International Journal of Regulation and Governance
Year : 2005, Volume : 5, Issue : 1
Print ISSN : 0972-4907.
Electricity Reform in China, India and Russia: The World Bank template and the politics of power
Chong Xu Yi
Reviewed by Sundar S, Distinguished Fellow, TERI
Since the early 1990s, power supply industry in many parts of the world has been going through a process of reforms and restructuring. The template of reforms had similar features like unbundling of vertically integrated utilities, change from public ownership to private ownership, evolution of a competitive power market, and establishment of independent regulatory bodies. It was expected that the reforms would lead to a vibrant power sector, protection of consumer interests, and minimize government spending in the sector. To what extent the different countries have been able to realize the goals of reforms and viability, applicability, and feasibility of market-led reforms in the developing countries, however, remains a hotly debated topic. The California crisis added more fuel to this debate. Nevertheless, the reform programme is spreading to all parts of the world, always with high expectations. A critical and comparative study of the process of reforms in countries with different political, legal, and economic systems should therefore be most welcome at this juncture. This book aims precisely at this and covers three countries, namely China, India, and Russia. The author has chosen the countries keeping in view the striking differences and similarities, in terms of development of electricity industry, legal and constitutional set-up, and economic development.
The book is structured into nine chapters. The introductory one dwells briefly on the reform template and experiences of a few of the developed countries. It then debates that the World Bank took the lead in developing a template for reforms following the experience in UK. The same was then applied in other developed and developing countries. According to the author, this was the resultant effort of ‘the joint forces of the eager tutors of the Bank and international actors and the willing pupils of the local elite’. The observations are often quite sarcastic and this continues throughout the other chapters as well.
The second chapter examines the nature, organizational structure, and development of the electricity industry in different countries. The third chapter provides a brief survey of the political, legal, and economic systems of China, India, and Russia and an examination of their electricity industry. It also examines the interaction between political and economic institutions that govern the electricity industry in these countries. The fourth chapter examines how and why reforms were initiated in the three countries. The fifth chapter focuses on ownership reforms. The sixth chapter deals with the structural reforms of the electricity industry, namely the vertical and horizontal unbundling of the industry, functionally and organizationally. The seventh chapter deals with regulatory reform in the three countries. The eighth chapter on ‘Reform complications’ opens with the statement that ‘no government can stand back from responsibility of electricity supply because in the extent of failure, electorates will hold them responsible, no matter whatever arm's length arrangements they may have put in place’.
In the ninth and concluding chapter, the author has summarized his findings. He reiterates inter alia that (a) markets will not and cannot undertake the responsibility to ensure the public good and public service aspects; (b) a combination of private, local/state, joint-venture and public ownership can bring in competition and improved performance; (c) unbundling poses the risk of supply reliability; (d) guaranteeing universal access to electricity is imperative for human development and hence, pricing calls for delicate balancing of interests; and (e) one reform model does not fit all.
The book is an excellent addition to the literature on reforms in electricity. It has effectively articulated, albeit some repetitions, the risk of rushing through market reforms and adoption of a common template for reforms. How the local political and economic realities can impact reforms and the need for honouring the engineering and physical principles of the industry are also highlighted. It has also focused on the importance of the role of governments in reforming the sector. As regards India, it is, however, to be noted that the Orissa case cannot be taken as a representative of the country. The book should provide an interesting reading for policy-makers, reform consultants, and academics and help inculcate added pragmatism in their work on the electricity sector reforms.
