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Last data update: November, 2009
Other Resources
Over the last fifteen years, governments around the world pursued policies to involve
the private sector in the delivery and financing of infrastructure services. Private
participation in infrastructure (PPI) and reforms were driven by the high costs
and poor performance of state-owned network utilities. The scale of this move away
from the dominant public sector model was far more rapid than had been anticipated
at the start of the 1990s with investment flows peaked at US$114 billion in 1997.
But they sharply fall after that, and recently recovered.
The following resources aim at providing the broader context in which the data collected
by the PPI Project database have taken place. The resources include toolkits to
design PPI schemes, websites that contains papers discussing PPI issues or transaction
information, and selected reading lists of papers dealing with private participation
in the different infrastructure sectors, and reviewing country or project level
experiences.
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Energy Papers
This reading list includes papers reviewing experiences with private participation in electricity and natural gas businesses.
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An Analysis of Independent Power Projects in Africa: understanding development and investment outcomes
Author:
Katharine Nawaal Gratwick and Anton Eberhard
Source:
MIR Working Paper, Management Program in Infrastructure Reform and Regulation (MIR), University of Cape Town, October 2007
This study analyzes the outcomes of African independent power projects (IPPs). IPPs in Africa arose through the need to attract investment for new electricity generating capacity. They were also seen as a way to introduce the private sector into the electric generation sector and thereby improve technical and financial performance. Around two dozen such projects have taken root to date, concentrated in mainly eight countries. Outcomes have been varied with more balanced outcomes perceived in the North African region than across Sub-Saharan Africa. This study focuses on identifying the contributing elements to successful and more sustainable IPPs.
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Electricity Utility Management Contract in Africa: Lessons and Experience from the Tanesco-NETGroup Solutions Management Contract in Tanzania, 2002-06
Author:
Rebecca Ghanadan and Anton Eberhard
Source:
MIR Working Paper, Management Program in Infrastructure Reform and Regulation (MIR), University of Cape Town, March 2007
This paper reviews the context in which the management contract for Tanesco took place, the goals of the contract, and the evolution of key performance indicators under the contract. The paper draws the key lessons of this experience which include successful outcomes from this type of contracts depend on broader power sector reform, effective regulation, reducing information asymmetry between the government and the contractor, adequate cost-effective generation planning ad procurement, and contract incentives need to reflect not only financial and technical goals but also customer service and access.
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Reforming Power Markets in Developing Countries: What Have We Learned?
Author:
John E. Besant-Jones
Source:
World Bank Energy and Mining Sector Board Discussion Paper series No. 19, the World Bank, September 2006
This paper compiles the lessons of experience from the reforming of power markets of developing countries and transition economies. The paper acts a sourcebook of about 240 references to this documented experience and complements the World Bank’s Operational Guidance Note for Public and Private Roles in the Supply of Electricity Services by compiling lessons of this experience that help in applying the Note’s guidance.
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Armenia travels the bumpy road to all-day electricity supply: How perseverance pays off in power sector reform
Author:
Gevorg Sargsyan, Ani Balabanyan, and Denzel Hankinson
Source:
Gridlines No. 2, Public-Private Infrastructure Advisory Facility (PPIAF), April 2006
Armenia’s power sector has suffered many setbacks: in the late 1980s an earthquake that took its major nuclear plant off-line, and in the early 1990s the collapse of the Soviet Union, economic blockade, and repeated sabotage of a new gas pipeline—all of which severely disrupted fuel supply. Technical and commercial problems further crippled operations. Armenians endured hard winters with barely two hours of electricity a day. The government set out to reform and privatized the sector, persevering through setbacks and learning from initial failure. Its persistence paid off: today the system runs efficiently and delivers power 24 hours a day.
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The Experience with Independent Power Projects in Developing Countries
Author:
Various
Source:
Program on Energy and Sustainable Development Stanford University October 2005.
This link contains the results of a study conducted by
the Program on Energy and Sustainable Development on the role of independent power
projects (IPPs) in power sector reforms. This study explores the factors that explain
the patterns in IPP investment, and the legal and institutional mechanisms that
could make the IPP mode of investment more sustainable. It also reviews the experiences
of thirteen developing countries with IPPs.
