LEBANESE REFORMS TO KEEP THE POWER ON
▶ Energy Minister Nada Boustani has ambitions to revamp ailing sector
Lebanon’s energy minister said she is confident that her reform programme for the country’s ailing local electricity sector would be implemented over a decade so that Lebanon could enjoy a reliable power supply.
Increasing electricity production by reducing losses, increasing prices and building temporary units followed by permanent ones, Nada Boustani says she hopes to pave the way for Lebanon to produce enough power to meet local demand by next year and reach a surplus by 2030.
Her plan was endorsed by Lebanon’s Cabinet on Monday and still needs to be ratified by parliament.
Electricity reform was also one of the key conditions demanded by international donors when they pledged $11 billion (Dh40.39bn) of subsidised loans for Lebanon last year to help it invest in its infrastructure.
Insufficient production capacity coupled with ageing power plants, technical losses and fraud, translates into daily cuts that reach between 3 and 12 hours a day, depending on the region. Lebanon can only produce 2,334 megawatts despite peak demand reaching 3,562MW, according to the energy ministry.
Temporary production units should enable the country to increase production by 1,450MW next year, which technically translates into electricity supply 24 hours a day.
The Lebanese government hopes to attract international companies such as Siemens or General Electric to invest in its electricity sector through public tenders.
However, experts worry the process will not be transparent as some public tenders in the past have not been transparent.
For energy consultant Jessica Obeid, the government must ensure “sustainable, least-cost solutions, in a highly transparent procurement process with the best contract terms since the government would most likely be signing long term agreements”.
A previous reform plan announced in 2010 by then energy minister Gebran Bassil – now Foreign Minister – who is from the same Free Patriotic Movement party as Mrs Boustani, failed to bridge the gap. This led several Lebanese journalists to question Mrs Boustani about the feasibility of her plan.
“The atmosphere today is positive”, the minister said yesterday. She said that all political parties understand the importance of reducing the deficit of the state-run national utility company, Electricite du Liban which reached $1.8bn in 2018 and $30bn over the past 25 years.
These figures represent a strain on Lebanon’s ballooning public debt of $85bn.
Mrs Boustani refused to dwell on why previous plans failed, stressing that what was important was to move forward.
In the past, “the main issue has been the absence of political will and weak governance”, which will be vital in the implementation of the new electricity reform plan, Mrs Obeid says.
According to the ministry’s policy paper, EDL’s deficit is primarily due to prices being frozen in 1994 when crude oil cost nearly four times less than today.
EDL produces electricity from fuel oil, but Lebanon’s energy ministry has plans for EDL to switch to natural gas and renewable energies.
Mrs Boustani said that electricity prices would increase starting next year to adjust to production costs and reduce EDL’s deficit.
However, she argued that Lebanese citizens will spend less on electricity because they will not have to pay for private generators. EDL’s production should increase, thus reducing hours of daily electricity cuts.
Lebanon’s electricity sector has been also burdened over the past eight years by the presence of roughly 1 million Syrian refugees, who consume 500MW and cost EDL an extra $275 million a year.
Mrs Boustani said the government would crack down on fraudulent activities such as non-collection of bills or people illegally hooking up into power supplies.