Energy Pricing and Demand Management

Dr. Munasinghe emphasizes the importance of coordinated energy planning and pricing in less developed countries with particular reference to the interrelationships among the pricing policies adopted in various energy subsectors–electric power, petroleum, natural gas, coal, and traditional fuels (e.g., firewood, crop residues, and dung). In less developed countries the already complex problems typically faced by energy planners are exacerbated by high levels of market distortion, shortages of foreign exchange and resources for development, large numbers of poor households whose basic needs must be met, reliance on traditional fuels, and a relative paucity of energy data. The principal investment issues surrounding energy planning and the extent to which they influence pricing policy are also discussed.