IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v38y2010i11p7001-7013.html
   My bibliography  Save this article

Privatization of electricity distribution in the Northeast of Brazil: The good, the bad, the ugly or the naïve?

Author

Listed:
  • Silvestre, Bruno
  • Hall, Jeremy
  • Matos, Stelvia
  • Figueira, Luiz Augusto

Abstract

This paper analyzes the evolution of five electricity distribution companies in the Northeast of Brazil using technical and financial indicators. Three privatized and two public firms were analyzed between 1997 and 2008. The financial indicators are used as proxies for the capacity of the business to generate value for shareholders, while the technical indicators are used as proxies for service quality provided to consumers. We observed that the privatized firms had their financial indicators improved after privatization, increasing the value of the firm for the shareholders. However, there is no evidence that privatization affected the quality of service provided to consumers.

Suggested Citation

  • Silvestre, Bruno & Hall, Jeremy & Matos, Stelvia & Figueira, Luiz Augusto, 2010. "Privatization of electricity distribution in the Northeast of Brazil: The good, the bad, the ugly or the naïve?," Energy Policy, Elsevier, vol. 38(11), pages 7001-7013, November.
    • Handle: RePEc:eee:enepol:v:38:y:2010:i:11:p:7001-7013
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301-4215(10)00545-8
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Andrei Shleifer, 1998. "State versus Private Ownership," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 133-150, Fall.
    2. Cavaliere, Christianne & Larsen, Erik R. & Dyner, Isaac, 2007. "The privatization of EEB: From cash drain to major contributor," Energy Policy, Elsevier, vol. 35(3), pages 1884-1895, March.
    3. Ghisi, Enedir & Gosch, Samuel & Lamberts, Roberto, 2007. "Electricity end-uses in the residential sector of Brazil," Energy Policy, Elsevier, vol. 35(8), pages 4107-4120, August.
    4. Ajodhia, Virendra & Lo Schiavo, Luca & Malaman, Roberto, 2006. "Quality regulation of electricity distribution in Italy: an evaluation study," Energy Policy, Elsevier, vol. 34(13), pages 1478-1486, September.
    5. Cohen, Claude & Lenzen, Manfred & Schaeffer, Roberto, 2005. "Energy requirements of households in Brazil," Energy Policy, Elsevier, vol. 33(4), pages 555-562, March.
    6. Gabriele, Alberto, 2004. "Policy alternatives in reforming energy utilities in developing countries," Energy Policy, Elsevier, vol. 32(11), pages 1319-1337, July.
    7. Sanford Berg & Chen Lin & Valeriy Tsaplin, 2005. "Regulation of State-Owned and Privatized Utilities: Ukraine Electricity Distribution Company Performance," Journal of Regulatory Economics, Springer, vol. 28(3), pages 259-287, November.
    8. Giannakis, Dimitrios & Jamasb, Tooraj & Pollitt, Michael, 2005. "Benchmarking and incentive regulation of quality of service: an application to the UK electricity distribution networks," Energy Policy, Elsevier, vol. 33(17), pages 2256-2271, November.
    9. Williams, Greg & Robinson, Andrea R., 2006. "The Energy Policy Act's Reliability Provisions: Uncontroversial, Yes, but Doomed to Ineffectiveness?," The Electricity Journal, Elsevier, vol. 19(1), pages 10-17.
    10. Kalay, Avner & Singhal, Rajeev & Tashjian, Elizabeth, 2007. "Is Chapter 11 costly?," Journal of Financial Economics, Elsevier, vol. 84(3), pages 772-796, June.
    11. Erdogdu, Erkan, 2005. "Energy market reforms in Turkey: An economic analysis," MPRA Paper 26929, University Library of Munich, Germany.
    12. Chisari, Omar & Estache, Antonio & Romero, Carlos, 1997. "Winners and losers from utility privatization in Argentina : lessons from a general equilibrium model," Policy Research Working Paper Series 1824, The World Bank.
