Impact of Power Sector Reform on the Poor : A Review of Issues and the Literature
Prescription for the commercialization, restructuring, and privatization of the energy sector are now in fashion. They are actively promoted by donors but fiercely decried by opponents. One crux in the debate is the apprehension that these reforms are a setback for the poor. The present note reviews the issues and the literature. Its objective is to inform rather than settle the debate and to suggest orientations for future research. Its focus is on the power sector and on developing countries. The literature and data reviewed here strengthens the presumption that the impact on the poor has been positive in countries where the reform is most complete and mature. While the direct impact is often a tariff increase for many users, in these cases, the poor were protected against increases or benefited as a group from the improvements that reform brought about in the secotr--better access and service--in government finances and in the economy at large. Information is sketchy, however, on many of these aspects and in what circumstances the results, good or bad were obtained; data is also limited to a handful of countries. Further work is strongly recommended along three directions: post-reform social assessments; good practices evaluation; and pre-reform social assessments.