Creative destruction? Energy poverty and the double-edged role of the private sector
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Creative destruction? Energy poverty and the double-edged role of the private sector Ed Brown and Jonathan Cloke (Department of Geography, Loughborough University, UK)
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Creative destruction? Energy poverty and the double-edged role of the private sector. Ed Brown and Jonathan Cloke (Department of Geography, Loughborough University, UK). 1. Introduction. - PowerPoint PPT Presentation
Transcript of Creative destruction? Energy poverty and the double-edged role of the private sector
Creative destruction? Energy poverty and the double-edged
role of the private sector
Ed Brown and Jonathan Cloke(Department of Geography, Loughborough University, UK)
1. Introduction
The preoccupation with the private sector and FDI amongst international institutions and parts of the ‘development community.’
“The private sector is crucial to meeting the Millennium Development Goals. Businesses are an engine of growth and development, and can have a potentially huge impact on improving the lives of people in developing countries through increasing investment, creating jobs, and developing products and services, technologies and innovations... “
Department for International Development (DFID) website (2009)
“UNDP recognizes that achieving the Millennium Development Goals (MDGs) depends on vibrant economic growth, driven by private enterprises that create jobs and provide goods and services for the poor... The private sector - from large multi-national companies to small enterprises and cooperatives servicing local markets - also has an essential role to play in achieving broader UNDP goals in areas such as energy and environmental service delivery, crisis prevention, gender equality and democratic governance.”
United Nations Development Programme (UNDP) website (2009)
1. Introduction
Origins: The CSR industry and the UN Beyond CSR: Current re-assessments of the
role of the private sector in development The contribution of this paper
Two Points to Consider
The imaginary dividing line between the public and the private spheres.
The relative size and dynamics of individual private sector companies (and questions of transnationalism/sovereignty).
2. Historical Antecedents
The immediate post-war years
2. Historical Antecedents
The immediate post-war years
Dependency and the NIEO
Image from: http://i-p-o.org/nieo2.htm
2. Historical Antecedents
The immediate post-war years
Dependency and the NIEO
The Rise and Fall of the UNCTC
2. Historical Antecedents
The immediate post-war years
Dependency and the NIEO
The Rise and Fall of the UNCTC
The Global CompactImage from: http://i-p-o.org/nieo2.htm
2. Historical Antecedents
The immediate post-war years
Dependency and the NIEO
The Rise and Fall of the UNCTC
The Global Compact Critical Voices
Images from: http://www.gapsucks.org; http://www.campaignforlaborrights.org;
3. Services and the Private Sector
Main current arena of privatizing and liberalizing impulses.
Key area of developmental concern - provision of basic services.
Service sectors cover about two thirds of all economic activity and are particularly important in relation to female employment.
GATS and Service Liberalization
The WTO’s case for Liberalization“Simply put, the principle of “comparative advantage” says that countries prosper first by taking advantage of their assets in order to concentrate on what they can produce best. In other words, liberal trade policies – policies that allow the unrestricted flow of goods and services – sharpen competition, motivate innovation and breed success. They multiply the rewards that result from producing the best products, with the best design.”WTO (2007)
GATS and Service Liberalization
The WTO’s case for Liberalization The importance of understanding the
relational spaces through which liberalization occurs.
The flaws in previously existing privatization processes.
The crowding out of smaller-scale local capital
4. A Brief Detour concerning PFIs and PPPs
Reluctant partners? Declining flows of private finance.
The regulatory context: poor governance and regulatory failures.
Lessons from the World Bank’s Extractive Industries Review of 2004.
EIR Executive summary
‘Building Blocks of Governance’ deemed essential conditions for private sector participation in extractive industry projects:
Promotion of transparency in revenue flows; disclosure of project documents; the development of the capacity to manage fluctuating revenues; provision of help to governments to develop modern policy and regulatory frameworks; the integration of the public in decision-making processes
In addition the EIR suggested private companies engaged in: constant dialogue with communities to obtain informed consent; revenue-sharing with local communities; utilization of systematic poverty indicators and the setting up of independent greivance mechanisms
The relevance of this to the case of public service projects? GATS, Services, Accountability and Assymetries of Power.
