IDEAS home Printed from https://ideas.repec.org/a/eee/juipol/v28y2014icp62-72.html
   My bibliography  Save this article

Total factor productivity analysis of a single vertically integrated electricity utility in Malaysia using a Törnqvist index method

Author

Listed:
  • See, Kok Fong
  • Coelli, Tim

Abstract

The objective of this paper is to measure the total factor productivity (TFP) growth of Tenaga Nasional Berhad (TNB) from 1975 to 2005. Prior to 1995, TNB was essentially the sole electricity provider in Malaysia. However, since 1995 independent power producers (IPPs) have also begun generating electricity, all of which is purchased by TNB under fixed Power Purchase Agreements (PPAs). The introduction of IPPs has reduced the need for TNB to find finance for new power plants. It has been argued that the participation of IPPs in the electricity generation industry should also facilitate improvements in TNB's productivity; however this proposition is yet to be tested. In this study we calculate TFP growth using a Törnqvist index method, finding that there is no direct evidence of productivity improvements attributable to the industry restructuring. Furthermore, it is not clear that consumers have benefited from this, since the PPAs have generally been quite generous to the IPPs in terms of risk sharing and prices paid.

Suggested Citation

  • See, Kok Fong & Coelli, Tim, 2014. "Total factor productivity analysis of a single vertically integrated electricity utility in Malaysia using a Törnqvist index method," Utilities Policy, Elsevier, vol. 28(C), pages 62-72.
    • Handle: RePEc:eee:juipol:v:28:y:2014:i:c:p:62-72
    DOI: 10.1016/j.jup.2013.11.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0957178713000696
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jup.2013.11.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    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. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
    3. Rodríguez Pardina, Martín A. & Rossi, Martín, 2000. "Technical Change and Catching-up: The Electricity Distribution Sector in South America," UADE Working Papers 11_2000, Instituto de Economía, Universidad Argentina de la Empresa.
    4. Estache, Antonio & Rossi, Martin A., 2005. "Do regulation and ownership drive the efficiency of electricity distribution? Evidence from Latin America," Economics Letters, Elsevier, vol. 86(2), pages 253-257, February.
    5. Paul L. Joskow, 2008. "Lessons Learned From Electricity Market Liberalization," The Energy Journal, , vol. 29(2_suppl), pages 9-42, December.
    6. Nagayama, Hiroaki, 2009. "Electric power sector reform liberalization models and electric power prices in developing countries: An empirical analysis using international panel data," Energy Economics, Elsevier, vol. 31(3), pages 463-472, May.
    7. Estache, Antonio & Tovar, Beatriz & Trujillo, Lourdes, 2008. "How efficient are African electricity companies? Evidence from the Southern African countries," Energy Policy, Elsevier, vol. 36(6), pages 1969-1979, June.
    8. W. Erwin Diewert & Alice O. Nakamura, 1999. "Benchmarking and the measurement of the best practice efficiency: an electricity generation application," Canadian Journal of Economics, Canadian Economics Association, vol. 32(2), pages 570-588, April.
    9. Arocena, Pablo & Waddams Price, Catherine, 2002. "Generating efficiency: economic and environmental regulation of public and private electricity generators in Spain," International Journal of Industrial Organization, Elsevier, vol. 20(1), pages 41-69, January.
    10. Barros, Carlos Pestana, 2008. "Efficiency analysis of hydroelectric generating plants: A case study for Portugal," Energy Economics, Elsevier, vol. 30(1), pages 59-75, January.
    11. Antonio Estache & MartÌn A. Rossi & Christian A. Ruzzier, 2004. "The Case for International Coordination of Electricity Regulation: Evidence from the Measurement of Efficiency in South America," Journal of Regulatory Economics, Springer, vol. 25(3), pages 271-295, May.
