Syndicate content

Energy

Will South Asia make the most of cheap oil?

Markus Kitzmuller's picture

The world economy today presents itself as a diverse canvas full of challenges and opportunities. Advanced economies continue to struggle towards recovery, with the US on its way to tighten monetary policy as the economy picks up while a still weak Eurozone awaits quantitative easing to kick in. At the same time, plunging oil prices have set in motion significant real income shifts from exporters to importers of oil. Astonishingly, amidst all this turmoil, South Asia has emerged as the fastest growing region in the world over the second half of 2014. Led by a strong India, South Asia is set to further accelerate from 7 percent real growth in 2015 to 7.6 percent by 2017, leaving behind a slowing East Asia gradually landed in second spot by China.



While bolstered by record low inflation and strong external positions across the region, the biggest question yet to be addressed by policy makers in South Asia will be how to make the most of cheap oil.
All countries are net oil importers as well as large providers of fuel and related food subsidies, therefore bound to benefit from low oil prices. However, the biggest oil price dividend to be cashed in by South Asia is one yet to be earned, and not one that will automatically transit through government or consumer accounts. The current constellation of macroeconomic tailwinds provides a unique opportunity for policy makers to rationalize energy prices and to improve fiscal policy. Decoupling external oil prices from fiscal deficits may decrease vulnerability to future oil price hikes – something that may very well happen in the medium term. Furthermore, cheap oil offers a great opportunity to introduce carbon taxation and address the negative externalities from the use of fossil fuels.

The World Bank’s latest South Asia Economic Focus (April 2015) titled “Making the most of cheap oil” provides deeper insights regarding South Asia’s diverse policy challenges and opportunities stemming from cheap oil.
A first major realization is that the pass through from oil prices to domestic South Asian economies is as diverse as the countries themselves, thanks to a variety of different policy environments across countries and oil products. This is also reflected in recent dynamics, seeing India taking determined action towards rationalizing fuel and energy prices, even introducing a de facto carbon tax and beginning to reap fiscal and environmental benefits. Other countries have so far shown less or no enthusiasm towards reform, in spite of significant and/or increasing oil dependency (particularly in electricity generation, one of the region’s weak spots). 

If you want to go far, go together

Jana Malinska's picture

A new global network of Climate Innovation Centers will support the most innovative private-sector solutions for climate change.
 
Pop quiz: What does an organic leather wallet have in common with a cookstove for making flatbread and a pile of recycled concrete?
 
Believe it or not, each of these represents something revolutionary: a private sector-driven approach to climate change. Each of these products – yes, even concrete – is produced by an innovative clean-tech company. And as of March 26th, those businesses, and hundreds more like them, have something else in common. They’re connected through infoDev's newly established global network of Climate Innovation Centers (CICs), an innovative project that is taking the idea of green innovation beyond borders.
 
Having piloted the CIC model in seven different countries – Kenya, South Africa, the Caribbean, Ethiopia, Morocco, Ghana and Vietnam – it was time for infoDev, a global entrepreneurship program in the World Bank Group’s Trade and Competitiveness Global Practice, to follow a time-honored business practice: to scale up and take this movement global.

And so, as part of last month’s South Africa Climate Innovation Conference, we joined forces with 14 experts from the seven different countries where the CICs operate to establish the foundations of the world’s first global network devoted to supporting green growth and clean-tech innovation.



CIC staff debate and discuss the new CIC Network during the South Africa Climate Innovation Conference.

This global network of Climate Innovation Centers – business incubators for small and medium-sized enterprises (SMEs) – has been designed to help local ventures take full advantage of the fast-growing clean-technology market. The infoDev study “Building Competitive Green Industries” estimates that over the next decade $6.4 trillion will be invested in clean technologies in developing countries. An even more promising fact is that, out of this amount, about $1.6 trillion represents future business opportunities for SMEs, which are important drivers of job creation and competitiveness in the clean-tech space.

Baltički autoput podataka: Kada ćemo mi imati balkanski?

