Private Participation in the Power Sector in Europe and Central Asia
Authors: Krishnaswamy, Venkataraman; Stuggins, Gary
Publication date: June 2003
This study is essentially based on a desk review of the relevant Bank documents covering the electricity related operations in the ECA countries during the 1990s. Detailed case studies have been prepared for four countries, which are all candidates for EU accession (Hungary, Lithuania, Poland and Turkey) and six former Soviet Union states (Georgia, Kazakhstan, Kyrgyz Republic, Moldova, Tajikistan, Ukraine). Taking these, as well as information relating to Russia, Romania, Armenia and Albania, lessons have been drawn.
The key lessons relate to: (a) the overriding need for comprehensive commercialization of the sector, before attempting sector reforms involving unbundling, privatization and competition; (b) the need to adjust tariffs to cover costs of supply and depoliticize tariff setting by establishing independent regulatory bodies; (c) the need to select market structures appropriate for the circumstances of each country; and (d) the need to protect the targeted poorer consumers from rising electricity costs. Good practices leading to optimal privatization receipts and successful privatizations to strategic investors have been identified. Actions to be pursued in the context of declining interest of strategic investors in emerging markets are outlined.