Doing Business Reforms
MAKING ACCESS TO ELECTRICITY MORE EFFICIENT AND RELIABLE
World Bank Enterprise Surveys data show that business owners in developing economies identify access to reliable electrical services as the fourth largest obstacle to doing business. However, electricity sector constraints vary. A difficult connection process is associated with utility corruption and may hamper firms, while an unreliable electricity supply is linked to low firm productivity. Both an efficient connection process and safeguards to mitigate outage risks are crucial to business owners. Effective customer protections and regulations also provide predictability for firms, enabling them to better forecast risks.
Given the importance of the electricity sector, many economies aim to improve access to electricity and the quality of supply to strengthen the operating environment for small and medium-size enterprises. Doing Business recorded reforms in 20 economies making it easier to get electricity in 2016/17. Of these, 12 economies focused on improving the connection process and eight on the reliability of electricity supply.
The most common feature of electricity reforms in the past year was improvement to the connection process. Regulatory changes that reduce the number of interactions required between the utility or other third parties and customers when they apply for an electricity connection are an effective way to improve the connection process. Armenia successfully reduced the number of interactions required in 2016/17 by installing a geographic information system, eliminating the need for a site inspection to issue the technical conditions. As a result, the total time to obtain a connection was reduced from 138 days in 2016 to 127 days in 2017.
In the Dominican Republic and Kenya changes were made to improve the reliability of power supply. Major upgrades were made to the network infrastructure in Santo Domingo and Nairobi, resulting in a notable reduction in the duration of outages. In Kenya, the utility in Nairobi invested in its distribution lines and transformers and set up a squad specializing in restoring power when outages occur. In the Dominican Republic, the utility in Santo Domingo built new substations, redesigned the network zoning plan and established a response squad to quickly restore service after an outage. The initiatives implemented by the utilities in both economies resulted in significant improvements in the reliability of electric supply. As a result, Kenya and the Dominican Republic became eligible to score on Doing Business’ reliability of supply and transparency of tariff index as their System Average Interruption Duration Index (SAIDI) and System Average Interruption Frequency Index (SAIFI) scores are now below 100.
GETTING ELECTRICITY REFORMS BY ECONOMY DB2008-DB2018