Doing Business 2017 Getting Electricity Factors affecting the reliability of electricity supply S ƒ The getting electricity indicators ince 2011 Doing Business, through Minimizing the number and the duration measure the reliability of electricity its getting electricity indicator set, of power outages is critical for societies supply using data on the duration and has recorded the time, cost and at large. Although electricity is ultimately frequency of power outages, among number of procedures required for a provided by a distribution utility (the other metrics. small to medium-size business to legally “last step” in the supply chain), it is not ƒ A broad range of variables impact the connect a commercial warehouse to the the only entity responsible for providing a reliability of electricity supply. These electrical grid. Starting in 2015, the reli- stable supply, as many other actors play include the electricity generation ability of supply and the price of electric- an important role throughout the process adequacy, the condition of power ity have also been measured. Reliability of generation, transmission and distribu- system infrastructure, utility financial is measured through quantitative data tion of electricity. This case study focuses and operational performance and on the duration and frequency of power on lower-middle-income economies energy sector regulation. outages as well as through qualitative with varying levels of electricity supply ƒ Evidence from four lower-middle- information, which includes—among reliability. By comparing different aspects income economies with varying levels other things—the mechanisms put of their energy sectors, this chapter high- of reliability suggests that continuous in place by the utility for monitoring lights some key elements and actors that investment in infrastructure is essential power outages. These measures are can drive, or prevent, a reliable electricity to ensure a reliable electricity supply. important because a reliable electricity supply.4 supply is critical for enterprises to oper- ƒ Indonesia implemented structural ate and grow. According to 2016 World changes to its energy sector, increased investment in infrastructure and Bank Enterprise Survey data, business FACTORS AFFECTING THE introduced regulatory initiatives to owners in around 30% of developing PROVISION OF ELECTRICITY improve overall power reliability. economies perceive unreliable electric- ity services as a major obstacle to their A power system consists of three main ƒ Guatemala liberalized its energy sector activities. In Sub-Saharan Africa, where components: generation power plants, and adopted different tariff strategies economies suffered an average of 690 which use resources like hydropower, while maintaining incentives to enable hours of outages in 2015,1 the annual coal or renewables to produce electricity; cost recovery. These measures, coupled economic growth drag of a weak power the transmission network, consisting of with the presence of an overarching infrastructure is estimated to be about a high voltage network (usually above regulatory body, fostered a high level two percentage points.2 In addition to 35 kilo-volts) used to transmit electric- of power reliability in Guatemala City. negatively affecting business operations, ity from the generation station to the ƒ In the cases of Cameroon and Pakistan, an unreliable supply can compromise distribution network; and the distribution inadequate end-user tariff levels and an economy’s overall well-being. For network, a low-to-medium-voltage net- high transmission and distribution example, Beirut residents cope with an work that is used to deliver electricity to losses had an impact on the overall average of three hours with no electricity customers (figure 4.1). financial standing of utilities—and, in every day. Residents in other areas of the turn, on the reliability of supply. country must endure 12 hours of daily The reliability of electricity supply is ƒ The experience of these economies power outages. The average Lebanese determined by multiple interdependent suggests that utilities must ensure a household must then resort to generator factors. This case study focuses on healthy financial position so they can usage, spending $1,300 on electricity four main areas which directly impact invest the necessary resources to increase each year—equivalent to almost 15% of the power sector: electricity generation the reliability of electricity supply. income per capita.3 adequacy, power system infrastructure, GETTING ELECTRICITY 45 FIGURE 4.1 Doing Business measures the connection process at the level of power cuts undermine the economy; distribution utilities each minute of outage costs $9,000 to the Zambian mining sector.5 Step down transformer The financial performance of a utility Industrial customer depends on its ability to generate sufficient Transmission lines revenue to cover the costs of providing Generation station electricity and to ensure the profitability Commercial customer of its operations. End-user tariffs are a central aspect of the sector’s financial performance because the revenues of Step up Transmission Residential transformer customer cutomer all market players in an energy system— including the generation, transmission and distribution companies—come from Source: U.S.