This paper reviews recent literature on the impacts of various components of power sector reform on the performance of electric utilities in developing countries.
... See More + Recent literature is heavily focused on statistical testing of the significance of the links between four components of sector reform (unbundling, private sector participation, regulation, and competition) and various performance indicators (relating to utility performance, user outcomes, and broader economic development). Some studies exhibit methodological shortcomings in failing to account for interactions between reforms or degrees of reform; however, others appear to be robust. The strongest result is that the introduction of private sector participation is linked to a significant improvement in labor productivity and distribution losses. Moreover, unbundling reforms in isolation is found to have hardly any significant impact on utility performance. The introduction of an independent regulator or competition is not generally significant across studies. A notable feature of all of the studies is very limited testing of the effects of policy introduction on performance indicators, such as bill collection and the duration and frequency of outages. Poor performance on these indicators of state-owned power companies is well documented and bill collection has been identified as a major hidden cost of unreformed power sectors. The materiality of the impact of private sector participation, on the various performance indictors found to be significant, is calculated for studies that provide sufficient information to do so. The size of the impact of private sector participation on utility performance is substantial in a couple of studies, although much more modest in others.
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Policy Research Working Paper WPS8460 MAY 31, 2018
The electricity sector in the Middle East and North Africa (MENA) is in the grip of an apparent paradox. Although the region is home to the world's largest oil and gas reserves and has been able to maintain electricity access rates of close to 100 percent in most of its economies, it may not be able to cater to the future electricity needs of its fast-growing population and their business activities.
... See More + Primary energy demand is expected to rise at an annual rate of 1.9 percent through 2035, requiring a significant increase in generating capacity. Investments have not been rising fast enough to meet that requirement.
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Brief 122842 JAN 01, 2018
Mahgoub Hamid,Mohamad Ibrahim Mahmoud; Bacon,Robert W.; Estache,Antonio; Camos Daurella,DanielDisclosed
The electricity sector in the Middle East and North Africa (MENA) is in the grip of an apparent paradox. Although the region continues to hold the world’s largest oil and gas reserves and has been able to maintain electricity access rates of close to hundred percent in most of its economies, it may not be in a position to cater to the future electricity needs of its fast-growing population and their business activities.
... See More + Primary energy demand in the region is expected to continue to rise at an annual rate of 1.9 percent through 2035, requiring a significant increase in generating capacity. Investments have not been rising fast enough to meet that requirement. The report is divided into two parts and several appendices. Part I (chapters 1–5) focuses on the region. Part II (chapters 6–10) consists of four country studies and a synopsis of all four. A short conclusion evokes the main themes and lessons from the entire report. Across the report, information at the utility level drawn from the MENA Electricity Database forms the basis of the analysis. Chapter 1 calculates the QFD (or hidden costs) of the power sector in each of the fourteen MENA economies studied, a first attempt to quantify the hidden costs of power sector inefficiencies in the region. Chapter 2 provides a snapshot of key performance indicators of MENA power utilities for which international comparisons are possible. Chapter 3 examines performance indicators over time. Chapter 4 considers the relative overall performance of utilities within the MENA region when more than one indicator is considered. Chapter 5 investigates whether certain organizational differences are correlated with differences in performance. Chapters 6 to 9, focuses on detailed analysis of four countries that have taken very different approaches to the power sector namely Egypt, Jordan, Morocco, and Oman.
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Publication 121006 NOV 07, 2017
Hamid,Mohamad M.; Bacon,Robert W.; Camos,Daniel; Estache,AntonioDisclosed
Analysis of household expenditure surveys since 2008 in 22 Sub-Saharan African countries shows that one-third of all people use electricity. As expected, users are disproportionately urban and rich.