    12. Estache, A. & Tovar, B. & Trujillo, L., 2007. "Are African electricity distribution companies efficient? Evidence from southern African countries," Working Papers 07/13, Department of Economics, City University London.
    13. Jaraitė, Jūratė & Di Maria, Corrado, 2012. "Efficiency, productivity and environmental policy: A case study of power generation in the EU," Energy Economics, Elsevier, vol. 34(5), pages 1557-1568.
    14. See, Kok Fong & Coelli, Tim, 2012. "An analysis of factors that influence the technical efficiency of Malaysian thermal power plants," Energy Economics, Elsevier, vol. 34(3), pages 677-685.
    15. Tim Coelli & Antonio Estache & Sergio Perelman & Lourdes Trujillo, 2003. "A Primer on Efficiency Measurement for Utilities and Transport Regulators," World Bank Publications - Books, The World Bank Group, number 15149.
    16. See, Kok Fong & Coelli, Tim, 2013. "Estimating and decomposing productivity growth of the electricity generation industry in Malaysia: A stochastic frontier analysis," Energy Policy, Elsevier, vol. 62(C), pages 207-214.
    17. Massimo Filippini & Cornelia Luchsinger, 2007. "Economies of scale in the Swiss hydropower sector," Applied Economics Letters, Taylor & Francis Journals, vol. 14(15), pages 1109-1113.
    18. Olatubi, Williams O. & Dismukes, David E., 2000. "A data envelopment analysis of the levels and determinants of coal-fired electric power generation performance," Utilities Policy, Elsevier, vol. 9(2), pages 47-59, June.
    19. Dong-Soo Koh & Sanford V. Berg & Lawrence W. Kenny, 1996. "A Comparison of Costs in Privately Owned and Publicly Owned Electric Utilities: The Role of Scale," Land Economics, University of Wisconsin Press, vol. 72(1), pages 56-65.
    20. Timothy J. Coelli & D.S. Prasada Rao & Christopher J. O’Donnell & George E. Battese, 2005. "An Introduction to Efficiency and Productivity Analysis," Springer Books, Springer, edition 0, number 978-0-387-25895-9, June.
    21. Scott Atkinson & Claudia Halabí, 2005. "Economic Efficiency and Productivity Growth in the Post-Privatization Chilean Hydroelectric Industry," Journal of Productivity Analysis, Springer, vol. 23(2), pages 245-273, May.
    22. Pollitt, M.G., 1999. "A survey of the liberalisation of public enterprises in the UK since 1979," Cambridge Working Papers in Economics 9901, Faculty of Economics, University of Cambridge.
    23. Zamzam Jaafar, Mohd. & Kheng, Wong Hwee & Kamaruddin, Norhayati, 2003. "Greener energy solutions for a sustainable future: issues and challenges for Malaysia," Energy Policy, Elsevier, vol. 31(11), pages 1061-1072, September.
    24. Madhu Khanna & Kusum Mundra & Aman Ullah, 1999. "Parametric and semi-parametric estimation of the effect of firm attributes on efficiency: the electricity generating industry in India," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 8(4), pages 419-430.
    25. Woolf, Fiona & Halpern, Jonathan, 2001. "Integrating independent power producers into emerging wholesale power markets," Policy Research Working Paper Series 2703, The World Bank.
    26. Weyman-Jones, Thomas G., 1991. "Productive efficiency in a regulated industry : The area electricity boards of England and Wales," Energy Economics, Elsevier, vol. 13(2), pages 116-122, April.
    27. Goto, Mika & Tsutsui, Miki, 2008. "Technical efficiency and impacts of deregulation: An analysis of three functions in U.S. electric power utilities during the period from 1992 through 2000," Energy Economics, Elsevier, vol. 30(1), pages 15-38, January.
    28. L. Dean Hiebert, 2002. "The Determinants of the Cost Efficiency of Electric Generating Plants: A Stochastic Frontier Approach," Southern Economic Journal, John Wiley & Sons, vol. 68(4), pages 935-946, April.
    29. Ali Emami Meibodi, 1998. "Efficiency Considerations in the Electricity Supply Industry; The Case of Iran," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 95, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
    30. repec:bla:scandj:v:94:y:1992:i:0:p:s193-205 is not listed on IDEAS