-Canada Power System Outage Task Force 2004. electricity bills. In principle, tariffs take into account the costs involved in the operation of the power system. However, utility financial and operational perfor- vulnerability to supply shortages in the when tariffs do not allow for full cost mance, and energy sector regulation global commodity markets. recovery, insufficient revenues accrued (figure 4.2). by distribution utilities can create finan- The upkeep and the technical condition cial constraints across the power system. Electricity generation is the basis of any of a power system’s infrastructure direct- This may force cutbacks on maintenance power system, and generation adequacy is ly affect its operation and, therefore, the spending and capital investments, result- determined by the availability of resources duration and frequency of power cuts. ing in increased production costs and a as well as by their cost. If an economy has Poor upkeep is further exacerbated when deterioration of power system reliabil- sufficient domestic energy resources and an economy faces exogenous shocks ity. In addition to tariff pricing, a utility’s the necessary technological conditions, or inclement weather. In Zambia, for operational performance is crucial for the generation may be assured at a lower example, poorly maintained distribution electricity sector as without proper atten- cost compared to economies that rely on lines coupled with insufficient rainfall tion to market factors, its ability to ensure imported fossil fuels. Additionally, energy due to the El Niño weather phenom- electricity provision can be compro- self-reliance may ensure a higher reliabil- enon resulted in electricity shortages mised. Ownership structure in the power ity of supply as it reduces an economy’s in 2015—with Lusaka experiencing 137 sector varies greatly across economies, hours of outages per customer. Such including purely public, private, or mixed partnership. Regardless of a utility’s own- ership type, having an efficient manage- FIGURE 4.2 Various factors affect the reliability of electricity supply ment structure is essential. Finally, it is the role of the energy regula- tor to set the “rules of the game” for all Financial and Power system operational players. Since the electricity market is infrastructure performance often monopolistic, only an independent regulator is in a position to supervise the price of electricity and ensure consumer protection. In terms of electricity reliability, the regulator may set objectives regarding Generation utilities’ performance as well as deterrents adequacy Regulation to reduce the duration and frequency Reliability of supply of outages. An example of a financial deterrent can be setting a threshold for the number and/or duration of power out- ages. In that case, when outages surpass a certain threshold, the regulator can impose penalties or allow for customers to 46 DOING BUSINESS 2017 receive compensation. Doing Business data 1% of firms in Indonesia see electricity in Jakarta is a good performer if the reveal that low- and lower-middle-income as their “biggest obstacle”—compared time needed to get a new permanent economies using such financial deterrents to almost 10% of firms worldwide. This electricity connection is used as a proxy had 53 power cuts on average in 2015, reflects a well-performing power sector to gauge utility efficiency.13 It took 59 while economies in the same income in Indonesia’s largest municipalities, yet days to get a new electrical connection group without financial deterrents to limit major investments had to be made to in Jakarta in 2016 compared to 101 days outages had three times more outages. overcome several challenges. in 2009. This improvement is the result of better customer engagement and In the 1990s, power outages were a the streamlining of administrative pro- RELIABILITY ACROSS FOUR common occurrence in Jakarta. Rising cesses as highlighted by several reforms ECONOMIES electricity demand coupled with the recorded by Doing Business. 