Lebanon’s electricity sector is again on the verge of total failure, and the government has once more continued to throw money at it, instead of fixing it.
State-run producer Électricité du Liban (EDL) ran out of funds to purchase fuel, so the government issued a letter to the central bank for an advance from its withering reserves.
A source from the energy ministry told Al Jazeera the advance is worth $200m. The central bank’s subsidies, estimated at more than $15m, are depleting rapidly, and Lebanon’s expensive and ineffective electricity sector is partly to blame.
In a May 2020 presentation to international donors, Energy Minister Raymond Ghajar said that losses from the electricity sector cost about $1.6bn in public funds every year, though some reports say it can bleed up to $2bn. That is about 3 percent of the country’s entire economy, and experts told Al Jazeera it makes up for almost half of the cash-strapped country’s public debt.
“In the absence of any political solutions, we’re just kicking the can down the road,” Marc Ayoub, Energy Researcher at the American University of Beirut’s Issam Fares Institute, told Al Jazeera. “If we pay $200m [pounds], we carry on for two or three more months, then what? We cannot continue like this.”
Other stopgap measures have failed or stalled, most notably a fuel-for-medical-services deal with Iraq, where reportedly for security reasons caretaker Prime Minister Hassan Diab did not fly to the country to secure the deal in late April. On Tuesday, Hezbollah Secretary General Hassan Nasrallah suggested the Tehran-backed group is ready to negotiate and purchase fuel from Iran.
Lebanese households for almost three decades put up with daily intermittent power cuts that last for three hours in Beirut, though power cuts elsewhere usually last longer.
Those who can afford it pay private generator suppliers for an extra power boost. And despite the sheer ineffectiveness, the government continued to sustain the system: subsidising fuel and maintaining its bloated workforce, which activists and experts say are part of the political parties’ “clientelistic networks”.
While citizens and policy experts alike have condemned the country’s ineffective electricity sector, Lebanon’s struggling economy has renewed concerns of not being able to keep the lights on. Lebanon is reeling from a crushing economic crisis, with a local currency that has lost around 85 percent of its value and food prices among the highest in the world.
Today, power cuts have become more frequent, even in some of the most affluent parts of the capital. Power plants are shutting down, after running out of fuel to operate. In some cases, the EDL cannot pay for fuel from oil tankers that had already arrived in the country. Most recently, Turkey’s Karpower shut down two floating power barges – which provided a quarter of the country’s electricity – due to payment arrears.
Generator suppliers now say they are struggling to break even because of soaring demand and skyrocketing costs. One distributor, Kassem, told Al Jazeera they are resorting to buying fuel at extraordinary prices on the black market, amid shortages.
“Power cuts in Beirut were three hours but are hitting 12 hours sometimes,” he said anxiously, explaining most generators will overheat after about six hours. “The weather is nice at the moment, but once it gets hotter, demand will increase.”
And, like elsewhere in Lebanon’s struggling markets, Kassem said price hikes are imminent to cover expensive fuel and generator maintenance. “We can’t fill gaps left by the state. To think that we can replace state electricity almost entirely with generators is nonsense.”