Why Lebanon’s electricity crisis is so hard to fix

Why Lebanon’s electricity crisis is so hard to fix
Lebanon’s woefully inefficient energy sector — as illustrated by the labyrinth of cables that stretch across the capital city Beirut — has long been an economic thorn in the country’s side. (AFP)
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Updated 15 June 2020

Why Lebanon’s electricity crisis is so hard to fix

Why Lebanon’s electricity crisis is so hard to fix
  • An IMF official told Arab News “electricity reform is one of the key steps to re-equilibrate the economy”
  • The crisis gripping the sector is partly linked to smuggling of fuel oil and fuel products to war-torn Syria

BEIRUT: It is two in the afternoon and Verdun Street, one of Beirut’s upscale neighborhoods, is doubly lit up — by the midday sun and by street lights.

“Look at the street lamps shining brightly in the middle of the day while most areas suffer from power outages,” Fatima Hachem, 29, a local resident, told Arab News.

The incongruity of the scene — street lights kept unnecessarily on during daylight hours — is unmistakable in a country where residents get between three and 12 hours of electricity a day depending on the locality.

Such systemic inefficiencies are all the more glaring at a time when Lebanon is seeking a $10 billion loan from the International Monetary Fund (IMF).

Given its disproportionate contribution to Lebanon’s public debt, the urgency of an overhaul of the electricity sector cannot be overstated.

“Electricity reform is one of the key steps to re-equilibrate the economy,” an IMF official, speaking on condition of anonymity, told Arab News.

“We will see it as an emblematic and major improvement.”

 

The official added that, without reforms, “there would be no loan program.”

As a first step, the IMF has asked Lebanon to audit its national electricity company, known as Electricite du Liban (EDL). Loss estimates should note “not only the changes in price of fuel oil, but also the change in the exchange rate,” it said.

In recent months, the purchasing power of the Lebanese population has eroded, with the currency losing two-thirds of its value, dropping to LBP4,000 from LBP1,515 to the US dollar.

“At the moment, the Lebanese government links increasing tariffs on electricity to the increase in power generation, while the IMF believes that those two should not be tied. Also, eliminating electricity subsidies is the most significant potential expenditure saving,” the IMF official said.

To generate fiscal savings, it is imperative the Lebanese government increases tariffs as soon as possible, they said.

However, this would mean raising electricity charges for most of the population, who are already under economic pressure as a result of the COVID-19 pandemic.

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The power sector’s total bill comes to almost $2 billion annually, roughly 4.5 percent of the country’s gross domestic product.

Most of the losses can be attributed to a combination of fuel oil subsidies, tariff pricing on the basis of $20 per barrel since 1994, and theft from the power grid.

The problem is only set to worsen with an increasing population, including refugees (currently 1.5 million) whose numbers have grown through recent arrivals and whose electricity consumption has crossed the 400 MW mark.

Under the circumstances, Lebanon’s electricity shortfall is estimated at 1,600 MW.

Among the things the IMF wants to see are the creation of a regulatory authority for the electricity sector and the appointment of new board members for EDL, which after resignations has been left with only three members to oversee it.

INNUMBERS

44 per cent - EDL subsidies’ share of Lebanon’s entire debt

$1.5 billion - Yearly state transfers to EDL

$42 billion - Electricity sector’s debt

$94 billion - Estimated size of Lebanon’s public debt

2 - Power shortages’ rank as a business hindrance

Lebanon’s Energy Ministry, meanwhile, is pushing for an amendment to laws before the implementation of proposed reforms.

Electricity reforms already exist — but only on paper.

The law, 462/2002, permits the setting up of a regulatory authority, frees it from political interference, and disallows EDL’s monopoly over the electricity sector in terms of production, transportation and distribution of electricity.

The implementation, however, is easier said than done.

Christina Abi Haidar, a legal expert with 15 years’ experience in the energy sector, said: “Once we have a regulatory authority, the political authority would cease to exist.”

She told Arab News: “We only pass reform-related laws when we need to borrow from the international community, but we rarely implement them.”

