Person:
Dobozi, Istvan

Global Practice on Energy & Extractives
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Energy economics
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Global Practice on Energy & Extractives
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Last updated: January 31, 2023
Biography
Istvan Dobozi is a World Bank Lead Energy consultant. He joined the World Bank in 1992 and retired in 2013. Among other things, he has been managing the Bank’s energy project portfolio and energy policy dialogue in Kazakhstan, Bulgaria, Slovakia and Hungary. Before joining the Bank, he taught at the Arizona State University and the Colorado School of Mines. He started his professional career in Hungary teaching and researching at the Budapest University of Economics and the Institute for World Economy.  Authored or co-authored a number of books including “Energy and Economic Reform in the Former Soviet Union” and published numerous articles in leading energy and natural resource journals, including Resources Policy, Natural Resources Forum and Minerals and Energy. 

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Stuck in Transition: Reform Experiences and Challenges Ahead in the Kazakhstan Power Sector

2017-02-22, Aldayarov, Mirlan, Dobozi, Istvan, Nikolakakis, Thomas

The large-scale transformation of Kazakhstan’s power sector following independence in 1991 was reflected by the country’s move toward liberalizing the market and implementing sector regulation. As an early adopter of a liberalized multimarket model consisting of bilateral, spot, balancing, ancillary, and capacity submarkets Kazakhstan’s power sector was regarded a market reform leader among countries of the former Soviet Union, having achieved a much improved supply and demand balance and service quality. However, despite the noteworthy headway, sector reforms remain predominantly as unfinished business. The excess generation capacity that was inherited from the former Soviet Union at a time when the “energy-only” market prices were too low to attract serious investors has masked the need to reflect on the long-term outlook of the country’s power production. As the investment crunch unfolded in the mid-2000s, a diverging concern almost immediately arose; that is, the capacity additions of existing and planned generations may not be sufficient to keep pace with the perpetuating and significant increase in the demand for power. Instead of applying market mechanisms to allow prices to rise and reflect the underlying supply and demand gap, the GoK addressed the issue by implementing administrative, command-and-control measures. This study draws on the World Bank’s long-standing engagement in Kazakhstan’s energy sector and a number of recent technical assistance and advisory support activities. The study aims to (i) objectively identify the principal challenges faced by the Kazakhstan power sector in its ongoing transition and outlining potential policy options; and (ii) draw lessons from Kazakhstan’s experience in sector reforms for the broader international audience. The study covers broader sector issues including long-term least-cost power system planning, supply and demand balancing, tariff setting, market structure, and integration of renewable energy.

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Cost Recovery and Financial Viability of the Power Sector in Developing Countries: A Literature Review

2017-12, Huenteler, Joern, Dobozi, Istvan, Balabanyan, Ani, Banerjee, Sudeshna Ghosh

The financial viability of the power sector is a prerequisite for attracting the investment needed to ensure reliable energy supply, meet universal access targets, and hasten the clean energy transition. Adequate pricing of electricity to allow for cost recovery is also important to minimize the power sector’s negative macroeconomic, fiscal, environmental, and social impacts. This paper takes stock of the empirical and conceptual literature on the financial viability and cost recovery of the power sector in developing countries. Time-series data across countries are relatively scarce, but comparing the findings from 21 studies suggests that under-recovery of costs remains pervasive despite decades of efforts by governments and development institutions. Large electricity subsidies continue to burden governments, especially in the Middle East, South Asia, Central Asia, and Sub-Saharan Africa. Reviews by the World Bank and International Monetary Fund on outcomes of their own engagement also conclude that progress on cost recovery in supported countries has been limited. Although the aggregated view obscures fluctuation within individual countries over time, the available evidence suggests that countries progressing toward cost recovery may find themselves backsliding within a few years. As for understanding the circumstances under which progress can be made, a handful of studies point toward a correlation between sector reforms and cost recovery, although few of the studies address obvious endogeneity problems. To provide more solid guidance for future efforts to improve cost recovery, more research is needed on: (i) the determinants and enabling conditions of progress on cost recovery; (ii) tariff reform sequencing; and (iii) institutional arrangements, policies, and regulations that enable countries to sustain cost recovery once it is reached.