    13. Bagdadioglu, Necmiddin & Waddams Price, Catherine M. & Weyman-Jones, Thomas G., 1996. "Efficiency and ownership in electricity distribution: A non-parametric model of the Turkish experience," Energy Economics, Elsevier, vol. 18(1-2), pages 1-23, April.
    14. Geller, Howard & Schaeffer, Roberto & Szklo, Alexandre & Tolmasquim, Mauricio, 2004. "Policies for advancing energy efficiency and renewable energy use in Brazil," Energy Policy, Elsevier, vol. 32(12), pages 1437-1450, August.
    15. Tiago B. Correia & Elbia Melo & Agnes M. da Costa & Adriano J. da Silva, 2006. "Trajetória das Reformas Institucionais da Indústria Elétrica Brasileira e Novas Perspectivas de Mercado," Economia, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 7(3), pages 607-627.
    16. Mendonca, Augusto F. & Dahl, Carol, 1999. "The Brazilian electrical system reform," Energy Policy, Elsevier, vol. 27(2), pages 73-83, February.
    17. Focacci, Antonio, 2005. "Empirical analysis of the environmental and energy policies in some developing countries using widely employed macroeconomic indicators: the cases of Brazil, China and India," Energy Policy, Elsevier, vol. 33(4), pages 543-554, March.
    18. Megginson, William Leon, 2005. "The Financial Economics of Privatization," OUP Catalogue, Oxford University Press, number 9780195150629.
    19. Jamasb, Tooraj & Pollitt, Michael, 2007. "Incentive regulation of electricity distribution networks: Lessons of experience from Britain," Energy Policy, Elsevier, vol. 35(12), pages 6163-6187, December.
    20. Chisari, Omar & Estache, Antonio & Romero, Carlos, 1999. "Winners and Losers from the Privatization and Regulation of Utilities: Lessons from a General Equilibrium Model of Argentina," The World Bank Economic Review, World Bank, vol. 13(2), pages 357-378, May.
    21. Fumagalli, Elena & Garrone, Paola & Grilli, Luca, 2007. "Service quality in the electricity industry: The role of privatization and managerial behavior," Energy Policy, Elsevier, vol. 35(12), pages 6212-6224, December.
    22. David Parker & Colin Kirkpatrick, 2005. "Privatisation in Developing Countries: A Review of the Evidence and the Policy Lessons," Journal of Development Studies, Taylor & Francis Journals, vol. 41(4), pages 513-541.
    23. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
    24. Reichl, Johannes & Kollmann, Andrea & Tichler, Robert & Schneider, Friedrich, 2008. "The importance of incorporating reliability of supply criteria in a regulatory system of electricity distribution: An empirical analysis for Austria," Energy Policy, Elsevier, vol. 36(10), pages 3862-3871, October.
    25. Tolmasquim, Mauricio Tiomno & Cohen, Claude & Szklo, Alexandre Salem, 2001. "CO2 emissions in the Brazilian industrial sector according to the integrated energy planning model (IEPM)," Energy Policy, Elsevier, vol. 29(8), pages 641-651, June.
    26. King, Michael R. & Segal, Dan, 2008. "Market segmentation and equity valuation: Comparing Canada and the United States," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 18(3), pages 245-258, July.
    27. Jannuzzi, Gilberto De Martino, 2005. "Power sector reforms in Brazil and its impacts on energy efficiency and research and development activities," Energy Policy, Elsevier, vol. 33(13), pages 1753-1762, September.
    28. Erdogdu, Erkan, 2007. "Regulatory reform in Turkish energy industry: An analysis," Energy Policy, Elsevier, vol. 35(2), pages 984-993, February.
    29. Rocha, Katia & Camacho, Fernando & Braganca, Gabriel, 2007. "Return on capital of Brazilian electricity distributors: A comparative analysis," Energy Policy, Elsevier, vol. 35(4), pages 2526-2537, April.
    30. Kumbhakar, Subal C. & Hjalmarsson, Lennart, 1998. "Relative performance of public and private ownership under yardstick competition: electricity retail distribution," European Economic Review, Elsevier, vol. 42(1), pages 97-122, January.
