Publication: Rethinking Power Sector Reform: Positive Lessons for the Middle East and North Africa
Loading...
Published
2020-01-31
ISSN
Date
2020-05-04
Author(s)
Editor(s)
Abstract
The need for greater efficiency and accountability in the power sector in the Middle East and North Africa has renewed pressure for reforms. A major new World Bank report, Rethinking Power Sector Reform in the Developing World (Foster and Rana 2020), examines how developing countries have attempted to reform their power sector and with what results. Some key lessons point the way forward.
Link to Data Set
Citation
“Nguyen, Tu Chi; Rana, Anshul; Fernstrom, Erik Magnus; Foster, Vivien. 2020. Rethinking Power Sector Reform: Positive Lessons for the Middle East and North Africa. Live Wire;2020/108. © World Bank. http://hdl.handle.net/10986/33689 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Publication Measuring the Climate Resilience of the Power Sector: Harmonization, Not Homogenization(Washington, DC: World Bank, 2025-08-31)Although by its very nature climate resilience can never be fully “standardized”, the development and mainstreaming of climate resilience metrics can benefit from greater consensus around key topics. Areas such as metric categories, methodologies, and reporting frameworks can be aligned through coordinated efforts among regulators, utilities, and other stakeholders, enabling more consistent, effective, and scalable resilience planning across the sector. The key is harmonization and not homogenization.Publication Exploiting the Potential of Energy Efficiency in Residential Buildings(Washington, DC: World Bank, 2025-10-31)The residential sector makes up about 70 percent of building energy demand. This demand is expected to grow rapidly over the next decade. Although the sector offers huge potential for energy efficiency gains, a range of barriers impedes the realization of these benefits. Fortunately, a wealth of global experience shows how these challenges can be overcome through a combination of sound planning, strong policy and regulatory frameworks, well designed financing and incentives, robust institutional and market development, and accessible information to scale up residential energy efficiency.Publication Decarbonizing Ammonia and Nitrogen Fertilizers with Clean Hydrogen(Washington, DC: World Bank, 2025-03-12)Synthetic fertilizers are essential to sustaining the world’s population, but their production is responsible for 1.8–2.4 percent of global greenhouse gas emissions. Clean hydrogen holds growing potential (amid falling costs) to decarbonize fertilizer production. Hydrogen produces synthetic ammonia, a building block of most fertilizers. With the fertilizer market as a reliable off-taker, this shift could support the overall expansion of clean hydrogen, even as it boosts global food security. However, this transition may require adjustments, including changes in fertilizer types and modifications to existing subsidy schemes.Publication Shared Infrastructure for Clean Hydrogen(Washington, DC: World Bank, 2025-08-31)Studies of the development of clean hydrogen have often focused on the production side. Infrastructure built and used for storage and transportation warrants more attention. Among the topics that should be assessed are system design, operation, integration, and ownership; market design and governance; and planning. This Live Wire examines case studies and literature on the infrastructure for hydrogen hubs, with an emphasis on the benefits of shared infrastructure. Given the breadth of hydrogen production and infrastructure, the focus is on renewable hydrogen production for domestic use and for export after conversion to ammonia.Publication Using Biomass or Green Ammonia to Replace Coal in Existing Thermal Power Plants(Washington, DC: World Bank, 2024-06-06)Finding fuel sources to replace coal in power plants is crucial in the march toward decarbonization. Biomass and ammonia are two options offering significant potential. Both can be used with coal or alone in newly constructed facilities or in modified power plants. Relatively new power plants are good candidates for modification. While work is underway demonstrating the feasibility of each material, there are logistical challenges to address, particularly in the case of ammonia.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Rethinking Power Sector Reform in the Developing World(Washington, DC: World Bank, 2020)A new paradigm for power sector reform emerged during the 1990s, under the influence of the Washington Consensus, and began to spread across the developing world. This approach advocated restructuring of national power utilities to create scope for competition, while delegating responsibilities to the private sector under a clear regulatory framework. After 25 years, few developing countries have managed to adopt the model in its entirety, while many others encountered political and economic challenges along the way. This book provides a comprehensive evaluation of developing country power sector reform, sifting the evidence of whether reforms have contributed to improved sector outcomes. It also examines to what extent the reform paradigm remains relevant to the new social and environmental policy agenda of the twenty-first century, and is capable of adaptation to emerging technological disruption.Publication Cost Recovery and Financial Viability of the Power Sector in Developing Countries(World Bank, Washington, DC, 2020-01)This paper analyzes power utilities in 15 jurisdictions to understand the determinants of success for reforms aimed at improving financial viability and cost recovery in the power sector and the impacts of these reforms on metrics of sector performance. The analysis finds that electricity tariffs are rarely high enough to cover the full costs of service