Natalija Gelvanovska's picture
Izvor fotografije: Data Logistics Center
Pre par meseci su Estonija, Letonija i Litvanija završile petogodišnju gradnju Baltičkog autoputa – kičme širokopojasne mreže koja koristi prednosti postojećih optičkih kablova koji poseduju tri baltička energetska postrojenja. Optička kičma dugačka 3000km prolazi kroz baltički region povezujući nove mega centre za podatke u severnoj Evropi Talinu sa čvorištem za podatke zapadne Evrope u Frankfurtu i ima mogućnost daljeg povezivanja sa Rusijom i Belorusijom. Izgradnja i funkcionisanje baltičkog autoputa je odličan primer regionalne saradnje i zajedničke infrastrukture.
 
Baltički autoput je proizvod nekoliko aktera - Data Logistics Center (deo od Lietuvos Energija, državne holding kompanije litvanskih snabdevača energijom), Latvenergo (državne kompanije za električnu energiju u Letoniji), i Televõrk (podružnica privatne energetske firme Eesti Energia iz Estonije). Za razliku od drugih ova mreža je građena tako što su kablovi sa optičkim vlaknima polagani preko visokonaponskih dalekovoda i gasovoda koji pripadaju energetskim kompanijama, umesto korišćenja različitih segmenata operatera za telekomunikacije koji su već bili “priheftani”. Sada klijenti baltičkog autoputa imaju mogućnost da koriste regionalnu infrastrukturu iz jedne tačke.

Autostrada Baltike e të dhënave: Kur do e ketë Ballkani një të tillë?

Natalija Gelvanovska's picture
Foto nga: Data Logistics Center
Para disa muajve, Estonia, Letonia dhe Lituania kanë përfunduar ndërtimin 5 vjeçar të autostradës së Baltikut - rrjet backbone i broadbandit (brezit të gjerë) i cili shfrytëzon asetet e kabllos optike të tri kompanive energjetike Baltike. Backboni fibër pa nyje prej 3000 km që përshkon tërë regjionin e Baltikut, lidhë mega qendrat e të dhënave të Evropës së veriut në Talin me hubat e të dhënave të Evropës perëndimore në Frankfurt dhe ka mundësinë e zgjerimit të lidhjes me Rusinë dhe Bjellorusinë. Ndërtimi dhe operimi i autostradës së Baltikut është shembull i shkëlqyeshëm i bashkëpunimit regjional dhe i bashkëndarjes së infrastrukturës.
 
Autostrada Baltike është krijuar nga Data Logistics Center (pjesë e Lieuvas Energija, kompani shtetërore aksionare e furnizuesit Lituanez të energjisë), Latvenergo (kompani energjetike shtetërore e Letonisë), dhe Televork (subsidiar i firmës private energjetike Eesti Energia në Estoni). Për dallim nga të tjerët, ky rrjet është ndërtuar duke shtruar kabllon optike përgjatë linjave energjetike të tensionit të lartë dhe gypat e gazit të cilat i përkasin kompanive energjetike, e nuk janë përdorur segmentet e ndryshme të rrjeteve të operatorëve të telekomit të cilat janë të "arnuar së bashku". Tani klientët e Autostradës së Baltikut kanë mundësinë e shfrytëzimit të infrastrukturës regjionale pa nyje nga nj pikë e vetme.

Now that there's a Baltic Data Highway, when will we have one for the Balkans?

Natalija Gelvanovska's picture
Photo credit: Data Logistics Center
In January, Estonia, Latvia and Lithuania finished the five-year construction of the Baltic Highway – a broadband backbone network that takes advantage of fiber-optic assets from three Baltic energy and utility entities. The Highway is a seamless fiber backbone of 3,000 kilometers (1,864 miles) across the Baltic region, connecting Northern Europe’s new mega-data centers in Tallinn to Western Europe's data hub in Frankfurt, Germany, with the possibility of extending connections to Russia and Belarus.

The construction and operation of the Baltic Highway is a great example of regional cooperation and infrastructure sharing — and there are many lessons we can learn from it.
 
The Baltic Highway was created by Data Logistics Center (part of Lietuvos Energija, a state-owned holding company of Lithuanian energy suppliers), Latvenergo (a state-owned electric utility company in Latvia) and Televõrk (a subsidiary of private energy firm Eesti Energia in Estonia). Unlike previous data highways, this network was built by laying optical fiber over high-voltage electricity lines and gas pipelines that belong to energy companies, as opposed to using different segments of telecommunications networks that have been “stitched together.” Today, Baltic Highway clients have the opportunity to utilize one seamless regional infrastructure system from a single point.

What would it take to implement a similar project in the Balkans?

