Approval of the Egyptian Natural Gas Company (GASCO) Accounting Unbundling Plan
The Egyptian gas market has witnessed a number of significant changes and developments after the establishment of the regulator, which resulted from its role, responsibilities, and activities as a neutral and regulating entity of the market. These developments are reflected in Law No. 196 of 2017, which regulates gas market activities. They represent the board of directors’ commitment to the Egyptian state’s plans and the sector’s strategy to transform the Egyptian market into a competitive regional market, adding to the sector’s achieved successes.
In this context, the law and its executive regulations discussed the regulator’s role in approving, adopting, and setting rules and procedures for investigating and monitoring the separation process, which is considered one of the essential pillars for achieving and enhancing competition in the market, through Articles (50) and (45). These articles oblige any entity that wishes to engage in market activities and combine them or with any other activity to apply accounting separation rules.
This led to the issuance of Decision No. (78) by the regulator’s board of directors regarding the adoption of necessary rules and procedures to achieve accounting separation, which clarify the general and mandatory frameworks for companies to succeed in applying the required degree of separation. These rules grant companies during that transitional period the freedom to develop and determine their detailed implementation plans within a binding time frame, provided that those plans are reviewed by the regulator to ensure their consistency with its objectives and regulations, and then adopted to start actual implementation.
The regulator’s board of directors has approved the plan presented by the operator of the national network (GASCO) for financial unbundling, which began finalizing it during the previous year. It has witnessed a significant number of amendments to the currently applied systems. For example, the number of cost centers in the company has been changed from 65 cost centers to 1,150 cost centers, based on the regulator’s established rules, in order to raise the degree of accuracy and reliability in the separation results. The accounting separation plan is to be implemented through the ongoing digital transformation program, which is being applied in cooperation with various stakeholders in the sector.