Lebanon sees high chances of offshore discovery, reforms on track-minister

Lebanese Minister of Energy and Water, Nada Boustani Khoury speaks during an interview with Reuters at her office in Beirut, Lebanon, August 21, 2019. (Reuters)
Updated 22 August 2019

Lebanon sees high chances of offshore discovery, reforms on track-minister

BEIRUT: Lebanon has high chances of making an offshore energy discovery once drilling gets underway from November or December and its second licensing round is receiving lots of interest, the minister of energy and water said on Wednesday.
Nada Boustani also said plans to reform the electricity sector, which bleeds state funds while inflicting daily power cuts on Lebanese, were on schedule and expressed hope a regulatory authority would be established soon.
“We are really working on this strategy for the electricity sector because we are aware of its importance for the whole country,” she told Reuters in an interview.
Boustani’s ministry is a focal point of government efforts to reform an economy struggling with one of the world’s heaviest public debt burdens and years of low economic growth.
Fixing the electricity sector is seen as a key measure of Beirut’s will to drive through long-stalled reforms. Donor states and institutions last year offered $11 billion in soft loans for investment, conditional on such reforms.
Lebanon hopes an offshore energy discovery would give a big boost to its economy in the coming years. The country is in the eastern Mediterranean region where a number of sub-sea gas fields in Israeli, Cypriot and Egyptian waters have been discovered since 2009.
Lebanon awarded its first offshore gas and oil exploration and production agreements in 2018 to a consortium of France’s Total, Italy’s Eni and Russia’s Novatek for two blocks.
“We have among the best companies worldwide working on it.
“Worldwide ... the average is to explore three wells before having a discovery,” Boustani said, citing guidance from Total.
“So if we have it from our first well, it would be amazing.” Drilling of the first well was expected to begin in November or early December and would take 55 days, she added.
The closing date for bids in the second licensing round is Jan. 31, 2020. “We are seeing lots of interest,” she said from firms including Malaysia’s Petronas, BP, Russia’s Lukoil and Gazprom.
US diplomats had also expressed interest though American firms had yet to be in touch.
CUTTING LOSSES, IMPROVING REVENUES
The government approved a plan earlier this year to reform the electricity sector. It aims to provide Lebanon with uninterrupted supply and to eliminate the annual deficits wracked up by the state-owned power company.
Boustani said efforts to reduce losses through fixing bottlenecks in the grid were on schedule. So too were efforts to reduce “non-technical losses” such as power theft. A planned “smart grid” will include meters that prevent this.
The government’s goal of reducing losses from the grid to 25% by the end of 2019 from the previous 34% would be met and possibly exceeded, she said. Efforts to improve revenue collection were also ahead of target.
Tenders for bids to build and operate new power stations under public-private partnerships would hopefully be launched in September, Boustani said.
As power supply improves, allowing Lebanese to do away with expensive private generators, the plan includes an increase to the power tariff. Boustani hoped this would be possible in 2020.
Lebanon aims to be producing 30% of its energy from renewable sources by 2030, she added.
Boustani said the regulatory authority should be established as soon as possible. “For me it can be done tomorrow if everyone agrees,” she said.


Blame game as wheels come off India’s auto sector

Updated 33 min 11 sec ago

Blame game as wheels come off India’s auto sector

NEW DELHI: When India’s Finance Minister Nirmala Sitharaman claimed that a preference by millennials for ride-hailing apps was contributing to a painful slump in car sales, it sparked an online backlash from furious youngsters.

They started a campaign using ironic hashtags such as #BoycottMillennials and #SayItLikeNirmalaTai last week to push back against older generations blaming them for today’s problems in society.

While data shows firms such as Uber and Ola are popular with younger consumers more comfortable with shared mobility and digital trends, analysts say the auto industry’s problems run deeper than that — and it is facing more serious bumps in the road.

With a population of 1.3 billion people, India is the world’s fourth-largest car market and one where owning a vehicle is as much a status symbol as a means of transport.

But the country’s once-booming auto sector — seen as an important barometer of overall economic health — is in the slow lane, with sales slumping for the 10th-straight month in August.

“The minimum (priced) car that you can get nowadays starts from six to seven lakhs ($8,500 — $9,800),” university student Somya Saluja told AFP.

“So it’s much easier to pool-in rather than to buy a new car.”

Even India’s richest banker, Uday Kotak, recently said that his son was more comfortable using ride-sharing apps than owning a car.

Uber and Ola reportedly facilitate some 3.65 million daily rides.

Still, Avanteum Advisers managing partner VG Ramakrishnan told AFP the key reason for the drop in car purchases was economic.

“I think the slowdown is primarily because consumer confidence is low and income growth has really been impacted in the last couple of years,” he told AFP.

India’s economic growth slowed for the fifth-straight quarter in April-June to reach its weakest pace in five years.

Banks are also more reluctant to lend owing to a liquidity crunch caused by the near-collapse a year ago of IL&FS, one of India’s biggest shadow banks — finance houses responsible for significant consumer lending.

There are also extra production costs caused by new rules requiring cars to be compliant with emissions and safety standards, while a 28 percent goods and services tax (GST) introduced in 2017 has dampened demand, analysts said.

“Cars are increasingly becoming unaffordable now because of so many taxes,” Karvy Stock Broking auto analyst Mahesh Bendre told AFP.

“To put things in perspective, if you buy a car in India, at least 40-45 percent of costs go to the government in terms of taxes and registration charges and so on.”

A year ago, India displaced Germany to become the world’s fourth biggest car market, having clocked up annual sales growth above seven percent for several years.

But the promising growth ride is screeching to a halt, with passenger car sales tumbling this year, including a 41 percent drop last month — the worst since records began more than 20 years ago.

Aside from passenger cars, sales of commercial vehicles, motorcycles and scooters have also been hammered.

With the industry — a major employer in India — contributing more than seven percent to total GDP and almost half of manufacturing GDP, the potential fallout from an extended slowdown is sending shockwaves through the economy.

Manufacturers are reducing production and cutting jobs, which is also affecting related industries such as auto component manufacturing and at dealerships, totaling about seven percent of India’s total workforce, Bendre said.