Power crisis threatens Lebanese economy
Energy experts warned Wednesday that the mounting losses of the electricity sector would wreak havoc on the Lebanese economy if not addressed in the near term. The experts were speaking during a three-day seminar organized by Issam Fares Center for Lebanese Affairs on sustainable energy in Lebanon.
Ibrahim Shahrour, the director of planning and programing at the Council for Development and Reconstruction, said successive energy ministers had made very little progress toward solving the major problems in the electricity sector since 2002. Shahrour added that the Lebanese economy would suffer miserably if the the electricity sector maintained its losses indefinitely. He noted that no governments to date had kept promises to privatize the state-run Electricite du Liban (EDL) or find a private-sector partner that could ease the burden on the state. The annual losses of the electricity sector are expected to exceed $2 billion by the end of 2011.
EDL has long been a drain on the Lebanese state’s coffers, and experts complain that the state-run firm is plagued by poor management, unqualified and unmotivated staff and rampant corruption.
Many agree that the best solution for the ailing electricity sector would be privatization, or a private-public partnership in which a private firm would jointly run EDL with the state. But some critics have voiced fears that the sale of state assets to private companies could increase unemployment.
“It seems that they [authorities] have bypassed demands for privatization and private-public partnership by focusing on a plan that integrates public investments with private investments,” Shahrour said. He added that EDL could apply modern technologies in administering electricity production.
“There are programs and software that will enable EDL to conduct studies on the movement of energy on the power grid to ease the technical losses and also to study malfunctioning and their impact on safety of facilities,” the expert said. Shahrour underscored the importance of completing the installation of the high voltage cables in the Mansourieh area, the scene of protests by residents who fear that the cables could be harmful to their health.
Engineer Zakaria Ramal noted that most of the major transformers were old and obsolete and needed to be replaced, citing the example of the transformer in the southern suburbs. He also complained that the electricity network suffers from high levels of technical losses, or power lost through the ageing grid, as well as non-technical losses, or power lost through electricity theft. Ramal said EDL sold a kilowatt hour to private electricity companies between LL50 to LL75 while EDL’s subscribers pay LL125, meaning that private concession companies make a profit of up to LL75 for every kilowatt they sell to their customers. Ramal warned that the Energy Ministry might be forced to increase electricity rationing if the energy plan was not implemented soon.
Another speaker said the financial bleeding of the electricity sector represented 35 percent of Lebanon’s total public debt. “Bill collection losses each year are over $350 million not to mention technical and non-technical losses,” one of the speakers said.
Energy and Water Minister Gibran Bassil has submitted a plan to build new power plants and rehabilitate the existing ones over the next five years at a cost of $4.5 billion.
- 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'
- Structural weakness or bad luck? Oman, Bahrain will be pinched the hardest by lower oil prices
- Dear oil, now what?