World Energy Outlook 2006

(in year-2005 dollars). These reforms attracted a strong initial response
from the private sector, but private investment declined rapidly after 1997
(Figure 6.15). The reasons included poor design of the economic reforms,
under-pricing of electricity, adverse exchange-rate movements, economic
recession and more cautious business judgments. Many private companies have
since sold their assets in developing countries, resulting in a sharp reduction in
the number of active international investors. Investment rebounded in 2000,
reaching $29 billion, but has since been fluctuating around $10 billion to
$15 billion, only about 30% of the peak in 1997.
billion dollars (2005)
60
50
40
30
20
10
Figure 6.15: Private Investment in Electricity Infrastructure
in Developing Countries, 1990-2004
0
1990 1992 1994 1996 1998 2000 2002 2004
Source: World Bank Private Participation in Infrastructure (PPI) database.
Over the past decade, most private investment in electricity has gone into
power generation, either into individual power plants or independent power
producers. The bulk of the remaining investment has been made mainly in the
distribution sector. Initially, most private investment went into the acquisition
of existing facilities. But in the past few years, investment in greenfield projects
has predominated (World Bank, 2005).
Over the period 1990-2004, private activity was selectively directed to projects
in a few large developing economies, such as Brazil, China, Argentina and
India. Out of nearly a hundred countries in total, the top ten received
$200 billion, or 72% of the total. Brazil alone received $60 billion, accounting
for more than one-fifth of the total private investment flow to developing
countries (Figure 6.16). From 1990 to 2004, the low-income countries received
154 World Energy Outlook 2006 - THE REFERENCE SCENARIO
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