PSIA in Policy Dialogue: Energy sector reforms in Serbia

1. PSIA in Policy Dialogue: Energy sector reforms in Serbia Caterina Ruggeri Laderchi ECSPE

2. Context • Ongoing reforms in the energy sector • Energy sector reform program under EU market principles launched in 2004 • Independent regulator + move towards cost recovery through regular pattern of increases • South Eastern Europe Energy Community • External commitments to raise tariffs and protect vulnerable consumers • Countries prepare action plans on protecting the poor • Political sensitivity of tariff increases in a crisis context

3. Ongoing PSIA process • Series of analytical products • New engagement with different actors • Very good multi-sectoral collaboration • Opportunity to make substantive impact by providing input into secondary legislation defining • Vulnerable groups • Practical measures to ensure energy affordability

4. Emerging findings • Poor households most affected by reforms • High reliance on electricity, and high share of electricity expenditures in consumption • Debt arrears as a major issue • Often little ability to manage energy consumption • Vulnerability to price increases: • High shares of energy poverty: Elderly households, especially if single; Single parent households and households with infants; Households dependent on transfers and social insurance • Elderly in particular little flexibility in their budgets to adjust expenditures and already consuming little energy • Policy performance • Earmarked assistance to poor households – small program and low take up • Need to address low take up of regular social assistance • Scope for extending double metering • Scope for thinking of energy efficiency

5. One way to look at process • Quantitative analysis • Electricity expenditure patterns • Electricity consumption patterns • Distribution of subsidies • Welfare impact of price increases • Poverty impact • Focus groups with poor consumers • Engagement with inter-ministerial working group Range of policy options Request

6. Another way to look at process • Ongoing WB engagement in dialogue and development of project pipeline Press clipping Initial analysis Request from technical working group Multi- sectoral dialogue HD (Energy) Energy agenda items Possible DPL PSIA Technical discussion with Regulator Social protection options Targeting criteria • Legislative developments: • Reform of social assistance • Consumer protection law • Draft energy law •  Secondary legislation will define vulnerable categories Social map Operational support for implementation Focus groups with poor users

7. What is working well • Timeliness (luck?) • Serious external commitment created: • Demand • Institutional counterpart • Outputs easy to tailor to requests • Broadening dialogue with additional tools • Overall PSIA part of a broader engagement with the country team • Strength of sectoral dialogue

8. What has required attention • Multi-sectoral and decentralized team • Evolving nature of the engagement • Dynamic environment • In terms of WB work: managing transitions between different phases of the dialogue • Tension between institutional arrangements and need to broaden audiences • Persuasive role that analytical work has to play