Killefit consult

consultant sourcing and project management

 SME Interventions Ltd. U.K. –  Experts + Projects S.A. CR

Econometric model (CGE – Computable General Equilibrium) study on reduction of

fossil fuel subsidies and support and increase of fossil fuel taxes in Viet Nam and

their effects on economic development and income distribution

Country/ Location of the position Vietnam
Status/Reference FWC
Agency/Donor EC
Experts E1-E3  3 senior experts (at least 10 years of experience)
Start + duration of project 30/01/2012 – 30/06/2012
Duration of mission E1 30.00 working days
  E2 25.00 working days
  E3 25.00 working days
Required language The team of consultants will conduct its activities and produce all reports in English. However, some interventions with Vietnamese interlocutors will require knowledge of Vietnamese. Replacement of language skills required from the Experts by an interpretation/translation service is not allowed.
12 03/12/2011 12:00:00. Recruitment starts immediately upon publication of this vacancy announcement, posts may be filled already before the indicated application deadline.
ToR Available hereunder
Eligible Nationalities all
Observations Only short listed consultants will be replied to.

Please apply only if you fulfill all requirements for the vacant position

All experts must have at least regional experience

Sending us your application is a commitment and we expect you to be available for the mission you are applying for.

Download EU AID CV template in the 4 main languages  of the EC http://wp.me/p1sHoW-5D
Our web page http://www.killefitconsult.com/beta/

APPLICATION

CONTACT

applications@killefitconsult.com

Only short listed consultants will be replied to.

 

If you wish to submit your candidature, please send us:

 

1 – Your up dated and position-adjusted CV in EU AID format, in the language of vacancy and as word.doc detailing qualifications, experience in similar assignments. CVs in other format than EU format will not be evaluated.

2 – The country, no of position/field (s) you will apply for in the subject line of message

3 – Your daily/monthly fee (EUR) without the living allowances.

4 – Your communication details (Mobil, phone, etc.)

 

Suggestions: Please make sure, that the experience requested is also shown “Description” section 14 of your CV. As the selections are very strict and paper based, we request you to prepare your CV in the right format and detail all the relevant experience under the Professional experience table as much as possible. There is no problem if your CV is long, the most important is to prepare so that it describes clearly your experiences relevant to the mission. (Your CV has to sell you!)

Restrictions: In case consultants are short listed, they must be able to provide documentary evidence for educational and professional items in their CVs (copies of diplomas, copies of employers’ reference letters, etc.). Documents that are not available in English have to be accompanied by a faithful translation. This is mandatory requirement for Europe Aid tenders.

DESCRIPTION

               

Profile: Expert 1

Categoy of expert             Senior (at least 10 years of experience)

Duration               30.00 working days

 

Requirements      Profile per expertise required

 

•All experts should be educated to at least Masters Degree Academic level or equivalent in economics, econometrics, statistics, international development or relevant subject.

•All experts should have at least 10 years of professional experience in economic analysis, forecasting and modelling, with the team as a whole demonstrating an excellent understanding of the Vietnamese economy.

•At least one member of the team should have at least 10 years experience in CGE modelling, and include full understanding of input-output tables as used in CGE modelling exercises. The team as a whole should demonstrate knowledge of CGE models developed and used in Vietnam.

•The expertise of the team must include a proven track record conducting research on energy efficiency or economics of climate change, with at least one of the team possessing significant experience in the formulation of CGE models analysing the macroeconomic, fiscal and environmental impact of developments in the energy sector.

•The team’s expertise must also have good understanding of climate change, including greenhouse gas emissions in Viet Nam and specifically knowledge of energy production, trade and consumption forecast in Viet Nam.

•The team should demonstrate significant knowledge of the socio-political environment in Vietnam, with an emphasis on current fiscal, environmental and social policy.

•All experts should be proficient in English with at least one of expert fluent in Vietnamese.

 

3.3. Working language(s)

 

The team of consultants will conduct its activities and produce all reports in English. However, some interventions with Vietnamese interlocutors will require knowledge of Vietnamese. Replacement of language skills required from the Experts by an interpretation/translation service is not allowed.

               

                              

                              

Profile: Expert 2

Categoy of expert             Senior (at least 10 years of experience)

Duration               25.00 working days

 

Requirements      Profile per expertise required

 

•All experts should be educated to at least Masters Degree Academic level or equivalent in economics, econometrics, statistics, international development or relevant subject.

•All experts should have at least 10 years of professional experience in economic analysis, forecasting and modelling, with the team as a whole demonstrating an excellent understanding of the Vietnamese economy.

•At least one member of the team should have at least 10 years experience in CGE modelling, and include full understanding of input-output tables as used in CGE modelling exercises. The team as a whole should demonstrate knowledge of CGE models developed and used in Vietnam.

•The expertise of the team must include a proven track record conducting research on energy efficiency or economics of climate change, with at least one of the team possessing significant experience in the formulation of CGE models analysing the macroeconomic, fiscal and environmental impact of developments in the energy sector.

•The team’s expertise must also have good understanding of climate change, including greenhouse gas emissions in Viet Nam and specifically knowledge of energy production, trade and consumption forecast in Viet Nam.

•The team should demonstrate significant knowledge of the socio-political environment in Vietnam, with an emphasis on current fiscal, environmental and social policy.

•All experts should be proficient in English with at least one of expert fluent in Vietnamese.

 

3.3. Working language(s)

 

The team of consultants will conduct its activities and produce all reports in English. However, some interventions with Vietnamese interlocutors will require knowledge of Vietnamese. Replacement of language skills required from the Experts by an interpretation/translation service is not allowed.

