Perfomance and Efficiency in Colombia's Power Distribution Sistem: Effects of the 1994 Reform

We asess evolution in perfomance, efficiency and productivity of Colombia's power distribution utilitiesbefore and after the 1994 regulatory reform that introduced electricity market activities for the power sector in 12 distribution companies from 1985 to 2001. Perfomance is evaluated contrasting changes in meanand median by Wilcoxon Rank Sum and Pearson test on financial and other perfomance indicators. Technical efficiency is measured by means of Data Envelopment Analysis (DEA). The nature of the dataset allows the the estimation of Malmquist productivity index and its evolution in time. Results show a recovery after thereform in the mains perfomance indicators of profitability, parcial input productivity, and output. Plantefficiency and productivity increased after de reform, mainly in the largest utilities used as benchmarks inthe DEA efficiency scores measures. Meanwhile, the less efficient power distribution companies did not improve after the reform and were not able to undertake plant restructuring to chatch up in plant efficiency with respectto the Pareto efficient input allocation. Econometric results on DEA efficiency scores suggest a positive effectof policy reform.Electricity distribution, productive efficiency, power sector Colombia, Malmquist productivity index

Performance and efficiency in Colombia's power utilities: an assessment of the 1994 reform

This paper describes the core features of the power sector 1994 regulatory reform and evaluates utility performance and efficiency before and after the reform. The performance analysis assesses the changes in means and medians of a series of profitability, efficiency, investment, sales of the privatized power holdings. Technical efficiency is estimated through DEA technique in a sample of 33 power thermal-plants that account for 85% of the thermal park and 12 distribution utilities. The sample units are plants that were active before the reform and new entrants that started business operations after the reform. The main outcomes show that efficiency scores have improved after the reform and that regulatory policy has had a positive effect on technical efficiency in thermal power generation. In contrasts the less efficient power distributors got worsened after the reform and were not able to undertake plant restructuring in order to catch up productive efficiency with respect to the best practice production frontier. ******************************************************************* El artículo describe las características centrales de la reforma regulatoria al sector eléctrico en 1994 y evalúa el desempeño y la eficiencia de las empresas públicas antes y después de la reforma. El análisis de desempeño evalúa los cambios en medias y medianas en ganancias, eficiencia, inversión y ventas de las empresas privatizadas en el sector. La eficiencia técnica es estimada mediante la técnica DEA en una muestra de 33 plantas térmicas de energía, que representan el 85% del parque térmico; y 12 empresas distribuidoras de energía. La muestra de plantas generadoras está compuesta por plantas que estaban activas antes de la reforma y plantas nuevas que entraron en operación después de la reforma. Los principales resultados muestran que la eficiencia mejoro después de la reforma y que la política regulatoria ha tenido un efecto positivo en la eficiencia de la generación térmica de energía. Por el contrario, las distribuidoras de energía menos eficientes empeoraron después de la reforma y no llevaron a cabo una reestructuración para alcanzar la eficiencia productiva respecto a las empresas que conforman la frontera de eficiencia en distribución de energía.Privatization, industrial restrucuring, Colombian power sector, regulatory reform

Firm Entry, Productivity Differentials and Turnovers in Import Substituting Markets: A study of the petrochemical industry in Colombia

This paper analyses plant entry, total factor productivity growth, average productivity level differentials and turnovers across Colombia's petrochemical industry for the 1974-1998 period. Results show that successful entrants shaped industry productivity and induced plant restructuring among incumbent plants. There is consistent plant heterogeneity across plant cohorts as well as across sub-markets within petrochemicals. Entry flows were steady increasing within plastics regardless of trade policy regimes. Survival rates are remarkably high and consistent over time in medium-size plants meaning that entrants adopted competitive post-entry strategies. Total factor productivity growth decomposition shows that the incumbent effect dominates the turnover effect. Market share reallocation among continuing plants constitutes an important source of productivity growth. Econometric results suggest that barriers to entry associated with plant technology licensing and dependence of imported raw materials deter entry while complementary market variables such as industry productivity levels, growth in housing construction, and fringe competition induce firm entry.Entry, Turnover, Total Factor Productivity, Petrochemical Industry

