Financial Wellb & Indigenous Australia AIATSIS Canberra Vinita Godinho 28 March 2014.
RETHINKING POWER SECTOR REFORM -...
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RETHINKING POWER SECTOR REFORM IN SUB-SAHARAN AFRICA & SOUTH ASIA Catrina Godinho Management Programme in Infrastructure Reform & Regulation www.gsb.uct.ac.za/mir [email protected] 1
Transcript of RETHINKING POWER SECTOR REFORM -...
RETHINKING POWER SECTOR REFORM
IN SUB-SAHARAN AFRICA & SOUTH ASIA
Catrina GodinhoManagement Programme in
Infrastructure Reform & Regulation
www.gsb.uct.ac.za/[email protected]
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Corporatization & Commercialization
Legislation
Independent Regulation
Private Sector Participation
Restructuring
Divestiture Assets
Competition
In Sub-Saharan Africa & South Asia , power sector reforms have proven much more difficult thananticipated, and remain a work in progress in some countries while having completely stalled orreversed in many others.
25 YEARS OF POWER SECTOR REFORMS IN SUB-SAHARAN AFRICA & SOUTH ASIA
THE STANDARD 1990s MODEL OF POWER SECTOR REFORM
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SUB-SAHARAN AFRICA
48 Countries
1 billion people
90 GW installed capacitySouth Africa accounts for 43 GW
~ 60% without access
48% of the global population without access
THE STATUS OF POWER SECTOR DEVELOPMENT IN SUB-SAHARAN AFRICA & SOUTH ASIA
SOUTH ASIA
8 countries
1.74 billion people
350 GW installed capacity, India accounts for 305 GW
~ 25% without access
33% of the global population without access
Pivotal Challenges: Attracting private sector investment & improving utility performance
Catch 22 – Strategic Reforms Essential3
SUB-SAHARAN AFRICA
SUB-SAHARAN AFRICA
POWER STRUCTURES IN
KEY
State ow
ned
entityG
eneration
activities
Transmissio
n activities
Distrib
ution
activities
Reg
ulatory ag
ency exists
Grid
connected
for
pow
er imp
ort/exp
ort
Private ow
ned
entity (PS
P)
Eb
erhard &
Go
dinho
(2016
), University o
f Cap
e Town.
With PSP
GROUP 2: Vertically integrated with PSP
BO
TSWA
NA
CA
PE
VE
RD
E
GU
INE
AM
AD
AG
ASC
AR
MA
UR
ITIUS
RW
AN
DA
SEN
EG
AL
SAO
TOM
E A
ND
PR
INC
IPE
SW
AZ
ILAN
D
TAN
ZA
NIA
TO
GO
Without PSP
GROUP 3: Vertically unbundled
ETH
IOP
IAA
NG
OLA
UG
AN
DA
NIG
ER
IAZ
IMB
AB
WE
LESO
THO
GROUP 1: Vertically integrated with no PSP
NIG
ER
R
EP
UB
LIC O
F CO
NG
O
BE
NIN
BU
RK
INA
FASO
B
UR
UN
DI
CA
R
CH
AD
CO
MO
RO
SD
RC
EQ
UA
TOR
IAL G
UIN
EA
ER
ITRE
A
GU
INE
A-B
ISSAU
LIBE
RIA
MA
LAW
IM
AU
RITA
NIA
SE
YCH
ELLE
SSO
MA
LIASO
UTH
SUD
AN
THE
GA
MB
IA
SUD
AN
KE
NYA
GH
AN
A
MO
ZA
MB
IQU
E
ZA
MB
IA
CA
ME
RO
ON
C
OTE
D’IV
OIR
E
GA
BO
N
MA
LI
NA
MIB
IA
SOU
TH A
FRIC
A
SIER
RA
LEO
NE
SUB-SAHARAN AFRICA
POWER STRUCTURES IN
KEY
State owned entity
Generation activities
Transmission activities
Distribution activities
Regulatory agency exists
Grid connected for power import/export
Private owned entity (PSP)
Eberhard & Godinho (2016), University of Cape Town.