Last month, Dr. Antoine Habchi, a Lebanese Forces MP, filed a lawsuit against the Energy Ministry for corruption and waste of public money.




Dr. Antoine Habchi, Lebanese Forces MP.  (Supplied)

“The electricity sector is a black box marred by corruption,” he told Arab News, “It is not in the interest of those planning on financially benefiting from it to implement laws or to fix the situation.”

Take Law 181 passed in 2011. It was enacted in support of a proposal by Gebran Bassil, the then energy and water minister, to enable the power sector to hire consultants, appoint a board of directors for EDL and establish a regulatory authority within three months.

The cost to the government was projected to be LBP1.772 trillion (equivalent to $1.175 billion at the time). The proposal was to be implemented within four years, resulting in most of Lebanon receiving power for up to 24 hours a day.

By the end of the period, the money had been spent, but unsurprisingly, there was no improvement in the electricity supply.

“We have spent the money, appointed consultants and built two new power plants in Zouk and Jiyeh, and over $350 million was spent on the primary works of rehabilitating the old Zouk and Jiyeh power plants,” said Habchi.

“But to date, we do not have a regulatory authority or a new board of directors for EDL. We also do not have 24/7 electricity supply.”

 

The new Zouk and Jiyeh power plants are said to lack the fuel treatment systems and separators necessary for the burning of any type of fuel.

After many bureaucratic delays, separators reached Lebanon, only to be held up at the Beirut docks instead of being transported to the site and installed.

Now, Lebanon is planning to have four gas-fired plants, two of which were built in 1996. Use of gas could save up to a quarter of a billion dollars per power plant in imported fuel oil costs, according to experts.

But here, too, problems have arisen.

The Selaata power project is a case in point. Work on the new plant is scheduled to start by the end of 2020, around the time when Lebanon intends to shut down the old Zouk and Jiyeh power plants.

Selaata is linked to a plan involving the installation of Floating Storage Regasification Units, or FSRUs, across the country to serve both new and existing plants operating on gas.




Lebanon plans to install Floating Storage Regasification Units, or FSRUs, across the country to serve both new and existing plants operating on gas. (AN photo by Leila Hatoum)

The initial idea was to have one FSRU for all of Lebanon, located in the northern, Sunni-majority Beddawi area.

However, the issue has sparked political debate along sectarian lines, resulting in the plan expanding to include three FSRUs, tripling the cost.

The argument in favor of Selaata is that there is a need for such a large power plant and that it will be constructed in an industrial area.

However, a number of ministers within the Cabinet object to the Selaata project on the grounds that it involves costly land appropriation.

They say the project was conceived only to please the Christian constituency of the Free Patriotic Movement party and not on merit.

Other concerns are insufficient feasibility and its environmental impact, in light of the power plant’s location close to the sea.

“The whole of Egypt has one FSRU, yet the smart people here in Lebanon want to build three FSRUs and waste public money on a useless power plant and overpriced land appropriation,” said Habchi.

Raymond Ghajar, the energy and water minister, declined to comment on the Selaata project among other issues.

Lebanon’s power crisis is also linked to the smuggling of fuel oil and fuel products to neighboring Syria, according to experts.

This is not only problematic from the standpoint of electricity generation, says Habchi, but also poses a risk in light of Washington’s Caesar Act, which bans aiding the Syrian regime.

Within its borders, too, fuel oil transactions are a cause for concern.

An official document obtained by Arab News suggests that subsidized fuel oil has been finding its way from the EDL to the private sector.

A letter numbered 198 and dated June 4, 2018, sent by Sarkis Hleiss, director general of the petroleum facilities in Tripoli and Zahrani (ports), to Cesar Abi Khalil, Lebanon’s then energy minister, asked for permission for the purchase of 6,000 metric tons of fuel oil.

More worrying than the amount is the likelihood that the deal was only the tip of the iceberg.

The letter said: “Due to the shortage of fuel oil in our possession, and in order to supply of the local market, your Excellency is kindly requested to accept the request from EDL to hand us a quantity that is about 6000 metric tons of fuel oil from the first tanker loaded with an ISO 8217 fuel oil reaching the oil facilities in Zahrani, knowing that we are ready to pay for the price of this quantity in cash, after determining its cost by the General Directorate of Petroleum, as always.”

