Caribbean electricity restructuring: An assessment

Abstract

This article assesses the privatisation of the electricity sector in two Caribbean countries, Jamaica and Trinidad and Tobago, to determine if they have been successful and whether they have contributed benefits to the respective societies. Two general methods are applied in assessing the success of the divestments; attainment of governments' stated objectives and commonly used utility performance metrics together with social and customer focus indicators. The results indicate that the stated objectives were broadly achieved, and the privatisation and its attempts brought benefits to the consumers and the society in general. The short to medium term benefits were accrued through lower labour costs per unit of electricity, higher performance of plant and operations and business led decision-making. Long-term benefits are accrued through the reduction or elimination of electricity supply deficits. However, although the basic privatisations were successful, the absence of an adequate regulatory framework in one case may have reduced the quantum of benefits through failure to enforce continuous improvement in the privatised generation company, and reductions in worker rents in the public distribution company. Further, benefits were reduced by long divestment processes, accompanying strategic drift, opportunity costs from delayed sale proceeds and efficiency enhancement, and the costs to sustain interim operations. Copyright © 2005 John Wiley & Sons, Ltd.