Rethinking Power Sector Reform in the Developing World presents a comprehensive picture of developing country experience with power sector reform that distills the lessons learned over the last 25 years and reflects on how recent technological trends that are disrupting the sector may call for new thinking on reform strategies.
The report finds that while regulation has been widely adopted, practice often falls well short of theory; and cost recovery remains an elusive goal. The private sector has financed a substantial expansion of generation capacity. Yet, its contribution to power distribution has been much more limited, with efficiency levels that can sometimes be matched by well-governed public utilities. Restructuring and liberalisation have been beneficial in a handful of larger middle-income nations; but have proved too complex for most countries to implement.
Based on these findings, the report points to three major policy implications:
- First, reform efforts need to be shaped by the political and economic context of the host country. The 1990s reform model was most successful in countries that had reached certain minimum conditions of power sector development and offered a supportive political environment.
- Second, reform efforts should be driven and tailored towards desired policy outcomes, and less preoccupied with following a predetermined process; particularly given that standard market-oriented reforms alone will not deliver on twenty-first century policy objectives.
- Third, countries found alternative institutional pathways to achieving good power sector outcomes, making a case for greater pluralism going forward.