Opening up and transition, success and problems : Financing and reforms of the electric power sector in Latin America and the Caribbean

Financing problems triggered the wave of electric power sector reforms in Latin America and the Caribbean. The reforms, in turn, have changed the functioning of financing in the power sector. Financial institutions have continually adapted their instruments, existing sources of capital have stepped up investing in the sector and new financial sources have emerged. This paper reviews the evolution of financing and its interplay with legal and structural reforms and property rights changes in the electric power sector of Latin America and the Caribbean. It classifies sector development in the region by reform strategies, and their consequences for financing. Finally, it conducts an assesment using criteria such as sector financing, sector efficiency, general economic efficiency, economic development objectives and the environment. It finds that the different reform and financing strategies have distinctive impacts on the sustainable development of the sector through their impacts on the choice of generating technology and fuel, on the contribution of cogeneration and renewable energy sources, on participation of national capital and national human capital formation, and on rational use of energy.