Energy
sector liberalization boosts economic benefits
Paris, 1 September
1998 – Energy market liberalization drives
competition and brings widespread national and international economic benefits,
according to a report issued today by the International Chamber of Commerce
(ICC), the world’s leading business organization.
One critical component of national energy sector
liberalization, the report says, is the creation of specialist, supervisory
authorities, independent of government, with clear mandates to facilitate and
promote the development of competition in the gas and electricity sectors. The
establishment of such authorities, with the power to create truly open markets,
will ensure that the national benefits to be derived from liberalization are
maximized. <
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The report, entitled "Liberalization and Privatization
of the Energy Sector", is the result of a two-year study by senior business
executives from major companies who worked as an international expert group
for the Paris-based ICC. The document highlights key success factors in nearly
a dozen countries where liberalization and privatization of the energy market
has been implemented. It also points to a number of critical areas where improved
policy formulation would work to enhance the positive effects of liberalization.
The report reflects ICC’s policy to promote
open international trade and the market economy worldwide. It promotes "liberalization"
and "deregulation" of markets and gives the viewpoint of the "private
sector" concluding there are distinct economic advantages to be derived
from the process
Furthermore, the diversity of participants within
the work group, consisting of energy suppliers and users, energy experts and
scientists, ensures a balanced view.
Chairman of the 20 strong ICC work group was Dr
Michael Kohn, Head of the Zrich-based Institute for Capital and Economy, assisted
by Vice-Chairman Dr Francesco Balocco, European energy supply Manager, Dow Europe
and Mr Peter Styles, Vice-President of Enron Capital and Trade Resources (London
and Houston).
The report’s main conclusions and recommendations
include:
- liberalization measures consistently facilitate
competition, which brings substantial benefits through increased efficiency
and market transparency
- specialist supervisory authorities are required
for electricity and gas, independent from government, with power to intervene
over questions of market access and a clear mandate to facilitate and promote
the development of competition
- transnational harmonization of regulation will
be increasingly required
- non-discriminatory third party access to network
infrastructure is crucial for the development of competition
- predictable transmission tariffs help create
a "level playing field" in the marketplace
- policy makers must focus on creating the best
framework for electricity and gas trading, especially when flows include cross-border
transactions
- transmission, which is a natural monopoly, must
be "unbundled" from potentially competitive elements of the energy
sector, such as supply and production
The report deals specifically with certain problem
areas, like Stranded Investments, Environmental Preferences and Social Issues,
elaborating recommendations and practical policies.
Companies and organizations represented on the
ICC Working Party included: AKZO (Belgium), BASF (Germany), Canadian Electricity
Association, Dow (Europe), Enron (Europe), Hoogovens Steel (Netherlands), Institute
for Capital and Economy (Switzerland), Institute for Energy Economics (Germany),
the International Energy Agency (IEA), Powergen (United Kingdom), Ruhrgas AG
(Germany), Shell Exploration and Production and Shell International Petroleum
Company (Uni
ted Kingdom), Tokyo Electric Power Company (Japan), UBS (Switzerland).
ICC Commission
on Energy