In this paper, relative coverage according to income deciles is analyzed in order to judge the
impact of electricity privatization on the bolivian poor. Along with the aforementioned analysis,
the regional dispersion of access indicators is also considered since differences between the
headcount index of the poor in urban and rural areas are extremely high (Krakowski, 2003). In
light of this reality, it is not surprising that during the process of consultations organized in the
framework of the elaboration of Bolivia´s Poverty Reduction Strategy Paper (PRSP), rural
electrification was identified in 78% of all municipal workshops as the most important action in
combatting poverty (PRSP, p. 64).
Another factor that ought to be considered when analyzing the utilization of subsides in regulated
industries is that it has often been used to favor richer categories of consumers. An explicit
objective of most privatization schemes has been to end this discriminatory practice, with varying
degrees of success. The reality is that special-interest groups, particularly the better funded ones,
still influence economic policy in most nations and the survival - indeed, thriving - of
subsidization schemes in which poor consumers are not the main beneficiaries is proof of the
sustaining power of richer, better organized groups. It may also illustrate a “capture” of
regulators by politically - and economically - influential groups.
A related theme is the possible capture of regulatory institutions by private operators (Stigler
1972). As it relates to this paper, the capture would come from operators throughout the
electricity industry in Bolivia and might be reflected in failing to achieve privatization targets. A
possible consequence of this situation might involve, for instance, the provision of services with
quality benchmarks that are too laxed and generous, reflecting a captured regulator.
The results of utility privatization after more than a decade of reforms in many countries are
disappointing. Though in most cases they have injected badly needed capital and managerial
capabilities into newly privatized and/or capitalized industries, they have not necessarily
improved on the levels of efficiency in the delivery of public services. They have often caused
worsening, and indeed, growing public deficits; have fallen short of expectations in terms of their
ability to generate economic growth; have produced limited diversification of economic
activities; and have not contributed - some indeed argue that they have created an even greater
divide - to a convergence on the very uneven distribution of wealth that characterizes nations in
Latin America.
In light of the apparent poor performance of reforms in most American countries, it is no wonder
that they are under increasingly close scrutiny from various quarters. In Bolivia, calls have been
made to reverse on the path of the reforms and to nationalize some of the enterprises that were