               

                              

                              

Profile: Expert 3

Categoy of expert             Senior (at least 10 years of experience)

Duration               25.00 working days

 

Requirements      Profile per expertise required

 

•All experts should be educated to at least Masters Degree Academic level or equivalent in economics, econometrics, statistics, international development or relevant subject.

•All experts should have at least 10 years of professional experience in economic analysis, forecasting and modelling, with the team as a whole demonstrating an excellent understanding of the Vietnamese economy.

•At least one member of the team should have at least 10 years experience in CGE modelling, and include full understanding of input-output tables as used in CGE modelling exercises. The team as a whole should demonstrate knowledge of CGE models developed and used in Vietnam.

•The expertise of the team must include a proven track record conducting research on energy efficiency or economics of climate change, with at least one of the team possessing significant experience in the formulation of CGE models analysing the macroeconomic, fiscal and environmental impact of developments in the energy sector.

•The team’s expertise must also have good understanding of climate change, including greenhouse gas emissions in Viet Nam and specifically knowledge of energy production, trade and consumption forecast in Viet Nam.

•The team should demonstrate significant knowledge of the socio-political environment in Vietnam, with an emphasis on current fiscal, environmental and social policy.

•All experts should be proficient in English with at least one of expert fluent in Vietnamese.

 

3.3. Working language(s)

 

The team of consultants will conduct its activities and produce all reports in English. However, some interventions with Vietnamese interlocutors will require knowledge of Vietnamese. Replacement of language skills required from the Experts by an interpretation/translation service is not allowed.

               

                              

                              

EC rules applicable to any ECassignment  

• Working days are from Monday to Friday, if not indicated otherwise in the ToR

• Per diem covers all expenses of the expert (local transport, hotel, meals, telecom,

etc) and it is only paid if the expert stay overnight.

• International travel: the EC only reimburse economy class flight tickets

Terms of reference

 

SPECIFIC TERMS OF REFERENCE

 

Econometric model (CGE[1]) study on reduction of fossil fuel subsidies and support and increase of fossil fuel taxes in Viet Nam and their effects on economic development and income distribution

 

 

1. BACKGROUND

 

1.1. Contracting Authority

 

The Delegation of the European Union to Vietnam, for and on behalf of the Government of Vietnam, will be the contracting authority for this assignment.

 

1.2. Background

 

Climate change, energy and fossil fuels in Viet Nam

 

Climate change is caused by built up of atmospheric green house gasses from industrialization, transport and e.g. deforestation. The historic responsibility lies mainly with industrialized nations, not with poor countries, women and men, but nearly 20 percent of current global emissions are from deforestation and forest degradation, mostly in developing countries. Importantly, the emissions from growth in the use of fossil fuel are increasing as especially Asian countries are developing rapidly, including Viet Nam. Energy demand in industry, transport and households is increasing, and major investments in energy efficiency as well as electricity generation are needed, also in renewable energy.

 

Climate change challenges have been recognized by the Government of Viet Nam, and a National Target Program to Respond to Climate Change (NTP-RCC) was approved in December 2008 and implementation is supported by several donors. The country is now about to agree a National Climate Change Strategy as well, and sector ministries and provinces are advanced in formulation action plans to respond to climate change. In addition, the National Target Program on Energy Efficiency (NTP-EE) is supported by a number of donors. However, whilst energy demand is rising at an estimated 8-12 percent annually, the energy supply will have to increase dramatically over the next years. This will require very major energy related investments, which gives an unprecedented chance to Viet Nam to develop a low carbon economy.

 

The Government is currently formulating a Green Growth Strategy that is expected to focus on energy. Important medium and long term green house gas mitigation options for Viet Nam are in energy production and consumption, especially in the urban and industrialised areas. Improving energy efficiency and achieving “co-benefits” of e.g. reduced local pollution are typically important in urban production and consumption patterns, including transport, manufacturing industry, heating, cooling, and lighting.

 

The European Union policy on Climate Change and Energy

In January 2008 the European Commission proposed binding legislation to implement the “20/20/20” targets[2] for 2020. This ‘climate and energy package’ was agreed by the European Parliament and Council in December 2008 and became law in June 2009

The European Union (EU) itself has chosen the path towards a resource efficient and low carbon economy development[3] as part of its Europe 2020 Strategy[4] for smart, sustainable and inclusive growth. It has also put in place a series of robust policies and programmes in the domain of climate change and environmental protection over the last two decades.

 

In the field of climate change abatement, the EU has invested in the development of  a market based mechanism, the EU Emission Trading System (EU-ETS),  which has demonstrated its effectiveness and efficiency in meeting Greenhouse Gas (GHG) emission reduction targets (and contributing to energy efficiency). The EU ETS covers around half of EU CO2 emissions. An ETS system reduces the cost of meeting national targets, by being flexible. It can also provide important revenues and other opportunities that allow transfers from richer to poorer regions, additional investment in new technologies and climate, or compensation for low income households.

 

Fiscal policy and fossil fuel use: international examples

 

Greenhouse gas (GHG) emissions mitigation is contingent on international finance and technology transfers, and much must also be achieved by optimal domestic fiscal policies. Regulation as well as market based instruments such as tax can reduce carbon consumption, ensure that the alternatives to emissions become financially attractive in the short and longer term (including energy efficiency; and wind and solar energy production) and drive technological modernization. Instead of taxing fossil fuels, (mostly indirect) subsidies are currently making different fossil fuels comparatively cheap in Viet Nam, whilst the Government runs annual budget deficits[5].

 

Research in different countries shows higher fuel taxes lead to an increase in the energy efficiency. The short run and long run elasticities of demand of fuel are significantly different. As illustrated by Sterner (2006) most of the energy efficiency differences between the US and the EU are due to the high tax rate applied in the European Union[6]. Other authors have also found that long-run negative economic impact of higher fuel prices were limited[7]. This is partially due to the fact that the increase in energy input prices are compensated by higher energy efficiency and a decrease in oil demand, everything else constant. This suggests that higher energy efficiency may be beneficial for the overall economy.