... See More + In communities with access to electricity, lack of affordability is the greatest barrier to household connection. Lifeline rates enabling the poor to use grid electricity vary in availability, with six countries allowing 30 kilowatt-hours or less of electricity usage a month at low prices. Affordability challenges are aggravated by sharing of meters by several households -- denying them access to lifeline rates -- and high connection costs in many countries, made worse by demands from utility staff for bribes in some countries. Collection of detailed information on residential schedules enabled calculation of the percentage of total household expenditures needed for electricity at the subsistence and other levels. Affordability varied across countries, with grid electricity even at the subsistence level being out of reach for the poor in half the countries and even more so once connection charges are considered. Examination of the gender of the head of household shows that female-headed households are not disadvantaged in electricity use once income and the place of residence (urban or rural) are taken into account. However, female-headed households tend to be poorer, making it all the more important to focus on helping the poor for the goal of achieving universal access. Installing individual meters and subsidizing installation, encouraging prepaid metering so as to avoid disconnection and reconnection charges, reformulating lifeline blocks and rates as appropriate, and stamping out corruption to eliminate bribe-taking can all help the poor.
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Policy Research Working Paper WPS7789 AUG 09, 2016
Kojima,Masami; Zhou,Xin; Han,Jeesun; De Wit,Joerie Frederik; Bacon,Robert W.; Trimble,Christopher PhilipDisclosed
The objective of this paper is to help project teams better articulate the link between their projects and the World Bank Group's twin corporate goals of reducing poverty and boosting shared prosperity.
... See More + Based on an extensive literature review, this report examines what type of empirical evidence exists to support linking the project interventions to the twin goals. There are many studies citing a strong link between energy, economic growth, and poverty reduction. However, not all of them are robust, and not distinguishing robust studies from flawed ones risks making exaggerated or inaccurate claims about the benefits of an energy project. The detailed review of the published studies contained in this report is intended to point teams to reliable studies and caution against citing results from studies with serious methodological or data problems. This overview chapter summarizes the findings of the study. Because many studies employed advanced econometric techniques, and because methodological flaws found in many studies invalidate their findings, the rigor of methodological approaches is discussed in some detail in the chapters that follow. Annex one, which treats these methodological issues, should ideally be read before proceeding to the next four chapters. Each of chapters two–five begins with a summary, followed by a table of the main results of the key studies and their strengths and weaknesses, more detailed discussion of the reviewed studies, and an assessment. Each chapter can be read as a stand-alone chapter. Chapters two–five can be highly technical in some places. The intention is to serve as a reference for teams wishing to find out more about the studies and their findings, as well as explain why some studies cannot be used to explain the link between energy and economic outcomes.
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The objective of this paper is to help project teams better articulate the link between their projects and the World Bank Group's twin corporate goals of reducing poverty and boosting shared prosperity.
... See More + Based on an extensive literature review, this report examines what type of empirical evidence exists to support linking the project interventions to the twin goals. There are many studies citing a strong link between energy, economic growth, and poverty reduction. However, not all of them are robust, and not distinguishing robust studies from flawed ones risks making exaggerated or inaccurate claims about the benefits of an energy project. The detailed review of the published studies contained in this report is intended to point teams to reliable studies and caution against citing results from studies with serious methodological or data problems. This overview chapter summarizes the findings of the study. Because many studies employed advanced econometric techniques, and because methodological flaws found in many studies invalidate their findings, the rigor of methodological approaches is discussed in some detail in the chapters that follow. Annex one, which treats these methodological issues, should ideally be read before proceeding to the next four chapters. Each of chapters two–five begins with a summary, followed by a table of the main results of the key studies and their strengths and weaknesses, more detailed discussion of the reviewed studies, and an assessment. Each chapter can be read as a stand-alone chapter. Chapters two–five can be highly technical in some places. The intention is to serve as a reference for teams wishing to find out more about the studies and their findings, as well as explain why some studies cannot be used to explain the link between energy and economic outcomes.
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This Poverty and Social Impact Analysis (PSIA) is part of a broader dialogue on energy tax reform and strengthening social safety nets in Djibouti.
