Lebanon Seeks Solutions For Electricity Problems
Faced with a severe shortage of power generation capacity, the new Lebanese government, which won a parliamentary vote of confidence on 12 August, has moved quickly to look for solutions for the long-lasting problems in the electricity sector. Prime Minister Fuad Siniora visited Alexandria, Egypt on 16 August and met President Husni Mubarak and other senior officials from the government to discuss the supply of electricity and gas from Egypt to Lebanon. We are coordinating our efforts with Prime Minister Ahmad Nadhif and the relevant ministers in Egypt in order to enable Egyptian electricity and gas to reach Lebanon as soon as possible, Mr Siniora said on 16 August in a press conference in Alexandria. According to Lebanese officials, the supply of Egyptian electricity and gas could save the Lebanese budget up to $250mn annually.
Egypt has a surplus of some 600mw of power generating capacity, enabling the export of 200mw of electric power each to Lebanon, Jordan and Syria. Egyptian electricity will be supplied to Lebanon via the regional grid which links up Egypt, Iraq, Jordan, Lebanon, Syria and Turkey (MEES, 11 August). A section of the grid to supply Lebanon needed some modifications, but these have been completed according to Lebanese media. Mr Siniora also discussed with Egyptian officials the possibility of speeding up the delivery of Egyptian gas to Lebanon, via the Arab Gas Pipeline (AGP), which links Egypt, Jordan, Syria and Lebanon. Deliveries of Egyptian gas to Syria via the AGP began on 10 July on a test basis, reaching the Dair 'Ali power plant, which can also run on gas (MEES, 21 July). Lebanon in mid-2005 completed the construction of its section of the pipeline to connect with Syria and eventually AGP. Lebanon was originally supposed to receive Syrian gas to feed the Badawi power plant, but Syria had no spare gas and therefore Lebanon had to wait for supplies from Egypt. Details of the gas supply agreement between Egypt and Lebanon have yet to be finalized and are to be discussed in further meetings in the near future, according to Lebanese officials. Furthermore Lebanon and Syria also have to agree on transit fees charged by the latter for the Egyptian gas.
Mr Siniora also paid a one-day visit to Iraq on 20 August to discuss with Iraqi Prime Minister Nuri al-Maliki the possibility of negotiating an economic package between the two countries, including the supply of crude oil. According to a report in the Beirut daily al-Nahar of 21 August, Mr Maliki is reported to have informed his Lebanese counterpart that Iraq would be willing to sell crude oil to Lebanon at preferential prices and to supply it in any way Lebanon preferred, namely by land, sea or pipeline (ie to Tripoli terminal on the Mediterranean).
Electricity Sector: A Financial Burden
Lebanon needs to raise its current power generation capacity from 1.5gw to close to 2.3gw, which would require an investment of over $2bn for the construction of new plants and the modernization of existing ones, according to Energy and Water Minister Alan Tabourian. The state-owned Electricite du Liban (EDL) is expected to incur a loss of around $1.5bn for 2008 if oil prices remain high, or a third of the governments annual budget, outgoing Minister of Finance Jihad Az'ur previously said. The government noted in its statement to parliament that the energy sector has become a considerable burden on public finances, with high oil and product prices, and stressed that its priority is to modernize the electricity sector and improve EDL financial position. Its plan is to introduce short-term and medium-term reforms. At the same time it will review and introduce new electricity rates which are intended to reduce the gap between costs and revenues.
Copyright MEES 2008.
