Power sector reform in Central Asia: observations on the diverse experiences of some formerly Soviet Republics and Mongolia

Abstract

We examine the paths to structural reform of the electricity sectors in six former communist Central Asian countries, present data on progress towards solving identified problems, and develop economic hypotheses linking the structural changes with progress identified. This analysis is used to derive suggestions for the further structural reforms of the sectors. The experiences documented make a strong case for (i) improving the transparency of operations of Central Asia's power utilities, beginning with the transactions between subsidiaries; and (ii) improving incentives for distribution companies to perform their billing and cash collection responsibilities, both through improved accountability, and, in the countries studied, some privatisation of these commercial services. They also highlight the critical role of governmental commitment to restoring discipline, the importance of setting limited and consistent objectives for regulators, and the function of transmission company independence in promoting economically and environmentally efficient and sustainable regional power trade.