citizens.8
The Transparency and Public Information Access Law (LTAIP, for its Spanish acronym), promotes the transparency of the State proceedings and regulates the right of the administered parties to access public information.9 The LTAIP establishes the obligation of the public entities to disseminate in their web pages different provisions and communications, to promote the transparency of their acts and the access to their information.
Framework Law for Regulators (LMOR). Applicable for Peruvian economic regulators, states the creation of User Councils, which are a mechanism for the participation of the stakeholders in the regulated sector. The regulations of this law establish that the regulators must ensure adequate transparency in the development of their functions, establishing mechanisms that allow citizens access to the information managed or produced by them and the participation of citizens in the decision-making process and in the evaluation of the performance of these bodies.10 Furthermore, regulators are subject to provisions of transparency and procedures of public consultation considered in their rules.
The rules of the LMPSL develops the provisions of the LMPSL related with the structure that must be observed for the preparation and publication of the national legislation.
By-law that establishes the provisions regarding publicity, publication of legislative projects, and diffusion of legal regulations of general character (PPD By-law). This Regulation requires that all legislative proposals of the Executive Branch – except for Legislative Decrees and Emergency Decrees, with the category of law – are available for the public for a period not less than 30 days before the scheduled date of their entry into force. Likewise, the PPD Regulation establishes the reception of stakeholders comments and promotes the permanent diffusion of these rules using web pages of the Public entities of the Executive Branch and other institutional tools.
Progress in the implementation of the RIA in the executive branch
PCM role in the RIA implementation process
The PCM is responsible for the co-ordination of national and sectorial policies of the Executive Branch. In accordance with the LOPE, the PCM co-ordinates with the other state Branches, constitutional bodies, regional governments, and civil society.11 Furthermore, it is entitled with the functions granted to other Ministries of the Executive Branch, including the formulation, planification, co-ordination, execution, and supervision of the national and sectorial policy under its jurisdiction; the approval of legislative provisions; reaching the compliance of the legislative framework, and perform the follow-up of the performance and the achievements reached at national, regional, and local level.12
In the same line, the Regulation on Organization and Functions of PCM (ROF PCM, for its Spanish acronym) determines that the PCM is the governing instance of the Administrative System of the Modernization of Public Management,13 which promotes reforms in all areas of public management, applicable to all entities and levels of government, with competence in matters of State operation and organisation, administrative simplification, ethics and transparency, citizen participation, and the promotion of the quality of regulations issued by the public administration, among others.14
The Secretariat for Public Administration, an independent body of the General Secretariat, is responsible for the management of this system.15 In turn, to fulfill its functions, the Secretariat of Public Administration has, among other, the Undersecretary of Simplification and Regulatory Analysis. The functions of this Undersecretary focus mainly on topics of administrative simplification and regulatory quality, including:
Designing, preparing, updating, proposing, and implementing policies, plans, and strategies on matters of administrative simplification, and actions on regulatory quality in the area of its competence.
Preparing reports of technical opinion of the law and autographs on matters on administrative simplification, services provided exclusively and regulatory quality.
Performing the supervision and inspection of the compliance of the regulations of administrative simplification and regulatory quality.
Designing and proposing indicators and tools that facilitate the follow-up and evaluation of the plans and other instruments related to administrative simplification and regulatory quality in the area of their competencies.
It also has the function of implementing methodologies and actions for the RIA of procedures in the legislative training process, and issuing an opinion and advising public entities on the adequacy of the RIA in the legislative training process, in matters of its jurisdiction.16
RIA design for the executive branch
The legislative production in the Peruvian state is excessive. Between 2015-19, 574 laws, 289 Legislative Decrees, and 76 Emergency Decrees were issued. This last two are types of regulations classified similarly as a law. At the level of minor level regulations, in the same period, 4,598 Supreme Decrees, 6,819 Supreme Resolutions, and 26,223 Ministerial Resolutions were issued.17 In the specific case of the PCM, during the afore mentioned period, 664 Supreme Decrees in total were issued.18
The process of drafting regulations of general nature in the Peruvian Executive Branch includes several stages, summarised below: analysis of constitutionality and legality, need of the regulation, analysis of the content of the legislative proposal, cost-benefit analysis, and analysis of the impact of the validity of the regulation in the current legislation. These elements are considered in the explanatory memorandum of the legislations that are approved. However, this process has several opportunities for improvement.
Even when public entities have data collection strategies to assist in the analysis of legislative proposals (OECD, 2019[2]), the explanatory memorandum generally do not have evidence of the existence of a public problem requiring state intervention, nor do they contain appropriate identification of public policy objectives. Furthermore, the analysis of the content of the legislative proposal is a repetition of the provisions contained in the draft legislation and these do not contemplate an evaluation of legislative alternatives. In the case of the cost-benefit analysis, in those cases where it is included, it is more qualitative than quantitative. Nor do the explanatory memorandum contemplate mechanisms for compliance with the regulation, or for monitoring and evaluation that would make it possible to follow up on the effectiveness of the regulation.
Additionally, with regard to public consultations, although there is a procedure for the participation of stakeholders through the early publication of draft legislative projects,19 each public entity uses different consultation methods at different times and there is no standardised procedure for dealing with the comments received.
Therefore, the PCM encouraged the approval of the Legislative Decree that approves additional measures of administrative simplification, and perfects the institutional framework and instruments governing the regulatory quality improvement process (RIA Law).20 This regulation includes provisions regulating instruments governing the regulatory quality improvement process, among others, the ex ante and ex post RIAs. The RIA Law established the obligation for the PCM, Ministry of Economy and Finance (MEF), and Ministry of Justice and Human Rights (MINJUS) to issue a regulation legislating RIA.
Based on that, the PCM has prepared a proposal of the regulation for implementing RIAs for entities of the Executive Branch which, by the time of preparing this report, was not approved yet, developing the guidelines for applying this tool for ensuring that the proposal of legislative intervention is the best option to contribute for solving the public problem identified based on evidence. The PCM carried out workshops with public entities belonging to the Executive Branch to notify the content of the regulation proposal and to gather their comments. Concurrently, the PCM has been preparing manuals that facilitate the implementation of the RIA. These manuals correspond to the public consultation process and the use of methodologies to perform the cost-benefit analysis.
Practices consistent with RIA: regulatory quality analysis
On 2016, the PCM encouraged the approval of the Legislative Decree approving additional measures of administrative simplification (RQA Law).21 The RQA Law sets forth the obligation of performing a regulatory quality analysis to all the legislative provisions of general nature issued by the Executive Branch where administrative proceedings or procedures are established (OECD, 2019[2]). This process is aimed to identify, review, or eliminate those proceedings resulting unnecessary, unjustified, disproportional, ineffective, redundant, or inappropriate to the laws for which they are the support; reducing burdens and contributing to the transparency of management.22
In accordance with the RQA, the entities of the Executive Branch should perform three actions: an ex ante assessment of impacts of administrative proceedings, a review of the existing regulations, and a review of regulations every three years, in order to reduce burdens. However, the RQA only assesses administrative procedures and not all the legislative measures issued by the government entities.
Even when the RQA has a different purpose and dynamics compared to the RIA, it coexists with this tool as an additional ex ante assessment mechanism of regulations, specifically, of those establishing unnecessary burdens through administrative proceedings, thus creating a cost overrun for society.
The Supreme Decree approving the Regulation for applying the Regulatory Quality Analysis of administrative proceedings set forth in article 2 of the Legislative Decree No. 1310 (RQA Regulation)23 establishes that the administrative proceedings are assessed through the RQA by applying four criteria: legality need, effectiveness, and proportionality. The outcomes of this assessment are validated by a Multisectoral Commission of Better regulation (CMCR, for its Spanish acronym) established as a permanent body that issues opinions on the assessments of the PCM.24 The opinions of the CMCR, proposed amendments to be implemented by the governmental entity, as well as the acceptance or rejection of the administrative procedure if the principles of legality or necessity are not met.
Once the CMCR endorses the RQAs, the government entities are obliged to perform a new RQA of the validated procedures three years after the date of validity, and to submit it again for consideration.
The RQA took more than 2 years, during which 2432 procedures were reviewed. Of these, 1439 were validated, 319 eliminated, and 674 declared inappropriate.25 This implies a saving for natural persons, companies, and non-profit organisations since approximately four million requests of procedures will no longer be submitted. Furthermore, 73% of eliminated procedures have impact on the micro, small, and medium enterprises (MSMEs). According with the PCM, the reduction resulting from the implementation of RQA is equivalent to S/. 286.3 million (Presidencia del Consejo de Ministros, 2019[3]).
In addition, as part of the activities of implementation of the recommendations of the OECD Review of Regulatory Policy for Peru, regarding the implementation of the RIA in the country, in 2017 the “Pilot RIA” program was installed under the direction of the MEF, PCM, and MINJUS. This pilot program allowed to review legislative projects, including the legislative decrees approved by the Executive Branch in the framework of the powers delegated by the Congress of the Republic, before their entrance into the Vice-ministerial Coordinating Council (CCV, for its Spanish acronym).26 Through this review, the need of a legislative project not breaching regulations of administrative simplification (under the direction of the PCM), constitutionality, legality of the regulation proposal (under the direction of the MINJUS), as well as the information of the costs and benefits identified (under the direction of the MEF) is analysed.
RIA in executive branch bodies
While PCM is encouraging the implementation of the RIA at the Executive Branch, the MEF and three Peruvian economic regulators have taken actions to implement RIA in their entities.
Peru has four economic regulators: the Supervisory Agency for Investment in Energy and Mining (Osinergmin), Supervisory Organism of Private Investment in Telecommunications (Osiptel), Supervisory Agency for Public Transportation Infrastructure (Ositran), and National Superintendence of Sanitation Services (Sunass). These bodies are adhered to the PCM and are entitled with technical, administrative, economic, and financial autonomy. Furthermore, these bodies are governed by the LMOR which, among other functions, grants them the authority to dictate legislations of general and specific nature, for regulating the interests, obligations, or rights of the entities or activities supervised or their users.
The case studies are aimed to detail the progress in the implementation of RIAs and the best practices of the MEF and of those peer regulators of Sunass. Each of the case studies is divided in six parts. In the first one, the legal framework implemented by the regulator to carry out the RIA is detailed; in the second, the RIA implementation process is described; in the third one, information of the developed RIAs is provided; in the fourth, the elements constituting the RIA for the regulator are described; in the fifth, there is information about the examples of the RIA performed and their consultation processes; and, in the sixth, information about other practices relevant for the regulatory policy is provided. From this description, it is intended to rescue the lessons on the RIA implementation in these bodies.
Context
The MEF is a body of the Executive Branch whose field is the Sector of Economy and Finance. In accordance with the updated Integrated Text of the Regulation of Organization and Functions del Ministry of Economy and Finance (ROF of the MEF), this Ministry enforces its powers at national level in the following fields: economic, financial, and fiscal; scales of remuneration and benefits of all nature at the public sector; public and private sector welfare policy in its scope of jurisdiction; public and private investment; public budget, public debt, treasury, accounting, multiannual programming and management of investments, fiscal management of human resources and supply; tributary, non-tributary incomes, customs, duties, and public hiring; and the harmonisation of the national economic and financial activity to promote its competitiveness, ongoing improvement of productivity, and the efficient operation of markets.
The MEF has two Vice-Ministries, Finance and Economy. The latter has, among other functions, to co-ordinate, enforce, and oversee the application of policies, strategies, plans, programs, and projects on macroeconomic and microeconomic matters, including, topics of competition and productivity (ROF of the MEF).27
One of the bodies of this Vice-Ministry is the Directorate General of International Economic Affairs, Competition, and Private Investment (DGAEICIP, for its Spanish acronym), in charge of proposing, addressing, and formulating policy measures and plans promoting more production and productivity. Among other functions assigned, the DGAEICIP formulates and proposes measures to improve the processes for issuing regulations, in order to be consistent with the efficient allocation of productive resources and not constituting obstacles to the mechanism of competition and to the market performance (ROF of the MEF).28
Likewise, the MEF —through the Vice-Ministry of Economy— is one of the bodies that integrates the CMCR analysing the RQAs.
Legal framework for performing the regulatory impact assessment in the MEF
The MEF was the first Peruvian entity in implementing mechanisms for better regulation in the country. In 2006 the “Manual for the Economic and Legal Analysis of Normative Production at the Ministry of Economy and Finance” (MEF’s RIA Manual) was prepared. Its objective is to improve and make more efficient the processes for issuing economic legislations, in order that they do not constitute obstacles to the mechanism of competition and the market performance. The MEF’s RIA Manual is applicable for the preparation of all the devices issued by the MEF, except for those legal provisions stating otherwise. Likewise, the MEF’s RIA Manual must be followed by the General Directorates of the MEF, in addition to those regulations that establish the procedures and obligations regarding the preparation of the legal devices.
Moreover, the MEF prepared some Guidelines for the quality improvement of rules and regulations; however, these have not been approved to the date. The RIA in the MEF is based on the following principles dictating its legislative policy highlighted in Table 6.1.
According with the MEF’s RIA Manual, the preparation and approval process of legislative instruments must follow certain guidelines and controls for ensuring the issuance of high-quality regulations. The Regulatory Impact Report (RIR) describes the stages of the preparation process of the regulation in the MEF and contains the impact assessment of the proposal. The RIR is aimed to apply the necessary controls and filters for the legislative analysis and incorporate the principles of the best regulatory practices.
The MEF’s RIA Manual also establishes the need to formulate consultations in the process for preparing legislations and pre-publishing the regulations, as a mechanism to increase transparency in decision-making.
RIA implementation in the MEF
One of the main reasons for the broad spread of the RIA is that it helps to improve the decision-making process defining the regulation. The RIA promotes a systematic process with a comparative approach about political decisions and raises the awareness of legislation issuers about the accurate identification of the problem to be managed, in addition to the different alternatives to achieve. Additionally, the RIA asks about the economic feasibility to implement a regulation. Another advantage of the RIA is that it provides an evidence-based analytical method that compares several proposals or alternatives; it promotes the identification of (direct or indirect) benefits and costs derived from the regulation; it sets a rational system of decisions and assesses the regulation in a cross-sectioned manner (OECD, 2019[2]).
Preparation process
The MEF’s RIA Manual has foreseen a special procedure for the approval of the eventual regulation with controls or filters to ensure the compliance of the principles governing the legislative policy of the MEF. A first control is carried out by the MEF´s Senior Management, which must approve the beginning of the preparation process of the regulation. Once the approval is obtained, the line agency of the MEF which proposes a regulation is in charge of performing the preparation of the legislative proposal and the RIR.
The quality control of the regulation is performed by the DGAEICIP, which also provides advice in the formulation of the RIR. Meanwhile, the General Office of Legal Advice (OGAJ, for its Spanish acronym) performs the legal control of the legislative proposal to ensure the constitutionality of the legislation and its coherence with the valid legal ordinance. Finally, the publication of the legislative proposal for comments is considered a control mechanism while it intends to ensure the transparency of the legislative process.
The preparation process of a legislative project entails eight stages, as seen in Figure 6.1.
Source: MEF’s RIA Manual.
Although the process has several controls, it is intended to prepare a legislative proposal, which is subject to resistance tests to identify the potential failures; that is, the process comes from the premise that the decision to be implemented is a regulation. The assessment of other alternatives to the regulation is an element that can emerge as part of the assessment that the DGAEICIP conducts as part of the quality control of regulations. In the same sense, the analysis of legality is produced on the legislative proposal before this is published in the Official Gazette.
An outstanding element of the MEF’s RIA Manual is the final step, aimed at reviewing the experience of the formulation of the standard in order to identify improvement opportunities to be implemented in other processes.
RIA training for MEF staff
In May 2017, the MEF organised a Training Workshop on Regulatory Impact Assessment. The workshop consisted of 22 meetings performed for 3 days and leaded by officers of the OECD and 2 international experts of Mexico and United Kingdom's Office of Regulatory Services. The objective was to provide training for officers of the MEF and other government bodies on the preparation and assessment of the RIA.
The workshop covered each of the elements constituting the RIA: problem definition, objective of the policy, alternatives, impact assessment, participation of stakeholders, assessment of competition, and implementation of the RIA, as well as the analysis of 9 case studies.