delivery, even where the cost of service is low, and that few countries adequately manage volatile costs and maintain cost recovery levels over time. Almost everywhere, power utilities often impose a substantial fiscal burden and contingent liabilities on government budgets. Over the past 30 years, cost recovery levels have increased on average, but progress has been uneven, with over half of the case study jurisdictions experiencing a decline compared with the pre-reform period. The record of reforms of price formation, especially tariff setting through regulatory agencies, is mixed. On average, countries that have made more progress on utility governance and decision making perform better on cost recovery. The paper concludes with proposed modifications to the conceptual framework underpinning the economic analysis of power sector reforms as well as immediate, practical implications for understanding cost recovery as part of the overall power sector reform agenda.Publication Learning from Power Sector Reform(World Bank, Washington, DC, 2020-02)The challenge of power sector reform in the Arab Republic of Egypt has long been dominated by extremely high subsidies, with prices set well below the costs of supply. These subsidies have taken a variety of forms: explicit subsidies in the government budget, implicit subsidies in the underpricing of fuel supply (particularly natural gas) to the power sector, accumulation of arrears from the sector, poorly-maintained physical capital, and cross-subsidies across customer classes. Egypt's social contract was linked to expanding energy access with good quality supply based on public financing and huge subsidies. Egypt has been able to achieve universal access with more or less reliable power over the entire period, except when chronic underinvestment in the sector caused blackouts in 2011–14 at time of severe political uncertainty. The social compact came under pressure in 2014 when energy subsidies reached 6.8 percent of gross domestic product. Since then, the reform process has been revived based on new electricity, gas, and renewable energy laws; price and subsidy adjustments; structural reforms with a deliberately long time frame; and greater emphasis on the role of the private sector.Publication Underpowered : The State of the Power Sector in Sub-Saharan Africa(World Bank, Washington, DC, 2008-05)Sub-Saharan Africa is in the midst of a power crisis marked by insufficient generating capacity, unreliable supplies, high prices, and low rates of popular access to the electricity grid. The region's capacity for generating power is lower than that of any other world region, and growth in that capacity has stagnated. The average price of power in Sub-Saharan Africa is double that of other developing regions, but supply is unreliable. Because new household connections in many countries are not keeping up with population growth, the electrification rate, already low, is actually declining. The manifestations of the current crisis are symptoms of deeper problems that are explored in this study of power sector institutions in 24 countries of Sub-Saharan Africa, which draws extensively on a new body of research undertaken as part of the multi-donor Africa Infrastructure Country Diagnostic (AICD). There are nearly 60 medium- to longer-term power sector projects involving the private sector in the region excluding leases for emergency power generation. Almost half of these are independent power producers (IPPs). Involving more than $2 billion of private sector investment, these IPPs have added early 3,000 MW of new capacity. A few IPP investments have been particularly well structured and contribute reliable power to the national grid.Publication Charting the Diffusion of Power Sector Reforms across the Developing World(World Bank, Washington, DC, 2017-11)Some 25 years have elapsed since international financial institutions espoused a package of power sector reform measures that became known as the Washington Consensus. This package encompassed the establishment of autonomous regulatory entities, the vertical and horizontal unbundling of integrated national monopoly utilities, private sector participation in generation and distribution, and eventually the introduction of competition into power generation and even retail services. Exploiting a unique new data set on the timing and scope of power sector reforms adopted by 88 countries across the developing world over 25 years, this paper seeks to improve understanding of the uptake, diffusion, packaging, and sequencing of power sector reforms, and the extent to which they were affected by the economic and political characteristics of the countries concerned. The analysis focuses on describing the patterns of reform without judging their desirability or evaluating their impact. The paper finds that following rapid diffusion during 1995-2005, the spread of power sector reforms slowed significantly in 2005-15. Only a small minority of developing countries fully implemented the reform model as originally conceived. For the majority, reforms were only selectively adopted according to ease of implementation, often stagnated at an intermediate stage, and were sometimes packaged and sequenced in ways unrelated to the original logic. Country characteristics such as geography, income group, power system size, and political economy all had a significant influence on the uptake of reform. Moreover, a significant number of countries experienced reversals of private sector participation, or were unable to follow through with reform plans that were officially announced. Overall, power sector reform in the developing world lags far behind what was achieved in the developed world during the same time period. Yet, even in the developed world, the full package of reforms does not seem to have been universally adopted.