1997 Asian financial crisis placed a To assess the power reliability in differ- heavy strain on the system. Generation A stable electricity supply in Indonesia ent economies across the dimensions activities—as well as transmission and has been achieved over the past decades highlighted, this study looks at four lower- distribution—were conducted exclusively mostly by supply-side initiatives. On the middle-income economies. Guatemala by Perusahaan Listrik Negara (PLN), the demand side, the country has not sought and Indonesia are examples of economies state-owned, vertically-integrated utility. to limit consumption through tariffs. In that provide a reliable electricity supply in However, the 1999 electricity law opened fact, the pricing policy pursued by the the main business cities, having registered up the electricity generation market to government aims to balance the financial low levels of outages in 2015, according to the private sector. With the entrance of standing of the utility with the afford- Doing Business data (table 4.1.). Cameroon new actors, installed generation capac- ability of electricity tariffs. Tariffs are, and Pakistan, however, have outages ity was able to expand substantially. At therefore, set below market levels, but on a regular basis and are examples of the end of 2014, independent power PLN is compensated through subsidies economies providing an unreliable supply producers and private utilities accounted that allow for a profit margin of 7%.14 for customers (table 4.2.).6 For the other for approximately 30% of Indonesia’s Tariffs are also routinely reviewed by the aspects analyzed, the majority of the data installed generation capacity.9 regulator. End-user tariffs were raised by are from 2014. In some cases, newer data 15% in 2013, for example, to help improve were available but the same base year was In parallel to the partial liberalization PLN’s financial performance in the wake chosen for cross-comparability purposes. of the sector, the government of of rising energy prices. Indonesia also devised ambitious Reliable electricity supply infrastructure investment plans to meet Even though access to reliable electricity Indonesia rising electricity demand.10 Between has improved in Java, Indonesia still faces From an energy perspective, Indonesia 2004 and 2014, generation capac- considerable challenges going forward. faces considerable challenges: it has the ity doubled from 26.4 gigawatts to 53.0 According to the Indonesian Ministry fourth largest population globally, a com- gigawatts11 through a mix of private and of Energy and Mineral Resources, over plex geography and falling oil reserves. public investments. These investments 12,000 villages in the country are still Nevertheless, Indonesia has achieved allowed the country to diversify electric- without electricity and approximately a high level of electrification with 96% ity production and reduce reliance on 65% of them are in six provinces in of the total population having access to oil, of which Indonesia is a net importer, eastern Indonesia.15 In the coming years, it electricity in 2012, up from 67% in 1990.7 increasing the share of natural gas (21%), will be crucial for the country to pursue its Furthermore, the frequency and duration hydropower (7%) and geothermal power Indonesia Terang (Bright Indonesia) plan by of power outages in Jakarta and Surabaya (5%) in its generation mix.12 building island-based generation capac- today are low compared to other econo- ity infrastructure and expanding access to mies in East Asia and the Pacific. System While Indonesia’s success vis-à-vis electricity across the archipelago. average interruption duration index power reliability is largely attributed to (SAIFI) data suggest that a business in infrastructure development, regulatory Guatemala Jakarta only suffered two outages in 2015, deterrents to prevent utility underper- Substantial improvements to the reli- almost nine times less than the regional formance may also have contributed to ability of electricity supply have been average. As electricity outages and tariff minimizing power cuts. Per government achieved in Guatemala, particularly in levels are relatively low in Java,8 where regulation, customers experiencing out- the capital. Although some regions still over half of Indonesians live, it is then not ages beyond certain levels are eligible struggle to provide a reliable electricity surprising to observe that the World Bank for compensation from PLN. And Doing supply, residents of Guatemala City had, Enterprise Surveys report that less than Business data now suggest that PLN on average, less than three outages in GETTING ELECTRICITY 47 2015 compared to an average 13 power electricity transmission sector and in the a regulatory framework to oversee the cuts in the other main business cities of distribution sector, where the privately- new competitive market. The national Latin America and the Caribbean. This owned Energuate controls 60% of the electricity commission, an independent is quite a feat considering concerns two market share.18 regulatory body, was established in 1996. decades ago about potential shortfalls The commission sets the market rules, in generation capacity due to rising Within two decades of its adoption, the