Competition, regulation and privatisation of electricity generation in developing countries: does the sequencing of the reforms matter?

Abstract

Recent years have seen countries introducing reform of their utility industries with a view to promoting private ownership and competition. This paper studies the effect of the sequencing of privatisation, competition and regulation reforms in electricity generation using data from 25 developing countries for the period 1985 to 2001. A fixed effects panel data model is used. The study finds that establishing an independent regulatory authority and introducing competition before privatisation is correlated with higher electricity generation, higher generation capacity and, in the case of the sequence of competition before privatisation, improved capital utilisation.

Regulatory Agencies : Impact On Firm Performance And Social Welfare

“…Estache and Rossi (2005) study the impact of regulatory regimes on utility performance. Zhang, Parker, and Kirkpatrick (2005) analyze the sequencing of reforms in the electricity generation sector in developing countries. Our work is also related to the literature on the impact of regulatory agencies on the odds of renegotiation (Guasch, 2004) and on the development of financial markets (Glaeser, Johnson, and Shleifer, 2001).…”

Privatisation processes and firm performance : the Libyan industrial sector

“…It can take different forms and degrees in the transfer of ownership; it can be complete sector divestment or public and private partnerships (Calabrese, 2008). Furthermore, privatisation is a complex process, which requires a great deal of planning, preparation, and the creation of institutional infrastructure favourable to the market exchange (Zhang, Parker, & Kirkpatrick, 2005). This can pose a host of policy questions and decisions that need to be addressed prior to the sale (Mahoobi, 2003).…”

“…In recent years, policy makers in the WB and WTO have increasingly recognised the need to strengthen market institutions before privatisation, both globally and in developing countries. This was mirrored by the growing evidence from the industrialised economies, such as the United Kingdom (UK), that privatisation alone was insufficient to stimulate the performance improvements (Zhang, Parker, & Kirkpatrick, 2005). The increased importance given to the market institutions was also viewed as a response to the disappointing privatisation results coming from some transition economies such as Russia and the Czech Republic (Shirley & Walsh, 2000).…”

“…In this context, the research focuses on a developing country, where the institutional framework for regulation is weak. It may be expected that the impact of ownership change, competition and regulation in this type of country will be affected by why and how these policies are introduced (Zhang, Parker, & Kirkpatrick, 2005). Accordingly, the research argues that to gain a better understanding of the privatisation process, it is necessary to divide the central research question into three parts that together lead to an adequate addressing of the problem statement.…”

“…Privatisation in these countries is seen as part of structural adjustment programs involving concomitant macroeconomic and institutional reforms (Boubkri, Cosset, & Guedhami, 2005). It may be expected that the impact of privatisation, competition and regulation in these countries will be affected by why and how the policies are introduced (Zhang, Parker, & Kirkpatrick, 2005). More specifically, the research concentrates on Libya, as this country is now at a turning point from a socialist to a market-oriented economy (IMF, 2007).…”