Lebanon: Electricity plan needs a clear majority

As the international investor community awaits the results of Lebanon’s Parliament on the country’s reformation in finance as well as electricity sector; the majority of the Cabinet showed support toward the new plans.

parliament beirut roula messarra
The Cabinet discussion on “2019 draft state budget” has been postpone to this week, while the international community is being kept anxious to see if the key fiscal and economic reforms is affected. © Roula Messarra

Is the recovery for Lebanese electricity sector ailing for thirty years, finally in sight? Lebanese parliament is now ready to sanction a new plan for the sector as the majority have shown their support. The way ahead seems to be clear for the blueprint implementation which is going to repair the damage by boosting “power supply” and slashing “subsidies to the state-run electricity company”.

A political adviser to Prime Minister Hariri, Ammar Houri, an ex-Future Movement MP, said: “The electricity plan is expected to gain a clear majority from Parliament after having won Cabinet unanimity. The parliamentary approval of the electricity blueprint will definitely pave the way for its implementation with the aim of gradually increasing power supply and reducing deficit [at Electricité du Liban]”. Strangely, for once, almost every political players are on the same page.

On the other side of the political spectrum, the deputy speaker of the parliament, Elie Ferzli shared similar views: “The electricity plan will easily pass in Parliament with a big and respectable majority after having been discussed at length and approved by the main blocs in Cabinet. The parliamentary move will subsequently clear the way for the plan’s implementation, including the release of the book of terms and tenders [for companies to build power plants]”.

Previously, the Cabinet showed an unanimous backing for the above mentioned project that aims to reshape the “dysfunctional sector” by improving the power supply and reducing EDL’s subsidiaries which is estimated to be nearly $2 billion on a yearly basis. The international community considers the Cabinet support as a strong indication of Lebanese government’s resolve on enacting the recommended reformation suggested at the CEDRE conference.

The international investors have urged for a reformation even in the electricity sector of Lebanon, which will eventually unlock the $11 billion amount kept as soft loans and grants that were promised at the CEDRE conference, which took place last year in Paris for “finance investment and infrastructure projects in Lebanon”.

As per the plan, revealed Hariri, Lebanese household will get 24-hours of electricity supply, while the plan has two aspects. From a short term perspective, it aims to cut down the losses from thirty four percent to eleven percent while taking up the electricity tariff and bringing it to the level of oil price in order to prevent the EDL to end up in a deficit once again if the prices of oil were to surge anew.

Moreover, the plan also seeks to secure an additional 1,450 megawatts as a temporary measure by the year of 2020. In this way, the government hopes to rake up total output to 3,500 MW. The said amount of electricity will be “just enough” to provide a 24/7 supply at peak demand.

On the other hand, the long terms measure is to boost the electricity production by over 3,000 MW over a period of six years which is likely to combine “new power plants and renewable energy”. As per the committee discussions, the main topic remains the extension of Law 288 of 2014, under this the Cabinet will have the power to provide “temporary permits and licenses” for electricity production when proposed by the “Energy and Finance ministers”.

Electricity, but also…

Among other bills that is featured in the agenda, there are issues related to “natural reserves, protocols with the European Union”, and matters connected to the “biological diversity and draft laws” needed to create “a natural forest reserve in Beirut” besides creating “special economic zones” in the North in Batroun as well as in the South in Tyre.

However, the Cabinet discussion on “2019 draft state budget” has been postpone to this week, while the international community is being kept anxious to see if the key fiscal and economic reforms is affected, as per the promises made. Last year, the budget deficit figures we at $6.7 billion for Lebanon, while Hariri has been holding meetings with ministers and officials from various blocs for narrowing down on the steps to be enacted to “reduce the budget deficit”.

A statement issued by the Future Movement’s parliamentary bloc read: “The positive impact that arose from the approval of the electricity plan must be complemented with other reformist measures contained in the government program. This requires wrapping up the budget and agreeing on the broad lines of the country’s financial and economic policy”.

While, MP Ibrahim Kanaan from the FPM parliamentary bloc” stated: “As the electricity plan is a must, the Budget must also contain reforms which we have been talking about since 2010. Reforms are essential and are not targeted against anyone, especially Lebanese citizens.”

Will the Lebanese citizens avail twenty four hours of electricity? Stay tuned.