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Bassil unveils plan to reform power sector

08 July 2010

BEIRUT: Energy and Water Minister Jebran Bassil on Wednesday disclosed his ambitious $5 billion plan to restructure the aging electricity sector that would boost production to 4,000 MW from the current 1,600 MW.

Speaking before a large audience of ministers, lawmakers, bankers and economists at UNESCO Palace, Bassil made it clear that the plan, which had been approved by the Cabinet, required time, patience and concentration before it could fully materialize.

“This document will lead to a solid electricity sector with more than 4,000 MW of power up to 2014 and 5,000 MW after 2015. We are talking about a stable and secure distribution and transport network,” the minister said.

The efforts of all successive Lebanese governments to totally or partially solve the chronic electricity problem have proven futile.

The electricity problem has not only been a nightmare for Lebanese citizens, who have to cope with severe power rationing, but also a major headache for the Finance Ministry , which is forced to allocate close to $1.5 billion annually to settle the deficit of state-owned Electricite du Liban (EDL) .

Most of the power plants run on either fuel oil or gasoil, which is one of the reasons behind the hefty energy bill.

Experts say that 80 percent of electricity losses are due to the high cost of fuel oil, adding that Lebanon is at the mercy of the volatile oil prices in the international markets.

According to Bassil’s plan, the government will allocate $1.550 billion to the plan, $2.320 billion will come from the private sector and the remaining $1 billion will be in the form of donations and soft loans from the donor countries that took part in Paris III conference to help Lebanon.

“This document, if adopted, will reduce the gross losses of the electricity sector from $4.4 billion in 2010 to zero in 2014 with 24 hours of electricity a day,” Bassil said.

He warned that if this plan is not adopted and implemented then the losses of the electricity sector will reach $9.5 billion in 2015.

The minister said this plan had been prepared after careful study of all the plans and studies drafted by other ministers in previous governments.

In a report released last week, the Finance Ministry indicated it had transferred LL772 billion to EDL up to May of 2010.

“Transfers in January-May 2010 registered a level that is LL542 billion lower compared to the same period of 2009, which stood at L1.347 trillion due to a drop in payments to Kuwait Petroleum Corporation and Algeria’s Sonatrach for fuel and gas purchases by LL523 billion,” the Finance Ministry said.

It added that the other reason for the drop in allocation was due to a decrease in debt service by LL19 billion.

The plan also calls for investing in convertible energy or substitute energy such as wind run power mills and recycled trash. This alternative energy will produce nearly 12 percent of the entire power generation in 2014.

To solve the short-term problems, the minister proposed the installation of reciprocated engines (private generators) with a capacity ranging between 300 MW to 500 MW.

This short-term plan will help ease electricity rationing after 2010 if the funds are made available by the government.

Bassil stressed that the projected annual growth of 7 percent necessitates the construction of more power plants to meet growing consumption.

The second phase of the plan involves rehabilitating or replacing some of the old power plants and turbines, which can be done through a Build-Operate and Transfer (BOT) plan.

Commercial banks and private companies have repeatedly offered to help the government in the financing of some of electricity projects.

The plan clearly calls for converting to cheaper and environmentally cheaper sources of energy such as gas trough pipelines crossing through Syria and build special terminals along the coast to receive LNG (liquefied natural gas) that are carried by huge tankers from Qatar and Algeria.

Bassil said he was looking into the possibility of importing electricity from Turkey.

Lebanon has already signed an agreement with Egypt to purchase electricity.

The minister confirmed that there was no immediate plan to revise or increase the electricity bills on consumers although the state was subsidizing the cost of electricity due to the high prices of oil in international markets.

In some of Lebanon’s power plants the production cost of electricity is 22 cents per kilowatt hour (kWh), while tariffs stand at 9.6 cents per kWh. – The Daily Star

© Copyright The Daily Star 2010.