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EDL may hike rates to save on energy bill

EDL’s electricity output is 1,500 MW, but demand is over 2,900 MW.

BEIRUT: The Finance Ministry is in favor of revising electricity rates upward provided that such a move would not affect low-income families, an insider said Tuesday.

“We have received a study from Electricite du Liban suggesting a gradual and proportional rise in electricity tariffs but this study was not elaborate and did not go into details. As long as the new rates do not affect low-income families, we have no objection,” the source told The Daily Star.

An EDL official said one of the key reasons behind the decision to supply most Lebanese regions with 13 hours of electricity every day was due to the high cost of fuel and gas oil that operates most of Lebanon’s power plants.

“As long as we are at the mercy of high oil prices in the international markets EDL has no choice but to increase electricity rationing and shut down some power plants to save on the energy bill,” the official told the paper.

She added that revising the tariffs is an inevitable choice if the government demanded that all the new power plants become fully operational at the end of the year.

Under the new program, the electricity output at present is only 1,500 MW while the actual demand exceeds 2,900 MW.

EDL also argues that it is obliged to stick to the LL2.8 trillion budget that it was allocated by the Cabinet, adding that this amount is not sufficient to run all the power plants at the same time.

However, the Finance Ministry insists that the actual allocation to EDL was set at LL3.2 trillion and that this is enough to provide most regions with 16 hours of electricity each day.

Under a proposal made by Amal and Hezbollah, the electricity tariffs would be raised on the higher brackets. In other words, the new tariffs would be applied on luxury households and large premises that consume a lot of electricity.

The study claims that the state can generate an additional LL360 billion a year if the tariffs were adjusted.

But sources said the Future parliamentary bloc refuses any amendment to the electricity tariffs, suggesting instead an increase to VAT from 10 percent to 11 percent.

The EDL official stressed that the other long-term option is to switch completely to gas to run the power plants, which would cut the energy bill by half.

“When Der Ammar received gas from Egypt four years ago, we were able to save 50 percent from this plant alone. Switching to cheaper and environmentally friendly gas is imperative,” she added.

However, all experts agree that the cash-strapped state cannot afford to invest in new electricity plants or build facilities to process gas.

“The best choice is to privatize the electricity factories or encouraging he private sector to take part in the construction of new plants. This proposal should be the priority for this Cabinet or any future Cabinet,” the insider said.

 
A version of this article appeared in the print edition of The Daily Star on July 09, 2014, on page 5.

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Summary

An EDL official said one of the key reasons behind the decision to supply most Lebanese regions with 13 hours of electricity every day was due to the high cost of fuel and gas oil that operates most of Lebanon's power plants.

EDL also argues that it is obliged to stick to the LL2.8 trillion budget that it was allocated by the Cabinet, adding that this amount is not sufficient to run all the power plants at the same time.

However, the Finance Ministry insists that the actual allocation to EDL was set at LL3.2 trillion and that this is enough to provide most regions with 16 hours of electricity each day.


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