**Figure 7.1 Prevalence of the full extent of power sector reforms across developed and developing countries**<sup>**16**</sup>

|Percentage of<br>countries|Some degre<br>Developing<br>countries|e of reform<br>Developed<br>countries|Full exten<br>Developing<br>countries|t of reform<br>Developed<br>countries|
|---|---|---|---|---|
|Regulation|Na.|Na.|72|91|
|Restructuring|44**|79**|20**|44**|
|Competition|69**|96**|7**|78**|
|Private sector<br>participation|70|61|39|39|

Source: Own elaboration based on RISE 2015 and PPI 1990‐2015 databases

****** Differences are statistically significant at the 5% level ***** Differences are statistically significant at the 10% level

# **B. Developing country power sector reform has been running out of steam over the last decade**

The pace of reform, which was particularly rapid during the decade 1995‐2005, has slowed considerably during the decade 2005‐15. The time series analysis identified 1990 as the baseline year after which earlier reforms in Chile and the United Kingdom began to spread to other parts of the developing world. During the period 1990‐95, early reformers experimented primarily with contract‐based forms of private sector participation in generation and, to a lesser extent distribution. Divestitures were relatively rare and less than 10 percent of countries had established a regulatory entity by 1995. During the decade 1995 to 2005, there was rapid diffusion of many of the key reform measures, including establishment of regulatory entities, as well as private sector participation or divestiture of generation and distribution. Since 2005, the uptake of these measures slowed down considerably, with the main action during that last decade consisting in the creation of regulatory entities.

These patterns are clearly identifiable when comparing the percentage of countries that adopted certain standard reform measures in the decade 1995‐2005 with the percentage of countries that did so during the decade 2005‐2015 (Figure 7.2). Along many (though not all) dimensions of reform (including establishment of regulatory agencies and wholesale markets, as well as private sector participation along the energy supply chain), the percentage of countries taking such measures during the earlier decade was significantly higher than during the more recent period; and almost all of these differences are highly statistically significant. This pattern of slowing reform can also be seen graphically in Figures 7.3 and 7.4, which further illustrate that the slowing pace of reform does not reflect saturation, since even the most prevalent reform measures have in no case been adopted in more than 70 percent of developing countries suggesting there would be room for further uptake should additional countries so choose.

> 16 “Some degree” of reform is defined as at least partial vertical unbundling, at least introduction of Independent Power Producers, and at least some degree of private sector participation in either generation or distribution. “Full extent” of reform is defined as establishment of a regulator, full vertical and horizontal unbundling, creation of a power market and some degree of private sector participation both for generation and distribution.

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