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Evaluating electricity sector reform in five MENA countries Share Share

All countries studied pushing towards reforms, but none quite there yet.

Over the past two decades, countries throughout the Middle East and North Africa (MENA) have launched efforts to reform their electricity sectors to allow private actors into this traditionally state-controlled industry. Despite significant advances, as yet, none of the countries studied have fully implemented their reform targets, says an article recently published in Energy Strategy Reviews.

 

According to Ralf Dyllick from EPFL’s Chair of Management of Network Industries, the corresponding author of the article that was published earlier this year, all five countries evaluated – the United Arab Emirates (focusing on its largest emirate Abu Dhabi), Iran, Algeria, Saudi Arabia, and Kuwait – have come long ways since they embarked on the reform path some ten years ago.

 

Varying reform ambitions and approaches have led to a diversity of electricity sector models. These tend to be variants of the so-called single-buyer model, in which the state or a state-owned entity retains the monopoly over wholesale electricity trading while private companies can be involved in power production or distribution. With the exception of Kuwait, all of the countries studied aim to further liberalize the market, letting private companies participate in the wholesale trading of electricity. 

 

While none have reached their target sector model, the achieved intermediary models have already brought significant benefits to the reforming countries. In the article, the authors state that “the adopted sector models allow the reforming countries to import better practices in power plant management and operation, to improve sector efficiency and, most importantly, to build the capacities required for the management of […] markets governed by competition principles.”

 

Operating fully competitive markets demands experienced regulators and policy makers. Thanks to the gradual pace of the transitions underway, the reforming countries have time to acquire the professional capacity to effectively run more advanced reform models.

 

In the future, the researchers will extend the scope of their work to the remaining MENA countries.

 

Reference: Ralf M. Dyllick-Brenzinger, Matthias Finger, Review of electricity sector reform in five large, oil- and gas-exporting MENA countries: Current status and outlook, Energy Strategy Reviews, Volume 2, Issue 1, June 2013, Pages 31-45, ISSN 2211-467X, http://dx.doi.org/10.1016/j.esr.2013.03.004.