Regulation of State-Owned Enterprises

Regulating State-Owned Enterprises (SOEs) raises a unique set of issues for a infrastructure regulator:  a state organization (which is often relatively new) is attempting to regulate another (very established) state organization that has strong links to politically powerful stakeholders.

There is no simple recipe for regulators: the laws, traditions, and historical performance by the SOE differ widely. Economic incentives used by regulators work differently on private and public companies: this observation affects regulatory policies. Important steps for improving sector performance include seeking insulation from politics, communicating clear priorities, collecting financial and operating data, incentivizing cost-containment and quality improvements, promoting good governance (including transparency), evaluating network expansion, and monitoring utility performance. The cases and lessons in these FAQs should help decision-makers address emerging issues.

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