Lebanon's Energy Minister signs power-plant deal

Published April 14th, 2013 - 01:08 GMT
Lebanon's energy minister signed a $470 million contract on Friday for a new power plant in near Tripoli, Lebanon.
Lebanon's energy minister signed a $470 million contract on Friday for a new power plant in near Tripoli, Lebanon.

Lebanon's energy minister signed on Friday a $470 million contract with Greek-Cypriot firm J&P-AVAX for a new 538 megawatt power plant in Deir Ammar, near Tripoli.

“The new plant will allow Lebanon to have electricity over 24 hours by 2015,” Gebran Bassil said at a news conference announcing the contract.

He added that the new power plant’s capacity could increase to 565 MW if the General Electric-manufactured turbines were converted to natural gas. It will initially run on heavy fuel, the minister said in a news conference.

Bassil said the construction of the new plant would be finalized within 25 months, with a first phase due in 18 months, when the power plant would produce 360 MW.

Also Friday, MP Mohammad Qabbani urged the Court of Accounts to reconsider its decision over the relaunched tender for Deir Ammar, which was approved by the Cabinet last month.

“We were astonished to know through, the media, that the Court of Accounts had cleared the tender of Deir Ammar power plant No 2. We had already shown several [pieces of evidence] that clearly demonstrate that the tender was illegal,” the MP said in a letter to the head of the court, Awni Ramadan.

Qabbani said a Chinese company, one of two firms that participated in the tender, had withdrawn after the Energy Ministry failed to take several of their complaints into consideration.

“This meant there was only a single applicant for the tender, making it completely illegal,” the Beirut MP said in the letter.

Qabbani added that the new tender did not include some works that had been stipulated in the the original plan, dismissing the claim by Bassil that financial savings had been made as a result of repeating the tender.

The Cabinet last month approved the tender to build and operate the Deir Ammar power.

In December Bassil relaunched the tender, canceling the results of the initial tender for financial reasons. Mediation between the government and the Lebanese-Spanish consortium that won the tender failed to bring the two sides into an agreement.

Last month, Abener-Butec, whose $662 million provisional contract to rebuild the Deir Ammar power plant was canceled by Cabinet, denied that it officially submitted a lawsuit against the Lebanese government to the World Bank’s international investment mediation panel.

The two firms maintain Bassil and the Cabinet violated international standards and harmed Lebanon’s reputation.

Qabbani said the new tender had slashed maintenance and spare parts from the tender, adding that equipment needed to receive fuel shipments were also dropped from the tender.

“The exhaust pipe of the power plan was reduced to 60 meters from the original 120 meters, required by environmental standards. The plant will also burn HFO, a heavy fuel, that is highly polluting, and will amount to a massacre affecting the local population,” the letter added.

The original tender, the MP added, required that the applicant should have built at least two similar-capacity power plants before.

The Greek company had forged documents for a power plant it built in Cyprus, where he said the power plant’s actual capacity was 220 MW instead of the 250 claimed by the firm.

The three-week time given for the tender was far less than international standards and signaled the result had been prearranged, Qabbani argued.

“We call on the Court of Accounts to reconsider the information and correct its decision,” he added.

Qabbani also sent copies of the letter to President Michel Suleiman, Speaker Nabih Berri, caretaker Prime Minister Najib Mikati and Prime Minister-designate Tammam Salam.

In February the Energy Ministry signed a $348 million contract with a Danish-German consortium to build new power plants in Jiyyeh and Zouk.

Under the contract, Danish BWSC and German Man Diesel will build two plants, with a maximum capacity of 272 MW, at the same locations housing Lebanon’s two biggest power plants.

The Energy Ministry announced in May 2012 a $850 million project to produce 700 MW of power. Bassil said Friday savings would allow Lebanon to produce 840 MW at $814 million, around $36 million less than budgeted.

The 700 MW plan is the first of a larger $4.87 billion comprehensive plan launched last year to provide over 4,000 MW by 2014, and 5,000 MW by 2015.

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