REGIONAL DEAL WILL ENABLE LEBANON TO RESTORE POWER
US and World Bank involved in complex plan to import electricity and gas through Syria
Lebanon will be able to provide an extra six hours of power a day within weeks after a deal with Egypt and Jordan, Energy Minister Walid Fayad has told The National.
The country is suffering a major power crisis, with state-run Electricite du Liban recently announcing it could not provide electricity because it was unable to import fuel.
The agreement, which involves the US and the World Bank, requires dealing with the region’s complex politics, including US sanctions against Syria and decades-long hostilities between Israel and Syria on one hand, and Israel and Lebanon on the other.
It involves a gas swap with Egypt, which is expected to sell a yet-to-be-decided amount of gas to Syria to be distributed internally. Syria will then send a smaller quantity to Lebanon through the Arab Gas Pipeline.
The difference will be equal to an in-kind payment to Syria from Lebanon through a loan from the World Bank.
By not paying cash, Lebanon will evade US Caesar Act sanctions that threaten measures on people and businesses that work with Damascus.
“By virtue of the deal, the Syrians will have more gas flowing into Syria than gas coming to Lebanon in a way that is equivalent to the service rendered,” Mr Fayad said.
The minister said that during a visit to Beirut on Wednesday, US diplomat Amos Hochstein confirmed that Washington had issued a letter of comfort, which will “make this deal possible without any ramifications vis-avis the sanctions”.
A letter of comfort refers to documents issued to clarify exceptions to sanctions, typically for humanitarian or Covid-19 reasons, said Karim El Mufti, professor of political science at Beirut’s Saint Joseph University.
“Such letters already exist for the medical and humanitarian sectors in Syria,” he said.
“This is all being done, prompted and encouraged by the international community and the US administration. So it’s all in line with their recommendations.”
Negotiations are continuing with Egypt to decide on how much gas it will deliver to Syria.
“We’re working to finalise it soon – I’m hoping in weeks rather than months,” Mr Fayad said.
He declined to give a figure for the loan requested from the World Bank, which did not respond to a request for comment.
But Marc Ayoub, an energy policy researcher at the American University of Beirut, said Mr Fayad’s predecessor, Raymond Ghajar, had asked the World Bank for a $250 million credit support. This means the World Bank would act as a guarantor should Lebanon default on its payment.
This figure is expected to
change as energy prices soar around the world.
“The reason that he [Mr Fayad] may have not given a price is because gas prices are increasing, and Egypt might be asking for more,” said Mr Ayoub.
Egypt has assured Syria it will pump gas from its own fields and not use imports from Israel, which is technically at war with both Lebanon and Syria, Mr Ayoub said.
“The pipeline that used to send gas from Egypt to Israel has been inverted to pump gas from Israel to Egypt. This pipeline could be split,” he said.
Mr Ghajar announced in September that Lebanon needed 600 million cubic metres of gas to provide 450 megawatts of electricity, a quantity that matches Lebanon’s only electricity plant that can convert gas into power.
This is roughly equivalent to injecting four additional hours of electricity a day into the national grid.
While it ran out for a time, Lebanon’s state-run national utility company currently generates about four hours of electricity a day, in part thanks to fuel imported from Iraq via another complicated swap deal involving the Emirates National Oil Company.
Another two hours of electricity a day, or 250MW, are expected to come to Lebanon from an electricity transfer from Jordan via Syria, said Mr Fayad.
Added to the four hours expected from Egypt, that would bring the total number of hours of power a day to 10.
“If we could do more, that would be much better, but at this stage, this is not guaranteed,” said Mr Fayad.
Electricity transfers from Syria to Lebanon used to be common until 2018. Syria’s electricity grid has been damaged during its civil war but is being repaired.
“It should be upgraded and usable soon, in a matter of weeks,” said Mr Fayad, who met Syria’s Minister of Electricity Ghassan Al Zamil in September in Amman, with Egyptian and Jordanian officials present.
Joint Lebanese-Syrian teams of engineers recently inspected the gas network in Lebanon and are scheduled to also inspect the gas network in Syria “to make sure it’s suitable”, said Mr Fayad.
The electricity is expected to be transferred from Jordan towards the Syrian border area of Deraa, which was recently the scene of months of fighting. It will pass through Damascus and arrive in Lebanon at Ksara substation, said Mr Ayoub.
He said the restoration of the Syrian network would take at least three months.
“Informal discussions among officials indicate that Jordan intends to support Syria with spare parts,” he said.
“The Jordanians are eager to export electricity because it produces a surplus and they’ll do whatever they can to do it.”
The two deals involving Egypt and Jordan could be financed by separate World Bank loans.
“It doesn’t have to be the same [loan], given that each one of those is a project on its own and maybe we don’t want one delaying the other,” said Mr Fayad.
Lebanon’s power crisis was caused by decades of mismanagement of the country’s finances by politicians. The World Bank ranks its two-year economic crisis as one of the worst in the world since the mid-1800s.
But Mr Fayad was hopeful about the two energy deals.
“If the terms are done right, and if the money is used properly, this could work in the interest of the Lebanese people,” he said.