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Mediterranean regulators brainstormed on the establishment of an independent Egyptian Gas regulator
30 March 2017
Cairo, Egypt
With the recent establishment of the Egytian Gas Regulator, Mediterranean Energy Regulators (MEDREG) brainstormed in Cairo on the independence of regulators, their financial autonomy and gas market models. Hosted by the Egyptian Gas Holding Company EGAS, the workshop “Towards the establishment of an independent Egyptian Gas regulator: Market Model and License Fees” brought together leading perspectives and expertise on these topics.
Opening the workshop, the EU Delegation representative recalled the important role of Egypt in the Mediterranean region, underlining the latest discovery of the Zohr gas field which will have a great impact in resource diversification for the region.
One common characteristic of the independent regulators which were present at the workshop is the autonomy they have in defining their annual work programme as well as in setting up and using their annual budget. In addition, they all regulate the generation, transmission, distribution and energy supply activities, and issue authorizations and licenses. Most take their revenues from license application fees.
Based on their experience of funding mechanisms, the Turkish and Albanian regulators, EMRA and ERE, shared good practices and pitfalls to avoid in order to achieve a proper gas market model; they also explained how the evolution of license fees has accompanied the changes in their national markets. Meanwhile the Portuguese regulator ERSE and the Greek regulator RAE introduced the core principles that characterize their market models, focusing on the relation between the regulator and the market players.
Egypt is expected to continue playing an important role in the Mediterranean gas industry, especially now that the country is on the path of reforms and is making efforts to re-attract foreign investment that will further develop its hydrocarbon potential. In the context of its substantial reform of its energy sector, Egypt new gas sector reforms established an independent regulatory authority for the gas market, which joined MEDREG in 2016.
MEDREG members have been sharing experience and good practices with the new body charged with the setting up of the gas regulator, with the aim of reinforcing the capacity of the regulator as a leverage for market development.
This workshop discussed methodologies to estimate license fees and the management of a developing gas market: - The Turkish regulator (EMRA) established its financial independence based on the provision to autonomously set up and use its annual budget based on its work programme. Financial resources are provided through the fees collected for license applications, renewals, modifications, license copies and annual license fees. Revenues can also come from other sources such as publications, fines and transmission surcharges. EMRA’s forecasted annual budget is approved by the Parliament and published in the Turkish “Official Journal”. - The Albanian regulator (ERE) indicated that it has the authority to regulate all the segments of the energy market. In particular, the regulator issues authorizations and licenses; regulates the activities in the power and natural gas sector; ensures customer protection and security of supply. - The Portuguese regulator (ERSE) indicated that it worked with the Spanish energy regulator CNMC to establish the new MIBGAS (Mercado Iberico del Gas) exchange platform in order to promote the liquidity on both virtual points. In 2015 Portugal passed a law that identified MIBGAS as its market platform. ERSE and CNMC are also working on the implementation of a market coupling mechanism with implicit capacity allocation that should become operational in the first semester of 2017. Finally, the Greek gas regulator (RAE) shared its work to support the transition of Greece from being an “island” to becoming a transit country. The regulator discussed its intention to create an equal playing-field in the country and implement a proper secondary legislation that leads to the unbundling and certification of the TSO. RAE also presented the interconnection agreement signed in June 2016 between the Greek and Bulgarian TSOs, DESFA and Bulgartransgaz, that allowed Third Party Access at the gas interconnection point “Kulata-Sidirokastro”.
For more information, read MEDREG background note on “Regulatory Financial Autonomy: Estimation of License fees” and “The Gas Market Mode: Securing the Appropriate Regulatory Framework” 
See our Press Release

The presentations of the workshop are available here.
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