engleski

The Effects of Privatization in Electricity Sector: The Case of Southeast European Countries

Privatization in electricity sector of Southeast European countries has been undertaken in a variety of manners but with the same goal to encourage foreign direct investment into the sector and to allow market liberalization and increasing competition. The success of electricity privatization is mostly dependent upon the prior sector restructuring, a transparent and effective regulatory framework and appropriate market conditions for investors to enter the market. Bulgaria, Romania and Macedonia have privatized complete distribution network, while Croatia, Serbia and Bosnia and Herzegovina are still in the initial phases of the privatization process. All these Southeast European countries are small economies (Romania is the only exception) and they face significant economic constraints that are related to their limited market size and capacity. The systemic constraints are related to the physical size of their electricity systems because they are too small to be divided up into several competing firms. In addition to the systemic issues, these countries are faced with the lack of institutional and regulatory resources as well. The EU reform model which has been implemented in all SEE countries needs certain institutional resources that are still missing. It has become the biggest obstacle in the process of full implementation of electricity reforms and privatization because appropriate level of institutional environment and regulatory quality are crucial for SEE countries in order to benefit from the reforms.

privatization, electricity sector, reforms, Southeast Europe

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