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LIMS celebrated a landmark victory after the Lebanese Court of Audit annulled the Ministry of Communications' contract with "Stream Media" for Over-The-Top (OTT) media services, citing multiple legal violations. The court ruled that the contract was an attempt to secure illicit profits through a partnership with an unqualified "shell company," marking a significant blow against corruption.
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This ruling aligns with two policy briefs published by LIMS under the APPLE C program, dated June 5, 2024, and December 14, 2023, which exposed the ministry’s efforts to establish a monopoly on OTT services in favor of Stream Media, in clear violation of public procurement laws. LIMS highlighted that the Ministry of Communications had disguised the deal as a Public-Private Partnership (PPP) with Ogero, Lebanon’s national telecom company, in an effort to circumvent legal scrutiny.
LIMS had consistently argued that restricting OTT services to a single provider would have detrimental effects on Lebanon’s economy and consumers by stifling competition and limiting consumer choice. The ministry’s assertion that Stream Media was the sole available provider was discredited by LIMS, which pointed out that well-established OTT platforms were overlooked in the process.
In its advocacy, LIMS emphasized that OTT services should remain open to all interested parties, free from bureaucratic constraints, to ensure healthy competition and maximize benefits for the economy and citizens alike. This ruling is not only a victory for LIMS but also a critical step towards safeguarding Lebanon’s digital economy from monopolistic practices and corruption.
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Lebanon's Power Crisis Deepens Amid Fuel Shortage
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During the first week of July, Electricité du Liban (EDL) has announced a sharp reduction in power supply across Lebanon, citing, a "severe" decline in fuel reserves. Power generation was limited to just two plants, Zahrani and Deir Ammar, but one production unit at Zahrani has already ceased operation. EDL has prioritized electricity distribution to essential facilities such as Beirut's airport, port, and water pumps. The decision comes amid a dispute over fuel payments to the Iraqi government.
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The Impact of Power Shortages on Human Dignity
LIMS argued that this situation undermines human dignity by depriving people of basic necessities and reliable services, eroding their standard of living and increasing hardship. The lack of access to electricity affects essential daily activities—such as studying, refrigerating medicines, and operating businesses—further compromising human dignity. The root cause lies in the Ministry of Energy and Water’s persistent failure to address financial losses at EDL despite raising electricity prices precisely to cover the cost of fuel procurement. LIMS explained that 55-60% of electricity generated from Iraqi fuel remains unbilled, uncollected, or is outright stolen. This inefficiency leaves EDL unable to meet its fuel payment obligations, perpetuating a vicious cycle of financial instability.
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Rather than tackling the fundamental issues of electricity bills, the ministry has resorted to leveraging the threat of blackouts to pressure the central bank into financing fuel imports using Lebanon’s dwindling foreign exchange reserves. This tactic, LIMS argued, only deepens the country’s financial woes without resolving the systemic inefficiencies plaguing the power sector. EDL’s continued subservience to the ministry and its failure to assert financial autonomy have further compounded these challenges.
LIMS also raised concerns about the procurement of Iraqi fuel, which was initially portrayed by the Ministry as a generous grant in solidarity with Lebanon, later described as a barter agreement for medical services, and is now being presented as a purchase requiring significant payment. LIMS called for an investigation into what it described as a “shady deal,” questioning whether the fuel was genuinely acquired through barter or if it was, in fact, a purchase. In that case, the deal would potentially be in violation of public procurement laws since a specific bidder was chosen without conducting a tender that ensures competition and equal opportunity among multiple potential suppliers.
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Private Initiatives on the Local Level
The Ministry’s ongoing struggle to pay for fuel imports from electricity revenues, without relying on additional government or central bank funding, underscores a critical need to decentralize the production of basic services. A shift toward local energy solutions could unlock significant opportunities for entrepreneurs, particularly in the renewable energy sector, by encouraging them to invest in and manage cleaner, more reliable power sources for their communities.
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The existing network of private microgrid generators at the local level demonstrates a proven capacity for effective bill collection—something Electricité du Liban (EDL) has failed to achieve over the past three decades. By capitalizing on this local infrastructure, Lebanon could address both energy production and revenue collection challenges simultaneously. This decentralized approach would not only ensure a more stable energy supply but also foster an environment where local businesses can thrive.
For local enterprises, access to reliable energy is fundamental to growth and development. Consistent power supply enables businesses to operate efficiently, reduce overhead costs associated with energy disruptions, and plan for the future with greater confidence. Moreover, the adoption of local renewable energy projects would instill a sense of ownership and pride among entrepreneurs, who would be directly contributing to the sustainability and resilience of their communities.
In the broader economic context, this shift toward localized energy production could act as a catalyst for innovation and investment in the renewable energy sector, creating jobs and stimulating local economy. As businesses become more self-sufficient, they are better positioned to weather economic uncertainties, ultimately leading to a more prosperous and sustainable future for Lebanon’s local economies.
