Designing OBA When There is an Incumbent

This working paper aims to provide practical guidance to Government officials and others who are asked to design Output Based Aid (OBA) projects in situations in which there is an existing supplier. The focus is on water and electricity projects where there is a request for development of an OBA subsidy, and there is an existing Private Sector Participation (PSP) contract involving supply of the service in (or near) the area in question.