third of developing countries, have not been willing or able to undertake even these relatively tractable measures during the 20‐year period that they have been widely put forward in policy circles.

The second group of measures are applied by approximately half of developing countries. These include vertical unbundling of the power utility and private sector participation in distribution. Both of these represent a higher degree of disruption to the status quo. In the case of unbundling, the incumbent utility has to be restructured into multiple entities with consequent governance and human resource challenges. In the case of distribution private sector participation, the degree of political sensitivity is quite high since it involves changing the point of interface with the public, and likely imposing stronger payment discipline and higher tariffs, as well as reforming the practices of a larger workforce.

The least popular group of measures are applied by up to 20 percent of developing countries only. It makes sense that the creation of power markets would fall into this group, since its establishment is only relevant in larger power systems, is contingent on the prior adoption of many of the other reform measures, and entails relinquishing a high degree of state influence over the sector. The comparative rarity of private sector participation in transmission partly reflects that this was never in any case a strong policy prescription of the reform model, due to the many public good functions provided by the power grid. Finally, management contracts have not been widely adopted in the power sector, with the exception of Sub‐Saharan Africa where experience has been mixed. While they are relatively easy to introduce from a political and technical standpoint, the resulting impacts have been quite limited.

**Figure 7.6: Prevalence of different types of power sector reform measures in the developing world**

|Percentage of developingcountries with...||
|---|---|
|A regulatoryentity|72|
|Some use of BOT/BOO contracts|69|
|Some form ofprivate sectorparticipation ingeneration|63|
|Some use of divestiture|61|
|Some degree of vertical unbundling|44|
|Some form ofprivateparticipation in distribution|44|
|Some use of concession contracts|39|
|A competitivepower market|20|
|Horizontal unbundlingin addition to vertical unbundling|20|
|A Single Buyer Model|18|
|Some form ofprivate sectorparticipation in transmission|14|
|Some use of management contracts|10|

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

# **D. Developing countries packaged power sector reforms in ways unrelated to the original logic**

Power sector reform measures were originally conceived as a coherent and inter‐related package, and it was envisaged that they would be implemented according to a certain logical sequence. Regulation would typically be the starting point, so that the rules and incentives of the sector would be clearly specified, before any changes were made to the institutional actors. This would be followed by unbundling to create the desired sector architecture, which once completed would pave the way for potential changes in ownership. Given that the distribution segment represents the beginning of the payment chain for electricity, it was generally thought that it made sense to begin private sector participation with distribution, so as to improve the operational performance and commercial viability of the sector, and 46