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Analysis of the two main World Bank’s documents:
-"The World Bank’s role in the electric power sector" and
-"Energy efficiency and conservation in the developing world".

Both documents are centred on the structural transformation of the energy sector in all countries. The central idea for such change is to pass from a situation of state monopoly to a situation of partial or total participation of the private sector in energy generation, transmission and distribution. Even in the case of non-privatization, the focus is on the corporatization of the energy sector, under strict market rules.

The bank adopts a number of measures to achieve that purpose:

1) To require countries to set up a legal framework and regulatory processes for the energy sector. (p.14)

2) To pursue "aggressively" the commercialization and corporatization of, and private sector participation in, developing-country power sectors (p.16).

3) To condition loans on a clear commitment by governments to improving sector performance in line with the above principles.(p.17)

4) To encourage private investment in the power sector. (p.18)

The change and its alleged causes

During the previous decades, the bank’s role in the power sector focused on expanding electricity supply and on facilitating institutional development.(p.21).

The bank suddenly "discovers" the need for changing course and to concentrate on corporatization and privatization. This "discovery" is obviously linked to the global process of passing on power from the state to the private sector and particularly to transnationals, which are practically the only ones with the capacity to invest the millions of dollars required to buy the huge power facilities. The bank’s arguments for such change need to be checked to see if they are valid for every single country, and our own national studies should analyse this issue. Are all the state power sector enterprises inefficient, corrupt and non-profitable? The bank argues that the state-owned power sector is inefficient due to a number of reasons:

- governments’ internal policies and conflicts between governments’ roles as owner and operator of the energy utilities

- exogenous factors such as world oil prices (e.g. rises in the 70s and 80s)

- internal economic situation (macroeconomic difficulties, external debt)

- social issues (subsidized or free energy for the poor)

Both bank documents are based on a narrow scenario where:

- the only energy sources seem to be coal, oil and natural gas. Even hydroelectricity is not taken into account and even less so clean and renewable energy sources.

- the issue of whether energy use is actually excessive is not analysed and the only aim is to achieve a more efficient generation, distribution and consumption, fundamentally through market mechanisms.

- the current prevailing development model and its implications on energy consumption is not analysed. For example, rural-urban migration, which generates an immediate increase in modern energy consumption; urbanization and its increasing energy requirements in motorized transport; the excessive consumerism promoted worldwide and its consequences on the use of energy in the production and distribution of the promoted products.

- the fact that the current development model is not analysed implies that alternatives -such as the use of bicycles as a transport means, organic agriculture- with low energy requirements are not taken into account.

- the bank’s analysis is extremely simplistic: governments under whose administration energy generation and distribution lies, are the problem. However, the bank’s papers show examples -such as France, p.44- where the state-owned companies work very efficiently. Are there no such other examples?

- the environmental issue is basically viewed as on how to mitigate or minimise the impacts of traditional energy sources (coal, oil and natural gas), switching from the more polluting (coal) to the less polluting (gas), as well as through emmissions control and energy efficiency and not under the broader view of the global and local environmental problems.

- in spite that the bank tries to demonstrate that the proposed changes will pave the way for more participation -within the framework of a regulatory mechanism open to different social actors- the fact is that the bank has already taken the main decisions on the future of the energy sector and that it will impose it "aggressively" on developing country governments. Participation will be only aimed at dealing with the details.

In sum, the bank has become the main promoter of energy sector restructuring which -regardless of local realities, needs and aspirations- would be passed on to the private sector, while the main function of governments would be limited to the establishment of strategies and policies for the sector and to the regulation of its activities.

The main questions that I can think of are: Should we oppose this process? Is opposition possible? After restructuring: will the situation be worse or better than before? Should we assume that privatization has already taken place and to move on from that assumption? Should we focus on what the bank DOESN’T SAY? (e.g. clean and alternative energies, alternatives in energy use, the defence of the poor, who will be left outside the market?).

By Ricardo Carrere
Latin America Regional Coordinator
MDB-Energy Project