Energy sector reform and liberalization: case studies

Abstract

Introduction In the 1990s many developing countries faced with the inefficiencies of public sector energy enterprises and the adverse impact of increasing energy subsidies on their budget, embarked upon an extensive program of energy sector reform within the framework of macroeconomic reform and liberalization. Developing countries expected that the reforming of the energy sector by reversing the pre-1990s command and control strategy of monopoly of public energy enterprises would promote competition, improve energy enterprise efficiency and attract private investment to increase energy supplies for development. While the number of countries on the reform path increased in the 1990s, not all of them were equally successful. At one end of the reform spectrum, countries such as China and Argentina were considered to be successful reformers. Democratic Argentina, embracing a US style free market was considered (until the economic crisis that started in 2001) to have successfully completed its energy sector reform and was put forward as a model and the best practice to other developing countries embarking on a similar reform process in the 1990s. Other countries in East Asia seemed to be succeeding until before the 1998 crisis and are now trying to get back into the reform process. Many other countries at the other end of the spectrum in SSA burdened by economic and political difficulties continue to struggle along with little success. As discussed in Chapter 4, the review of energy sector reform and liberalization in developing countries shows mixed performances with interregional and inter-energy sub-sector variations.