If Not Now, When? Energy Price Reform in Arab Countries; April 2017 Rabat, Morocco

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Regulating energy prices is a common practice worldwide with the general objective of facilitating access to energy products, which are central to people’s well-being and countries’ economic development.
Energy price regulation leads to wasteful and excessive consumption, discourages investment in the energy sector, and locks in inefficient technologies.
Low energy prices result in subsidies that erode fiscal space, while benefits for the poor are limited.
These effects have been evident in Arab countries, where domestic energy prices are among the lowest in the world.
The current environment of low oil prices offers a unique opportunity for change.
Lessons from international experience suggest how well thought-out and sequenced reforms can be successful.

Energy price regulation produces wasteful and excessive consumption.
Energy price regulation discourages investment in the energy sector.
Energy price regulation locks in inefficient technologies.
Low domestic energy prices in Arab countries have produced subsidies that erode fiscal space.
The distributional benefits of low energy prices for the poor are limited.
The low oil price environment presents a timely opportunity to implement reforms.

Pursue well thought-out and sequenced reforms, drawing on lessons from international experience.
Use the current low oil price environment as an opportunity to adjust domestic energy pricing frameworks.
Design reforms that address both efficiency (reducing wasteful consumption and locking in inefficient technologies) and fiscal sustainability (reducing subsidies that erode fiscal space).
Ensure reforms consider distributional impacts, given that benefits of low energy prices for the poor are limited.

If Not Now, When? Energy Price Reform in Arab Countries; April 2017 Rabat, Morocco, June 13, 2017

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