There are two fundamental institutional issues that need to be addressed in any discussion of INEP and its implementation. The first relates to the organization of the energy planning activity itself: what kind of an institution should be created for sector wide planning, where and how is policy analysis conducted within such an institution, and how does one ensure that the outputs of such an activity are properly utilized? There are countless examples of national energy planning agencies being created in developing countries that are completely ineffective, not because they lack policy analysis tools, or appropriately trained staff, or even direction from senior officials and assistance from the International Assistance Community (although in some cases these factors are lacking as well), but more often than not as a result of a poor institutional concept. Indeed, it is a theme that we have no hesitation in belaboring: if the modeling and policy analysis activity does not match the established institutional framework, it will ultimately be of little value.

The second set of issues deals with broader, but equally important questions about the organization of the energy sector, and about the relationship of the central government to energy sector activities. Moreover, in some cases the failure of the existing arrangements between national governments, energy producers, and consumers, is not due to shortcomings of the policy criteria themselves, but to the imprecise interpretation and application of these objectives. Thus, the desire for growth and modernization has resulted in unquestioned funding of energy needs, continuous central government subsidies to the sector, non-optimal or unbalanced investments, and lack of productive efficiency and incentives to maintain technical and financial discipline.