With PSP
GROU
P 2: V
ertic
ally i
nteg
rate
d with
PSP
BOTSWANACAPE VERDE GUINEAMADAGASCARMAURITIUSRWANDA
SENEGAL SAO TOME AND PRINCIPE SWAZILAND TANZANIA TOGO
Without PSP
GROU
P 3: V
ertic
ally u
nbun
dled ETHIOPIA ANGOLA
UGANDANIGERIA ZIMBABWE
LESOTHO
GROU
P 1: V
ertic
ally
integ
rate
d with
no PS
P
NIGER REPUBLIC OF CONGO BENINBURKINA FASO BURUNDICAR CHADCOMOROSDRCEQUATORIAL GUINEAERITREA
GUINEA-BISSAULIBERIAMALAWIMAURITANIA SEYCHELLESSOMALIASOUTH SUDANTHE GAMBIA
SUDAN
KENYAGHANA
MOZAMBIQUE ZAMBIA
CAMEROON COTE D’IVOIRE GABON MALI
NAMIBIA SOUTH AFRICA
SIERRA LEONE
SUB-SAHARAN AFRICA
POWER STRUCTURES IN
KEY
State ow
ned
entityG
eneration
activities
Transmissio
n activities
Distrib
ution
activities
Reg
ulatory ag
ency exists
Grid
connected
for
pow
er imp
ort/exp
ort
Private ow
ned
entity (PS
P)
Eb
erhard &
Go
dinho
(2016
), University o
f Cap
e Town.
With PSP
GROUP 2: Vertically integrated with PSP
BO
TSWA
NA
CA
PE
VE
RD
E
GU
INE
AM
AD
AG
ASC
AR
MA
UR
ITIUS
RW
AN
DA
SEN
EG
AL
SAO
TOM
E A
ND
PR
INC
IPE
SW
AZ
ILAN
D
TAN
ZA
NIA
TO
GO
Without PSP
GROUP 3: Vertically unbundled
ETH
IOP
IAA
NG
OLA
UG
AN
DA
NIG
ER
IAZ
IMB
AB
WE
LESO
THO
GROUP 1: Vertically integrated with no PSP
NIG
ER
R
EP
UB
LIC O
F CO
NG
O
BE
NIN
BU
RK
INA
FASO
B
UR
UN
DI
CA
R
CH
AD
CO
MO
RO
SD
RC
EQ
UA
TOR
IAL G
UIN
EA
ER
ITRE
A
GU
INE
A-B
ISSAU
LIBE
RIA
MA
LAW
IM
AU
RITA
NIA
SE
YCH
ELLE
SSO
MA
LIASO
UTH
SUD
AN
THE
GA
MB
IA
SUD
AN
KE
NYA
GH
AN
A
MO
ZA
MB
IQU
E
ZA
MB
IA
CA
ME
RO
ON
C
OTE
D’IV
OIR
E
GA
BO
N
MA
LI
NA
MIB
IA
SOU
TH A
FRIC
A
SIER
RA
LEO
NE
SUB-SAHARAN AFRICA
POWER STRUCTURES IN
KEY
State ow
ned
entityG
eneration
activities
Transmissio
n activities
Distrib
ution
activities
Reg
ulatory ag
ency exists
Grid
connected
for
pow
er imp
ort/exp
ort
Private ow
ned
entity (PS
P)
Eb
erhard &
Go
dinho
(2016
), University o
f Cap
e Town.
With PSP
GROUP 2: Vertically integrated with PSP
BO
TSWA
NA
CA
PE
VE
RD
E
GU
INE
AM
AD
AG
ASC
AR
MA
UR
ITIUS
RW
AN
DA
SEN
EG
AL
SAO
TOM
E A
ND
PR
INC
IPE
SW
AZ
ILAN
D
TAN
ZA
NIA
TO
GO
Without PSP
GROUP 3: Vertically unbundled
ETH
IOP
IAA
NG
OLA
UG
AN
DA
NIG
ER
IAZ
IMB
AB
WE
LESO
THO
GROUP 1: Vertically integrated with no PSP
NIG
ER
R
EP
UB
LIC O
F CO
NG
O
BE
NIN
BU
RK
INA
FASO
B
UR
UN
DI
CA
R
CH
AD
CO
MO
RO
SD
RC
EQ
UA
TOR
IAL G
UIN
EA
ER
ITRE
A
GU
INE
A-B
ISSAU
LIBE
RIA
MA
LAW
IM
AU
RITA
NIA
SE
YCH
ELLE
SSO
MA
LIASO
UTH
SUD
AN
THE
GA
MB
IA
SUD
AN
KE
NYA
GH
AN
A
MO
ZA
MB
IQU
E
ZA
MB
IA
CA
ME
RO
ON
C
OTE
D’IV
OIR
E
GA
BO
N
MA
LI
NA
MIB
IA
SOU
TH A
FRIC
A
SIER
RA
LEO
NE
THE STATUS OF POWER SECTOR REFORMIN SUB-SAHARAN AFRICA & SOUTH ASIA
19 countries, 3 variations, 5 regulators
10 countries, 10 variations, 10 regulators
19 countries, 5 variations, 13 regulators
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GROUP 1: Vertically integrated with no PSP
SOUTH ASIAPOW
ER STRUCTURES IN
Eberhard & G
odinho (2016), U
niversity of Cape Tow
n.
