By Marlene Sabeh
Upon her appointment as Minister of Energy and Water in 2019, H.E. Nada Boustani’s main focus was to effectively reform the electricity sector. In accordance with FPM’s 2010 proposed plan for the Energy and Water Ministry, Minister Boustani presented a detailed strategy primarily centering on regulating Electricité du Liban’s tariffs as well as increasing production.
Presented in March 2019, the provided for a 180 percent increase in EDL’s tariffs by early 2020; the tariffs had been frozen and subsidized since 1994. The plan also required an increase in power generation and subsequent electricity output in the same year. This would eliminate private generator bills for consumers:
• For the first (lowest) tariff category, which includes 375,690 users consuming an average of 510 kWh / month, EDL’s monthly bill would have averaged around US $74 in 2020, meaning a 14.5% decrease compared to their current total bill (including costs relating to private generators).
• For the fifth category (the top consumers), which includes 38,843 users consuming an average of 2,150 kWh / month, EDL’s monthly bill would have averaged about $310 in 2020, a drop of 10.7% compared to their current total bill (Reuters, April 2019).
The rise in tariffs would have had a direct positive impact on EDL’s deficit and consequently on the country’s finances, as the Treasury’s portion to cover EDL’s deficit is the third largest public expenditure in the budget. EDL’s deficit in 2018 was estimated at US $1.8 billion, with an accumulated deficit of $30 billion (L’Orient le Jour, March 2019).
Minister Boustani’s detailed plan also stipulated tactics for improving the collection of bills (EDL expected to recover almost $2 billion in unpaid bills) and the installation of smart meters as it was estimated that non-technical losses (theft and illegal connections) accounted for 21% of EDL’s output. Not to mention that the modernization and extension of the transmission and distribution network, also covered by the plan, would make it possible to address the technical losses which waste 16% of the output.
Additionally, the plan included: The rehabilitation of the Deir Ammar II plant in 2019, making it partially functional by 2021 and reach its full capacity by 2022.
Regarding the proposed increase in production, Minister Boustani’s plan also provided for the launch of a new call for tenders for long-term power purchase agreements (Zawya, August 2019). Interested companies would propose a solution to increase output by an additional 1,450 MW (megawatts) in the short-term (i.e. before EDL’s tariff increase came into effect and until 2025) in addition to a long-term solution, through the construction of new sustainable plants at Selaata (550 MW in 2023), Zahrani II (550 MW in 2023), and Hraiche (300 MW in 2024).
The installation process for these facilities would have required between three and six months. This temporary solution has been recommended by the World Bank and will probably be given preference in the potential applications by General Electric or Siemens, the companies have already begun discussions with the Ministry of Energy (The National News, April 2019).
Additionally, the plan included:
• The rehabilitation of the Deir Ammar II plant in 2019, making it partially functional by 2021 and reach its full capacity by 2022.
• The construction and commissioning of the new Zouk 2 plants (550 MW in 2025) and Jiyyé II (550 MW in 2026).
• The development of solar power farms (300 MW in 2022) and wind farms (400 MW in 2023).
Minister Boustani understood that her ministry was a focal point of government efforts to reform an economy struggling with one of the world’s heaviest public debt burdens and years of low economic growth. “We are diligently working on this strategy for the electricity sector because we are aware of its importance for the whole country,” she had told Reuters in a 2019 interview, alluding to the fact that donor states and institutions had offered $11 billion in soft loans for investment in Lebanon, conditional on crucial reforms such as fixing the electricity problem (CEDRE Conference, June 2018).
