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BEIRUT: Energy and Water Minister Nada Boustani said over the weekend that Lebanon intended to launch new tenders in September to build new power plants and rehabilitate existing ones. Speaking to The Daily Star, the minister emphasized that her ministry and the Cabinet in general were fully committed to the execution of the power plants in order to provide the country with 24-hour power in the future.
We have launched the prequalifications and will soon launch the new tender books in September for the new power plants in Zahrani and Selaata. This is a very important step. This means we will have four new power plants that are operational on gas, those being Zahrani, Deir Ammar, Zouk and Jiyyeh, Boustani said.
At present, Lebanon has only two power plants that are capable of running on gas with a 400 megawatt capacity each.
The two power plants were built in 1996 for this purpose.
The country faces growing demand on electricity, due to an increase in its national population and an influx in the number of refugees. The growing demand is met with a shortage in power supply, of around 1,500 to 1,600 MW to be exact, which the new power plan is set to tackle, the minister said.
Lebanons current electricity output is close to 1,800 MW if the electricity barges are included.
Lebanese officials have said that the around 1.5 million Syrian refugees in the country consume more than 400 MW, exacerbating the electricity problem.
To Boustani, it is vital for work to proceed on schedule despite any setbacks, so that Lebanon can finally reach the ultimate goal, as she puts it, of 24/7 power feed and eliminating the massive deficit which Lebanons power company suffers from. With the current plan implemented, we will see Electricite du Liban with zero deficit and turning into profitability going forward.
She did not provide a time frame for when Lebanon would see a deficit-free EDL, but hinted that once the power plan was in order and done, things would progress in the countrys best interest.
EDLs huge deficit over the past 25 years stands at $35 billion, due to the governments subsidizing of power bills.
The government of Prime Minister Saad Hariri has endorsed an electricity plan that aims to cut EDLs deficit by 20 percent a year and over the next five years.
EDLs $2 billion deficit is one of the main causes of the huge budget deficit. International organizations such as the International Monetary Fun have urged the government to remove electricity subsidies.
The minister said people had been paying a price per kilowatt that was based on oil prices at $20 a barrel in 1994.
The work on the temporary and permanent power plants will be simultaneous, Boustani said. The plan took a lot of time to launch because we wanted to cover everything and see how much the power grid can hold and how many megawatts are needed for each area, she added.
In Selaata, there will be a permanent combined cycle gas turbine power plant with a capacity of 700-800 MW, and it will be paired with a temporary solution in Deir Ammar which provides 450 MW.
The second package includes a permanent combined cycle gas turbine power plant in Zahrani with a capacity of 600-700 MW, paired with the permanent solution in Zahrani that provides 400 MW, along with 100 MW to be provided by the Jiyyeh power plant, 50 MW to be provided by the Jub Jennin plant and 50 MW to be provided by the Bint Jbeil plant.
This means the temporary solutions will provide about 1,050 MW, compared to the 1,450 MW that will be provided by the permanent power plants.
The second phase will start around the end of 2020, whereby we shut down the Zouk and Jiyyeh power plants and we replace them with new eco-friendly power plants that operate on natural gas, the minister said.
She also stressed that Lebanon planned to explore for gas off the Lebanese coast as per the plan introduced by the Energy Ministry.
Asked about the border dispute with Israel, the minister insisted that Lebanon would not relinquish any part of its territory.
We will not let go of any of our rights. Why would we present ourselves as weak? We are a country that has rights and we are able to negotiate and defend our rights. There are international legal measures that safeguard our rights, the minister said.
This comes after the U.S. expressed interest in renewing talks between Israel and Lebanon over the disputed maritime and land borders.
However, some politicians doubt the Israelis would want to commence negotiations in September as proposed, due to the fact that there will be elections in Israel that month.
Boustani said Lebanon would remain steadfast on oil exploration and drilling.
She said she expected the drilling process to happen before years end, toward November, or December.
The minister said she was not aware of any U.S. pressure on Lebanon to rush the talks, or of U.S. intent to push forward its companies to enter the oil and gas sector in Lebanon.
We had a visit from a U.S. delegation recently and they expressed their interest in seeing U.S. companies entering the sector. I hope this happens because it would be good for Lebanon. There will be no favoritism. They have to enter the tenders and bids like everyone else and if they win, then so be it, the minister said.
The U.S. ambassador has also praised our transparency in handling the sectors licensing and bids so far, as well as other NGOs and diplomats, she added.
Lebanon has outdone itself in terms of being transparency in the oil and gas sector, which is considered very secretive in other countries, said Laury Haytayan, a Beirut-based oil and gas governance expert. The minister meets with EU ambassadors and NGOs on a monthly basis and answers their queries and keeps them up to date ... and that is what matters to their companies and investments.
Lebanon awarded its first offshore gas and oil exploration and production agreements in 2018 to a consortium of Frances Total, Italys Eni and Russias Novatek, for two blocks.
Israel, on the other hand, has failed in its second licensing round - a miserable fail. This is the second bid that Israel opens and it failed. Haytayan said.
