Optimal timing in the privatisation of a utility in an emerging country: the case of electricity distribution in Delhi

Privatisation of utilities in emerging countries is impeded by informational problems. We analyse privatisation of utilities as a process, focusing on the creation of information that arises both before and after the transfer of property. We take the example of the privatisation of electricity in Delhi ( Section 1). We examine the interest in creating as much information as possible before the transfer of property, and propose a model based on a trade-off between the potential benefits of creating information prior to selling of assets, vs. facing the costs of delays associated with the risks of a state's failure in creating this information prior to privatisation. We operationalise the model in the case of Delhi and argue that, in similar conditions, it is reasonable and profitable to invest a few years in information building (Section 2). We test the robustness of this model with what risks to be the most stringent critique: the inefficiency of the state (Section 3). We conclude that this simple model is fit for a clear and transparent decision-making on privatisation and reforms.