Furthermore, the officers of the MEF, over 90 officers of the Peruvian government of the PCM attended to this workshop, MINJUS, Ministry of Commerce and Tourism, Ministry of Culture, Agriculture and Irrigation, Ministry of Health, Ministry of Labor and Promotion of Employment, the agency on competition (Indecopi), Osiptel, Osinergmin, Ositran y Sunass, among other.
RIAs developed by MEF
Ordinarily, the MEF issues few regulations. Most of the regulations are approved in tax matters, which are exempted from the RIA. For all other regulations, the MEF has approved the MEF´s RIA Manual. However, there is no obligation to apply the MEF´s RIA Manual, so in practice the RIA is not applied systematically. Therefore, in general, the legislative formulation processes of the MEF have not followed the guidelines established in the MEF´s RIA Manual.
RIA elements
The MEF’s RIA Manual includes the principle of proportionality as part of the RIA analysis, which implies that the analysis of the costs and benefits of the proposal must be carried out in such a way as to verify that the latter exceed the costs. Unlike what is seen in economic regulators, the RIA MEF Manual has not incorporated different types of RIAs by level of impact. However, the MEF’s RIA Manual provides exclusions for the application of the RIA. These are the following:
Regulations with no direct or indirect impact on the market competition.
Minor amendments not altering the legal ordinance and the market performance.
Regulations associated with budgetary systems, debt, accounting, treasury, and public investment.
Regulations related with the administrative area of the Ministry.
Regulations associated with situations of an urgent nature in terms of timely attention to a need of public intervention, such as the prevention of an irreparable economic damage or the elimination of administrative obstacles.
As set before, the MEF does not apply systematically the RIA in practice; however, the information covered by the MEF’s RIA Manual is provided on each of the tool's analysis elements that should be considered in the regulatory process.
Problem definition
According to the MEF’s RIA Manual, the diagnosis of the problem requires all relevant and available information that can be collected on the functioning of the market involved and the behavior of the regulated parties; and when it is not possible to find evidence in the country, others can be considered or qualitative studies on the problem can be employed.
Even when the MEF lacks from a systematised process to identify the problem —such as a list of questions or criteria — the definition of the problem carried out is compatible with the RIA practices (OECD, 2019[2]). The explanatory memorandum of the regulations issued by the MEF include a description of the problems that encourage the state intervention.
Policy objectives definition
The MEF’s RIA Manual includes several principles that govern MEF's regulatory policy, some of which are linked to the definition of policy objectives. On the one hand, the principle of effectiveness demands that the standard has a clearly defined objective and the mechanisms to achieve it. On the other hand, the application of the principle of consistency implies that the standards issued must be consistent with the general objectives of the MEF, which implies the co-ordination between the different departments of the entity. In addition, the MEF’s RIA Manual establishes that the RIR must include as an analytical element, the objectives that the regulation seeks to achieve.
However, the clear definition of the public policy objective has been one of the aspects that deserve more attention at the time of the legislative formulation (OECD, 2019[2]).
Alternatives to regulation
This stage of the analysis allows to identify other tools different to regulations that might be used to reach specific objectives determined in a more efficient and efficacious manner. One of these options implies keeping the status quo and analysing the consequences of this scenario. A good practice for applying the RIA methodology is to consider all the potential alternatives, including performance-based regulations, process-based regulations, co-regulation, measures for information and education, and the application of behavior science (OECD, 2020[4]).
The MEF’s RIA Manual establishes the need as a principle that governs the MEF legislative policy, which implies the exploration of all the alternatives of intervention intending to solve a public problem, including the evaluation of the possibility of reaching the desired public policy results without the need of changing the valid legal framework. However, this assessment is not routinely considered in MEF's analyses.
Analysis of the available alternatives
The cost-benefit analysis is one of the most useful methodologies for the realisation of the RIA, because it allows to compare quantitatively the expected net impact of the different regulatory and non-regulatory alternatives. To do this, the direct and indirect costs and benefits of the impacts of these alternatives must be quantified and monetised. This evaluation ensures that regulation is only done when its benefits exceed the costs it imposes (OECD, 2008[5]). In some cases, monetary quantification of costs and benefits will not be possible, for example, when information is not available. In these cases, a conceptual identification of costs and benefits can be made to carry out a reasonableness analysis of the regulation.
The MEF’s RIA Manual states that the assessment of alternatives is one of the main components of the required pre-analysis of the process, requiring the quantification of economic impacts and possible performance over time of the evaluated alternatives. The Manual includes the cost-benefit analytical methodology. The purpose is that the costs generated by the regulation for society due to the legislative intervention are not higher than those costs created by the existing problem. The RIR considers this assessment, which must include the identification of the effects on the market competition, national and international trade, consumers, business performance, among others.
However, the MEF’s RIA Manual does not develop guidelines for conducting the analysis and, even when it is stated that a quantitative analysis should be conducted, in very few occasions the MEF has conducted such an analysis. Additionally, qualitative analyses have not been performed systematically. Likewise, as stated, the MEF does not consider in the analysis other measures apart from that of the regulation (OECD, 2019[2]) although in some cases it has considered the scenario where no legislative change is conducted.29
Regulation compliance
The establishment of the compliance strategy of the regulation creates, among other benefits, the minimisation of costs and efforts for the regulated individuals and government, the generation of incentives for the regulated individuals to comply with the regulation, as well as adequate guidelines for those who oversee the regulation (OECD, 2019[2]).
The MEF’s RIA Manual acknowledges the importance of identifying the mechanisms chosen for implementing the legislative project as part of the analysis, however, it lacks from an explanation guiding the MEF’s officers to perform such identification. The Manual also does not have provisions related to the need to ensure compliance with the regulation. In practice, in the process of the regulation preparation, the MEF does not consider this element as part of its analysis.
Monitoring and assessment mechanisms
The monitoring and assessments mechanisms of the implemented proposal allow identifying if the public policy objectives are being reached and to determine if the proposed regulation is necessary or if it can be more efficacious and efficient for achieving the proposed objectives (OECD, 2019[2]). Therefore, the assessment mechanisms must be thought from the time when the regulation is being designed.
As in the case of regulatory compliance mechanisms, the MEF’s RIA Manual acknowledges the need for identifying the follow-up mechanisms for the legislative project; however, it does not provide guidelines to be followed by the MEF’s officers to carry out the ex post assessment of the regulation. Likewise, the MEF does not conduct the analysis of this aspect during the process of the legislative formulation.
Public consultation
Public consultation is one of the most important elements of RIAs since it allows improving the transparency on decision-making, and provides efficacy and legitimacy to them (OECD, 2008[6]), therefore, it is necessary to identify the time, manner, and scope for its conduction.
The MEF’s RIA Manual establishes that consultation can be conducted through the publication of the legislative project in the institutional web page of the entity and/or in the official gazette “El Peruano”, as well as by means of panels or other means, where applicable for each case. However, consultations, when carried out, are performed only by means of the publication of the legislative project. Frequently, the MEF does not publish the legislative projects to collect comments before their approval (OECD, 2019[2]).
Likewise, the MEF’s RIA Manual grants a maximum of two-week period from the publication of the legislative project in order that stakeholders can issue their opinions, comments, or remarks. This period is shorter than that set forth by the PPD Regulations, which states the obligation of publishing legislative projects in the official gazette, El Peruano, or in the web pages during a period of not less than thirty days. Furthermore, in the practice, publications of legislative projects have been carried out considering different deadlines, which are shorter than the one established by the PPD Regulations.
Additionally, the MEF’s RIA Manual does not consider consultations prior to the development of the legislative proposal; nor does it contain specific provisions on the criteria that can be used to determine the form of the consultation and the identification of potential stakeholders, as well as the handling of public comments.
Examples of RIA and its consultation process
RIA: “Amendment of the General Customs Law Regulations”
In 2018 the Law amending the General Customs Law (LMLGA) was approved aimed to accelerate foreign trade operations, guarantee the security of the logistic chain, and adequate the customs regulations to international standards. The LMLGA also set forth the adaptation of the General Customs Law Regulations (RLGA) for the changes introduced. The regulation analysed in the RIA framework is the Decree introducing the amendments to the RLGA (DMRLGA), approved by the MEF. This is one of the few regulations that tried to apply the MEF’s RIA Manual.
RIA elements
The MEF assessment is contained in the DMRLGA explanatory memorandum.30 The explanatory memorandum explains that the regulation has been performed to amend the RLGA according with that set forth by the LMLGA and to approve the measures intended to simplify proceedings for the entry and exit of merchandise and ensure the logistic chain. This document explains the problem that motivates the amendment and that it is linked to the high costs that Peru faces in the logistic chain, which exceed costs of the same services in the main economies of the region and the world, and that reduce competitiveness to Peruvian operators, importers, and exporters. Additionally, threatens to the security of loads were identified as a problem that raises the prices of logistic services, the control of operations performed related to the cargo and customs control. These threats to the logistics chain mean that Peruvian exports are treated with greater rigor by the control services in the destination economies, which makes it difficult for products, means of transport and people to enter, and has repercussions on the competitiveness of Peruvian exports and the country's economy.
Additionally, in the development of each of the provisions of the RLGA which have been modified, the underlying problem and the reasons for amending each one of these provisions are explained. The changes to the RLGA provisions are based on the compliance or adequacy with international trades and best commerce practices. While these changes could have been optimal, the explanatory memorandum does not consider other potential alternatives that could have been assessed by the MEF as means to comply with the adequacy to these best practices and which were discarded. The explanatory memorandum only develops the final amendment proposals.
The explanatory memorandum of the DMRLGA also includes the general and secondary objectives which are sought with the adopted decision and it is concluded that there is no alternative mechanism to reach the proposed objectives since the only one possible is the amendment of the RLGA.
Regarding the cost-benefit analysis, the MEF made a calculation of the time and costs that could be saved by incorporating the proposed modifications in the processes of entry and exit of goods to the country.
Regarding the effect of the regulation over the national legislation, the explanatory memorandum only mentions that the legislative proposal is framed in the Political Constitution of Peru and in the valid regulations.
The explanatory memorandum does not include the mechanisms for complying with the regulation or for performing an ex post assessment of the regulation.
Consultation process of the RIA
According with the MEF’s RIA Manual, the MEF published the legislative project, its annexes, and the explanatory memorandum in the official gazette El Peruano, and granted a period of fifteen calendar days in order that the public issue comments and remarks to the project. Additionally, the MEF published the Ministerial Resolution determining the period for comments in the sole digital platform of the State of Peru,31 and made available an e-mail in order that the public could submit their comments.
The legislative proposal received comments from the public which were assessed by the MEF to be included in the regulation to be finally approved. However, those comments and the assessment by the MEF are not available for the public. The web page where the DMRLGA was published only provides the consultation documents, but does not show the information of the comments which were submitted, or the evaluation performed by the MEF, in contrast to that perceived as the practice for Peruvian regulators.
Other relevant practices on regulatory policy
Implementation of a RIA pilot program
As part of the “Pilot RIA” programme, under the direction of the MEF, PCM, and MINJUS which was implemented in 2017, the MEF has been performing reviews for the legislative projects. Within this review, the legislative decrees approved by the Executive Branch in the framework of the powers delegated by the Congress of the Republic were included.
These reviews have as purpose to improve the identification of the public problem and identify the need of the legislative proposal. In this sense, the regulations which were issued under this review scheme depicted better the public problem intended to be solved.
Context
Ositran monitors private transport infrastructure investments for public transportation for four sectors, by inspecting contract concessions granted by the Peruvian government according with the Law of Supervision of Private Investment in Infrastructure of Public Use Transportation and Promotion of Air Transportation Services (Law of Supervision of Infrastructure). Originally, the sectors supervised by Ositran corresponded to airports, ports, railways, and roads. As of 2011, by means of Law No. 29754, it was entitled with additional powers to supervise the services of the Electrical System of Mass Transportation of Lima and Callao (Lima’s subway). This is the only sector where the Ositran can regulate the service provision, but has not the powers for setting and reviewing tariffs for passengers, which is the jurisdiction of the Ministry of Transport. Then, in 2017, the Ositran was entitled with powers to supervise the Amazonic Hydro-route, the first of the country, because it is a transport infrastructure of national scope pursuant to the Law of Supervision of Infrastructure.
In addition to the supervisory powers of the concession contracts, Ositran is entitled for setting and reviewing service tariffs, state non-binding technical opinions on the transport infrastructure at national level, set and impose sanctions and corrective measures, and issue regulatory instruments.
Ositran has the power to dictate regulations regulating procedures under its authority, including regulations of supervision, breaches, and sanctions, controversy solutions, and attention to users. Additionally, it also has powers in other regulations of general nature applicable to the regulated individuals, the supervised activities or users, such as the regulations to regulate access tariffs of essential facilities, infrastructure and service quality standards, among others.
Legal framework for performing the RIA in Ositran
Ositran has regulatory principles that, although they do not implement the RIA, require to apply practices consistent with this tool and served as a basis for adopting the RIA within the regulator. The General Regulation of the Supervisory Agency for Public Transportation Infrastructure (General Regulations of the Ositran) addresses these principles.32
The principle of action based on the cost-benefit analysis establishes the need of assessing benefits and costs of decisions before their adoption, and their adequate support under the criteria of rationality and efficacy.
The principle of the regulatory impact assessment has as purpose that the legislative and/or regulatory assessment must consider the effects on issues of tariffs, quality, investment incentives, innovation incentives, contractual conditions, and any other issue relevant for the market development and the satisfaction of the users’ interests, therefore, the impact of each one of these issues must be assessed on the other topics involved.
The principle of transparency states that every decision must be adopted in such a manner that all the criteria to be used are known and predictable.
The Ositran’s proceedings are also governed by the principle of efficiency for the resource allocation and the achievement of objectives at the lowest cost for society as a whole.33
RIA regulation in Ositran
The implementation of the RIA in Ositran has been progressive and implied the approval of several regulations.
Resolution constituting the Better regulation Committee (RCMR34). Issued in August 2016 by the Ositran’s Presidency of the Board of Directors (PCD). The Better regulation Committee (CMR, for its Spanish acronym) is conformed of the Ositran’s President of the Board of Directors, who presides it; the General Manager; Manager of the Legal Advise Department (GAJ, for its Spanish acronym), who serves as secretary; Manager of the Regulation and Economic Studies Department (GRE, for its Spanish acronym); Manager of the Enforcement and Supervision Department (GSF, for its Spanish acronym); and Manager of the User Protection Department (GAU, for its Spanish acronym). The CMR has as function to analyse the standards, best practices, and recommendations of the Review of Regulatory Policy of Peru and other applicable to regulators.
Better regulation Policy. In October 2016, Ositran approved the Better regulation Policy. According with it, Ositran is committed to adopt and enforce the OECD’s principles, standards, best practices, and recommendations to warrant high-quality regulations. For such purposes, three action lines were installed:
The adoption of a regulatory quality management system based on the OECD’s principles, on the governance of the regulatory cycle, and standards of regulatory quality. This system incorporates gradually, the RIA and alternatives to regulations.
The preparation of directives, guidelines, manuals, or other documents to implement the Better regulation Policy.
The constitution of work teams to perform the RIA for specific cases, such as the RIA Assessment Committee (CEAIR, for its Spanish acronym) responsible of supervising its quality, accountable to the CMR.
Regulatory Impact Assessment Manual (RIA Manual). Approved in December 2017. This document orientates the Ositran in the conduction of each one of the stages conforming the RIA. With the approval of the RIA Manual, the Board of Directors also mandated the review of the procedure to prepare and review the regulations of the entity.
Procedure for Preparing and Reviewing Rules in the RIA framework (PROAIR, for its Spanish acronym). Approved by the General Management on May 2018. PROAIR incorporates two important elements for assessing RIAs:
Responsible body: it is the body or unit that identifies the need before beginning the RIA procedure; it proposes the regulation under its jurisdiction, and prepares the RIA Report.
Ositran’s RIA Evaluation Committee:35 In charge of reviewing the quality of RIAs performed by the Responsible body. This committee is constituted by a representative of the General Manager, GRE’s Manager, GSF’s Manager, GAU’s Manager, and GAJ’s Manager.
