The Lebanese electricity sector is in the political line of fire: the intersection of crises between the ministry’s legacy and the performance test
In a remarkable shift in the Lebanese political scene, the emerging crisis in the electricity sector put the “Lebanese Forces” party confronting the contradiction between the slogans of the previous opposition and the reality of the ministry’s management. Since the “Forces” took over the reins of the Ministry of Energy, the pretext of “the minister’s decision-making alone” that had long been raised in the face of the “Free Patriotic Movement” has fallen, making it clear that the responsibility is expanding and distributed across the cabinet table, while the citizen alone remains hostage to the darkness and the exorbitant subscription bills.
Financial legacy and inherited resources
Financial data indicate that the new administration of the Ministry of Energy did not take over a bankrupt sector, but rather was provided with favorable conditions that were not available to its predecessors. The Ministry received a sector that operates at a tariff approved between 2022 and 2023 based on a price for gas oil of approximately $1,000 per ton, with a margin of waste and loss of up to 40% to achieve financial balance.
In addition, the first phase benefited from the surplus of the Iraqi fuel exchange contract, and nine oil gas ships did not impose additional burdens on the treasury of the “Electricité du Liban” thanks to contracts signed by former Minister Walid Fayyad during the delivery and delivery phase. About $150 million was also allocated to the corporation’s accounts, in addition to previous billing and collection arrears. In this context, the question arises about the size of the financial improvement actually resulting from the new administration compared to inherited revenues. In the month of December, a surplus worth one and a half million dollars was recorded and it was considered an achievement, ignoring the decline in the price of gas oil to about $700 per ton in exchange for a fixed tariff based on $1000, which puts the size of the surplus into legitimate question.
The test of war and the high cost
With the outbreak of war and the rise in fuel prices globally, the proactive measures required to review the cost of production and tariffs to protect the corporation and the consumer were absent. The mechanism announced when the tariff was launched in November 2022 provided for a periodic review every month or two depending on oil prices, but allowing the gap to widen between spending and revenues led to a financial drain estimated at about $400 million in just 7 months.
The crisis is most clearly embodied in the continued cessation of the new factories in Zouk and Jiyeh under the cover of a legal dispute and the expiration of the operation and maintenance contract. With the rise in the price of gas oil to about $1,700 per ton compared to $500 for fuel, the cost of production with gas oil rises to about 34 cents per kilowatt hour compared to 14 cents in the Zouk and Jiyeh plants, which requires clear answers about the reasons for the disruption of these cheap production capacities and plans to restart them.
Conclusion: Managing the sector or managing the political narrative?
In the face of the decline in electricity supply to one or two hours per day and the increased reliance on generators, political campaigns and holding the government responsible are no longer sufficient. What is required, according to observers, is a transparent statement of account that includes the resources received, the volume of spending, the actual cost of production, and the blocked decisions.
Ultimately, the transfer of the Ministry of Energy to the Lebanese Forces created a new political reality. It gave the “Free Patriotic Movement” justifications that were previously rejected, and proved that the complexities of the system and the overlapping of powers affect everyone, so that the citizen remains the only party that bears the heavy costs between the administration’s failure and its justifications.
