This paper reports an empirical investigation into the welfare impacts of
introduction of private sector participation into the Philippine electricity generation
sector, through liberalization of the market for independent power producers (IPPs)
during the power crisis of 1990-1993. This study uses a social cost and benefit
analysis. The main benefits came from IPPs, which contributed to resolving the
crisis and promoted economic and social development. Consumers and investors
are net gainers, while the government lost and an air pollution cost was incurred.
The paper concludes that reform with private sector participation increased social
welfare.
