Daniel Camos

Shedding Light on Electricity Utilities in the Middle East and North Africa

The electricity sector in the Middle East and North Africa (MENA) is in the grip of an apparent paradox. Although the region continues to hold the world’s largest oil and gas reserves and has been able to maintain electricity access rates of close to hundred percent in most of its economies, it may not be in a position to cater to the future electricity needs of its fast-growing population and their business activities. Primary energy demand in the region is expected to continue to rise at an annual rate of 1.9 percent through 2035, requiring a significant increase in generating capacity. Investments have not been rising fast enough to meet that requirement. The report is divided into two parts and several appendices. Part I (chapters 1–5) focuses on the region. Part II (chapters 6–10) consists of four country studies and a synopsis of all four. A short conclusion evokes the main themes and lessons from the entire report. Across the report, information at the utility level drawn from the MENA Electricity Database forms the basis of the analysis. Chapter 1 calculates the QFD (or hidden costs) of the power sector in each of the fourteen MENA economies studied, a first attempt to quantify the hidden costs of power sector inefficiencies in the region. Chapter 2 provides a snapshot of key performance indicators of MENA power utilities for which international comparisons are possible. Chapter 3 examines performance indicators over time. Chapter 4 considers the relative overall performance of utilities within the MENA region when more than one indicator is considered. Chapter 5 investigates whether certain organizational differences are correlated with differences in performance. Chapters 6 to 9, focuses on detailed analysis of four countries that have taken very different approaches to the power sector namely Egypt, Jordan, Morocco, and Oman.

Do private water utility operators care about regulatory agencies in developing countries

This paper shows that the creation of an independent regulatory agency is often not a necessary or sufficient condition to help attract private participation in the operation and financing of the water and sanitation sector in developing countries. However, the odds of an impact are significantly higher for Latin American and Caribbean countries and, to a lesser extent, Eastern European countries, than for any other region. Higher income levels and higher prices are also correlated with higher effectiveness of independent regulatory agencies in attracting private sector financing. Analysis of the impact on various types of public-private partnership contracts shows that, at the margin, independent regulatory agencies are irrelevant in general, for the contract choice, except for greenfield projects, for which such agencies may be counterproductive at the margin.

Quasi-Fiscal Deficits in the Electricity Sector of the Middle East and North Africa

The annual electricity investments needed in the Middle East and North Africa region to keep up with demand have been estimated at about 3 percent of the regions projected gross domestic product. However, in most economies of the region, the ability to make those investments is limited by fiscal and macroeconomic constraints. This paper demonstrates that the solution is readily available: by improving the management and performance of the regions utilities, more than enough resources could be freed up to make the investments needed. The paper presents the first evaluation of the size and composition of the quasi-fiscal deficit associated with the management of the electricity sector in 14 economies in the Middle East and North Africa region. The estimations are for 2013. They show that the average quasi-fiscal deficit is 4.4 percent of gross domestic product (but goes down to 2.9 percent if Lebanon, Djibouti, Bahrain, and Jordan are excluded). Only five economies have a quasi-fiscal deficit below 3 percent of gross domestic product (Algeria, Morocco, Tunisia, Qatar, and the West Bank), and hence would not be able to finance the average investment requirement through elimination of inefficiencies. For most economies, the main driver of the quasi-fiscal deficit is the underpricing of electricity, which costs on average 3.2 percent of gross domestic product (but 2.2 percent without Lebanon, Djibouti, Bahrain, and Jordan). Commercial inefficiency comes next, at an average cost of 0.6 percent of gross domestic product. Technical and labor inefficiencies represent, respectively, 0.4 and 0.2 percent of gross domestic product.