Reforming power markets in developing countries : what have we learned?

This paper broadly follows the structure of the World Bank's Operational Guidance Note (OGN) for Public and Private Roles in the Supply of Electricity Services. Following the overview in chapter 1, the rest of chapter 2 sets out the techno-economic basis and the importance of political and institutional factors for reforming power markets in developing countries. Chapter 3 covers the current extent and outcomes of power market reform in developing countries. Chapter 4 covers enterprise restructuring and corporate governance, including the respective roles of state-owned enterprises and private enterprises in the provision of electricity services. Chapter 5 covers market structure, including restructuring power systems, the experience with independent power producers, and competition in the power market. Chapter 6 covers regulation of power markets. Chapter 7 covers ways that power market reform can support access and affordability to electricity services for the poor. The final chapter of the paper -- chapter 8 -- covers reform implementation, which complements the subjects covered by the OGN. The chapter covers three main aspects: (a) the challenges for implementing power market reform, including governments' roles and responsibilities in this endeavor; (b) the sequencing of power market reform; and (c) managing reform transition, especially the importance of starting conditions. The appendix to the paper examines the relevance of experience with power market reform in OECD countries for reform in developing countries.