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Financial Viability of the Electricity Sector in Developing Countries

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  • Independent Evaluation Group

Abstract

This Independent Evaluation Group (IEG) Learning Product addresses the effectiveness of World Bank interventions during fiscal years (FY) 2000–2015 in supporting client countries for improving the financial performance and long-term viability of their electricity sectors. Like other IEG learning products, this study is a synthesis of evaluation findings, cross-cutting lessons, and good practices from existing IEG evaluations, supplemented with a targeted literature review. This study compiled a comprehensive inventory of World Bank electricity sector investment projects approved during FY2000–2015 that contain components and covenants for improving sector financial performance and viability. IEG conducted a targeted literature survey to compile the latest analysis on electricity sector financial viability in developing countries and compiled the leading electricity utilities’ profitability trends between 2003 and 2013 for a sample of 40 World Bank client countries. The study uses available data to characterize an empirical relationship between sector financial performance and sector outcomes. This study’s analysis shows that most investment loans with financial components and covenants for the electricity sector show a moderately satisfactory or better performance regarding their financial performance objectives. This study book is arranged as follows: second chapter is an overview of developing country electricity sector financial performance and financial viability drivers, and it characterizes the link between financial viability and sector outcomes; third chapter covers the role of investment loans in improving sector financial viability and analyzes their performance; fourth chapter covers the role of development policy operations (DPOs) for improving sector financial viability and analyzes their performance; and fifth chapter summarizes the main findings and lessons from World Bank support for sector financial viability and illustrates them with relevant investment loan and DPO examples.

Suggested Citation

  • Independent Evaluation Group, 2016. "Financial Viability of the Electricity Sector in Developing Countries," World Bank Publications - Books, The World Bank Group, number 25174.
    • Handle: RePEc:wbk:wbpubs:25174
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    References listed on IDEAS

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    1. World Bank, 2011. "Best Practices for Market-Based Power Rationing : Implications for South Africa," World Bank Publications - Reports 12507, The World Bank Group.
    2. Briceno-Garmendia, Cecilia & Shkaratan, Maria, 2011. "Power tariffs : caught between cost recovery and affordability," Policy Research Working Paper Series 5904, The World Bank.
    3. Anupama Sen & Tooraj Jamasb, 2010. "The Economic Effects of Electricity Deregulation: An Empirical Analysis of Indian States," Working Papers EPRG 1001, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
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    1. Maboshe, Mashekwa & Kabechani, Akabondo & Chelwa, Grieve, 2019. "The welfare effects of unprecedented electricity price hikes in Zambia," Energy Policy, Elsevier, vol. 126(C), pages 108-117.
    2. Kathuria, Vinish, 2021. "Impact of institutional reforms on the performance of distribution utilities in India – A dynamic panel data analysis," Energy Policy, Elsevier, vol. 158(C).
    3. de Oliveira Ventura, Lucas & Melo, Joel D. & Padilha-Feltrin, Antonio & Fernández-Gutiérrez, Juan Pablo & Sánchez Zuleta, Carmen C. & Piedrahita Escobar, Carlos César, 2020. "A new way for comparing solutions to non-technical electricity losses in South America," Utilities Policy, Elsevier, vol. 67(C).

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