Framework for public consultation
Policy consultation is a strategy that strengthens the effective participation with the regulated parties and other stakeholders. This, in turn, will increase the trust of the public and stakeholders on the decisions and actions taken by regulators, which is the main objective of the good governance of such bodies (OECD, 2008[6]).
In addition to the general regulations applicable to the entities of the Executive Branch, explained before, the Ositran’s General Regulation also regulates the participation of stakeholders, by establishing that it is a requirement for the approval and amendment of regulations and rules.36
The RIA Manual also has detailed provisions on public consultation. Ositran has included early public consultations (used to obtain information allowing to correctly identify the public policy problem) and the public consultation during the regulatory process (which is carried out when the decision was made for issuing a regulation and it is required to obtain information to improve the proposal). The RIA Manual describes the principles governing public consultations, details their elements and stages, and develops criteria for identifying stakeholders and choosing the more adequate consultation methods.
The consultations are carried out as part of the activities of the Development and Review Procedure of the Regulations under the RIA.
RIA implementation in Ositran
Unlike other Peruvian economic regulators, Ositran verifies the compliance of obligations derived from concession contracts of national transport public infrastructure. The regulations that it issues are linked to topics about the compliance of these obligations and the compliance of the tariffs system, tolls, or similar charges that the Ositran must set or derived from the concession contracts. Therefore, the assumption for preparing a RIA is the modification, approval, or elimination of any of the elements of these regulations.
RIA preparation process
The RIA process is divided in two main elements: preparation and oversight. The first is carried out by the responsible body proposing the regulation, preparing the RIA, and starting the procedure. The second is carried out by the CEAIR, in charge of assessing the RIA quality.
Once the responsible body identifies the need for starting a RIA, the process to be followed is shown in Figure 6.2.
All RIAs are reviewed by the CEAIR before their submission to the General Management and the Board of Directors. As set previously, the CEAIR is a group constituted by a representative of the General Management, GRE’s Manager, GSF’ Manager, GAU’s Manager, and GAJ’s Manager. CEAIR is entitled with the power of blocking and returning for review those deficient RIAs before their approval.
If the CEAIR has no remarks of the proposal, it is submitted to the General Management, responsible for transferring it to the Board of Directors for its assessment. The Board of Directors can approve the proposal or request changes, which implies returning this proposal to the responsible body. Once included the modifications, it follows the same process to be submitted to the Board of Directors. The regulation must be approved by the Board of Directors and published in the official gazette in order to entry in force.
Ositran has continued to provide staff training on the implementation of the RIA, which has been carried out by GRE staff. The Procedure for the Preparation and Review of regulations within the framework of the RIA establishes that the Head of Economic Studies of the GRE is responsible for dealing with the queries made by the body in charge of preparing the RIA Report.
Source: PROAIR.
Training on RIAs for Ositran’s personnel
In February 2017, Ositran organised a RIA Workshop with conferences with OECD experts.37 The workshop had as purpose to develop the skills of the Ositran’s officers to prepare and perform high-quality assessments through the evaluation and debate of real case studies, and discussions with the course facilitators. The course was carried out in compliance with the OECD recommendations on regulatory policy contained in the report on Regulatory Policy of Peru published on August 17, 2016 and which is part of the Country Program.
RIAs developed by Ositran
Ositran, like other economic regulators of Peru, has been pioneer on the RIA implementation and the application of this tool at the Peruvian Executive Branch. However, to the date, the entity has performed only one RIA, corresponding to the review procedure of the General Regulation of Tariffs of Ositran (RETA).38
Ositran is currently revising the Framework Regulation on Access to Public Transport Infrastructure (REMA) and the General Oversight Regulation, under the parameters of the RIA Manual.
RIA elements in Ositran
Impact assessments should be addressed towards those proposals expected to create greater impacts on society and to warrant that all those proposals are subject to the screening of the RIA. The extent of the assessment depends on the importance of the regulation to analyse, that is, not all proposals should undergo the same extent of assessment. One of the principles of RIA best practices consists on recognizing that the RIA methodology should be as simple and flexible as possible, while ensuring that certain key characteristics are covered (OECD, 2020[4]).
Ositran has adopted the recommendation of the OECD that the extent of the RIA depends on the level of complexity of the proposed regulation (OECD, 2019[2]). In this study, the RIA Manual regulates two types of RIA: Basic RIA and Full RIA.
Both RIAs are different, mainly, due to the cost quantification and the level of complexity in the impact assessment and the scope of the public consultation. Basic RIAs are thought for regulations with a limited scope. On the other hand, Full RIAs are used for regulations with significant impacts requiring a quantification and monetisation of costs and benefits. Public consultation in these cases is thorough and requires more significant resources. Likewise, the compliance, monitoring, and assessment is stricter when the regulation is more complex. Table 6.2 details the differences.
To identify which of the two RIAs will be conducted, Ositran considers some criteria that are helpful for deciding. These are:
Compliance costs of the regulation for the regulated individuals. For example, long-term structural costs should be assessed by a Full RIA.
The relative importance of economic units subject to the regulation. Depending on the contribution regarding the GNI a threshold can be established for performing a Full RIA.
Level of stakeholder interest in the proposal. For example, when it comes to a controversial topic, there must be a Full RIA.
Sectors affected by the regulation. If the regulation can affect critical sectors, a Full RIA should be done.
Level of impact on competition. To determine the impact, Ositran uses a checklist including the analysis of the following impacts: limitations to the number of suppliers, limitations to the capacity of suppliers, reduction of incentives of suppliers to compete intensely, and limitations to the alternatives and information available for consumers.
The design of the RIA implemented by Ositran includes three blocks for analysis. In turn, each of these incorporates any of the RIA elements. In the first block the elements working as input for the design of the legislative proposal are analysed; the second block contains the elements for the impact assessment itself; and the third block includes the inputs for implementing the legislative proposal. The public consultation constitutes an element of the RIA tool which is not part of a specific block, but that stays constantly and cross-wised during the analysis.
Source: Ositran’s RIA Manual.
The practices of Ositran regarding each one of these elements is described below.
Problem definition
The identification of the problem is a core analytical component in the Ositran’s methodology for Basic RIA and Full RIA. The methodology considers three elements to define the problem: Delimitation, which assumes a explicit definition of the problem; causes-consequences, using the methodology of the logical framework; and magnitude. The RIA Manual grants a special importance to the latter because it works for designing a regulation proportional to the problem analysed. The definition of the magnitude is constructed from three variables:
The definition of the affected parties. This a broad-spectrum analysis and considers geographical aspects or specific groups in specific areas.
The degree of affectation caused by the problem, including the effective materialisation of damages.
The occurrence probability of the problem, which allows to design a preventive regulation.
Furthermore, the RIA Manual includes questions guiding the problem identification, applicable for Full RIAs and Basic RIAs.
Policy objectives definition
The RIA Manual of Ositran follows the recommendations formulated by the European Commission to set public policy objectives which are optimal and efficient (summarised in the acronym SMART39). Therefore, objectives must be specific, measurable, achievable, relevant, and time-dependent. Like in the case of the problem definition, for establishing the policy objectives, the RIA Manual includes questions guiding officers of the entity to perform this assessment.
Alternatives to regulation
Ositran has developed questions to guide its officers in the identification of several alternatives that can be considered in the assessment for the Full RIA and Basic RIA. Regulatory alternatives considered by Ositran in its RIA Manual are found in Table 6.3.
This stage of analysis allows to identify other tools, apart from the regulation, which can be used for attaining the set objectives in a more efficient and efficacious manner. One of these options implies maintaining the status-quo and analysing the consequences in this scenario. A good practice for applying the RIA methodology is to consider all the potential alternatives, including performance-based regulations, process-based regulations, co-regulation, measures of information and education and application of behavioral sciences (OECD, 2020[4]).
Legality analysis
This is a specific analytical element of Ositran since other Peruvian economic regulators do not include it, and because most of the time, the legal quality of the legislative proposal is linked to issues of legal technique. Therefore, the assessment of proposals requires a co-ordination of the legal and technical departments.
The legality analysis regulated by the Ositran entails a verification of the coherence of the proposals with the legal system. For such purpose, the regulator has developed two criteria that allow to perform the assessment: Performing a broad legal analysis to identify the potential problems, such as duplicity or excessive regulations; and considering the principle of hierarchy to avoid the risk that the proposal creates controversies impeding its implementation or that cause the annulment.
Additionally, the RIA Manual has also considered questions guiding the analysis that the Ositran’s officer must carry out when assessing this element.
Impact assessment: cost-benefit analysis
The Ositran’s RIA Manual has developed a Cost-benefit analysis considering the quantification and monetisation of impacts, which includes four steps:
Source: Ositran’s RIA Manual.
The RIA Manual requires identifying direct and indirect costs and benefits from the regulation for the State, companies, or citizens. Even when they are not taxable, the Manual considers some costs and benefits which can incur in the above mentioned three groups, for guiding the task of the assessment. Table 6.4 details the costs considered by the Ositran as a reference.
Regarding the benefits, in a general manner, Ositran has considered the increase of the wellbeing, improvements of the market efficiency, collateral effects, macroeconomic effects, and social objectives.
The Ositran’s RIA Manual develops thoroughly each of the steps that the cost-benefit analysis entails. The following graph describes the application of such methodology.
Source: Ositran’s RIA Manual.
In addition to the methodology of the cost-benefit analysis, the Ositran’s RIA Manual considers alternative methodologies to estimate the impact of regulations, as it is recognised that it will not be possible to apply the cost-benefit analysis methodology in all cases, aligned with the international practices (OECD, 2008[5]). These methodologies are the cost-effectiveness and Multi-criteria Decision Analysis. The application of these methodological alternatives must follow the guidelines included in the RIA Manual. This manual also contains a comparison of the methodologies (advantages, disadvantages, and when they must be used). This is an element that facilitates Ositran’s officers to identify that methodology fitting better to an specific case under assessment.
Even when the three methodologies are available, the standard assessment for a Full RIA is stricter than that for a Basic RIA. The RIA Manual establishes that the Full RIA must follow the methodology of cost-benefit analysis, while the Basic RIA can use any of the three methodologies, depending on the information available. Likewise, the analysis of costs and benefits in the Basic RIA must be, at least, conceptual if it is not possible to obtain quantifiable data at a monetary level.
Regulation compliance
Ositran is one of the Peruvian bodies that emphasises the follow-up of a regulation once it is approved. The Ositran’s RIA Manual has dedicated a special section to develop in detail the RIA elements linked to the regulation implementation where the principles for inspection actions are established, in order to warrant and increase regulatory compliance. These principles are based on the best practice principles to achieve the compliance of regulations and performing inspection processes of the OECD (OECD, 2018[7]). Table 6.5 shows the inspection principles of Ositran.
Additionally, Ositran has developed some guiding questions to define the compliance strategies.
Monitoring and assessment mechanisms
Monitoring and assessment are elements thought to be applied in the Ositran’s Basic RIA and Full RIA.
The Ositran’s RIA Manual considers three necessary aspects to perform an efficient monitoring: To identify the evidence needed; to determine the time and way in which evidence should be gathered, as well as to identify the person responsible for its collection, and the person who should provide the information. In addition, it sets the need for establishing indicators that allow to measure the performance of the legislative proposal, that must be defined and measurable through a specific period of time.
Ositran establishes important guidelines to obtain the best information for monitoring:
Search of exhaustive information at a qualitative and quantitative level.
The expected benefit from obtaining information should be proportional to the cost of data collection.
The collection and use of information should be appropriate, thus preventing cost overruns.
Transparency and usefulness of information must be guaranteed.
Ositran has also established guidelines for performing ex post assessment of regulations. For performing the assessment, this regulator has considered two actions:
To identify and collect information on indicators that allow measuring the achievement of the objectives planned by the regulation, as well as its level of compliance and effects, which are established during the ex ante assessment, when applying the impact assessment methodologies.
Methodologically determine the causal link between the estimated effects and the regulation. The Ositran’s RIA Manual recognises the methodology used by the OECD and Australia.40
Furthermore, Ositran has set criteria for establishing the framework for the ex post assessment. These are shown in Table 6.6:
As for other elements of RIA, some questions are integrated for guiding officers through their assessment.
Public consultation
The Ositran’s RIA Manual acknowledges that public consultation does not follow a single model since this is determined according to the legislative proposal intended to be implemented. However, for the optimal development of consultations, these must observe the following overall principles: participation, transparency and accountability, effectiveness, and coherence. Furthermore, Ositran has developed extensive public consultation provisions to guide its officials in their development.
Ositran has regulated two stages for performing the consultation: early stage and during the process.
Early public consultation: It is performed before designing and submitting a legislative proposal, when the problem arises that requires the intervention of the regulator. Consultations are useful for obtaining information allowing to identify the public policy problem and if the regulation is the best alternative. Not limited to the following, the methods considered for performing this type of consultation are:41 focus groups, conferences, public hearings, events of stakeholders, meetings, workshops and seminars, interviews, and questionnaires.
Public consultation during the process: It consists of the consultation performed on the legislative proposal to obtain information contributing to improve the project. Moreover, it is acknowledged that the public consultation can be performed in more than one timepoint, according to the needs of the case and the type of information intended to be obtained.
Ositran has designed a public consultation scheme applicable for consultation at the early stage or during the process, constituted by three stages.
One element highlighted in the Ositran’s RIA Manual is the Communication and Diffusion Plan of Public Consultation which is part of the execution stage. This plan aims to achieve the highest possible level of participation in the public consultation, which in turn affects its level of effectiveness, legitimacy and transparency. The Plan seeks to acknowledge the several characteristics of stakeholders that can participate in the consultation and to identify the communication channels that must be used to reach each of the stakeholders.
Another element of Ositran's public consultation that stands out is the feedback of the consultation, which is done to identify whether the proposed objectives were met, which is a best practice on regulatory matters (OECD, 2020[4]). This aspect allows to identify improvements for future consultation processes and achieve a better effectivity of the tool.
The Ositran’s RIA Manual regulates several methods and tools that can be used within the consultation process, explained below:
In the case of methods, open public consultations and specific public consultations are considered. The first ones are carried out when the problem may affect several sectors and, therefore, a broad participation is required; while the second ones are conducted for a focalised economic sector, social group, or group of companies; when it is about well-defined.
Regarding the tools, the RIA Manual considers a broad variety, among which the following are found: Public notice for written comments; public hearings for oral comments; informal consultation; circulation of work documents (for early consultations) or legislative proposals (for consultations during the process), and advisory bodies. These types of tools allow the participation through written and oral comments.
The methods and tools for public consultation respond to the roles of the regulator and the stakeholders who might be involved in its regulatory processes. In addition, considering the means that currently exist, the RIA Manual acknowledges that the consultation can be done virtually, in person, or in written, thus allowing a broad basis for public participation. In the same manner, comments can be submitted in written, electronically (virtual) or verbally, according with the mechanism used for the public consultation. Ositran has set a minimum period of 30 days for consultations during the process in order that stakeholders can submit their comments, which – as a common practice of Peruvian economic regulators— are collected and assessed through a matrix of comments.
Examples of RIA and Its Consultation Process
In this section the RIA performed by Ositran is analysed, corresponding to the review procedure of RETA and the public consultation activities developed as part of this RIA.
RIA: “Review Procedure of the General Regulation of Tariffs of Ositran (RETA)”42
In this RIA Ositran analyses the main problems that raised in the application of the RETA, valid since 200443 in order to identify if an amendment is applicable. The RETA establishes the principles and general rules for the execution of the regulatory powers of Ositran and the obligations of the service provider entities regarding the setting and application of tariffs for the offered services. Likewise, the regulation defines the general rules for the participation of users and organisations representing them. The report containing the RIA was approved in January 2019 and published for receiving comments from stakeholders. Moreover, on 21 March 2019, a public hearing was held to present the draft regulation and RIA Report, in order to gather the comments of the interested parties.
In January 2021, by Board of Directors Resolution No. 0003-2021-CD-Ositran,44 the new Ositran General Tariff Regulation and annexes, including the RIA Report, were approved.
