Fossil fuel subsidy removal and inadequate public power supply: Implications for businesses

Bazilian, M. & Onyeji, I. (2012). Fossil fuel subsidy removal and inadequate public power supply: Implications for businesses. Energy Policy 45 1-5. 10.1016/j.enpol.2012.02.057.

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We briefly consider the impact of fossil fuel subsidy removal policies in the context of inadequate power supply, with a focus on the implications for businesses. In doing so, we utilize the case of the early 2012 fuel subsidy removal in Nigeria. The rationale for such subsidy-removal policies is typically informed by analysis showing that they lead to an economically inefficient allocation of resources and market distortions, while often failing to meet intended objectives. However, often the realities of infrastructural and institutional deficiencies are not appropriately factored into the decision-making process. Businesses in many developing countries, already impaired by the high cost of power supply deficiencies, become even less competitive on an unsubsidized basis. We find that justifications for removal often do not adequately reflect the specific environments of developing country economies, resulting in poor recommendations - or ineffective policy.

Item Type: Article
Uncontrolled Keywords: Energy subsidies; Industrialization; Energy access
Research Programs: Transitions to New Technologies (TNT)
Bibliographic Reference: Energy Policy; 45:1-5 (June 2012) (Published online 14 March 2012)
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 08:46
Last Modified: 27 Aug 2021 17:39

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