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|**Area**|**Consideration**|**Specific issues**|
|---|---|---|
|||duplication of infrastructure?|
||Subsidies in place|Universal or targeted subsidies? Who is targeted and how? Are<br>subsidized fuels rationed, and if so, how?|
||Who uses which fuel and for<br>what purpose|Is there widespread use of gasoline or diesel for stand-by power<br>generation? If so, higher fuel prices could threaten access to power.<br>Is gasoline used primarily by the better-off, or is there widespread<br>use of gasoline in motorbikes by small businesses and lower-<br>middle class families so that gasoline is not fuel only of the rich? Is<br>kerosene or LPG widely used for cooking? There is more resistance<br>to raising cooking fuel prices that affect a majority of households.<br>Is there widespread use of kerosene for lighting? If so, pro-poor<br>arguments could be used to argue against raising kerosene prices<br>without compensation.|
||Commercial malpractice|Are there flourishing black markets? Are actual prices paid by<br>consumers markedly higher than official prices? If so, raising<br>official prices would have much less adverse impact. Is short-<br>selling routine? If so, enforcing rules against short-selling would<br>lower the effective price increases when official prices are raised.<br>Is there smuggling? Is there diversion of subsidized fuels to<br>consumers who are not eligible? Is there adulteration of higher-<br>priced fuels with subsidized fuels?|
||Perception of the oil sector|Is it considered opaque, corrupt, politically well-connected, or a<br>state within a state? Are there scandals to do with large leakages in<br>subsidy delivery? If so, raising prices could be difficult if the public<br>is angry about corruption; on the other hand, it might be possible to<br>persuade the public that higher prices get to the source of the<br>corruption and help stamp it out. If a large oil producer, is the<br>countryan EITI member?|
|Social<br>protection|Safety nets|Is there an up-to-date database of beneficiaries? Is there an<br>administrative system in place to deliver benefits? Does the<br>government have a national identity and smart card system for cash<br>transfer to the needy? Does the government have safety nets that<br>can be scaled up in terms of benefits, coverage, or both to<br>compensate the vulnerable for higher oil prices in a way that would<br>be consistent with medium- and long-term goals for social<br>protection? Or will deployment of sound social safety nets require<br>considerable preparatory work and development?|
||Delivery of essential social<br>services|What is the state of primary education, primary health, access to<br>safe water, access to sanitation? Is the track record of delivery such<br>that the public would consider credible the government’s promises<br>ofputtingthe savings from subsidyreduction to better uses?|
|Reform steps|Sector structure and regulation|<br>Is the market sufficiently large to become competitive over time,<br>making price deregulation a realistic goal? If there is market<br>concentration, what are the main bottlenecks to breaking down the<br>market power of the incumbents—import terminals, refineries,<br>depot terminals, pipelines? Are there laws or regulations on supply<br>that need to be amended? Do regulations and standards reflect<br>current international good practice, or do they need to be updated?<br>Is there monitoring and enforcement, and how can they be<br>strengthened? How is commercial malpractice tackled and is there<br>a plan to reduce it further?|
||Who will set prices and how|Will there be an independent regulatory agency in charge of setting<br>prices? Are there laws or regulations on pricing that need to be<br>amended? If there are large price subsidies, what transition steps|