Privatization of electricity distribution in the Northeast of Brazil: The good, the bad, the ugly or the naïve?

This paper analyzes the evolution of five electricity distribution companies in the Northeast of Brazil using technical and financial indicators. Three privatized and two public firms were analyzed between 1997 and 2008. The financial indicators are used as proxies for the capacity of the business to generate value for shareholders, while the technical indicators are used as proxies for service quality provided to consumers. We observed that the privatized firms had their financial indicators improved after privatization, increasing the value of the firm for the shareholders. However, there is no evidence that privatization affected the quality of service provided to consumers.