Lebanon tries to short circuit its billion-dollar ‘generator mafias’
▶ Faced with power cuts, the public also pays unregulated providers, but now the government is enforcing a metered supply, writes Sunniva Rose
After decades of apathy, the Lebanese authorities have decided to confront the country’s largely unregulated private generator providers, who have profited – at often exorbitant rates – from the state’s inability to provide a consistent power supply.
With cuts of at least three hours a day in Beirut but often much longer at peak times or outside the capital, many who can afford it subscribe to a local generator – often a loud, humming, polluting diesel monolith tucked away in their neighbourhood.
Unmetered, people pay based on the amperes they subscribe to, but the bill is based on how many hours the generator owners say they ran their machine to fill in for power cuts. Although the Ministry of Economy and Trade sends out fuel prices with recommended rates generator owners should charge, there has been little enforcement.
The ministry gave generator providers until October 1 to install meters that would, in theory, enable them to bill clients on the basis of electricity consumption instead of the opaque flat fee.
But providers pushed back. The owners claimed the new system would lead to a loss in profit, in an industry that associate professor of economics at the American University of Beirut, Jad Chaaban, estimates is worth more than $1.2 billion (Dh4.4bn) a year. They threatened to protest, block roads and shut down generators to leave the country in darkness.
But in a rare show of resolve, the ministry refused to back down and recently sent investigators to ensure compliance after reports that the majority of generators still did not have meters. Economy Minister Raed Khoury estimated non-compliance with the order was up to 60 per cent.
He said the latest move is to reduce costs for residents who already pay the state-run national utility company, Electricite du Liban, despite the long daily power cuts.
Even though the activities of the private providers are illegal under Lebanese law, authorities turned a blind eye to the rise of private providers during the 15-year civil war that ended in 1990. After the war, the generators filled the supply gap left by the conflict-shattered state provider.
Dr Chaaban said an average a family of four paid $300 a month for electricity between EDL and generator bills – a hefty sum in a country with a minimum wage of $450 a month.
On Tuesday, many generator owners outside Beirut made good on their threat, shutting down between 5pm and 7pm. Areas of the eastern Bekaa Valley – where daily cuts can last 12 hours – were hardest hit.
In response to the authorities questioning and even detaining some generator owners who had not installed meters, a committee claiming to represent the industry accused the government of treating them like drug dealers and thieves. After Tuesday’s protests, Mr Khoury threatened to confiscate generators and to send offenders to court.
At a press conference with Mr Khoury, Justice Minister Salim Jreissati accused a generator “mafia” of carrying out a “rebellion against public authority” and of “attacking citizens’ rights”. He said he asked State Prosecutor Samir Hammoud to take action against owners who caused the blackouts on Tuesday.
For the past month, Mr Khoury’s hundreds of inspectors from the ministry’s Consumer Protection Unit have been travelling the country to check meters on generators.
Fearing a backlash, the inspectors work in pairs and with the protection of members of State Security, an intelligence unit that reports directly to the president’s office. The officers carry M16s and handcuffs but say they have never had to use them against generator owners.
“We’re working under a lot of pressure,” said Nadine Hachouch, of the Consumer Protection Unit, as she drove to inspect generators in the Beirut suburb of Furn El Chebbak with her colleague Nada Mahmoud.
The two women have a list of 22 generator owners who operate in the area. Only two did not turn off their generators during the strike on Tuesday.
Mrs Mahmoud writes down the names of the protesters, to be passed to the ministry.
However, a list of names and phone numbers is not always enough to track down the owners. The first generator owner on the list, who had not installed meters as required, was nowhere to be found and his employees said they did not know his whereabouts.
When he finally answered the phone, he said he was overseas and could not send a copy of his ID card, which is necessary for the inspectors to record the offence.
“Of course he’s not overseas,” muttered the State Security officer after a tense phone conversation. “He turned his generator off yesterday – he can’t be outside Lebanon.”
The inspectors left after the owner promised he would bring his ID in person to the local municipality.
But the new system is not likely to change the generator business overnight. Once meters are installed, subscribers are free to decide if they want to move to the new system or remain at the same flat rate as before, and some are undecided.
“I’m going to wait and see what everybody else in my building does,” said Dalida Hanna, from Zouk Mosbeh, a town north of Beirut.
With the new meter system, she believes her generator bill would be lower than her $55 monthly flat fee. While she might pay less per month, the ministry’s new instructions require a one-time $115 deposit for households who subscribed less than two years ago to keep a monthly supply of 10 amperes, and $66 for a subscription of 5 amperes.
“We just have to keep paying and paying,” she said.
While Mr Khoury is talking tough, Dr Chaaban said it is unlikely the government will rein in what media regularly call the “generator mafias”.
“It’s not the first time the state tries to impose its will on generator owners,” Dr Chaaban said.
“The generator owners are much more powerful than the government. At best, they will compromise by accepting the meters, but increasing their prices.”
At best, generator owners will compromise by accepting the meters, but increasing their prices DR JAD CHAABAN Associate professor of economics