on one hand (restricting working investment capital flexibility in the short term) and are "prohibited from accepting long-term certificates of deposit and other extended time deposits" (Cicchetti and Sepetys 106). However, historically, power plant construction is financed with long-term (up to 30 years, at relatively low rates of interest) and not short-term debt (at relatively higher rates of interest). Thus the debt service, or the cost of financing a power plant, could compound the actual negative cost of construction and maintenance of the plant itself, and could further drain national capital commitments. Meanwhile, the high reserve requirement for commercial banks that might finance power facilities prevents the banks from putting capital to work in the near term. More generally, direct government management of a public utility such as electricity means that a government gets into the electricity business as well as into the governance business, distracting the government from its principal public duty and multiplying inefficiencies. This is further multiplied where management and maintenance of massive physical facilities are concerned.
These factors are in the background of Cicchetti and Sepetys's description (99ff) of a policy of BOT, which means build, operate, and transfer utility construction, development, and maintenance, from public to private sector responsibility. The delivery of electricity is based on delivery from IPP, or independent private power resources (102). Beginning with Turkey, and continuing with Pakistan and Peru, Cicchetti and Sepetys describe the movement toward IPP in terms of the desire on the part of each of these nations to improve antiquated electricity delivery systems technology, foster efficiencies, and encourage native capital investment in resource delivery and management. Their focus is principally on these three developing countries; however, they also refer to the example of the United K...