 

Moreover, the impact of fuel taxes is not necessarily regressive and negative for income distribution. In the case of low-income developing countries where the poorer strata of the population use relatively little fuel, a tax on energy might indeed be progressive. This has been shown for India[8], Indonesia[9] and to some extent for Costa Rica[10].

 

A fuel tax in India would be progressive for most fuel types as the poor consume relatively little fuel. A sensitivity analysis to assess the differentiation between elasticities of demand of the rich and the poor showed that fuel tax would not be regressive for both diesel and gasoline. Tax on transport fuel seemed to offer the best environmental results without affecting much the poorer strata of the population. Taxing coal would be progressive and environmentally friendly as long as coal appliances are switched to electricity or gas. However, switching to electrical appliances might not give significant positive environmental results as most electricity in India is coal based, so it is necessary to differentiate coal use for private and industrial purposes. Taxing the industrial use of coal will incentivize switching towards cleaner energies. But taxing kerosene would have shown a regressive fiscal pattern as it is mainly used for cooking by low income households. Taxing kerosene could also lead to pressure on forests, as the poor would be incentivised to collect fuel wood.

 

The distributional consequences of a 10 percent increase in fuel taxes in Costa Rica was analyzed, which is a one-time increase that will normally not have lasting influence on inflation. The Study separates first and second round effects of this fuel prices increase. It argues that first round effects of a tax on gasoline would be progressive as it concerns mainly richer car owners. A tax on diesel would be regressive as it would impact bus prices, and lower and middle income groups travel by bus. However, taxing only one of the fuels may not be efficient as demand could switch to lower taxed fuel. Both the first and second round impacts of taxing both fuels are generally regressive for income distribution in Costa Rica and affect mainly the middle income groups, but the effects are limited. Furthermore, the taxes also cause additional government revenue that could be used to offset negative effects, or other taxes could be reduced. In conclusion, to ensure that a fuel tax does not disproportionally hurt the poor, it is important to differentiate fuel users, to take into account first and second round effects of a tax increase, and to redistribute the extra revenue.

 

Phasing out fossil fuel subsidies and introducing fuel taxes will produce a revenue stream that the government could use to counterbalance the negative effects on low income groups, and e.g. for investments in low carbon development or climate change adaptation. Moreover, subsidies may grow out of hand and their removal will be more and more difficult, which will be detrimental for other social policies. For example, Indonesia spends now more than 25 % of its total budget for fossil fuel subsidies. The Indonesian government was spending more on fuel subsidies than it did on education, health, and law and order combined.[11] It is now however gradually removing energy subsidies[12].

 

Simultaneously reducing other taxes on items used by the poor such as basic nutritional items can compensate for a (potentially) regressive fuel tax. It has been found in the EU that if fuel taxes were combined with reduced labour taxes, the macroeconomic conditions of a country could improve[13]: as labour becomes relatively cheaper than energy, firms re-orientate towards labour intensive investment. In the case of a developing country with comparatively low labour costs, the margin and the added value of decreasing labour costs is not lower. However, the revenue could for example be used to improve education to foster innovation as well as infrastructure to decrease transportation costs, and improve competitiveness.

 

Fuel taxes, growth, technological progress, and equity

 

Viet Nam has now reached the low middle-income country status and has to avoid the “middle-income trap”. To do so, it has to enter production of higher value added goods and develop more capacities for research and development. Fuel taxes could incentivise investments for rapid technological progress so that developing countries could leap-frog into a “low carbon” economy. This includes technological innovation in energy and industrial production; improving energy efficiency of buildings; improving (energy efficient, low emissions) mass transport systems; and changing behaviours of consumers.

 

The introduction of different type of fuel taxes may lead to various outcomes and degrees of effectiveness in reducing GHG emissions and should be weighed against effects on equity (income distribution). A tax may have significant impact on vulnerable groups but only produce marginal GHG reduction, which would mean that there is a weak case of introducing it. It is crucial to identify those types of fuel taxes that have the highest potential for GHG emissions mitigation, that have potentially positive economic gains (especially from increased efficiencies, technological innovation) and that minimize potential social costs.

 

Moreover, the international climate negotiations also address international tax on airline fuel and bunker fuel (for shipping) – with the revenue to finance climate change adaptation and GHG emissions mitigation actions in developing countries. Airlines and ships from the least developed countries (LDCs) might be exempt. Also proposed internationally is a carbon tax at source on all fuels and in all countries, though possibly a lower carbon tax initially in developing countries, combined with a financial flow to developing countries. “At source” would mean when oil leaves the oil well and is used in-country, or at “point of entry”, e.g. a harbour where an oil tanker moors. This international practice would have different effects on Viet Nam, as Viet Nam would receive additional international finance, and because it exports as well as imports fossil fuels of different kinds.

 

On-going supports on low-carbon development in Vietnam

The UK/DFID supports the Vietnam Ministry of Planning and Investment (MPI) in the implementation of the study on the Economics of Low-Carbon Climate-Resilient Growth in Vietnam[14] which will be used as input for the government of Vietnam in developing its Green Growth Strategy[15]. The study is phased into three steps: Scoping, Inputs and Main study. The first phase (scoping phase) was completed in March 2011 and the report will be made available upon request.

The objectives of the 2nd phase (inputs) of the study are: (1) to collect and fill the gaps of data; (2) to train Vietnamese staff on how to integrate low carbon and climate resilient development into the country‘s economic planning process, develop skills for using the designed models to evaluate the economics of low carbon and climate resilient development. A considerable number of organizations and agencies from different ministries and organizations will be mobilised in this phase to meet the objectives of the study.

