Alexandru Cojocaru, THE WORLD BANK

Transcription

1 Alexandru Cojocaru, THE WORLD BANK

2 The energy sector has started reforms to address its challenges Some of these reforms are likely to affect the most vulnerable groups Existing measures to protect the poor have a negligible effect while the non-poor are still the main beneficiaries of the existing energy subsidy Moving towards cost recovery calls for new thinking on how to protect the poor and vulnerable

3 US cents / kwh kwh per capita 14,0 12,0 10,0 8,0 6,0 Albania Bosnia and Herzegovina Macedonia Montenegro Serbia Albania Bosnia and Herzegovina Montenegro Serbia 4, , , Residential prices Per capita consumption

4 Domestic supply suffering from low rainfall Quality of service is often poor and unreliable The system is not sustainable High losses in distribution Tariffs below cost recovery Low collection rates

5 Privatization to support new investments 2007: unbundling of generation and distribution 2008: privatization of distribution (OSSH) Regulatory system that provides incentives to move towards self-sufficiency Subsidies to OSSH are time bound (2012) Improving efficiency of distribution Increasing collection rates Moving tariffs toward cost-recovery

6 Average Tariff for all Customers (Lek) Year Household Household (First Block) (Second Block) < 300 kwh 8.0 > 300 kwh < 300 kwh 8.0 > 300 kwh < 300 kwh 8.8 > 300 kwh < 220 kwh 8.9 >220 kwh < 210 kwh 9.0 > 210 kwh 2006 (first half) 4.5 < 210 kwh 9.0 > 210 kwh 2006 (second 7.0 half) (March) 7.0 <300 kwh 12.0 >300 kwh <300 kwh 12.0 >300 kwh <300 kwh 13.5 >300 kwh

7 Through the block tariff (implicit) Lower tariff for the first 300 kwh consumed Through a direct payment delivered by the social protection system (explicit) Eligible households received In 2005: 220kWh*( )+(300kWh-220kWh)*( ) = 472 Lek / month In 2008: 200kWh*( ) = 500 Lek / month Currently: 200kWh*( ) = 640 Lek / month Eligibility criteria might be exclusionary (e.g. nonindividually metered households in rural areas)

8 Share of first block in total st 2nd 3rd 4th 5th

9 Marginal tariffs Share of first block in total 100% 80% 60% 40% 20% 0% st 2nd 3rd 4th 5th 1st 2nd 3rd 4th 5th <350 kwh kwh kwh Serbia Albania

10 Implicit subsidy Explicit (theoretical) subsidy Coverage Distribution of beneficiaries Distribution of benefits Generosity Coverage Distribution of beneficiaries Distribution of benefits Generosity Q Q Q Q Q Total Q Q Q Q Q Total Cost-Benefit (dpg0/x) = Cost-Benefit (dpg0/x)= 0.117

11 Share of electricity in energy expenditures Share of electricity in total household expenditures Poor Near poor Overall The poor spend a higher share of their budget on electricity than other households Poor households less likely to adjust by cutting consumption

12 Main source of heating Category incidence, by year (%) Electricity Wood Gas None /no heating Other Total Heating-cooling w/ elect Reliance on electricity increasing overtime Shift from traditional fuel High electricity expenditures if electricity is used for: Main heating source Heating-cooling Heating water Cooking w/ elect Water heating w/ elect

13 Poor and those in the bottom 20 percent affected the most Uneven impact by area urban areas and especially Tirana very affected Special concerns for the urban poor Change in electricity expenditures share in total consumption (pp) Overall Vulnerable to poverty Poor 5th th 3rd 2nd 1st Rural Urban Tirana Mountain Central Coast 0 0,2 0,4 0,6 0,8

14 P0 (baseline) P0 (simulated) Near poor (baseline) Near poor (simulated) Urban Rural Main source of heating Electricity Wood Gas None /no heating Specific electricity uses Heating-cooling Cooking Water heating Overall

15 Range of options to be discussed Removing conditionalities against the poor in direct transfer program Redesign eligibility criteria for social protection Redefine the tariff blocks to free resources for social assistance Redesign the tariff structure around volumes of consumption