The request was approved on June 6, 2018.

It seems that Lebanese taxpayers are paying double to receive electricity: Once, during the importing of fuel oil, and again when buying power from the private sector during blackouts.

Against this backdrop of mismanagement, wastefulness, incompetence and corruption in the power sector, what is the realistic probability of the Lebanese government getting the IMF loan?

Not much, says Nazih Najm, head of the energy parliamentary committee, who doubts that international donors will lend any money to Lebanon.

Najm is not even sure Lebanon needs to go cap in hand to the IMF. His logic: “We still have about $18 billion in foreign reserves at the Central Bank as well as gold reserves.”

* * * * * * * * * 

@Leila1H


Abu Dhabi to reopen cinemas with reduced capacity, Dubai bans cafes offering drinks in baby bottles

Abu Dhabi to reopen cinemas with reduced capacity, Dubai bans cafes offering drinks in baby bottles
Updated 39 min 10 sec ago

Abu Dhabi to reopen cinemas with reduced capacity, Dubai bans cafes offering drinks in baby bottles

Abu Dhabi to reopen cinemas with reduced capacity, Dubai bans cafes offering drinks in baby bottles
  • Earlier in February, the Abu Dhabi Emergency, Crisis and Disasters Committee approved closing all cinemas
  • Dubai authorities have banned local cafes from serving drinks in baby bottles to prevent the spread of coronavirus

DUBAI: Abu Dhabi will reopen its cinemas at a reduced 30 percent capacity while adhering to coronavirus precautionary measures, state news agency WAM reported.
Earlier in February, the Abu Dhabi Emergency, Crisis and Disasters Committee approved closing all cinemas.
Meanwhile, Dubai authorities have banned local cafes from serving drinks in baby bottles to prevent the spread of coronavirus, Dubai Economy said in a tweet.
“The Commercial Compliance & Consumer Protection (CCCP) Sector in Dubai Economy directed coffee shops to stop serving drinks in baby bottles,” DED said.
There has been a spike in new daily cases since the beginning of the year, largely due to the high number of tourists traveling to the country over the holiday period.


Fighting in Yemen’s Marib kills 90 in 24 hours: govt military source

Fighting in Yemen’s Marib kills 90 in 24 hours: govt military source
Updated 13 min 51 sec ago

Fighting in Yemen’s Marib kills 90 in 24 hours: govt military source

Fighting in Yemen’s Marib kills 90 in 24 hours: govt military source

DUBAI: Fierce fighting between Yemeni pro-government forces and Iran-backed Houthi rebels has killed at least 90 combatants on both sides in the past 24 hours, government military sources said Saturday.
The Shiite rebels launched an offensive last month to seize Marib, the last stronghold in northern Yemen of pro-government forces who are backed by a Saudi-led military coalition.
The clashes in the oil-rich province left 32 dead among government forces and loyalist tribes, while 58 Houthi rebels were killed in coalition air strikes, the sources told AFP.
They said heavy clashes broke out on six fronts as government forces were able to counter attacks by the Houthis who managed to advance only on the Kassara front northwest of Marib city.
The fighting also left dozens of people wounded, the sources added.
The loss of Marib would be a huge blow for the Yemeni government, but would also threaten catastrophe for civilians, including hundreds of thousands of displaced people sheltering in desolate camps in the surrounding desert.
It would also be a major setback for Saudi Arabia, which has been the target of increasingly frequent Houthi missile attacks in recent weeks.
Shrapnel from Houthi drones intercepted by the Saudis on Friday wounded two civilians, including a 10-year-old, in the southwest of the kingdom, the official SPA news agency reported.
US Secretary of State Antony Blinken on Monday urged the Houthis to halt their offensive in Marib, as he announced $191 million in aid at a donors' conference.
"Aid alone will not end the conflict. We can only end the humanitarian crisis in Yemen by ending the war... so the United States is reinvigorating our diplomatic efforts to end the war," he said.
The United Nations had sought to raise $3.85 billion from more than 100 governments and donors, but only $1.7 billion was offered.