monitors power outages and imposes demand—which increased by 7% annu- electricity law spurred a series of invest- financial penalties on utilities when exces- ally on average between 1986 and 2012.16 ments which have more than tripled sive service interruptions occur. End-user As in Indonesia, Guatemala’s first push Guatemala’s installed capacity from 1.0 tariffs are also regulated by the commis- to boost capacity involved opening the gigawatts to 3.7 gigawatts.19 This increase sion and are classified into two categories: energy sector to private participation. in capacity was accompanied by a diversi- a “regular rate”—which is determined fication of the energy mix, notably through based on the blended costs of supply Unlike its Southeast Asian counterpart, tariff and tax incentives, thereby encour- from generation companies, as well as however, Guatemala unbundled the aging the use of renewable resources. In transmission and distribution costs—and entire energy sector in 1996 through a 1996, 31% of Guatemalan electricity was a subsidized “social rate” for consum- general electricity law. Competition was generated from oil, and biofuel accounted ers with monthly demand of up to 300 introduced, with private and public play- for 13%.20 Twenty years later, biofuel’s kilowatt-hours.23 Utilities can thus recu- ers entering the generation, transmis- share has grown to 38% and the share perate their capital investments while, at sion, electricity trading and distribution of oil-based generation has fallen to the same time, consumers are protected segments. As a result, the Instituto 12%.21 Furthermore, the Central American from price gouging.24 Nacional de Electrificación (INDE), which regional electricity market has provided previously controlled all assets from some flexibility to Guatemala, allowing it Doing Business data also suggest that generation to distribution, now operates to export its excess supply of electricity the improved reliability in Guatemala 15% of Guatemala’s installed generation (or to import it when needed).22 City may be partly attributed to effective capacity. The remaining 85% is oper- utility management. Doing Business ranks ated by a variety of private companies.17 Following the liberalization program, the Guatemala among the highest in Latin The private sector is also present in the government recognized the need to create America and the Caribbean for utility performance; it takes just 39 days to get TABLE 4.1 Reliability of supply and transparency of tariff index for Guatemala a new connection to the electrical grid and Indonesia in Guatemala compared to the regional average of 66 days. Guatemala Indonesia Reliability of supply and transparency of tariff index (0–8) 7 6 Unreliable electricity supply Total duration and frequency of outages per customer a year (0–3) 2 2 Cameroon System average interruption duration index (SAIDI) in 2015 3.7 2.6 Cameroon was one of the first Sub- System average interruption frequency index (SAIFI) in 2015 2.6 1.7 Saharan African economies to liberalize its Mechanisms for monitoring outages (0–1) 1 1 energy sector. The adoption of the 1998 Does the distribution utility use automated tools to monitor outages? Yes Yes Electricity Sector Law led to the priva- tization of the vertically-integrated and Mechanisms for restoring service (0–1) 1 1 state-owned utility, the Société Nationale Does the distribution utility use automated tools to restore service? Yes Yes d’Electricité (SONEL).25 Nonetheless, Regulatory monitoring (0–1) 1 1 the total installed generation capacity Does a regulator monitor the utility’s performance on reliability of supply? Yes Yes remained largely stagnant between 2000 Financial deterrents aimed at limiting outages (0–1) 1 1 (0.8 gigawatts) and 2012 (1.0 gigawatts)26 Does the utility either pay compensation to customers or face fines by the Yes Yes in view of Cameroon’s rising energy needs regulator (or both) if outages exceed a certain cap? and population growth. As a result, Communication of tariffs and tariff changes (0–1) 1 0 Cameroon faces a severe electricity sup- Are effective tariffs available online? Yes Yes ply deficit—even though about half of the population is not connected to the grid.27 Are customers notified of tariff changes at least 1 month ahead of time? Yes No Douala residents experienced on average Source: Doing Business database. almost two hours of outages each week Note: SAIDI is the average total duration of outages over the course of a year for each customer served, while in 2015. This has likely impacted business SAIFI is the average number of service interruptions experienced by a customer in a year. For Indonesia, SAIDI/SAIFI data are for Jakarta only. 48 DOING BUSINESS 2017 behavior; approximately 35% of firms in with outage limits. Nevertheless, such 1990 to 94% in 2012,35 the frequency Cameroon own a generator.28 