Reforming power markets in developing countries
This paper, Reforming power markets in developing countries, compiles the lessons of experience from the reforming power markets of developing countries and transition economies.
It focuses on reforms that address the generally poor performance of power markets in developing countries. It also covers reforms in those developing countries with power markets that are performing reasonably well. These lessons are taken from the rapidly growing literature on power market reform in these countries.
The paper also acts a sourcebook of about 240 references to this documented experience. The paper complements the World Bank’s Operational Guidance Note for Public and Private Roles in the Supply of Electricity Services (OGN; World Bank 2004b). It follows the sequence of reform components adopted in this Note in order to ease cross-referencing between these documents.
The paper covers:
- the context and background of power market reform in developing countries,
- the strategic components of reform to power markets, starting with enterprise restructuring and corporate governance, including the respective roles of state-owned enterprises and private enterprises in the provision of electricity services,
- market structure and restructuring power systems, the experience with independent power producers (IPPs), and competition in the power market,
- regulation of power markets and—subsequently—at the social issues associated with power market reform for access and affordability to electricity services for the poor, and
- issues for implementing a reform program, including government’s roles and responsibilities, sequencing of reform steps, and transition issues for reform programs.