quality of regulation in brazil: electricity and oil & gas sectors
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Quality of Regulation in Brazil: Electricity and Oil & Gas Sectors. Eduardo Machado Technological Research Institute New Dehli , March 27 th 2010. 1. Brazilian regulation in historical perspective. From the entrepreneurial state to the regulatory state. 1980-90. 1930. 1996. 2005. - PowerPoint PPT PresentationTRANSCRIPT
Eduardo MachadoTechnological Research Institute
New Dehli, March 27th 2010
Quality of Regulation in Brazil: Electricity and Oil &
Gas Sectors
1. Brazilian regulation in historical perspective
3
From the entrepreneurial state to the regulatory state
Entrepreneurial state
Transition to an open economy Regulatory
State
19301930 1980-901980-90 19961996 20052005
4
Regulatory agencies were established after the second half of the nineties…
19961996 19971997 19991999 20002000
ANEEL (Electricity) ANATEL
(Telecom)
ANP(Petroleum and
Natural Gas)
20022002
ANVISA(Sanitary Control) ANS
(Health Plans)
ANA(Water Resources)
ANTT(Ground
Transports)
ANTAQ(Water
Transports)
5
Brazil had the wrong sequence in some sectors…
Sector PrivatizationRegulatory
agency
Electricity 1995 1996
Telecommunications 1997 1997
Railways 1998 2002
Ports 1999 2002
2. Regulatory framework in selected sectors
Agencies respond to different types of market failure...
Property Information Asymmetry Externalities Natural
MonopoliesAnticompetitive
Practices
Sector
Oil & Gas X XX XXX XXX
Electricity XX XX XXX X
Three groups of regulated infra-structure markets
• Regulatory framework exists, there are policy issues: telecommunications, electricity and civil aviation.
• Regulatory framework exists but it is inadequate: petroleum, railways, roads and ports
• No regulatory framework: natural gas, water and sanitation
9
State intervention and legal uncertainty in selected sectors…
XXXXXXXXXXXXNatural Gas
XXXXXXXXXXXPetroleum
XX-XXXXXElectricity
CommercializationDistributionTransmissionProcessingTransport
Generation
Level of Legal
Uncertainty
Degree of State Intervention
Sector
Regulatory Change in Petroleum Industry
Electricity Sector Pre and Post Reform
3. Regulation Quality: Results
Diffferents studies show that...
0,0
0,1
0,2
0,3
0,4
2000 2001 2002 2003 2004 2005 2006 2007 2008
ELECTRICITY PETROLEUM
Source: Author sSource: Author s
SECTORIAL PERFORMANCE INDEX
...reforms do not improve...
Source: Kauffaman & Kraay (2009) Source: Kauffaman & Kraay (2009)
World Governance Indicators
...quality of regulation!
AGENCY AUTONOMYDECISION MAKING
DECISION TOOLS
ACCOUNTABILITY RGI RANK
ANP 0,6043 0,6841 0,7608 0,5962 0,6752 3
ANEEL 0,6896 0,8976 0,5160 0,5885 0,6980 2
Regulatory Governance IndexRegulatory Governance Index
Source: Correa et al. (2006)
4. Conclusion
17
Electricity has been a failure…
• Supply crisis in 2001 and 2009
• Recent model does not provide stability
• Centralizes decisions in the Executive Power
• More investments are required to avoid a possible
supply crisis
18
Petrobrás” does not allow enough competition and entry…
• State-owned company controls over 90% of the
exploration, transportation and distribution segments
• Petrobrás’ price policy is not transparent
• Lack of access to transportation and distribution networks
hinders new entry and investment
19
The natural gas sector lacks a specific regulatory framework…
• Recent discovery increased the importance of
natural gas
• Need for a specific regulatory framework:
– Need for clear rules for access to transportation and
distribution networks
– Federal and subnational governments have to coordinate