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The Lebanese population would have liked to benefit from a continuous power supply, as promised two decades ago by the Ministry of Energy. However, Lebanon is on the list of countries with the worst electricity management record. What’s more, it’s the country with the darkest reputation, thanks to decades of waste, corruption and failure.
In Lebanon, the electricity issue is regarded as one of the paramount and persistent challenges. Over the course of several years, the country has faced continuous difficulties in securing a sustainable and efficient electricity supply. The root causes of this crisis, including funding shortages, corruption and infrastructure neglect, have resulted in the deterioration of the electrical grid and recurrent power outages. In certain instances, these outages have reached the critical point of zero electricity supply for a full twenty-four hours.
On the flip side, Lebanon heavily leans on private generators to meet its electricity demands, exposing the system to fluctuations and disruptions. The government incurred considerable expenses to procure electrical energy. However, persistent structural, administrative and political challenges prevent any significant progress in this sector due to the issues of corruption, absence of governance and political conflicts surrounding this file.
The improvements in the electricity sector appear somewhat unrealistic, underscoring a critical need for substantial investments in upgrading infrastructure and enhancing power generation capacity. Consequently, Lebanese citizens are growing increasingly frustrated due to persistent power outages and the adverse impact on their daily lives and businesses. The electricity crisis deeply affects all sectors, including tourism, industry and services, plunging Lebanon into a state of widespread chaos and inflicting significant financial losses on these sectors.
Nomination of the Regulatory Authority
In this context, member of the Strong Republic parliamentary bloc MP Ziad Hawat conveyed to “Houna Loubnan” that the plan to reform the electricity sector dated back to 2010 and was developed by then-Minister Gebran Bassil. The Ministry of Energy has seen a succession of ministers, all affiliated with the same political coalition. The crucial observation is that none of the electricity projects has adequately addressed the fundamental issue of a tariff increase. The tariff has consistently been below the production cost, resulting in the sale of the kilowatt to consumers at rates lower than cost prices. This is impermissible knowing that it has led to the current situation and staggering losses of $40 billion in the electricity sector.
We underscore that the primary responsibility lies with the Minister of Energy and all predecessors since Decree 4517, issued on 13/12/1972 (Public Institutions System), stipulates tariff matters as falling under the guardianship authority.
“Not a single electricity minister has drawn the electricity administration’s attention or requested a tariff increase to make things right. Instead, the issue has systematically been deferred to the Cabinet, with ministers fully aware that the latter would sidestep deciding on this matter, deemed unpopular. This has ultimately led to the current economic disaster. Therefore, the evaluation of the government’s performance shall start from the assessment of energy ministers’ performance,” added Hawat.
In response to the Free Patriotic Movement’s (FPM) accusation against the Lebanese Forces of obstructing electricity plans, Hawat clarified that there was no impediment to the implementation of proposed plans. Instead, the LF actively sought to address existing flaws, which were clearly evident. Moreover, stressing their consistent advocacy for the appointment of a regulatory authority to manage the sector efficiently and professionally, he expressed concern that, to date, this appointment has not been realized, leaving the electricity sector in its current state.
Hawat went on to say, “When the proposal for Turkish power ships for electricity production in Lebanon was approved, we voiced opposition, considering that it was going to cost the treasury without offering a sustainable solution. The evidence lay in the termination of contracts with Turkish ship companies, their departure from Lebanon and the persistently unchanged state of the electricity situation. Therefore, our focus was on correcting and presenting alternative ideas to address flaws rather than impeding the proposed projects which were marred by significant loopholes and errors.”
Addressing the Lebanese Forces’ stance regarding the electricity file, Hawat said, “We have a clear vision to overcome the electricity crisis. We want a holistic and comprehensive plan that commences with the swift appointment of the regulatory authority. The second plan is investing in renewable energy, particularly in the wake of the recent enactment of the Renewable Energy Law by the Parliament.” Lebanese citizens have already harnessed a thousand megawatts through solar energy. Encouraging investments from both local authorities and citizens in this sector is paramount, recognizing their substantial contribution to easing the burden on the State’s treasury. Moreover, let’s promote the expansion of alternative energy which might serve as an alternative solution to the construction of new power plants.
