Measuring the Performance of the DR Congos Electric Power Company (SNEL)

Abstract

This masters thesis sought to measure the performance of the DR Congos electric power company (SNEL) by comparing it with other state electric power companies in SAPP (Angola, Botswana, Lesotho, Malawi, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia, and Zimbabwe) from 2004 to 2013. In our research, we used the Data Envelopment Analysis (DEA) method, especially the Charnes, Cooper, and Rhodes (CCR) model, to find the technical efficient score of each company. Then we decomposed the change into the Technical Efficiency Change, Technological Change, and Scale Efficiency Means to get a sense of how much effort some companies made to catch up with the best practice in the electricity market (SAPP). After that, we estimated the Malmquist Index to follow the performance progress of each company. Finally, we used the OLS model in the second stage to assess the environmental factors that affected the efficiency of the companies. The results revealed that SNEL was inefficient and its performance did not progress during the period of our analysis. Even though the important constant of our model (regulatory authority) was statistically insignificant, factors such as human resources, competition in electricity distribution, electricity net exports and the urban population were statistically significant and contributed positively to the companies efficiency. However, other factors, such as income per capita, competition in electricity generation and vertical integration were also statistically significant, but affected negatively the companies efficiency. Finally, policy implications were suggested to enhance SNELs performance trend.