Publication overview

Competition in the power sectors of transition economies

Abstract

Radical reform of the power sector is under way in a number of EBRD countries of operations. This paper is concerned with the introduction of competition to the power sectors of transition economies. In particular, the paper focuses on the reform path from vertically integrated state-owned monopoly to liberalised industry, and on the appropriate model of competition. The message of the paper is two-fold: first, the model of competition adopted should fit the sector context; second, if the wrong reform path is chosen then mistakes can be hard to undo. The sector should be restructured before the private sector is introduced, Independent Power Producers (IPPs) should be limited prior to liberalisation, and the single buyer model may provide a stop-gap while tariffs are rebalanced and (cash) collections improved. In the longer term the most suitable arrangements would be open network access backed by pools.