Regulatory policies and reforms in the power and downstream oil industries

Regulatory policies and reforms in the power and downstream oil industries

Like many developing countries, the Philippines has witnessed substantial trade liberalization and economic deregulation in various sectors of the economy including telecommunications, financial market, airlines, ports, shipping, water, and energy. At the same time, the country has engaged in privatizing and devising new regulatory frameworks particularly for the utilities sectors. To address the power crisis in 1992 and 1993, the power generation sector was opened up to private sector participation. The late 1990s also saw the concessioning of Manila’s water supply and sanitation systems and the long-term leasing of Manila’s container terminal facilities.

This paper looks at the regulatory reforms in the electricity and downstream oil industries, two important inputs to the production process that were heavily regulated by the government. While electricity has strong externalities as well as economies of scale and scope, the oil industry does not exhibit natural monopoly characteristics nor does it display economic features that would warrant government regulation.

The paper also analyses the economic theories underlying these reforms: why is regulation necessary, what are the different forms of regulation, and how can these policy reforms bring about competition? It also identifies the emerging issues and problems associated with the regulatory reforms. Given our little experience in the effective use of public regulation in a market-driven setting, research is needed to provide a deeper understanding of these issues within the context of our economic, institutional and political structure. This is necessary in order to come up with possible approaches to overcome our weaknesses and shore up weak administrative and enforcement capacities.

  1. How good is this research?

    Assessing the quality of research can be a tricky business. This blog from our editor offers some tools and tips.