Evaluation Step 1: Impact on Production Costs (Performance) and Investments (Incentive)
Liberalization does not necessarily reduce electricity prices. In the case of directly subsidized systems, the only possible “price” indicator would be the wholesale cost. In countries which introduced competition in generation and implemented the single buyer model, wholesale tariffs or Bulk Supply Tariffs could be the best proxies to measure possible efficiency gains in the sector. The evaluation will also depend on the chosen method of regulation (“rate of return” or “RPI-X”). The second step of this evaluation consists in analysing whether reforms contributed to attracting private investments. The MENA region was able to attract a portion of global private investments, although not as much as other emerging regions (e.g. Latin America). The fuel cost advantage made the region relatively attractive for power developers, but it was not sufficient and not sustainable.
KeywordsRegulation Private investments Attractiveness Incentives
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