2015年-世界发展银行全球_Energy_Subsidies_Reform_in_Jordan___Welfare_Implications_of_Different_Scenarios_30页_755kb

Summary of "Energy Subsidies Reform in Jordan: Welfare Implications of Different Scenarios"

Core Content

This working paper by Aziz Atamanov, Jon Jellema, and Umar Serajuddin analyzes the welfare and fiscal implications of energy subsidies reform in Jordan, focusing on petroleum and electricity sectors. The study is based on the 2010 Household Expenditures and Income Survey (HEIS) and evaluates different reform scenarios to assess their impact on household welfare and government revenues.

Main Views and Key Information

1. Background and Context

• Jordan faced a fiscal crisis, prompting significant petroleum subsidies reform in 2012.
• Electricity subsidies, though less discussed, are more burdensome than petroleum subsidies, due to the complexity of the pricing structure.
• The reform of petroleum subsidies was accompanied by a large-scale cash transfer program to compensate the poor.

2. Petroleum Subsidies Reform

• Subsidy Trends: Petroleum subsidies accounted for 2.8% of GDP and 8.8% of government expenditures by 2012.
• Reform Implementation: In November 2012, the government removed subsidies on gasoline, diesel, and kerosene, and reduced LPG subsidies.
• Impact on Consumption: A full removal of subsidies led to a 2.9% average drop in per capita consumption, with the poorest quintile experiencing a 3.8% decrease.
• Compensation Mechanism: A cash transfer program targeting households earning less than JD10,000 annually was introduced, which helped offset the negative impact on the poorest.

3. Electricity Subsidies Reform

• Electricity System Structure: The production is private, transmission is public, and the government regulates tariffs.
• Fuel Cost Impact: Due to gas supply disruptions from Egypt, Jordan shifted to more expensive diesel and heavy fuel oil, increasing electricity production costs significantly.
• Tariff Brackets: There are seven tariff brackets, with the lowest and highest brackets having minimal household representation.
• Reform Scenarios:
  • Flat Tariff Increase: Would heavily burden the poorest households.
  • Progressive Tariff Increase: Generates substantial government savings, even with compensatory mechanisms to protect the vulnerable.

4. Distributional Impacts

• Petroleum Products:
  • Gasoline accounts for the largest share of expenditures on subsidized products (about 66%).
  • Poorer households spend more proportionally on LPG and kerosene.
  • The poorest quintile spends about 5% of their total expenditures on petroleum products, while the richest spend 6.4%.
• Electricity:
  • Electricity is a more significant portion of the budget for the poorest households (3.5% vs. 2.4% for the richest).
  • Poor households consume less electricity but pay a smaller share of their budget on it compared to richer households.
  • The poorest quintile spends about JD30 per capita annually on electricity, while the richest spend JD105.

5. Political Economy Considerations

• The question of "who gets what, when, and how" in subsidy reform remains a critical challenge.
• The immediate compensation of those affected by reforms is crucial for their successful implementation.
• Political unrest and the need to maintain social stability have influenced the pace and scope of reforms.

6. Conclusion

• The full removal of petroleum subsidies would have increased poverty, but the cash transfer program mitigated this.
• The impact of electricity subsidy reform depends heavily on the implementation method.
• A progressive tariff increase is more sustainable and beneficial for the government, though it requires careful design to protect vulnerable populations.

Key Findings

• Fiscal Burden: Petroleum subsidies accounted for 2.8% of GDP and 8.8% of government spending in 2012, with electricity subsidies being even more significant.
• Consumption Patterns: Poorer households spend a larger proportion of their income on subsidized petroleum products, particularly LPG and kerosene.
• Reform Impacts:
  • Removing subsidies without compensation would worsen poverty and inequality.
  • A flat tariff increase is regressive and could severely impact the poor.
  • A progressive tariff increase is more equitable and can reduce fiscal pressure while minimizing welfare loss.
• Compensation Mechanisms: The cash transfer program has been effective in mitigating the negative effects of petroleum subsidies on the poor.

Methodology

• The study uses the SUBSIM model for simulations.
• Data is based on the HEIS 2010 survey, adjusted for inflation and economic growth to reflect 2013 conditions.
• Demand elasticity is used to estimate changes in consumption, with an own-price elasticity of -0.3 applied to petroleum products.

Recommendations

• Subsidy reform should be combined with targeted cash transfers to protect the poor.
• Progressive tariff increases are preferred for electricity subsidies to balance fiscal savings and welfare impacts.
• Reforms must consider the distributional effects and political economy constraints to ensure social stability and successful implementation.