    31. Atkinson, Scott E. & Halvorsen, Robert, 1986. "The relative efficiency of public and private firms in a regulated environment: The case of U.S. electric utilities," Journal of Public Economics, Elsevier, vol. 29(3), pages 281-294, April.
    32. de Lucena, André Frossard Pereira & Szklo, Alexandre Salem & Schaeffer, Roberto & de Souza, Raquel Rodrigues & Borba, Bruno Soares Moreira Cesar & da Costa, Isabella Vaz Leal & Júnior, Amaro Olimpio P, 2009. "The vulnerability of renewable energy to climate change in Brazil," Energy Policy, Elsevier, vol. 37(3), pages 879-889, March.
    33. Antonio Estache & Eduardo Bitrán & J.L. Guasch, 1999. "Privatizing and Regulating Chile's Utilities, 1974-2000: Successes, Failures and Outstanding Challenges," ULB Institutional Repository 2013/44074, ULB -- Universite Libre de Bruxelles.
    34. Pousa, Gabriella P.A.G. & Santos, Andre L.F. & Suarez, Paulo A.Z., 2007. "History and policy of biodiesel in Brazil," Energy Policy, Elsevier, vol. 35(11), pages 5393-5398, November.
    35. LaCommare, Kristina Hamachi & Eto, Joseph H., 2006. "Cost of power interruptions to electricity consumers in the United States (US)," Energy, Elsevier, vol. 31(12), pages 1845-1855.
    36. Chirarattananon, Surapong & Nirukkanaporn, Supattana, 2006. "Deregulation of ESI and privatization of state electric utilities in Thailand," Energy Policy, Elsevier, vol. 34(16), pages 2521-2531, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. van Els, Rudi Henri & de Souza Vianna, João Nildo & Brasil, Antonio Cesar Pinho, 2012. "The Brazilian experience of rural electrification in the Amazon with decentralized generation – The need to change the paradigm from electrification to development," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(3), pages 1450-1461.
    2. Devkar, Ganesh A. & Mahalingam, Ashwin & Deep, Akash & Thillairajan, A., 2013. "Impact of Private Sector Participation on access and quality in provision of electricity, telecom and water services in developing countries: A systematic review," Utilities Policy, Elsevier, vol. 27(C), pages 65-81.
    3. Sylvia Gaylord & Kathleen J. Hancock, 2013. "Developing world: national energy strategies," Chapters, in: Hugh Dyer & Maria Julia Trombetta (ed.), International Handbook of Energy Security, chapter 10, pages 206-236, Edward Elgar Publishing.
    4. Heesun Jang, 2021. "Firm structure, scale economies, and productivity in the U.S. electric power industry: A cost function analysis," Energy & Environment, , vol. 32(5), pages 834-854, August.
    5. Muller, Renan Bergonsi & Rego, Erik Eduardo, 2021. "Privatization of electricity distribution in Brazil: Long-term effects on service quality and financial indicators," Energy Policy, Elsevier, vol. 159(C).
    6. Karahan, Hatice & Toptas, Mehmet, 2013. "The effect of power distribution privatization on electricity prices in Turkey: Has liberalization served the purpose?," Energy Policy, Elsevier, vol. 63(C), pages 614-621.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Muller, Renan Bergonsi & Rego, Erik Eduardo, 2021. "Privatization of electricity distribution in Brazil: Long-term effects on service quality and financial indicators," Energy Policy, Elsevier, vol. 159(C).
    2. Jamasb,Tooraj & Nepal,Rabindra & Timilsina,Govinda R., 2015. "A quarter century effort yet to come of age : a survey of power sector reforms in developing countries," Policy Research Working Paper Series 7330, The World Bank.
    3. Tooraj Jamasb & Rabindra Nepal & Govinda R. Timilsina, 2017. "A Quarter Century Effort Yet to Come of Age: A Survey of Electricity Sector Reform in Developing Countries," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    4. Tooraj Jamasb & Rabindra Nepal & Govinda Timilsina & Michael Toman, 2014. "Energy Sector Reform, Economic Efficiency and Poverty Reduction," Discussion Papers Series 529, School of Economics, University of Queensland, Australia.
