# **I. Introduction**

Infrastructure services such as roads, water, electricity and telecommunications matter for private businesses. Where the quality and accessibility of infrastructure services are poor, companies’ productivity and growth suffer. World Bank Enterprise Surveys, conducted in 108 economies from 2006 to 2010, report that, globally, managers consider electricity the most serious obstacle to their business<sup>2</sup> . Moreover, poor electricity supply has been shown to have adverse effects on firms’ productivity and the investments they make in their productive capacity, thereby hindering the local economy (Calderon and Serven (2003), Dollar et al. (2005), Reinikka and Svensson (1999), Eiffert (2007)). For instance, Iimi (2008), using firm level data, estimates that in Eastern Europe and Central Asia eliminating existing electricity outages could lead to an increase of the gross domestic product by 0.5 to 6 percent.

Given the link between the quality of the electricity supply and firm performance, many enterprises in developing countries counter outages by relying on self-supply through a generator. This solution has been shown to be significantly more expensive than if the electricity is supplied by any utility (Foster and Steinbuks, 2009). This holds especially true for small firms for which the cost of self-supply can be prohibitively high (Lee et al. 1996)<sup>3</sup> .

<mark>This paper provides new data that help understand the challenges faced by utilities as they help firms connect to power. More specifically, we present data on the process of obtaining an electricity connection for distribution utilities in 183 economies, detailing the required associated procedures along with their time and cost. The new indicators follow a methodology similar to the one developed in the seminal paper by Djankov et al (2002) on the “Regulation of Entry” that was then expanded into several indicators within the World Bank’s Doing Business report to measure the efficiency of different public service providers. As La Porta et al (1999) and Djankov et al (2002) before us, we find that low-income countries are less efficient at providing public services, including in the particular case of electricity connections.</mark> This paper adds to the literature on enterprise performance and business regulation – in addition to complementing existing research on electricity regulation by providing new data and analysis on the service quality of distribution utilities. In recent years, numerous studies have tried to establish the effectiveness and determinants of success of different electricity sector reforms (see Jamasb et al. (2005) for an overview of the literature). One reform aspect that has received

> 2 According to World Bank Enterprise Survey data for 108 economies, 22% of managers consider electricity the most serious constraint to their business before competition from the informal sector (13%) and access to finance (12%) (see Table 15a).

> 3 One of the consequences of these prohibitively high costs of self-supply is that new firms in countries with weak infrastructure services are more likely to locate near the city center or in an old industrial area with easy access to good utilities and other essential services (Lee (1985,1989)).

2