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Does Private Sector Participation Improve Performance in Electricity and Water Distribution?


  • Katharina Gassner
  • Alexander Popov
  • Nataliya Pushak


This study addresses the question with a rigorous econometric approach and distills global results from a multitude of evidence. The data set compiled is unique in its coverage, size, and composition, making it possible to address for the first time methodological problems that have plagued empirical research and hampered conclusive results. The findings provide some answers, but also indicate where the challenges lie going forward. Privately run water and electricity utilities outperform comparable state-owned companies in terms of labor productivity and operational efficiency, but staff reductions also occur. Policy makers need to be aware of and acknowledge both the benefits and the costs of reform. Clear communication between stakeholders plays an important role in the acceptance and success of private participation, and a strategy for mitigating labor issues should be an integral part of reform efforts. The study also makes it clear that the investment problem is not solved by private participation alone, and it raises questions about the scope for increasing residential tariffs in low-income countries and thus the long-term sustainability of improvements in service delivery, be it by public or private operators.

Suggested Citation

  • Katharina Gassner & Alexander Popov & Nataliya Pushak, 2009. "Does Private Sector Participation Improve Performance in Electricity and Water Distribution?," World Bank Publications, The World Bank, number 6605, June.
  • Handle: RePEc:wbk:wbpubs:6605

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    References listed on IDEAS

    1. repec:hrv:faseco:33077889 is not listed on IDEAS
    2. Ros, Agustin J. & Banerjee, Aniruddha, 2000. "Telecommunications privatization and tariff rebalancing: evidence from Latin America," Telecommunications Policy, Elsevier, vol. 24(3), pages 233-252, April.
    3. Andrei Shleifer, 1998. "State versus Private Ownership," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 133-150, Fall.
    4. Vining, Aidan R & Boardman, Anthony E, 1992. "Ownership versus Competition: Efficiency in Public Enterprise," Public Choice, Springer, vol. 73(2), pages 205-239, March.
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    Cited by:

    1. World Bank, 2015. "Private Sector Delivery of Rural Piped Water Services in Bangladesh," World Bank Other Operational Studies 24784, The World Bank.
    2. Claude Ménard & Aleksandra Peeroo, 2011. "Liberalization in the Water Sector: Three Leading Models," Chapters,in: International Handbook of Network Industries, chapter 18 Edward Elgar Publishing.
    3. repec:spr:waterr:v:31:y:2017:i:8:d:10.1007_s11269-016-1495-3 is not listed on IDEAS
    4. Pedro E. Sanchez & Samuel Oguah, 2015. "Private Sector Participation in Transmission Systems," World Bank Other Operational Studies 23135, The World Bank.
    5. Ba, Lika & Gasmi, Farid, 2011. "To what extent do infrastructure and financial sectors reforms interplay? Evidence from panel data on the power sector in developing countries," TSE Working Papers 11-264, Toulouse School of Economics (TSE).
    6. Fiorio, Carlo V. & Florio, Massimo, 2013. "Electricity prices and public ownership: Evidence from the EU15 over thirty years," Energy Economics, Elsevier, vol. 39(C), pages 222-232.
    7. Marja Hirvi & Lindsay Whitfield, 2015. "Public-Service Provision in Clientelist Political Settlements: Lessons from Ghana's Urban Water Sector," Development Policy Review, Overseas Development Institute, vol. 33(2), pages 135-158, March.
    8. Aidan R. VINING & Anthony E. BOARDMAN & Mark A. MOORE, 2014. "The Theory And Evidence Pertaining To Local Government Mixed Enterprises," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 85(1), pages 53-86, March.
    9. Claude Ménard, 2013. "Is Public-Private Partnership Obsolete? Assessing the Obstacles and Shortcomings of PPP," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00653090, HAL.
    10. repec:eur:ejmsjr:253 is not listed on IDEAS
    11. Antonio Estache, 2016. "Institutions for Infrastructure in Developing Countries: What We Know and the Lot We still Need to Know," Working Papers ECARES ECARES 2016-27, ULB -- Universite Libre de Bruxelles.
    12. Philippe Marin, 2009. "Public-Private Partnerships for Urban Water Utilities : A Review of Experiences in Developing Countries," World Bank Publications, The World Bank, number 2703, June.
    13. repec:hal:wpaper:halshs-00653090 is not listed on IDEAS
    14. Ba, Lika & Gasmi, Farid, 2011. "To what extent do infrastructure and financial sectors reforms interplay? Evidence from panel data on the power sector in developing countries," IDEI Working Papers 692, Institut d'Économie Industrielle (IDEI), Toulouse.
    15. Bertoméu-Sánchez, Salvador & Camos, Daniel & Estache, Antonio, 2018. "Do economic regulatory agencies matter to private-sector involvement in water utilities in developing countries?," Utilities Policy, Elsevier, vol. 50(C), pages 153-163.
    16. Geginat,Carolin & Ramalho,Rita, 2015. "Electricity connections and firm performance in 183 countries," Policy Research Working Paper Series 7460, The World Bank.


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