RIA elements
With the application of the RIA Manual, Ositran determined that there were provisions in the RETA that required to be fitted to the valid regulations and to be specified to grant a greater predictability to users of the regulation. It also found that the provisions regulating the dissemination of fares, prices, offers and other concepts did not guarantee adequate and timely access to users on all the necessary information required for the proper use of public transport services, which generated unnecessary burdens for providers and users.45
These problems were defined based on the regulator’s experience for applying the RETA and the information collected during the early consultation that was carried out. Likewise, the RIA analysed thoroughly each of the problems identified, specifying their causes and consequences. The assessment also considered the existing competition conditions and features for the application of methodologies of the regulation.
The definition of the problems allowed Ositran to clearly establish the general and specific objectives of the intervention. In general terms, the aim was to generate greater predictability, transparency and efficiency in the application of RETA. At a specific level, the intervention had four objectives linked to the problems identified: to reduce uncertainties in the application of the RETA; to establish greater predictability in tariff procedures; to improve efficiency in the processing of tariff-setting procedures; and to reduce the burdens and extra costs generated for regulated subjects.
Regarding the potential alternatives to the regulation, Ositran assessed to introduce specific improvements for each identified problem for improving the implementation of RETA, which are thoroughly explained in the RIA. The constant alternative in the assessment was no intervention (status quo).
Following the guidelines of the RIA Manual, prior to the impact assessment of alternatives, Ositran performed a legality analysis to warrant that the intervention was consistent with the valid legal framework to that date.
Considering the problems identified and the objectives sought with the modification of the RETA, it was determined that the proposed modifications linked to the adaptation of the RETA to the regulatory framework and the incorporation of clarifications for greater clarity for users did not require an impact assessment, since these modifications did not generate substantial changes in the existing procedures, did not create new obligations or burdens for the administered, and did not generate costs for the regulated subjects and users.
In the case of the proposals related to the dissemination and entry into force of the Tariff and the obligation to include information on surcharges in the Tariff, it was considered that these involved modifications that have an impact on the costs for providers, users and the regulator. Considering the information available, as well as the type of costs and benefits of the regulatory proposals, it was decided to apply the multi-criteria analysis methodology.
RIA consultation process46
In accordance with the RIA Manual, Ositran conducted an early public consultation process (i.e., before the development of the draft standard), to obtain information and opinions from stakeholders, in particular, users and service providers, and to broaden knowledge about the problem identified, as well as possible alternative solutions.47 Early consultation had also as objective to warrant the transparency on the process of review and modification of the RETA. The early consultation was looking to know the opinion of the users of RETA through data and specific experiences, regarding the main problems linked to its application, aspects that required modification, and proposals for modification.
The means used was to send an online questionnaire to all the service providers supervised by Ositran, which are obliged to comply with RETA, and associations representing users and members of Ositran's User Councils. The questionnaire consisted of 14 questions related to the main aspects of RETA and an open question for stakeholders to submit additional information.48
The early consultation involved airport and port service providers (main users of RETA) and members of the Port Users Council. Comments were received and analysed in a matrix of comments. Ositran also carried out internal co-ordination with GAU and GAJ of Ositran, regarding topics linked to their jurisdictions in the application of the RETA.
Furthermore, Ositran carried out a public consultation on RETA proposal, by publishing the document for comments for stakeholders in the web site of the public entity and in the official gazette El Peruano.49 The publication in the web site included, in addition to the legislative project, the explanatory memorandum for the legislative proposal and the RIA Report. The regulator enabled two channels in order that stakeholders could submit their comments: in written at Ositran's main office in Lima and by e-mail. However, Ositran established a term of 20 working days for the submission of comments, which is less than the period established in the RIA Manual.
In addition to the publication of the proposed regulations, Ositran called for a public hearing.50 During this hearing, Ositran explained each of the RIA elements. The presentation and minutes are published on the entity's website; while the comments formulated are systematised and answered in the matrix of comment, that is part of the documents published with the approval of the regulation (Resolution of the Directive Counsel No. 0003-2021-CD-Ositran).51
Other relevant practices in the regulatory policy
Ex post assessments
The ex post regulatory assessment is not a reglementary practice at the Peruvian central government bodies (OCDE, 2016[1]). Recently, with the issuance of the Legislative Decree that modifies the article 2 of the Legislative Decree No. 1310 (RIA Law) aimed to approve additional measures for administrative simplification and to improve better regulation instruments, the ex post Regulatory Impact Assessment established as an instrument for improving regulatory quality (OECD, 2019[2]). However, this tool has not been developed at the regulatory level and has therefore not yet been implemented.
The Better regulation Policy of Ositran establishes that a systematic and periodic review of regulations is part of the Regulatory Quality Management System whose purpose is identifying and eliminating inefficient loads and requirements. Considering this and given that Ositran has started to apply the RIA in its regulatory decision-making, the ex post assessment should become an essential and automatic assessment component of the entity's regulatory formulation.
Accountability
Ositran has implemented as a management practice the submission of an annual report on its main activities, even though it is not required by law to share annual reports with Congress or any other body (OECD, 2020[4]). The regulator was committed to voluntarily deliver annual reports to the Consumer Defense Commission and the Regulatory Bodies of the Congress of the Republic to strengthen the transparency and accountability, as part of the actions to implement better regulation mechanisms in the entity. The submission takes place every year in April. The first annual report (corresponding to 2017) was submitted in April 2018, with no Plenary. On that occasion, no questions were asked about Ositran’s performance.52
Likewise, in July 2018, Ositran held a public accountability hearing, at which the presidency presented the annual report to various stakeholders.53
Context
Osinergmin is the regulator in charge of supervising the safety and compliance of energy and medium and large mining infrastructure. Additionally, it has the functions to set tariffs for regulated energy markets, supervise the hydrocarbon sector, and manage renewable energy auctions. In addition to its functions as regulator, the Law that creates the Hydrocarbons Energy Security System and the Social Inclusion Energy Fund entitled Osinergmin with the function of managing the Social Inclusion Energy Fund (FISE) and supervising its deployment.54 Likewise, through the Emergency Decree mandating urgent and exceptional measures to preserve the value of goods of the concession of the project “Improvement to Energy Security of the Country and Development of the South Peruvian Pipeline”, it was entitled with the function of appointing an administrator of the assets of the South Peruvian Pipeline concession, once the contract was terminated (OECD, 2019[8]).
The LMOR legislating the Peruvian regulatory agencies -among these, the Osinergmin- grants them powers to set and review tariffs, establish and impose sanctions and corrective measures, resolve disputes and user complaints and issue regulatory instruments. The regulatory and legislative function of Osinergmin includes the power to fix prices and tariffs on electricity and natural gas, as well as to dictate regulations and rules to regulate procedures under its jurisdiction and others of general nature.
In the electricity sector, Osinergmin warrants the enforcement of the provisions of the Law of Electric Concessions (LCE, for its Spanish acronym) and approves the procedure to establish the conditions of use and open access to electricity transmission and distribution systems o that they are consistent with the legislation in force and avoid discriminatory conditions in the access and use of the transmission and distribution systems. The regulator also establishes procedures to request or make use of the electricity transmission and distribution systems for the provision of the energy transport service. In the hydrocarbons sector, Osinergmin regulates downstream tariffs for transportation services (OECD, 2019[8]).
Legal framework for performing RIA in Osinergmin
The General Regulation of the Supervisory Agency for Investment in Energy and Mining (Osinergmin’s General Regulation) establishes the regulatory approach based on the cost-benefit analysis, so that the benefits and costs of the decisions taken by this public entity must be evaluated before they are adopted, in addition to being supported by studies and technical evaluations that prove their rationality and effectiveness. For this evaluation, the regulation considers short- and long-term assessments, as well as direct and indirect costs and benefits, monetary and non-monetary, including those costs imposed by the regulation to other State entities and private sector.
This regulation, although it does not implement the RIA, it states the application of consistent practices with this tool and served as a basis for the adoption of the RIA within the regulator described below.
RIA regulation at Osinergmin
The RIA implementation in Osinergmin has been progressive and required the following actions:
Institutional Operational Plan 2015 (IOP 2015). In 2015, Osinergmin incorporated among its institutional goals the implementation of RIAs.55 The strategy designed to comply with this goal was based on the development of three activities:
The gradual adoption of the RIA methodology through a trial period, initially, of one year.
The application of a RIA manual in 2 legislative proposals during the trial period, whose results would be assessed at the end of the period.
The establishment of minimum conditions for applying a moderate-impact RIA.
Regulation of Organization and Functions of the Osinergmin (ROF of Osinergmin). Approved in February 2016, lays the foundations for implementing RIAs in Osinergmin, by establishing the need of conducting the studies required to carry out the RIA to the regulations chosen by its Board of Directors.
Guideline of Regulatory Policy N°1: Methodological Guideline for performing Regulatory Impact Assessment in Osinergmin (Methodological Guideline). Approved in April 2016, it contains the guidelines for the assessment of the regulator’s regulatory decisions. This was a fundamental step for implementing the RIA in Osinergmin since from the approval of this tool, the regulator has a methodology to apply the RIA to its regulations.
Minutes of the Board of Directors No. 13-2016. According with the strategy approved by the IOP 2015, the Board of Directors of Osinergmin approved the beginning of the trial period for applying the RIA in two selected regulatory proposals, linked to the supervision of payments to dual power generation plants and safety in the commercialisation of LPG gas balloons (Osinergmin, 2016[9]).
General guidelines for the presentation of proposals during the trial stage on mini RIA and exclusion of RIA56 (Memorandums GPAE-61-2016 and Memorandum GPAE-108-2016). It states the content of the Supporting Reports of minor impact RIAs (or mini RIA), level of required assessment, exclusion and inclusion criteria of RIA, summary of the presentation of legislative proposals for assessing and identifying costs and benefits (Osinergmin, 2016[10]).
General guidelines about the exclusion of RIA (Memorandum GPAE-122-2017). It completes the first guidelines and establishes the assumptions for mini RIA waivers (Osinergmin, 2017[11]).
Format for legislative proposals (Memorandum GAJ-629-2016). It establishes the project form of the Board of Directors Resolution and Statement of Reasons to be used in the legislative proposals to be published for comments (Osinergmin, 2016[12]), in order to unify the information that will be available for stakeholders, which constitutes a practice encouraging transparency and predictability. This form considers the standards required in the RIA Methodology.
Guidelines for conducting Regulatory Impact Assessment in Osinergmin (RIA Guidelines). Approved in August 2020,57 it is an update of the Methodological Guide that systematises, consolidates and updates the criteria and principles of the regulatory impact assessment applied by Osinergmin. It also defines the regulator's Regulatory Impact Assessment macro-process.
Therefore, since 2016, Osinergmin already had guidelines to carry out a high-impact and low-impact RIA, as well as specific criteria to identify those regulations exempted from RIA.
Framework for public consultation
The Osinergmin’s General Rules establish that, before making a decision, the regulator must pre-publish the measures or even consider holding hearings to receive the public’s opinion and to notify the criteria that were used during the decision-making process. Furthermore, the Methodological Guideline regulates the public consultation as an essential element to apply the RIA. The guideline sets the criteria to perform the consultation process and provides orientation on the time for its conduction.
RIA implementation in Osinergmin
Between 2016 and 2020 Osinergmin has implemented progressively and gradually the RIA methodology. According with this methodology, Osinergmin acknowledges that RIA is applicable to those proposals that are considered important and that are aligned with the Annual Operational Plan and the Strategic Plan of the Institution.
According with the Methodological Guideline, the proposals that can be analysed through a RIA can be of different nature, which are classified in three groups:
Non-legislative initiatives, recommendations, and white books establishing compromises for future legislative actions.
Cross-wide legislative actions, such as rules and guidelines that address broad issues and can have a significant impact on more than one stakeholder.
Specific legislative actions, which affect a particular sector and do not have a major impact on the immediate policy environment.
The update of the Methodological Guide indicates that the RIA is compulsorily applied by all the areas of Osinergmin in charge of carrying out the RIA of regulatory proposals.
Preparation process
The preparation process of the RIA in Osinergmin follows the process depicted in Figure 6.6.
Source: Methodological Guideline.
As observed, there is a planning period for the RIA and a period for the tool execution.
The planification of the RIA is a fundamental element of the methodology used by Osinergmin to carry out the ex ante assessment of the impact of its regulations since it allows to create a strategy, in advance to conduct its assessment, considering each of the elements and variables, according to the practices of RIA. The planification entails the preparation of a plan (PAIR).
The planification stage begins with the formulation of the proposal derived from each technical area, following the structure approved by the Methodological Guideline. The proposal should be linked to the Osinergmin’s strategic and operational objectives; therefore, it is required to co-ordinate with other areas of the regulator to find common points and ensure the consistency of actions. The preparation of the PAIR and its connection with strategic plans of the entity is a consistent practice with the best practice principles for the RIA because it introduces the RIA as part of a long-term systemic plan to encourage the quality of the regulation, and fully integrated with other instruments of regulatory management (OECD, 2020[4]).
Likewise, the planification stage entails the identification of the problem that the initiative is intended to solve, the identification of the groups affected by the problem, and a first assessment of the regulatory and non-regulatory options.
To carry out these actions, the technical management establishes a working group, the Grupo de Dirección de Análisis de Impacto [steering group for impact analysis] (GDRIA, for its Spanish acronym), including all the areas linked to the proposal. The GDRIA will be responsible for preparing the RIA and will participate in all the stages that the RIA include.
Not every proposal follows the RIA process. The General Management decides if the proposal should be subject to a RIA, as well as its scope during the planification stage. Osinergmin has developed inclusion and exclusion criteria allowing to identify those assumptions where the RIA is applicable and those where the tool is not applied. These criteria are explained below:
However, the Methodological Guideline does not explain how these criteria will be used in the practice, that is, if any of them predominates over any other, and which is the content for each of them.
If it is determined that is necessary to carry out the RIA, the detail and depth of the required impact assessment is defined in the PAIR, according to the significance of the proposal.58 The more significant the expected impacts, the greater the depth of the assessment, which means that evidence collection, stakeholders consultation, and impact quantification will be more extensive. This practice implemented by Osinergmin is consistent with the best practice principles for regulatory impact assessment, which state that an RIA should be conducted in proportion to the importance of the regulation (OECD, 2020[4]).
Once the proposal is approved by the General Manager, it is included in the Osinergmin’s Annual Operational Plan so that it can be implemented the following year with the appropriate resources, thus warranting that the RIA is integrated into the regulator's strategic planning and programming cycle.
Once the planification stage is completed, the next stage is the development of the RIA.
The RIA outcomes are gathered in the Impact Assessment Report (RAIR, for its Spanish acronym), which is submitted to the RIA Committee (CAIR, for its Spanish acronym). The CAIR is constituted by the managements that advice the General Manager. In addition to control the quality of the RAIR, the CAIR also has the function of providing support and advice to the GDRIA throughout the RIA process. The RAIR approving the control of CAIR is submitted to the Board of Directors for its approval.
RIA training for Osinergmin staff
In September 2016, Osinergmin organised the International Workshop on RIAs with conferences from OECD’s experts, which was designed to train its personnel, as well as personnel from other Peruvian state bodies that were invited.59 This workshop consisted on 24 sessions spread over three days. Staff from the OECD Regulatory Policy Division directed the 20-hour length training, along with three experts from Mexico with experience on the design and assessment of RIA of the Energy Regulatory Commission of Mexico, Federal Telecommunications Institute, and with experience working at the Federal Commission for Better Regulation of Mexico.
The workshop was aimed to improve the process through which Osinergmin prepares its regulations and rules, thus increasing the transparency, accountability, and quality of these regulations, by implementing the RIA tool. The importance of performing wide consultations to stakeholders in the preparation of regulations to receive information, even online, was highlighted in the workshop.
Osinergmin also organised a workshop to apply the RIA methodology with an expert of the Office of Gas and Electricity Markets (Ofgem) of England to provide recommendations for its application.60 Additionally, internally, the Office of Policies and Economic Analysis of the Osinergmin performed workshops on the application of the RIA for the personnel of other departments of the regulator.
