Bickering cost state $40bln in electricity sector: Lebanon's president

Aoun’s remarks came a day after a ministerial committee agreed on a new electricity plan submitted by Energy Minister Nada Boustani to the Cabinet last month.

Lebanese President Michel Aoun arrives at Vnukovo International Airport in Moscow, Russia March 25, 2019. Image used for illustrative purpose.

Lebanese President Michel Aoun arrives at Vnukovo International Airport in Moscow, Russia March 25, 2019. Image used for illustrative purpose.

REUTERS/Maxim Shemetov

BEIRUT: The state Treasury has incurred over $40 billion in losses in the electricity sector as a result of political bickering among rival factions, President Michel Aoun said Friday, in the latest twist of a decades-old saga to resolve the chronic power problem. “The electricity sector has cost the state Treasury more than $40 billion and the main reason for this is political spitefulness,” Aoun said during a meeting at Baabda Palace with the newly appointed Maronite League Council, according to a statement from his office.

“Although we had previously achieved an electricity plan that had been agreed upon, it was obstructed,” Aoun said.

“Today, we are trying to bring the nation back to economic options and stay away from spitefulness because development has nothing to do with [political] parties.”

Aoun’s remarks came a day after a ministerial committee agreed on a new electricity plan submitted by Energy Minister Nada Boustani to the Cabinet last month. The plan will now be discussed and probably approved at a special Cabinet session set for Monday at Baabda Palace despite the committee’s failure to agree on who will carry out the tenders to implement the blueprint.

The plan aims to overhaul the dilapidating electricity sector, improve power supply and reduce state subsidies to the state-run, cash-strapped Electricite du Liban, estimated at $2 billion annually.

MPs and politicians from the Free Patriotic Movement, founded by Aoun, and the Lebanese Forces have repeatedly traded barbs over responsibility for the long-broken electricity sector. The LF and other political parties have rejected previous FPM plans to lease more power barges to improve electricity supply for being too expensive, and called instead for the building of power plants as the only solution to the long-running severe electricity rationing.

The electricity plan was among other topics discussed Friday during a meeting at Baabda Palace between Aoun and former Minister Ghattas Khoury, a political adviser to Prime Minister Saad Hariri.

Aoun and Khoury discussed “current political developments, as well as the work of the government and the challenges facing it and the steps that needs to be taken in this delicate stage in Lebanon’s history,” the National News Agency reported. Despite “positive” atmosphere that has marked its four days of discussions this week, the ministerial committee, headed by Hariri and tasked with examining the electricity plan, remained divided over who would manage the tenders for companies to implement the blueprint.

The committee was reported to be split over whether the bidding would be conducted by Electricite du Liban, the Central Inspection Bureau’s Tenders Department or unspecified third parties.

“Prime Minister Hariri and committee members are making efforts to resolve the rift over a mechanism to conduct the bidding,” a political source familiar with the electricity talks told The Daily Star Friday. “The electricity plan will be approved during Monday’s Cabinet session once agreement is reached on the bidding mechanism.

“There is no intention on the part of anyone to derail the plan. All the parties want to see the electricity plan implemented,” the source said.

According to the source, the Cabinet would adopt one of three options to manage the tenders: The Energy Ministry, the Tenders Department, or the ministerial committee which represents the country’s main political parties.

If the plan is approved by the Cabinet Monday, it will still need to be endorsed by Parliament.

The Central News Agency said Monday’s Cabinet session would be decisive as the political parties represented in the government were divided over who should manage the tenders. While the Future Movement and the FPM support the ministerial committee to handle the tenders, Hezbollah, the Amal Movement, the LF and the Progressive Socialist Party want the bidding to be conducted by the Tenders Department, it said.

“We support going to the Tenders Department. This is an irreversible principled position and we will go with until the end,” former LF MP Fadi Karam told the agency.

Committee member, Deputy Prime Minister Ghassan Hasbani, said the committee has amended provisions related to reducing the budget deficit, boosting production levels and rolling out the plan’s short- and long-term stages. Hasbani, one of four ministers representing the LF in the Cabinet, told Voice of Lebanon radio (93.3) that the electricity plan must prioritize addressing the squandering of funds in the sector over augmenting electricity production so that the deficit does not further increase.

“The Cabinet is the authority in charge of approving the electricity plan ... and the goal is to implement it, and this is the responsibility of the Energy Ministry and Cabinet,” Hasbani said.

Fixing the electricity sector and endorsing the 2019 draft state budget are among important measures the government has pledged to take as part of key financial and economic reforms recommended at the CEDRE conference to bolster the country’s ailing economy, burdened by $85 billion in national debt, an endemic budget deficit and slow growth. The reforms are deemed crucial to unlocking over $11 billion in grants and soft loans pledged by international donors at the CEDRE conference held in Paris on April 6 last year.

Among other things, Lebanon has promised to fight rampant corruption in the public administration, curb the waste of public funds, and reduce subsidies to EDL.

Finance Minister Ali Hasan Khalil this week submitted to Hariri a revised draft budget that included reductions in all ministries’ budgets as a means to slash the deficit.

The budget now awaits Cabinet’s approval before being sent to Parliament for final ratification.

The 2019 budget had been held up during the 254-day Cabinet void that ended on Jan. 31.

Despite the worsening economic situation, Aoun stressed that internal unity was in a good state, and that external affairs were what threatened Lebanon’s stability. “Don’t worry about national unity. There is no danger internally. Dangers come from outside, but Resolution 1701 contain them,” he said, referring to Israeli threats as a result of the near-daily violations of Lebanese airspace and maritime territory by Israel. U.N. Security Council Resolution 1701 ended the 33-day Israel-Hezbollah war in 2006.

Speaking to visitors at Baabda Palace, Aoun also vowed to forge ahead in the battle against corruption. “I will not allow any party to stand in the face of the reform process and fighting corruption,” he said.

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