Lebanon is approaching its second competitive round and there are a number of companies interested, according to the minister and experts in the sector, including BP, Gazprom and Lukoil.
There is also the issue of interlocking reservoirs along the maritime borders with Cyprus that the prime minister and Boustani say Lebanon is in talks with the Cypriots over.
She hinted at new agreements that may be announced in September and that some speculate may have to do with the unionization agreement that is being finalized and ratified with Cyprus.
In the second licensing round, Lebanon has opened all its maritime borders for bidding, and those borders are intertwined with the Cypriots (Block 5) and even the Syrians.
The oil and gas sector is a savior to our economy. We need foreign investments and hard currency and that can be provided via this sector. That is how the Lebanese see it, Haytayan added.
The minister also commented on plans to set up Floating Storage Regasification Units, or FSRUs.
Boustani indicated that turning to gas instead of fuel/diesel oil was also very important for Lebanon, as gas prices were much cheaper and would save Lebanon hundreds of millions of dollars a year in fuel costs.
In 2010, minister Gebran Bassil suggested that we resort to buying gas, but that suggestion was blocked. Gas prices at that time were even much more favorable than now, the minister said, pointing to the fact that Lebanon could have saved billions to date on its fuel imports bill.
When we talk about gas being cost effective, we do not only mean in terms of money, but also in terms of it being more environment friendly. We are looking at solutions that will not add to the pollution in the country, Boustani said.
And with the new power plan moving forward and tenders in place to be launched in September, the minister said that the FSRUs had become a must.
While some have claimed that a Selaata FSRU to feed the power plants in the area would be a waste of money, costing the country as much as $2 billion, others claim it is being set in a Christian area for sectarian reasons, since the two other FSRUs are to be located in Muslim-populated areas in north and south Lebanon.
The minister is quick to reject such rumors, explaining that the Selaata power plant project had been on Lebanons agenda since the 1970s, which means the power plants there would need their own FSRU terminal for supply.
She added that unlike in other countries, Lebanons FSRUs would be smaller in size, hence the storage capacity fits each of the areas.
In the beginning, we had planned for one large FSRU in Beddawi for all of Lebanon, but as the plan progressed we found that having multiple smaller FSRUs is still cost effective and efficient, she said.
According to Haytayan, there is a silver lining in having multiple FSRUs, especially if troubles over maritime border issues with Israel and Syria persist.
Our only way to get rid of the trouble is to focus on LNG [liquefied natural gas], and here lies the importance of the FSRUs. And should Lebanon go with an LNG option going forward, we can ship it in tankers from the FSRUs and send it on its way to Europe directly via the Mediterranean Haytayan said.
The minister denied rumors that Lebanon might further delay the LNG terminals that would provide natural gas to the new power plants.
Though she is faced with political and technical hindrances, Boustani remains positive.
Every technical problem has a technical solution. I am not worried about that. Things may take time but we always find a solution, she said, adding that when it came to political matters, she took an efficient approach: Holding a dialogue with all parties in the government, for the greater good of the country.
The Energy Ministry has already reviewed bids by consortia to build LNG terminals that are designed to supply Lebanons power plants with a cheaper and friendlier source of energy, but is yet to pick one or more companies from the bidders to carry out the job.
That decision lies with the Cabinet, Boustani said.
The bid to develop an integrated LNG import supply chain to provide natural gas to current and future power plants in Lebanon and secure the development of offshore LNG imports at the three sites Selaata, Beddawi and Zahrani can all be under one bidder or many, the minister said.
She added that it was up to the Cabinet to decide on what was best for the countrys interest.
Of the six consortia that had qualified in the second licensing round, only one (ENI, Qatar Petroleum Int. Ltd.) managed to fit all the criteria in the tender book, which some deem unfeasible.
Two other consortia - Total with ZR Energy, and Vitol with Butec - offered similar bids along with alternative favorable bids that would save the country billions of dollars over the next 10 years.
According to experts, a gas pipeline that runs overland from Selaata to the Zouk power plant that is noted in the tender book is not cost effective.
An alternative could be a sea pipeline from Selaata to Zouk, as one expert has suggested, or the use of tankers. The minister insisted that the land pipeline was necessary and feasible.
On the renewable energy front, things have been progressing well with Boustani who, despite being eight months pregnant, barely sits still and insists on inspecting work on the ground herself.
She was touring Batroun region over the weekend to follow up on the Balaa dam, which is expected to support the towns in the higher Batroun region with 2 million cubic meters of freshwater.
The Balaa dam, which should be completed in 2020, is one of many dams that are set to be done over the course of the next three years.
Those include the Mseilha dam, which is on course to be completed by the end of 2019; the Beqaata dam in 2020, and the Janna dam, set to for 2022.
We never made use of our abundant wealth of freshwater because we never had any storage units. These dams, alongside others that have been accomplished, will help us tackle water shortages going forward as well as produce energy from them, Boustani said.
Though some dam projects have faced mounting political and NGO pressures, the minister is adamant on going through with the plan.
We have carried out multiple studies for each project, be it the geological, technical, environmental and other studies. I am 100 percent sure of the studies, she said.
Producing energy from dams is also part of the renewable energy plan.
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