Top Shiite cleric tells pope Iraq Christians should live in peace

Top Shiite cleric tells pope Iraq Christians should live in peace
Updated 06 March 2021

Top Shiite cleric tells pope Iraq Christians should live in peace

Top Shiite cleric tells pope Iraq Christians should live in peace
  • The meeting, on the second day of the first-ever papal visit to Iraq, marked a landmark moment in modern religious history
  • Sistani, 90, “affirmed his concern that Christian citizens should live like all Iraqis in peace and security, and with their full constitutional rights,”

NAJAF, Iraq: Grand Ayatollah Ali Sistani, the authority for most of the world’s Shiite Muslims, told Pope Francis in a historic meeting in the Iraqi city of Najaf Saturday that the country’s Christians should live in “peace.”
The meeting, on the second day of the first-ever papal visit to Iraq, marked a landmark moment in modern religious history.
Pope Francis is defying a second wave of coronavirus cases and renewed security fears to make a “long-awaited” trip to Iraq, aiming to comfort the country’s ancient Christian community and deepen his dialogue with other religions.
The meeting between the two elderly men lasted 50 minutes, with Sistani’s office putting out a statement shortly afterwards thanking Francis, 84, for visiting the holy city of Najaf.
Sistani, 90, “affirmed his concern that Christian citizens should live like all Iraqis in peace and security, and with their full constitutional rights,” it said.
His office published an image of the two, neither wearing masks: Sistani in a black turban with his wispy grey beard reaching down to his black robe and Francis all in white, looking directly at the grand ayatollah.
Sistani is extremely reclusive and rarely grants meetings but made an exception to host Francis, an outspoken proponent of interreligious dialogue.
The Pope had landed earlier at Najaf airport, where posters had been set up featuring a famous saying by Ali, the fourth caliph and the Prophet Muhammad’s relative, who is buried in the holy city.
“People are of two kinds, either your brothers in faith or your equals in humanity,” read the banners.
The meeting is one of the highlights of Francis’s four-day trip to war-scarred Iraq, where Sistani has played a key role in tamping down tensions in recent decades.
It took months of careful negotiations between Najaf and the Vatican to secure the one-on-one meeting.
“We feel proud of what this visit represents and we thank those who made it possible,” said Mohamed Ali Bahr Al-Ulum, a senior cleric in Najaf.
Pope Francis, a strong proponent of interfaith dialogue, has met top Sunni clerics in several Muslim-majority countries, including Bangladesh, Morocco, Turkey and the United Arab Emirates.
Sistani, meanwhile, is followed by most of the world’s 200 million Shiites — a minority among Muslims but the majority in Iraq — and is a national figure for Iraqis.
“Ali Sistani is a religious leader with a high moral authority,” said Cardinal Miguel Angel Ayuso Guixot, the head of the Pontifical Council for Interreligious Dialogue and a specialist in Islamic studies.
Sistani began his religious studies at the age of five, climbing through the ranks of Shiite clergy to grand ayatollah in the 1990s.
While Saddam Hussein was in power, he languished under house arrest for years, but emerged after the US-led invasion toppled the repressive regime in 2003 to play an unprecedented public role.
In 2019, he stood with Iraqi protesters demanding better public services and rejecting external interference in Iraq’s domestic affairs.
On Friday in Baghdad, Pope Francis made a similar plea.
“May partisan interests cease, those outside interests who don’t take into account the local population,” Francis said.
Sistani has had a complicated relationship with his birthplace Iran, where the other main seat of Shiite religious authority lies: Qom.
While Najaf affirms the separation of religion and politics, Qom believes the top cleric — Iran’s supreme leader Ayatollah Ali Khamenei — should also govern.
Iraqi clerics and Christian leaders said the visit could strengthen Najaf’s standing compared to Qom.
“The Najaf school has great prestige and is more secular than the more religious Qom school,” Ayuso said.
“Najaf places more weight on social affairs,” he added.
In Abu Dhabi in 2019, the Pope met Sheikh Ahmed Al-Tayeb, the imam of the Al-Azhar mosque in Cairo and a key authority for Sunni Muslims.
They signed a text encouraging Christian-Muslim dialogue, which Catholic clerics hoped Sistani would also endorse, but clerical sources in Najaf told AFP it is unlikely.
While the Pope has been vaccinated and encouraged others to get the jab, Sistani’s office has not announced his vaccination.
Iraq is currently gripped by a resurgence of coronavirus cases, recording more than 5,000 infections and more than two dozen deaths daily.
Following his visit to the grand ayatollah, the pope will head to the desert site of the ancient city of Ur — believed to be the birthplace of the Prophet Abraham, common patriarch of the Christian, Jewish and Muslim faiths — where he will host an interfaith service, with many of Iraq’s other religious minorities in attendance.


