Catalog

Electricity Reforms

Asian economies seek private investors for power development—and believe that privatization and deregulation are essential in power development

Large and small Asian economies called on private sector investors to help develop their power sectors and accelerate economic growth.

At a seminar on Electricity Sector Reforms in Asia, energy ministers of Bangladesh, People’s Republic of China, India, and Philippines presented diverse scenarios of their countries’ power needs and solutions. But they expressed a common view that privatization and deregulation are essential in power development.

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Xie Songlin, Vice President of the PRC's State Power Corporation, said PRC’s accession into the World Trade Organization would “deepen” market-oriented reforms that would introduce competition to improve efficiency and lower costs.

The State Power Corporation owns 46% of nationwide installed capacity and 90% of transmission assets. Most generation assets will be separated from the State Power Corporation to form four to five independent generation companies, he said. “These reforms will offer more investment opportunities and market space.”

PRC’s power sector has high capacity and wants to focus on distribution—trans-regional networks and nationwide interconnection to improve access of underserved areas to electricity, he said.

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For Bangladesh, Iqbal Hassan Mahmood, Minister of State for Power, said the private sector could help the country meet its goal of providing affordable and reliable electricity to all by 2020. At present, only 30% of Bangladesh’s population has access to electricity. Under planned reforms, power sector entities will be commercialized, services (generation, transmission, and distribution) will be segregated, and an energy regulatory commission established, he said. This will further support a private sector power generation policy approved in 1996.

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Suresh P. Prabhu, India’s Minister of Power said India needs more capacity but is suffering from a lack of investor confidence. Over the next 10 years, India plans to install 100,000 megawatts of power—equivalent to the capacity it had developed over 100 years. “Resource generation within the sector through prompt and efficient collection of user charges from all electricity consumers is the long-term solution,” he said.

Power distribution in India is another area that needs to be developed and is open for privatization. Every dollar invested in power generation needs a dollar in power distribution and transmission, he added.

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Vincent Perez Jr., Secretary for Energy of the Philippines, a non-oil producing country, said power reforms need to be accompanied by financial reengineering, particularly in managing the huge foreign debt of the country’s National Power Corporation, incurred largely from a now-abandoned nuclear power plant project.

The fast tracking of build-operate-transfer projects has led to excess power capacity in the Philippines. A Power Reform Act has been approved and power sector reforms include the sale of power transmission assets and privatization of the management of generating plants. To make electricity affordable, a group of end users with a certain aggregate peak monthly capacity will be allowed to pool and choose their source of electricity.

Meanwhile, the private sector expressed the need for governments to stay out of the power sector. Colin Tam, president of the International Power Producers Association, challenged governments to give up their shareholdings in the industry and focus instead on regulatory functions.

“Countries also need to improve related infrastructure such as transport, banking, and capital markets; restructure tariffs; and create a level playing field,” said Mr. Tam.

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Read the news release - Asian Economies Seek Private Investors for Power Development

Learn more about the presentation on Blueprint for Power Sector Development

Find out how ADB strengthens private sector development

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