{
  "title": "Power It Up: Strengthening the Electricity Sector to Improve Efficiency and Support Economic Activity",
  "publication": "IMF Working Papers, April 8, 2016",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/power-it-up-strengthening-the-electricity-sector-to-improve-efficiency-and-support-economic-43858",
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  "summary": "Poor performance of the electricity sector remains a drag to economic efficiency and a bottleneck to economic activity in many low-income countries. This paper proposes a number of models that account for different equilibria (some better, some worse) of the electricity sector.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Poor performance of the electricity sector remains a drag to economic efficiency and a bottleneck to economic activity in many low-income countries.\n- The paper proposes a number of models that account for different equilibria (some better, some worse) of the electricity sector.\n- Authors: Gabriel Di Bella, Francesco Grigoli."
    },
    {
      "heading": "Analytical framework and models",
      "content": "- Models incorporate:\n  - Policy choices affecting insolvency prospects, rules for electricity dispatching, and tariff setting.\n  - Stochastic generation costs.\n  - Initial conditions that influence investment in generation and electricity supply.\n- Models generate multiple equilibria for the electricity sector, reflecting interactions between policy credibility, theft enforcement, investment, and supply."
    },
    {
      "heading": "Main findings",
      "content": "- Credible (non-credible) promises of stronger enforcement to reduce theft lead to:\n  - larger (smaller) electricity supply;\n  - lower (higher) government subsidies;\n  - lower (higher) tariffs;\n  - lower (higher) distribution losses.\n- These outcomes in turn affect overall economic activity and economic efficiency.\n- Policy credibility and initial sector conditions can tip a country into better or worse equilibria of generation investment and service provision."
    },
    {
      "heading": "Country illustrations",
      "content": "- Haiti:\n  - Characterized as stuck in a bad equilibrium of insufficient supply, high prices, and electricity theft.\n- Nicaragua:\n  - Described as gradually transitioning to a better equilibrium of the electricity sector."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Strengthen enforcement credibility to reduce theft, which can:\n  - increase electricity supply;\n  - reduce the need for government subsidies;\n  - lower tariffs and distribution losses.\n- Reform tariff-setting and dispatching rules to improve insolvency prospects and investment incentives.\n- Recognize role of stochastic generation costs and initial conditions when designing sector reforms to ensure movement toward better equilibria.\n\nGabriel Di Bella and Francesco Grigoli, \"Power It Up: Strengthening the Electricity Sector to Improve Efficiency and Support Economic Activity\", IMF Working Paper No. 2016/085, April 8, 2016.\n\n---\n\n Content in this bundle\n\n- Appendix I. Nicaragua: A Medium-Term Framework\n  - Appendix I. Nicaragua: A Medium-Term Framework (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Appendix I. Nicaragua: A Medium-Term Framework (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/power-it-up-strengthening-the-electricity-sector-to-improve-efficiency-and-support-economic-43858"
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    "Authors: Gabriel Di Bella, Francesco Grigoli",
    "Published: April 8, 2016",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484322437.001",
    "Poor performance of the electricity sector remains a drag to economic efficiency and a bottleneck to economic activity in many low-income countries.",
    "The paper proposes a number of models that account for different equilibria (some better, some worse) of the electricity sector.",
    "Authors: Gabriel Di Bella, Francesco Grigoli.",
    "Models incorporate:",
    "Models generate multiple equilibria for the electricity sector, reflecting interactions between policy credibility, theft enforcement, investment, and supply.",
    "Credible (non-credible) promises of stronger enforcement to reduce theft lead to:",
    "These outcomes in turn affect overall economic activity and economic efficiency.",
    "Policy credibility and initial sector conditions can tip a country into better or worse equilibria of generation investment and service provision.",
    "Haiti:",
    "Nicaragua:",
    "Strengthen enforcement credibility to reduce theft, which can:",
    "Reform tariff-setting and dispatching rules to improve insolvency prospects and investment incentives.",
    "Recognize role of stochastic generation costs and initial conditions when designing sector reforms to ensure movement toward better equilibria.",
    "**Appendix I. Nicaragua: A Medium-Term Framework**"
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