HWWA DISCUSSION PAPER 250

October 2003

Regulation of the Electricity Industry
in Bolivia: Its Impact on Access to the
Poor, Prices and Quality

Abstract

This paper takes stock with the results of utility privatization in Bolivia. This paper
deals with the process of structural reforms in this country and the specific results that
have to date been accomplished in the electricity industry. It is mostly interested in ex-
ploring whether the reformation of this industry contributed to lessen poverty levels and
whether in light of the obtained results, a reversal or a continuation of the reform proc-
ess should take place. The paper shows that coverage of electricity users has grown
faster in urban areas ever since the establishment of regulation. Although it is not ar-
gued that regulation has caused the increase in electricity consumers, the data does show
that a comparatively faster urban growth rate of users takes place after 1995. In this
sense, it seems plausible that regulation of the electricity industry has indeed lessen
poverty levels in urban Bolivia by making this utility more accessible to larger segments
of the urban population. The same cannot be said, however, about rural Bolivia. The re-
sults show that coverage has remained about the same in the last 10 years, with no dis-
cernible improvement after the transformation of the industry in 1995. When rural Bo-
livia is divided into income groups, the data shows that some of the poorest groups have
indeed experienced a decline in coverage during the regulation period, which sheds
doubts about the purportedly positive effects that structural changes in this industry
were to have in the livelihoods of the poorest people in the country. Alternative ways
which may improve the poverty reduction outcome of electricity regulation are ex-
plored.

Keywords: Regulation, Poverty Reduction, Bolivia
JEL Code: L51, O20, O54

Antonio Bojanic, Universidad Andina Simon Bolivar (UASB), La Paz / Bolivia

Michael Krakowski, HWWA - Hamburg Institute of International Economics
Department World Economy

Neuer Jungfernstieg 21

D-20347 Hamburg / Germany

Phone: +49-40-42834-413

Fax: +49-40-42834-451

E-mail: michael.krakowski@hwwa.de

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