Privatization in Colombia: a plant performance analysis

This paper describes the real sector privatization program in Colombia during the nineties and puts that policy in the context of general market deregulation and promotion of private investment in the provision of public infrastructure and domiciliary public services strategy. The paper evaluates the privatization program in manufacturing and power sector as case studies. It follows the ex-post measuring and econometric analysis of a set of operative and restructuring performance indicators for the privatized firms. For manufacturing, the study sample consists of 30 large manufacturing firms where the Instituto de Fomento Industrial was the founding partner. The main findings suggest that those firms followed a pro-cyclical behavior relative to their private competitors and undertook tight plant operative restructuring. For the power sector the paper studies the impact of the Regulatory Reform on market entry, ownership structure, market competition, and productive efficiency. The measurement of productive efficiency follows a Data Envelope Analysis technique based on a sample of 33 plants that count for 85% of the installed capacity in thermal generation. The sample units are plants that were active before the reform and the entrant ones that started commercial operations after the reform. The results suggest that efficiency scores in thermal generation have improved after the reform and that regulatory policy had a positive effect on productive efficiency. ********************************************************************* El artículo describe el programa de privatización en el sector real de la economía Colombiana durante los años noventa y ubica esta política en un contexto de desregulación de mercados y promoción de la inversión privada en la oferta de infraestructura publica y servicios públicos domiciliarios. El articulo evalúa el programa de privatización en los sectores manufacturero y de generación de energía eléctrica. Se hacen mediciones ex - post y análisis econométrico del desempeño de las firmas privatizadas. En el sector manufacturero la muestra analizada esta compuesta por 30 firmas manufactureras de gran tamaño, donde el Instituto de Fomento Industrial era socio fundador. Los principales resultados sugieren que estas firmas mantuvieron un comportamiento pro - cíclico relativo a su principal competidor privado y desestimaron planes drásticos de reestructuración operativa. Para el grupo de firmas de generación de energía el articulo estudia el impacto de la reforma regulatoria en el proceso de entrada al mercado, estructura de propiedad, competencia de mercado y eficiencia productiva. La medición de eficiencia productiva usa la técnica de Data Envelope Análisis para 33 plantas que representan el 85% de la capacidad instalada en la generación térmica de energía eléctrica. La muestra esta compuesta por plantas que estaban en funcionamiento antes de la reforma y las entrantes que comenzaron su operación comercial después de la reforma. Los resultados sugieren que los niveles de evidencia en la generación térmica a mejorado después de la reforma y que la política regulatoria ha tenido un efecto positivo en la eficiencia productiva.Privatization, Industrial Restructuring, Colombian Power Sector, Regulatory Reform

Privatization in Colombia: A Plant Performance Analysis

This paper describes the privatization program carried out in the productive sector of the Colombian economy during the 1990s. It evaluates privatization within the policy context of general market deregulation and the promotion of private investment in the provision of public infrastructure and domiciliary public services. Two case studies are explored: the manufacturing and power sectors. The paper follows the ex-post measuring and econometric analysis of a set of operative and restructuring performance indicators for the privatized firms. For manufacturing, the study sample consists of 30 large manufacturing firms of which the Instituto de Fomento Industrial was the founding or supporting partner. The main findings suggest that those firms followed pro-cyclical behavior relative to their private competitors and undertook tight plant operative restructuring. For the power sector, the paper studies the impact of regulatory reform on market entry, ownership structure, market competition, and productive efficiency of the privatized holdings. The results suggest that privatization and entry competition in power generation have had a positive effect on the privatized utilities’ efficiency and investment. With respect to thermal generation, the measurement of productive efficiency follows a data envelope analysis technique based on a sample of 33 plants that account for 85% of the installed capacity. The sample units are plants that were active before the reform and new entrants that started business operations after the reform. The main outcome shows that efficiency scores have improved after the reform and that regulatory policy has had a positive effect on productive efficiency.

