Bassil: electricity crisis costs economy $5.75 billion annually

BEIRUT: Energy and Water Minister Jibran Bassil on Thursday painted a bleak picture of electricity in Lebanon, stressing that the sector is causing the economy to lose $5.75 billion each year. Speaking at a press conference, Bassil said the deficit of the electricity sector in 2008 stood at $1.860 billion because of the high prices of oil, while the deficit in 2009 fell to $1 billion after prices gradually fell. 

Nearly all of Lebanon’s aging power plants run on fuel and gas oil, which puts them at the mercy of fluctuating international oil prices. 

The deficit of Electricite du Liban (EDL) has been a major headache for all successive governments since 1994. Minister after minister has tried in vain to find a radical solution to the cash-strapped electricity sector. 

Bassil commented on the fact that a few private companies in Lebanon had secured concessions from the government to run electricity firms in some regions such as Zahle, Byblos, Alyeh and Bhamdoun. 

“All of the companies that have concession rights from the government have 82,000 subscribers out of 1.2 million who subscribe to EDL,” Bassil said. 

The minister added that the state sells electricity to the citizen at an average of LL103 floating rating or LL127 fixed rate for each kilowatt, while Zahle sells the kilowatt of electricity at only LL50. 

“But these companies buy the kilowatt of electricity from the state for only LL50 to LL75 while we sell them to the citizen for LL127. Each kilowatt cost the state LL127 and this include the costs of maintenance and transportation,” he said. 

He added that the four private companies are actually benefitting from the state’s subsidies because they are buying electricity directly from EDL at a fraction of the actual cost. 

As for the current condition of EDL, Bassil said that the state-owned company currently has 1,930 full time employees but the firm still need 3,097 to operate normally again. 

He added 120 to 150 employees are forced into mandatory retirement each year after reaching the retirement age. 

“This means that EDL is losing close to 8 percent of its entire staff each year,” he said. 

Bassil added that the lack of investment in the electricity sector is causing EDL to lose money each year. 

“We only invested $1.5 billion in the electricity sector over the past 18 years while many Arab countries spend this amount every year to upgrade their power stations,” he said. 

He added that the finance minister in 2006 had announced that the accumulated bills of EDL had reached $7.5 billion. 

“But most of these losses are actually interest rates on treasury bills that were issued by the Finance Ministry to buy fuel and gas oil to run the power plants,” Bassil said. 

He emphasized that the electricity shortage and power rationing was causing havoc on the Lebanese economy. 

“The electricity shortage is causing a loss of $700 per megawatt and this means that the total loss for the economy is $5.75 billion in 2009,” he said. 

The technical loss of electricity is around 15 percent of the total losses each year while theft and illegal connection represent 20 percent. – The Daily Star