How Much Would Bangladesh Gain from the Removal of Subsidies on Electricity and Natural Gas?

Timilsina, Govinda R. ; Pargal, Sheoli ; Tsigas, Marinos ; Sahin, Sebnem

World Bank, Washington, DC

关键词: ENERGY SUBSIDIES;    NATURAL GAS PRICING;    ELASTICITY;    CGE MODEL;    ELECTRICITY;   

DOI  :  10.1596/1813-9450-8677
RP-ID  :  WPS8677

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

As in many countries around the world,subsidies to energy in Bangladesh impose a significantfiscal burden, with benefits that disproportionately accrueto high-income households. Any reforms of energy subsidiesshould benefit the overall economy rather than those who useenergy the most. Using a computable general equilibriummodel, this study investigates the economywide impacts ofthe removal of direct subsidies in the electricity sectorand indirect subsidies in natural gas in Bangladesh. Thestudy finds that removal of energy subsidies would bebeneficial to the economy and would increase gross domesticproduct. The magnitude of the economic impact depends on howthe budgetary savings from the removal of the electricitysubsidies and increased revenues due to the removal ofindirect subsidies to natural gas are reallocated to theeconomy. Recycling the savings (or the new revenues) to fundinvestment would benefit the country most, followed by thecase of utilizing them to fund cuts in income taxes, andfinally to fund cuts in indirect taxes. Although thereallocation of budgetary savings to households throughlump-sum transfers is found to be inferior to the otherrecycling options considered, it would be the preferredoption from the distributional perspective.