The objectives of the 3rd phase (Main study) of the study are to analyse a portfolio of low carbon interventions and identify growth patterns that would help the economy increase its resilience to climate impacts and reduce its carbon intensity.

The World Bank through DFID funding is responsible for mobilising the consultants and supervises the study in the following phases (i.e. input and main analyses). Each phase will be implemented for 12 months.

Beside the support from UK/DFID/WB, other development partners actively participating in the policy dialogue on low-carbon development related to energy sector in Vietnam are UNDP, ADB, US, Australia, JICA, French/AFD and the EU Delegation.

 

Fossil fuels related fiscal research in Viet Nam

 

There is limited analysis on the potential effects in Viet Nam of fiscal policies on stimulating technological innovation and energy efficiency in industry, consumer behaviour, the national economy (growth), or income distribution. However, some research was done during the formulation of the environmental tax law, and in the course of 2010 and 2011 the UNDP in Viet Nam in collaboration with the EU-funded MUTRAP project and a range of national partners commissioned research on phasing out of (indirect) subsidies on fossil fuels and the potential introduction of different carbon or fossil fuel taxes.

 

The research focused on the main policy opportunities for Viet Nam in the short and medium term future of energy pricing and revenue collection from fossil fuel taxes, as a core part of national responses to climate change whilst ensuring economic and social benefits. The research consisted of three “packages”:

 

1)     Value chain and policy analysis of fossil fuel trade, subsidy and tax, which differentiated between different fossil fuels and fuel uses

2)     CGE modelling to assess the economic and social impact of tax on fossil fuels; and

3)     Environmental Assessment of the potential effects and impacts of removal of fuel subsidies and of fuel taxes.

 

This research is now nearly completed and several tentative conclusions are being drawn (see list of references with the three draft publications).

 

The value chain analysis shows that:

 

a)     Most subsidies on fossil fuels and thus electricity and e.g. transport in Viet Nam are indirect and very hard to quantify. Price caps and bail outs of loss making state owned enterprises are among the support measures.

b)     The increased use of fossil fuels has meant increased revenues through taxation and VAT. The Government has used tax waivers on the numerous taxes in the petroleum sector in order to stabilise and limit the increase in prices. Losses in SOEs means no or lower than expected transfers to the state budget from SOEs.

c)     It is very difficult to identify who the target groups and real beneficiaries of the indirect subsidies and support measures are.

d)     But several industries have benefited from low electricity prices and also low prices for coal. Losses in the electricity sector under the current price capping system for electricity and coal cannot be quantified.

e)     The current electricity prices are generally low, which discourages firms from investing in energy saving technologies and efficient use of electricity.

f)      Higher prices for coal in Viet Nam, in-line with global prices and more expensive electricity as a result of removal of indirect subsidies / support measures and increase of tax will make investment in electricity generation more attractive and may help a move away from a reliance on coal for electricity and manufacturing.

 

The quantitative simulation analysis suggests that:

 

g)     The gradual phasing-out of fossil fuel subsidies raises the user prices of coal, refined fuels and provides an incentive to economize on the use of these commodities and the use of other domestically produced commodities with a high energy share in production costs.

h)     When the subsidy phase-out is accompanied by a phasing in of carbon taxes on the use of fossil fuels, the energy saving effects are considerably magnified.

i)      These effects are magnified further if the carbon tax revenue and subsidy savings are used for R&D in energy-efficient and low-carbon technologies.

j)      The macroeconomic impacts on real GDP growth and the time profile of household consumption growth depend to some extent on the use of the additional revenue. If the additional revenue is used for additional productive investment medium-run growth is higher than in the baseline, but in the initial phase the purchasing power of household drops.

k)     In the absence of compensatory transfer payments, the middle-income groups suffer marginally more than the poorest and richest households during the introduction of carbon taxes, because their energy shares in household expenditure are highest.

l)      Sectoral negative effects on production growth are most pronounced in the domestic coal, petrol refining and power sectors directly hit by the carbon taxes and subsidy cuts, as well as in energy-intensive (coal intensive) sectors and sectors closely linked to these industries, such as metal production and air transport services.

m)   The simulation analysis suggest that the joint implementation of a carbon tax on fossil fuels and a removal of existing fossil fuel subsidies in combination with the targeted use of the additional revenue to foster the accelerated adoption of energy-efficient technologies would be associated in the medium run with the emergence of a “double dividend” in the form of additional economic growth, on top of the environmental benefits associated with the transition to a less carbon-intensive growth path.

 

The analysis of emissions as a result of increased price of fossil fuels suggests that:

 

n)     The price changes will lead to a decrease in levels of demand, and a significant decline in emissions from the energy sector over the coming decades, when compared to a business as usual baseline.

  • o)     There may be several co-benefits from increased investment in energy efficiency and alternative energy technologies, including improved local environmental quality, reduced dependence on imported fossil fuels and less vulnerability to volatile fossil fuel prices, and Viet Nam would be taking a lead in the global effort to address climate change.

p)     However, many of the outcomes are contingent upon how the additional revenue that becomes available from subsidy reduction and tax imposition are spent.

 

Crucially, although the work under package 2 (CGE modelling) was received very well by national and international technical experts, the scope has remained limited mainly due to financial limitations. The model selected was not the most comprehensive available model and the numbers of CGE models run under package 2 were limited. The conclusions are however far reaching, notably at a time that Viet Nam is struggling to control inflation and other macro-economic challenges. This has prompted the desire to verify the above mentioned conclusions and recommendations. Additional analysis is thought to be of great importance to enhance the CGE modelling work, preferably with different CGE model(s) and with different sets of assumptions, to ensure comprehensive sensitivity analysis of the conclusions and recommendations arising from the econometric study.