Can Mozambique use its booming energy sector to create jobs?

Channing Arndt's picture
Despite a decade of strong economic growth, the rate of formal sector job creation in Mozambique has been weak. But what impact will the recent large investments in the country’s oil and gas sector have on the employment outlook? Channing Arndt from UNU-Wider argues that there will not be many direct jobs created as a result of this boom, especially past the first investment phase. But there is a great opportunity for jobs to be created in ancillary services and support sectors, as well as those benefitting from the overall improvement in the country’s infrastructure.

Reflections from Hells Gate National Park

Jan Mattsson's picture

​​​​​​Jan Mattsson visits Hells Gate National Park, KenyaJan Mattsson, a member of the Inspection Panel, describes his fact finding mission to Kenya and the truism that every case is unique and every case is complex.

I was recently appointed a Panel Member of the World Bank’s Inspection Panel, and I am blogging from the Rift Valley, Kenya where I am participating in my first fact finding mission related to a complaint filed by Maasai communities. The project in question is the Kenya: Electricity Expansion Project, which was funded by both the World Bank and the European Investment Bank (EIB) and has financed the construction of a geothermal plant within the Hell’s Gate National Park.

The project is geared to addressing Kenya’s growing demand for electricity, as only one out of four Kenyans have access to the national grid.  As with all countries, the growth of the economy and social development efforts relies on a reliable supply of electricity. The use of geothermal energy has the advantage of reducing the dependency on fossil fuels and being climate friendly, as well as lessening dependency on hydro-power resources in Kenya.
 

The things we do: Nudging people to give

Roxanne Bauer's picture

Man delivers gas cylinders in IndiaIn an appeal to civic duty, the Government of India is asking citizens to forgo a gas subsidy they receive so that gas cylinders can be transferred to the less fortunate. To encourage Indians to "Give It Up," the government called on business leaders to set an example and made the procedure extremely easy.

India recently launched an ambitious cash transfer program to help small businesses and households buy fuel.  Under the plan, consumers of liquefied petroleum gas (LPG), commonly referred to as propane or butane, receive a cash subsidy in their bank accounts to buy gas cylinders at market price.

Once joining the scheme, the subsidy, which is equal to the difference between the current subsidized rate and the market price, is transferred to the consumer’s bank account when he/she orders a cylinder.  Another transfer is then provided at the time of delivery of the cylinder. 

Last November, the Direct Benefit Transfer Scheme for LPG was rolled out across 54 districts, with the rest of the country participating by January 1 of this year. 

The scheme was launched by India’s previous UPA government in June 2013, but it was abruptly stopped earlier this year following court orders.  It has since been modified to exclude the requirement of providing a unique identification number (Aadhaar) to avail the cash subsidy.

The idea behind the direct benefit transfer is that it can ensure that the subsidy meant for the genuine domestic customer reaches them directly and is not diverted. The Government of India hoped to save millions each year by curbing diversions and leakages in the system but also to ensure efficient delivery of subsidies to the target beneficiaries— the consumers.

How parliaments could better contribute to the governance of revenues from extractive industries

Hassane Cisse's picture

Oil Pumps in Russia photo Kolodkin

Resource rich developing countries face challenges in ensuring that revenues from Extractive Industries (EI) are used to foster economic development, reduce poverty and promote shared prosperity.
 
Effective governance of extractive revenue is a precondition for ensuring that the ‘development dividend’ that is meant to flow from the decision to extract becomes a reality. Good governance of the sector requires sufficient participation, transparency, and accountability across the entire EI value chain.
 
A wide range of stakeholders can contribute to these governance objectives, whether they be government agencies, private sector, civil society, and formal accountability institutions, such as parliaments. 
 
Parliaments are coming to the fore as key stakeholders in ensuring that extractive revenues are equitably shared. That means making sure that extractive revenues are accurately captured in budget forecasts and estimates, appropriations are focused on delivering services to affected communities, and effective oversight of governments’ management of the sector is provided.
 
I participated in the recent 2015 Helsinki Parliamentary Seminar, hosted by the Parliament of Finland as part of the World Bank-Finnish Parliamentary Partnership, which brought together parliamentary delegations from Ghana, Iraq, Kenya, Mongolia, Somalia, South Sudan, Tanzania, Timor Leste, and Zambia to explore how parliaments could better contribute to the governance of revenues from extractive industries.


Pages