Econometric assessment of the impact of power sector reforms in Africa: A study of the generation, transmission and distribution sectors

Gboney, W. (2009). Econometric assessment of the impact of power sector reforms in Africa: A study of the generation, transmission and distribution sectors. (Unpublished Doctoral thesis, City University London)

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Abstract

The objective of the thesis is to use econometric analysis to assess the impact of power sector reforms in Africa during the period 1988-2005, using panel data analysis. The study uses fixed effects model, where all the reform variables are assumed to be strictly exogenous, but goes a step further, to endogenise the variables using 1-step Generalized Method of Moments (GMM) estimation. To ensure the robustness of the results, the study makes use of both static and dynamic models and other econometric methods to reduce as far as practicable, the likelihood of spurious correlation. The main conclusion from the generation sector study is that, the establishment of a regulatory agency is generally associated with favourable generation outcomes. These are likely to be achieved after a minimum period of 2 years for installed plant capacity, 3 years for plant energy output, and 7 years for plant utilization. Passage of energy sector law seems likely to enhance both installed generation capacity and actual plant energy output. On the impact of private sector participation (PSP) in the generation sector, management and lease contracts, as well as greenfield projects seem likely to enhance installed capacity and actual plant output. On plant utilization, the favourable outcome is associated with concessions and greenfield projects. For the network sector, the result seems to indicate that the co-existence of energy sector law and regulatory agency can reduce transmission network loss levels. The result on the distribution system however show that though energy sector law and regulation are necessary, they are not likely to be sufficient to reduce the system loss level. Effective loss reduction in the distribution sector is likely to be achieved if management and lease contract is present as a PSP option. The long lags associated with the existence of regulation, underline the notion that institutional changes alone are unlikely to be sufficient, if the workforce is not competent and well trained. This implies that regulatory agencies in Africa are still fragile, and it will take quite sometime to build the capacity of key professional staff to operate whatever institutional and regulatory frameworks are chosen.

Item Type: Thesis (Doctoral)
Subjects: H Social Sciences
Divisions: School of Social Sciences > Department of Economics
URI: http://openaccess.city.ac.uk/id/eprint/11922

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