Energy pricing policies in developing countries

Government energy pricing policies have multiple and often conflicting objectives: economic efficiency, government revenues (for both parastatal supply companies and the treasury), maintenance or improvement of income distribution, promotion of particular sectors (such as industrial exporters and local resource development) demand management and security of supply. It is important to examine the impacts on and the trade-offs between these objectives resulting from alternative policies in order to assist in policy selection. This article discusses the more important objectives and their conflicts and outlines an approach for the quantitative examination of alternative policies.