Policy and Regulatory Environment for Private Investment in the Power Sector

The power sector has remained under public monopoly and riddled with inefficiency in most developing countries. Increasing demand and inadequate public investment has prompted enhanced private investment. However, the scale of private investment in the Indian power sector is not as encouraging as in the case of some reforming countries in Latin America and Asia.

Private investors respond to risk return tradeoffs. The policy environment and regulatory framework significantly influence risk as well as return in the power sector.

Through comparative analysis of the policy and regulatory environment in the power sector in Argentina, Brazil, People?s Republic of China, India, Mexico and Thailand, this paper finds the scope, pace and sequencing of the reform process have significant influence on private and foreign investment. Policy clarity and independent regulatory institutions reduce risk perception of investors as well as lenders.

The views expressed in this paper are the views of the authors and do not necessarily reflect the views or policies of the Asian Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.

Download this Paper/Presentation [ PDF 147.5KB | 24 pages ].

Post a Comment

We welcome your feedback on this publication. Post a comment. ADBI is not obliged to acknowledge or publish comments and may abridge or edit them before web posting.

Comment(s)

There are [0] comment(s) for this entry. Post a comment.