In developing countries, power system planning faces enormous challenges and problems as, for example, future load growth in the face of uncertainties, the constraints imposed on investment, the type and availability of fuel for the generating units, the need for consolidating the dispersed electric utilities in the isolated regions as a prerequisite for future interconnecting these regions via local national grids and with other neighboring countries. Also, how an optimal reliability level can be achieved that will guarantee a continuous power flow with a reasonable costs. All these obstacles made power systems planners and concerned agencies face tremendous difficulties in planning electric power facilities and making sound and appropriate decisions in constructing new power plants or adding new generating units or reinforcing the transmission and distribution networks. The proposed work attempts to display the most tedious and prominent problems and challenges that face the electric power systems in developing countries and influence the decisionmaking process which must be based on two major factors, namely, reliability and cost.