BEIRUT: A $780 million contract with three distribution service providers are vital to putting an end to Lebanon’s electricity woes, Energy Ministry officials told The Daily Star Wednesday.
However, parliamentarians and experts say boosting electricity production should be prioritized before the expensive upgrade. The service providers project effectively privatizes Electricite du Liban’s power distribution, maintenance work and bill collection – tasks currently undertaken by part-time EDL employees and contractors.
Additionally, the contracts signed with the service providers include a nationwide upgrade to electricity distribution infrastructures and networks, including household power metering.
But the project, which came into effect as of June 1, has yet to get off the ground as 2,500 part-time and contractual EDL workers continue their crippling protests.
Despite being offered employment at the three service providers that won the bid, part-time workers have insisted on becoming permanent EDL employees.
“We want social safety and our rights after decades of serving the company,” a part-time worker, who did not wish to be identified, told The Daily Star Wednesday. He said part-time workers would not accept employment by the service providers that would put their jobs at risk.
Privately, many contractual workers say that they feel more secure working for the government instead of private firms.
Parliament endorsed last week a law offering most part-timers a chance at full-time employment.
MP Mohammad Qabbani, who has long opposed the service providers’ scheme, told The Daily Star his opposition stems from the project’s violation of Lebanese law and the Constitution.
According to Qabbani, the venture would have needed endorsement from Parliament as it encompassed government finances, borrowing and revenues – all of which are under the authority of Parliament.
Instead, he said, the project was passed by the Cabinet in a legally questionable move.
“Around $1 billion are being spent on a project without clear accountability and authorization from Parliament,” Qabbani said last week.
In addition to legal reservations, Qabbani reiterated he was deeply concerned about very high profit margins set for service providers.
He said the contracts, which include major renovations to electricity distribution and metering infrastructure, oddly precedes a needed boost in electricity supply.
“This is like buying a fancy tie before you actually own a suit,” he commented sarcastically.
Lebanon’s current electricity production stands at 1,500 MW. To meet the current demand energy experts say that production should rise to at least 2,400 MW, particularly in summer when energy consumption soars.
But Qabbani’s accusations were dismissed by the energy minister’s adviser Kamal Mhayyar, who is responsible for coordinating the project.
He said the Court of Accounts and the Shura Council have both given the scheme the green light despite the many objections filed against it by Qabbani.
According to Mhayyar, Lebanon loses up to 40 percent of its electricity production on technical and nontechnical losses in power transmission.
Nontechnical losses, or electricity thefts, account for some 25 percent of electricity consumed in Lebanon. Technical losses resulting from the archaic distribution network, Mhayyar added, constitute the remaining 15 percent.
Upgrading the distribution networks would not only cut back on waste by up to 15 percent, but the use of “Smart Meters,” advanced metering equipment, would boost state-run Electricite du Liban’s revenues, he said.
Subscribers who embezzle electricity would be remotely cut off “just like what happens in the mobile telecoms sector where bill collection is almost perfect,” he said.
The project will pay off investments in three years, Mhayyar said, denying that the project would increase government expenditures.
According to Mhayyar, EDL would save more than $685 million during the implementation of the project.
EDL would also be able to charge more for peak consumption hours and provide discounts for off-peak usage. The company would also have the ability to ration capacity rather than cut off power altogether, Mhayyar added.
In an interview, Fady Aboujaoude, general manager of Butec Utility Services, one of the companies awarded a service provider contract, told The Daily Star that the work of service providers would overhaul the sector.
He told The Daily Star that no less than 30 percent of EDL part-timers had signed contracts with the service providers. The EDL part-time workers, he said, were being offered higher salaries, health insurance and extensive safety trainings.
For the Butec general manager, boosting power supply before renovating the electricity network defied logic.
“Why would you add capacity to a deteriorating distribution network that wastes 40 percent of electricity?” Aboujaoude asked.