The TA will develop a theoretical and empirical framework to define and measure fossil-fuel subsidies and assess the socioeconomic impact of its elimination in selected ADB developing member countries (DMCs). The first component will constitute a discussion and clarification of suitable definition of fossil-fuel subsidy and its estimation across selected DMCs. Both consumer and producer subsidies will be considered to the extent that relevant data are available. The second component will evaluate household-specific impacts from the elimination of subsidies and the consequent short to medium-term rise in energy prices, and discuss the design of social safety nets to mitigate these impacts on the poor, considering gender equity.
|Project Name||Assessment and Implications of Rationalizing and Phasing Out Fossil-Fuel Subsidies|
|Project Type / Modality of Assistance||Technical Assistance
|Source of Funding / Amount||
|Strategic Agendas||Environmentally sustainable growth
Inclusive economic growth
|Drivers of Change||Gender Equity and Mainstreaming
Governance and capacity development
|Sector / Subsector||
Energy / Energy sector development and institutional reform
Industry and trade / Industry and trade sector development
Public sector management / Public expenditure and fiscal management - Social protection initiatives
|Gender Equity and Mainstreaming||Some gender elements|
|Description||The TA will develop a theoretical and empirical framework to define and measure fossil-fuel subsidies and assess the socioeconomic impact of its elimination in selected ADB developing member countries (DMCs). The first component will constitute a discussion and clarification of suitable definition of fossil-fuel subsidy and its estimation across selected DMCs. Both consumer and producer subsidies will be considered to the extent that relevant data are available. The second component will evaluate household-specific impacts from the elimination of subsidies and the consequent short to medium-term rise in energy prices, and discuss the design of social safety nets to mitigate these impacts on the poor, considering gender equity.|
|Project Rationale and Linkage to Country/Regional Strategy||The contextual analysis of the reform of inefficient energy subsidies will help policy makers design energy subsidies in an environmentally, socially, and economically sound manner. With rising energy prices in recent past, low-income countries have been confronted with a strong and consistent increase in the fiscal cost of energy subsidies, undermining their development efforts. Subsidizing fossil-fuel consumption leads to increased demand for the highly scarce energy source. Higher domestic demand puts pressure on energy imports for importing countries and lowers export of energy products from exporting countries, both of which worsen the trade balance. Subsidies to fossil-fuel producers also create excessive supply, which may lead to an early depletion of reserves that in some countries represent the main or only source of foreign exchange earnings. This incentive to fossil-fuels has created a disincentive for the development and rapid deployment of renewable energy and therefore, stunted the pursuit of countries for low-carbon growth.|
|Impact||More efficient use of energy, less environmental pollution, and better safety nets to protect the poor|
|Description of Outcome||Target DMCs have better understanding of fossil-fuel subsidies and the implications of phasing it out for poor households|
|Progress Toward Outcome|
|Description of Project Outputs||
Theoretical and empirical framework to define and estimate fossil-fuel subsidies
A report on the definition and estimates of existing fossil-fuel subsidies; assessment of the microeconomic (household-level) impact of phasing out fossil-fuel subsidies in selected ADB DMCs; and options for targeted subsidy to protect the poor households
|Status of Implementation Progress (Outputs, Activities, and Issues)|
|Summary of Environmental and Social Aspects|
|Stakeholder Communication, Participation, and Consultation|
|During Project Design|
|During Project Implementation||
Workshops, country seminars and conferences will be organized to consult with governments and other stakeholders and to disseminate the findings of the research study. The inception workshop, to which high-caliber resource persons and economists will be invited, will refine the research problems to be tackled, the analytical framework to be used, and the study methodology to be applied by the project. Representatives from the government, the private sector, academe, and multilateral organizations will be invited to country seminars and conferences to exchange ideas, take stock of the lessons learned from the project, examine its contributions, and chart the way forward.
Analytical papers produced under the project will be published in different formats such as working papers, policy notes/briefs, and journal articles. The final findings from the project would be published in a form that could be used as guidelines by DMCs in reforming their energy sectors and instituting mechanisms to protect the poor from the resulting economic changes. The output will not be designed as a policy prescription but as a guidepost to policy making.
|Consulting Services||The TA wil require the services of nine international consultants for a total of 27 person-months and 12 national consultants for a total of 54 person-months. The consulting team will comprise (i) an international energy economist (lead consultant); (ii) an international public finance and energy specialist; (iii) 6 international resource persons; (iv) an international copy editor, (v) 10 national economists; (vi) a national logistics coordinator; and (vii) a national research analyst. The logistics coordinator will manage day-to-day communications and logistics among all stakeholders and keep track of implementation. The research analyst will support the development of a complete database on all information collected during TA implementation to generate longer-term benefits from the TA for ADB and the DMCs. ADB will recruit the consultants in accordance with its Guidelines on the Use of Consultants (2010, as amended from time to time). A consulting firm will be selected to provide specialists (i), (ii) and (v) according to quality-and-cost-based selection procedures. As the contract budgets from this component are less than $1,000,000, simplified technical proposals will be requested from short-listed firms. The standard quality-cost ratio of 80:20 will be applied. The remaining consultants will be recruited as individual consultants.|
|Responsible ADB Officer||Jha, Shikha|
|Responsible ADB Department||Economic Research and Regional Cooperation Department|
|Responsible ADB Division||ERMR|
Asian Development Bank
6 ADB Avenue,
Mandaluyong City 1550, Philippines
|Concept Clearance||25 Feb 2011|
|Approval||21 Jul 2011|
|Last Review Mission||-|
|Last PDS Update||05 Aug 2011|
|Approval||Signing Date||Effectivity Date||Closing|
|21 Jul 2011||-||21 Jul 2011||31 Jan 2013||31 Mar 2016||-|
|Financing Plan/TA Utilization||Cumulative Disbursements|
|1,000,000.00||0.00||0.00||0.00||0.00||0.00||1,000,000.00||21 Jul 2011||740,376.72|
Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.
The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.
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|Title||Document Type||Document Date|
|Assessment and Implications of Rationalizing and Phasing Out Fossil-Fuel Subsidies: Technical Assistance Completion Report||TA Completion Reports||Jul 2016|
Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.
None currently available.
Evaluation Documents See also: Independent Evaluation
None currently available.
|Title||Document Type||Document Date|
|RETA 7834: Assessment and Implications of Rationalizing and Phasing Out Fossil Fuel Subsidies: Finalization Conference Report||Conference Proceedings||Jul 2014|
The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.
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