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EDL: Paltry funding means less power

BEIRUT: Faced with increasing budgetary restraints and high cost of oil, Electricite du Liban announced Friday that it is compelled to close a number of power plants and increase electricity rationing to 11 hours a day in most Lebanese regions with the exception of Beirut.

“We have no other choice but take such a drastic step this summer. We have a letter from the Cabinet instructing us to stick to the 2013 allocation, which is LL2.8 trillion ($1.8 billion) to cover all our expenses for 2014. If we stick to this ceiling then we have no other choice but to increase electricity rationing and shut down some plants in order not to use more fuel and gas oil to run the turbines,” an EDL official told The Daily Star.

EDL was also compelled to stop buying electricity from Syria to reduce expenses.

Finance Minister Ali Hasan Khalil has repeatedly said the allocation to EDL has been set at LL3.2 trillion instead of LL2.8 trillion.

However, EDL officials say that they have not received any official letter from the Cabinet that changes the ceiling from LL2.8 trillion to LL3.2 trillion.

The Finance Ministry was not available for comments.

The presence of the Syrian refugees, according to the company, has further exacerbated the problem.

“There are more than 1.5 million Syrian refugees living in Lebanon and this fact has increased the pressure on the power plants and consumption,” the EDL official said.

At present, the power plants are producing 1,500 MW but actual consumption exceeds 2,900 MW.

The price of oil in the international markets has increased dramatically since the outbreak of clashes in Iraq and this has reflected on the prices of fuel oil and gasoil on which most of the power plants in Lebanon operate.

“Nearly 85 percent of EDL’s losses are due to the high price of fuel oil and this reality will not change unless the government gradually increases electricity tariffs proportionally and shifts from fuel oil to the cheaper and environmentally friendly gas,” the official stressed.

She added that gas would reduce the energy bill by at least 50 percent, if not more.

The official revealed that once the new plants, which have a total capacity of 700 MW become operational at the end of this year, the Energy Ministry will gradually increase the tariffs.

Energy and Water Minister Arthur Nazarian said earlier that one of the options the government is seriously considering is to let the private sector get involved in the construction of new power plants.

The minister said privatization may be the best solution to put an end to EDL’s mounting losses.

Nazarian added that the Finance Ministry and most ministers support this move and have dropped previous reservations about the privatization program.

In 2013, EDL’s deficit reached $2.2 billion, making it the third-largest item after the cost of debt servicing and civil servants’ wages.

“Once we have 24 hours of electricity every day then the consumers will no longer need the private generators. We promise that the new rates will not hurt limited income families,” EDL official said.

 
A version of this article appeared in the print edition of The Daily Star on July 05, 2014, on page 4.

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Summary

Faced with increasing budgetary restraints and high cost of oil, Electricite du Liban announced Friday that it is compelled to close a number of power plants and increase electricity rationing to 11 hours a day in most Lebanese regions with the exception of Beirut.

EDL was also compelled to stop buying electricity from Syria to reduce expenses.

Finance Minister Ali Hasan Khalil has repeatedly said the allocation to EDL has been set at LL3.2 trillion instead of LL2.8 trillion.

However, EDL officials say that they have not received any official letter from the Cabinet that changes the ceiling from LL2.8 trillion to LL3.2 trillion.


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