RIAs developed by Osinergmin
Although Osinergmin has been one of the pioneers in the implementation of RIAs —it was the first Peruvian economic regulator using this tool— its use in its high-impact version has not been extensive. Between 2016 and 2019, Osinergmin carried out 2 high-impact RIA. However, it has developed numerous mini RIA (or moderate-impact RIA). In the period mentioned before, Osinergmin performed 20 mini RIAs and assessed 67 exclusions of mini RIA.
RIA elements in Osingermin
The depth of the RIA depends on the level of complexity of the proposed regulation (OECD, 2019[2]). Based on that, Osinergmin has developed differentiated methodological criteria depending on the complexity of the regulatory assessment. The criteria for defining the level of assessment of RIAs are based on a threshold approach that considers the following variables: the magnitude of the costs that the regulation generates, the relative contribution to the energy or mining GDP of the regulated parties subject to the regulatory proposal, the level of stakeholder attention to the proposal, and the level of impact on competition.
The regulator has designed guidelines to develop a high-impact RIA and a moderate-impact RIA (Mini RIA). The Mini RIA is a summarised version of the RIA and it has been developed to be applied for cases with minor impacts. Furthermore, Osinergmin has established exclusion criteria for the Mini RIA, which can be of two types. However, it is not clear how the two exceptions differ or in which cases each one is applicable. This is an aspect of improvement in the application of the RIA for the regulator.
Osinergmin establishes the elements included in the assessment of each type of RIA and its exclusions. However, the guidelines for the assessment for each type of RIA need a better definition, to avoid confusion for officers applying the tool regarding the scope of the assessment, the bodies that can intervene, the activities to be performed, among others.
In the following sections the RIA elements that are analysed by Osinergmin on each type of RIA are developed.
Problem definition
No impact assessment can be successful if the legislative context and objectives are not defined, in particular, the identification of the problem. To the extent that the problem, its dimensions, and origin are identified correctly, it will be possible to design the instruments that reduce or eliminate the identified risks. If the problem is not defined correctly, it can create wrongly designed policies and deficient outcomes (OECD, 2019[2]).
The identification of the problem is a required component of analysis in the Osinergmin methodology for the high-impact RIA, Mini RIA, and the two exclusion scenarios.
The Methodological Guideline considers as elements for an adequate problem definition, the nature, scale, and causes of the problem on clear terms and based on evidence, the identification of the affected parties, the description of the progress of the problem over time, the deficiencies of the regulation to face it, the base scenario, risks, as well as the uncertainty that the problem creates.
Of all the elements for defining the problem, Osinergmin emphasises the description of the base scenario as an element to perform the comparison of the regulatory policy options. The description of the base scenario requires to explain the evolution of the considered situation without an additional public intervention and includes the sensitivity analysis linked to the uncertainty extent of the formulated projections. This analysis considers three assumptions:
If a regulation exists, the base scenario is the continuation of the application of the regulation without considering changes.
If there is a high probability of implementing a change to the current regulation, the base scenario reflects this possibility. This assumption requires an explanation of the severity of the problem and the effects that could occur if the appropriate measures are not implemented.
If an approved regulation exists but is not implemented, the base scenario considers the outcomes of the implementation of the regulation.
Additionally, one aspect included in the analysis is the verification of the Osinergmin's competence to address it, which includes an assessment of its position versus other state entities to lead the regulatory policy.
Policy objectives definition
This is the second step of the RIA and implies to determine the final outcome intended to be reached by the government through the regulatory policy, stating the differences of the means to be used for their achievement. No RIA can be successful if the legislative context and objectives are not defined (OECD, 2020[4]).
The Methodological Guideline establishes that the objectives should be clearly related to the problem and its causes, which is consistent with the RIA practices. In addition, it acknowledges that the definition of the policy objectives is an iterative process because they can be defined and refined during the RIA process.
The definition of the policy objectives is a component of the cross-wide analysis for the high-impact RIA, mini RIA, and the two assumptions of exclusion. However, only in the case of the high-impact RIA, the objectives are expressed in SMART terms,61 that is, the objectives must be specific, measurable, achievable, realistic, and defined over time.
The following box shows the differences of the assessment of this element of the RIA for each assumption:
The guiding documents for preparing the RIA offer a detailed description to orientate on the definition of the policy objectives and the indicators that allow their measurement. However, they are thought for high-impact RIAs.
Osinergmin has defined three types of policy objectives: general, specific, and operational. The general objectives are established when the problem is defined to identify the contribution of the intervention; while the specific and operational objectives can be modified as the effectiveness and efficiency of the policy options are assessed. These objectives are linked with the indicators that can be products, outcomes, impacts, as shown below:
Alternatives to the regulation
There are several policy instruments available to achieve the objectives anticipated by a government entity, which can be combined to obtain different options. This assessment stage allows the identification of these instruments, other than regulation, that can be used to achieve the objectives more efficiently and effectively. A good practice for applying the RIA methodology is to consider all the potential alternatives, including performance-based regulations, process-based regulations, co-regulation, measures of information and education, and application of behavior science (OECD, 2020[4]).
The assessment of alternatives to the regulation in Osinergmin is based on the principle of proportionality. Among the alternatives are non-regulatory options, self-regulation and co-regulation.
For the identification and selection of alternatives, Osinergmin has developed criteria that allow you to consider an appropriate range of realistic options. These criteria refer to the current legal framework, technical considerations or feasibility of the proposals and economic and social considerations of the stakeholders.
Furthermore, the assessment at this stage must comply with certain guidelines that include allowing the contributions of stakeholders; assessing doing nothing or improving the implementation or enforcement of existing regulations; identifying different types of intervention based on their content; ensuring that options are complete and sufficiently developed; and avoiding ruling out feasible options too quickly.
Impact assessment: cost-benefit analysis
The cost-benefit analysis is one of the most important stages of the RIA because it allows to assess the magnitude of the benefits and costs by comparing the impact of different alternatives. This assessment ensures that the regulation is performed only when its benefits overcome the imposed costs (OECD, 2008[5]).
This analysis can be conducted quantitatively and qualitatively. The quantitative analysis requires quantitative information, to the extent possible, about the size of the problem, regulation costs and expected benefits. The qualitative analysis is used when it is not possible to obtain monetary information for the quantitative analysis. However, qualitative analysis should present the information as clearly and objectively as possible (OECD, 2008[5]).
The impact assessment is a component of the analysis required for the high-impact RIA, Mini RIA, and the first assumption of the exclusion. However, the level of assessment is different for each one.
The assessment of this step of the RIA has a more extensive and comprehensive explanation in the case of the RIA, but not for Mini RIA, and the first exclusion.
Osinergmin assesses the impacts of different policy options compared to the base scenario (without a regulatory change) and based on the results produced. Additionally, this analysis does not only consider immediate and direct effects, but also indirect or secondary that other economy sectors might cause. Likewise, when quantifiable impacts are identified, but cannot be monetised, the public entity provides more insight of the most important impact estimations, appealing to a proportionality criterion.
The regulator has established a three-step analysis to assess the impact:
Source: Methodological Guideline del Osinergmin.
The Methodology Guideline details each of these steps, as well as criteria for identifying and quantifying costs and benefits.
The first step (the identification of economic, social, and environmental impacts) entails the process described below:
The potential direct and indirect impacts resulting from the alternatives (including intentional impacts which are the objectives sought) are identified and defined at qualitative level. Impacts are analysed under the proportionality criterion by considering, among others, the type of regulation, time for the analysis, and available information. Osinergmin has developed questions that help to identify the potential economic, social, or environmental impacts.
Costs and benefits are categorised in three groups: quantified and monetised impacts; quantified impacts but not monetised; and impacts expressed on qualitative or intangible terms that are non-quantifiable.
Positive and negative effects are listed by stakeholder, according to their relevance. The analysis considers two types of impacts: impacts between different economic and social groups (that implies identifying winners or losers in the policy implementation) and impacts on the existing inequities (which leads to assess if the policy options worsen or reduce the existing inequities).
The second step (the analysis of the magnitude of impacts) is in general qualitative and includes the identification of those areas where the policy options will create benefits and produce direct costs or unwanted impacts. Likewise, it includes a likelihood analysis of the impact creation and estimation of its magnitude.
In the third step (exhaustive analysis of most significant impacts), the quantitative estimations of the most important benefits and costs are produced. If it is not possible to quantify the impacts, the importance that these have for the analysis is indicated.
Furthermore, Osinergmin performs an assessment of specific impacts, such as the effects on competition and other administrative burdens; a sensitivity analysis, when there is uncertainty between the assumptions that establish the conditions of the base scenario and policy options; and an assessment of the potential obstacles and incentives for the compliance of the measures. The Methodological Guideline contains guidelines to carry out these analyses.
Comparison of alternatives
Once the impact assessment of each of the policy options is carried out, the weighting of such options is performed to justify the decisions made.
Osinergmin has established three criteria to perform the comparison between the policy options: effectiveness of the option regarding objectives, efficiency of the option for the achievement of objectives, and coherence of the option with the strategic objectives of the regulator. In addition to the cost-benefit analysis methodology, the Methodological Guideline considers alternate methodologies to estimate the impact of regulations because it acknowledges that not in all cases it will be possible to apply the cost-benefit analysis methodology, aligned with the international practices (OECD, 2008[5]). These are cost-effectiveness analysis and multicriteria analysis. The cost-benefit analysis and cost-effectiveness analysis are applied in general to the high-impact RIA, while the latter is applied to Mini RIA.
The following diagrams show the steps for applying the cost-benefit analysis, cost-effectiveness analysis, and multicriteria analysis:
Source: Methodological Guideline.
Source: Methodological Guideline.
Source: Methodological Guideline.
Regulation compliance
The establishment of a regulatory compliance strategy generates, among other benefits, the minimisation of costs and efforts for the regulated subjects and the government, the generation of incentives for the regulated subjects to comply with the regulation, as well as adequate guidelines for those who supervise the regulation (OECD, 2019[2]).
The way in which regulations are applied and enforced, and the way in which compliance with their requirements is ensured and promoted are determining factors for the regulatory system to function as intended (OECD, 2018[7]); however, the Methodological Guide has not incorporated mechanisms or criteria to enforce regulation. The incorporation of this element would strengthen the implementation of the RIA.
Monitoring and assessment mechanisms
The monitoring and assessments mechanisms of the implemented proposal allow identifying if the public policy objectives are being reached and to determine if the proposed regulation is necessary or if it can be more efficacious and efficient for achieving the proposed objectives (OECD, 2019[2]). Therefore, the assessment mechanisms must be considered from the moment the regulation is designed.
This stage of the assessment is intended for high-impact RIA, Mini RIA, and for the first assumption of waiver from the RIA. In all these cases, the compliance monitoring indicators of objectives are identified, and a general scheme of the potential follow-up and policy assessment mechanisms is prepared. However, the Methodological Guideline does not provide guidelines or orientations to identify assessment criteria or indicators which will be used for monitoring and assessment.
Public consultation
The Methodological Guideline anticipates the conduction of consultations at an early stage of the regulatory policy design. Prior to regulations approval, Osinergmin publishes the projects and organises public hearings for stakeholders. Likewise, it prepares a matrix with the comments made by stakeholders and the response of the regulator, which is published with the final regulation.
Public consultations are foreseen only for high-impact RIA and Mini RIA. For the former, consultations are mandatory, while, for the latter, they are optional. In the case of the high-impact RIA, it also anticipates prior consultations. Likewise, consultations are performed on a Consultation Document, which can be the PAIR (if information is sought for the formulation of regulatory policy) or RIA.
Consultations are carried out following a plan prepared since the beginning of the regulatory policy formulation, containing information on the objective of the consultation, the elements of the impact assessment that are being consulted (nature of the problem, objectives, and policy options, comparison of the policy options, and costs and benefits analysis), the targeted stakeholders, consultation techniques, and time assigned for the consultation.
The Methodological Guideline establishes minimum standards for consultation that allow the process to be organised. One of these serves to identify stakeholders. However, only the group that will be affected by the regulation is considered, and this analysis can be extended to cover other parties that may be affected.
As for consultation techniques, the Methodological Guideline considers the following: notification and comments, circulation for comments (to a selected group of stakeholders), focus groups, public hearings, and advisory bodies, which are consistent with the functions performed by the regulator. Additionally, the Methodological Guideline establishes criteria for the performance of consultations, explained below:
Plan the consultation at an early stage of the policy design
Ensure the participation of relevant stakeholders, especially those most affected by the policy.
Provide the time, format and tools necessary for each group to ensure the objectives of their participation.
Ensure that stakeholders can comment on a clearly defined problem, the description of possible intervention options, and the impact assessment.
Ensure stakeholder contact throughout the process and feedback.
Ensure that the RIA reflects the contribution of stakeholders in its development.
Examples of RIA and Its consultation process
This section details two cases of RIA that have been carried out by the Osinergmin and the public consultation activities developed. The first corresponds to a high impact RIA, while the second corresponds to a Mini RIA.62
RIA: “To improve the security in the commercialisation of Liquefied petroleum gas cylinders (LPG)”
The purpose of this RIA was to analyse alternatives to improve safety conditions in the commercialisation of liquified petroleum gas cylinders (LPG).
RIA elements
Applying the Methodological Guideline, Osinergmin identified as public problem the high security risk faced by people using 10-kg LPG cylinders. Despite the fact that LPG is a potentially dangerous fuel, it had not been possible to guarantee its safe commercialisation and more than 50% of the total number of cylinders nationwide had been identified as lacking the appropriate conditions for its commercialisation.
As part of the problem definition, Osinergmin analysed the LPG cylinder commercialisation market and the rules that regulate that market, which allowed it to identify existing market and legislative failures. Based on the assessment, Osinergmin was able to identify the causes of the problem,63 which generated economic incentives encouraging the companies to not renew the cylinder inventory, and to not comply with the security conditions set forth in the valid Technical Regulations.
The RIA included the definition of the general and specific objective of the intervention, following the “SMART” criteria, established for high-impact RIAs. The objective identified by Osinergmin considers a specific goal that can be measured and realistically achieved, within a specific period of time. At a general level, the creation of incentives in order that the commercialisation of bottled LPG is performed in adequate security conditions was set as the objective, while in the specific level, the decrease to 30% of the ratio of LPG cylinders of the national inventory with high-risk noncompliances of technical and safety conditions was considered.
The RIA assessment considered three regulatory policy options, considering Osinergmin's scope of competence:
To keep the regular supervision of cylinders, consisting in supervising the integrity of cylinders (baseline setting).
To implement an electronic labelling system. This proposal consists of adding an electronic device (transponder) fixed in the body of each cylinder with relevant information allowing the automatic identification and traceability through radiofrequency.
To implement the supervision of technical and safety conditions of cylinders. According with his proposal, those cylinders with non-compliances of technical and security conditions in a high level will be immobilised.
The assessment of each of the options was carried out using the methodology of cost-effectiveness analysis. As a result of the analysis, the implementation of the third option was recommended.
The analysis also included the identification of the main affected parties (positively and negatively) by the proposal. Additionally, the information of the ex post follow-up and assessment mechanisms of the regulation was included.64
RIA consultation process
The RIA consultation process involved several stages. During this process, the Osinergmin employed two consultation mechanisms. The first one consisted on the publication for comments of the document that includes the assessment carried out by Osinergmin (Consultation Document DC-001-2016-RIA/OS). According to the regulator's usual practice, the publication was performed in the institutional web page. In addition, Osinergmin organised an open public hearing in order that all agents with interest in the proposal could participate. The regulator also invited the Ministry of Energy and Mines (MINEM), National Institute for the Defence of Competition and Protection of Intellectual Property (INDECOPI, for its Spanish acronym), as well as the private sector, and society (bottling companies, consumer associations, and legal firms).
In September 2016 the first version of RIA was published in the institutional web page of Osinergmin to receive the comments from the public (Osinergmin, 2016[13]). The public hearing was performed in November 2016, which included the presentation of the used RIA methodology and the situational condition of the commercialisation of LPG gas balloons. Likewise, three conferences of the National Society of Mining, Petroleum and Energy, MINEM, and the Peruvian Association of Gas Companies were considered.
The comments formulated during this first part of the process were analysed and answered in a document which was published in the institutional web page of Osinergmin in December 2016. These comments created a new assessment by the regulator. From this assessment, Osinergmin prepared a new consultation document, which was published in its institutional web page in December 2016.
