Low energy prices were considered for years, as a necessary condition to encourage economic development in Algeria. But this pricing policy has reached its limits, and indeed, appeared to be negative in its effects on the economy. Important economic deficits in oil and gas production and marketing companies, subsidized prices fostered misuse and waste between our hydrocarbon resources and their use.

The introduction of economic reforms made it necessary to remodel the Algerian energy pricing policy. The new pricing system, which is seen as a way to implement the Algerian energy consumption pattern, is aimed to:

  • Ensure a maximum level of budget earnings,

  • Improve the financial situation of the companies operating in the oil and gas sector,

  • Provide a more balanced use of the country's hydrocarbon resources adoption of the new pricing system in 1990.

In the second part of the paper, we will show the different steps taken in designing energy tariffs since the I NTRO D U CTIO N The price policy of energy products set up in 1968 in the wake of the nationalization of foreign marketing companies was intended to allow a cheaper supply of energy to the various parts of the economy within the framework of a development policy designed to sustain growing industries.

Since 1968, the prices of energy products have progressed, but the progress affected only the tax levy included in the prices, not the payment of operators, which was left nearly unchanged. This low prices policy and the relative freezing of operators' income led to: ~ on the one hand, the squandering of energy resources resulting in an unbalance between the structure of our energy resources and the structure of consumption; - and on the other hand, the creation of a corporate financial imbalance induced companies to resort to compensation practices and to obtain bank overdrafts so feeding inflation.

In order to put an end to the distortions brought about by the old system to the production plants as well as to the national economy, the Ministry of Energy put forward late in 1990 a report in connection with the pricing of energy products.

The approach proposed in that report and approved by the interministerial board on 17 December 1990, was based on the following principles. 1. GENERAL PRINCIPLES 1.1. True prices and the recovering of petroleum revenue Taking into account the long term tendencies of the national supply in the various forms of energy (crude oil, condensate, refined products, natural gas, LPG), the price policy should lead to: - on the other hand, the progressive adjustment of the national economy to the cost and price conditions prevailing in the international market; - and, on the other hand, the recovering by the state of the greatest part of the revenue with the purpose of distributing it according to the economic and social choices of the countr

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