    5. Fumagalli, Elena & Garrone, Paola & Grilli, Luca, 2007. "Service quality in the electricity industry: The role of privatization and managerial behavior," Energy Policy, Elsevier, vol. 35(12), pages 6212-6224, December.
    6. Nepal, Rabindra & Foster, John, 2015. "Electricity networks privatization in Australia: An overview of the debate," Economic Analysis and Policy, Elsevier, vol. 48(C), pages 12-24.
    7. Erdogdu, Erkan, 2013. "Essays on Electricity Market Reforms: A Cross-Country Applied Approach," MPRA Paper 47139, University Library of Munich, Germany.
    8. Ali Akkemik, K., 2009. "Cost function estimates, scale economies and technological progress in the Turkish electricity generation sector," Energy Policy, Elsevier, vol. 37(1), pages 204-213, January.
    9. Antonio Estache & L. Wren-Lewis, 2008. "Towards a Theory of Regulation for Developing Countries: Following Laffont's Lead," Working Papers ECARES 2008_018, ULB -- Universite Libre de Bruxelles.
    10. Elisa Borghi & Chiara Del Bo & Massimo Florio, 2016. "Institutions and Firms' Productivity: Evidence from Electricity Distribution in the EU," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(2), pages 170-196, April.
    11. Erdogdu, Erkan, 2011. "The impact of power market reforms on electricity price-cost margins and cross-subsidy levels: A cross country panel data analysis," Energy Policy, Elsevier, vol. 39(3), pages 1080-1092, March.
    12. Vivien Foster & José Luis Guasch & Luis Andrés & Thomas Haven, 2008. "The Impact of Private Sector Participation in Infrastructure: Lights, Shadows, and the Road Ahead," IDB Publications (Books), Inter-American Development Bank, number 59818, February.
    13. Alberto Chong & Florencio de, 2003. "The Truth about Privatization in Latin America," Yale School of Management Working Papers ysm436, Yale School of Management.
    14. Haselip, James & Dyner, Isaac & Cherni, Judith, 2005. "Electricity market reform in Argentina: assessing the impact for the poor in Buenos Aires," Utilities Policy, Elsevier, vol. 13(1), pages 1-14, March.
    15. Caroline Stiel & Astrid Cullmann & Maria Nieswand, 2018. "Do Private Utilities Outperform Local Government‐Owned Utilities? Evidence from German Retail Electricity," German Economic Review, Verein für Socialpolitik, vol. 19(4), pages 401-425, November.
    16. Stiel, Caroline & Cullmann, Astrid & Nieswand, Maria, 2018. "Do Private Utilities Outperform Local Government-Owned Utilities? Evidence from German Retail Electricity," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 19(4), pages 401-425.
    17. Foster, Vivien & Guasch, José Luis & Andrés, Luis & Haven, Thomas, 2008. "The Impact of Private Sector Participation in Infrastructure: Lights, Shadows, and the Road Ahead," IDB Publications (Books), Inter-American Development Bank, number 358, November.
    18. S P Santos & C A F Amado & J R Rosado, 2011. "Formative evaluation of electricity distribution utilities using data envelopment analysis," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(7), pages 1298-1319, July.
    19. Bhatt, Brijesh & Singh, Anoop, 2021. "Power sector reforms and technology adoption in the Indian electricity distribution sector," Energy, Elsevier, vol. 215(PA).
    20. Philippe Marin, 2009. "Public-Private Partnerships for Urban Water Utilities : A Review of Experiences in Developing Countries," World Bank Publications - Books, The World Bank Group, number 2703.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:38:y:2010:i:11:p:7001-7013. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.