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...

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Main Authors:	Huenteler, Joern, Hankinson, Denzel, Rosenthal, Nicole, Balabanyan, Ani, Kochnakyan, Arthur, Nguyen, Tu Chi, Rana, Anshul, Foster, Vivien
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2020
Subjects:	POWER SECTOR COST OF SERVICE DELIVERY ACCESS TO ELECTRICITY ELECTRICITY PRICING ELECTRICITY TARIFF COST RECOVERY ELECTRICITY SUBSIDY EMERGING MARKET ECONOMIES ELECTRIC UTILITIES
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

id	okr-10986-33292
recordtype	oai_dc
spelling	okr-10986-332922022-09-20T00:12:15Z Cost Recovery and Financial Viability of the Power Sector in Developing Countries : Insights from 15 Case Studies Huenteler, Joern Hankinson, Denzel Rosenthal, Nicole Balabanyan, Ani Kochnakyan, Arthur Nguyen, Tu Chi Rana, Anshul Foster, Vivien POWER SECTOR COST OF SERVICE DELIVERY ACCESS TO ELECTRICITY ELECTRICITY PRICING ELECTRICITY TARIFF COST RECOVERY ELECTRICITY SUBSIDY EMERGING MARKET ECONOMIES ELECTRIC UTILITIES 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. 2020-02-06T16:39:51Z 2020-02-06T16:39:51Z 2020-01 Working Paper 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 English Policy Research Working Paper;No. 9136 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	POWER SECTOR COST OF SERVICE DELIVERY ACCESS TO ELECTRICITY ELECTRICITY PRICING ELECTRICITY TARIFF COST RECOVERY ELECTRICITY SUBSIDY EMERGING MARKET ECONOMIES ELECTRIC UTILITIES
spellingShingle	POWER SECTOR COST OF SERVICE DELIVERY ACCESS TO ELECTRICITY ELECTRICITY PRICING ELECTRICITY TARIFF COST RECOVERY ELECTRICITY SUBSIDY EMERGING MARKET ECONOMIES ELECTRIC UTILITIES Huenteler, Joern Hankinson, Denzel Rosenthal, Nicole Balabanyan, Ani Kochnakyan, Arthur Nguyen, Tu Chi Rana, Anshul Foster, Vivien Cost Recovery and Financial Viability of the Power Sector in Developing Countries : Insights from 15 Case Studies
relation	Policy Research Working Paper;No. 9136
description	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.
format	Working Paper
author	Huenteler, Joern Hankinson, Denzel Rosenthal, Nicole Balabanyan, Ani Kochnakyan, Arthur Nguyen, Tu Chi Rana, Anshul Foster, Vivien
author_facet	Huenteler, Joern Hankinson, Denzel Rosenthal, Nicole Balabanyan, Ani Kochnakyan, Arthur Nguyen, Tu Chi Rana, Anshul Foster, Vivien
author_sort	Huenteler, Joern
title	Cost Recovery and Financial Viability of the Power Sector in Developing Countries : Insights from 15 Case Studies
title_short	Cost Recovery and Financial Viability of the Power Sector in Developing Countries : Insights from 15 Case Studies
title_full	Cost Recovery and Financial Viability of the Power Sector in Developing Countries : Insights from 15 Case Studies
title_fullStr	Cost Recovery and Financial Viability of the Power Sector in Developing Countries : Insights from 15 Case Studies
title_full_unstemmed	Cost Recovery and Financial Viability of the Power Sector in Developing Countries : Insights from 15 Case Studies
title_sort	cost recovery and financial viability of the power sector in developing countries : insights from 15 case studies
publisher	World Bank, Washington, DC
publishDate	2020
url	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
_version_	1764478412215287808

Cost Recovery and Financial Viability of the Power Sector in Developing Countries : Insights from 15 Case Studies

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