PISTOL, Infrastructure, Electricity and Renewables, Economic Update

Electricity Reform: Central Planning Versus Renewables on the Municipal Level

11:35 | 30 September 2022LIMS output
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Electricity Reform: Central Planning Versus Renewables on the Municipal Level

During the economic crisis, the deterioration of the electricity sector has been rapidly amplified, with government owned Electricite Du Liban (EDL) unable to sustain a mere 3 hours of electricity supply across Lebanon. Given the inability of the treasury to cover electricity losses any longer, the Ministry of Energy and Water has been forced to raise electricity prices. The ministry plans to increase the cost from the current less than 0.5 cents per kilowatt hour (kWh) to 10 cents per kWh for the first 100 kWhs, then 27 cents per kWh for larger consumption.

LIMS believes that this attempt to preserve a failing monopoly is futile since the suggested hike in prices, although substantial, would not allow EDL to break even. EDL produces electricity at a very high cost and loses 40% of the production in transmission, distribution, and electricity theft. The only way for EDL to breakeven is by increasing its tariff to above 50 cents per kWh, equal to that of the private generators.  

LIMS explained that opening up the electricity sector to private companies provides a better solution. Law 288 of 2014 and Law 129 of May 2019 enabled the private sector to enter the electricity market if licensed by the Ministry of Energy of Water. However, the ministry did not grant any license, thus maintaining the monopoly of EDL over the market. LIMS argued for stripping the ministry from the ability to grant licenses and moving the jurisdiction to municipalities. This would come at the perfect time with the boom in renewable energy. Such a solution would allow the introduction of independent large-scale solar power producers to sell electricity directly to the Lebanese consumer. Municipalities can also grant licenses to electricity distribution companies. 

LIMS Media Interviews: 

  • Anthony Zina to LebTalks: Raising Electricity Tariffs Without A Plan Is Not The Solution… September 3, 2022: Leb Talks, Article AR 
  • Mardini To “A Point On The Line”: Depositors’ Dollars Wasted On Financing Electricity, September 15, 2022: VDL, Radio Interview AR 
  • Electricity On Same Path As Telecommunications…Tariffs Increase With Zero Production, September 19, 2022: This is Lebanon, Article AR 
  • Could Lebanon’s Economic Collapse Create New Humanitarian Crisis? September 24, 2022: Al Jazeera, TV Interview EN 
  • Lebanon Lifts Electricity Subsidies: An Eye On The Treasury… And An Expert Reviews The Final Solution, September 26, 2022: Lebanon 24, Article AR