Market restructure impact assessment

Egyptian Electricity sector has been functioning under a vertically integrated structure for quite sometime. However, a restructure process to put the sector into a more competitive form has already started. The objective of the introduction of competition into the sector is to bring the sector into a state of self sufficiency, i.e., the sector should be able to generate enough cash to cover all costs incurred and to support future expansion without the need of external assistance. The Egyptian Electricity Market is currently arranged in the form of three separate subsectors; generation, transmission, and distribution. Both, the transmission subsector, one company, and the distribution subsector, nine companies, are fully owned by the government. The generation sector is mainly composed of: four government owned thermal generation companies, a hydro generation company, and three privately owned pay-or-take BOOT projects. The market is arranged in a single-buyer form. The present ownership structure offers limited competition. Therefore, it does not appeal to investors willing to take share in the sector´s activities. It has been proposed in a prior publication to gradually liberalize the market [1]. This paper is dedicated to the formulation of a methodology to assess the impact of implementation of such measures. The paper is arranged in five further sections. Section II describes the proposed market changes and their objective. Section III introduces the methodology adopted for the perceived market modeling. Section IV is an example for illustration. Section V is conclusions.