Adopt an appropriate pricing policy for the energy sector (Policy no. 7, Maldives National Energy Policy and Strategy 2010)

Background: In Maldives, the energy pricing structure follows a top-down approach. The Ministry of Economic Development sets energy prices, which are implemented by most local bodies with minor adaptations. However, electricity pricing is a little nore diffused for the provincial utility companies that determine electricity tariffs which are then approved by the Maldives Energy Authority.The lack of a proper regulatory mechanism has led to non-cost reflective price, making it difficult for companies that operate in the energy sector to become ficially feasible. In addition, non-targeted subsidization of electricity production in the past has diverted the states scarce financial resources. The pricing policies need to be reviewed regularly action has to be taken against non-compliance under this policy.

Strategies:

• Empower Maldives Energy Authority (MEA) to regulate the energy sector and the pricing policy.
• Formulate and implement pricing strategies to achieve a cost-reflective pricing policy for all commercial energy products including electricity.
• Formulate and implement optimal energy supply expansion plans for the energy sector to ensure cost-reflective prices.

Major Aim: To regulate pricing policy and ensure cost-reflective prices in the energy products.

Achievement: To encourage the investments in renewable energy sector for power generation, feed-in tariff was introduced in 2011. A modified feed-in tariff will be introduced for large scale installations taking into consideration cost-based compensation for RE generation, with different prices offered to different technologies, project sizes and regions. In addition, the government is also planning to allow customers who generate electricity using a RE source, to connect their facility to the distribution network under a Net Metering scheme. MEA is now working on drafting the net metering scheme.

Stakeholders: The Maldives Energy Authority(MEA) is the main body for regulatory work. Regulations will be made after consulting with the stakeholders and after appropriate researches. Also the pricing mechanism and regulations will be made in compliance with the existing policies.

Time Frame: This is a general policy with no particular time frame. However, targets with time frame is set each year in the work plan.

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