5. The Private Sector and Energy Issues
The complexity and developmental importance of the energy sector.
Our focus here: the financial systems through which energy projects are facilitated.
5. Energy Issues and Local Capital
Rural electrification challenges and the importance of small-scale providers
“Local SMEs, financial markets and communities can reducepolitical and foreign exchange risks, handle specific managerial challenges, such as revenue collection, and develop decentralized energy systems. SMEs are likely to be more flexible in the use of technology, use locally available resources, and to integrate better into the local social fabric.” DFID (2007)
5. Energy Issues and Local Capital
The Non-Technical Barriers facing energy sector SMEs: legal and regulatory frameworks; anti-SME market rules; discriminatory banking relations; high commercial risks; cultural perceptions of off-grid technologies.
Questions of Politico-financial power.
6. Energy production in Nicaragua
2008 EnergyCentral workshops. The relational context of electricity production
and distribution in Nicaragua and why it is important.
The role of the private sector historically in the development of renewables in Nicaragua.
Intensifying Hydro-Carbon Dependency and its impacts on the Poor.
The Potential for Renewable Alternatives
2.11959,280TOTAL
30.060200 *Biomasa0.00800Eólica0.7375,000Geotérmica3.0983,280Hidroel éctrica
PORCENTAJE DE APROVECHAMIENTO
(%)
CAPACIDAD
EFECTIVA
(MW)
POTENCIAL
(MW)TIPO DE
GENERACI î N
2.11959,280TOTAL
30.060200 *Biomasa0.00800Eólica0.7375,000Geotérmica3.0983,280Hidroel éctrica
PORCENTAJE DE APROVECHAMIENTO
(%)
CAPACIDAD
EFECTIVA
(MW)
POTENCIAL
(MW)TIPO DE
GENERACI î N
Sources: MARENA and CNE (2006)
6. Energy production in Nicaragua
The inefficiency of productive energy use in Nicaragua and the politics of contract negotiation.
Corruption, privatization and clientelistic political systems in Nicaragua.
Corporate Monopolies: Union Fenosa (distribution), Esso (hydrocarbon market)
LOS MçRGENES ACUMULADOS DE LAS GASOLINAS Y EL DIESEL 2002 -2004
0.28
0.37 0.370.39
0.460.48
0.30
0.40
0.45 0.46
0.51
0.59
0.33
0.39 0.39
0.45
0.530.56
0.24
0.33 0.330.29
0.41 0.40
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
GUATEMALA PANAMÁ EL SALVADOR COSTA RICA HONDURAS NICARAGUA
DÓ
LA
RE
S P
OR
GA
LÓN
PROMEDIO PONDERADO GASOLINA SUPERIOR GASOLINA REGULAR DIESEL
COMPARADO AL RESTO DE LOS PAÍSES CENTROAMERICANOS, NICARAGUA TIENE EL MAYOR MARGEN PROMEDIO PONDERADO: US$0.48 POR GALÓN
7. Conclusions Nicaragua: Resource-Rich and Energy-Corrupt. Which private sector model? The perils of universalized,
top-down privatization agendas. The already skewed patterns of private investment and the
likely impacts of the global financial crisis. The existence of substantial, under-used and excluded
financial capacity in the South - the need to liberate ‘dead capital’ (de Soto)Nearly 92% of businesses, 76% of rural properties and 65% of the dwellings in 12 Latin American countries studied are in the informal or “extralegal” sector. Dwellings, rural properties and businesses in the informal or “extralegal” sector of 12 Latin American countries are worth more than $1.2 trillion (Sources: The Multilateral Investment Fund, IADB Press Release June 12, 2006)
“There is enormous economic potential in the vast mass of below-average-income households that remains untapped by the formal financial services sector, and whose financial marginalisation holds back national economies across the region.
Whilst this summary and the accompanying report come with the usual caveats and the uncertainty that the current credit crisis in the international markets has created, in purely internal terms each of the seven metropolitan economies studied…. is utilising only a fraction of the full potential of its native entrepreneurs because of substantial barriers to access in the financial services sector.”