 

2. DESCRIPTION OF ASSIGNMENT

 

2.1. Overall objective

To contribute to support the government of Vietnam in developing and implementation of foregone “Vietnam Green Growth Strategy for the period 2011-2020 and vision to 2050”.

 

2.2. Specific objective

To perform a comprehensive econometric model study (hereafter the Study) of the potential effects of higher prices of different fossil fuels as a result of phasing out of fossil fuel subsidies and other support and imposing additional taxes, on the general economy, industrial development, consumer behaviour, income distribution, as well as revenue collection, and the use of this additional revenue for social and other purposes.

 

2.3. Requested services, including suggested methodology

The team of consultants must verify and make recommendations on modifications of fossil fuel subsidies and support measures and introduction of fossil fuel taxes by applying one or more existing CGE models of the Vietnamese economy. The team of consultants must build on previous econometric studies of fossil fuel fiscal policies in Viet Nam and verify their conclusions and recommendations. The team of consultants will include different scenarios of levels of tax, speed of introduction, and different sets of assumptions to assess sensitivity of findings for such tax scenarios and assumptions regarding the economic, social and environmental impact.

 

  • The Study should be methodologically sound and capture country specific aspects that contribute to a good calibration of the model and robustness of simulation results. The modelling should assess first and second round effects on Viet Nam’s economic.
  • The Study should assess the short and long run impacts of fossil fuel taxes on the Vietnamese economy under different assumptions and fiscal strategies:

– Status quo (business as usual)

– Removing (certain direct and indirect) subsidies

– Introducing different fuel taxation schemes.

  • This should include effects on development of different industrial subsectors.
  • The effects on income distribution should be analyzed.
  • The Study should include different alternatives in terms of tax revenue
  • It should also make suggestions for the Government to counteract the potentially negative effects of the tax.
  • It should include an assessment of the innovation and R&D effect of the fuel tax and of the potential of savings and tax revenue in this regard.
  • Finally, the potential effects on the national trade deficit should be analyzed.

 

The recommendations for possible subsidy/support removal and fossil fuel tax regimes would include options to (i) maintain high growth; (ii) encourage energy efficiency and “low carbon” innovation in electricity generation as well as energy consumption by industry, the transport sector, and households; and (iii) maintain or improve benefits for low income households.

 

The Consultants are expected to produce an Inception Report as mentioned above, discuss in the inception meeting and adjust as per agreements. This will include a proposal for CGE simulations based on this TOR; a proposal for detailed expert discussions in the two Expert Workshops; and an outline of the final report.

 

The Consultants will reflect the inception meeting in the final inception report and translate the main points regarding CGE modelling scenarios that would offer best potential for useful and trustworthy conclusions and recommendations, assumptions and various parameters into concrete CGE simulations.

 

The Consultants will organise the two Expert Workshops in Hanoi in coordination with MPI, EU Delegation and the UNDP Policy Advisor. These workshops are expected to be at least of a half day duration each, and include technical / policy staff from a wide range of national research organisations and international agencies (targeted number of participants about 30 people with appropriate background), especially researchers from government research institutes (e.g. IPSARD, IPSONRE, CIEM, FPA-MOF, CAF, ILSSA) as well as selected universities. Participants will contribute their specialised expertise to gain a better understanding of key traits of the Vietnamese economy, society and environment that are relevant for this Study. The Expert Workshops will be co-facilitated by the contracted Team Leader and a UNDP Policy Advisor. All organisational and logistical matters will be managed by the Consultants. The costs for the workshops should be part of the contract’s budget.

 

The Consultants will commission at least 6 Vietnamese specialists as peer reviewers to attend both Expert Workshops and provide detailed written comments on the draft reports that will be presented and discussed in those workshops. The peer reviewers will be selected by the Consultants in agreement with the EU Delegation. All organisational and logistical matters will be managed by the Consultants. The costs for the peer review should also be part of the contract’s budget.

 

The Consultants will perform two rounds of model study/economic policy analysis and will run the simulations with scenarios and assumptions as agreed in the Inception report and the First Experts Workshop. The first Expert Workshop will be informed by the earlier UNDP-MUTRAP research. The main inputs will be from the contracted expert CGE modellers focusing on the first round of CGE simulations.

 

The second round of simulations will be reported in a second draft report, which should be sent to the EU Delegation and all workshop participants, in advance of the Second Experts Workshop. The Second Experts Workshop will assess the results of the two rounds of model study and the draft conclusions and recommendations, including how those compare with the results of the UNDP-MUTRAP research through 2010 and 2011. It will aim to agree on refinement of draft conclusions.

 

Following the Second Experts Workshop, the team of consultants will produce a final draft report and send that to the EU for written comments. They will incorporate the written comments in a Final Report with Executive Summary, a report on the two rounds of model study, conclusions and recommendations, and annexes on the methodology followed, including how the technical discussion process was organised and short reports of the two Expert Workshops.

 

The Consultants will circulate draft reports in advance of the Inception Meeting and Expert Workshops, and present the proposals / draft results to those meetings. The Consultants will produce the two draft reports, the final draft and the final reports mentioned above, as well as PowerPoint presentations that summarise the main points for the Expert Workshops.

 

The Consultants may chose to entre into partnership with an established Vietnamese institution who would help to facilitate to access to existing CGE models concerning the Vietnamese economy and to relevant data.

In particular the Consultants will:

ü  Prepare the Study, including review of background materials and practical arrangements (including work plan) for the team of consultants in close co-operation with the EU Delegation in Hanoi. This will include a  kick-off meeting to be organised at the EU Delegation within two days after the Consultants’ arrival in Hanoi during which the Consultants will present the ‘Inception Report’ (see paragraph 5.1) and a debriefing meeting to be organised at the EU Delegation during which the Consultants will present the main findings of the Study in a power point presentation (see paragraph 5.1);

ü  To seek and document the views and level of interest of all relevant stakeholders, including notably the Vietnamese authorities[16] (MPI, MOIT, MOF), relevant, EU member states, other donors, business groups.

