Economic growth depends significantly on the supply of energy, including electricity. This is more so in the case of under-developed and developing countries, which have a linear GDP-to-energy relationship. An economy’s growth, development, ability to handle global competition is all dependent on the availability, reliability and quality of the power sector.

The demand for power is growing exponentially and the scope of growth of this sector is immense. More than half of the investment requirement in the power sector over the next three decades is required in developing countries. De-regulation in areas of the global energy markets has led to fierce competition. A number of developing countries have embraced reforms of the power sector and have undertaken policy initiatives to improve the investment climate for the private sector

Developing countries face massive problems in meeting their power needs for economic development in ways that are financially and environmentally acceptable. The evolution to competitive power markets and privatization has resulted in more complex financing structures. Power market reforms were implemented in emerging markets with the expressed goal of achieving economic efficiency gains and creating a sector that could be increasingly financed by the private sector.