Welfare impacts of electricity generation sector reform in the Philippines

Abstract

This paper reports an empirical investigation into the welfare impacts of an introduction of private sector participation into the Philippines electricity generation sector, by liberalizing the market for independent power producers (IPPs) during the power crisis of 1990-1993. This study uses a social cost and benefit analysis. The main benefits came from IPPs, who contributed to resolving the crisis, and promoted economic and social development. Consumers and investors are net gainers, while the Government lost and there was an air pollution cost. The paper concludes that the reform with private sector participation increased social welfare.

Evaluating the evidence on electricity reform: Lessons for the South East Europe (SEE) market

“…None of these countries has pursued the EU model as far as the EU (no developing country has full retail competition) but there have been significant positive experience and illustrations of how problems may be overcome. Some of the gains have been very high: Toba (2003) estimated that the liberalisation of Philippine electricity generation produced a one-off gain equivalent to around 10% of GDP, while Mota (2003) estimated that the privatisation (and incentive regulation) of Brazilian electricity distribution produced a one-off gain of more than 2% of GDP.…”