Officials: 18 killed as truck crashes into bus outside Cairo

Officials: 18 killed as truck crashes into bus outside Cairo
Updated 06 March 2021

Officials: 18 killed as truck crashes into bus outside Cairo

Officials: 18 killed as truck crashes into bus outside Cairo

CAIRO: A trailer-truck crashed into a microbus, killing at least 18 people and injuring five others south of the Egyptian capital, authorities said.
The country’s chief prosecutor’s office said in a statement the crash took place late Friday on a highway near the town of Atfih, 100 kilometers (62 miles) south of Cairo.
The Cairo-Assiut eastern road, located on the eastern side of the Nile River, links Cairo to the country’s southern provinces and is known for speeding traffic.
Police authorities said the truck’s tire exploded, causing it to overturn and collide with the microbus. The victims were taken to nearby hospitals, the statement said. The truck driver was arrested.
Traffic accidents claim thousands of lives every year in Egypt, which has a poor transportation safety record. The crashes are mostly caused by speeding, bad roads or poor enforcement of traffic laws.
The country’s official statistics agency says around 10,000 road accidents took place in 2019, the most recent year for which statistics are available, leaving over 3,480 dead. In 2018, there were 8,480 car accidents, causing over 3,080 deaths.


Israel to further ease its coronavirus restrictions from Sunday

Israel to further ease its coronavirus restrictions from Sunday
Updated 06 March 2021

Israel to further ease its coronavirus restrictions from Sunday

Israel to further ease its coronavirus restrictions from Sunday
  • Green passport holders can enter cafes and restaurants and choose to sit indoors or outdoors
  • At the airport, Israel will only allow 3,000 Israelis to enter the country per day

DUBAI: Israel announced it will further ease its coronavirus measures from Sunday, national daily The Jerusalem Post reported.
Students between grades seven and 10 will attend classes physically in green, yellow and orange cities, the report said.
The country’s “traffic system” has identified “green” cities as those with lowest COVID-19 cases, while the second lowest infection rates are “yellow,” followed by “orange” and “red.”
Israel had also required people entering cafes, restaurants and hotels to submit a green passport, which can be obtained through the health ministry for anyone who has taken the two shots of the coronavirus vaccine for at least a week.
But “children below the age of 16, who are not allowed to be vaccinated, will not be able to accompany their vaccinated parents,” the report added.
Green passport holders can enter cafes and restaurants and choose to sit indoors or outdoors.
Non-vaccinated people can only sit outside. Hotels will also reopen, allowing holders of the passport to access a wide range of activities.
At the airport, Israel will only allow 3,000 Israelis to enter the country per day.
New arrivals will be required to quarantine and must present a negative COVID-19 test result and be tested on arrival.
Meanwhile, the Coronavirus Knowledge and Information Center has warned that the country may witness another outbreak, as around 5 percent of Israel’s population have tested positive each day.
The health ministry said more than 4.9 million people have taken at least one shot of the COVID-19 vaccine, including 3.6 million who have already taken their second shot.
More than half of the country’s 9 million-strong population have already received the two recommended doses of the Pfizer/BioNTech coronavirus vaccine since the inoculation drive began in December.
Israel has registered more than 796,000 cases of Covid-19, including over 5,800 deaths.