Advertisement

Energy Pricing in Developing Countries: Role of Prices in Investment Allocation and Consumer Choices

  • Ramesh Bhatia

Abstract

As noted in preceding chapters, the basic objectives of energy pricing policy will include the achievement of (1) economic efficiency and (2) social equity, while maintaining (3) financial viability. Some of these objectives may be translated in terms of criteria of fixing administered prices, e.g., “lifeline rates” for electricity, subsidized kerosene for meeting basic needs, control of inflation, encouragement to domestic resources, optimum investments in fuel-producing sectors, optimum product mix of refineries, and profitability and efficient management of public sector units. Administered prices could be changed at one or more of the following stages: (1) resource pricing, (2) transfer pricing (to conversion units), (3) output pricing (for the manufacturing unit), and (4) consumer pricing through taxes and subsidies. It is important to realize that some of the objectives of energy pricing can be achieved by adjusting the final product prices through appropriate taxes and subsidies. Adjustment of consumer prices is sufficient to attain objectives such as meeting basic needs, controlling inflation, and considering environmental requirements. Thus, distortions in the mine-mouth or well-head pricing of energy resources, transfer pricing, and product prices can be avoided if it is kept in mind that these prices do not have to be used for achieving macro-economic objectives.

Keywords

Diesel Engine Energy Price Shadow Price Biogas Plant Transfer Price 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Anandalingam, G. (1984). The Economics of Industrial Energy Conservation in Developing Countries. Delhi, India: Tata Energy Research Institute.Google Scholar
  2. Bhatia, R. (1976). “A multiprocess multiregional programming model for petroleum industry.” Indian Economic Review (April).Google Scholar
  3. Bhatia, R. (1980). “Energy alternatives for irrigation pumping.” in R. K. Pachauri (ed.), International Energy Studies. New Delhi: Wiley Eastern.Google Scholar
  4. Bhatia, R. (1981). Energy Pricing in Developing Countries: An Integrated Framework. (Draft) Cambridge, Mass: Harvard University (February).Google Scholar
  5. Bhatia, R. (1983). Planning for the Petroleum and Fertilizer Industries: A Programming Model for India. Oxford, UK: Oxford University Press.Google Scholar
  6. Desai, A. V. (1979). Impact of Higher Oil Prices on India`. International Labour Organisation (September).Google Scholar
  7. Gellerson, M. (1979). “Marginal cost-based electricity tariffs: Theory and case study of India.” Indian Economic Review (October).Google Scholar
  8. Government of India (1976). Report of the Oil Prices Committee`.Google Scholar
  9. Government of India (1979). Report of the Working Group on Energy Policy`.Google Scholar
  10. Government of India (1980). Report of the Committee on Power`. New Delhi.Google Scholar
  11. Government of India (1983a). Evaluation of the Rural Electrification Programme. Vol. II.Google Scholar
  12. Government of India (1983b). Mid-Term Appraisal of the Sixth Plan`.Google Scholar
  13. Government of India (1983c). Report on Coal, Bureau of Costs and Prices`.Google Scholar
  14. Kadekodi, G. (1984). Pricing of energy inputs: Cases of coal, petroleum and electricity. Institute of Economic Growth. Mimeo.Google Scholar
  15. Koomsap, P. (1981). Petroleum Products Pricing and Its Impacts, View from an Oil-Importing Country`. Conference of the Federation of ASEAN Economic Associations (November).Google Scholar
  16. Munasinghe, M. (1980). “An integrated framework for energy pricing in developing countries.” Energy Journal (July).Google Scholar
  17. Munasinghe, M. (1984). Energy Supply and Demand Management. Draft.Google Scholar
  18. Munasinghe, M. and J. Warford (1982). Electricity Pricing, Theory and Case Studies. Baltimore: The Johns Hopkins University Press.Google Scholar
  19. Murty, M. N. (1984). Distributional Equity, Government Revenue, Prices and Tax Policy. Institute of Economic Growth (March). (Mimeo.)Google Scholar
  20. Patel, S. M. (1982). Study on Conservation of Light Diesel Oil and Electricity Used in Pumpsets for Lift Irrigation in Gujarat, Ahmedabad, India.Google Scholar
  21. Patel, S. M. and R. K. Gupta (1979). Study on Conservation of Light Diesel Oil Used in Pumpsets for Lift Irrigation in Gujarat. Ahmedabad, India.Google Scholar
  22. Ramesh, S. (1980). Pricing Policy for Power (December). (Draft).Google Scholar
  23. Schramm, G. (1979). The Economics of Energy Pricing (January). (Draft).Google Scholar
  24. Sharma, S. (1983). Domestic Energy Consumption in India`. IES Training Programme.Google Scholar
  25. Siddayao, C. M. (1981a). Fossil Fuel Pricing Policies in the Asia Pactfic Region: A Preliminary Assessment of Some Allocative Implications. Expanded version of report prepared for the Asian Development Bank 1980 Regional Energy Survey issued in the Resource Systems Working Paper Series as WP-81-3. Honolulu: The East-West Center.Google Scholar
  26. Siddayao, CM. (1981b). Pricing of Fossil Fuels in Asia: Allocative Implications. Paper presented at the International Atlantic Economic Conference, London, 1981, and issued in the Resource Systems Working Paper Series as WP-81-11. Honolulu: The East-West Center.Google Scholar
  27. Swiss Development Corporation Agency, New Delhi (1985). Energy Alternatives for Lift Irrigation. Mimeo.Google Scholar
  28. United Nations. (1982). Proceedings of the Committee on Natural Resources, Eighth Session. Energy Resources Development Series No. 25. Bangkok: Economic and Social Commission for Asia and the Pacific.Google Scholar
  29. World Bank (1981). Energy Pricing in Developing Countries: A Review of Literature`. Energy Department. Paper No. 1 (September).Google Scholar
  30. World Bank (1982a). Bangladesh: Issues and Options in the Energy Sector (October).Google Scholar
  31. World Bank (1982b). India: Coal Sector Report (September).Google Scholar
  32. World Bank (1982c). Sri Lanka: Issues and Options in the Energy Sector (April).Google Scholar
  33. World Bank (1983). Nepal: Issues and Options in the Energy Sector (August).Google Scholar

Copyright information

© The East-West Center, Honolulu, and the United Nations, New York 1985

Authors and Affiliations

  • Ramesh Bhatia

There are no affiliations available

Personalised recommendations