2013年-世界发展银行全球_The_Transition_from_Underpricing_Residential_Electricity_in_Bangladesh___Fiscal_and_Distributional_Impacts_44页_2mb

Summary of "The Transition from Underpricing Residential Electricity in Bangladesh: Fiscal and Distributional Impacts"

Core Content

This policy note analyzes the fiscal and distributional impacts of residential electricity tariff increases in Bangladesh from 2010 to 2012. It highlights the challenges faced by the electricity sector, including capacity constraints, rising energy prices, and high fiscal costs due to electricity subsidies. The study uses household survey data (HIES 2010) and tariff structures to assess how electricity subsidies affect poor and vulnerable households and the fiscal burden on the government.

Main Points

1. Electricity Subsidies and Fiscal Burden

• Electricity subsidies in Bangladesh quadrupled from 0.2% to 0.8% of GDP between 2010 and 2012.
• The fiscal deficit increased from 3.1% of GDP in FY2010 to 4.4% of GDP in FY2012, partly due to electricity subsidies.
• The real cost of supply increased by almost 20% during this period.
• In 2010, the average unit of electricity was subsidized 25%, and this remained constant in 2012.
• Low consumption levels among poor households mean that tariff changes do not significantly impact them, limiting the effectiveness of subsidies as a social protection mechanism.

2. Electricity Access and Consumption Profiles

• 55% of households in Bangladesh had access to electricity in 2010, with only 42% in rural areas and 21% in the poorest quintile.
• 80% of households consumed less than 100 kWh per month, with low per capita consumption (252 kWh in 2009), one of the lowest globally.
• High-consuming households (those using more than 300 kWh) are rare, representing less than 2% of all households but accounting for almost 10% of total electricity consumption.

3. Tariff Structure and Subsidy Calculation

• Residential electricity tariffs are structured using an incremental block tariff (IBT), with three slabs for urban and four for rural households.
• Subsidy is defined as the difference between the tariff and the cost of supply.
• In 2010, low-consumption households received higher subsidies due to stagnant tariffs and rising supply costs.

4. Distributional Impact of Subsidies

• Subsidies are not well-targeted to the poor. Richest quintile households received seven times more subsidy benefits than poorest quintile households (42% vs. 6%).
• Leakage of subsidies to non-poor households is significant, indicating inefficiency in subsidy targeting.
• Cross-subsidies from high-consuming households (mainly urban) to low-consuming households were limited, reducing the fiscal burden by only 4%.

5. Key Changes in the Electricity Sector (2010–2012)

• Cost of supply increased, leading to tariff hikes and increased fiscal burden.
• Slab benefits were removed, which significantly increased cross-subsidies from high consumers to low consumers.
• Electricity consumption increased, partially offsetting the fiscal burden.
• The fiscal burden of electricity subsidies to residential customers rose by over 40% in real terms between 2010 and 2012.

6. Policy Implications

• Subsidy reforms must consider the political economy of changes, as tariff increases can lead to social unrest.
• Improved generation and operational efficiency could help reduce leakage and fiscal burden in the medium term.
• Universal access is a long-term goal, but as more households connect, the fiscal burden will increase, requiring targeted subsidy mechanisms.
• Reduced supply costs and well-designed slabs (e.g., seven or nine slabs) could help achieve dual policy goals: well-targeted subsidies and low-to-zero fiscal burden.
• In the best-case scenario, the tariff and subsidy structure could generate a net fiscal contribution, supporting future infrastructure investments.

Key Information

• Subsidy leakage is a major issue, with rich households benefiting disproportionately.
• Cross-subsidization is limited due to low consumption among poor households.
• The fiscal burden of electricity subsidies is expected to continue rising unless supply costs are reduced or subsidy mechanisms are reformed.
• Universal access by 2020 is a key policy objective, but it will increase the fiscal burden.
• Tariff reform must be carefully communicated to avoid social unrest and ensure public support.

Conclusion

The study emphasizes the complex interplay between electricity subsidies, fiscal sustainability, and distributional equity in Bangladesh. It recommends reforms in tariff structures, improved efficiency in generation and distribution, and targeted subsidy mechanisms to reduce fiscal burden and better serve the poor. The political economy of reform is also a critical factor in the success of subsidy policies.