ü  Identify possibilities of establishing synergies or avoid overlapping with actions of other donors, Vietnamese counterparts or wider stakeholders.

 

IMPORTANT NOTE: the Consultants should indicate the experts’ place of residence in their CVs.

 

The consultant team will operate under the direct supervision of the Team Leader, who will be directly responsible to the EU Delegation for the overall quality and consistency of reports and documents produced by the team. The experts must have sound communication skills and be capable of working as a team. Each must be able to produce high quality reports rapidly. The consultants must be able to work independently in terms of computer and office facilities. The team will have excellent writing and editing skills

 

UNDP and MUTRAP SUPPORT

 

The UNDP-Viet Nam and MUTRAP project contribute in-kind to this undertaking. They will

a)     provide advice on research methodology and expected results (inception stage);

b)     provide background data to the Consultants where available and possible

c)     participate in the two Expert Workshops on CGE modelling

d)     review the draft written outputs, including the peer reviews by national experts and the final draft report.

 

Documents can be provided to the consultants are listed in the Annex of the TORs

 

2.4. Required outputs

 

The Consultants will:

1)     Draft and final Inception report.

2)     First and second draft reports as inputs into first and second Expert Workshops

3)     PowerPoint presentations summarising the first and second draft reports, as inputs into first and second Expert Workshops, in English and Vietnamese

4)     Organise two Expert Workshops, in Hanoi

5)     Brief reports on the two Expert Workshops

6)     Commission minimum six national peer reviewers (names to be supplied)

7)     Ensure peer reviews of both rounds of model study, in written form, by all commissioned peer reviewers

8)     Final draft report, in English and Vietnamese

9)     Final report, with Executive Summary, reports of simulations, final conclusions and recommendations, methodology annex and  other information, in English and Vietnamese

 

 

3.  EXPERTS’ PROFILE

3.1. Number of requested experts per category and number of man-days per category

 

The Consultants will propose maximum 3 team members (Senior), one of whom is the team leader. The team’s combined experience of econometric (CGE) modelling, climate change and energy policy research, and knowledge of the Vietnamese economic, environmental, social and political context (particularly relating to fiscal policy, energy production and climate change) will enable them to complete the assignment efficiently and effectively in accordance with the Terms of Reference. All team members should have excellent command of the English language, and at least one should have fluency in Vietnamese.

 

The team leader will have overall responsibility for the quality and timely submission of the deliverables.

 

The assignment will comprise 80 working and travel days for all experts.

 

3.2. Profile per expertise required

 

  • All experts should be educated to at least Masters Degree Academic level or equivalent in economics, econometrics, statistics, international development or relevant subject.
  • All experts should have at least 10 years of professional experience in economic analysis, forecasting and modelling, with the team as a whole demonstrating an excellent understanding of the Vietnamese economy.
  • At least one member of the team should have at least 10 years experience in CGE modelling, and include full understanding of input-output tables as used in CGE modelling exercises. The team as a whole should demonstrate knowledge of CGE models developed and used in Vietnam.
  • The expertise of the team must include a proven track record conducting research on energy efficiency or economics of climate change, with at least one of the team possessing significant experience in the formulation of CGE models analysing the macroeconomic, fiscal and environmental impact of developments in the energy sector.
  • The team’s expertise must also have good understanding of climate change, including greenhouse gas emissions in Viet Nam and specifically knowledge of energy production, trade and consumption forecast in Viet Nam.
  • The team should demonstrate significant knowledge of the socio-political environment in Vietnam, with an emphasis on current fiscal, environmental and social policy.
  • All experts should be proficient in English with at least one of expert fluent in Vietnamese.

 

3.3. Working language(s)

 

The team of consultants will conduct its activities and produce all reports in English. However, some interventions with Vietnamese interlocutors will require knowledge of Vietnamese. Replacement of language skills required from the Experts by an interpretation/translation service is not allowed.

 

 

3.4 Methodology

 

In addition, the Consultants will provide a short assignment methodology as part of the technical offer. This note, which should be limited to a maximum of 6 A4 pages, should demonstrate an understanding of the TOR, demonstrate the complementarity between team members and outline the proposed methodology for the assignment. This methodology should be submitted in English

 

 

4. LOCATION AND DURATION OF ASSIGNMENT

 

4.1. Start of the mission

 

The team of consultants is expected to start at the last week of January 2012. The field work in Vietnam will start with a briefing at the office of EU Delegation in Hanoi on January 30, 2012. The date will be confirmed with the EU Delegation upon contract signature.

 

4.2. Foreseen finishing period or duration

 

The overall duration of this assignment up to the submission of the final report should be completed before June 30, 2012

 

4.3. Planning including the period for notification for placement of the staff

 

The main steps and timing of the Study are summarised as follows:

Main Steps

 

Time Line

Partnerships

I)             Briefing with EU Delegation From last week of January 2012 (tbc)  
II)            Prepare inception report Beginning of February 2012  

  • Experts of Ministries of Planning and Investment (MPI), of Industry and Trade (MOIT), and of Finance. (MOF)
  • Experts of other ministries, universities
  • Policy Advisors Team of UNDP Vietnam
  • Experts of MUTRAP project
III)           Inception meeting Late February 2012
IV)          First round of model study March 2012
V)           Present draft report of first round of CGE Modelling  to First Expert Workshop Mid April 2012
VI)          Second round of  model study April-May 2012
VII)         Present second draft report including results of the second round of CGE Modelling  to the Second Expert Workshop Mid May 2012
VIII)        Incorporate comments in Final Report Provide Final Draft Report with Conclusions and Recommendations; Early to late June 2012

 

In Vietnam, the team will liaise closely with the EU Delegation and include a briefing at the beginning of the Study and a debriefing before departure from the country. The EU Delegation, the UNDP Policy Advisors team and MULTRAP project will provide the team of consultants with documents which are mentioned in section 2.3 as requested by the Study’s Team Leader. The team of consultants itself must be self-sustaining (for logistic, interpretation and translation, local travel etc.). The Delegation will assist for arranging meetings.

