Lebanon's Parliament to clear way for electricity plan execution

The move will include the release of the book of terms and tenders [for companies to build power plants]

Image used for illustrative purpose. Smoke rises from an electricity power station in Jayeh area, south of Beirut September 22, 2011.

Image used for illustrative purpose. Smoke rises from an electricity power station in Jayeh area, south of Beirut September 22, 2011.

REUTERS/Sharif Karim

BEIRUT: Parliament is to set to ratify a new electricity plan with a big majority Wednesday, effectively clearing the way for the implementation of the blueprint that aims to overhaul the ailing sector, boost power supply and slash subsidies to the state-run electricity company, officials said Tuesday. “The electricity plan is expected to gain a clear majority from Parliament after having won Cabinet unanimity,” former Future Movement MP Ammar Houri, a political adviser to Prime Minister Saad Hariri, told The Daily Star.

“The parliamentary approval of the electricity blueprint will definitely pave the way for its implementation with the aim of gradually increasing power supply and reducing deficit [at Electricite du Liban],” Houri said.

A similar view was echoed by Deputy Parliament Speaker Elie Ferzli. “The electricity plan will easily pass in Parliament with a big and respectable majority after having been discussed at length and approved by the main blocs in Cabinet,” Ferzli told The Daily Star.

“The parliamentary move will subsequently clear the way for the plan’s implementation, including the release of the book of terms and tenders [for companies to build power plants],” he said.

The Cabinet last week unanimously endorsed the electricity project designed to restructure the dysfunctional sector, improve power supply and cut subsidies to EDL, estimated at $2 billion annually. The Cabinet move was viewed as a strong signal to the international community about the government’ resolve to enact reforms recommended at the CEDRE conference.

International donors have called for reforms, including in the electricity sector, to unlock $11 billion in soft loans and grants pledged at the CEDRE conference held in Paris last year to finance investment and infrastructure projects in Lebanon.

Hariri has said the plan would eventually provide 24-hour electricity to the Lebanese.

The plan’s approach is two pronged. In the short term, its goals include reducing losses from 34 to 11 percent, and increasing the electricity tariff and tying it to the price of oil so that EDL doesn’t end up falling into deficit once again if oil prices surge. It also lays out a plan to secure an additional 1,450 megawatts of temporary power by 2020 so that total output will reach 3,500 MW. This translates to just enough electricity to secure a 24/7 supply at peak demand.

In the long term, the plan calls for power production to be boosted by more than 3,000 MW over the next six years using a combination of new power plants and renewable energy. Ahead of the legislative session, a parliamentary committee Monday unanimously agreed on amendments necessary to implement the electricity plan. The amendments would be discussed by MPs Wednesday. The committee’s discussion centered on the extension of Law 288 of 2014, which would empower Cabinet to grant temporary permits and licenses to produce electricity upon the proposal of the energy and finance ministers.

In addition to the electricity plan, there are 17 other items on the legislative session to be chaired by Speaker Nabih Berri at 11 a.m. Wednesday.

Other bills on the agenda deal with natural reserves, protocols with the European Union, issues related to biological diversity and draft laws for building a natural forest reserve in Beirut and special economic zones in the Tyre district in the south and the Batroun district in the north.

Meanwhile, a Cabinet session scheduled for Thursday has been postponed until next week to allow for more consultations on securing political consensus over the austerity measures planned by the government to reduce the budget deficit, a Baabda Palace source told The Daily Star.

Thursday’s session was originally set to begin discussing the 2019 draft state budget, which is anxiously being awaited by the international community to see the key fiscal and economic reforms the Cabinet has promised to enact.

Hariri has been meeting with ministers and officials from various blocs in a bid to agree on the “difficult measures” the Cabinet needs to take reduce the budget deficit, which stood at $6.7 billion last year.

A meeting was held at the Finance Ministry Tuesday night to discuss possible solutions to cut the budget deficit, MTV reported.

Among measures mulled by Finance Minister Ali Hasan Khalil and ministers representing other parties are revenues from tax evasion and customs tariff evasion and a reduction in the salaries of civil servants that will not include middle-class people, it said.

Banking sources had told The Daily Star that tax evasion costs the state Treasury around $4 billion annually.

Khalil has submitted to Hariri the 2019 draft state budget that included reductions in all ministries’ spending as a means to slash the deficit. He has called for reducing the budget deficit by 2.5 percent each year for the next five years.

The Future Movement’s parliamentary bloc called for endorsing the 2019 budget and taking “bold measures” to rescue the flagging economy, burdened by $85 billion in public debt and slow growth.

“The positive impact that arose from the approval of the electricity plan must be complemented with other reformist measures contained in the government program. This requires wrapping up the budget and agreeing on the broad lines of the country’s financial and economic policy,” the bloc said in a statement issued after its weekly meeting chaired by Sidon MP Bahia Hariri.

The bloc said “a political cover and guarantees” were required for “bold measures” the government might have to take to protect the budget and the anticipated reforms from “media and populist outbiddings and move to clear policies that deal with the causes of waste [of public funds] and outline the appropriate mechanisms to control spending.”

The Free Patriotic Movement’s parliamentary Strong Lebanon bloc also called for enacting reforms to reduce the budget deficit and curb the squandering of public funds.

MP Ibrahim Kanaan said in a statement after the bloc’s weekly meeting: “As the electricity plan is a must, the budget must also contain reforms which we have been talking about since 2010. Reforms are essential and are not targeted against anyone, especially Lebanese citizens.”

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