Corporate Valuation and Governance: Evidence from Colombia

We examine for the first time the association of different measures of ownership and control, and separation ratios with firm’s value and performance for 108 non-financial firms that traded their stock during the period 1998 to 2002. We found that large blockholders exert a positive influence upon firm’s valuation and performance, which validates the positive monitoring approach of large shareholders, but also found that this relation is not monotone implying that when separation of control and ownership tends to increase, a negative effect is exerted on firm’s valuation. Furthermore, we report first estimates of a survey of corporate governance practices conducted in 2004 for 43 Colombian non-financial companies. The index’s scores suggest that implementation of good governance in Colombian firms has been slow and poor as measured by the average of the Index that is below half the maximum attainable value. Regrettably, we did not find any support to recent theories that predict a positive association between good governance practices, measured by the CGI, and performance. At most there exists a positive relationship for sub-index but the results were not statistically significant in general.Ownership, Control, Corporate Governance, Colombia

Corporate Governance and Firm Valuation in Colombia

This paper studies the separation of ownership and control of 108 listed companies in Colombia from 1996 to 2002, finding that voting rights are greater than cash flow rights because of indirect ownership across firms. The paper also examines the association of various ownership and control measures and separation ratios with a firm’s value and performance for the same sample of companies that traded their stock from 1998 to 2002. Large blockholders were found to exert a positive influence upon a firm’s valuation and performance, which validates the positive monitoring approach of large shareholders, but this relationship is not monotonic. The paper further reports results from a 2004 survey which suggests that Colombian firms have been slow to improve their corporate governance practices.

Corporate Valuation and Governance: Evidence from Colombia

This paper examines for the first time the association of different ownership and control measures and separation ratios with a firm`s value and performance for 108 non-financial firms that traded their stock during the period 1998 to 2002. Large blockholders were found to exert a positive influence upon a firm`s valuation and performance, which validates the positive monitoring approach of large shareholders, but it was also found that this relationship is not monotonic, implying that when separation of control and ownership tends to increase, a negative effect is exerted on firm`s valuation. This paper also reports the first estimates of a survey of corporate governance practices conducted in 2004 for 43 Colombian non-financial companies. The corporate governance index`s (CGI) scores suggest that implementation of good governance in Colombian firms has been slow and poor, as measured by an index average that is below half the maximum attainable value. Regrettably, it was not possible to find any support to recent theories that predict a positive association between good governance practices -as measured by the CGI - and performance. At most, there exists a positive relationship for the sub-index, but the results were not statistically significant in general.

Industrialization and industrial policy in Colombia: a tale of economic development

This paper analyzes the main features and historical factors that played a central role for the industrialization process in Colombia during the twentieth century. The document surveys the legislation and policy instruments used in the programs of import substitution industrialization, nontraditional export promotion, and economic openness. ********************************************************************** Este articulo analiza los principales elementos históricos que tuvieron un papel central en el proceso de industrialización en Colombia durante el Siglo XX. El artículo resume la legislación e instrumentos de política usados en el programa de sustitución de importaciones, promoción de exportaciones no tradicionales y apertura económica.Colombia Industrialization, Industrial Policy

Regulación de monopolios naturales con información asimétrica: Una introducción

Este artículo describe el modelo de regulación de costos con completa información y el modelo de Baron y Myerson de regulación de monopolios naturales con selección adversa dentro de un esquema de principal-agente en su versión discreta de dos tipos. El modelo resalta las distorsiones causadas por las rentas de información que el agente obtiene debido a que el regulador no conoce el verdadero parámetro de costos marginales de la firma. ************************************************************************* This paper analyses the model of cost regulation with complete information and the Baron & Myerson model of natural monopoly regulation with adverse selection based on a discrete, two types, principal-agent scheme. The model highlights the distortions caused by information rents gained by the agent due to the regulator does not know the firm's marginal costs.Regulación, Teoría de Contratos, Monopolio Natural