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Electricity: an illustration of the enormous costs of political stalemate
Published on 08/04/2010 in L’Orient - Le Jour
The summer is fast approaching and the prospect of a new round of draconian power rationing gives the Lebanese little reason to rejoice. One of the commitments made by the National Unity government was to rapidly begin the construction of extra generating capacity (600 MW) to meet the growing deficit between supply and demand. To date, the Electricity dossier has not advanced a single step as a result of political disagreements, particularly over how to finance this investment. The case of the power-generating sector is profoundly revealing of the huge cost the entire country pays for political paralysis.

Immobilised by narrow considerations and the rule of consensus, the Executive has been unable to cut through the complex issues that require strategic thought in both the medium and long term. The status quo cannot continue. Doing nothing is extremely costly financially, but also costly socially, environmentally and economically.

The most obvious expenses have been highlighted by the Ministry of Finance, which recently decided to publish a monthly report on the development of the Treasury’s transfers to Lebanon Electricity (EDL). These transfers, used primarily to finance fuel purchases, totalled US$ 1,498 million in 2009. Debt-servicing aside, that represents 20% of public spending and 4.3% of GDP! To this exorbitant figure, we must add a number of unquantifiable costs: the amount spent by households and companies to ensure a continuous supply of electricity through the purchase of their own generators or subscriptions to neighbourhood generators, the polluting effect of these private generators which run on gasoil, and the pollution resulting from EDL’s reliance on outdated equipment, I’m thinking here in particular of the plants at Zouk and Jiyye.

The diagnosis of the problems facing the electricity sector is known. There’s almost no point in repeating it: insufficient capacity, technical losses related to outdated transmission and distribution, theft, mismanagement of the public company in charge, a lack of qualified human resources both within EDL and at the Department of Energy.

The solutions are also known: building new plants, resolving the problem of gas supply to Lebanon, completing the transmission network, notably by resolving the issue of Mansourieh, optimizing distribution, involving the private sector, encouraging renewable energy, whether this is solar, wind or hydro-power.

It appears to me that the implementation of a viable energy policy must address a few basic principles:

1) Access to electricity is a fundamental right in the 21st Century. Twenty years after the end of the war in Lebanon, it is unacceptable that the State does not supply electricity 24 hours a day to its citizens.

2) If electricity is a basic amenity, to which we all have a right, the State is not necessarily best placed to provide its supply. Partnerships with the private sector are a necessity. Possible options for privatization are myriad and nothing prevents the creation of financial incentives to reduce the cost of capital required for investment, under the aegis of the State.

3) The definition of our technological options for the coming decades must certainly depend on traditional criteria of cost and profitability, but it must also take into account geopolitical considerations, especially given that Lebanon is not itself a producer of petroleum - pending confirmation of the possible presence of oil deposits in its territorial waters. I refer in particular to the need to ensure the security of supply by diversifying sources of provision.

4) Electricity does not only meet the needs of people, it also meets the needs of business and its provision affects the potential competitiveness of Lebanese companies, especially manufacturers. The elaboration of a sectorial strategy must take into account this aspect, especially as Lebanon is in direct competition with oil-producing countries for which provision of electricity incurs minimal costs. If it is necessary to think in terms of cost, it is also necessary to consider the construction of gas networks for the industrial sector.

5) Environmental considerations may seem like a luxury for a developing country. However, I believe they are a necessity in a country like Lebanon, whose environment has suffered so much. The intelligent use of water, sun or wind for power generation should not be considered the preserve of wealthy countries, especially as these resources are available in abundance in our small country.

6) Finally, rationalising consumption of electricity is inseparable from the drive to increase production. Whether we are talking about construction methods or the kinds of appliances used by individuals, companies or public institutions, it is time to acquire energy-saving instincts.

Given the gravity of the situation and the huge cost of inaction, I can only add my voice to all those who call on the Minister concerned and the government as a whole to finally pass the act.