The Opportunity Cost Of Electricity Outages And Privatization Of Substations In Nepal

Aygul Ozbafli, Glenn Jenkins () and Roop Jyoti
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Aygul Ozbafli: Queen's University
Roop Jyoti: Ministry of Finance, Nepal

No 1066, Working Paper from Economics Department, Queen's University

Abstract: The unreliability of electricity supplies is a major cause of the high cost of manufacturing in developing countries. In this paper we are able to measure the cost imposed by power outages and suggest some feasible mitigating measures. The study employs a rich, if not unique, set of data from three large manufacturing enterprises in Nepal. Using it the opportunity costs to the enterprises from lost production from electricity outages can be estimated accurately. Power outages due to substation failure can be separated from other electricity systems failures. An analysis is carried out on the feasibility of privatized electricity substations. We find that this is a very worthwhile capital investment for the private sector to undertake, even when additional generation capacity to improve overall electricity reliability is not justified.

Keywords: opportunity costs; reliability; electricity supply; privatization (search for similar items in EconPapers)
JEL-codes: L94 Q41 Q48 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2006-04
New Economics Papers: this item is included in nep-eff, nep-ene and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:1066

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