Users also downloaded
Showing related downloaded files
Publication Kyrgyz Republic Country Climate and Development Report(Washington, DC: World Bank, 2025-11-03)This Country Climate and Development Report (CCDR) on the Kyrgyz Republic aims to support the country’s development goals amid a changing climate. The CCDR considers two policy scenarios up to 2050: the business-as-usual (BAU) and high-growth scenarios. As it quantifies the likely impacts of climate change on the Kyrgyz economy between now and 2050, the report highlights key government actions to best prepare for and adapt to climate impacts (referred to as “with adaptation” measures), with a particular focus on the time horizon up to 2030. The CCDR also outlines a path to net zero emissions by 2050 (referred to as “with mitigation” measures, “decarbonization,” or, simply, “net zero 2050”), highlighting associated development co-benefits.Publication Guinea-Bissau Country Climate and Development Report(Washington, DC: World Bank, 2024-10-23)Guinea-Bissau is endowed with a wealth of natural resources, with the highest natural capital per capita in West Africa (US3,874 dollars per capita), which could be leveraged for sustainable and resilient growth. However, Guinea-Bissau faces significant development hurdles, such as high poverty rates, political instability, and economic challenges, including an over-reliance on cashew nuts. Rural poverty has increased, and the nation's infrastructure, education, and health care systems are underdeveloped. Climate change poses a severe threat, potentially impacting agriculture, fisheries, and infrastructure. Without adaptation, it could lead to a significant cut in real GDP per capita (minus 7.3 percent by 2050) and increase in poverty (with up to over 200,000 additional poor by 2050, that is, 5 percent of the expected population, in the worst scenario). The country's low greenhouse gas emissions are expected to rise, mainly due to agriculture and land-use changes, with deforestation being a major contributing factor. Although Guinea-Bissau is a low emitter, it has high mitigation ambitions, targeting a 30 percent reduction in greenhouse gas emissions by 2030. The Nationally Determined Contribution outlines significant climate actions, with initiatives focused on forest conservation, sustainable agriculture, and community development. However, the country's political instability, institutional weaknesses, and limited financial resources pose challenges to implementing these climate commitments, which depend heavily on external funding. The financial sector's underdevelopment and vulnerability to external shocks limit its ability to support green investments, though reforms could enhance resilience. Guinea-Bissau must consider its climate financing as development financing and vice-versa, engage the private sector, and integrate climate goals with national development plans to ensure a sustainable future. Concessional climate financing is vital due to the underdeveloped financial sector and the government’s limited borrowing capacity. Addressing Guinea-Bissau's vulnerability to climate change and its structural issues requires a cohesive approach that integrates development and climate strategies. This could involve improving governance, diversifying the economy, protecting natural capital, developing human capital, and investing in sustainable agriculture and infrastructure. The transition to a more sustainable and inclusive development pathway that supports economic growth is possible, but requires focusing on key strategic sectors, enhancing institutional capacity, and creating the conditions to mobilize finance. As a highly vulnerable country, there are myriad needs in the different sectors; however, to be more efficient and effective, Guinea-Bissau should prioritize actions in a few sectors, especially actions on biodiversity, agriculture, and social protection. Low carbon development, especially in energy and forestry sectors, could provide cost-efficient solutions and attract climate finance, including from the private sector, which will support the overall development agenda.Publication World Bank Annual Report 2024(Washington, DC: World Bank, 2024-10-25)This annual report, which covers the period from July 1, 2023, to June 30, 2024, has been prepared by the Executive Directors of both the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA)—collectively known as the World Bank—in accordance with the respective bylaws of the two institutions. Ajay Banga, President of the World Bank Group and Chairman of the Board of Executive Directors, has submitted this report, together with the accompanying administrative budgets and audited financial statements, to the Board of Governors.Publication Vietnam(World Bank, Hanoi, 2020-05-01)Following from Vietnam’s ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in late 2018 and its effectiveness from January 2019, and the European Parliament’s recent approval of the European Union-Vietnam Free Trade Agreement (EVFTA) and its subsequent planned ratification by the National Assembly in May 2020, Vietnam has further demonstrated its determination to be a modern, competitive, open economy. As the COVID-19 (Coronavirus) crisis has clearly shown, diversified markets and supply chains will be key in the future global context to managing the risk of disruptions in trade and in supply chains due to changing trade relationships, climate change, natural disasters, and disease outbreaks. In those regards, Vietnam is in a stronger position than most countries in the region. The benefits of globalization are increasingly being debated and questioned. However, in the case of Vietnam, the benefits have been clear in terms of high and consistent economic growth and a large reduction in poverty levels. As Vietnam moves to ratify and implement a new generation of free trade agreements (FTAs), such as the CPTPP and EVFTA, it is important to clearly demonstrate, in a transparent manner, the economic gains and distributional impacts (such as sectoral and poverty) from joining these FTAs. In the meantime, it is crucial to highlight the legal gaps that must be addressed to ensure that national laws and regulations are in compliance with Vietnam’s obligations under these FTAs. Readiness to implement this new generation of FTAs at both the national and subnational level is important to ensure that the country maximizes the full economic benefits in terms of trade and investment. This report explores the issues of globalization and the integration of Vietnam into the global economy, particularly through implementation of the EVFTA.Publication Argentina Country Climate and Development Report(World Bank, Washington, DC, 2022-11)The Argentina Country Climate and Development Report (CCDR) explores opportunities and identifies trade-offs for aligning Argentina’s growth and poverty reduction policies with its commitments on, and its ability to withstand, climate change. It assesses how the country can: reduce its vulnerability to climate shocks through targeted public and private investments and adequation of social protection. The report also shows how Argentina can seize the benefits of a global decarbonization path to sustain a more robust economic growth through further development of Argentina’s potential for renewable energy, energy efficiency actions, the lithium value chain, as well as climate-smart agriculture (and land use) options. Given Argentina’s context, this CCDR focuses on win-win policies and investments, which have large co-benefits or can contribute to raising the country’s growth while helping to adapt the economy, also considering how human capital actions can accompany a just transition.