Can Reforms be Made Sustainable?: Analysis and Design Considerations for the Electricity Sector

This document discusses and proposes a new framework to improve the quality of programs supporting such reforms in Latin America. Firstly, it responds to the risk that the reforms in the region might be reversed, which might originate in the lack of public support for privatization and the succession of crises and events in the recent past (problems of supply in Chile and Brazil; price peaks in the spot market in El Salvador; the commercial unsustainability of the pool in Colombia; the ENRON/Andersen scandal, and the Argentine crisis among others), that have provided the enemies of reform with new political space. Secondly, it responds to evidence that the consolidation of sector reforms is not automatic, involving as it does the simultaneous creation of traditions of respect for the rights of investors and consumers. Finally, this paper partly builds upon the experience gathered from a project supporting the sustainability of electricity reform in Colombia, Guatemala and Honduras.