Country Report Lebanon January 2011

Economic policy: Energy minister urges cabinet to approve electricity plan

Mr Bassil proposed a comprehensive US$5bn plan in late 2010 to reform the sector, ranging from building new generating stations to overhauling management (November 2010, Economic policy). Within this, there was an emergency plan that included hiring 250-mw power-generating barges as an interim measure to increase supply over the next three years. However, because of the political tensions, the cabinet has not addressed this issue. In January Mr Bassil said that further delays would prevent the plan being put into action in time. "We are heading for a big electricity disaster this summer if the plan I presented to the cabinet is not implemented immediately," he told a press conference.

New official figures were released in December showing that electricity production reached 9.47bn kwh in the first nine months, up by 5.8% on the same point in 2009, but still well below demand. State subsidies to EDL were reported to be US$1.01bn in the first ten months of the year. This was 22% lower than in the same period of 2009, but disguised an accumulation of new debts after the Beddawi power station in the north of the country was converted in late 2009 from being run on oil to being run on natural gas. Payments to Kuwait Petroleum Corporation and Sonatrach of Algeria for oil supplies were said to be US$949m in the first ten months, down by 22% year on year, reflecting the reduction in demand, but it was reported that no payments had yet been made to Egypt for natural gas.

Another factor undermining EDL is its inability to collect bills, mostly from individuals and groups that enjoy political protection as well as, anecdotally, from whole swathes of the country controlled by Hizbullah and Amal. Mr Bassil said in January that bill collection had improved in 2010 after a concerted campaign. However, in December EDL workers came close to striking after a regional executive was severely beaten up by a customer whose electricity supplies were cut off due to his failure to pay bills. Collection officers have called for protection from the army, but this has made the issue a political matter, ensuring that there is little hope of a dramatic improvement in collection in the short term.

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