AFG
HA
NISTA
N
GROUP 2: Vertically integrated with PSP
MA
LDIV
ESSR
I-LAN
KA
NEPA
L
With PSP
Without PSP
GROUP 3: Vertically unbundled
BH
UTA
NB
AN
GLA
DESH
IND
IAPA
KISTA
N
KEY
State owned
entity
Generation
activitiesTransm
ission activities
Distrib
ution activities
Reg
ulatory agency
exists
Private ow
ned
entity (PSP
)
Grid
connected for
pow
er imp
ort/export
SOUTH ASIA
GROU
P 1: V
ertic
ally
inte
grat
ed w
ith no
PSP
SOUTH ASIAPOWER STRUCTURES IN
Eberhard & Godinho (2016), University of Cape Town.
AFGHANISTAN
GROU
P 2: V
ertic
ally
inte
grat
ed w
ith PS
P MALDIVES SRI-LANKANEPAL
With PSPWithout PSP
GROU
P 3: V
ertic
ally
unbu
ndle
d BHUTAN BANGLADESH INDIA PAKISTAN
KEY
State owned entity
Generation activities
Transmission activities
Distribution activities
Regulatory agency exists
Private owned entity (PSP)
Grid connected for power import/export
GROUP 1: Vertically integrated with no PSP
SOUTH ASIAPOW
ER STRUCTURES IN
Eberhard & G
odinho (2016), U
niversity of Cape Tow
n.
AFG
HA
NISTA
N
GROUP 2: Vertically integrated with PSP
MA
LDIV
ESSR
I-LAN
KA
NEPA
L
With PSP
Without PSP
GROUP 3: Vertically unbundled
BH
UTA
NB
AN
GLA
DESH
IND
IAPA
KISTA
N
KEY
State owned
entity
Generation
activitiesTransm
ission activities
Distrib
ution activities
Reg
ulatory agency
exists
Private ow
ned
entity (PSP
)
Grid
connected for
pow
er imp
ort/export
GROUP 1: Vertically integrated with no PSP
SOUTH ASIAPOW
ER STRUCTURES IN
Eberhard & G
odinho (2016), U
niversity of Cape Tow
n.
AFG
HA
NISTA
NGROUP 2: Vertically integrated with PSP
MA
LDIV
ESSR
I-LAN
KA
NEPA
L
With PSP
Without PSP
GROUP 3: Vertically unbundled
BH
UTA
NB
AN
GLA
DESH
IND
IAPA
KISTA
N
KEY
State owned
entity
Generation
activitiesTransm
ission activities
Distrib
ution activities
Reg
ulatory agency
exists
Private ow
ned
entity (PSP
)
Grid
connected for
pow
er imp
ort/export
THE STATUS OF POWER SECTOR REFORMIN SUB-SAHARAN AFRICA & SOUTH ASIA
1 countries, 0 variations, 0 regulators
3 countries, 3 variations, 2 regulators
4 countries, 4 variations, 4 regulators5
For non-OECD countries, the drivers, context and process of power sector
reform have been vastly different to OECD countries and each other.
REFLECTING ON THE EXPERIENCE OF POWER SECTOR REFORMSIN SUB-SAHARAN AFRICA & SOUTH ASIA
Broad consensus that a normative and prescriptive ‘one size fits all’ approach,like of the ‘standard model’, is not appropriate given this heterogeneity.
Power sector reform is not simply a techno-economic problem, but a politicaleconomy challenge.
Initial political economy research has begun to identify determinative politicaleconomy contextualities and offer a number of lessons.
