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Literature Review: Energy Subsidy Reforms - Coggle Diagram
Literature Review: Energy Subsidy Reforms
Types of Energy Subsidies
Conditional & targeted
Vouchers to qualifying beneficiaries
Unconditional & targeted
Cash transfer to qualifying beneficiaries
Conditional& Untargeted
Universal Voucher
Unconditional & Untargeted
Universal Cash Transfer & Generalized Price Subsidy
Problem with Energy Subsidies
Create Distortion, have significant fiscal costs
Prevalence of energy subsidies & govt commitment to keep commodity prices low can result in supply shocks & volatility of International prices can spiral into a fiscal crisis, pushing the government to subsidy reform
Genralized energy subsidies are inequitable and regressive
Energy subsidies promote overconsumption of energy rather than energy saving & contribute to environmental damage
Key lessons in subsidy & cash transfers in clean cooking
Payment Mechanisma & Delivery Mechanism
Feedback & Grievance handling
Design & Financing of Cash Transfer Program
Using new or existing database or combination of both database for selection of beneficiaries
Effective communication can significantly increase the uptake of energy compensatory cash transfers.
The Dominican Republic-Case Study
2 Types of Energy Subsidy
Bonogas-Chofores: Subsidized fuel allocation for transport operators
Bonogas- Hogares: Targeted to households
Use of existig conditional cash transer platform to integrate an iunconditional program (Bonogas)
Factors Contributing to design of Bonogas
Exitsting payment mechanism, a VISA branded debit card, accepted by wide numbe rof retailors used for Bonogas transfer.
Leveraging existing social protection delivery system.
Key Lessons
Use of existing social protection system to successfully design and deliver compensatory transfers.
Use of well recognised & accepted channel for directly delivering benefits to consumers.
Ukraine Energy Program: Case Study
Identify, scale up & consolidate existing program, revamping energy compesatory transfer program.
Making the program inclusive at the outset, then implementing progressivity through formula-based transfers depending on household income level. This help minimize exclusion errors
Integrating energy compensatory transfers with broader social assistance
Understanding beneficiaries needs and communicating well
Gradually strengthen program design and targeting
Summary of Key Lessons from Worldwide
Cash transfers can support energy subsidy reorms by helping mitigate impacts on stakeholders, building trust & enebling support.
Clear, effective & targeted communication is key to any transition from universal price subsidies to reformed prices complimented by cash transfers.
Compensating households through cash transfers alone is not enough, there should be other measures to strengthen the resilience of households against shocks.