Centralized Purchasing Arrangements
By examining the broad range of variations in design and implementation of energy trading models around the world, our evaluation showed that sometimes the pure Single Buyer is actually the only alternative, particularly in distressed power systems. Even under dire circumstances, it is still possible to minimize many of its drawbacks with a careful design at the outset. It is essential to procure energy competitively and build flexible contractual and institutional arrangements that envisage a smooth transition towards a more competitive power sector, when conditions permit. The results of this study also indicate that it is neither necessary nor desirable to grant a de jure monopoly status to a Single Buyer, even at the early stages of power sector reform. Such a monopoly may backfire, by creating future rigidities that will defeat the main objectives of the reform process. Experiences have shown that more often than not, Single Buyer models have resulted in unaffordable prices, lack of transparency, and virtually little or no competition in power generation.