INTRODUCTION

Utilities' privatization has become a booming industry. From Latin America, to Europe, to Asia and now to Africa, Utilities' privatization has become a key element of reform-minded governments. Global ideological changes, fiscal concerns, and the recognition that there may not be any visible advantage for government ownership are behind this global reconsideration of the ownership role in the provision of utility services. But with privatization comes the recognition, often belatedly, that utilities are not like any other sector of the economy, where an appropriate tax treatment and a stable economic environment is enough to develop private investment in utilities. In case after case, it is being recognized that the private sector has to be “encouraged” to undertake all the investments that the public and the government expected from the utility. The need for this encouragement, however, is often seen by many governments and the public in general as a further example of the private monopolies ripping off customers, of collusion between the private companies and the governments, of the need to renationalize, and so on.

The purpose of this essay is to discuss what seems to be the crux of success for privatized utilities and what research is needed to further our understanding of the ability to succeed in regulating newly privatized utilities. In this essay I discuss the experience of some countries that have undertaken, or attempted to undertake, utility privatizations. I do not claim, however, that the discussion here is exhaustive, as I focus on a few selected countries on which I have undertaken primary research.