Developing Countries Restructuring with Benefits from Competition (or Not)

september/october 2004 M MANY DEVELOPING COUNTRIES in Asia, Africa, Eastern Europe, and South America are freeing up their electric energy industries in search of benefits from competition. This activity is more pronounced in Eastern Europe because restructuring of the electric energy industry is a requirement for accession to the European Union (EU). Some developing countries in Asia are restructuring without any plans for eventual introduction of competition. A considerable number of developing countries are on a fast-paced plan to implement restructuring, despite the fact that the benefits from restructuring are yet to prove themselves in the more developed countries such as the United States, Western Europe, and Australia. The challenge among the developing countries is to develop a balance between introduction of competition, regulation, and command and control, which is not a trivial task. The lessons of the California energy crisis of 2000 and 2001 are tilting the balance more toward command and control. Recent trends in restructuring within the developing countries reflect that government control and monopoly is being maintained in some form, even after unbundling the traditional functions of generation, transmission, and distribution. Retention of command and control Eddie S. Dehdashti