Assessing regulatory performance: The case of the Namibian electricity supply industry

Abstract

The power sector reforms that commenced in the 1990s led to the establishment of independent electricity regulators in more than twenty countries across Africa. The main purpose for these institutions was to create greater transparency in tariff setting and provide increased certainty for investors. At the same time regulators are charged with the protection of the interests of current and future consumers of electricity. During the initial stages of reform it was the expectation that the state owned incumbents that were traditionally vertically integrated would be unbundled and privatised. In practice there have been very few privatisations and what have emerged are hybrid markets where state-owned utilities remain dominant with independent power producers on the margin. In these markets regulation is a complex melting pot of incentivising the performance of state-owned utilities, attraction of private sector investment especially to fill gaps in generation capacity and making sensitive pricing decisions. Recognising that regulation is beginning to establish a track record, the African Electricity Regulator Peer Review and Learning Network, an initiative of the University of Cape Town, Graduate School of Business provides an opportunity for high level learning through the assessment of regulatory performance. We detail an assessment of regulation in Namibia where we find prices transitioning to cost reflectivity but question the sustainability of current arrangements in the distribution of electricity and the country’s long-term generation adequacy.