Lebanon's cabinet set to tackle electricity hurdles

The Cabinet session was scheduled after the electricity plan had been agreed upon by a ministerial committee following four rounds of discussions last week

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: The Cabinet is set to meet in a special session Monday to discuss and endorse a new electricity plan aiming to overhaul the dilapidating sector, boost power supply and slash state subsidies to the state-run Electricite du Liban, estimated at $2 billion annually, ministerial sources said Sunday. However, the Cabinet, which meets under President Michel Aoun at 4 p.m. Monday at Baabda Palace, needs to overcome two sticking points before the energy reform plan presented by Energy Minister Nada Boustani could materialize, the sources said. The Cabinet session was scheduled after the electricity plan had been agreed upon by a ministerial committee following four rounds of discussions last week. Yet, the committee failed to agree on who will carry out the tenders to implement the blueprint.

“There are still some sticking points that need to be resolved, the most important of which is the mechanism to conduct the bidding to implement the plan,” Youth and Sports Minister Mohammad Fneish told The Daily Star.

Fneish, a member of the ministerial committee headed by Prime Minister Saad Hariri and tasked with examining the electricity blueprint, said the committee remained split over who would manage the tenders for companies to implement the plan despite holding four meetings in a bid to reach a final agreement.

“There are parties who want the bidding to be conducted by [the Central Inspection Bureau’s] Tenders Department, and others who want the bidding to be handled by the ministerial committee,” said Fneish, one of three Hezbollah ministers in the Cabinet. “The Cabinet is supposed to find solutions to the sticking points in order for the electricity plan to be approved,” he added.

Fneish reiterated Hezbollah’s position, which supports the bidding to be conducted by the Tenders Department. This position is also backed by the Amal Movement, the Lebanese Forces and the Progressive Socialist Party.The Free Patriotic Movement, founded by Aoun and to which the energy minister belongs, and the Future Movement were reported to be supporting the ministerial committee to handle the tenders.

A political adviser to Hariri sounded optimistic about the electricity plan being passed by the Cabinet Monday.

“The electricity plan should be approved within the required transparency. We hope that the plan will be endorsed tomorrow [Monday] after ironing out the remaining points,” former Future MP Ammar Houri, a political adviser to Hariri, told The Daily Star.

Asked which bidding formula the Future Movement supports to implement the plan, Houri said: “We support any [bidding] formula that is within the law and transparency.”

Although Lebanon is coming under growing international pressure to enact key economic and financial reforms recommended at the CEDRE conference to rescue its struggling economy, Hariri said he was optimistic about overcoming the economic crisis.

Addressing a delegation from the Higher Islamic Council at his Downtown Beirut residence Saturday night, Hariri said he expected growth in the tourism sector, in particular after Saudi Arabia in February lifted a travel warning for Lebanon, saying he hoped other Gulf countries would follow its lead, according to a statement release by his media office.

Hariri said the 2019 draft state budget would have to introduce austerity measures to boost the economy, stressing the need for reform and put an end to the squandering of public funds. “The budget, to be approved by the Cabinet, would be an austere one after we reached a difficult economic and social situation,” he said.

The 2019 state budget has been waiting to be discussed and approved by the Cabinet before sending it to Parliament for final ratification.

A Baabda Palace source said there are two outstanding points that need to be addressed before the electricity plan could be approved: The mechanism to conduct the tenders and the formation of a committee to overhaul the electricity sector.

“But all the parties are saying that the atmosphere [of electricity talks] is positive. Therefore, the Cabinet is expected to reach agreement on passing the electricity plan tomorrow [Monday],” the source told The Daily Star.

Boustani also sounded optimistic about passing the electricity plan. “We are heading to an agreement on the electricity plan Monday. The atmosphere is positive,” the energy minister said during a tour of two electricity facilities in Beirut Saturday.

“There are more details to be discussed with the electricity plan,” but they will not cause an issue, because “everyone knows the importance of reducing the electricity deficit,” she added during a tour of the power plant in Zouk, north of Beirut. Boustani said she did not oppose the Tenders’ Department handling the bidding.

“Technical cuts [of electricity] will decrease gradually from now until the end of the year according to the plan we’re working on,” Boustani said after visiting the Jounieh office of EDL.

One of the plan’s short-term goals is to reduce electricity cuts from 34 to 11 percent, including by minimizing technical cuts, such as electricity wasted from failures in the grid.

The plan’s approach is two pronged. In the short term, its goals include reducing the electricity losses, 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. The plan also lays out a strategy to secure an additional 1,450 MW 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. If the plan is approved by the Cabinet Monday, it will still need to be endorsed by Parliament.

However, PSP leader Walid Joumblatt appeared to be skeptical about the passing of the electricity plan. “The electricity plan is still facing strong winds and violent storms,” he tweeted Sunday, without elaborating on who is obstructing the plan.

Labor Minister Camille Abousleiman, one of four ministers representing the LF in the Cabinet, also defended the role of the Tenders’ Department in overseeing the bidding. “The Tenders Department’s role will never cancel the role of the Energy Ministry because preparing the book of terms is done through the ministry and its advisers and will be presented to the ministerial committee,” Abousleiman told MTV.

“Proposing the Tenders Department is the only legal way in Lebanon.”

Finance Minister Ali Hasan Khalil expressed hope that the electricity plan would be based on transparency and lower the sector’s bulging deficit.

“[The plan] should be based on clarity, transparency, respect for ... national interests, and should preserve public funds and lower the deficit” of the electricity sector, Khalil said, addressing an Amal Movement rally in the southern town of Taibeh.

He added that the 2019 state budget would not include additional taxes. “No [additional] taxes will be imposed in this budget that touch on people’s lives and living ... No [additional] taxes will be imposed on poor and middle-class people.”

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