Policy and Regulatory Environment for Private Investment in the Power Sector

24 Pages Posted: 22 Aug 2019

See all articles by Anoop Singh

Anoop Singh

Department of Industrial & Management Engineering; Centre for Energy Regulation (CER) & Energy Analytics Lab (EAL)

Date Written: 2019

Abstract

Private investors respond to risk return tradeoffs. The policy environment and regulatory framework significantly influence risk as well as return in the power sector. Power sector reform and policy initiatives for enhanced private participation have been undertaken in a number of developing countries. The economic crisis faced by India in the early 90s led to opening up of the power sector for private investment there. Major policy initiatives were undertaken to encourage private and foreign investment. The investment climate was further strengthened by gradual restructuring of state electricity boards (SEBs) and regulatory reforms. More recently, the Electricity Act 2003 has enabled competition in the sector and improved the policy environment for private investment. Abolition of the single buyer model and phased access to consumers has opened substantial potential for private investment in the sector. 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. This paper undertakes a comparative analysis of the policy and regulatory environment in the power sector in Argentina, Brazil, People’s Republic of China, India, Mexico and Thailand. We find that the scope, pace and sequencing of the reform process has significant influence on private and foreign investment. Policy clarity and independent regulatory institutions reduce risk perception of investors as well as lenders.

Suggested Citation

Singh, Anoop, Policy and Regulatory Environment for Private Investment in the Power Sector (2019). Available at SSRN: https://ssrn.com/abstract=3440144 or http://dx.doi.org/10.2139/ssrn.3440144

Anoop Singh (Contact Author)

Department of Industrial & Management Engineering ( email )

Room No. 324
Indian Institute of Technology (IIT), Kanpur
Kanpur, Uttar Pradesh 208016
India

HOME PAGE: http://www.iitk.ac.in/ime/anoops/

Centre for Energy Regulation (CER) & Energy Analytics Lab (EAL) ( email )

Department of Industrial & Management Engineering
Indian Institute of Technology Kanpur
Kanpur, 208016
India
(+91) 512 2597679 (Phone)

HOME PAGE: http://cer.iitk.ac.in/

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
75
Abstract Views
507
Rank
572,227
PlumX Metrics