penalties were not imposed between and duration of outages remain high 2012 and 2015 as ARSEL opted instead in its two largest cities. Doing Business Cameroon’s privatization program has to hold tariffs steady, thereby providing data show that Karachi and Lahore were not resulted in a sharp rise in installed customers with lower tariffs in real terms among the cities that experienced the capacity nor has it established a fully in “compensation” for excessive outages.33 most outages globally in 2015. Indeed, competitive market. Power generation is World Bank Enterprise Survey data report open to independent private sector par- Cameroon’s energy sector faces consider- that for 45% of enterprises in Pakistan, ticipation, yet the sector remains largely able challenges. However, Doing Business a lack of reliable electricity supply is dominated by one company, ENEO data suggest that reliability issues in the largest obstacle to the operation of Cameroon (formerly SONEL). Because Douala stem more from the generation their business. the power sector is not fully unbundled, mix and infrastructure than from utility the transmission and distribution sectors management. Obtaining a new electricity After three decades of energy sector are also operated by ENEO Cameroon, connection, for example, takes on average expansion, privatization in Pakistan began which struggles with transmission losses. 64 days in Cameroon, about half the aver- in 1994 with the unbundling of the Water For example, 35% of the electricity gener- age time in the Sub-Saharan Africa region. and Power Development Authority and ated from hydro-powered and gas plants the opening of power generation to inde- is lost through electricity transmission.29 Pakistan pendent producers. Subsequent reforms, In this context, the government recently Pakistan is in the midst of an energy cri- such as the provision of incentives for announced the establishment of a new sis. The rapid expansion of the economy private investments, were pursued in the state-owned entity, the Société Nationale in recent decades has led to increased late 1990s leading to an inflow of private de Transport de l’Electricité (Sonatrel), energy demand. In 2011, electricity capital and an increase in generation which will take over the transmission shortages exceeded 7.0 gigawatts, equal capacity.36 However, declining investment sector with the goal of upgrading the to about one-third of peak demand.34 following the 1997 Asian financial crisis power infrastructure. And while Pakistan was able to increase coupled with surging local demand result- its level of electrification from 60% in ed in a severe electricity deficit. Between Cameroon relies entirely on domestical- ly-sourced resources, with hydropower accounting for 71% of generated elec- TABLE 4.2 Reliability of supply and transparency of tariff index for Cameroon tricity, and oil and gas making up the and Pakistan balance.30 While it could export electric- Cameroon Pakistan ity to neighboring economies thanks Reliability of supply and transparency of tariff index (0–8) 3 0 to an abundance of natural resources, that potential is under-exploited.31 Total duration and frequency of outages per customer a year (0–3) 0 0 Cameroon’s heavy reliance on hydro- System average interruption duration index (SAIDI) in 2015 89 861.7 electricity has also meant that droughts System average interruption frequency index (SAIFI) in 2015 23.3 387.2 often result in prolonged outages. This Mechanisms for monitoring outages (0–1) 0 1 was the case in 2015 as power outages Does the distribution utility use automated tools to monitor outages? No Yes brought activities at the Douala port to Mechanisms for restoring service (0–1) 0 1 a standstill for several days.32 To prevent Does the distribution utility use automated tools to restore service? No Yes such scenarios in the future, Cameroon is aiming to diversify its energy mix and Regulatory monitoring (0–1) 1 1 boost generation capacity through a Does a regulator monitor the utility’s performance on reliability of supply? Yes Yes series of tax-based incentives for renew- Financial deterrents aimed at limiting outages (0–1) 1 1 able electricity generation projects. Does the utility either pay compensation to customers or face fines by the Yes Yes regulator (or both) if outages exceed a certain cap? The electricity sector law of 1998 created Communication of tariffs and tariff changes (0–1) 1 0 the Agence de Régulation du Secteur de Are effective tariffs available online? Yes Yes l’Electricité (ARSEL), a regulatory agency responsible for setting end-user tariffs. Are customers notified of tariff changes at least 1 month ahead of time? Yes No The agency’s duties also include the moni- Source: Doing Business database. toring of power outages and the levying of Note: Under the getting electricity methodology if SAIDI/SAIFI is 100 or more