... See More + As part of a possible reform of energy taxes in Djibouti, the government of Djibouti has sought the support of the World Bank to better understand how such a policy reform can be pro-poor. The study was designed and implemented by a multisectoral committee composed of various stakeholder institutions, including the Ministry of Economy and Finance, the Ministry of Budget, the Secretary of State responsible for National Solidarity (SESN), the Department of Statistics and Demographic Studies (DISED), the Ministry of Energy, and the Ministry of Transport, with whom the teams of the Bank and the IMF collaborated throughout the process of preparation of the study. Technical meetings were held on January 30, February 2, May 25, May 28, and May 29, 2014, in Djibouti to discuss the various scenarios of reform, obtain additional information, and present preliminary quantitative results. Consultation meetings were held on July 2 and November 15, 2014, to present the findings and discuss possible reform options. This executive summary condenses the main findings of the study. The study is available as a separate report with more analyses and background information. The study is based on data from a representative household survey which includes detailed information on household expenditures and receipt of certain cash and in-kind benefits (EDAM 3-2012). The tables in this executive summary show 2014 prices, with inflation rates of 2.5 and 2.9 for 2013 and 2014, respectively.
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This Poverty and Social Impact Analysis (PSIA) is part of a broader dialogue on energy tax reform and strengthening social safety nets in Djibouti.
... See More + As part of a possible reform of energy taxes in Djibouti, the government of Djibouti has sought the support of the World Bank to better understand how such a policy reform can be pro-poor. The study was designed and implemented by a multisectoral committee composed of various stakeholder institutions, including the Ministry of Economy and Finance, the Ministry of Budget, the Secretary of State responsible for National Solidarity (SESN), the Department of Statistics and Demographic Studies (DISED), the Ministry of Energy, and the Ministry of Transport, with whom the teams of the Bank and the IMF collaborated throughout the process of preparation of the study. Technical meetings were held on January 30, February 2, May 25, May 28, and May 29, 2014, in Djibouti to discuss the various scenarios of reform, obtain additional information, and present preliminary quantitative results. Consultation meetings were held on July 2 and November 15, 2014, to present the findings and discuss possible reform options. This executive summary condenses the main findings of the study. The study is available as a separate report with more analyses and background information. The study is based on data from a representative household survey which includes detailed information on household expenditures and receipt of certain cash and in-kind benefits (EDAM 3-2012). The tables in this executive summary show 2014 prices, with inflation rates of 2.5 and 2.9 for 2013 and 2014, respectively.
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This Poverty and Social Impact Analysis (PSIA) is part of a broader dialogue on energy tax reform and strengthening social safety nets in Djibouti.
... See More + As part of a possible reform of energy taxes in Djibouti, the government of Djibouti has sought the support of the World Bank to better understand how such a policy reform can be pro-poor. The study was designed and implemented by a multisectoral committee composed of various stakeholder institutions, including the Ministry of Economy and Finance, the Ministry of Budget, the Secretary of State responsible for National Solidarity (SESN), the Department of Statistics and Demographic Studies (DISED), the Ministry of Energy, and the Ministry of Transport, with whom the teams of the Bank and the IMF collaborated throughout the process of preparation of the study. Technical meetings were held on January 30, February 2, May 25, May 28, and May 29, 2014, in Djibouti to discuss the various scenarios of reform, obtain additional information, and present preliminary quantitative results. Consultation meetings were held on July 2 and November 15, 2014, to present the findings and discuss possible reform options. This executive summary condenses the main findings of the study. The study is available as a separate report with more analyses and background information. The study is based on data from a representative household survey which includes detailed information on household expenditures and receipt of certain cash and in-kind benefits (EDAM 3-2012). The tables in this executive summary show 2014 prices, with inflation rates of 2.5 and 2.9 for 2013 and 2014, respectively.
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This Poverty and Social Impact Analysis (PSIA) is part of a broader dialogue on energy tax reform and strengthening social safety nets in Djibouti.