 

The team of consultants will visit relevant authorities, beneficiaries, stakeholders and donors. At the end of the Study in Vietnam at least one debriefing will be organised with the Delegation to discuss the findings and recommendation of the Study.

 

4.4. Location(s) of assignment

 

The Study will take place in Hanoi, Vietnam. All experts will participate in the Inception Meeting, and both Expert Workshops.

 

 

5. REPORTING

 

The Team Leader will be responsible for the overall planning and implementation of the Study as well as for the production and presentation of the required reports.

 

5.1. Content

  • The team will produce a concise Inception Report
  • Written comment from the Peer Review
  • Short report of the 2 technical workshop and Power Point presentation summarise the main points for the Expert Workshops.
  • A draft final report
  • The final report which contain an executive summary and annexes.

 

5.2. Language

 

In both English and Vietnamese for all items under point 5.1 above

 

5.3. Submission/comments timing

 

  • The Aide-Memoire to be presented by the Team Leader to the EU Delegation, as a basis for discussion, two days before the debriefing meeting, which will be scheduled 3 calendar days before departure.
  • PowerPoint presentations that summarise the main points for the Expert Workshops.
  • The draft report will be submitted by the Consultants to the EU Delegation by electronic mail 10 calendar days after departure of the Team Leader from Vietnam, at the latest.
  • Comments on the draft report will be sent to the Consultants within a maximum of 4 weeks after the receipt of the document.
  • The final report, taking into account Delegation’s comments, will be submitted in English by the Consultants to the EU Delegation 2 week after the receipt of those comments, with the Vietnamese version to follow a week after that.

 

If the Experts prove unable to meet the level of quality required for drafting these documents, the Framework Contractor will provide, at no additional cost to the European Commission, immediate technical support to the team to meet the required standards.

 

5.4. Number of report(s) copies

 

The Final Report will be submitted to the EU Delegation in Hanoi, electronically and in addition by Special Delivery in five copies in English and five in Vietnamese.  The Final Report will clearly contain on the cover page the following indication: “Letter of contract, number (…..) of the (….) Framework contract”.

 

 

6. ADMINISTRATIVE INFORMATION

 

6.1. Language of the specific contract: English

 

6.2. Other authorized items to foresee under ‘Reimbursable costs”

 

  • Provision for interpretation/translation. Please consult the EU-UN guidelines for local costs available on the website of the EU Delegation to Vietnam: http://www.delvnm.ec.europa.eu/eu_vn_relations/development_coo/EU_Guidelines.html. The interpretation and translation costs should be quoted as “all-in” and no travel, accommodation or any other additional costs may be charged for translator/interpreter.
  • Provision for workshops (i.e. costs for refreshment, venue, equipment rentals, handout materials, stationaries,…)
  • Provision for Peer Reviewers
  • International flights to and from Vietnam shall be economy class and via the shortest possible route.

 

6.3. For riders only: operational conditionality for intermediary payment if foreseen as per article 7.2 b) of the Special conditions: N/A

 

6.4. Others

 

  • Visas for Vietnam must be obtained prior to commencement of the team of consultants. The EU Delegation in Hanoi can assist the experts to this purpose;
  • During all contacts with the Vietnamese Authorities or any other project or organisation, the consultants will clearly identify themselves as independent consultants and not as official representatives of the European Commission. All documents and papers produced by the consultants shall clearly indicate the number of the contract and carry the following disclaimer: “This report has been prepared with the financial assistance of the European Commission. The views expressed herein are those of the consultants and therefore in no way reflect the official opinion of the Commission”.
  • Secretarial/office-related costs which may include office rental, communications (fax, telecommunications, mail, courier etc.), report production and secretarial services both in the Consultant’s headquarters and/or individual expert’s home office and for experts in the beneficiary country are considered to be included within the fee rates of the experts. No costs of this nature may be charged in addition. Please also note that no office, secretarial or communication facilities will be provided by the EU Delegation.
  • These Terms of Reference may be elaborated further by the EU Delegation and/or be completed at the briefing session foreseen in Hanoi, Vietnam. Attention is drawn to the fact that the EU Delegation reserves the right to have the reports redrafted by the Experts, as many times as necessary, and that financial penalties will be applied if deadlines indicated for the submission of reports (draft and final, in hard and electronic copy) are not adhered to.

▪       Selected consultants must possess at least six month passport validity and obtain or possess a valid visa from relevant Vietnamese embassies/consulate offices prior to coming to Vietnam, with assistance from the EU Delegation in terms of a Note Verbale to the relevant Vietnamese Embassy.

