Power for Development: A Review of the World Bank Group's Experience With Private Participation Inthe Electricity Sector (Operations Evaluation Studies)

Power for Development evaluates the performance of the World Bank Group during the 1990s in promoting private sector development in the electric power sector. This joint review aims to inform the implementation of the World Bank Group's 2001 Energy Business Renewal Strategy and the 2003 Infrastructure Plan. It is based on an evaluation of the World Bank Group's assistance for private sector development of the electric power sector in 80 countries. The main messages of the report are: - The World Bank Group should continue to support private sector development in the electric power sector as a key objective. Well-implemented Bank Group activities in this area can improve sector efficiency in countries politically committed to the advancement of power sector reforms. - Outcomes of International Finance Corporation and Multilateral Investment Guarantee Agency transactions have been positive, but the Bank's project-level outcomes were disappointing, mostly because the Bank underestimated the complexity and time required for reforms to achieve lasting and equitable outcomes. At the sector level, outcomes have been poor or, at best, mixed, except in countries fully committed to reforms. - Private sector development of the electric power sector is a work in progress because the power sector reform process is complex, takes time, is resource-intensive, and requires phasing and careful sequencing to create the conditions for sector transformation. - Much work remains to integrate poverty reduction and environmental mainstreaming into the design of power sector reform and related strategies, which to date have focused mostly on sector efficiency and macro-fiscal objectives. The purpose of this study is to assess the results of the World Bank Group's (WBG's) private sector development (PSD)-related interventions during the 1990s in the power sectors of some 80 developing and transition countries and to answer four evaluation questions: (i) how have private participation and the WBG's role changed in the 1990s; (ii) to what extent has the WBG's assistance supported its PSDE strategies; (iii) what have been the results of the WBG's private sector development in the electric power sector (PSDE) interventions; and (iv) what are the lessons that should guide the WBG's future business directions in promoting PSDE. As WBG assistance in the power sector is still needed, particularly at this time when foreign investors are retreating from the sector, the study derives lessons from experience to inform the ongoing implementation of the EBRS. To date, PSDE practitioners have been learning by doing, with the WBG having the advantage of institutional scope and memory. The continually evolving practices in PSDE make difficult the establishment of convincing theories about the optimal sequencing of reforms, although the catalogue of things to avoid continues to expand. Within the WBG, PSDE practice is a moving target, making it particularly difficult to establish evaluative benchmarks to measure results, other than the stated objectives of the individual PSDE project and the overall PSDE program (if any) at the country level. Moreover, given the number of stakeholders and practitioners (other than the WBG), as well as the unpredictability of reform outcomes, it is challenging to assess the extent to which WBG interventions were pivotal or decisive catalysts of reform, and to recommend how this role could be enhanced in the future Power for Development evaluates the performance of the World Bank Group (WBG) during the 1990s in promoting private sector development in the electric power sector. This joint review aims to inform the implementation of the WBG's 2001 Energy Business Renewal Strategy and the 2003 Infrastructure Plan. It is based on an evaluation of the WBG's assistance for private sector development of the electric power sector in 80 countries.