... See More + As part of a possible reform of energy taxes in Djibouti, the government of Djibouti has sought the support of the World Bank to better understand how such a policy reform can be pro-poor. The study was designed and implemented by a multisectoral committee composed of various stakeholder institutions, including the Ministry of Economy and Finance, the Ministry of Budget, the Secretary of State responsible for National Solidarity (SESN), the Department of Statistics and Demographic Studies (DISED), the Ministry of Energy, and the Ministry of Transport, with whom the teams of the Bank and the IMF collaborated throughout the process of preparation of the study. Technical meetings were held on January 30, February 2, May 25, May 28, and May 29, 2014, in Djibouti to discuss the various scenarios of reform, obtain additional information, and present preliminary quantitative results. Consultation meetings were held on July 2 and November 15, 2014, to present the findings and discuss possible reform options. This executive summary condenses the main findings of the study. The study is available as a separate report with more analyses and background information. The study is based on data from a representative household survey which includes detailed information on household expenditures and receipt of certain cash and in-kind benefits (EDAM 3-2012). The tables in this executive summary show 2014 prices, with inflation rates of 2.5 and 2.9 for 2013 and 2014, respectively.
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Power sector subsidies in Sub-Saharan Africa are substantial and highly regressive. While subsidies can be quick, easy, and politically expedient to implement, they are equally quick to take root and challenging to remove.
... See More + Optimal policies that are technically sound and welfare-enhancing over the long run have nevertheless been found difficult to launch and even more challenging to sustain. Of the barriers to reform, those associated with political economy are among the most powerful, yet their analysis is often lacking due consideration in the reform design process. This paper reviews the literature on power subsidies and their reform with emphasis on the political economy of such reform. It examines pricing principles in the power sector and different types of subsides; drivers for subsidies, benefits and costs of subsidy reform, and their distribution; and approaches to political economy analysis, tools available, and methodological issues. The paper draws examples from Sub-Saharan Africa and elsewhere, and presents case studies from the literature.
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Working Paper 89547 JUL 01, 2014
Kojima, Masami ; Bacon, Robert ; Trimble, ChrisDisclosed
The state of national labor markets has always been a concern for governments and development agencies such as the World Bank. Key labor market indicators, such as the rate of unemployment, send signals about the health of an economy and mirror citizens' attitudes.
... See More + Being gainfully employed is an important aspect of an individual's well-being both financially and socially, as 'initial failures in finding a job can lead to persistent joblessness, a loss of interest in further schooling, delayed family formation, mental distress, and negative manifestations of citizenship' (World Bank 2007). Increased expenditure on infrastructure projects has a short-run effect on employment creation as more workers are hired to build infrastructure. These jobs last only during the investment phase of the project, and, without a continuous injection as in a stimulus-type program, such jobs will be temporary. However, the investment program will have created a larger stock of infrastructure capital and this permanent addition facilitates additional growth in the economy. The extra demand from this incremental growth creates more jobs, and these tend to be permanent. Furthermore, an employment experience in an infrastructure-related employment program, even if temporary, might improve the chance of being re-employed at a later date. This study capitalizes on the World Bank's long-standing knowledge on infrastructure, employment, and growth and applies it to the case of MENA to assess the employment creation potential of infrastructure investment.
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Household surveys in Guatemala, India, Indonesia, Kenya, Pakistan, and Sri Lanka were analyzed using a two-stage Heckman model to examine the factors influencing the decision to use liquefied petroleum gas (stage 1) and, among users, the quantity consumed per person (stage 2).
