A Comparative Analysis of Energy Subsidy in the MENA Region

Abstract

This paper focuses on analyzing energy prices subsidies distribution in the MENA region among its seven components, according to the products that benefit from subsidized prices, and by per capita. As a nominal average of the years 2013, 2015, and 2017, both Iran and KSA had the higher nominal pre-tax subsidy averages estimated to $52.11 and $45.54 billion respectively, and also had higher post-tax subsidy averages estimated to $118.55 and $114.81 respectively. Global warming and local air pollution were the most important components after the pre-tax subsidies component in all MENA region countries. The “Congestion” component came after the level of the two environmental components averages in oil-exporting countries, while the “accidents” component in almost all the oil-importing countries came after the level of the two environmental components averages. By products, petroleum products were the main products that benefited from energy prices subsidies in almost all MENA countries. The reform process must take into account the specifics of each country with regard to the details of energy subsidies at its level, as energy subsidies vary from one country to another, whether in terms of its value, the weight of its components, and the subsidy share of each energy products.