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Analysis of Power Projects with Private Participation under Stress
Author:
M. Ananda Covindassamy, Daizo Oda, and Yabei Zhang
Source:
Energy Sector Management Assistance Program (ESMAP), October 2005
The study, prepared with input from six major investors, reviews the causes and consequences of distress for power projects with private participation in developing countries. The study finds that distress risk is higher for projects with higher market risk. Political visibility associated with distribution projects or divestitures also increases the distress risk. The main causes of distress are, in decreasing order, socio political factors, macroeconomic instability, regulatory and pricing disputes, project structural problems, and investors’ poor performance. The study concludes that reforms without a strong consensus among the parties involved, including the public, is a major cause for distress. The second conclusion is that power projects workout needs to address macroeconomic instability through financial engineering instruments and risk re-allocation. The third conclusion is that workouts need to ensure fair and sustainable price adjustments, particularly under macroeconomic instability.
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Lessons from the Independent Private Power Experience in Pakistan
Author:
Julia M. Fraser
Source:
Energy and Mining sector board discussion paper No. 14,The World Bank, May 2005
The discussion paper reviews the IPP program and concludes with several lessons
learned. Se tting a bulk tariff ceiling allowed Pakistan to alleviate its power
shortage through private generation in record time; however, too much power was
contracted with little regard for least cost expansion. Private investment in generation
should be aligned with the country's sector reforms and also social, economic, political
and institutional governance. In addition, solicitation of IPPs should be on a competitive
basis and staggered over a few years so that changes in international investors'
assessment of country and contract risks could lead to declining bid prices. Finally,
while the risk of renegotiation can be minimized by competitive bidding and transparent
contracts, this risk cannot be wholly avoided. All parties have to recognize that
renegotiation is reasonable provided it is done in a mutually acceptable manner.
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The Delhi Electricity Discom Privatizations: Some Observations and Recommendations
for Future Privatizations in India and Elsewhere
Author:
Manish Agarwal, Ian Alexander and Bernard Tenenbaum
Source:
Energy and Mining Sector Board Discussion Paper Series Paper No. 8, The World Bank, October 2003
Energy and Mining Sector Board Discussion Paper Series
Paper No. 8, The World Bank, October 2003
The paper reviews the privatization process of electricity distribution companies
in Delhi and concludes than the design of the Delhi privatizations clearly improved
on the Orissa privatizations in several key dimensions. However, the electricity
privatization scheme used in Delhi can also be further improved, and ten recommendations
are made to further improve future electricity privatizations in India . Those recommendations
included to have a strong and clear political support, design a two transfer schemes,
mandate ex-post transaction assessment, define measurable loss reduction targets,
define a bidding variable which is under the investor control, and determine subsidies
schemes, among others.
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Regulation by Contract: A New Way to Privatize Electricity Distribution?
Author:
Tonci Bakovic, Bernard Tenenbaum and Fiona Woolf
Source:
Energy and Mining Sector Board Discussion Paper Series
Paper No. 7, the World Bank, May 2003
In many developing countries, both governments and investors have expressed disappointment
with the performance of recently privatized electricity distribution companies.
This paper examines whether regulation by contract or a combination of regulation
by contract and regulatory independence would provide a better regulatory system
for developing countries that wish to privatize some or all of their distribution
systems. It compares and contrasts some recent regulatory experiences of distribution
companies in Latin America and India.
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What International Investors Look For When Investing In Developing Countries.
Results from a Survey of International Investors in the Power Sector
Author:
Ranjit Lamech and Kazim Saeed
Source:
Energy and Mining Sector Board Discussion Paper Series
Paper No. 6, the World Bank, May 2003
This paper presents the results of World Bank surveyed firms with international
equity investments in developing country power sectors. It aims at capturing international
investors' perceptions of the factors critical to the success or failure of their
investments based on their experience. The survey found that investors look for,
among other things, reform-minded governments that have within their mandate to
ensure - the rule of law, respect for the rights of investors, and a judicial and
regulatory process free of arbitrary government interference.
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Global Electric Power Reform, Privatization and Liberalization of the Electric Power Industry in Developing Countries
Author:
R. W. Bacon and J. Besant-Jones
Source:
Energy and Mining Sector Board Discussion Paper Series
Paper No. 2, the World Bank, June 2002
This paper reviews the progress of the movement to privatize and liberalize the
power sector in developing countries. It reviews the forces driving the movement
and then describes the steps that should be taken to achieve success. Data on actual
steps taken and preliminary information on the impact of reform are presented. Finally,
lessons from this past experience are highlighted
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Multi-Utilities and Access: Can Private Multi-Utilities Help Expand Service
to Rural Areas?
