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Is Lebanon’s electricity sector heading toward institutionalized privatization?

[photo]
Dr. Raymond Ghajar.

January 7, 2015—

Lebanon’s chronic lack of electricity is curious. We have an abundance of sunshine but do not generate solar energy. We have a long coastline but do not invest in large-scale power plants. And to top it all, residents pay simultaneously for both subsidized electricity from the government and premiums for generator subscriptions.

Dr. Raymond Ghajar, professor and associate dean at LAU’s Department of Electrical and Computer Engineering, explains the contradictions and details how he foresees the country’s electricity sector in the long run.

 

MarCom: Why doesn’t the supply of electricity in Lebanon meet demand?

Raymond Ghajar: In the 1990s, we built four natural gas power plants but the gas expected through the Arab Gas Pipeline didn’t materialize in sufficient quantities. We also rehabilitated existing diesel-fueled power plants and then stopped investing in both capital and human resources, so their productivity decreased considerably. All this happened at a time when the demand for electricity increased, more than you would witness elsewhere, as a natural result of post-war recovery.

 

MarCom: Since residents are already paying premiums for generator subscriptions, why doesn’t the ministry simply raise the tariffs for electricity in order to ensure sufficient supply?

Raymond Ghajar: Tariffs were set in the 1990s when oil was cheap and the plan was to produce electricity from natural gas, the cheapest source available.  And politicians have had no desire to increase tariffs because it doesn’t serve their political interests. In fact, there seems to be a conscious effort to bring Electricite Du Liban (EDL) to its knees and to show that it is a failing public service project therefore encouraging people to support privatization of the sector.

 

MarCom: Which private sector entity is large enough and wealthy enough to take on the rehabilitation of Lebanon’s electricity sector?

Raymond Ghajar: Privatization doesn’t require large monopolizing investors. In fact, Lebanon isn’t conducive to profitable large-scale electricity production. Thermal power plants require a lot of space near large bodies of water. The land by our coastline is expensive – the Zouk plant in Jounieh is sitting on land worth $2 billion. One could build a plant in Egypt and transport the electricity to Lebanon for less than it costs to produce here.

In any case, the whole world is moving away from the top-down system that sees two or three large power plants feed into energy grids that feed into sub-grids that make up the distribution network. In Europe and elsewhere, individuals and small businesses can pump energy into the grid from electricity produced through local hydro-plants, wind-turbines, solar panels, biogas plants and other methods.

In Lebanon, the small generators currently supplying directly to households could start supplying the national distribution grid. Such a system would require price negotiations and a robust sophisticated smart grid system, but it is plausible.

 

MarCom: Does environmentally friendly energy have a future in Lebanon?

Raymond Ghajar: We do not have enough desert or uninhabited land for large-scale projects. The Beirut River Solar Energy Snake project is one initiative currently underway to provide EDL with electricity. The authorities are now experimenting with different financial and regulatory systems to encourage small businesses and individuals to convert their load to solar, so we may see more modest initiatives – but our roofs are so cluttered with water tanks and satellite dishes that right now solar panels on a block of apartments can only supply enough for one floor.

 

 

 

 

 


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