Regulation inside government: The challenges of regulating a government-owned utility

This article explores the process of independent regulation of a government-owned utility (GOU) in the water supply and sanitation (WSS) sector drawing on the theory of regulation inside government. Our fieldwork focused on recent efforts by the Rio de Janeiro state WSS utility (CEDAE) to comply with requirements imposed by an independent regulatory agency (IRA). Our findings highlight the challenges of regulating GOUs and identify key political factors that induce state governments, through state-owned companies, to shirk regulation. The multi-level governance structure of Brazilian WSS sector adds to the complexity of “regulating inside the government”.