Afterwards, in October 2018, after collecting comments from stakeholders, the Board of Directors approved the listing of conditions of the technical and safety conditions in the cylinders for bottled Liquified Petroleum Gas (LPG) that warrant the implementation of the Medida de Seguridad de inmovilización y el marco de supervisión [safety measure of immobilisation and supervisory framework] (Regulation of LPG). The LPG Regulation and the document of final analysis of RIA were published and are available in the web page of the regulator.
Mini RIA “Procedure proposing the improvement of the mechanism of tenders for hiring electricity supplies”
In this Mini RIA, Osinergmin analyses options to improve the contractual mechanism in electric generation from the bidding procedure.
Mini RIA elements
During the Mini RIA, Osinergmin identified the existence of deficiencies in the bidding procedures for the acquisition of electric energy supply, linked to the incentives for the development of new electric generation projects, the management of risks between the contracting parties, the evolution of the updating factors of each contract and its link with the price of the service and the revision of conditions established in the contracts.
The evaluation included the causes of the problems identified (which respond to a dissociation between the objectives intended by the bidding and what really happened), and the justification for the intervention.
Additionally, the Mini RIA included a development of the objectives (general and specific) that were intended to be established from the intervention. In general terms, the intervention had as purpose to design contractual mechanisms to improve the bidding process of the electric supply of regulated clients.
Regarding the options of policy, Osinergmin assessed five alternatives applicable for the case:
Option 0: The base scenario that consisted in keeping the situation without changes to the regulatory framework.
Option 1: Maintain the existing contracting system but incorporating the obligation of establishing a Bidding Plan of binding nature, splitting the bidding processes intended to the installed generation (basic offer – existing) and projects of generation (offer growth). Likewise, it considered to define the boundaries for the exclusion period and the contractual terms.
Option 2: Corresponds to Option 1 but incorporates a mechanism for firm power recognition that allows generation projects with Renewable Energy Resources to participate in bids.
Option 3: It is a modification of Option 1 and consists of the migration to a system of products based on firm energy blocks with associated power similar to the Chilean model, without distinguishing between installed generation and generation projects. Only in one of these blocks would power and firm energy be acquired.
Option 4: Starting from Option 1, in addition to the creation of the Bidding Plan, block segmentation was included, as in Option 3. In addition, the energy price indexation formula for contracts signed with generation projects was modified.
The assessment of the impact of each of these alternatives followed the methodology of cost-benefit analysis, from a qualitative approach, taking as a reference the base scenario or not making any intervention. Osinergmin established that option 4 was the one that registered greater benefits than costs.
Mini RIA consultation process
During the consultation process of the Mini RIA, Osinergmin employed two consultation mechanisms. The first was the publication on the institutional website of the document that compiles the analysis carried out by Osinergmin. The second was a working meeting to explain in detail the content of the proposal and gather comments and suggestions from stakeholders. In this meeting the regulator presented each of the elements analysed in the Mini RIA. The presentations used during the workshop, as well as the list of those attending the meeting, are published on the institutional portal of the entity.
Stakeholder comments were received through two means. The first was a four-part outline survey given to those who participated in the workshop. This survey gathers information on 4 specific aspects: the order of relevance of the problems identified; additional aspects not considered by the regulator that would affect the problem; the assessment (by importance) of the policy alternatives; and specific solutions proposed by the stakeholders that could be useful to solve the identified problems. The second mechanism was the submission of comments received during the Mini RIA publication period.
The comments received and the responses to these were included in a comment matrix available publicly on the Osinergmin corporate website. The proposal for intervention has not been approved.
Other relevant regulatory policy practices
Ex post assessments
The ex post regulatory assessment is not a mandatory practice of the central Peruvian government entities (OECD, 2016[14]). Notwithstanding, during 2017, Osinergmin carried out seven regulatory policy impact assessments, the results of which were reflected in the Policy Assessment Documents (PAD). These ad hoc assessments were aimed to quantify ex post the impacts of regulations and supervision actions on audited activities, using different criteria. The PAD performed by Osinergmin are the following:
Impact assessment of the supervision of the public lighting service: It analysed the cost-benefit ratio of changing the supervision process using the consumer's willingness to pay
Impact assessment of the impact of the regulation of energy losses: It analysed the impact of a regulatory change focused on reducing energy losses by measuring consumer savings.
Impact of the impact of safety and accident prevention regulation: It analysed the impact of a change in monitoring practices in terms of prevented deaths
Impact assessment of the supervision of metrological control: It analysed the change in the supervision in terms of costs and social benefits.
Impact assessment of the supervision of mining activities: It analysed the change in the supervision practices in terms of prevented deaths.
Impact assessment of the supervision of electric meter contrast: It analysed the impact of monitoring practices in terms of consumers savings.
Impact assessment of fuel quality supervision (gasoline and diesel): It analysed the impact of a reduction in the number of low-quality gas stations in terms of consumers benefits.
In addition, Osinergmin manages two investment programs (Social Inclusion Energy Fund – FISE and Electric Social Compensation Fund – FOSE), of which an impact assessment is conducted according with the methodologies set forth by the MEF.
With the accumulative experience in the conduction of assessments, Osinergmin might develop an intern guideline to orientate future efforts. Likewise, it could establish measures for conducting assessments in a more systemised way.
Context
Osiptel is one of the four economic regulators of Peru created in the decade of 1990 to supervise the transition of Peru to a liberal economy and allow a long-term stability in key economic sectors (OECD, 2019[15]).
Its first role as regulator was to watch the Peruvian telecommunication market liberalisation in its first years of operation. Osiptel ensures the quality and efficiency of services to users and the regulation of the sector tariffs, as well as regulates and supervises the competition and protection to consumers in the telecommunication market (OECD, 2019[15]). As regulator, Osiptel is governed by the LMOR, which grants powers to set for public services in the telecommunication sector, establish and impose sanctions and corrective measures, resolve disputes in the telecommunications sector, act as second instance for user complaints, supervise that regulated entities respect the rules and regulations of the sector issued by the regulator and issue regulatory instruments.
Legal framework to perform the RIA in Osinergmin
The General Rules of the Supervisory Agency for Private Investment in Telecommunications (Osiptel’s General Rules) contain several provisions containing guiding principles for decision-making, including regulations. These are the principles of action based on cost-benefit analysis, transparency and functional decision analysis.
According to the former, the benefits and costs of the regulator’s actions must be assessed before their conduction and be supported to endorse their reasonability and efficacy.65 This assessment must take into account short- and long-term projections, as well as direct and indirect costs and benefits, either monetary or non-monetary.
The principle of transparency, in turn, establishes that the projects of legislative and/or regulatory decisions will be pre-published to receive opinions of the general public.66
Finally, in accordance with the principle of functional decision analysis, Osiptel should take into account the effects of its decisions on issues of tariffs determination, quality, incentives for innovation, contractual conditions, and any other feature relevant for the market development and the satisfaction of the users’ interests, for which the impact of these aspects should be assessed.67 Likewise, according with this principle, the performance of Osiptel should be guided also for the search of efficiency in the allocation of resources and the achievement of objectives at a lower cost for society.
Although this regulation does not implement the RIA, it states the application of consistent practices with this tool and served as a basis for adopting the RIA within the regulator, described below.
RIA regulations at Osinergmin
In March 2018, Osiptel approved the Guidelines on Regulatory Quality (LCR, for its Spanish acronym), with the purpose of providing the regulator with a mechanism that allows it to carry out a legality and cost-benefit impact analysis of its regulations, thus strengthening the good governance and the Better regulation Policy (OSIPTEL, 2018[16]).68
The LCR includes a Manual of Technical Regulations (to perform the legality analysis) and a Manual de la Declaración de Calidad Regulatoria [manual of regulatory quality statement] (to perform the impact analysis of costs and benefits of each regulation). The approval of LCR was carried out through a participatory process pursuant to the principles set forth in the General Rules of Osiptel. On one hand, it was published for comments of the content of both manuals, LCR, and its forms.69 On the other, a public hearing was convened.70 The comments formulated during this process were considered in the document which was finally approved by Osiptel.
The LCR work as guiding principles of regulatory governance in Osiptel. These are aimed to ensure that the regulatory decisions of this body are issued within a planned, transparent, and participatory process, ensuring that these decisions are justifiable, reasonable, legal and efficient. In turn, the two manuals constituting the LCR allow the technical and legal assessment of the legislative proposal, that is, the application of the RIA in practice.
The Regulatory Quality Statement Manual (MDCR, for its Spanish acronym) allows the implementation of the RIA guaranteeing that Osiptel's decisions are justifiable, reasonable, legal, generate benefits and are efficient. On the other hand, the Manual of Technical Regulations (MTN) sets forth the provisions for standardizing the preparation of regulations issued by the Board of Directors regarding the language, structure of the regulation, and means of publication.
Source: LCR.
Framework for public consultation
As stated previously, the General Rules of Osiptel regulate the participation of stakeholders in regulatory decision-making since it established that the legislative and/or regulatory projects should be published to receive opinions from the public.
Additionally, the LCR orientate the actions of the public entity in order that these are transparent and to allow the participation of stakeholders in the regulation. Likewise, the MDCR contains provisions on public consultation, applicable to the two modalities of RIA implemented by Osiptel. These provisions guide officials in the dissemination of the legislative proposal, how they should conduct the consultation process, and the effective participation of stakeholders.
RIA implementation in Osinergmin
Osiptel complies with several functions derived from the general and specific rules regulating it, whose purpose is to ensure the growth and maintenance of the public service market of telecommunications.
This regulator has approved regulations by analysing the impact that these generate since 2016. However, as of March 2018 the regulator applies the RIA using the methodology approved in its LCR.
Osiptel has considered that the application of LCR and its manuals should be mandatory to all those procedures leading to rules of general nature or, if they are of specific nature, are applicable and/or impact companies or users of the sector. Therefore, the RIA is applied for decisions that:
Create new obligations and/or sanctions for the operating companies or for the users, make the existing ones stricter or generate higher costs for their compliance.
Create or modify rules of procedures which can create administrative burdens or compliance costs for operating companies or users.71
Reduce or restrict benefits or rights for operating companies or users.
Establish or modify definitions, classifications, methodologies, criteria, or any other impacting the rights, obligations, benefits, or procedures of individuals.
These decisions are filed under two types of procedures.72
Procedures for the issuance of regulations approving provisions applicable to the current and future public service companies of telecommunications and/or users.
Regulatory procedures approving provisions applicable to current and future public service companies of telecommunications.
The RIA is applicable to all the Osiptel’s decisions. However, the LCR has established two suppositions where the analysis of alternatives has variations. The first assumption corresponds to cases in which regulation derives from the express mandate of a higher-ranking law or regulation. In these cases, maintaining the status quo (non-intervention) is excluded from the analysis alternatives. The second assumption corresponds to cases in which the regulation must establish deadlines for carrying out an activity (from Osiptel and/or the regulated individuals). In these cases, the analysis of alternatives can be excluded.
Preparation process
The RIA in Osiptel involves several entities of the government. Even when a particular area leads one of these procedures, the LCR has the need to carry out co-ordination between areas and, when it is noticed that the intervention is transversal to multiple functions, Interdepartmental Committees can be enabled, whose members represent each area involved in the legislative proposal. Thus, it is ensured that the decisions issued respond to the functions established for the entity, in a general way.
Once the responsible department or the Interdepartmental Committee has completed the preparation of the RIA, this follows the following procedure for its approval (see Figure 6.13).
All RIAs are controlled by the General Management before being submitted to the Board of Directors. The General Management has the power of blocking and returning for review those deficient RIAs before their submission to the Board of Directors.
Source: LCR.
RIA training for Osiptel staff
In September 2016, Osiptel organised a Forum on Regulatory Impact Assessment where an officer from the OECD Regulatory Policy Division participated. In such opportunity, the regulator explained the proposed Guidelines on Regulatory Quality and made it available for comments from all stakeholders.
Additionally, Osiptel’s officers have participated in training activities on matters of RIA performed by other Peruvian public entities.
RIA developed by Osiptel
Osiptel like other economic regulators in Peru, has been a pioneer in the implementation of RIA and in the application of this tool at the level of the public management in Peru. To date, Osiptel has performed 28 RIAs using the different methodologies approved by the LCR. Some of these RIAs are still under assessment.
RIA elements in Osiptel
One of the principles of RIA best practices consists in acknowledging that a RIA should be carried out in proportion to the importance of regulation (OECD, 2020[4]). Osiptel’s RIA is governed by the principles established in the Osiptel’s General Rules,73 in particular the principle of proportionality to ensure that the pronouncements issued have followed an analysis that weighs the impact of the decision.
Based on the proportionality principle, Osiptel has designed two types of RIA: medium-/high-impact RIA and Low-impact RIA. The first requires a more detailed analysis. However, even though both RIAs would be differentiated, mainly, by the level of analysis, the LCRs do not include accurate information that allows to identify these variations; thus, it is not possible to identify the characteristics of these types RIAs and their scopes. Likewise, in both cases, public consultation is carried out in the same way, except for emergency cases set forth by the Osiptel’s General Rules.
On the other hand, although the RIA is developed based on the jurisdiction assigned to the regulator and the principles governing its decisions are followed, it is not part of an annual regulatory planification linked to the strategic framework of the public body.
Problem definition
To the extent that the problem, its dimensions, and origin are identified correctly, it will be possible to design the instruments that reduce or eliminate the identified risks. If the problem is not defined correctly, it can create wrongly designed policies and deficient outcomes (OECD, 2019[2]).
According with the LCRs, the analysis of this element includes four aspects:
Description of the evolution of the study subject and its legal framework.
The assessment of the permanence of the problem if the status quo is kept or it is decided to not intervene.
From these four aspects, the approach of the problem entails a deeper analysis. Through the use of questions, it is intended to describe the problem, its manifestations, most relevant effects and evolutive trends, as well as to identify the evidence available, the affected agents and markets, and similar cases abroad that may serve as a reference.
Osiptel acknowledges the importance in the use of evidence to achieve this analysis, therefore, it establishes the use of several data sources. The information that can be obtained from market agents or stakeholders is not only considered, but also it is intended to use information available internally from the regulator, academics, specialists on the subject or consulting committees, as well as that which may be obtained from international sources. Likewise, the mechanisms that can be used to obtain such information are established,74 which must consider the level of representativeness of who provides the information.
The analysis of the potential causes of the problem includes identifying whether the problem is due to a regulatory failure, a market failure, or an action caused by an agent. Furthermore, the analysis involves determining the mistakes or defects on the design and implementation of other regulations intended to address the same problem.
Policy objectives definition
The definition of policy objectives implies determining the final result that the government wants to achieve through regulatory policy, differentiating it from the means that will be used to achieve it. No RIA can be successful if the legislative context and objectives are not defined (OECD, 2020[4]).
Osiptel’s LCR establish the need to identify general and specific objectives, which must be related to the root causes of the problem. The general objective must be directly related to the cause of the problem detected.
The analysis also includes determining the legal basis for the intervention, that is, if the regulation is issued for complying with the provisions of a law or regulation of higher hierarchy and if the regulator has the enough jurisdiction to intervene.
As in the case of problem definition, to establish the objectives of the regulation, the Guidelines use questions that guide the entity’s officers through the conduction of the analysis.
Alternatives to regulation
This assessment stage allows the identification of other tools, different from regulation, that can be used to achieve the determined objectives in a more efficient and effective way. A good practice for the application of the RIA methodology is to consider all possible alternatives, including performance-based regulations, process-based regulations, co-regulation, information and education measures and application of behavioral science (OECD, 2020[4]).
LCRs formulate questions so that public entity officials can conduct their analysis and identify possible alternatives that could be implemented to solve the problem, their differences, and their effectiveness.
Impact assessment: cost-benefit analysis
The cost-benefit analysis is one of the most important stages of the RIA because it allows to assess the magnitude of the benefits and costs by comparing the impact of different alternatives. This assessment ensures that the regulation is performed only when its benefits overcome the imposed costs (OECD, 2008[5]). This analysis can be conducted quantitatively and qualitatively. The quantitative analysis requires quantitative information, to the extent possible, about the size of the problem, regulation costs and expected benefits. The qualitative analysis is used when it is not possible to obtain monetary information for the quantitative analysis. However, the qualitative analysis must show the information in the most clear and objective manner possible (OECD, 2008[5]).
