Electricity Crisis in Lebanon: Will a Strong Covenant Government Realize a 24/24 Dream?
MBS News | October 1, 2019
At a time when Lebanon is experiencing the worst economic crisis in decades, several questions have arisen about the possibility of the Lebanese government represented by the Ministry of Energy and Water
in implementing the electricity plan prepared by the concerned ministry, especially since Energy Minister Nada Boustani had promised to start implementing the plan and increase tariffs. Electric start next year.
Electricity bill of the most expensive in the world
The monthly electricity bill in Lebanon is one of the most expensive in the world.Lebanese citizen pays more than $ 120 on average per month, instead of one bill he pays two bills, one bill to the EDL, and another bill to the owners of the generators who fill the deficit of electric rationing.
Large fiscal deficit
EDL’s fiscal deficit in 2018 amounted to more than $ 1.8 billion.According to the Ministry of Energy and Water, the reasons are due to fixing the rate of tariff on a lower rate of production cost, the use of old factories with low efficiency and high operating cost, the technical waste and the impact of the displaced Syrians who estimated their consumption. 500 MW. All these factors led to the accumulation of a fiscal deficit of over US $ 30 billion.
Plan to increase production and ease the deficit
The Ministry of Energy and Water has worked to present a plan approved by the Lebanese government in 2019, aimed at alleviating the electricity deficit and securing electricity 24/24 in various Lebanese regions, working in partnership with the private sector.
MP Edgar Maalouf told Sputnik that this is the most appropriate plan to alleviate Lebanon’s electricity deficit.The plan was drawn up in 2010 and was discussed and criticized and amended until approved in 2019, and approved by the consensus of all political forces, and everyone praised it especially that the bank International and international institutions in a particular place were supervising their details. “
The interests are affected by the insurance of electricity 24/24
Maalouf stressed that “it is clear that there are significant interests will be affected with the provision of electricity 24/24 in Lebanon, and in my opinion the obstacles that we see from time to time and criticism is in the context of people and parties do not want to secure electricity in the country because they do not want to improve neither the plan nor performance nothing more and nothing less “.
Maalouf said that “who brought the file of electricity to what we are is a decision not to want to be electricity 24 hours because there are significant benefits are obtained from the owners of generators or from companies importing fuel and diesel on Lebanon.”
The Lebanese MP pointed out that there is a possibility to raise nutrition in the event that the obstacles are not put to the plan, today we have the books of conditions were developed very quickly by very high standards.
The electricity sector is responsible for 45% of the public debt
Lebanon has been suffering from a crisis in the electricity sector for nearly three decades, so that successive governments have not been able to solve this intractable crisis, which increases the burden of the state treasury hundreds of millions of dollars annually and constitutes 45% of the public debt.
The head of the Lebanese Institute for Market Studies Dr. Patrick Mardini tells Sputnik that “the electricity sector is responsible for almost 45% of the debt in Lebanon,” pointing out that “we have a debt problem and we can get to a place we can not pay and the electricity deficit is the first responsible about this topic”.
He adds: “ Lebanon’s electricity deficit in 2019 amounted to approximately 2500 billion pounds, this is estimated for 2019, and in the 2019 budget, Lebanese politicians said they expect a deficit of 2500 billion pounds, although the deficit in 2018 was larger, about 3,000 billion. ”
The link between the electricity sector and the price of oil
Mardini pointed out that the deficit of the electricity sector is linked to the price of oil, electricity deficit is 2500 billion pounds and there are promises to reduce it to 1500 billion pounds in 2020, if we talk about the price of a barrel of oil between 50 and 60 US dollars could be a deficit of 2500 billion pounds in 2019, but If the price of oil goes up to about $ 80, the deficit will surpass that figure.
He pointed out that EDL produces and sells electricity and is not supposed to have any loss, 2500 billion and 1500 billion pounds deficit sector due to poor management of electricity, because this sector is supposed to earn money and not vice versa, and today if we look at the owners of generators who were able To make profits from their work in electricity, we wonder why the Lebanese state is losing money, not only loss, but will break the state and this is the main problem. “
The private sector will ensure the establishment of electricity plants
Mardini said that “the latest version of the plan of the Ministry of Economy is better than the 2010 version that was developed, because it considered that the state will not pay the cost of establishing factories for additional production of electricity because the private sector will ensure the establishment of factories and the sale of electricity, and thus save the state the cost of investment In new power plants. “
He added: “This reform is a reform in the right direction in order to increase production, the positive part is that the private sector will be responsible for the establishment of factories instead of the Lebanese state, and the non-positive part of the plan is to impose on these private companies that will establish factories to provide electricity quickly, which is called It has the name of a phased plan, which means that in addition to the factories they want them to rent electricity vessels, this will lead to a high price of electricity, and the public finances situation in Lebanon is very bad and does not carry any adventures.
Increase tariffs to ease deficits
Mardini pointed out that there are two ways to reduce the deficit in this sector, increase tariffs or increase rationing, because the Lebanese state today sells electricity at a loss and whenever it sells kilowatts whenever you lose, and today we want electricity and do not want rationing, and the solution is to sell electricity at a price that covers the cost and this direction we will go 2020 mechanism. “
For his part, the head of the Committee on Energy and Water in the House of Representatives MP Nazih Najm told “Sputnik”, “Any plan we have access to electricity 24/24 and 7/7 I am on its side.”
The Minister of Energy and Water Nada Boustany announced the launch of a detailed book of conditions calling for the private sector to build 500 MW of wind power plants.
She pointed out that the detailed book of conditions has been sent to all companies and the coalition of companies that have previously submitted declarations of intent, which amounted to 42 from Lebanon and the world