Gas Regulatory Authority Mandates Accounting Separation Rules for CNG Activities to Enhance Transparency and Competition
The Gas Regulatory Authority (GASREG) has announced a decision requiring companies engaged in compressed natural gas (CNG) activities to implement accounting separation rules between their different activities. The decision aims to enhance transparency, ensure a level playing field, and promote fair competition in Egypt’s natural gas market.
The decision is in line with Gas Market Regulatory Law No. 196 of 2017 and its Executive Regulations, which require companies engaged in multiple activities, including GASREG-licensed activities, to maintain separate accounting records. This ensures that tariffs and charges for networks and facilities reflect the actual cost of the relevant service and are not affected by costs associated with other activities.
Following an assessment of CNG companies, including GASTEC, Master Gas, and Car Gas, GASREG’s Board of Directors decided to require these companies to prepare proposed accounting separation plans covering their different activities, including the operation of gas compression and fueling stations and CNG transportation systems using trucks.
The plans will be submitted to GASREG for review and approval to ensure compliance with applicable regulatory requirements.
Accounting separation helps prevent cost cross-subsidization and overlap between activities, supporting fair, cost-reflective tariffs and a level competitive environment. It also strengthens investor confidence by ensuring that activities are conducted under clear and transparent rules.
GASREG clarified that the new requirements will not affect the companies’ consolidated financial statements as legal entities. They are intended only to organize data and reporting for activities under GASREG’s regulatory oversight. Companies will continue to comply with accounting standards issued by other competent authorities.
The decision reflects GASREG’s commitment to developing Egypt’s natural gas regulatory framework, enhancing transparency and competition, and encouraging investment. It also supports the adoption of international best practices and Egypt’s efforts to strengthen its position as a regional energy trading hub.
The implementation of these rules is part of GASREG’s broader strategy to improve market efficiency, integration, and the effective use of networks and facilities, supporting sustainable growth in Egypt’s natural gas sector.