Industry Restructuring and Regulation - Building a base<sup>for sustainable growth</sup> are unwilling to consider the potentially lucrative North-South<sup>traffic, since it is seen as a possible</sup> 21 threat to their access to the rail system.

**Table** 13: **Brazilian Rail Company ownership and customer base**

||**_|OESE_**|**_CENTR0_**<br>**_L!SE_**<br>_<br> <br>|**_SUDESM_**<br>__<br>|**_TeWA_**<br>**_CRISTINA_**<br>_|**_SIUL_**<br>__|**_-ORDEST_**<br>|**_E_**<br>**_MAUUISrA_**|
|---|---|---|---|---|---|---|---|
|<br>Main<br>**Customers**|Petrobas<br>Petrobas<br>Petroleo Ipir.<br>Shell<br>Cia Cimento<br>Port Itau<br>Nestle<br>Cival Al.<br>COSIPA|Petrobrs<br>.<br>Petrobras<br>Petroleo Ipir.<br>Shell<br>Cimento<br>Caue<br>Copebras<br>Usiminas<br>Nitrofertil|MBR<br>CSN<br>COSIPA<br>COSIPA<br>CBA<br>Cimento<br>CmtoSSTrv,<br>Tupi<br>Fosfertil|ELETROSUL<br>|Petrobas<br> <br>Petroleo<br>lpr.<br>ph.<br>ESSO<br>Votorantim<br>Incobrasa|Petrobas<br>Petroleo Ipir.<br>Shell<br>ESSO<br>E<br>Trevo,<br>Gerdaus<br>Milho Brasil|CBSIA<br>COSIPA<br>Shell<br>Holdercim<br>Cargill<br>Glencore|
|Private<br>operator<br>Shareholders<br>(main ones<br>(m**i**n tacs)<br>in ita.lics)<br>.|Ferr.<br>Novoeste<br>(FNV)<br>_NoelGrop,_<br>_Noel Group,_<br>Partners,<br>Western Rail<br>Invest.,<br>Bakmrc<br>Bankamerica<br>DK Partners,<br>Chem Lat.<br>Amer Eq<br>|Ferr.Centro<br>Atlantica<br>(FCA)<br>_in. Tacumd,_<br>Interferrea,<br>_CSN,_<br>Tupinai .,<br>_Railtex,_<br>_Valpra_<br>_Rlh_<br>_Partners,_<br>_uanorn_<br>CVRD<br>|MRS<br>Logistica<br>(MRS)<br>_CSN_<br>_MBR_<br>Ferteco<br>_Usiminas_<br>_Caeqiari._<br>Celato<br>Caemi<br>Cosigua|Ferr. Tereza<br>Cristina<br>(FTC)<br>_Banco_<br>_Interfinance,_<br>_Gemon G Eng_<br>_Mont,_<br>_Sta. Liacia_|Sul<br>Auni<br>A(tFSiA)c<br>_Ralph_<br>_Partners,_<br>Varbra,<br>Judori Ad<br>Emp Part<br>Railtex<br>_Judori_<br>Interferrea<br>Brazil.|Co. Ferr.<br>Nordeste<br>(CFN)<br>_CSN_<br>_ABS_<br>_Taquari_<br>_CR_<br>_CV_|Feffoban<br>FBN<br>FPurnecvef<br>U. de<br>Comerci<br>Comercioor<br>hs<br>ai<br>_RD_<br>_CVRD_|
|_Source:_|RFF|SA (1998).||||||

_Abbreviations:_ MGS=Rio Grande do Sul, SP=Sao Paulo, Ser=Sergipe,<sup>Bah=Bahia, MG=Minas Gerais,</sup> Goi=Goias, ES=Espiritu Santo, RJ=Rio de Janeiro,<sup>DF=Distrito Federal, SC=Santa Catarina,</sup> Mar=Maranhao, Pia=Piaui, Cea=Ceara, RGN=Rio Grande<sup>do Norte, Pab=Pariba,</sup> Per=Pernambuco, Ala=Alagoas.

# **Chile electricity**

Ownership problems relating to the vertical nature<sup>of the electricity industry were encountered in</sup> Chile. There are three areas where concerns have been<sup>raised.</sup>

1. As mentioned above, the degree of concentration<sup>within the generation sector</sup> experienced by the three dominant players<sup>is significant. Endesa owns 60% of the</sup> installed capacity while Chilgener and<sup>Colbun own 22% and 11% respectively of the</sup> installed capacity.

2. In a form of up-stream vertical control, Endesa owns<sup>60% of the non-consuming water</sup> rights, and the majority of potential new hydro-stations<sup>are covered by these rights.</sup> 3. Endesa also exhibits down-stream vertical<sup>control through the fact that it owns the</sup> transmission grid and is itself owned by ENERSIS,<sup>a company that controls 40% of the</sup> distribution system in Chile.22

- 21 This problem is not unlike to the problem<sup>that has been encountered in many transitional economies when a</sup> significant stake in the ownership of the company<sup>has been given to existing managers and workers. They are</sup> then able to use this stake to block structural<sup>reform that would threaten their livelihood. It is a difficult tight-</sup> rope to walk between giving existing staff a sense<sup>of involvement in the reform process and ensuring that the</sup> control that they achieve is not sufficient<sup>to block or hamper the development of the reforms.</sup>

- 22 The issue of whether vertical reintegration should be allowed in an electricity sector that has<sup>been vertically</sup> disaggregated as part of a government reform<sup>program has arisen in the UK. The dominant electricity</sup> generating companies in England and Wales<sup>both wanted to acquire distribution companies at a time when</sup> distribution companies were allowed to establish<sup>their own generating capacity (although limited, in principle,</sup>

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