Electricity pricing in Mali: the dilemma between allocative and productive efficiency

Abstract

Abstract

The fair price of a good or a service can result from many competing or complementary approaches, especially if it is a good such as electricity, with both economic and social characteristics. Indeed, electricity is an industrial product, which has a cost but it is also a social good, essential for the well-being of the population. Therefore, the pricing of electricity must take into account the social nature of its demand but also the reality of its production cost. The whole issue is to reconcile these two seemingly contradictory aspects of a single model. The main objective of this paper is to develop an electricity pricing model in Mali that takes into account the economic nature and cost of producing electricity without ignoring the social nature of its demand. The methodological approach, based mainly on documentary research, consisted in drawing up a review of theoretical models and pricing practices for electricity in the world, supplemented by an analysis of the production costs of electricity in Mali. Based on these analyzes, an electricity pricing model is proposed as a weighted sum of cost and demand factors.

Keywords: Electricity; Pricing; Demand; Welfare; Cost.

JEL Classification : B20 ; L11 ; D0 ; D1 ; D24

Type of paper: Theoretical article