Lebanon: Plenty of solutions to electricity crisis, but no will
Energy experts and officials are still at loggerheads over the best way to end the long-running electricity crisis with some favoring full or partial privatization of the sector while others insisting that the state can do the job.
This debate has jeopardized all attempts to tackle the electricity crisis as the current government failed again to allocate the necessary money to finance Energy Minister Gibran Bassil’s plan to boost production by 700 MW. All sides agree that more investments are needed for the electricity sector.
They also agree that most of the existing power plants may stop functioning one day due to their old age and lack of maintenance. But these discussions have proven futile while the state of the electricity sector has deteriorated further with power rationing reaching its highest levels since the end of the Civil War. “It is the duty of the government to end the electricity crisis and to give affordable and efficient power around the clock,” Roudy Baroudi, a leading energy expert, told The Daily Star.
Baroudi argued that rehabilitating the electricity sector was not a big deal if true intentions were available. “We are not reinventing the wheel. The most important thing is to have political consensus on whatever plan they have at their disposal,” he said, Baroudi added that no major investment had been made in the sector since 1998.
“If Lebanon has between 4 and 5 percent growth in energy need then investment in this sector is badly needed. However, no such investment has taken place since 1998 and this has made the situation worse,” he said. It has become common knowledge that the current electricity production which now stands at 1,500 MW is not sufficient to meet the growing demand for electricity.
To meet the current demand, energy experts say that production should rise to at least 2,400 MW, adding that even this goal may not be sufficient in the next four to five years due to population growth and the construction of more housing units, factories and malls across the country.
Bassil and his bloc accuse Prime Minister Najib Mikati of withholding funds from the Energy Ministry to implement the 700 MW plan. They reiterate that Lebanon will lose $1.2 billion each year if electricity production is not boosted and new alternative energy secured.
Bassil refused to negotiate with the Arab funds for a soft loan, claiming that this process was too long and tedious. But Mikati and Finance Minister Mohammad Safadi have said repeatedly that ending the electricity crisis is in the interests of all Lebanese, irrespective of their political affiliation. However, Mikati and Safadi want all the contracts for the electricity plants to be handled by the regulatory authority for energy which has yet to be formed by the Cabinet.
Baroudi said it was in the interests of the government to appoint the regulatory authority to ensure all the transactions and contracts were awarded in a transparent manner. “If a firm or a mall experience a power cut for an unknown reason they can complain to the regulatory authority to take the proper measures,” he said.
Baroudi supports the idea of standby electricity such as power barges and standby power plants that can be easily installed next to existing power stations. “The government can rent these standby plants for two or three years until the construction of new stations in the country are completed,” he said. But a former senior official, who spoke on condition of anonymity, told The Daily Star that the former government refused to endorse a plan submitted by the former energy minister to install standby power plants under different pretexts.
“It is not true that there is a liquidity crunch. If the government can issue $1 billion in Eurobonds to raise money this issue is usually oversubscribed. If they [government] can raise money through Eurobonds then why can’t they do the same for electricity,” he asked.
The former official said the state was already incurring $1.5 billion in losses due to the electricity crisis. “If the former government had agreed to install the standby plants three years ago this would have given ample time to build more plants in the country to reduce the rationing,” he said.
Baroudi and the former official warn that the existing power plants may stop functioning without any prior warning. “These plants are not designed to run forever. They will run out of steam if they are not upgraded immediately,” the former official warned.
Lebanese banks have offered the state a chance to take part in the rehabilitation of electricity either through a build, operate and transfer system or through a partnership with the state. But to this date, the government and the Energy Ministry have not engaged in any serious talks with the commercial banks on the modernization of the electricity sector.
- Does this spell the end for the tax haven dream? Crisis looms for the GCC as the rich Gulf could be in financial jeopardy
- Saudi Oil Chief spills! Shoots down conspiracy theories on oil prices
- Oil prices: the honeymoon is over
- Betting on the counterintuitive? Understanding Saudi Arabia's logic, or lack thereof, behind not cutting oil output
- Oil markets downward spiral 'unbriddled'