Power sector reform in South Asia: Why slow and limited so far?

Although South Asian developing countries had initiated some form of electric power sector reform in the 1990s, often under external lending agency pressures, not much progress has been made so far and there is hardly any noteworthy example of a successful reform in the region. This paper provides a brief review of power sector reform efforts in five South Asian countries and uses an institutional economics framework to identify the factors shaping the success of power sector reforms. Four factors, namely instability of rule-makers, poor overall acceptance, slow adaptation and poor transition management are identified and their effect on the reform process of South Asia are analysed. The paper finds that political instability has affected the power sector reform of the region, making hard decisions difficult to take. Slow progress of reform has also affected the sector viability, as signs of adverse effects on the power sector investment and performance are already visible.