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Competition in the power sectors of transition economies
Radical reform of the power sector is under way in a number of EBRD countries
of operations. This paper is concerned with the introduction of competition to
the power sectors of transition economies. In particular, the paper focuses on
the reform path from vertically integrated state-owned monopoly to liberalised
industry, and on the appropriate model of competition. The message of the
paper is two-fold: first, the model of competition adopted should fit the
sector context; second, if the wrong reform path is chosen then mistakes can
be hard to undo. The sector should be restructured before the private sector
is introduced, Independent Power Producers (IPPs) should be limited prior to
liberalisation, and the single buyer model may provide a stop-gap while
tariffs are rebalanced and (cash) collections improved. In the longer term the
most suitable arrangements would be open network access backed by pools.
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