Power Sector Reform in Latin America: Accomplishments, Failures and Challenges

May 2006
In this technical paper, the author addresses pertinent issues that affect reform in the power sector and the status of current efforts. The objective of the paper is such: 1) It explains the difficulties in achieving a separation of the roles of the State in an environment in which it continues to play an important role as entrepreneur, and the difficulties of providing adequate regulation in an institutional and resource-constrained environment; 2) It discusses the stranded costs arising from the impossibility of following the correct sequence of reforms and the constraints imposed by this failure; 3) It provides an analysis of the difficulties encountered in achieving competition while assuring long-term resource adequacy; 3) It looks at the regulation of noncompetitive segments and the elusive goal of achieving cost recovery while addressing the needs of the poor.