Ali Masoud Ali Al-Sunaidy
Electricity service utilities in the GCC : steps towards a common regulatory reform
Al-Sunaidy, Ali Masoud Ali
Richard, 1966 Green
Dr Steve Trotter S.D.Trotter@hull.ac.uk
The member states of the Gulf Cooperation Council (GCC), namely; the Kingdom of Bahrain, the State of Kuwait, the Sultanate of Oman, the State of Qatar, the Kingdom of Saudi Arabia and the United Arab Emirates (UAE) have been moving towards more economic integration while taking practical steps in the direction of market opening and liberalisation. Over the past ten years, the GCC has evolved into a more integrated economic zone with agreed common policies that are coordinated through its Secretariat. With respect to service utilities, the GCC Interconnection Grid – nearing completion in 2011 – is considered a milestone in the direction of integrating GCC electricity markets.
The objective of this research is to suggest a GCC-wide policy to support reform of GCC electricity markets. The suggested policy would include new market structure(s) as well as institutional changes supported - when required - by sector specific laws and regulations. Further to the study’s academic contributions, the research is primarily intended to advance the further development of the economies of GCC member states. The study presents a model that we believe could contribute to expediting the process of developing the GCC zone as a common market by advising policy makers on the applicable elements of GCC electricity market structure, governance and performance.
This study provides a comprehensive review of the theoretical aspects of electricity sector restructuring and examines different options for reform and restructuring based on worldwide experiences. The study adopts a case study research method to analyse the GCC situation in order to arrive at the recommended policy or ‘model’. The research specifically emphasises reforms that have already taken place in the Sultanate of Oman – for which an empirical social cost benefit analysis is carried out - and the Emirate of Abu Dhabi (UAE). Oman and Abu Dhabi are believed to be at more advanced stages of electricity market reform compared to other countries within the region.
The study concludes that while some GCC member states have already taken the initial steps to restructure their respective electricity markets, other members are expected to follow. The study recommends a set of common steps or ‘rules’ that are presented in the form of a ‘model’ for restructuring GCC electricity markets. The proposed model for reform takes into consideration the nature of member states’ economies as well as the restrictions imposed by market size limitations and some other considerations that are a feature of prevailing policies in the region - such as commitments to subsidise consumer electricity tariffs. Since not all GCC member states are on an equal footing in terms of economy-size and preparation for structural reform, the suggested model allows for a transition mechanism. The study recommends that the electricity markets are unbundled before embarking on any further privatisation programmes. Further measures of wholesale competition may be then introduced allowing for a mix of both private and state-ownership through the use of a single-buyer model. Subsequently, activities that have natural monopoly characteristics such as transmission and distribution are to be separated and subject to incentive based regulation.
The study recommends that the role of the GCC Interconnection Authority be restricted to transmission and system operations only and that each member state should have its own independent regulator. The study suggests that the GCC Secretariat play a co-ordination role between the different regulators while a separate power-exchange instrument be introduced to facilitate cross-border electricity trading between GCC member states.
Al-Sunaidy, A. M. A. (2011). Electricity service utilities in the GCC : steps towards a common regulatory reform. (Thesis). University of Hull. Retrieved from https://hull-repository.worktribe.com/output/4213445
|Publication Date||Nov 1, 2011|
|Deposit Date||Nov 20, 2012|
|Publicly Available Date||Feb 22, 2023|
|Additional Information||Business School, The University of Hull|
© 2011 Al-Sunaidy, Ali Masoud Ali. All rights reserved. No part of this publication may be reproduced without the written permission of the copyright holder.
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