then the economy is not eligible to score on the reliability of supply and transparency of tariff index. For Pakistan, SAIDI/SAIFI data are penalties on utilities for non-compliance for Karachi only. GETTING ELECTRICITY 49 2004 and 2008, commercial electricity with the difference being paid to the and Indonesia show that investment consumption increased by approximately utility through extensive government can be implemented through a strategy 8% per year. In addition, the electricity subsidies42—which are sizeable both in pursuing sectoral liberalization or with a sector’s share of total public investment relation to GDP and total general govern- vertically-integrated public utility con- fell from 51% in the mid-1990s to 26% by ment expenditures.43 Delays in disbursing tinuing to play a major role in the energy 2010.37 As a result, generation capacity these subsidies have at times contributed sector, so long as there are incentives to was not able to keep up with demand. to debts that have strained the finances ensure generation adequacy (figure 4.3). of generation companies, undermining Pakistan’s generation sector is com- investments and the upkeep of the distri- The highlighted good performers prised of different players with private bution network. underscore the importance of not only power producers providing about 30% investing in productive capacity but also of the total generation capacity. On the The unreliability of the electricity sector of maintaining the power system infra- distribution end, the sector is operated in Pakistan may also be attributed to structure. Aging infrastructure results in by 10 state-owned regional utilities and the state of utility financial and opera- increased losses and a deterioration in a private company, K-Electric, which tional performance. According to Doing the reliability of supply. It is also useful to serves Karachi. Almost all of the utilities, Business data, it takes well over 100 days diversify the energy mix to decrease the however, experience the same sets of for a business to connect to electricity in dependence on a given resource. A coun- challenges: shortfalls in electricity supply, Lahore and Karachi and a new connec- try that is over-reliant on hydropower, for chronic transmission and distribution tion costs about 1,770% of the national example, might be particularly exposed losses38 and insufficient exploitation of income per capita, a cost that is among to droughts, while a country that strongly existing capacity. the highest in South Asia. relies on imported oil may be vulnerable to fluctuations in global crude prices. Pakistan’s electricity generation mix consists mainly of thermal power (69%) DRIVERS OF SUPPLY Other factors impacting the reliability of and hydropower (28%).39 Gas is sourced RELIABILITY supply are tariff levels, bill collection rates domestically but the economy is a net and transmission and distribution losses. importer of oil, which makes the electric- Evidence suggests that adequate invest- In many economies, tariffs are calculated ity sector reliant on imports and exposed ment in electricity generation is essential taking into account all costs associated to market fluctuations. Repeated hikes in to ensure a reliable electricity supply. with the generation, transmission and global oil prices have at times strained Without investment, generation capac- distribution of electricity, as well as profit the public—and utility—finances, but ity can quickly be overtaken by rising margins and infrastructure maintenance the oil share of electricity generation has demand, as occurred in Cameroon and costs. Subsidies, if needed, typically grown since the 1990s.40 Considering Pakistan. The experiences of Guatemala target certain groups of customers for this situation, Pakistan has undertaken a power sector reform agenda to address FIGURE 4.3 Generation capacity from 2000 to 2012 its generation shortfall by further devel- oping its hydropower potential. In this Kilowatts per 1,000 people context, hydropower investment projects 200 supported by multilateral institutions such as the World Bank Group have 150 recently been announced.41 100 The regulator, the National Electric Power Regulatory Authority (NEPRA), was established in 1998 as an autono- 50 mous body without any government 0 administrative control. However, while 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 NEPRA has jurisdiction on tariffs, all deci- sions need to be approved by the state, Guatemala Pakistan which has led successive governments Indonesia Cameroon to set tariff levels in a discretionary manner. Consequently, end-user prices Sources: International Energy Agency database (http://www.iea.org/statistics/); World Bank country data have been set below the cost of supply (http://data.worldbank.org/country). 