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Nazarian: More power, more tariffs

File - The Deir Ammar power plant near Tripoli, Monday, April 16, 2012. (The Daily Star/Antoine Amrieh)

BEIRUT: Energy Minister Arthur Nazarian Monday said Lebanon had no option but to raise electricity tariffs if citizens wanted to enjoy 24 hours of electricity.

“The investments made in the electricity sector will increase the power output and hence will allow the Lebanese to be less dependent on the private generators whose bills are three times more than bills from Elecricite du Liban. The increase of production will be accompanied by a gradual and proportional increase in tariffs,” the minister said during a workshop at Parliament entitled “Saving the Treasury and the Electricity Sector.”

Observers say that even those who were against increasing electricity bills are now convinced that the rates should be revised because the state can no longer sustain such heavy losses.

In 2013, EDL’s deficit reached over $2.2 billion, making it the third largest spending item in the budget.

It has become a common practice of successive governments to subsidize the EDL’s losses.

Experts say 85 percent of those losses are due to the high prices of fuel oil and gas oil, adding that as long as the country’s power plants are run on fuel, Lebanon will continue to sustain heavy losses every year.

Former Energy Minister Gebran Bassil has launched a 700 MW plan that involves the construction of new plants and the upgrading existing ones.

Officials stress that electricity production should reach over 2,500 MW once the new plants become fully operational at the end of this year.

But they warned that running all of the power plants at the same time would mean the Finance Ministry could be forced to subsidize the purchase of more fuel oil and gas oil.

Buying more fuel to run all of the plants will naturally lead to a much bigger deficit, according to experts.

EDL warned recently that it might be compelled to increase electricity rationing this summer if the Finance Ministry’s allocations fell below the $1.8 billion mark.

The company added that even Beirut, which enjoys 21 hours of electricity a day, might experience tougher rationing.

Among the ideas the government is considering is the possibility of using natural gas to run the plants. This would reduce bills by 30 percent or encourage the private sector to become involved in the production and distribution of electricity.

Nazarian said the presence of a large number of Syrian refugees in Lebanon had exacerbated the electricity problem.

The minister revealed that the ministry was now coordinating with the private sector to build more power plants.

“We are preparing tenders to increase electricity production by 1,500 MW, and this will be done with the help of the private sector,” Nazarian explained.

Some experts argue that even if the EDL increased tariffs, it would still be much less expensive than private generators.

 
A version of this article appeared in the print edition of The Daily Star on June 24, 2014, on page 5.

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Summary

Energy Minister Arthur Nazarian Monday said Lebanon had no option but to raise electricity tariffs if citizens wanted to enjoy 24 hours of electricity.

Observers say that even those who were against increasing electricity bills are now convinced that the rates should be revised because the state can no longer sustain such heavy losses.

Officials stress that electricity production should reach over 2,500 MW once the new plants become fully operational at the end of this year.

EDL warned recently that it might be compelled to increase electricity rationing this summer if the Finance Ministry's allocations fell below the $1.8 billion mark.

This would reduce bills by 30 percent or encourage the private sector to become involved in the production and distribution of electricity.


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