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Determinative Political Economy Contextualities
dependence on aid/loansdebt
inequality
economic structure
undeveloped private sector
war
Regimepolitical instability
power/influence/access
political blocs
institutions weak
legitimacyInstitutional capacity
corruption
political interference
Hybrid Model
starting positionrent seeking
Macro-Economic Circumstances- Fiscal crises, dependence on aid/loans, high national debt, SAPs- Low socio-economic development, high inequality and poverty- Undiversified economic structure, high unemployment, volatile inflation, pervasive subsidies, undeveloped private sector- Resource discovery
Socio-Political Conditions- Current/recent civil war, proxy wars, regional/political instability, ethnic conflict- Regime - authoritarian/ nominal democracy- Strong socialist (sometimes communist), anti-privitisation, and labour political blocs- High socio-economic inequality (ethnic, racial, class) parallels distribution of political and economic power/influence/access
Institutional Environment- Formal institutions weak and unreflective of real distribution of power, - Lack broad support/legitimacy- Institutional capacity weak, politicised distribution of limited resources- Close alignment of political and economic power, facilitates corruption
Power Sector- Highly politicised, political interference, strategic sector- Traditional Industry Model/ Hybrid Model- Large capital requirements – rent seeking - Weak starting position, poor utility performance, infrastructure maintenance and expansion backlogs
Determinative Political Economy Contextualities
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Market-based vs State-led a false dichotomy - whatever capacity exists across the privateand public sector needs to be harnessed to meet the ultimate power sector developmentgoals
LESSONS FROM THE EXPERIENCE OF POWER SECTOR REFORMSIN SUB-SAHARAN AFRICA & SOUTH ASIA
Reform efforts need to be flexible yet durable, suitably paced and sequenced, and seen tobe broadly legitimate by public, private and political actors
Design needs to be “reality-based” - designed and implemented with due considerationof the starting conditions of the power sector, the complexities of the political economycontext, and the larger macro-economic and social conditions within a country
• realistic objectives and timelines• choosing appropriate measures and reform steps• identifying politically feasible paths to reform
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AN INTEGRATED POLITICAL ECONOMY APPROACHIN SUB-SAHARAN AFRICA & SOUTH ASIA
NATIONAL STRUCTURAL
CHARACTERISTICS
State formation,History, Geopolitics, Natural environment & resources,Macro-economic status/structure,Demographics, Socio-economic conditions, Culture, religion, ideologies
POLITICAL & ECONOMIC
INSTITUTIONS
Regime, Structure, Distribution power and resources, Incentives, Responsiveness, Accountability, Inclusive/exclusive, Transparency & legitimacy (level and source of legitimacy), Capacity & capability
SECTOR ANALYSIS
SECTOR & POLICY REFORM AREAHistorical evolution of sector,Structural features & organisation,Relevant institutions & policies,Stated sector objectives,Performance,Transparency/ Information
STAKEHOLDER ANALYSISPower (type, distribution & source), Mode and degree of Influence,Interests, Incentives, Ideas/ ideology, Networks and relationships
POLICY ANALYSISContent,Viability (political, techno-economic and organisational),Impact on sector organisation/performance,Impact on stakeholders, interests and incentives
POLICY/REFORM PROCESSES
Policy making and implementation processes, Incentives and capacities of actors working in policy formulation, negotiation and implementationPast policy process timelines and experiences (of relevance)
SITUATIONAL / TEMPORARY
FACTORS
‘Focusing events’ (eg. crises, news, regime transition, technological breakthrough, etc.), Policy/reform/issue champions and/or coalitions, External actors, donor agenciesStability/volatility across the political economy system
POLITICAL ECONOMY ANALYSIS
NATIONAL STRUCTURAL
CHARACTERISTICS
POLITICAL AND ECONOMIC
INSTITUTIONS
SECTOR ANALYSIS (SECTOR
STRUCTURE, STAKEHOLDERS &
POLICY)
POLICY AND REFORM
PROCESSES
SITUATIONAL/ TEMPORARY
FACTORS
UNDERSTAND POLITICAL ECONOMY AS CONTEXT & OBJECT OF REFORM
IDENTIFY STRATEGIC AREAS FOR REFORM
DESIGN “REALISTIC” REFORMS
MAP POLITICALLY FEASIBLE PATHWAYS TO POWER SECTOR DEVELOPMENT
RESEARCH AGENDA
DEVELOP AN INTEGRATED & THEORETICALLY INFORMED POLITICAL ECONOMY APPROACHObjectives: Practical policy tool & base point for theory developmentMethod: An in-depth, explorative application of this framework in one or a small selection of countries
UNDERTAKE A SYSTEMATIC REVIEW OF EXTANT CORE AND PERIPHERAL LITERATUREObjectives: Identify common enabling or constraining political economy contextualities in power sectorMethod: Mapping contextualities and lessons across the literature within a framework, so as to identifypatterns and begin to develop an understanding around what is possible, appropriate and sustainable
ADVANCE EMPIRICAL POLITICAL ECONOMY RESEARCH ACROSS DEVELOPING COUNTRIES AND REGIONSObjectives: Country-to-county learning across and within developing regions & the development of PowerSector PE research networks for knowledge sharing & developmentMethod: Development of integrated PE framework & sourcebook, launch empirical case studies acrossregions & facilitate inter-regional learning and collaboration. 10
