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Global electric power reform, privatization and liberalization of the electric power industry in developing countries (English)

In many developing countries, and in particular those in Asia, the Middle East, and Africa, reform of the power sector starts from a market structure that is dominated by a state-owned national power utility with a legally endowed monopoly and a vertically integrated supply chain encompassing power generation, transmission, distribution, and customer services. The rationale for this structure is minimization of the costs of coordination between these functions and of financing the development of power systems. The pre-reform structure in other countries, notably in South America, places distribution and customer services with local companies, separate from national companies that provide power generation and transmission. Power reforms are designed to introduce competition where feasible, which is in the upstream production and downstream supply functions of the industry structure, and to use economic regulation of the wholesale and retail power markets to promote competition and protect consumer interests. Regulation of the power market is essential, as shown by the experience of New Zealand, which tried an approach without the amount of regulation used elsewhere. Their approach was based on mandatory separation of generation, transmission, and distribution, using general competition laws to deal with both the terms of interconnection and conduct generally in unbundled power networks.


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    R. W. Bacon J. Besant-Jopnes

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    Working Paper (Numbered Series)

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    The World Region,

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    Global electric power reform, privatization and liberalization of the electric power industry in developing countries

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    Country Policy and Institutional Assessment;commercial energy use per capita;information storage and retrieval system;growth in energy use;Kilograms of Oil Equivalent;competitive return on equity;competitive wholesale power market;marginal cost of production;public supply of electricity;price elasticity of demand;independent power producer;state owned enterprise;privatization of asset;introduction of competition;power purchase agreement;wholesale electricity market;divestiture of state;Electricity Sector Reform;cost recovery mechanism;sale of electricity;demand for electricity;lack of investment;public expenditure need;consumption of energy;central government expenditure;user of electricity;sale of asset;economies of scale;expansion of access;international lending agency;process of reform;enactment of legislation;extent of electricity;achievement of targets;electric power supply;national power utility;inequality between country;delivery of energy;electricity distribution company;terms of performance;individual country data;transfer of ownership;prior written permission;exchange rate exposure;gross domestic product;competitive bidding process;independent regulatory authority;degree of competition;power sector regulation;small power system;state-owned utilities;generation of electricity;weighted average price;general competition law;market power;power utilities;reform process;industry structure;distribution entity;power pool;market structure;sector liberalization;Power Generation;private-sector involvement;supply chain;cross subsidy;political feasibility;power reform;energy industry;winning bid;private finance;country survey;electricity supplier;private investor;retail power;natural monopolies;electricity generator;wholesale market;retail market;open access;private involvement;profit motive;multiple regression;dependency ratio;perfect competition;state enterprises;efficient supply;collected data;liberalization program;electricity law;tariff setting;political risk;risk exposure;private investment;government guarantee;regulatory risk;utility model;heavy investment;Fixed Assets;expenditure expenditure;market concentration;private power;rapid change;electricity producer;industrial structure;generating capacity;comparative study;interesting case;generating plant;market regulator;risk indicator;supply industry;private restructuring;business environment;distribution enterprise;excessive costs;privatization proceeds;gigawatt hour;net receivables;energy loss;management skill;regulatory body;Regulatory Bodies;distribution privatization;industrial enterprise;tariff reform;discriminatory manner;asian countries;financial claim;long-term financing;fuel supply;project debt;wholesale tariff;foreign debt;project financing;financial risk;sale price;entry barrier;private management;commercial performance;competitive elements;relative performance;energy sale;Power Policy;local company;financial structure;power supplier;state sector;spot price;price control;electricity service;electricity price;industrialized world;third-party access;demonstration effect;reform approaches;macroeconomic performance;foreign company;macroeconomic stabilization;state ownership;irreversible change;supply function;foreign ownership;consumer interest;enterprise control;electricity distributor;existing asset;mandatory separation;economic welfare;fiscal control;governance arrangement;power network;electricity enterprises;transmission system;macroeconomic reform;financial resource;managerial expertise;utility management;government resource;supply market;local grid;targeted subsidy;competitive segment;interest group;profit opportunity;system control;concentration ratio;bilateral contract;wholesale competition;short-term problem;specialty market;trade electricity;commercial practice;subsidiary right;distribution market;regional power;upstream production;driving force;system operator;transmission grid;private operator;independent company;common ownership;labor employment



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R. W. Bacon J. Besant-Jopnes

Global electric power reform, privatization and liberalization of the electric power industry in developing countries (English). Energy and Mining Sector Board discussion paper series : Paper no. 2 (June 2002) Washington, D.C. : World Bank Group.