![]() The acute economic problems facing Georgia after it regained independence have compounded problems in the power sector. However, outcomes of the reform have not been as promised. ![]() The Republic of Georgia, like many economies in transition (e.g., Hungary, Ukraine, and Kazakhstan) has followed this reform model. Five components of power sector reform are commonly proposed by the World Bank and others for these countries: commercialization, privatization, establishment of an independent regulatory agency, unbundling and gradual introduction of competition in generation and retail markets. The dominant power sector restructuring strategies seek to promote economic efficiency through a gradual introduction of competition into the power sector. In developing countries and economies in transition (i.e., the Eastern Europe and the former Soviet Union), government-owned utilities are often considered to be highly inefficient. Understanding these problems and finding solutions are essential to successful restructuring. The challenges of transition from a monopolistic to an open market competitive structure are numerous. A global trend toward deregulation and restructuring is evident in countries at different levels of social and economic development. A new wave of market liberalization, together with rapid technological changes, has challenged the previously dominant monopoly organization of these industries. Around the world, network utilities (i.e., electricity, natural gas, railway, telecommunications, and water supply industries) are undergoing major structural transformation.
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