... See More + In the first stage, liquefied petroleum gas selection in all six countries increased with household expenditure and the highest level of education attained by female and male household members. Electricity connection increased, and engagement in agriculture and increasing household size decreased, liquefied petroleum gas selection in five countries; urban residence increased selection in four countries; and rising firewood and kerosene prices increased selection in three countries each. In the second stage, the quantity of liquefied petroleum gas consumed increased with rising household expenditure and decreasing price of liquefied petroleum gas in every country. Urban residence increased and engagement in agriculture decreased liquefied petroleum gas consumption. Surveys in Albania, Brazil, Mexico, and Peru, which did not report quantities, were also examined by calculating quantities using national average prices. Although fuel prices faced by individual households could not be tested, the findings largely supported those from the first six countries. Once the education levels of men and women were separately accounted for, the gender of the head of household was not statistically significant in most cases across the ten countries. Where it was significant (five equations), the sign of the coefficient was positive for men, possibly suggesting that female-headed households are burdened with unmeasured economic disadvantages, making less cash available for purchasing liquefied petroleum gas.
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Policy Research Working Paper WPS5731 JUL 01, 2011
Many recent studies and reports on the performance of the energy sector have focused on the employment generated by investment. Governments, planning their energy futures, are also interested in the job creation benefits and possible identification of skill shortages that may emerge from a large energy program.
... See More + Employment created or supported by the energy sector is frequently an issue whenever government support is being considered or provided. The purpose of this issues paper is to provide a guide to using such figures or constructing such estimates, and focuses in particular on illustrating different approaches and methodologies used in the last decade in estimating employment created. The study does not aim to provide definitive estimates of the employment generation potential of different technologies. The paper begins with a brief review of the various reasons why studies have focused on the employment generated by energy sector activities. It then reviews the different categories of employment that are commonly measured and discusses the bottom-up and top-down methodologies widely used for estimating these employment levels. The second half of the paper reviews in some detail certain studies that provide useful insights into methodology, and illustrates some of their typical findings.
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Patterns of household energy use and expenditure have been the subject of a large number of studies. Household expenditures on energy-particularly, how much the poor spend-have policy implications for several reasons.
... See More + First, policies to mitigate or cope with energy price shocks are increasingly focusing on targeted support to low-income households as a way of limiting the fiscal cost of such policies while offering protection to the most vulnerable members of society. Second, for governments looking to reform energy price subsidies, the effects on household welfare- especially effects on poor households-of price increases resulting from subsidy reduction/removal is an important policy consideration. But subsidies for liquid fuels targeting the poor are difficult to design and implement effectively, because liquid fuels tend to be used more by the rich than by the poor, and are also easy to transport (and hence to divert to non-poor users). For this reason, there is a growing recognition of the need to move away from price subsidies for liquid fuels to alternative forms of targeted assistance to compensate the poor for the adverse effects of higher fuel prices. Third, in areas where many households have not yet begun using modern commercial energy regularly, the amount they can afford to pay for such energy services is a relevant question. Quantifying expenditures on different types of energy at varying income levels provides a basis for addressing these questions. The paper also examines expenditures on motorized passenger transport and food, two items for which the price of oil is an important component of their cost structure and which are consequential in the budget of poor households.
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Working Paper (Numbered Series) 54929 JUN 01, 2010
This paper aims to provide those working in developing countries with a review of the issues that can help address the four questions: 1) are petroleum product margins excessively high at certain times?
... See More + ; 2) Does asymmetry of price responses to cost changes exist and, if so, what are the possible reasons that could account for it?; 3) If there is asymmetry of petroleum product price responsiveness, how large is the cost to consumers compared with symmetric pricing?; And 4) what policies can combat excessive petroleum product margins? The discussion focuses mainly on liberalized markets, because, in markets subject to price control, the pattern of responses of prices to cost changes will be determined partially or largely by the Government. Chapter one describes asymmetric pricing and the structure of the oil market, focusing in particular on the links between the retail sector and the rest of the chain of supply. The chapter next briefly reviews types of legislation that exist in liberalized markets to protect consumers from monopolistic or collusive behavior in petroleum products pricing. Chapter two describes different types of firms' pricing behavior, including both collusive and non collusive behavior, and provides an overview of how lags in pricing behavior arise and the reasons they can lead to asymmetry. Following this section on theories, econometric studies testing for the presence of asymmetric pricing are reviewed, with special reference to those studies carried out in developing countries. Based on these models, a sample calculation of the extra costs to the consumer of asymmetric pricing relative to those under symmetric pricing is given, including an illustration based on a specially constructed estimate for Guatemala. Chapter three provides an overview of policy responses to asymmetric pricing.
