Trade Policy Note Final-rev08 - Development
Trade Policy Note Final-rev08 - Development
Trade Policy Note Final-rev08 - Development
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How to ensure universal access?<br />
Governments of developing countries are seeking private sector participation to<br />
obtain the necessary capital and technology. The dilemma often faced by governments<br />
is how to obtain foreign investment to increase capacity and efficiency, whilst<br />
simultaneously keeping the price of electricity, in particular, at levels accessible to the<br />
poor. In the energy sector, conditions for entry and performance requirements are<br />
essential tools for ensuring tha t liberalization attains the ultimate objective of<br />
universal coverage. Such conditions may include price undertakings (as liberalization<br />
tends to result in increased prices if not controlled), universal service obligations and<br />
transfer of technology requirements. On the other hand, governments may need to<br />
subsidize investors in isolated regions, particularly those involved in renewable<br />
energy production (e.g. solar or wind energy). Fair and transparent rules governing<br />
TPA and cross subsidization can also encourage investors. The energy sector can be a<br />
source of employment for youth, providing higher paying jobs, both at home and<br />
abroad through MNP. In addition, it may be necessary to retain energy subsidies, but<br />
with more focus on the poor. Such requirements should be stipulated in GATS<br />
commitments or in FTA “reservations”.<br />
The scope of WTO negotiations on energy extends beyond the services sector. Energy<br />
importing countries are seeking to expand the rules on subsides to restrict “dual<br />
pricing” practices under which energy producing countries maintain prices for<br />
domestic consumers at levels below those prevailing on the world market. There are<br />
also initiatives to eliminate exports taxes, as a policy tool frequently used in the<br />
energy sector.<br />
Box 24: Energy Services Liberalization in Latin America<br />
Country-case studies carried out in Latin America in 2001 show that energy market<br />
liberalization has, on balance, been beneficial to countries that have implemented it. Both<br />
energy availability and the quality of the service have been enhanced, mostly through (too<br />
broad in its sweep) rapid transfer of technology and systems, and more efficient modern<br />
management. However, energy accessibility and affordability, although better overall, has not<br />
improved for marginal populations. In general, market liberalization has tended to reduce<br />
employment in the sector as public monopoly enterprises tended to be over -staffed.<br />
Reductions in personnel in privatized companies have been accompanied, however, by<br />
increases in the number of jobs in contracting companies as a result of the increasing<br />
outsourcing of many activities. 148 Within the context of heavy reliance on services companies,<br />
there is still a great variety in the degree to which energy companies vertically integrate<br />
backwards or outsource services to external providers.<br />
148 World Energy Council (2001), Energy Markets in Transition: The Latin American and Caribbean<br />
Experience, London.<br />
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