U.S. companies key in world privatization trend

Issue 1 and Volume 101.

U.S. companies key in world privatization trend

Privatizations of formerly state-owned energy enterprises throughout the 1990s have presented energy investment opportunities of historic dimensions. Around the globe, energy privatizations have led to several billions of dollars in cross-border capital flows thus far, and the level of future foreign investment activity looks larger still.

In former socialist countries, privatization represents an important part of the transition from centrally planned economies to free markets. These are among the findings of the Energy Information Administration (EIA) presented in “Privatization and the Globalization of Energy Markets.” This report reviews recent global efforts to privatize energy resources and outlines the opportunities and challenges privatization has presented to U.S. and foreign multinational energy companies.

The privatization of electric resources may be the most important privatization effort. Electric power is expected to be the fastest-growing source of end-use energy supply over the next two decades. Several developing countries have removed restrictions on private and foreign investment in new electric power generation facilities. Several formerly state-owned electric utilities have also been fully privatized and often sold to foreign investors. Among OECD nations, Australia and the UK have led global electricity privatization efforts. U.S. investors have been the most prominent of all foreign investors in the newly privatized Australian and UK electric companies.

Copies of the report are available from the EIA National Energy Information Center, Room 1F-048, Forrestal Building, Washington, D.C. 20585, at (202) 586-8800 (phone), and on the Internet at www.gifia.doe.gov.