Improving the Performance of Electricity Industries in Developing Countries: is World Bank Policy on Deregulation the Way Forward?

Investment in power sector development has played a large role in international assistance to developing countries in the post war era. According to the [World Bank Development Report (1994)], p. 149, power sector loans headed total sectoral lending by the World Bank in 22 out of the 44 years between 1950 and 1993. Even in 1993 such loans amounted to 29% of total identified sector World Bank IBRD and IDA commitments. World Bank lending rose from $768 million per year in the 1970s to $2363 million in the 1980s and to over $2500 million in the 1990s. In a study of its role in the electric power sector ([World Bank (1993)], p. 34) the Bank indicated that it had financed 7% of total power investments in developing countries during the 1980s, although its promotion of co-financing makes this an underestimate of its impact. The World Bank was not the only supporter of power development but it was by far the most influential. It is an important question, therefore, as to whether the direction of international policy has been helpful overall to the recipients of loans, and whether recent changes in policy are well founded. The objective of this paper is to analyse the performance of developing country power sectors over the period focusing on the role played by the World Bank in its programme of loan assistance.