Between the State and Market: Electricity Sector Reform in Developing Countries

Developing countries have had to reform technically and financially less efficient electricity sectors than developed countries with less resources and weaker institutions. This paper examines the reform experience and lessons in these countries. The paper reviews private participation and key reform steps such as restructuring, competition, and regulation. The role of contextual factors such as system size, institutional endowment, and international organizations are then discussed. It then argues that there is a need for redefining the role of the state rather than a full withdrawal from the sector and that many countries should adopt simpler reform models and gradual implementation.