Getting Electricity - A Pilot Study by the Doing Business Project
Getting Electricity presents findings on the kinds of constraints entrepreneurs around the world face in getting access to electricity and illustrates patterns in connection processes. The study tracks all the procedures, the time, and the cost required for a business to obtain an electricity connection for a newly constructed building. It highlights economies where this process is efficient and others where it could be made simpler and more efficient.
The Getting Electricity pilot study sheds light on the interactions of businesses with distribution utilities. In doing so it covers only a small part of electricity service for the 140 economies surveyed. Yet it provides information on a number of issues for which data previously did not exist for such a large number of countries. These include the efficiency and cost of the services provided to commercial customers by distribution utilities, the complexity of procedures, and the resources expended by businesses in obtaining a connection.
The study finds that the number of interactions customers have with the utility and other agencies is one of the most important determinants of connection delays. In the 10 economies with the fewest procedures, the process of obtaining an electricity connection takes only 56 days on average. In the 10 economies with the most procedures, it is 215. Because connection times are more likely to be long where entrepreneurs must go through many procedures, it is important to understand why particular procedures are needed and how they can delay connections.
For example, Mauritius is one country that makes it easy for businesses to get connected to electricity. Getting connected in Port Louis, the country’s capital, takes only 3 procedures and 44 days. The customer interacts only with the utility, and no prior clearances from other agencies are required. The responsibility for the internal wiring is transferred to the customer’s electrical contractor, who is required to submit an electrical installation certificate with the service application. All external works are completed by the utility, which can guarantee that the materials needed are generally available.
The study also finds that:
- Connection delays increase where opportunities are missed to streamline approvals with other public agencies. For example, in Romania the private contractor hired to complete the connection works must get a separate construction license for the distribution transformer needed for the connection. In both Montenegro and Serbia this construction license can be obtained from the municipality together with the main construction permit.
- Connection delays increase where customers face multiple procedures related to the quality and safety of the internal wiring. Middle-income economies offer the most scope to streamline procedures.
- Connection delays increase where utilities do not have the materials needed to connect customers readily available. This problem is most acute in low- and lower-middle-income countries. Survey respondents reported additional wait times of up to 150 days when the utility did not have such critical materials as distribution transformers or meters in stock.
- Connection costs are not simply a function of the level of development of the country. Although connection costs are generally higher in poorer countries, connection costs vary significantly within country income groups, suggesting room to reduce the costs regardless of the existing type of infrastructure.
- The standard connection fee component of the total connection cost is smaller in economies with less developed distribution systems. A higher share of fixed costs increases the transparency of connection costs and the accountability of utilities to customers.
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