Another fundamental solution lies in appointing a specialized energy minister, devoid of political interference and influences. This is crucial as the current problem is evident: a minister’s allegiance to a specific political party may compel them to prioritize their party’s interests over the broader public welfare.
Holding onto the Ministry of Energy
On the other hand, the FPM prominent figure Malek Abi Nader stated, “If we adhere to the Constitution and the law, we fulfill our complete duty. We have developed the plans and executed all executive decrees. Projects like these require Cabinet approval. Unfortunately, opposition within the Cabinet has impeded our efforts to achieve these objectives. Nevertheless, all successive ministers have devised an electricity plan that was approved by the Cabinet and gone into effect. However, Ministers of Finance openly admitted to obstructing the electricity plan. While individual ministers can be held accountable if the payment order falls within their purview, these matters involve the Cabinet as a whole, extending beyond the ministry alone. This is what we have done.
He added, “Therefore, we do not feel guilty in this matter for a simple reason – we have fulfilled our duties, but the Cabinet let us down by not voting with us. Holding onto the Ministry of Energy is crucial for us because we have a clear plan for both electricity and the oil project, and everyone is aware of our contributions to the latter.”
“In the electricity sector, a mafia comprising generator owners and fuel traders operates in Lebanon, causing the State to face annual losses estimated at 3 billion dollars. The implementation of the electricity plan would not benefit this mafia and its affiliates within the Cabinet, so naturally, they won’t allow its execution. Accusations consistently point towards the FPM regarding power ship rentals, despite Prime Minister Mikati being the one to allocate them. And when the time came to renew the power ship contract, he refused,” he declared.
“Let’s be realistic; developing an electricity plan is impossible in the presence of a mafia that follows leaders and reap benefits from the trade of diesel and fuel,” he added.
Serial infringements
In a different context, President of the Public Procurement Authority Jean Ellieh highlighted, “Transparency assurances embedded in the Public Procurement Law encompass all procurement operations. It applies to the electricity sector and extends to the sectors of works, supplies, and procurement. It commences with the clear and timely identification of needs. Moreover, it involves formulating term-sheets that reflect actual requirements, and adhere to the principle of ensuring a balanced match between the specified needs and the reality of bidders. This indicates that these records should uphold fairness and avoid any exclusive or discriminatory conditions.
“In the third phase, after identifying needs and formulating term sheets, the tender is announced with an ample timeframe for bidders to submit their offers. During the subsequent evaluation stage, bidders are treated in accordance with the principle of equality.”
As for managing the challenges presented by electricity allocations, he underscored the necessity of planning conducted by the relevant entity which is the Ministry of Energy. “We know that every administrative action is risky, and in the realm of management science, a comprehensive risk assessment is a must. Moreover, measures should be established by the Ministry of Energy to face these risks, wise and aware management is crucial, and tenders should be released in a timely manner. What remains is the safety buffer to avert power disruptions, and this is unquestionably evident.
He added, “The expression ‘anti-corruption’ will remain a slogan and rhetoric, echoing among researchers and officials, unless accompanied by tangible accountability. In the electricity sector, documented reports of violations have surfaced, particularly within the previous tendering authority, spanning from 2016 to 2019 during the tenures of Ministers Cesar Abi Khalil and Nada Boustani. In 2021, the Committee of Works and Energy, chaired by MP Nazih Najm, convened and decided, based on a submitted report to the tendering administration, to form a fact-finding committee aimed at uncovering financial irregularities in the Ministry of Energy tenders. Regrettably, this committee failed to convene even once. To genuinely combat and prevent corruption, it is essential to hold both violations and those accountable for them. In an environment where legal breaches are easy, be it in the electricity sector or any other, the battle against corrupt individuals has fallen short. In Lebanon, discussions about corruption are pervasive, however, pinpointing a corrupt individual or a spoiler proves elusive; yet, the spoiler poses a greater threat, leading others into corrupt practices.”