 

 

Annex: Documents to be provided to the team of consultants upon request

 

Results of UNDP-MUTRAP study 2010-2011:

  1. PeaPros Consulting JSC (2011) Value Chain and Policy Analysis of Fossil Fuel Trade, Subsidy and Tax in Viet Nam, Package 1, under the UNDP Viet Nam research project “Research on fossil fuel prices and taxes, and their effects on economic development and income distribution in Viet Nam”. Hanoi
  2. Dirk Willenbockel and Ho Cong Hoa (2011) Fossil Fuel Prices And Taxes: Effects On Economic Development And Income Distribution In Viet Nam. Package 2 – CGE Modelling. Institute of Development Studies at the University of Sussex (UK) and Central Institute for Economic Management, Ha Noi
  3. Nguyen Minh Bao and John Sawdon (2011). Environmental Assessment of the Potential Effects and Impacts of Removal of Fossil Fuel Subsidies and of Fuel Taxes. Package 3 report – UNDP Viet Nam and Multilateral Trade Assistance Project III (EU-Viet Nam MUTRAP III; EuropeAid/126313/C/SER/VN)

 

Result of DFID-MPI study 2010:

 

  1. Nguyen Manh Hai, John Roger and et al (2011) Study into the Economics of Low Carbon, Climate-Resilient Development in Vietnam, Scoping Phase, CIEM/MPI. Hanoi.

 

Other background documents:

  1. Agustina C. et. al., 2008, Black Hole or Black Gold? The impact of Oil and Gas Prices on Indonesia’s Public Finances, Policy Research Working Paper, Vol. 4718, pp. 1-37.
  2. Agustina C. et. al., 2008, Black Hole or Black Gold? The impact of Oil and Gas Prices on Indonesia’s Public Finances, Policy Research Working Paper, Vol. 4718, pp. 1-37.
  3. Baumueller H., 2010, Building a Low Carbon Future for Vietnam: Technological and other Needs for Climate Change Mitigation and Adaptation, Energy, Environment and Development Program Paper (Chatham House), Vol. 09/02, pp. 1-33.
  4. Blackman A., Osakwe R., Alpizar F., 2010, Fuel Tax Incidence in Developing Countries: the Case of Costa Rica.
  5. Cunado J. & Perez de Gracia F., 2003, Do Oil Shock Matter? Evidence from some European Countries, Energy Economics, Vol. 25, pp. 137-154.
  6. Datta A., 2009, The Incidence of Fuel Taxation in India, Energy Economics, Energy Economics, Vol. 32 (1), pp. S26-S33
  7. Jansen H. & Klaasen G., 2000, Economic Impacts of the 1997 EU Energy Tax: Simulations with Three EU-wide Models, Environmental and Resources Economics, Vol. 15, pp. 179-197.
  8. Nationally appropriate mitigation actions (NAMAs) were agreed in the “Bali Action Plan” under the UNFCCC (in 2007), to be implemented by developing nations with support from developed nations
  9. Sterner T., 2006, Fuel Taxes: An Important Instrument for Climate Policy, Vol. 25, pp. 3194-3202.

 

Those as well as further available reference documents will be supplied by the UNDP Policy Advisors Team, MUTRAP project and the EU Delegation upon request.

 

 

 

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[1] Computable General Equilibrium (CGE) models are a class of economic models that use actual economic data to estimate how an economy might react to changes in policy, technology or other external factors.

[2] The 20/20/20 targets are: (1) Cutting greenhouse gases by at least 20% of 1990 levels (30% if other developed countries commit to comparable cuts); (2) Cutting energy consumption by 20% of projected 2020 levels – by improving energy efficiency; and (3) Increasing use of renewables (wind, solar, biomass, etc) to 20% of total energy production (currently ± 8.5%)

[3]    There is currently no internationally agreed definition of low carbon development; a definition could be “Actions which include making a contribution towards stabilising levels of CO2 and other greenhouse gases at a level that will avoid dangerous climate change, through deep cuts in global emissions, demonstrate a high level of energy efficiency and use low-carbon energy sources” – Skea and Nishioka (2008) stated from Institute of Development Studies (IDS)

[4]    The strategy aims to transform the EU into a knowledge-based, resource efficient and low-carbon economy and provide a sustainable response to the challenges facing the EU up to 2050.

[5]    Nationally appropriate mitigation actions (NAMAs) were agreed in the “Bali Action Plan” under the UNFCCC (in 2007), to be implemented by developing nations with support from developed nations.

[6]    Sterner T., 2006, Fuel Taxes: An Important Instrument for Climate Policy, Vol. 25, pp. 3194-3202.

[7]    Cunado J. & Perez de Gracia F., 2003, Do Oil Shock Matter? Evidence from some European Countries, Energy Economics, Vol. 25, pp. 137-154.

[8]    Datta A., 2009, The Incidence of Fuel Taxation in India, Energy Economics, Vol 32 (1), pp. S26-S33.

[9]    Agustina C. et. Al., 2008, Black Hole or Black Gold? The impact of Oil and Gas Prices on Indonesia’s Public Finances, Policy Research Working Paper, Vol. 4718, pp. 1-37.

[10] Blackman A., Osakwe R., Alpizar F., 2010, Fuel Tax Incidence in Developing Countries: the Case ofCosta Rica.

 

[11] Agustina C. et. Al., 2008, Black Hole or Black Gold? The impact of Oil and Gas Prices on Indonesia’s Public Finances, Policy Research Working Paper, Vol. 4718, pp. 1-37.

[12] Ramadhan Harisman (2011) Climate Fiscal Framework – Indonesian Perspective,Fiscal Policy Office, Ministry ofFinance,Indonesia. Presentation to Climate Change Finance and Development  Effectiveness: A country-led approach to strengthening the effectiveness of climate change finance 12-13 September, 2011.

[13] Jansen H. & Klaasen G., 2000, Economic Impacts of the 1997 EU Energy Tax: Simulations with Three EU-wide Models, Environmental and Resources Economics, Vol. 15, pp. 179-197.

[14] Beside financial support from DFID, the study has also received technical support from the WB, US andAustralia.

 

[15] In March 2011, the Prime Minister has assigned MPI to take the lead in developing the National Green Growth Strategy

[16] Please note that meetings with Vietnamese authorities will have to be held together with a representative from the EU Delegation