The effects of regulation on competition in an emerging economy from an energy sector perspective

Abstract

The debate of regulation and government involvement in markets has been alive for decades. With the recent economic crisis, the debate has been elevated and most developed economies have had to rely on government involvement for their survival. The most contentious point for many was whether regulation positively or negatively impacts the markets. The purpose of this study is to explore the impact of regulation on the energy sector in South Africa and whether regulation attracts new entries into the energy sector, thus creating an environment for competition. The research methodology used was based on exploratory research which comprised of face-to-face in-depth interviews with key informers from each of the stakeholder groups. In-depth interviews provided useful and detailed information from each key informer. The results from thirteen in-depth, face-to-face interviews with the key informers were analysed and presented. It was found that the majority of the key informers believed that regulation impacts competition and profits. Having the entire sector regulated has more of a negative impact. There is a lack of new entries into the energy sector with minimum competition created. There is an urgent need for a constructive pricing structure in the energy sector.