A new World Resource Institute (WRI) report by Dr. Navroz Dubash, entitled “Power Politics: Equity and Environment in Electricity Reform” examines the electricity sector restructuring in six countries: Argentina, Bulgaria, Ghana, India, Indonesia and South Africa. In these countries, profit alone did not provide enough incentive to reach rural customers and the urban poor. The reforms, often targeted at reducing subsidies and increasing tariffs, triggered social hardships and political opposition.

Currently less than half the people living in rural areas have access to electricity. Generating electricity accounts for 38% of the global carbon dioxide emissions, thus driving global climate change. It also contributes significantly to local and regional pollution.

The report cites a World Bank study stating that by 1998, 33% of developing countries had passed new electricity laws; 29% had established an independent regulator; and 40% had allowed the entry of privately owned power producers. The report also states that electricity reforms were overwhelmingly driven by narrow financial considerations. In order to change the current reform process for the electricity sector, the report recommends:

• Develop reforms to accommodate social and environmental benefits. A narrow focus on financial concerns is too restrictive. Donors such as the World Bank must allow a nationally driven vision of reform to emerge.

• Structure finance around reform goals, rather than reform goals around finance. Reform processes have catered to a need to attract private capital, but a broader vision and public support could reduce the risks to investors.

• Support reform processes with a system of sound governance. An open, transparent process of reform will enable more politically sustainable results.

• Build political strategies to support attention to a public benefits agenda. Linking the social and the environmental agendas will be a more useful political approach to reform.
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