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Ministry of Energy and Water’s Repeated Tender Failures Highlight Governance Concerns
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Under the APPLE C (Apply Public Procurement Law to End Corruption) initiative, LIMS has published policy briefs scrutinizing the Ministry of Energy and Water’s troubled public tender for the removal of chemical materials from the oil facilities in Tripoli and Zahrani. Despite launching the tender earlier this year, the Ministry has faced repeated failures, relaunching it five times within a span of fewer than five months.
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LIMS attributed these repeated failures to a series of irregularities made by the Ministry in the tendering process, raising serious concerns about the Ministry’s ability to manage contracts effectively—or, potentially, the intentional nature of these setbacks to deter legitimate offers and favor a certain company without a transparent bidding process.
LIMS added that the 2021 Public Procurement Law, which shifted contracting authority from the Tender Department to individual ministries, inadvertently empowered ministers to influence tender outcomes. This has allowed ministries to tailor processes to benefit specific companies, often by shortening the announcement period to limit competition. These practices undermine the core intent of procurement law, which is to ensure competition and secure the best services at the lowest possible prices. By narrowing the pool of potential bidders, ministries not only jeopardize the quality and cost-effectiveness of contracts but also erode public trust in the integrity of the procurement process.
LIMS proposed an amendment to the law that would transfer contracting authority back to the Public Procurement Authority, thereby reducing ministerial influence over tender outcomes. Such a move, LIMS argued, would restore the law’s original intent, opening contracts to broader competition and ensuring that both local and international companies can participate on a level playing field.
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Lebanese Pound: A Fragile Stability Dependent on Central Bank's Policies
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Lebanon has witnessed more than a year of relative monetary stability, with the exchange rate holding steady at around 90,000 Lebanese pounds to the dollar, despite the country’s deepening economic crises, heightened tensions in the south, and concerns over a potential expansion of regional conflict.
According to LIMS, this monetary stability is largely attributable to the central bank's stringent monetary policy, particularly its refusal to extend credit to the government in either Lebanese pounds or US dollars. By sharply reducing the money supply from over 80 trillion Lebanese pounds to an estimated 55-60 trillion pounds, the central bank has played a pivotal role in curbing inflationary pressures and maintaining exchange rate stability. This carefully managed monetary environment is expected to persist as long as the central bank continues to keep the money supply within these limits.
However, LIMS has cautioned that this stability is fragile and could be undermined if the Lebanese government reverts to relying on central bank financing. Should the government seek to increase public sector salaries, fund wage hikes, or finance fuel imports through the central bank, it may be forced to print additional money. This would likely trigger inflation and a subsequent depreciation of the Lebanese pound, or alternatively, it could lead to a depletion of foreign currency reserves, exacerbating the country’s financial crisis.
The warnings from LIMS underscore the delicate balance that currently exists in Lebanon's monetary landscape, where any shift in fiscal policy could have severe repercussions. As the country navigates its ongoing crises, the central bank's commitment to maintaining a tight monetary policy remains crucial to preventing further economic destabilization.
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Escalating Threats on Lebanon’s Southern Border Threaten Economic Stability
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Lebanon is experiencing an alarming escalation in conflict along its southern border with Israel, sparking fears that the war could spread across the country. These developments are raising significant concerns about the potential repercussions for Lebanon and its already beleaguered economy, which is grappling with multiple crises.
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LIMS has warned that the intensifying threats are likely to have a severe impact on air travel to and from Lebanon, casting a long shadow over the tourist season. Numerous flights have already been canceled, with more expected as travelers reconsider their plans. This escalation follows a tourist season already severely disrupted by ongoing hostilities in the south, and the worsening security situation is poised to exacerbate these negative effects.
Should the conflict escalate into a full-scale war, the economic consequences could be devastating, rippling across various sectors, including agriculture and industry, and potentially bringing them to a standstill. Many individuals may be confined to their homes, struggling to secure income to meet their basic needs. Unlike previous conflicts, where companies managed to continue paying salaries despite disruptions, the financial crisis has eroded savings, leaving businesses and individuals more vulnerable than ever.
The potential for a broader conflict threatens to further strain Lebanon’s already fragile economy, worsening the hardships faced by its citizens and deepening the ongoing economic downturn. As the situation unfolds, the country’s prospects for recovery appear increasingly uncertain, with the specter of conflict adding to the challenges of an already turbulent period.
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Fitch Confirms Restricted Default and Withdraws Lebanon of Its Credit ratings
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Fitch Ratings has affirmed Lebanon's credit rating at "RD" (Restricted Default), while simultaneously announcing the withdrawal of its credit ratings for the country, citing a significant lack of critical information. The move underscores the deepening challenges faced by Lebanon, a nation grappling with a protracted economic crisis and an ongoing default on its debt obligations.
