General annex: Key insights of international practices towards liberalised markets

This section will identify the key points of successful market in the United States and in European countries, providing more details, including the market design, TPA, transparency, and price index price index. It will also explore how these markets managed the transition from a regulated market to a liberalised one.

Gas market liberalisation increases the efficient use of infrastructure and gas in energy markets. Liberalisation is not a one-size-fits-all approach; numerous frameworks exist for gas market structure. Liberalisation is a lengthy process, but the process is often necessary to improve gas markets. The improvements include the following: more efficient price setting and determination by markets; optimised allocation of resources by value chain segments (often achieved through the breakup of monopolies); efficient use of infrastructure; increasing the number of market participants (i.e. sellers and buyers); transparent price signals to end users and to reduced system cost; increased building of infrastructure supported by market signals; and increased use of gas as an energy source.

Box 5. Lessons from other market liberalisation processes

This section shares the evolution of the US and EU gas markets. The regulations and implementation efforts to liberalise the gas markets were different in each market, and the path for the People’s Republic of China (“China”) will be unique, but there are sharable principles. There are several observations that can be drawn from the experiences of moving from a monopolistic market framework to a liberalised gas market.

There is no single model to create a successful gas market. Though a single correct model would be convenient, individual markets face a variety of specific issues to which market structures must adapt. The starting point for a liberalisation effort is different in each market.

New or revised legislation and regulations need to be clear and unambiguous. There also needs to be a balanced industry consultation process to ensure policies are not enacted “in a vacuum” and to ensure that objectives are achieved without unintended side effects.

Transitions often take substantial time to demonstrate material effects. This can be frustrating but happens as roles and rules change and participants adjust. Initial policies and regulations in the reform process will likely need to be modified, and stakeholders should be prepared for such adjustments. The political willingness to progress reforms and to monitor market liberalisation progress and adjust course as needed is imperative for successful change. A task force empowered with the authority to enact change will be needed to

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