Title In the Dark
Subtitle How Much Do Power Sector Distortions Cost South Asia?
Author Fan Zhang
ISBN 9781464811548
List price USD 39.95
Price outside India Available on Request
Original price
Binding Paperback
No of pages 262
Book size 178 x 254 mm
Publishing year 2019
Original publisher The World Bank
Published in India by .
Exclusive distributors Viva Books Private Limited
Sales territory India, Sri Lanka, Bangladesh, Pakistan, Nepal, .
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Description:

Electricity shortages are among the biggest barriers to South Asia’s development. Some 255 million people-more than a quarter of the world’s off-grid population-live in South Asia, and millions of households and firms that are connected experience frequent and long hours of blackouts.

Inefficiencies originating in every link of the electricity supply chain contribute significantly to the power deficit. Three types of distortions lead to most of the inefficiencies: institutional distortions caused by state ownership and weak governance; regulatory distortions resulting from price regulation, subsidies, and cross-subsidies; and social distortions (externalities) causing excessive environmental and health damages from energy use.

Using a common analytical framework and covering all stages of power supply. In the Dark identifies and estimates how policy-induced distortions have affected South Asian economies. The book introduces two innovations. First, it goes beyond fiscal costs, evaluating the impact of distortions from a welfare perspective by measuring the impact on consumer wellbeing, producer surplus, and environmental costs. And second, the book adopts a broader definition of the sector that covers the entire power supply chain, including upstream fuel supply and downstream access and reliability.

The book finds that the full cost of distortions in the power sector is far greater than previously estimated based on fiscal cost alone: The estimated total economic cost is 4-7 percent of the gross domestic product in Bangladesh, India, and Pakistan. Some of the largest costs are upstream and downstream.

Few other reforms could quickly yield the huge economic gains that power sector reform would produce. By expanding access to electricity and improving the quality of supply, power sector reform would also directly benefit poor households. The highest payoffs are likely to come from institutional reforms, expansion of reliable access, and the appropriate pricing of carbon and local air pollution emissions.


Contents:

Foreword

Acknowledgments

About the Author

Abbreviations

Overview • What This Study Adds • Beyond Fiscal Costs • Beyond the Core: Upstream and Downstream • Massive Electricity Shortages • Low Access and Low Quality of Supply • Dire Environmental and Health Concerns • Three Types of Distortions • Institutional: No Market • Regulatory: Market but Distorted. • Social: Market but with Externalities • Conclusion • Policy Recommendations • Outline of the Report • References

Chapter 1: What Are the Distortions? • Institutional Distortions • Upstream: Unproductive Mines, Leaking Pipelines, and • Privileged Access • Core: Inefficient Generation, High Losses, and Favoritism in Dispatch • Downstream: Lower Living Standards and Slower Business Growth • Regulatory Distortions • Upstream: Underpriced Coal and Gas • Core: Underpriced Electricity and Inefficient Transmission Pricing • Downstream: Cross-Subsidies Penalizing Competitiveness • Social Distortions • Upstream: Unpriced Externalities of Fossil Fuel Combustion and Coal Mining • Core: Groundwater Depletion • Downstream: Dependence on Kerosene Lamps and Inefficient • Captive Generators • References

Chapter 2: Assessing the Cost of Distortions • Decomposing the Cost of Distortions • Institutional Cost • Regulatory Cost • Social Cost • Estimating the Cost of Distortions Estimating Supply and Demand • Constructing a Production Possibility Frontier • Simulating the Increase in Output • Estimating the Welfare Effects on Households and Firms • Partial Equilibrium Analysis • Data on Utilities, Households, Firms, and More • Utilities • Households • Firms • Other Data • References

Chapter 3: Bangladesh • Upstream • Institutional: Rental Power Plants Favored in Gas Allocation • Regulatory: Underpriced Gas • Social: Emissions from the Use of Gas and Oil • Core • Institutional: Inefficient Government-Owned Power Plants • Institutional: Dispatch Not Based on Merit Order • Regulatory: Underpriced Electricity • Social: Gas Waste Leading to Pollution from Oil Use • Downstream • Institutional: Welfare Loss for Households • Institutional: Productivity Loss for Firms • Social: Emissions from Kerosene Lighting and Self-Generation • Summarizing the Costs • References

Chapter 4: India • Upstream • Institutional: Unproductive Mining and Privileged Access • Regulatory: Underpriced Coal for Power Generation • Regulatory: Coal Shortages from Mispriced Rail Freight • Social: Emissions, Disease, and Accidents from Coal • Core • Institutional: Inefficient State Government–Owned Power Plants • Institutional: Underinvestment in Transmission • Institutional: High Losses of Distribution Utilities • Regulatory: Underpriced Electricity • Social: Groundwater Depletion from Cheap Electricity • Downstream • Institutional: Welfare Loss for Households • Institutional: Productivity Loss for Firms • Regulatory: Cross-Subsidies Penalizing Competitiveness • Social: Emissions and Disease from Kerosene Lighting • Summarizing the Costs • Notes • References

Chapter 5: Pakistan • Upstream • Institutional: Gas Allocated to Uncompetitive Fertilizer Plants • Institutional: Gas Leakage and Gas Theft • Regulatory: Underpriced Gas • Social: Emissions from the Use of Gas and Oil • Core • Institutional: Inefficient Government-Owned Power Plants • Institutional: High Losses of Distribution Utilities • Institutional: Underinvestment in Transmission • Regulatory: Underpriced Electricity • Downstream • Institutional: Welfare Loss for Households • Institutional: Productivity Loss for Firms • Social: Emissions from Kerosene Lighting and Self-Generation • Summarizing the Cost • References

Chapter 6: Conclusion • Costs Are Much Higher than Previously Thought • Distortions May Reinforce or Offset One Another • Regional Distortions Hinder Greater Cross-Border Electricity Trade • Implications for Power Sector Reform • Look beyond the Core Sector • Think beyond Investment • Reform beyond Corporatization • Prioritize Quality, Not Just Access Accompany Reforms with Compensation • References

Appendix A: Methodology for Estimating Demand and Supply Elasticities

Appendix B: Use of the Stochastic Production Frontier Approach to Measure the Technical Efficiency of Utilities


About the Author:

Fan Zhang is a Senior Economist in the Office of the Chief Economist of the South Asia Region at the World Bank. Previously she worked in the Europe and Central Asia Region as a Senior Energy Economist for the Energy and Extractives Global Practice of the World Bank. She has led both lending and advisory programs and published in the areas of energy and environmental economics, economic growth, and climate change. Before joining the World Bank Group, she was an Assistant Professor of Energy Economics and Policy at Pennsylvania State University. She has a PhD from Harvard University.


Target Audience:

This book will be useful to people interested in Power and Energy.

 
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