Overview:
Phase 3 of
MF&3Ps Program
August 15, 2021
Transition to Phase 3 of the MF&3Ps Program
• Phase 3 will ensure a smooth transition from the Phase 2 activity where
working group participants were trained on use of the updated trade
model as well as electricity trade and market fundamentals
• The model is now populated with the power system technical and
financial data necessary to simulate operation of the market and identify
trade opportunities
• The Working Group participants are believed to have a sufficient
understanding of the model so each is able to: 1) test the model to
ensure it properly reflects operations in its power sector, and 2) develop
an international trade portfolio to optimize the cost of electricity supply
in its country going forward
• The World Bank and Host team will ensure sufficient support as needed
Objectives of Phase 3
Phase 3 will be conducted from August 15, 2021 to September 30, 2021
with the following objectives:
1. Establish communications platform that will ultimately evolve into a trading platform
2. Develop marginal production costs and publish them on the communications platform
3. Further test and refine the trade model for use in trade pricing and identification of priority
investments
4. Further develop the formulas for pricing international trades
5. Initiate shadow activities by working groups to develop the market functions consistent with draft
bylaws
6. Update the bylaws for the Pan-Arab ARC, Arab TSOs Committee and the PAEM Secretariat
7. Initiate development of a transmission pricing regime
Primary Outcomes of Phase 3
1. A fully-tested trade model that accurately reflects the 2020 operating characteristics of
each Member State’s power system reflecting international fuel prices
2. The ability of working group participants to use the trade model for calculating the
marginal cost of production and identifying international trade opportunities
3. The ability of working group participants to price international trades for different types
of transactions
4. Bylaws for the Pan-Arab ARC, the Arab TSOs Committee and the PAEM Secretariat with
comments from the Member State working group participants incorporated. A full
assessment for the improvement of the secondary governance documents will be
presented in subsequent phases of the program
Phase 3 Work Plan
• Establish communications platform
• Further refinements and testing of trade model
• Generation and transmission expansion plans confirmed
• Trade model tested through assignments and sanity checks against own production models
• Trade model test runs under different “what-if” scenarios
• Market roles simulation through shadow market work assignments
• Using trade model, 2 teams identify and negotiate trade prices, terms and conditions through to
confirmation of technical feasibility and regulatory approval
• 1 team uses trade model to identify priority transmission expansion projects to improve functionality of the
PAEM
• At virtual meeting, teams present and defend the results of findings
• The World Bank and Host will modify trade model, bylaws and pricing formulas consistent with feedback
• Brainstorming sessions held at regular intervals (every 2 weeks) on high priority
topics:
• Transmission pricing, priority transmission projects, communications platform design, etc.