Lebanese Parliament Reviews Proposed Draft Electricity Law

VOL. XLV

No 27

8-July-2002

LEBANON

Lebanese Parliament Reviews Proposed Draft Electricity Law

Lebanese parliamentary committees are reviewing a proposed draft electricity law to modernize the country’s struggling electricity sector with a view to future privatization of the state-owned power generation company Electricité du Liban (EDL). Restructuring EDL, which has accumulated debt of $2.33bn and makes an annual loss of $400mn, is one of the biggest challenges facing the government of Prime Minister Rafiq al-Hariri.

EDL has suffered over the years from insufficient investment, poor maintenance, an inability to collect outstanding debts and periodic Israeli attacks which have knocked out generation capacity. As a result, the Lebanese Government in April approved a rescue plan for the company (MEES, 29 April) which set out to achieve fiscal stability and introduce automation and transparency to EDL in preparation for privatization. A number of measures were also approved to assist EDL, including a grant of LL225bn ($149mn) and an advance of LL200bn ($133mn) to settle outstanding debt. The plan laid out two stages for improving EDL’s performance. Stage one, to run from February to July 2002, covers a program to raise revenue by improving collection of debts and reducing costs. Stage two, to run from August 2002 to December 2004, will focus on the development of the distribution network. During stage two the privatization process will be launched.

The draft law under debate “aims to create a suitable frame to implement a national electricity policy in line with the country’s economic, social and development needs” and to “secure a competitive market …dealing with generation, transmission and distribution”. The law grants the government permission to transform EDL to one or more joint stock companies, whose shares would be owned by the government. Under the proposed law a regulator (The National Body of the Electric Sector) would be established and fulfill the following major functions: fix transmission, distribution and periodical generation tariffs, subscription fees and service charges; grant licenses for generation, transmission and distribution; establish technical standards; ensure continuous electricity supply; impose penalties on companies not fulfilling their service obligations; and general monitoring of the electricity generation and distribution system.