Osiptel's LCRs require the identification of direct and indirect benefits and costs to the regulated agents and the regulator, according to each alternative, as well as the variations that could occur in them over time. The LCR consider, in a referential way, the costs and benefits that can be considered in the analysis, which are detailed below:
According to the LCRs the costs and benefits must be based on market prices and analysed in incremental terms, that is, only those additional costs and benefits generated by the proposed regulation, over the current situation, are considered. Furthermore, this analysis must be consistent with the principle of proportionality; in that sense, regulatory proposals that aim to solve high-impact problems must be based on a more detailed cost-benefit analysis.
The methodology to analyse the alternatives depends on the information that Osiptel has available. LCRs allow the use of additional information contributing to the assessment of available alternatives, such as outcomes obtained in other countries, related literature, among other. When the information is available, the analysis should be quantitative, otherwise, a quantitative analysis of alternatives will be performed. For such purposes, Osiptel uses two analytical methods for the quantification: direct methods (or declared preferences) and indirect methods (or revealed preferences).75
Osiptel's LCRs develop in detail each of the steps involved in carrying out the quantitative and/or qualitative cost-benefit analysis of alternatives. The following figure describes the application of such methodology, according with LCRs:
Source: MDCR.
As observed, one of the steps for applying the cost-benefit analysis is the sensitivity analysis. This consists of performing simulations on the effects of the regulation to identify its potential consequences and minimizing inherent mistakes of estimations. Moreover, decision-making is carried out following two criteria:
Cost-benefit ratio: If the indicator is higher or equal to 1, benefits are higher than costs and the legislative proposal derives in positive net effects; if it is lower than 1, benefits are lower than costs and the legislative proposal derives in negative net effects.
Net benefits: If this indicator is positive or equal to zero, benefits are higher or equal to costs and the proposal has positive effects, while, if the indicator is negative, benefits are lower than costs and the proposal derives in negative effects.
In addition to the cost-benefit analysis, LCRs consider the methodology of cost-effectivity analysis and multi-criteria analysis, aligned with the typical practices considered for performing the RIA (OECD, 2020[4]). The former consists of a four-step analysis by which the quantification of costs and identification of benefits of each alternative, the effectiveness quantification for each option, and the selection of the best outcome are achieved. The multi-criteria analysis considers the quantified costs and/or benefits in an ordinal and weighted manner.
LCRs have not established differences for applying these methodologies for the types of RIAs that can be done by Osiptel. However, to date, mainly multi-criteria analysis RIAs have been completed.
Regulation compliance and monitoring and assessments mechanisms
The establishment of a regulatory compliance strategy creates, among other benefits, the minimisation of costs and efforts for the regulated individuals and government; the generation of incentives in order that the regulated individuals comply with the regulation, as well as adequate guidelines for those who oversee the regulation (OECD, 2019[2]). The way in which regulations are applied and enforced, and the way for ensuring and encouraging the compliance of their requirements are determinant factors for the intended operation of the regulatory system (OECD, 2018[7]).
Additionally, monitoring and assessment mechanisms of the implemented proposal allow to identify if the public policy objectives are being achieved and determine if the proposed regulation is necessary or if it can be more efficacious and efficient for reaching the proposed objectives (OECD, 2019[2]). Therefore, the assessment mechanisms must be thought from the time when the regulation is being designed.
Osiptel’s LCRs develop the compliance mechanisms of the regulation and those of monitoring and assessment in a single step, called “application of the selected solution”. This has as purpose to establish the level of compliance of the regulation and the follow-up mechanisms that can be implemented to verify its effectiveness.
Regarding the compliance of the regulation, as with the other RIA Elements, LCRs establish questions in order that the regulator’s officers consider certain aspects in their assessment. In particular, it is required to identify three aspects: The incentives that the regulated agents might have to comply with the regulation, if the supervisory procedures are applicable, or if it is necessary to implement new procedures and the measures that could be set for breaches. However, LCRs do not have provisions guiding officers to identify each of these aspects.
Regarding the monitoring and assessment mechanisms, LCRs establish that the efficacy of regulations approved by Osiptel (regulations and pricing) can be assessed two years from its entry into force. However, LCRs do not have guidelines for performing this assessment. The incorporation of guiding criteria might improve the strategy to perform the follow up of the regulation compliance and check if this complies with the objectives for which it was issued.
Although the LCRs contemplate both steps of analysis of the RIA, it is important to define more clearly that they are different analyses, whose criteria and parameters of evaluation will differ, depending on whether it is a question of determining the mechanisms of compliance with the regulation or mechanisms of compliance with the regulation, aimed at verifying its level of effectiveness.
Notwithstanding the above, one aspect that stands out from the LCRs is to establish that during the RIA it will be identified whether the implementation of the regulation will require the creation or modification of of computer systems, networks, transmission systems or processes, as well as co-ordination with other State entities or organisations. Likewise, this assessment step requires to identify if the regulatory proposal creates or modifies proceeding rules for Osiptel’s procedures.76
Public consultation
Prior to the issuance of LCRs and their manuals, Osiptel had implemented some mechanisms for the participation of agents interested in the regulator's decision-making process. These mechanisms were included in the regulations legislating procedures for issuing regulations by the CD and for setting or reviewing maximum interconnection tariffs or charges.77
These mechanisms operated in two moments: Before the approval of the regulatory proposal and before the approval of the final text of the regulation. In the first one, Osiptel required information for preparing regulatory proposals and measured the response levels to these proposals. In the second, before the approval of the regulation, Osiptel disseminated the text of the regulation in the official gazette and its web page to receive comments from any stakeholder. The publication also included the explanatory memorandum (a brief description of reasons for issuing the regulation), and the report supporting the legislative proposal. Then, Osiptel disseminated the comments formulated about the legislative proposal, performed a matrix of comments and, in certain events, created spaces for public discussion,78 and then analyse the comments and the necessary modifications to the regulations, before finally arranging for their approval and publication.
Like its regulatory peers, Osiptel has established two moments for consultation: before the regulatory project approval and before the approval of the final regulation or legislation.
Before approving the legislative project: The purpose is to gather information about the problem and/or solution alternatives. Even when LCRs require to determine the mechanisms to collect information and the agents to whom such information was asked, they do not establish guiding criteria about the mechanisms that can be used or the subjects that can be consulted, neither about the way in which these should be identified. In practice, Osiptel has sometimes conducted informal and non-mandatory consultations at the initial stage with external stakeholders when the regulatory project assessment has begun. During these consultations, Osiptel can ask information or feedback about the topic, statistics, or impact. Feedback comes from users, companies, or relevant stakeholders. There is no counseling body, but sometimes there is contact with a group of private companies ad hoc to ask opinions at the onset of the regulatory process.
Before the approval of the final regulation: It consists of the consultation performed for the regulatory proposal. As in the case of the consultation performed before the approval of the legislative project, LCRs formulate questions guiding Osiptel’s officers on the aspects to be considered for the conduction of the consultation process. Based on these questions, there is the purpose of determining the way in which the regulator notified the proposal to the stakeholders, the agents that were informed, the channels that were used for performing the consultation, and the way they were made available for the public. However, LCRs do not have specific provisions about the methods and tools that can be used during the consultation process, or about which criteria can be used to determine the form of the consultation, and the identification of the potential stakeholders.
The method that Osiptel uses in general to perform the public consultation is the publication of the legislative proposal in the web site of the entity, as was the usual practice before the implementation of LCRs. In accordance with these, when a draft is published for comments, the supporting documents should be included in order to provide stakeholders with more information prior to the consultative process, for example, the cost model where appropriate, in Excel format. In some cases, a press release is also drafted.
Another consultation mechanism used are public hearings, which are performed when there is a legal ordinance setting the provision, or when because of the nature, scope, or impacts of the regulation, it is considered necessary.79 For example, changes in tariffs and interconnection charges require that these hearings be held. In the case of tariff regulation, public hearings must be held in three cities (one at North, one at South, and one at the Center) and the selection should be done according with the number of people using the regulated service. Public audiences should last at least 20 days (OECD, 2019[15]).
Osiptel has tried innovative methods, such as broadcasts via Facebook Live, to increase the participation of the groups of users, as well as to hold occasional seminars with academic audiences. However, the efficacy of these methods has not been assessed yet (OECD, 2019[15]).
As the typical Osiptel’s practice was, the final regulation and the matrix of comments of the consultation are published as a document on its web page. The matrix includes the response of the Osiptel with the explanation and rationale of the decision. The resolution approving the regulation is also published in the official gazette El Peruano, with a remark that all the supporting information can be consulted in the web site of the entity.
When a new regulation is approved, Osiptel issues a press release and organises interviews, forums, or seminars to provide more detailed information on new regulations (OECD, 2019[15]).
While the RIA establishes the need for public consultation prior to the approval of a regulation, there is an exception to this rule, and it occurs when regulations are considered urgent or necessary.80 In these cases, the regulation to be approved is exempted from the consultation process.
Osiptel, like all the other Peruvian economic regulators, has a User Board, which is mechanism to allow the participation of stakeholders in any sector. These might participate in public consultations; however, User Boards have not been established to be able to operate from this year.
Even though the Guidelines establish the possibility of early consultations, most public consultations have been carried out on proposed regulations.
Examples of RIA and Its consultation process
In this section we detail two cases of RIA that have been carried out by Osiptel and the public consultation activities developed, corresponding to the determination of important providers in the markets of access to the mobile network and mobile service and the procedure for the application of separate accounting for companies in the telecommunications sector.
RIA: “Determination of important suppliers in markets of access to mobile networks and mobile service”81
This RIA, completed on May 2018, was one of the first performed by Osiptel after the approval of its LCRs. The RIA was aimed to analyse the market conditions for accessing to the public network of mobile services and wholesale access to the telecommunication service from mobile terminals, to determine if there were changes on the last 3 years warranting or not to keep the statement of absence of important suppliers.
RIA elements
Under current regulations, it is an obligation of major suppliers of public telecommunications services to grant access and shared use of their telecommunications infrastructure to any concessionaire of public telecommunications services that requests it, as well as to offer the resale of their traffic and/or public telecommunications services at reasonable rates, subject to a system of non-discriminatory wholesale discounts.
Both conditions are necessary for a potential new operator - reseller to enter the market to compete directly in the retail market. The inability to access these services prevents the potential operator-reseller from originating the calls of its future users, offering full-duplex voice call services, SMS and MMS; and, therefore, prevents it from competing effectively.
Based on the RIA, Osiptel identified the public problem to be assessed which consisted in the fact that, as of 2014, there were no network operators that had access to the public network of other mobile service operator to provide the origination service82 of calls in such network, as well as there were not also transactions in a wholesale market access to communication services from mobile terminals. That is, there were no interactions in any of the markets, and therefore, there was a competition problem at the retail level. Even though it is established that market conditions did not vary, RIA does not detail the evidence that supports this assessment or the sources of information that were consulted, the causes that could have generated the identified problem, or the effects of the permanence of the problem in case of non-intervention.
Osiptel established as purpose of its intervention the refinement of the concept of important supplier. According with the regulator, at international level, this definition has facilitated the identification of suppliers subject to different obligations with market power in the sector, with the purpose of promoting more competitive intensity and safekeeping the wellbeing of users.
Regarding the policy options, Osiptel assessed two alternatives applicable for the case. The first consisted in considering that there had been no variations in the market conditions verified in 2014 (OSIPTEL, 2014[17]). The other alternative consisted in determining the existence of changes in the market and, therefore, in the conclusions reached in the analysis carried out in 2014, which would allow the identification of a major supplier in the same relevant market or in a new one. Osiptel performed a relevant market analysis and of the competition conditions valid to the date of the RIA, for which it used sector data, specifically from the regulated bodies. Based on this assessment, Osiptel established that there were no variations to the situation verified in 2014.
However, the RIA does not mention the analysis methodology it applies to carry out its assessment. Even when the improvements noticed on the market conditions supporting the no intervention of the regulator are detailed, a thorough weighting of costs and benefits of the alternatives considered is not performed.
The telecommunication sector is highly technical and people interacting in it generally have knowledge about its operation. Therefore, the information that should be provided through the RIA must be clear enough to explain the process of analysis of each of its elements and achieve effective stakeholder participation in the regulatory process. This implies a more detailed description of the problem, the intervention objectives, the regulatory alternatives and the impact assessment of each of these, in order to achieve a better understanding of the reasons for the intervention.
RIA consultation process
Osiptel published a resolution project and the report that supports it and granted a period of fifteen calendar days for interested operators to submit comments on the project (OSIPTEL, 2017[18]). Additionally, Osiptel published the Board of Directors Resolution that established the deadline for comments in the official gazette El Peruano and in its web page.
Only one service provider company submitted its comments through a letter, and they were included in the matrix of comments incorporated to the assessment report of the final regulatory proposal. This report is available publicly in the regulator’s web page (OSIPTEL, 2018[16]), together with the resolution concluding the RIA process, the Resolution of the Important Supplier on Markets No. 30: access to the Service from Mobiles (Board of Directors Resolution No. 102-2018-CD/Osiptel).
RIA “Procedure for applying separate accounts for companies in the telecommunication sector”83
This RIA was completed in December 2019 and a more rigorous application of LCRs is evident than in the previous example.
The RIA was aimed to assess the relevance of issuing a separate accounting application procedure for companies in the telecommunications sector.84 Separate accounting is considered a mechanism that provides benefits by reducing the asymmetry of information among market agents, since the methodological documents and audited reports of the companies are published in the Osiptel institutional portal for consultation by users and operating companies. The asymmetry of information between the regulator and the regulated companies is also reduced because the accounting accounts show greater detail,
This RIA was completed in December 2019 and there is a more rigorous application of LCRs than in the previous example.
The purpose of the RIA was to evaluate the pertinence of issuing a separate accounting application procedure for companies in the telecommunications sector. Separate accounting is considered as a mechanism that provides benefits by reducing the information asymmetry between market agents, since the methodological documents and audited reports of the companies are published on the institutional portal of Osiptel for consultation by users and operating companies. The asymmetry of information between the regulator and regulated companies is also reduced because the accounting accounts show greater detail, which allows monitoring the levels of competition in the market and the determination of tariffs.
RIA elements
Osiptel clearly identified the problems that were generated during the process of presentation of the methodological documents and audited regulatory reports. Likewise, it identified the causes and factors that originated each of these problems. The problems defined by the regulator were
The lack of precision in the general instructions on separate accounting motivated the regulated companies to consult Osiptel on the application of the instructions, and the regulator to comment on the information presented.
The lack of uniformity in the presentation of the documents of the regulated companies prevented Osiptel from performing a traceability analysis of the accounting information.
The lack of a relevant parameter for the registration of new business lines.
The costs were shown in an aggregated manner, which prevented Osiptel from performing a detailed analysis and an adequate comparability of cost structures.
The deadlines set for the submission of information were not sufficient for the regulated companies.
According to the LCRs, Osiptel assessed in its RIA the progress of problems over the time and identified that by keeping the status quo and not performing interventions, the specified problems would maintain without changes.
Osiptel established a clear and defined objective, consisting in issuing a new procedure with changes for each of the identified problems.85 Likewise, by following its LCR, Osiptel identified regulatory alternatives for each of the defined problems. The constant alternative was not to modify the existing regulations. The non-intervention alternative was compared with the regulatory proposal and the way these alternatives could solve the problems detected was analysed.
Once the alternatives were defined, Osiptel carried out the analysis of the regulatory options using the methodology of multi-criteria analysis, because not all the benefits and costs derived from the identified alternatives could be quantified or monetised.
The analysis of alternatives was performed independently by each problem identified. Osiptel used a matrix that considered criteria or attributes. Thus, for example, the problem of the lack of precision in the accounting separation methodology considered the criteria of predictability, costs and opportunity.86 Each criterion was weighted regarding the others and each attribute of each alternative was rated.87 The alternative that created a higher level of predictability, lower costs and specifications with a greater anticipation obtained the higher rate. From this analysis, Osiptel selected the alternative that resulted more cost-efficient for each of the problems assessed and detailed the modifications that should be included in the procedure.