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LIMS explained that the decision to maintain Lebanon's "RD" rating is rooted in the country's persistent state of default. Lebanon remains in default following its failure to meet the principal payment on a Eurobond that matured on March 9, 2020. This default marked a turning point in Lebanon's financial crisis, which has since been exacerbated by the government's inability to resume interest payments on the Banque Du Liban's (BDL) holdings of local-currency securities.
The decision to withdraw Lebanon's credit ratings adds another layer of concern. Fitch has pointed to the unavailability of key economic and fiscal data as the primary reason for this withdrawal. The Central Administration of Statistics, the national body responsible for providing such data, has not released updated national accounts and fiscal information since 2021. Without access to current and comprehensive data, the agency determined that it could no longer provide a reliable assessment of the country's creditworthiness.
The withdrawal of Lebanon's ratings is a stark indication of the country's deepening financial opacity. The move by Fitch may further isolate Lebanon from global financial markets, making it even more challenging for the country to secure the external support needed to stabilize its economy.
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LLA 101 - Saida Workshop: Empowering Municipalities to Deliver Basic Services
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On July 6, 2024, LIMS hosted its 7th "LLA101 Economic Foundations of Prosperity" workshop in Saida, bringing together 25 activists and reform-minded participants who are active at the municipal level and eager to drive change. The workshop provided a platform for addressing local economic challenges.
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Key issues specific to the Saida region, such as tourism and water scarcity, were discussed alongside cross-regional concerns, including electricity shortages and waste management. By the workshop's conclusion, participants had produced a comprehensive paper summarizing the main insights and established a committee to oversee the implementation of the proposed solutions.
To enhance Saida’s tourism sector, participants recommended infrastructure improvements, particularly in road quality and street lighting. They also gave the example of Saida during Ramadan to emphasize the importance of engaging the local community in social media marketing efforts. The discussion also highlighted the need to reduce political interference in the management of tourist sites. Addressing the issue of water scarcity, participants proposed attracting private investors to repair and manage the region’s aging water network, which is plagued by significant leakage. Expanding well operations was also suggested as a critical step towards securing a more reliable water supply.
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In tackling waste management challenges, participants discussed lengthy the failures of Saida’s waste management factory. They also focused on promoting waste sorting at the source and strengthening municipal enforcement against littering. Participants also called for attracting private companies to invest in recycling initiatives. The electricity crisis was another major topic of discussion, with participants identifying potential locations for establishing solar farms and exploring the integration of these farms into existing generator micro-grids. The municipality was urged to support these renewable energy projects, ensure adequate public lighting, and collaborate with the private sector to boost energy production. Additionally, there was a strong call to address the monopolistic practices of generator owners, which are seen as significant obstacles to progress in the energy sector.
The workshop's outcomes reflect a concerted effort to address the pressing issues facing Saida and its surrounding areas, with a clear focus on sustainable development and community involvement. The newly formed committee is now tasked with translating these recommendations into actionable plans that can drive real change on the ground.
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References
LIMS Media Interviews
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Lebanese Court of Audit Strikes Down Ministry's Attempt to Grant OTT Monopoly to a Shell Company
- LIMS exclusive: Limiting Online TV Broadcasting by “Stream Media” Either Voluntarily or Through Tendering is a Crime Against the Economy and Consumers, July 25, 2024: Limslb, Article AR
The Impact of Power Shortages on Human Dignity
- Additional Hours of Electricity Supply Awaiting "EDL" Decision: Potential Obstacles, July 26, 2024: Almodon, Article AR
- The Battle to Exchange One Billion "Local" Dollars with One Billion "Fresh" Dollars for Iraqi Oil! Is $32 Million in the Central Bank's Electricity Account Enough to Buy Fuel? July 23, 2024: Annahar, Article AR
