Rafic-Hariri power plan created a progressive accumulating deficit since 1994

The Truth about the Electricity Problem in Lebanon

The electricity crisis in Lebanon originated in 1994, when (then) Prime Minister Rafic Hariri decided to freeze electricity rates, basing them on $20-a-barrel oil. Years passed, prices of oil increased (currently over $60/barrel), operational costs increased, old plants’ efficiency decreased, resources changed, yet electricity rates remained fixed, consequently creating a progressively accumulating deficit that has been plaguing the country for more than two decades. In addition, years of unmonitored stealing combined with (unregulated) subsidies and high cost of private generators intensified the crisis and debt.

The 2010 Electricity Plan devised and proposed by (then) Minister Gebran Bassil was reasonable and functional. It primarily revolved around increasing total power production (as existing production was not sufficient for Lebanon’s population), modernizing existing plants, building advanced ones, reducing cost of usage and providing electricity 24/24. Here is a summative elaboration:

1-      Establish new and modern plants using Liquified Nitrogen Gas (LNG) and renewable energy: Launching the 2010-2015 National Energy Efficiency Action Plan (NEEAP), launching solar energy projects, launching the National Energy Efficiency and Renewable Energy Action (NEEREA), increasing the share of hydraulic power production through maintenance, rehabilitating and/or replacement of existing hydro plants, introducing wind power via the private sector by building wind farms, and partnering with Mott MacDonald Company that devised a technical and economic study to provide 1500 Megawatts through the IPP Modality System.

2-      Rehabilitate Zouk and Jiyyeh plants, upgrade Deir Ammar and Zahrani plants, and add combined cycle to Tyr and Baalbeck plants.

3-      Decrease the cost of consumption and fiscal deficit: a) Temporarily buy electricity from power ships at 12 cents/kWh, a cost less than all other temporary power providers’ (generators, etc.), b) install meters to monitor usage, c) ameliorate collection to eliminate illegal connections to the network, and d) reform subsidies.

4-      Gradually increase the tariff in conjunction with improvements in the electric service provision until reaching the goal of a sustainable 24/24 electric service hence eliminating the need for private generators and abolishing the financial deficit. Noteworthy is to mention that the tariff will be much less than the current cost.

Even though the total power production has significantly increased since 2010, many obstacles hindered the execution of other parts of the plan:

1-      The Ministry of Finance halted the building of Deir Ammar plant for the past 8 years.

2-      The Ministry of Finance failed to pay the power plants to develop/improve production; for instance, the Zouk and Jiyye plants did not receive financing for over eight months which stalled production. As a matter of fact, out of 23 requests submitted to the Ministry to finance power plants, only one was honored.

3-      Several plants already equipped to operate on gas have been using fuel and diesel since 1996, which are more costly and polluting; adding a cost of $700 million/ year for 24 years!

4-      Insisting on buying power from Syria for 25% more than the power ships’ price.

5-      Many politicians were involved in protecting the interests of the “generator mafia”.

6-      The presence of close to 2 million Syrian refugees exacerbated the crisis: 500 MW of Electricity are used by refugees, which is equivalent to 5 hours of power a day.

7-      Collection problems in areas like the Bekaa, the South, and North prevailed (at 35%, 49%, and 61% respectively).

 

The electricity plan faced (and still does) the usual barriers of exploitation and patronage. Even though it is logical, thorough, and efficient, it underwent the “expected” political waves of scrutiny, opposition, and condemnation. The “electricity vampires” are draining Lebanon’s finances; what must happen now is “slaying” them before the country runs out of money and time.

Marlene Sabeh

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