On the other hand, following the guidelines established in the LCR, Osiptel analysed the creation or elimination of rules of procedure, derived as a consequence of the alternatives chosen, within which changes in the regulations of infractions and sanctions were included.
RIA consultation process
Before the approval of the legislation project, the legislative proposal received the feedback from the Osiptel’s departments. The legislative project was approved by the CD through the Resolution approving the provisions to ensure the continuity, competition promotion, and sustained development of public telecommunication services in the framework of the National Emergency State (Resolution No. 50-2019-CD/Osiptel) and was published for stakeholders’ comments. This publication was performed in the official Gazette El Peruano in April 2019 and in the regulator’s web page. The publication in the institutional web page included, in addition to the legislative project, the explanatory memorandum of the proposal and the report supporting the project (OSIPTEL, 2019[19]).
Osiptel granted a term of 30 calendar days to submit comments, which were extended with 30 additional calendar days.
Other relevant practices in regulatory policy
Ex post assessment
Ex post assessment of regulation is not a mandatory practice in the central government dependencies of Peru (OCDE, 2016[1]).
However, Osiptel has performed some ex post assessments in and ad hoc manner and to specific regulations. In general, these are related with interconnection prices or charges, which are subject to periodic reviews.88 Osiptel also makes periodic analyses of the telecommunications market to identify the impacts of recently introduced regulations or modifications. In these analyses, the main statistics, such as the number, evolution of lines, penetration, traffic, market share, and incomes are considered (by market, by economic group). Likewise, Osiptel actively monitors the offers of telecommunications companies (the main plans, prices, specific characteristics) and consumers demand (OECD, 2019[15]).
However, the entity has not mandated specific regulations or guidelines to allow for ex post assessments. Each department of Osiptel is in charge of assessing its own regulations and the quantitative or qualitative criteria for performing it have not been established. Consultation of stakeholders or public is not used also. However, Osiptel receives frequently suggestions from companies in an a ad hoc manner with the request of eliminating regulations that are not always related to those subject to review (OECD, 2019[15]).
In addition to the review process of regulations through the RQA, Osiptel has anticipated to perform a review of other regulations not linked to administrative proceedings, that started on 2018 and will continue to 2021. To carry out this activity, Osiptel hired an external consultant to make a diagnosis on the regulations that may be an unnecessary burden for companies and created an ad hoc group to carry out the review process.
Considering this experience, Osiptel could extend these ex post assessments to other regulations and implement them as a constant and automatic component of policy formulation in the entity.
References
[1] OCDE (2016), Política Regulatoria en el Perú: Uniendo el Marco para la Calidad Regulatoria, https://www.oecd.org/gov/regulatory-policy/Poli%CC%81tica-Regulatoria-en-el-Peru%CC%81-aspectos-clave.pdf (accessed on 13 May 2020).
[4] OECD (2020), OECD Best Practice Principles for Regulatory Policy: Regulatory Impact Assessment.
[15] OECD (2019), Driving Performance at Peru’s Telecommunications Regulator. The Governance of Regulators, https://doi.org/10.1787/9789264310506-en (accessed on 14 July 2020).
[8] 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.
[2] OECD (2019), Implementing Regulatory Impact Analysis in the Central Government of Peru. Case Studies 2014-16, https://www.oecd-ilibrary.org/governance/implementing-regulatory-impact-analysis-in-the-central-government-of-peru_9789264305786-en.
[7] OECD (2018), OECD Regulatory Policy Outlook 2018, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264303072-en.
[14] OECD (2016), Governance of Regulators’ Practices: Accountability, Transparency and Co-ordination, The Governance of Regulators, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264255388-en.
[6] OECD (2008), Building an Institutional Framework for Regulatory Impact Analysis (RIA): Guidance for Policy Makers, https://www.oecd-ilibrary.org/docserver/9789264050013-en.pdf?expires=1542311953&id=id&accname=ocid84004878&checksum=F2E2296886FFEF96EB5903703FA3A8BA (accessed on 15 November 2018).
[5] OECD (2008), “Introductory Handbook for Undertaking Regulatory Impact Analysis ( RIA )”, October, Vol. 33/October, pp. 1-27.
[11] Osinergmin (2017), Memorando GPAE-122-2017.
[9] Osinergmin (2016), Acta de Consejo Directivo No. 13-206.
[13] Osinergmin (2016), Documento DAR-001-2016-RIA/OS.
[12] Osinergmin (2016), Memorando GAJ-629-2016.
[10] Osinergmin (2016), Memorando GPAE-061-2016.
[19] OSIPTEL (2019), Informe No. 00039-GPRC/2019.
[16] OSIPTEL (2018), Informe No. 00085-GPRC/2018.
[18] OSIPTEL (2017), Informe Sustentatorio N° 229-GPRC/2017.
[17] OSIPTEL (2014), Informe No. 365-GPRC/2014.
[3] Presidencia del Consejo de Ministros (2019), Resultados finales del Análisis de Calidad Regulatoria de los procedimientos administrativos del stock de entidades públicas del Poder Ejecutivo.
Notes
← 1. Article 1.
← 2. Article 6.
← 3. Article III of the Preliminary Title.
← 4. Article 3.
← 5. Article 4.
← 6. The last update of this guide was approved under the Directorial Resolution 002-2019-JUS/DGDNCR.
← 7. Article 51.
← 8. Article 196.
← 9. Article 1.
← 10. Article 1.
← 11. Article 17.
← 12. Article 23.
← 13. Article 2.
← 14. Article 2.
← 15. Article 41 of ROF PCM.
← 16. Article 45 of ROF PCM.
← 17. The count does not include secondary regulations issued by the entities of the Executive Branch such as Vice-Ministry Resolutions, Directorate Resolutions, Administrative Resolutions, among other.
← 18. Information obtained from the Peruvian Legal Information System.
← 19. By-law which lays down rules on advertising, publication, and dissemination of legal rules of general nature (Supreme Decree No. 001-2009-JUS).
← 20. Published on September 16, 2018.
← 21. Published on December 30, 2016.
← 22. The ACR Constitutes a measure that supports the objectives of administrative simplification of proceedings of the Peruvian government, which is one of the elements of the National Policy of Modernization of the Public Management. This National Policy Is an effort to formulate a strategy together with the whole government in order to modernise public practices.
← 23. Supreme Decree approving the Regulations for the Regulatory Quality Analysis implementation of administrative procedures set forth in article 2 of the Legislative Decree No. 1310 – Legislative Decree approving the additional measures of administrative simplification (Supreme Decree No. 061-2019-PCM), published on April 5, 2019.
← 24. The CMCR is constituted by the General Secretary of the PCM (presiding it), the Vice-Minister of Economy of the MEF and the Vice-Minister of Justice and Human Rights, or their representatives.
← 25. This category refers to some entities that created procedures on proceedings that were not formalities. From this review, 415 were eliminated because they were not necessary or pertinent for the development of the entity.
← 26. Integrated by Vice-Ministers of the Executive Branch and directed by the General Secretariat of the PCM. The CCV has as main role to state opinions on the projects of law proposed by the Executive Branch, and legislative projects approved by the Executive Branch requiring the approving vote of the Council of Ministers.
← 27. Article 12.
← 28. Article 226.
← 29. The Manual states that the possibility of reaching the desired outcomes of the public policy should be assessed without the need of changing the current legal framework or with the minimum intervention of the government (optimised original situation).
← 30. Available at https://cdn.www.gob.pe/uploads/document/file/320727/RLGA_EM.pdf.
← 31. Available at: https://www.gob.pe/institucion/mef/normas-legales/279567-231-2019-ef-10.
← 32. Article 9 of Supreme Decree No. 044-2006-PCM.
← 33. Article 14 of the Supreme Decree No. 044-2006-PCM.
← 34. This resolution was modified by the Presidency Resolutions No. 042-2016-PD-Ositran and 039-2017-PD-Ositran.
← 35. Conformed by Resolution No. 084-2018-GG-Ositran.
← 36. Article 15 of Supreme Decree No. 044-2006-PCM.
← 37. The content of the international workshop can be found at: http://www.oecd.org/gov/regulatory-policy/ria-workshop-ositran.htm.
← 38. On 21 January 2021, Ositran approved its new General Tariff Regulation (Resolution N° 0003-2021-CD-Ositran), as well as the corresponding Regulatory Impact Assessment Report, which is published on its institutional portal.
← 39. SMART is the acronym form: specific, measurable, achievable, realistic and time-dependent.
← 40. Specifically, the ex post methodology available for the Australian Productivity Commission is taken as reference.
← 41. Ositran took as reference the consultation methods used by the European Commission for early consultation.
← 42. The document supporting the RIA can be found at: https://www.ositran.gob.pe/wp-content/uploads/2019/02/INFORME.pdf.
← 43. The RETA was approved through the Resolution of the Board of Directors No. 043-2004-CD-Ositran. Thereafter, it was modified in 2006 and 2012.
← 44. https://cdn.www.gob.pe/uploads/document/file/1581023/reso-003-2021-cd.pdf.
← 45. The RIA identified four problems related to the RETA application: The regulation provisions were not clear enough for users and the regulated individuals, which limited its application; service provider companies suffered uncertainty for some aspects regarding the procedures for setting tariffs; some provisions prevented the efficiency of the proceeding of tariffs procedure, and the service provider companies carried with cost overruns in the publication of the tariffs.
← 46. The consultation process of this RIA is available at: https://www.ositran.gob.pe/consultas-publicas/consultas-normativas/.
← 47. Early consultation was carried out on August 21, and September 4, 2017.
← 48. Consultations were formulated on the following topics: the order of the provisions contained in the RETA, procedures required to be simplified, criteria, and methodologies for fixing prices and tariffs review, clarity of the provisions of the RETA, periods of time, application of tariffs, discounts, and commercial policies, information about services, tariffs, and entry into force, obligations on the publication of tariffs, provisions on the application of offers, discounts, and promotions, tariffs proposals, minimum content, and terms for publishing the tariff proposal, participation of stakeholders on the procedures for fixing or reviewing tariffs, information requested to companies on the procedures by law, requirements, and terms established in the procedures of the civil party, minimum content of a request for fixing, reviewing, or deregulating tariffs, and any other additional information.
← 49. The Board of Directors state the publication by means of the Resolution No. 0009-2019-CD-Ositran.
← 50. Carried out on March 21, 2019.
← 51. https://cdn.www.gob.pe/uploads/document/file/1581023/reso-003-2021-cd.pdf.
← 52. The report is available in the web site of Ositran.
← 53. Ositran published the call for this hearing in the official gazette, El Peruano, on July 6, 2018.
← 54. The objective of this fund is to achieve that Peru overcomes the energetic gap existing between the rural and urban areas of the country.
← 55. In the IOP as General Goal No. 007-2015 the development of the RIA under a systematic approach is considered.
← 56. These guidelines were applicable to the Energy Supervision Department, Mining Supervision Department, Tariff Regulation Department, and the Technical Secretariat of Resolution Bodies.
← 57. Approved by Board Resolution No. 130-2020-OS/CD.
← 58. The Methodological Guideline classifies this assessment as proportionality analysis.
← 59. The content of the international workshop can be found at: http://www.oecd.org/gov/regulatory-policy/agenda-osinergmin-peru-sp.pdf.
← 60. In the framework of this training, two legislative proposals were reviewed (GLP and combined centrals).
← 61. SMART is the acronym for the following definitions: specific, measurable, achievable, realistic and time-dependent.
← 62. The information of both RIAs is available at: https://www.osinergmin.gob.pe/seccion/institucional/acerca_osinergmin/analisis-de-impacto-regulatorio/ria#.
← 63. These were informality, lack of traceability of cylinders, the imperfect perception of security from consumers, and the characteristic of common resource of the GLP cylinder.
← 64. Considering the chosen option, the ratio of LPG cylinders with non-compliances of high-risk technical and safety conditions (valve leakage and cylinders with numerous paint layers) and the ratio of cylinders with leakage within the group of cylinders with non-compliances of high risk technical and safety conditions were considered as indicators. This indicator is estimated from the number of cylinders with valve leakage, detected during supervisions.
← 65. Article 6 of the General Rules of OSIPTEL.
← 66. Article 7 of the General Rules of OSIPTEL.
← 67. Article 13 of the General Rules of OSIPTEL.
← 68. This decision was based on a recommendation formulated by the Regulatory Policy and Competition Department (GPRC) of OSIPTEL.
← 69. Even when an initial period for publication of 20 working days was established, this term was extended by the Resolution of the Board of Directors No. 018-2017-CD/OSIPTEL. In total, the publication was carried out for a period of 40 working days.
← 70. Held on February 15, 2017.
← 71. These procedures have as main requirement the validation of the Regulatory Quality Analysis, under the framework set forth in the Legislative Decree No 1310, consisting of a tool for administrative simplification.
← 72. OSIPTEL has approved specific provisions to regulate procedures under two denominations: procedure for issuing regulations by the Board of Directors and procedure for setting or reviewing maximum interconnection tariffs or charges.
← 73. These principles are: free access, neutrality, non-discrimination, decisions based on cost-benefit analysis, promotion of competition, impartiality, autonomy, subsidiarity, supplementariety, analysis of functional decisions, efficiency, effectiveness, and promptness.
← 74. Among these, questionnaires, web sites or social media, technical meetings, focus groups, seminars, round tables, public hearings, or publications in general.
← 75. Direct methods use interviews to determine the agents’ willingness to pay regarding goods and services of which there is no economic value. Therefore, OSIPTEL uses the method of contingent assessment. Meanwhile, indirect methods assess the agents’ behavior and their preferences regarding the goods. In these cases, OSIPTEL uses the following methods: hedonic pricing, travel costs, defense costs, and transfer of benefits.
← 76. This aspect of the analysis is related with the Regulatory Quality Analysis explained in the section “Cross-sectional Elements of RIA in Peru”.
← 77. All the activities performed as part of these procedures, including the aspects linked with public consultations were recorded in a file, which was subject to audits from the OSIPTEL’s Quality Management System.
← 78. Considering the relevance of the regulation, OSIPTEL proceeded to perform public hearings for presenting the legislative project. Stakeholders were invited to these spaces for extending their comments.
← 79. These hearings will be governed by special regulations or, otherwise, by the TUO of the LPAG.
← 80. This exception is based on articles 7 and 27 of the General Rules of OSIPTEL.
← 81. The documents of this RIA are available at: https://www.osiptel.gob.pe/articulo/res102-2018-cd-osiptel.
← 82. It is a service provided among operators, which allow to access to the necessary infrastructure for providing Communication Services (full duplex calls, SMS, and MMS) to their final clients.
← 83. RIA documents can be obtained at: https://www.osiptel.gob.pe/articulo/res161-2019-cd-osiptel.
← 84. Separate accounting is intended for companies providing public telecommunication services and whose incomes generated during two fiscal years overcome, in each fiscal year, 1% of the total annual income created together by the operators of the market of public telecommunication services.
← 85. Among others, include specifications in the methodology for allocating incomes, costs, and inverted capital, establish a parameter of relevance for the registration of the additional business lines, modify the disaggregation of cost groups used in a separate accounting and specifying the procedure for amending methodological documents and audited reports, as consequence of changes in the allocation criteria of concessionaries.
← 86. Other criteria considered in the assessment were auditability, reliability, materiality, flexibility, disaggregability, adaptability, and reasonability.
← 87. OSIPTEL assigned to each attribute of each alternative the following rating:
Grade -1: lower rating
Grade 0: neutral
Grade +1: higher rating
← 88. According with the Guidelines to Develop and Consolidate the Competition and Expansion of Telecommunication Services in Peru (Supreme Decree No. 003-007-MTC), for the case of regulating interconnection prices and charges, OSIPTEL must assess the market condition every four years to determine if a change is applicable. OSIPTEL uses data from the market collected to monitor operators that according to the classification have Significant Market Power (SMP) and make the necessary modifications when deficiencies are detected. This classification is subject to the clause of termination, which states that OSIPTEL should perform an evaluation every three years to know if the operator still has the SMP classification. This analysis can be conducted every two years if the regulator has final evidence that a significant change existed in the market conditions or if a regulated body requests it.