The supply price (prix de cession) is to be determined, exclusive of taxes, on the basis of current and anticipated costs and indexed to both the exchange rate and inflation along the following formula:
•Pt+n is the supply price at year (t+n), in Algerian Dinars (AD) /’000m3
•Pt is the supply price on the date of application
•FXt+n is the USD-AD parity on 1st January of year (t+n)
•FXt is the USD-AD parity on the date of application
•r is a constant rate of inflation
This formula, first introduced by decree dated 24 April 2005, was amended twice, in two respects. First, the inflation rate has been adjusted downward in decree 12 April 2007 from 5% to 3% then readjusted back to 5% in decree dated 12 January 2010. Second, starting with the latter decree, the exchange rate index only applies if FXt+n/FXt >1, that is when the Algerian dinar depreciates against the USD.