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Working Paper (Numbered Series) 56249 JUN 01, 2010
The continued growth of global emissions of carbon dioxide (CO2) and their likely adverse effects on global warming are focusing debate on the contribution of various countries to total emissions and the comparability of efforts across countries in mitigating these emissions.
... See More + This paper examines recent trends in CO2 emissions across countries at different levels of development and asks what has been contributing to the growth of emissions as well as to their moderation. The paper applies a decomposition analysis, an accounting methodology based on a log mean Divisia index, to analyze the change in CO2 emissions over a decade.
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Working Paper (Numbered Series) 51117 OCT 01, 2009
This paper applies a decomposition technique using a log mean Divisia index to two sets of household surveys taken several years apart in Indonesia and Pakistan.
... See More + The methodology enables separation of changes in expenditure on different types of energy into changes in prices, quantities, the share of households using the given form of energy, and total household income. The technique was applied to electricity, liquefied petroleum gas (LPG), kerosene, and gasoline in Indonesia, and to natural gas, kerosene, LPG, purchased firewood, collected firewood, dung cake, and other forms of biomass in Pakistan. The methods of analysis presented in this paper could be extended to other commodities or to changes in energy use patterns over longer periods of time, where suitable household expenditure surveys are available. In particular, when household surveys covering the period of high oil prices become available, the analysis of changing household patterns of fuel use will be valuable. The availability of evidence on the use of energy by various household groups will be important for considerations of providing targeted support to low-income households at times of unexpected shocks to energy prices.
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Working Paper (Numbered Series) 49968 JUN 01, 2009
This paper examines the levels of and changes in vulnerability to oil price increases between 1996 and 2006 in 161 countries for which data are available.
... See More + Vulnerability defined here as the ratio of the value of net oil imports to gross domestic product (GDP) rises if oil consumption increases and oil production decreases per unit of GDP. By comparing the level of vulnerability of different economies at a point in time, those that are particularly vulnerable to oil price increases can be highlighted. This enables consideration of the factors (variables) that help determine the magnitude of vulnerability. Over time economies change in ways that may make them more vulnerable to oil price increases or less so, and the change in vulnerability will be related to changes in the underlying variables. The analysis this paper uses is a starting point for linking these factors. The study also examined changes in vulnerability by subdividing the period under review into two sub-periods, 1996-2001 and 2001-6. The oil price increase during the first sub-period was small, and correspondingly the change in vulnerability was also limited. The change in vulnerability was greater during the second sub-period, which saw a 2.5-fold price increase in nominal U.S. dollars. This paper highlights the role of changes in the oil share of energy and of energy intensity, both of which can be influenced by government policies, and also by oil production, which, even though it is largely a function of geology, can also be affected by a country's upstream fiscal, contractual, and regulatory frameworks.
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Working Paper (Numbered Series) 48422 AUG 01, 2008
Oil is important in every economy; when its prices are high and volatile, governments feel compelled to intervene. Because there can be large costs associated with such interventions, reserve banks, central planning institutions, and think tanks in industrial countries have been carrying out quantitative analyses of oil price volatility for a number of years.
... See More + This report focuses on fluctuations around trends in oil prices. It examines measurements of oil price volatility and evaluates several different approaches to coping with oil price volatility: hedging, security stocks, price-smoothing schemes, and reducing dependence on oil including diversification. It does not deal with the impact of oil price volatility on countries' macroeconomic performance or with macroeconomic policy responses; these generally have more to do with coping with higher price levels than with higher volatility per se. The study examines oil price volatility largely from the point of view of consumers and does not cover the management of revenue volatility by large oil exporters.
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