Why Don’t Governments Take Energy Advice?

“In the final analysis, governments generally don't embark on policies that may well mean their political demise sooner rather than later.”
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TRANSCRIPT

Question: Of all the governments you’ve advised on energy policy, which have been the most and least reasonable?

Charles Ebinger: Oh, I'd like to tell you that I could claim success on more than one hand out of 50 governments. I would say in the long run we probably made some great success in Jordan and Egypt and ironically, even in Pakistan in the energy sector.  Things have fallen apart since then.  The problem though I think is most interesting to say, well why don't governments listen to what even most officials would say was fundamentally sound advice.  The problem is in many of these countries you know, because of the large volumes of poor people energy prices are highly subsidized, in some cases free.  And still in large parts of India, the farmers pay nothing for electricity.  And so of course because there's no value on the good, demand shoots through the roof and then the Indian government can't build enough generation capacity so it becomes a self-fulfilling prophecy.

But it's really the political constraints these countries are under, are very, very serious.  And it's easy for the IMF or the World Bank to come in and say "Oh, you need to rationalize prices and you know get them up to the real cost," but you know we don't, as we were talking earlier, we don't have our prices reflecting the cost of carbon.  And so in some ways, we're not that different.   So I think that's the biggest thing.  They don't see any near-term benefit by making some of these tough reforms even though they recognize that they're on a collision course if they don't do these things.  So they do them at the margin, try to keep the system intact. 

But sadly in a place like Pakistan today, you know most of the major cities have electricity shortages 16, 18 hours a day.  And that's true in many large cities in India or around the world.  In the big cities electricity is you know often only available 3 or 4 hours a day, if at all.  And of course as we mentioned at the start of our talk, there's still huge numbers of people that have no access to electricity at all.  So these are the real dilemmas, so it's easy to talk about Western-style reforms, creating regulatory regimes for transparency and all this, but in the final analysis, governments generally don't embark on policies that may well mean their political demise sooner rather than later. 

Recorded on April 28th, 2010
Interviewed by Austin Allen