Minimizing the effects of tariff increases on the poor in Kyrgyzstan
Existing subsidy arrangements for energy in Kyrgyzstan were developed under the former Soviet system. These subsidies are regarded as being disadvantagous to the poor, delivering benefits to groups previously privileged under the former Soviet system. The challenge was to provide an evidence base for policy makers in Kyrgyzstan to enable them to examine how the rapid increase in energy costs were affecting the poor and to assess whether existing subsidy mechanisms were effective and, where necessary, to explore alternatives.
What we did
GYA led the international advice for the social impact and protection component of this DFID-funded tariff reform project (under contract to IPA). Working with a team of local and international researchers we used both quantitative and qualitative techniques involving:
- Focus group work with vulnerable groups in various locations. This qualitative research was important to build a picture of how energy use was changing in the post Soviet era and how vulnerable groups were coping. Powerful case studies were developed to illustrate key issues for policy makers and to inform questionnaires in the subsequent household survey work.
- National survey research on energy use and household expenditure (We led the design, supervision and data analysis and produced terms of reference for local market research companies). We then used this data to estimate how existing energy policy was impacting the poor
Working with the deputy minister and her team to build confidence in this research (getting observation of focus groups & presenting at workshops and meetings with policy makers)
- Using the survey data to quantify the economic cost of existing subsidy mechanisms and to illustrate graphically who benefited and how this failed to target the poor. We also helped the local team estimate the cost (saving) of alternative subsidy mechanisms.
- Working with other donors (such as the World Bank) to reinforce the case of misallocation of resources under existing subsidy arrangements. .
Changing practice involves redirecting benefits from groups privileged under the former Soviet system and hence required both evidence and supporting political momentum for change. This project has made a valuable contribution to this process.