By Anil K. Malhotra, Olivier Koenig, Prasert Sinsukprasert
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Additional info for A survey of Asia's energy prices, Volumes 23-248
The World Bank has consistently stressed that the determination of electricity tariffs should be based on two major principles. The first is that tariffs should reflect economic costs of supply, in terms of the structure and levels. In practice, this principle has been taken to mean that consumers should pay long run marginal costs of meeting their demand. The second major consideration is that tariff levels should be set so as to make power utilities financially viable. With this caveat in mind, the analysis of the tariff differences among these countries becomes interesting so as to identify 'best practices' and help in the formulation of rational pricing policies.
53* These prices are the average state "based" prices in Jan 1, 1992. ** These are actual consumer prices based on field surveys. As shown in Table 1, in all the East Asian countries, average industrial tariffs are lower than the residential ones, and in some countries substantially so. 86 c/kWh). This pattern is similar to that observed in OECD countries: average rates in OECD countries are about 7 c/kWh for industrial and just over US cents 10 c/kWh for residential. However, in practically all the countries of South Asia (except Bhutan), industrial tariffs are significantly higher than residential, while commercial tariffs are usually the highest.
In Kuala Lumpur the tariffs for industries and mining were reduced in 1986/1987 while residential and commercial tariffs were maintained more or less at the earlier levels. In Seoul the commercial tariff was reduced by more than half between 1986 and 1990, and similarly the industrial tariffs dropped by about 25%. In Jakarta and Manila, on the other hand, tariffs were raised almost in tune with domestic inflation. The case of Indonesia, China and India reveal a trend where the exchange rates have not kept up with the differences in inflation (domestic vis a vis the western exporting countries).
A survey of Asia's energy prices, Volumes 23-248 by Anil K. Malhotra, Olivier Koenig, Prasert Sinsukprasert