Cost Recovery and Financial Viability of the Power Sector in Developing Countries : Insights from 15 Case Studies
This paper analyzes power utilities in 15 jurisdictions to understand the determinants of success for reforms aimed at improving financial viability and cost recovery in the power sector and the impacts of these reforms on metrics of sector perform...
| Main Authors: | , , , , , , , |
|---|---|
| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/970281580414567801/Cost-Recovery-and-Financial-Viability-of-the-Power-Sector-in-Developing-Countries-Insights-from-15-Case-Studies http://hdl.handle.net/10986/33292 |
| Summary: | This paper analyzes power utilities in
15 jurisdictions to understand the determinants of success
for reforms aimed at improving financial viability and cost
recovery in the power sector and the impacts of these
reforms on metrics of sector performance. The analysis finds
that electricity tariffs are rarely high enough to cover the
full costs of service delivery, even where the cost of
service is low, and that few countries adequately manage
volatile costs and maintain cost recovery levels over time.
Almost everywhere, power utilities often impose a
substantial fiscal burden and contingent liabilities on
government budgets. Over the past 30 years, cost recovery
levels have increased on average, but progress has been
uneven, with over half of the case study jurisdictions
experiencing a decline compared with the pre-reform period.
The record of reforms of price formation, especially tariff
setting through regulatory agencies, is mixed. On average,
countries that have made more progress on utility governance
and decision making perform better on cost recovery. The
paper concludes with proposed modifications to the
conceptual framework underpinning the economic analysis of
power sector reforms as well as immediate, practical
implications for understanding cost recovery as part of the
overall power sector reform agenda. |
|---|