1. Power Sector Reform in Asia
David Parish

2. My Involvement in Asian Power
India
Bangladesh
Cambodia
Pakistan
Sri Lanka
Philippines
Vietnam
Plus review of ADB sector policy

3. Asian power sector around 1990
Universal public ownership
Extensive political intervention in all aspects of activity
Integrated utilities
High levels of losses and poor collection performance
Supply interruptions
Major investment needs
Significant subsidies to the sector from taxpayers

4. Two Caveats
Significant variations between countries in speed and enthusiasm for reform
Vietnam: late starter but keen implementer
Bangladesh: early starter but slow progress
Even bigger variations within countries, especially India but also Pakistan and Bangladesh

5. The standard model for reform
Unbundling (gencos, transco and discos)
Independent Regulation
Private sector involvement

6. The standard model for reform
Unbundling (gencos, transco and discos)
Independent Regulation
Private sector involvement
Moves towards competitive markets
Operational Improvements
Financial solvency
Tariff reform

7. Unbundling Some progress almost everywhere
India: centrally mandated requirement for states but mixed progress
Philippines: largely complete
Pakistan: structure in place but resistance within WAPDA
Bangladesh: work in progress and slow
Vietnam: work in progress but appear committed
Sri Lanka: reform stalled

8. Unbundling Creates framework for competition and private participation
Accompanied by corporatization and creation of new companies
Creates new senior positions, especially in discos
Significantly improved results, eg in India, Bangladesh and Vietnam
Reduced losses (technical and non-technical) and better revenue collection

9. Independent Regulation
Slow but sometimes significant progress
India: central regulator and in most states but effectiveness varies
Pakistan: good regulator but government still controls tariffs
Bangladesh: extreme delays in both legislation and establishment
Philippines: interesting model but some political interference
Vietnam: just starting
Sri Lanka: stalled

10. Independent Regulation
India best example to date (regulatory Raj replaces licence Raj)
Areas such as Delhi and Gujarat have effective regulation
Western regulatory models do not cater for situations with large supply shortfalls
Continuing political interference almost everywhere

11. Independent Regulation
Regulator often sees role as keeping prices down at all costs
Commitment to cross subsidy
Unwillingness to respond to fuel price increases
Not met objectives in any country yet
Negligible progress in tariff reform
But it was always going to be a challenge

12. Private Sector - Generation
Many IPPs contracted in mid to late 1990s from international companies
Some dubious investments, eg in Pakistan and Philippines and Enron in India
State solvency at risk in Pakistan and Philippines
Excellent projects in Bangladesh and Vietnam
International investors have less interest since 2000

13. Private Sector - Generation
Growing local capacity, especially in India
Some privatization in Philippines, but some failures as well
High initial costs but efficient plant operations
Projects require government guarantees
All projects to date have been baseload plants
Very difficult to promote projects at the moment

14. Private Sector – Transmission and Distribution
Private transmission project in India
Sale of KESC in Pakistan
Share issue by distribution and transmission companies in Bangladesh
Cooperatives in Philippines and Bangladesh
Limited conclusions

15. Competitive Markets
Countries generally adopt single buyer model in first stage
Open access continues to be an objective, not a reality
Continuing high levels of captive plant
Unwillingness to differentiate retail tariffs
Cross subsidy in retail tariffs
Question mark over viability of power investments without demand guarantees

16. Conclusions: Is it working?
Reform remains a work in progress
Slow progress but not surprising with so much at stake.
Ambitious hopes of structure like telecoms industry is dead
Very little regression back to old models
Unbundling has generally been successful

17. Conclusions: Is it working?
Regulation has a long way to go
Private sector has mixed results
Competition only in generation and even there is limited
Financial results still poor
Tariffs unreformed and a growing issue with system peak