Author:
Sophie Tremolet
Source:
Public Policy Journal No. 248, the World Bank, June 2002
In 1997 Gabon awarded the first real concession in Africa , under a contract that
introduced coverage targets for expanding service to previously unconnected rural
areas. SEEG, the new concessionaire, offers both water and electricity service,
with the electricity business cross-subsidizing the less developed water business.
Five years on, the concessionaire has performed well in established service areas,
often exceeding targets, but has made less progress in more isolated areas. This
Note assesses lessons for the design of contracts with incentives for expanding
service beyond the immediate circles of major urban centers—and on the potential
role of multi-utilities.
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Promoting Private Investment in Rural Electrification - The Case of Chile
Author:
Alejandro Jadresic
Source:
Public Policy Journal No. 214, the World Bank, June 2000
Chile, one of the earliest and most thorough energy reformers, has also been one
of the more innovative in restructuring its subsidy schemes. It has seen electrification
as a key measure in alleviating poverty in rural areas - in 1992 about 47 percent
of its rural population had no access to electricity. Its rural electrification
program includes subsidies designed to be consistent with the broad principles of
energy reform - decentralization, competition (between technologies as well as suppliers),
and a requirement that all partners in the process - users and private companies
as well as the state - contribute to the financing of expansion projects. The short-term
result: an increase in rural electrification of about 50 percent in the first five
years of the program.
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The Impact
of IPPs in Developing Countries-Out of the Crisis and into the Future
Author:
Yves Albouy and Reda Bousba
Source:
Public Policy Journal No. 162 the World Bank, December
1998
Developing countries started opening their power sectors to independent power producers
(IPPs) some ten years ago, and a large IPP market has emerged. This Note examines
several contentious questions relating to the development of this market: Have IPPs
led to a transfer of risk to the private sector, or contributed to an increase in
government liabilities? Have they contributed to an increase in foreign exchange
exposure? Have they resulted in efficient pricing and investment decisions? And
have they contributed to sector modernization? Answering these questions has become
more pressing with the global financial crisis. The Note concludes that on the whole
IPPs have had a positive development impact. But negative effects become significant
when the IPP program quickly grows to a large size relative to the host grid capacity,
as has happened in a few Asian countries.
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World Bank Guarantees for Oil and Gas Projects
Author:
Scott Sinclair
Source:
Public Policy Journal No. 157 the World Bank, November
1998
Private investors are considering several large-scale oil and gas production, pipeline,
and cross-border pipeline projects in developing countries, including in West Africa
and the Caspian Sea region. The World Bank and the International Monetary Fund are
well known for their work in helping to create enabling environments for foreign
investment in large infrastructure projects, by supporting reform in such areas
as taxation and energy legislation. This Note focuses on a different role for the
World Bank--encouraging private sector involvement in large-scale oil and gas projects
by providing guarantees in direct support of the government contractual undertakings
that may be needed to induce foreign direct investment in these projects. World
Bank guarantees offer a unique type of risk mitigation that may prove to be a catalyst
in raising finance for these projects.
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The East Asian Financial Crisis-Fallout for Private Power Projects
Author:
R. David Gray and John Schuster
Source:
Public Policy Journal No. 146, the World Bank, August
1998
The authors discuss the impact of the East Asian financial crisis on the power sectors
of four of the most severely affected economies -Indonesia , Malaysia , the Philippines,
and Thailand. For each country the authors examine the impact of the crisis on the
cost of private power and the knock-on effects on retail tariffs. They also assess
the sustainability of current private power programs, which hinges on the level
of government risk exposure, the method used in awarding contracts, and the changed
capacity needs in the wake of slowing or negative GDP growth.
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International Gas Trade-The Bolivia-Brazil Gas Pipeline
Author:
Peter L. Law and Nelson de Franco
Source:
Public Policy Journal No. 144, the World Bank, May 1998
The Bolivia-Brazil natural gas pipeline, which will transport natural gas more than
3,000 kilometers, will cost US$2.1 billion to construct. Despite the substantial
benefits for both Bolivia and Brazil and the involvement of reputable private partners,
the perceived risks and complexities of this large project made financing it a major
challenge. Peter Law and Nelson de Franco explain the historical factors that shaped
the project, how the financing package came together, and the role the pipeline
will play in liberalizing the Brazilian hydrocarbon sector.
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