The Political Economy of Power Sector Reform: The Experiences of Five Major Developing Countries

Cover......Page 1
Half-title......Page 3
Title......Page 5
Copyright......Page 6
Contents......Page 7
Figures......Page 9
Tables......Page 11
Notes on contributors......Page 13
Preface......Page 17
1 Introduction and overview......Page 21
This study......Page 31
Incumbent fuel......Page 32
National governance......Page 33
Adequacy of the power sector......Page 34
Reform strategy......Page 35
Strengths and limitations of our sample......Page 36
The historical context and the origins of reform......Page 39
Big bang......Page 41
The institutional context for markets......Page 42
Policy and regulation......Page 43
Industrial organization and management......Page 44
Finance......Page 46
Social contract......Page 48
Conclusion......Page 49
Introduction......Page 51
Historical development of the industry......Page 53
The virtuous circle......Page 55
Conflicts emerge......Page 61
The vicious circle......Page 63
Marginal reforms......Page 66
Reform through privatization......Page 69
Power experts come in......Page 72
Conceiving a "Hybrid Market"......Page 74
Unresolved issues: fuel diversity and systemic risk......Page 78
Fossil fuel markets......Page 80
Systemic risk......Page 82
A case study: the 2001 drought......Page 86
Conclusion......Page 92
Introduction......Page 96
Electricity industry development......Page 101
Fuel structure......Page 106
Transmission......Page 108
Rural electrification......Page 109
Environmental consequences......Page 112
Reform to raise capital (1986–1997)......Page 113
Reforms to separate business from politics (1997–2002)......Page 119
Market reform to introduce competition (2002–present)......Page 122
Conclusion......Page 126
Introduction......Page 129
Origins of the state-dominated power sector......Page 134
Generation and fuels......Page 137
Consumption, access, and growth......Page 142
Tariffs, finances, and budgeting: prime causes for reform......Page 147
Reforms and policy – context of change......Page 156
Generation and IPPs – the 1991 reforms......Page 158
State Experiences......Page 164
Orissa: Restructuring with Privatization......Page 165
Andhra Pradesh: restructuring without privatization......Page 167
Delhi: privatization with innovative incentives......Page 169
Independent regulation......Page 170
Professionalism......Page 171
The center consolidates reform (focusing first on distribution and, subsequently, competition)......Page 173
Unresolved issues......Page 176
Cherry picking and hybrid markets......Page 177
Labor markets and human capital......Page 178
System design and tariffs......Page 182
"Social Contract"......Page 188
Conclusion......Page 190
Appendix – Electricity Act 2003......Page 192
Introduction......Page 195
1880–1979: Mexico's political consolidation and power sector growth......Page 198
1980–1989: The lack of resources to increase infrastructure......Page 209
1990–2000: Structural reforms towards building a new market architecture......Page 210
The Regulator in the Power Sector......Page 219
Electricity and the social contract......Page 222
The evolving agenda......Page 225
Demand, supply, and gas......Page 226
Constitutional integrity: The supreme court decision and beyond......Page 228
Evolution of tariffs in the near future......Page 229
New role of CRE......Page 230
The Greatest challenge to reform: Public opinion......Page 231
Conclusions......Page 233
Introduction......Page 235
History of the electricity supply industry in South Africa......Page 236
Overview of the electricity industry in South Africa......Page 243
Political and economic context in the 1990s......Page 247
Drivers of electricity sector reform......Page 249
Inefficiencies in the distribution industry and responding to electrification backlogs......Page 250
Restructuring of state-owned enterprises......Page 251
Investment in the electricity supply industry......Page 252
Key achievements in the reform of the electricity sector since 1990......Page 255
Serving the poor: an accelerated national electrification program......Page 256
A new electricity regulator......Page 261
Restructuring the electricity distributors......Page 262
Eskom corporatization......Page 264
A paradigm shift in energy and electricity policy......Page 265
The evolving reform agenda......Page 267
Conclusion......Page 272
7 Major conclusions: the political economy of power sector reform in five developing countries......Page 274
Forces for reform......Page 282
Reform strategy......Page 286
Financing: hard budgets and the cost of capital......Page 288
Judicial reform and independent regulation......Page 291
Factor markets......Page 293
Public accounts......Page 296
The social contract......Page 297
The dual market for electric services......Page 303
Are dual markets stable?......Page 312
The need to focus on distribution reforms......Page 317
Creating and sustaining constituencies for reform......Page 321
Attaining leverage outside the electric sector......Page 323
Building appropriate regulatory institutions......Page 324
Conclusion......Page 325
Bibliography......Page 327
Index......Page 341