The Lebanese Ministry of Energy and Water is anticipating the reactivation of the Arab Gas Pipeline, whereby Egypt will be supplying Lebanon with natural gas to help against a crippling electricity crisis. Egyptian gas, in addition to electricity imports from Jordan, should help Electricité du Liban (EDL), Lebanon’s public monopolist electricity company, to increase the daily power supply from 2 to 10 hours. In coordination with the world bank, the ministry pf energy and water proposed repricing electricity, to be able to foot bill. 

LIMS has been arguing for several months now for repricing electricity to reduce power rationing and finally the ministry started listening. EDL is currently selling electricity for less than 1 cent per kWh, while the cost of supplying households is higher than 25 cents per kWh. However, EDL is lacking the funds to procure the fuel, essential for operating the power plants. By matching the billing rate to the electricity cost, EDL could then afford enough fuel to use its power stations at full capacity. Moreover, this move would reduce consumer demand and should lead to a lower rate of rationing. 

Still, LIMS highlighted that the current production cost for EDL is extremely high, due to rampant mismanagement. The power company is overstaffed and took numerous suspiciously illicit contracts, circumventing the scrutiny of the Tender Board and leading to higher costs. The electricity production cost can and must be lowered below 10 cents per kWh by eliminating wasteful expenses in EDL and the corresponding ministry. Furthermore, the minimum fee charged for electricity is an unjust burden on modest households, therefore the billing needs to be a flat rate per kwh for every consumer. 

Pricing below cost is also happening with internet providers, telecom services, along with gas stations, and should be immediately terminated. The ministry’s petrol prices are released twice weekly, and they fail to recognize the daily fluctuations of the highly volatile exchange rate. Gas stations are then forced to sell at a loss more frequently than usual. LIMS suggested that gas be priced in USD so import and retail prices match. Furthermore, price controls should be dropped to ensure fuel availability in the market, so gas stations and customers have their interests protected, LIMS stated. Alternatively, instead of regulating prices, the ministry can support the Lebanese by repealing the 11% value-added tax on fuel.

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