50 DOING BUSINESS 2017 whom affordability is an issue, but FIGURE 4.4 Electric power transmission and distribution losses in 2012 utilities in general should not carry the financial burden of tariffs set below Percent of output market levels. Bill collection rates are also 40 relevant because under-collection results in revenue losses, which exacerbate the 30 financial shortfalls that plague the sector. In turn, this poses challenges to the abil- ity of utilities to pay their suppliers. 20 Pakistan’s power sector also grapples 10 with financial challenges. In 2014 electric- ity tariffs were charged at 20.8 cents per kilowatt-hour,44 but the bill collection rate 0 Pakistan Cameroon Guatemala Indonesia was below 80%.45 Because tariffs were set at below cost-recovery level, genera- Source: International Energy Agency database (http://www.iea.org/statistics/). tion costs were not entirely recuperated through end-user tariffs. This resulted in chronic debt for the power system.46 accountable for the frequency and dura- makers must cope with local market tion of power outages. All four economies factors and other development objec- Transmission and distribution losses, analyzed have regulatory bodies in place tives such as “greening” the energy mix which serve as a metric of operational and impose financial deterrents aimed at and making electricity affordable for efficiency for a utility, also affect the limiting outages. However, energy regula- subsets of the population. The cases of financial performance and the reliability tion cannot by itself ensure a high level of Indonesia and Guatemala are interesting of electricity supply. In Cameroon and reliability of supply—the frequency and for this reason: growing demand was met Pakistan, transmission and distribution duration of power outages recorded in through different investment strategies losses stand at approximately 30%, com- Guatemala and Indonesia are significantly and varying degrees of sectoral liberaliza- pared to 10% or less in Guatemala and lower than in Cameroon and Pakistan. tion. And while liberalization helped spur Indonesia (figure 4.4). These losses can investment in these two economies, it be divided into technical and commercial has been less of a success in Pakistan and losses. Technical losses are due to the CONCLUSION Cameroon where some factors—such as natural resistance of the electric cables sustainable tariff pricing, sound financial to the flow of the electric current. They The reliability of electricity supply is management, high operational perfor- depend on the distance from generators critical for the development of the private mance and balanced energy mix—were to customers, on the voltage level and sector—as well as for societies at large. partly neglected in the past. As these the quality of infrastructure, among other There are multiple interdependent fac- cases suggest, having a multipronged factors. Commercial losses are caused by tors that directly affect reliability. Some approach is necessary to ensure the reli- non-payment due to theft, non-registered are beyond the control of policy makers ability of electricity supply. consumption or improper metering. In (such as inclement weather or commod- OECD high-income economies, com- ity prices) yet many factors are, in fact, mercial losses are minimal and stood at actionable if a long-term and compre- NOTES 6.5% in 2012.47 By contrast, the majority hensive approach is adopted. Therefore, This case study was written by Jean Arlet, Diane of losses in Cameroon and Pakistan are adequate generation capacity, financial Davoine, Tigran Parvanyan, Jayashree Srinivasan, commercial, considering that—based performance, the operational efficiency and Erick Tjong. on World Bank Group energy sector of the utilities and the overarching regu- 1. Average excludes Sub-Saharan African experience—technical losses usually do latory framework need not be treated economies for which SAIDI/SAIFI data was not exceed 12%. Such high numbers can separately. All of these levers are integral unavailable. These economies are: Angola, Benin, Botswana, Burundi, the Central African compromise utilities’ financial standing. to ensuring that electricity supply meets Republic, Chad, the Republic of Congo, demand in a sustainable fashion. Equatorial Guinea, Ethiopia, The Gambia, Another key driver of supply reliability is Ghana, Guinea-Bissau, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, a proper, overarching regulatory frame- With adequate planning and foresight, Rwanda, São Tomé and Príncipe, Senegal, work, as it can ensure adequate tariffs for different strategies can be used to ensure Sierra Leone, Somalia, South Africa, South each customer group and hold utilities a constant flow of electricity, as policy Sudan and Togo. Averages are for the primary GETTING ELECTRICITY 51 business city of each economy and exclude 2014 AES SONEL was acquired by a British data from Kano, Nigeria. group, ACTIS, and renamed ENEO Cameroon. 