    31. Jamasb, T., 2002. "Reform and Regulation of the Electricity Sectors in Developing Countries," Cambridge Working Papers in Economics 0226, Faculty of Economics, University of Cambridge.
    32. Fare, R. & Grosskopf, S. & Pasurka, C., 1986. "Effects on relative efficiency in electric power generation due to environmental controls," Resources and Energy, Elsevier, vol. 8(2), pages 167-184, June.
    33. Tim Coelli & Denis Lawrence (ed.), 2006. "Performance Measurement and Regulation of Network Utilities," Books, Edward Elgar Publishing, number 3801.
    34. Chang, Dong-Shang & Chen, Yi-Tui & Chen, Wen-Den, 2009. "The exogenous factors affecting the cost efficiency of power generation," Energy Policy, Elsevier, vol. 37(12), pages 5540-5545, December.
    35. Førsund, Finn R. & Kittelsen, Sverre A. C., 1998. "Productivity development of Norwegian electricity distribution utilities," Resource and Energy Economics, Elsevier, vol. 20(3), pages 207-224, September.
    36. Sarıca, Kemal & Or, Ilhan, 2007. "Efficiency assessment of Turkish power plants using data envelopment analysis," Energy, Elsevier, vol. 32(8), pages 1484-1499.
    37. Andrew N. Kleit & Dek Terrell, 2001. "Measuring Potential Efficiency Gains From Deregulation Of Electricity Generation: A Bayesian Approach," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 523-530, August.
    38. Yunos, Jamaluddin Mohd & Hawdon, David, 1997. "The efficiency of the National Electricity Board in Malaysia: An intercountry comparison using DEA," Energy Economics, Elsevier, vol. 19(2), pages 255-269, May.
    39. Pun-Lee Lam & Alice Shiu, 2004. "Efficiency and Productivity of China's Thermal Power Generation," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 24(1), pages 73-93, February.
    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. Ajayi, Victor & Anaya, Karim & Pollitt, Michael, 2022. "Incentive regulation, productivity growth and environmental effects: the case of electricity networks in Great Britain," Energy Economics, Elsevier, vol. 115(C).
    2. Pavala Malar Kannan & Govindan Marthandan & Rathimala Kannan, 2021. "Modelling Efficiency of Electric Utilities Using Three Stage Virtual Frontier Data Envelopment Analysis with Variable Selection by Loads Method," Energies, MDPI, vol. 14(12), pages 1-21, June.
    3. Briec, Walter & Fukuyama, Hirofumi & Ravelojaona, Paola, 2021. "Exponential distance function and duality theory," European Journal of Operational Research, Elsevier, vol. 293(3), pages 1002-1014.
    4. See, Kok Fong & Abdul Rashid, Azwan, 2016. "Total factor productivity analysis of Malaysia Airlines: Lessons from the past and directions for the future," Research in Transportation Economics, Elsevier, vol. 56(C), pages 42-49.
    5. Xie, Bai-Chen & Ni, Kang-Kang & O'Neill, Eoghan & Li, Hong-Zhou, 2021. "The scale effect in China's power grid sector from the perspective of malmquist total factor productivity analysis," Utilities Policy, Elsevier, vol. 69(C).
    6. Rehman, Naqeeb Ur & Nunziante, Giulia, 2023. "The effect of the digital economy on total factor productivity in European regions," Telecommunications Policy, Elsevier, vol. 47(10).
    7. Claudiu Tiberiu Albulescu & Serban Miclea, 2020. "Firm-level total factor productivity convergence in German electricity and gas industry," Working Papers hal-02512939, HAL.
    8. Shahari, Mohd Ridzwan & See, Kok Fong & Mohammed, Noor Syahireen & Yu, Ming-Miin, 2023. "Constructing the performance index of Malaysia’s district health centers using effectiveness-based hierarchical data envelopment analysis," Socio-Economic Planning Sciences, Elsevier, vol. 89(C).
    9. A. Abad & P. Ravelojaona, 2017. "Exponential environmental productivity index and indicators," Journal of Productivity Analysis, Springer, vol. 48(2), pages 147-166, December.
    10. Barnabé Walheer, 2019. "Dynamic directional nonparametric profit efficiency analysis for a single decision-making unit: an aggregation approach," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 41(4), pages 1123-1149, December.

