Performance of power generation: A dynamic productivity and efficiency analysis

Abstract

This study evaluates the performance dynamics of Oman's principal part of electricity generation. Emphasis is placed on capturing the influence of the COVID-19 pandemic on the industry's performance indicators. We utilised the Malmquist Index method to analyse the changes in overall performance indicators over time. This approach allows us to distinguish between efficiency and technology changes. In addition, we employed the analysis of variance approach to test hypotheses related to COVID-19. Data is collected from twelve electricity producers across Oman's power sector. These consist of companies listed on the Stock Exchange Market in Oman, accounting for about 60 % of the total electricity production in the Sultanate. The predominant findings indicate that COVID-19 detrimentally impacted the sector's aggregate performance in 2020 but had a swift recovery in 2021. The analysis of the sample firm's productivity indices verifies that the decline in productivity in 2020 due to the Pandemic is attributable to a decrease in average efficiency indices and a negative shift in the projected frontier. These are probable consequences of the recessionary effects caused by the Pandemic. Despite a considerable decrease in average efficiency scores, a positive change in the frontier has facilitated a rapid recovery in 2021. This recovery can be attributed to the implementation of advanced technical upgrades in particular enterprises, which began as early as 2018/2019, well before the onset of the Pandemic.

Keywords

• Electricity generation
• Desalination firms
• Malmquist index
• DEA
• Total factor productivity decomposition
• Technological change