2. Andersen and Dalgaard 2012. 26. These data are from the Electricity Installed 3. Westall, Sylvia. 2015. “No light at end of Capacity 1980-2012 section of the Cameroon tunnel for Lebanon’s power crisis.” Reuters, Data Portal (database), Yaoundé, Cameroon, October 26. http:/ /www.reuters http:/ /cameroon.opendataforafrica.org .com/article/us-lebanon-electricity- /sdjsclb/cameroon-electricity-installed- idUSKCN0SK1LH20151026/. capacity-1980-2012. 4. Exogenous factors, such as natural cataclysms, 27. Data on access to electricity are for 2012 and are not considered in the case study. are from the World Development Indicators 5. Mutale, Alexander. 2015. “Zambia: Hello database (http:/ /data.worldbank.org darkness.” Financial Mail. May 21. http:/ /www /indicator), World Bank. .financialmail.co.za/features/2015/05/21 28. Enterprise Surveys database (http:/ /www /zambia-hello-darkness; Botah, Tozya. 2016. .enterprisesurveys.org/), World Bank. “How El Nino is affecting Zambia.” Zambia 29. World Bank 2014a. Daily Mail. January 14. https:/ /www.daily- 30. These data are for 2013 and are from the mail.co.zm/?p=56004. statistical database of the International Energy 6. Doing Business collects data on the average Agency, Paris, France, http:/ /www.iea.org frequency and duration of power outages per /statistics/. customer in the main business city of each 31. According to the World Bank, Cameroon has economy over the course of one year. the third largest hydropower potential in Sub- 7. Data in this section are from the Sustainable Saharan Africa with an estimated capacity of Energy for All (SE4ALL) database, World 12,000 megawatts. Bank, Washington, DC, http:/ /data.worldbank 32. Kindzeka, Moki Edwin. 2015. “Cameroon .org/data-catalog/sustainable-energy-for-all. economy suffers through power failures.” VOA 8. According to Doing Business data commercial News. June 19. http:/ /www.voanews.com tariffs stand at 11 cents per kilowatt-hour in /content/cameroon-economy-suffers- Indonesia in 2016 compared to an average of through-power-failures/2829060.html. 23 cents per kilowatt-hour globally. 33. Investingincameroon.com. 2015. “The 9. PwC 2015. electricity regulator in Cameroon announced 10. Electricity demand is rising rapidly in a heavy penalty against Eneo.” July 9. http:// Indonesia (up by 6% in 2014 and forecast by www.investiraucameroun.com/energie/0907- PwC to rise by 9% annually between 2015 6527-pour-2015-le-regulateur-de-l- and 2019). https:/ /www.pwc.com/id/en electricite-au-cameroun-annonce-une-lourde- /publications/assets/eumpublications penalite-contre-eneo. /utilities/power-guide-2015.pdf. 34. Aziz and Ahmad 2015. 11. Indonesia, Ministry of Energy and Mineral 35. Data in this section are from the Sustainable Resources 2015. Energy for All (SE4ALL) database, World 12. Tharakan 2015. Bank, Washington, DC, http:/ /data.worldbank 13. Geginat and Ramalho 2015. .org/data-catalog/sustainable-energy-for-all. 14. Tharakan 2015. 36. Installed capacity rose from 7,700 megawatts 15. The six regions are Maluku, North Maluku, to 19,300 megawatts and production from East Nusa Tenggara (NTT), West Nusa 37.7 terawatt hours to 93.8 terawatt hours. Tenggara (NTB), Papua and West Papua. 37. Aziz and Ahmad 2015. 16. Guatemala, Ministry of Energy and Mines 2013. 38. These are estimated at 23% to 25% in 2016 17. Guatemala, Ministry of Energy and Mines 2016. according to data from the United States 18. Bolaños, Rosa María. 2016. “IC Power compra Institute of Peace. a Deocsa y Deorsa.” Prensa Libre, January 1. 39. Kessides 2012. http:/ /www.prensalibre.com/economia 40. Aziz and Ahmad 2015. /energuate-cambiaria-de-dueo-firma- 41. World Bank Group 2016. estadounidense-acuerda-compra/. 42. Mills 2012. 19. Data in this section are from the international 43. Kugelman 2013. energy statistics database of the U.S. Energy 44. These data are from the Doing Business Information Administration, Washington, DC, database and are for 2014. http:/ /www.eia.gov/cfapps/ipdbproject 45. Jamal, Nasir. 2014. “Amount of Unpaid Power /IEDIndex3.cfm. Bills Increases to Rs286bn.” April 16. http:// 20. According to IEA data, in 2013 the generation www.dawn.com/news/1100237. mix was: 15.8% coal, 17% oil, 18.1% biomass, 46. USAID 2016. 46.9% hydro and 2.1% geothermal. 47. These data are from the statistical database of 21. Guatemala, Ministry of Energy and Mines 2016. the International Energy Agency, Paris, France, 22. Although electricity imports and exports http:/ /www.iea.org/statistics/. have both increased since 2010, Guatemala remains a net energy exporter. Guatemala, Ministry of Energy and Mines 2013. 23. IDB 2013. 24. Guatemala, National Electric Energy Commission 2015. 25. In 2001 SONEL was acquired by the US-based AES Corporation, thereby becoming AES SONEL, and granted a 20-year monopoly over generation, transmission and distribution. In