After the warning issued by the Electricité du Liban (EDL) last week of a comprehensive power outage starting at the end of this month with its fuel supply running out, contacts began between Prime Minister Najib Mikati and the Governor of the Banque du Liban, Riad Salameh, to secure a new advance for the corporation to be approved by a decree in the Council of Ministers.
According to the trader, Salameh “is ready to finance an advance of $200 to $300 million, provided that the Ministers of Energy and Finance will follow up on the matter with the Prime Minister.” Those familiar with the communications said that Salama is considering securing funds from outside the mandatory reserve, that is, from the amounts that were used to open credits for diesel ships, provided that he stops opening credits for subsidized bills.
In the event of an agreement on the principle of the advance, after the agreement between Mikati and Salameh, the EDL will have to send a request for an advance to the Ministry of Energy to be transferred to the Banque du Liban. According to the sources, Salameh is not behaving with the current government as he did with the government of Prime Minister Hassan Diab, and he shows a tendency to cooperate with Mikati, “which suggests the progress of the loan file.”
While the Council of Ministers is expected to take its decision on the possibility of using part of the IMF’s Special Drawing Units (one billion and 350 million dollars) to support the energy project, the sources indicated that Energy Minister Walid Fayyad demanded that part of these funds be used to support the project to establish new plants, and to search for other means. To secure the financing of the factories’ need of fuel or gas, maintenance operations, repair and expansion of transmission and distribution networks in all regions.
According to sources in the Ministry of Energy and Electricité du Liban, after replacing it with the appropriate fuel, Iraqi oil can produce about 440 megawatts per month, in addition to about 40 megawatts of water production, which is not enough to load the network, which needs 600 megawatts as a minimum. Therefore, the options presented are divided between:
First, that the Bank of Lebanon agree to the request of the Electricity Corporation to convert its assets (about 200 billion pounds) into dollars according to the official exchange rate, which Salameh rejects, knowing that the Monetary and Credit Law considers the Bank of Lebanon concerned with financing the needs of state institutions and public institutions. In addition, the Legislation and Issues Commission in the Ministry of Justice decided that the Banque du Liban must sell dollars to public institutions at the official price. In the event of approval, EDL can purchase a quantity of fuel that allows to increase production to 800 megawatts, without the need for an advance whose approval may require passing a law opposed by large parliamentary blocs, bearing in mind that the board of directors of the same institution does not agree with all its members on the idea of the advance.
Salama shows a tendency to cooperate with Mikati, which makes it likely that the loan file will proceed
Second, that the government resort to an exceptional decision in the form of a decree obligating the Governor of the Banque du Liban to grant the institution an advance of between 250 and 300 million dollars to purchase fuel that produces energy in the autumn, winter and spring seasons when consumption is lower, a matter under discussion between Mikati and Salameh, who showed an initial response Considering that he can provide these funds from the surplus resulting from stopping subsidies for oil derivatives, especially diesel, in addition to that, the increase in nutrition leads to a reduction in the demand for diesel, and thus for dollars, whether from the Bank of Lebanon or from the market.
Third, that Lebanon succeed in persuading Egypt to increase the amount of gas that is supposed to be brought to Lebanon via the Arab line, provided that it find different means to dispose of it, whether by operating the Deir Ammar plant in a different way after maintaining one of the large generators, or by renting a gas-powered steamer, Funded by the World Bank, it is placed opposite the Deir Ammar plant to provide additional energy.
However, without this there are many obstacles, the most prominent of which is that Cairo has set a ceiling on the quantity that is supposed to be sold to Lebanon, which means that the decision to raise it requires new negotiations, and the second is the form of the contribution of the World Bank, which is willing to pay half the cost of gas, provided that it guarantees the Lebanese state, which is supposed to pay half. The second. However, the World Bank has conditions related to reforms in the electricity sector, which were presented to the Lebanese officials.
Arabic calligraphy maintenance
In the meantime, the Syrian technical delegation completed the inspection of the link for the Arab Gas Line, which extends for a length of 36 km between the Dabousiyah border point and Deir Ammar plant. The initial detection showed that there was no damage impeding the passage of gas, and that the maintenance process needs a few days and will be carried out by Syrian technical teams free of charge. After an understanding with the Lebanese Technical Committee, the Syrian delegation left yesterday evening to return to Syria.
According to the previous understandings between the relevant ministers in Lebanon, Syria, Jordan and Egypt, the rehabilitation of the line was entrusted to an Egyptian company, but the delay in issuing decisions by the United States through the Treasury Department to exempt these companies from the sanctions of the “Caesar Act” forced asylum to Syria. The Syrian Minister of Oil and Mineral Resources, Bassam Tohme, informed his Lebanese counterpart that Damascus would help in addressing the technical defect without any compensation.
Sources from the Ministry of Energy confirm that preparing the line requires a maximum of a week, and that the rest is subject to Fayyad’s travel to Egypt to set a time frame for the next phase and a practical framework for bringing in Egyptian gas, which would allow the Deir Ammar plant to operate quickly.
On the other hand, it is expected that Lebanon will conclude a cooperation agreement with Egypt to purchase a quantity of fuel designated for energy production according to the same mechanism that was adopted in the agreement with Iraq, allowing Lebanon to replace Egyptian fuel with fuel suitable for power generators in Lebanon. The sources indicated that Fayyad is preparing a file pending his decision to travel to Cairo to complete the matter, especially the financial aspect.