Amendment in Financial Resources of

In August 2017, the new Gas Market Law No. 196 of 2017 was issued reorganizing the natural gas sector (the “Law”)[1] in a step that was aimed to open the industry to a bigger involvement from the private sector. The Law also created a new regulator, the Gas Market Activities Regulation Authority (“GASREG”), that was tasked with managing a gradual liberalization of the gas market in Egypt. In addition to regulating everything related to the activities of the gas market and ensuring the provision of adequate services for all consumers, GASREG has the express aim of encouraging investments, inviting new actors into the market, and maintaining a competitive environment that is free of monopolistic practices. It issues licenses and determines the standards that must be followed by license holders when dealing with the gas market and infrastructure in Egypt. GASREG follows the Minister of Petroleum and is headed by a chief executive from the energy sector. Its board comprises three representatives from the government’s petroleum sector, the head of the Competition Protection Authority and the president of the Federation of Industries. The Law had defined GASREG’s financial resources under Article (10) to be:

1. Designations from public state budget;
2. Revenue from issuing and renewing licenses;
3. Grants and donations;
4. Fees for advisory opinions and consultations;
5. Investment revenues;
6. Yields equivalent to fines collected in the course of the application of the Law; and
7. Any other service fees.

On 25 March 2019, Law No. 13 of 2019[2] was issued amending Article (10) by removing clause (10-6) – fines collected for the violation of the Law – from the list of GASREG’s resources. Accordingly, fines collected from violators in the gas market will now be deposited with the State Treasury. It is worth noting that Article (11) of the Law states that GASREG prepares an independent budget as an economic public authority, and that it retains 25% of its annual surplus which it could defer to following fiscal years instead of depositing with the State Treasury. It is generally perceived as a positive step that regulatory authorities do not retain money collected from fines arising from the violation of the rules they are tasked with implementing to avoid conflict of interests and maintain good governance.   [1] Law No. 196/2017 on Organizing the Activities of the Gas Market, Official Gazette, Issue No. 30 (bis) (b), 1 August 2017. [2] Law No. 13/2019 amending certain provisions of Law No. 196/2017 on Organizing the Activities of the Gas Market, Official Gazette, Issue No. 12 (bis), 25 March 2019.