Electricity industry reforms in Thailand: an analysis of productivity

Purpose – In the early 1990s, the Thai government initiated a process of reform of the electricity industry with the argument that such reform would improve the performance of the industry and contribute to enhancing the overall economic prosperity. The purpose of this paper is to examine the veracity of this argument by analysing both the technical and environmental performance of the Thai electricity industry. Design/methodology/approach – A data envelopment analysis‐based methodology is employed in this study to measure the productivity of the Thai electricity industry, for the period 1980‐2006. This method enables the decomposition of productivity changes into technical and efficiency changes, and hence enables one to determine if changes in productivity are due to electricity reform (efficiency gains) or due to autonomous technological improvements. Findings – The study reveals that the increase in the productivity of the Thai electricity industry over the period 1980‐2006 was mainly driven by technological improvements and that industry reform has had insignificant impact on productivity. Further, the impacts of electricity reform on the environment appear to be relatively modest – this too was driven by government regulation that supports the use of less environmentally detrimental fuels for electricity generation by the private producers, rather than electricity reform. Originality/value – The analysis in this paper contributes to the literature on productivity and efficiency, by applying the DEA method to a time series data for a single industry. Additionally, the analysis of environmental performance of the Thai electricity industry – to the best of knowledge of the authors – is the first of its kind for the Thai electricity industry.