Rethinking Power Sector Reform
Rethinking Power Sector Reform is a multiyear initiative that provides an updated assessment of power sector reform issues at the global and country levels. It aims to reignite the policy debate around reform approaches by articulating a new vision that incorporates lessons learned over the past 25 years. It also reflects on how recent technological trends and business models that are disrupting the sector may call for a new thinking on reform strategies.
Supported by the Public Private Infrastructure Advisory Facility (PPIAF) and the World Bank’s Energy Sector Management Assistance Program (ESMAP), the initiative works with different partners and experts across the World Bank Group and beyond to generate evidence, analysis, and insights on key themes of interest to power sector reform practitioners and decision makers globally: cost recovery, utility governance and restructuring, power markets, regulation, and political economy. Findings and recommendations on each of these themes will be included in a forthcoming flagship report.
A nuanced picture emerges. 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 liberalization 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.
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