- Can State Funds and Public Sector Deposits with the Central Bank of Lebanon Be Used to Finance Electricity? July 15, 2024: Maharat, Article AR
- Lebanon: Darkness Strikes Again with Shutdown of Power Plants, July 17, 2024: Alyaum, Video Interview AR
- Lebanon's Electricity Cave: A History of Corruption, July 16, 2024: Thisislebanon, Audio Interview AR
- Scenarios Proposed Regarding the Electricity Problem Could Be Scenarios Threatening Total Darkness, July 11, 2024: VDL, Article AR
- Between Waste, Corruption, and Swapping Responsibilities, The Overall Darkness Threatens The Lives of Citizens Again, July 11, 2024: VDL, Audio Interview AR
- Minister's Intervention Won't Convince Central Bank: Electricité du Liban Awakens from Its Delayed Coma, July 11, 2024: Thisislebanon, Video Interview AR
- The Electricity Crisis In Lebanon Is Renewed, And Darkness Threatens The Summer Season, July 6, 2024: Alsharkalawsat, Article AR
- Electricity in Lebanon: Back to Square One... Darkness Threatens the Country, July 9, 2024: Independantarabia, Article AR
- Lebanon's Electricity Crisis: Is Lebanon Facing Total Darkness in the Midst of "Summer"? July 10, 2024: Aliwaa, Article AR
- Electricité du Liban: Uncovered Details in the Iraqi Fuel File, July 9, 2024: Almodon, Article AR
Private Initiatives on the Local Level
- Electricity Issues and Administrative Collapse: Who is Strangling the Economy? July 24, 2024: VDL, Audio Interview AR
- Electricity Providers in Lebanon: 'Privatization' Undermined and Continuous Financial Hemorrhage, July 17, 2024: Aliwaa, Article AR
- Parliamentary Proposal Allows Beirut Municipality to Issue Electricity Licenses… What Does the Law Say?, July 16, 2024: Annahar, Article AR
- "Electricité du Liban" Has Caused Two Historic Collapses of the Lebanese Pound... Is It Time for "Municipal Electricity"? July 9, 2024: Lebanon24, Article AR
- The Regulatory Authority: A Decisive Role in Addressing the Electricity Crisis... and the “Minister” Prevents Its Birth! July 13, 2024: Aliwaa, Article AR
- Mardini Explains to "Sawt Beirut" the Causes of the Electricity Crisis and Proposes Solutions, July 12, 2024: Sawtbeirut, Article AR
- What Role of “EDL” After the Enactment of “Cheaper” Clean Energy? The Regulatory Authority for the Electricity Sector Awaits the Decision to Establish It, July 30, 2024: Annahar, Article AR
- Fakrajian: Competition Solves the Electricity Crisis, July 30, 2024: Beirut Podcast, Video Interview AR
Ministry of Energy and Water’s Repeated Tender Failures Highlight Governance Concerns
- Exclusive to LIMSLB: The Ministry of Energy fails five times to conduct a tender for the removal of chemicals that may threaten public safety. July 4, 2024 : Limslb, Article AR
- LIMSLB Exclusive: Loose Terms and Conditions "Discourage" Potential Bidders for Transporting Hazardous Materials Stored in Oil Facilities in Favor of a Single Bidder: July 22, 2024: Limslb, Article AR
Lebanese Pound: A Fragile Stability Dependent on Central Bank's Policies
- After the 2019 Crisis... Negative Ratings Continue for Lebanese Sovereign Debt and the Lebanese Pound, July 17, 2024: Cnbc, Video Interview AR
- Exchange Rate Stability Continues as Long as the "Central Bank" Sticks to Its Decision, July 17, 2024: Lebaneseforces, Article AR
- “Fake Dollars” Invades the Markets, and There Is No Mechanism For Reporting or Accountability, July 11, 2024: MTV, Video Interview AR
- The Bigger Question: How Can the Lebanese Pound Regain Its Strength? July 18, 2024: Leb Economy, Article AR
- Old Rent Liberation Begins: Landlords On The Path To Reclaim Their Properties After Being Imprisoned In The Old Law's Dungeon For Over Three Decades, July 1, 2024: LebanonOn, Article AR
Escalating Threats on Lebanon’s Southern Border Threaten Economic Stability
- The Devastating Impact of War on Lebanon's Economy, July 30, 2024: Al Jadeed, Video Interview AR
- Leb Economy Publishes Latest Report on Economic Relations Between Lebanon and Cyprus, July 4, 2024: Lebeconomy, Article AR
- How Long Will It Take to Restore Economic Growth in Lebanon? July 15, 2024: Aljadeed, Video Interview AR
- Why Lebanon’s capital Beirut is among most expensive Arab cities despite crises, July 16, 2024: Alarabiya, Article EN
- "Summer is Buzzing in Lebanon"… Is August the Last Chance? July 23, 2024: Lebanondebate, Article AR
- "Bloomberg" Report Is Not Promising.. Decades For Recovery, July 31, 2024: Lebaneseforces, Article AR
Fitch Confirms Restricted Default and Withdraws Lebanon of Its Credit ratings
- Negative Credit Rating for Lebanon and Serious Implications, July 22, 2024: Lobnanelhor, Audio Interview AR
- The Deposit Crisis in Lebanon Continues... With No Solutions in Sight, July 17, 2024: Eram, Article AR
- Experts: The Prospect of Resuming Borrowing From Lebanese Banks Is Distant Due To Issues Concerning Currency Liquidity. July 2, 2024: Al machhad, Video Interview AR
- After Losing Trust In Banks... Where Does The Lebanese Hide Their Money? July 31, 2024: Lebanon24, Article AR
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