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RELMED Report Summary

Project ID: 748135
Funded under: H2020-EU.1.3.2.

Periodic Reporting for period 1 - RELMED (Electricity in the Mediterranean: Promoting good regulatory governance)

Reporting period: 2017-06-01 to 2019-05-31

Summary of the context and overall objectives of the project

What is the problem/issue being addressed?

The problem addressed in the RELMED project stems from the confrontation between Northern African countries’ acute need to reform their electricity sector and their political and societal characteristics that make this transition particularly difficult.

On the one hand, these countries face an urgent need to dramatically increase their production of electricity. Being developing countries, the demand for electricity rises very quickly every year. If they want to sustain their industrialization process and offer their population a good electricity service, they must find ways to build new power plants regularly so that their production of electricity matches the demand.

However, Northern African countries face particular difficulties for achieving this objective. Their limited budget implies that they need the intervention of foreign investors to build new power plants. Yet, attracting foreign investors requires the establishment of a transparent and market-based regulatory regime. This is particularly difficult for them to develop because of their autocratic and arbitrary political culture, developmental policies and need to buy out legitimacy from the population through subventions of electricity services.

The RELMED project examines how the different countries studied (Morocco, Algeria, Tunisia) address this particularly delicate and urgent challenge.

Why is it important for society?

First, the RELMED project helps these countries to address their electricity challenge. Looking at three neighbouring but very different countries, it identifies both successful practices and errors committed. This is very valuable information for all countries engaged in such reforms as it provides benchmark as well as positive and negative examples to get inspiration from (or to avoid).

The knowledge produced on the legal and regulatory landscape in the countries will also be very useful for potential investors, who need this information for evaluating the risks and opportunities of investing in the related countries. It shall thus facilitate the investment process, which shall help these countries to address their electricity challenge.

What are the overall objectives?

There are two types of objectives in the RELMED Project. First, it aims at helping Northern African countries to successfully address the challenge of electricity reform as explained in the preceding paragraph.

Besides, the RELMED project has scientific objectives. First, it contributes to the knowledge about the development of regulatory regimes in developing countries, a body of literature that has, so far, ignored the Northern African area. Second, by looking at the role of regulation in autocratic regimes, it opens a new research agenda within the field of studies on autocratic regimes.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

Work performed from the beginning of the project up to now :
- Review of the literature on the electricity sector in Africa and on Northern African studies (political and economic system).
- Visiting stay at Sciences Po Paris (at the CERI : Centre d’etude des relations internationales) during which I connected with French scholars working on the MENA region, and networked with French professionals working in the electricity sector and connected with the MENA region (in order to prepare contacts for interviews in the studied countries).
- I made a presentation of the project in a seminar at IBEI (my host institution)
- Several networking/exploratory work trip to Italy (Rome + Milan) where both most important regional associations in the electricity sector for the Mediterranean region are located, to Paris and to Brussels (to gain information and network with professionals of the sector in the context of workshops).
- Four field work trips: 2 to Morocco, 1 to Tunis, 1 to Algeria, in which I collected the data
- I organized two panels on regulation in MENA region at the ECPR Conference of the standing group on regulatory governance
- I wrote (together with the mentor from my host institution) a first paper on the creation of regulatory agencies in MENA region which we presented at the Conference above mentioned.

Main results achieved so far: Based on a comparison between the Moroccan and the Algerian case, I provided several innovative results.
- First, contrary to what is commonly assumed in the literature on the energy sector in MENA region, I find that resource rich countries (in oil and gas) do not necessarily reform their electricity system later than resource poor countries. To understand the – sometimes counter intuitive - timing of reform, we need to factor in the evolution of oil prices over time.
- Second, while the literature on regulatory governance has, so far, ignored the MENA region, I bring an explanation about the time lag characterizing the MENA region regarding the creation of regulatory agencies compared to the timing observed world-wide. This explanation is based on the abundance of fossil resources (oil) in the region.

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

Progress beyond the state of the art :
- First the RELMED project advances the knowledge on the electricity sector in the MENA region. Most of the related literature is engaged in a normative approach, often from an economic perspective (what should be done, why institutions or rules are not how they should be, etc.). By contrast, the RELMED project offers a political sciences perspective on the determinants of electricity reforms. It thus fully integrates the fundamental role of political factors, often overlooked by normative and economic approaches, to understand reforms, thereby allowing the development of more realistic views of what can be feasible in these particular political contexts.
- Second, it advances the knowledge on regulatory governance in developing countries with its unique insight on the MENA region, by uncovering the key conditional role of fossil resources

Expected results until the end of the project:
- By uncovering the key conditional role of fossil resources, it also points at the more general role of budget to understand why and when developing countries engage in economic and regulatory reforms. This will be developed in an upcoming paper.
- Based on the analysis of the Tunisian case and its comparison with Morocco and Algeria, I will also engage in a reflection on the role of the political system (democracy versus autocracy) in the development of regulation.
- Based on the results of the project, I will also open a new research agenda – together with 2 colleagues of in my host institution - on the role of regulation in autocratic regimes.

Socio-economic impact and wider societal implications.

- I have been invited to disseminate my findings 1) with a presentation in front of the stakeholders at the Union for the Mediterranean 2) publishing a policy paper with the IFRI (most important French think tank on international relations). Both opportunities, which I will take in the next autumn, will offer benchmarks and positive/negative examples to the community of policymakers and investors in the electricity sector in the Mediterranean region, which will help Northern African countries to perform a successful reform of their electricity sectors.

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