Empirical Assessment of the Impact of Power Sector Reforms in Africa: A Study of the Generation, Transmission and Distribution Sectors

Abstract

This paper is based on a research study which was carried out, to empirically assess the impact of power sector reforms, comprising privatization, competition and regulatory reforms in 29 African countries, for the period 1988–2005. The list of countries in the research sample is shown in Appendix 1. The main findings for the generation sector is that, in Africa, though energy sector regulation backed by sector law can bring about favorable outcomes, better results are likely to be achieved if the regulatory agency has been in existence for at least 3 years, and it co-exists with either competition ‘for’ the market or private sector participation. On private sector participation, the presence of Independent Power Producers, management contracts and private shareholding in generation assets, can enhance generation sector performance. The results on the transmission system seem to indicate that though the establishment of a regulatory agency can reduce transmission system loss level, this outcome is likely to be achieved if the regulatory agency has been existence for at least 3 years. On distribution system loss, it emerged that the sole existence of a regulatory agency may not be enough to influence a downward trend in distribution system loss level, unless the market, permits the co-existence of competition ‘for’ the market, with a regulatory agency.

Benchmarking of Mini-Grids Regulations for Kenya, Lesotho and Mozambique

“…In order to undertake benchmarking of the recently passed mini-grids regulations of Kenya, Lesotho and Mozambique, a comparative analysis using attributes and elements of regulatory substance, adapted from generic regulatory performance assessment [16,17], has been developed and proposed for use in this study as illustrated in Table 1. Regulatory substance defines the content and actual practice of regulation with thirteen key desired attributes proposed for mini-grids regulations covering purpose and scope, mini-grid definitions and categories, development procedures, community engagement, concession agreements, permits and licenses applications and acknowledgments, retail tariff determination, fiscal incentives, technical and quality standards, connection agreements, consumer service and protection, regulatory reporting requirements and main grid encroachment.…”

“…Each of the desired attributes of regulatory substance for mini-grids regulations elaborated in Table 1 has one or more elements that, if adequately satisfied or provided for in the legislation, will likely lead to quality and robustness of regulatory actions towards addressing regulatory barriers to private sector participation in the off-grid power sector. It is important to acknowledge that these simplified metrics of assessing regulatory substance for mini-grids regulations assumes equal weighting for all the 25 elements (score of either 0 or 1) affects the robustness of the final comparison as some of the elements are more critical than others and will require implementation of more detailed empirical weights in future using approaches such as principal component analysis [16,17]. The overall effectiveness and fulfilment rates [12] of the individual mini-grid regulations have been determined as percentages of the possible available total score of 25 by scoring each of the elements 0 for absence or 1 for presence as illustrated in the Appendix.…”