Brazil - Energy Sector Reform Loan Project
Fink, Carsten | Mattoo, Aaditya | Rathindran, Randeep
The assessment of outcome is satisfactory, sustainability likely, though institutional development impacts were only modest, with both performances by the Bank, and Borrower rated highly satisfactory. The Quality Assurance Group (QAG) review pointed out two lessons. The first is that because it often requires a major crisis to produce the political will, necessary for major power sector reforms, the Bank should maintain a low-key dialogue with countries in this sector, even when they are not in a reform mode, and be prepared to respond when the opportunity for reform arises. This is especially true in sectors such as this one, where the Bank has a long history of involvement, and the resulting detailed knowledge. The second lesson is that it is advantageous to complement adjustment operations with small technical assistance (TA) loans, to help maintain the dialogue "while leaving the Bank free to determine the appropriate timing of further reform interventions in an uncertain political climate." In this case, although the TA loan was delayed, discussion of it with the new administration turned out to be a good way to resume the sector dialogue". Finally, on a more technical note, the Government demonstrated how to manage a power sector crisis without blackouts, through a clever 20% rationing, which included power saving targets, and incentives to reduce consumption (large consumers trading electricity quotas on the Sao Paulo stock exchange, low income consumers being paid to reduce consumption).
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