ENP Newswire -
Release date- 25072014 - The current heating tariff system in
The report analyses the social, sectoral and fiscal impacts of the heat tariff reform considered by the Government and provides recommendations for developing a sustainable district heating sector and working out measures to mitigate adverse impacts of the heat tariff increases on the households.
According to the report, underpriced residential heat tariffs for district heating, that are currently at 10-21 percent of cost-recovery level, place an increasing fiscal burden on the budget and industrial producers. Because of the cross-subsidies from industrial to residential consumers, Belarusian manufacturers do not benefit from the low import price of natural gas. As a result, the tariff set for the industries is higher than the European average.
The report warns that the current system of subsidies to the population is poorly targeted. Instead of identifying the poorest households and providing subsidies to them, the subsidies are provided to all households regardless of their income. The existing social protection mechanisms need to be adjusted to support the poor and vulnerable groups in the event of a tariff reform.
'An effective social assistance package provided along with the elimination of subsidies would enable the Government to protect the poor, without jeopardizing the reform,' noted
In order to build momentum for the heating tariff reform the report recommends (i) enhancing customer communications and engagement to address the existing knowledge gap among residential consumers on tariff setting and the proposed reform; (ii) improving social protection mechanisms, and (iii) encouraging investments in energy efficiency both at production and consumption stages.
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