    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. See, Kok Fong & Coelli, Tim, 2012. "An analysis of factors that influence the technical efficiency of Malaysian thermal power plants," Energy Economics, Elsevier, vol. 34(3), pages 677-685.
    2. See, Kok Fong & Coelli, Tim, 2013. "Estimating and decomposing productivity growth of the electricity generation industry in Malaysia: A stochastic frontier analysis," Energy Policy, Elsevier, vol. 62(C), pages 207-214.
    3. Ghosh, Ranjan & Kathuria, Vinish, 2016. "The effect of regulatory governance on efficiency of thermal power generation in India: A stochastic frontier analysis," Energy Policy, Elsevier, vol. 89(C), pages 11-24.
    4. Kok Fong See & Tim Coelli, 2009. "The Effects of Competition Policy on TFP Growth: Some Evidence from the Malaysian Electricity Supply Industry," CEPA Working Papers Series WP062009, School of Economics, University of Queensland, Australia.
    5. Shrivastava, Naveen & Sharma, Seema & Chauhan, Kavita, 2012. "Efficiency assessment and benchmarking of thermal power plants in India," Energy Policy, Elsevier, vol. 40(C), pages 159-176.
    6. 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).
    7. Xie, Bai-Chen & Ni, Kang-Kang & O'Neill, Eoghan & Li, Hong-Zhou, 2021. "The scale effect in China's power grid sector from the perspective of malmquist total factor productivity analysis," Utilities Policy, Elsevier, vol. 69(C).
    8. Sueyoshi, Toshiyuki & Yuan, Yan & Goto, Mika, 2017. "A literature study for DEA applied to energy and environment," Energy Economics, Elsevier, vol. 62(C), pages 104-124.
    9. Assaf, A. George & Barros, Carlos Pestana & Managi, Shunsuke, 2011. "Cost efficiency of Japanese steam power generation companies: A Bayesian comparison of random and fixed frontier models," Applied Energy, Elsevier, vol. 88(4), pages 1441-1446, April.
    10. Mohammad Ali Motafakker Azad & Mohsen Pourebadollahan Covich & Sakineh Sojoodi, 2015. "The Impact of Electricity Competitive Market Establishment on Technical Efficiency of Thermal Power Plants in Iran," International Journal of Energy Economics and Policy, Econjournals, vol. 5(4), pages 1010-1015.
    11. 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.
    12. Seifert, Stefan & Cullmann, Astrid & von Hirschhausen, Christian, 2016. "Technical efficiency and CO2 reduction potentials — An analysis of the German electricity and heat generating sector," Energy Economics, Elsevier, vol. 56(C), pages 9-19.
    13. Jin-Peng Liu & Qian-Ru Yang & Lin He, 2017. "Total-Factor Energy Efficiency (TFEE) Evaluation on Thermal Power Industry with DEA, Malmquist and Multiple Regression Techniques," Energies, MDPI, vol. 10(7), pages 1-14, July.
    14. Stefan Seifert & Astrid Cullmann & Christian von Hirschhausen, 2014. "Technical Efficiency and CO2 Reduction Potentials: An Analysis of the German Electricity Generating Sector," Discussion Papers of DIW Berlin 1426, DIW Berlin, German Institute for Economic Research.
    15. Antonio Estache & Sergio Perelman & Lourdes Trujillo, 2006. "Infrastructure Reform in Developing Economies: Evidence from a survey of efficiency measures," ULB Institutional Repository 2013/44062, ULB -- Universite Libre de Bruxelles.
    16. Jamasb, T. & Pollitt, M., 2000. "Benchmarking and regulation: international electricity experience," Utilities Policy, Elsevier, vol. 9(3), pages 107-130, September.
    17. Chen, Zhongfei & Barros, Carlos Pestana & Borges, Maria Rosa, 2015. "A Bayesian stochastic frontier analysis of Chinese fossil-fuel electricity generation companies," Energy Economics, Elsevier, vol. 48(C), pages 136-144.
    18. 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.
    19. Gharneh, Naser Shams & Nabavieh, Alireza & Gholamiangonabadi, Davoud & Alimoradi, Mohammad, 2014. "Productivity change and its determinants: Application of the Malmquist index with bootstrapping in Iranian steam power plants," Utilities Policy, Elsevier, vol. 31(C), pages 114-120.
    20. Zhou, P. & Ang, B.W. & Poh, K.L., 2008. "A survey of data envelopment analysis in energy and environmental studies," European Journal of Operational Research, Elsevier, vol. 189(1), pages 1-18, August.

    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:juipol:v:28:y:2014:i:c:p:62-72. 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: https://www.sciencedirect.com/journal/utilities-policy .

    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.