Why the lights have gone out over Lebanon

Roula (last name withheld), a 50-year-old university professor, lives in Ashrafieh, traditionally an upmarket district of Beirut. For the past three weeks, the interminable electricity outages in Lebanon have become critical. “Since several months, the electricity cuts became more and more frequent, but a few weeks ago the situation clearly deteriorated,” she said. “I remained in the dark for three consecutive days. Nowadays it’s about one and a half hours of electricity per day.”

Amid the stifling July heat that sits over Lebanon she spent the days without sorely needed air conditioning. “But the real problem is the conservation of food, you can’t keep anything in the fridge,” she explained.   

Lebanon is plunged into what the World Bank described in a report released in June as one of the worst economic and financial crises in the world since 1850. The huge explosion of 2,750 tonnes of ammonium nitrate in the port of Beirut on August 4th last year precipitated the downfall of the government and an ongoing political paralysis. But already, fast-rising poverty, mass unemployment and runaway inflation had sparked a growing popular revolt, with mass protests, beginning in October 2019, against the country’s sectarian power-sharing political elite, denounced as self-serving and corrupt.

Since May the dramatic problem of electricity supply has been illustrated in numerous photos posted on the internet, such as one of an asthmatic man who had to connect his respiratory aid machine to the electricity of a nearby mosque, and others of families sleeping on the balconies of their apartments hoping for the slightest cooling stroke of a breeze.

The root of the problem is the shortage of fuel that would normally power the Lebanon’s electricity stations, and which is in turn due to the now two-year acute crisis of the country’s financial reserves. Fuel imports are usually ordered in advance by the Lebanese treasury, and paid by the Bank of Lebanon, the country’s central bank. But the latter, struggling to maintain its dwindling reserves of dollars, has slowed down the credit flows to pay for the fuel.

The national state electricity supply company, Électricité du Liban (EDL), has had to drastically ration production, managing around just 700 megawatts (MW) per day, out of a potential capacity of 1,900 MW. As a result, many have turned to sourcing power from private generators, but electricity from these too is subject to rationing because obtaining domestic oil has also become problematic due to strong demand. As the World Bank reported, already in 2018 electricity supplies around the country were rationed to between three and 11 hours per day, depending upon the region.

The problem affects not only households, but also hospitals, industry and food outlets. “The situation is catastrophic,” commented Sami Rizk, executive director of the Lebanese American University Medical Center–Rizk Hospital (LAUMC-RH), where electricity supply comes almost exclusively from its own generators. In face of the shortage of fuel, and to stave off a blackout, the hospital has turned to the black market, but there prices have soared, and supplies are also tight. “Our stocks having reached the critical point of lasting [just] one week, we’ve had to reduce consumption in certain administrative areas,” said Rizk. “For the moment, the patient services have been spared.”

After several months of negotiations, Lebanon reached an agreement with Iraq in July whereby the latter would supply one million tonnes of fuel in exchange for assistance with hospital care – which avoided using the limited and precious dollar reserves. In theory, that would allow around ten hours of electricity production per day over a period of four months. But even this may prove problematic; the Iraqi fuel is rich in sulphur, which the Lebanese power stations are not currently equipped for.

The shortage of dollar reserves has also led to problems with EDL’s service providers, who are paid by the Bank of Lebanon. Karpowership is a Turkish company operating a fleet of power-station vessels which are moored along the Lebanese coast, and which provide 25% of Lebanon’s electricity supplies. Beginning in May, it halted production for almost six weeks because it was owed 170 million dollars by the Lebanese state, accumulated over a period of one and a half years.

For ten years now, the Lebanese population has been promised by successive energy ministers that they would soon receive 24-hour-per-day electricity supplies, yet hardly any investment to allow for that was forthcoming. “Technical solutions are available, the blockages in a reform of the [energy] sector are purely political,” commented Marc Ayoub, a researcher specialised in energy policies at the American University of Beirut’s Issam Fares Institute for Public Policy and International Affairs.

The lucrative market for building new power stations was the object of shady dealings over the attribution of contracts, which, amid political infighting, led nowhere. Adding to the chaos was the fact that maintaining a status quo was to the benefit of certain private interests, notably private generator operators and intermediaries on the fuel supply market, and in which some political parties have important stakes.

When the country still had the means to do so, nothing was put in place to provide for durable solutions. Instead, the state opted for costly alternatives, such as the purchase of electricity from the power-station ships operated by Karpowership. Meanwhile, a number of individuals from that company’s management are cited in a judicial investigation opened in Lebanon in March this year into corruption and money laundering. The renting of the giant barges has cost the Lebanese state around 1.5 billion dollars since 2013, a sum that could almost have provided for three thermal power plants.

The production costs of Lebanon’s energy network are as a result very high. “They go from 13 [dollar] cents per kilowatt hour for the [Karpowership] barges, to up to 21 cents per kilowatt hour from some ageing units which, because there was no alternative, have never been dismantled,” said Marc Ayoub. “In comparison, those of a new power station are 7 cents per kilowatt hour.” Added to this, there are energy wastages due to the dilapidated infrastructure, and also thefts and bills left unpaid. EDL sells its supplies at 9.5 cents per kilowatt hour, which has seen it run up a colossal deficit. According to the World Bank, the total of bailouts provided to EDL represent 40% of the public debt accumulated since 1992.

The situation has become untenable in the bankrupted country, which in March 2020 defaulted on a 1.2-billion-dollar Eurobond debt. The Lebanese energy sector is at the centre of a series of reforms demanded by the international community in return for a desperately needed bailout by the International Monetary Fund. But the reforms appear to be a distant hope, with the country still waiting for the formation of a new government following the resignation of that led by prime minister Hassan Diab following the devastating August 4th 2020 explosion in the port of Beirut. 

-------------------------

• The original French version of this report can be found here.

English version by Graham Tearse