The Minister of Energy performed his part for Al-Ula by preparing a future plan for electricity, and went on to search for immediate financing as a “payment on the account.” The same logic applies to the way this important facility is run with the current ministry, but with two essential differences: the first is represented by the state’s bankruptcy coupled with a massive budget deficit, and the impossibility of securing emergency funding, whether from inside or outside. The second is summed up in the “death” of the Electricity Corporation and the lack of funding, even if available, to make a significant difference.
The Ministry of Energy and Water intends, according to sources, to follow up on “the Council of Ministers’ submission today, requesting a sum of money in US dollars in cash for the benefit of Electricité du Liban. This is in order to secure the minimum investment safety in the sectors of production, transmission and distribution. Especially for the next few months, pending the crystallization of the World Bank loan formula for importing electricity from Jordan and gas from Egypt.
Advance is the goal
The only way to obtain the required financing is: to give the institution a treasury advance in the amount specified in advance, at 5250 billion pounds, provided that the Bank of Lebanon converts it into US dollars at an exchange rate, so the institution obtains approximately 256 million dollars, which is sufficient to purchase some spare parts and equipment, and pay the arrears For the benefit of service provider companies to continue the distribution process. It is unlikely that any part will be allocated to increase production, since the whole amount is not sufficient to purchase fuel for a month.
The fabricated “hamroujah” regarding the plan, and making promises to appoint the regulatory authority, build factories, and secure electricity after a number of years… is no more than a maneuver, nothing is achievable,” according to the former Director General of Investment and Maintenance at the Ministry of Energy, Dr. Ghassan Baydoun. And “all of them are aimed at obtaining the required treasury advance.”
The government’s approval of the electricity plan implicated it, from Baydoun’s view, with “the Energy Minister’s request for interim funding to prepare the plants.” But the “road” of this request is paved with bumps. The amount allocated for electricity was taken out of the framework of the 2022 draft budget, when the government intended to send it to the House of Representatives from outside the draft budget. Accordingly, any advance or aid must pass through the House of Representatives first, and “it is impossible for the advance to be given to electricity by decree,” according to Baydoun, “because what money is given to Electricity of Lebanon does not meet the conditions of the advance. Among the conditions of the latter is that it be returned first, and that the borrower be able to return the amount after including it in his budget. This has not happened historically.”
Funding is almost impossible
Treasury advances to Electricité du Liban until 2018 amounted to approximately 5571 thousand billion pounds (3.7 billion dollars), according to a report issued by the Accountant’s Office in the course of auditing the state’s accounts for the years between 1995 and 2018, representing 69.7 percent of the total loans granted in this period of time. In 2018 alone, the Electricité du Liban (EDL) obtained an advance of 2,712 billion pounds ($1.8 billion), from which it was not received, or from the amounts previously borrowed, i.e., pounds.
The paradox is that the majority of the advances that were given in that period, especially in the periods when the relationship between the government and the House of Representatives was cold, reached the point of estrangement with some governments, it was more like contributions. Unfortunately, such contributions “can be repeated today in light of the chaos and madness that the country is going through,” according to Baydoun. “Knowing that these bids collect all violations, as they are illegal, burden the state’s budget, and make the latter appear as recovering, given that they are given from outside the budget without a legislative text, while the percentages of deficits in them are astronomical.”
Nevertheless, the question remains: If we assume, for the sake of argument, that the state can secure the amount in Lebanese pounds, how can it be converted into dollars? The Central Bank, before the intensification of campaigns against it, refused at the beginning of the year 2021 to give any support to the Electricité du Liban. And he devised a very complex mechanism to give a small part of the $200 million required to purchase spare parts, secure some supplies, pay service providers and pay dues to the company operating the Deir Ammar and Zahrani (Prime South) factories, estimated at $80 million for the years 2020 and 2021. Today, the Central Bank has stopped 90 percent of the subsidy, and the remaining reserves may have become negative with the expansion of giving the dollar during the last period as a result of circular 161. Accordingly, even if he accepted to give the amount, the possibilities became very limited and it is difficult to meet this request.
squander the rest of the rights
“The concern was never once to secure electricity to citizens. If it were, we would not have spent about 50 billion dollars in advances, contributions, losses and interests without even glimpsing electricity. The dangerous thing is that the same thing is being repeated today, as those responsible for the sector do not care if there are hard currency reserves that constitute the last rights of depositors or the sale of gold wealth or other things,” says member of the “Strong Republic” bloc, MP Imad Wakim. “All their concern is to pass the remaining months of the covenant’s life with the least possible moral losses. And we, from our position in the bloc, were and are still against any advances of depositors’ money and their rights wasted on deals, brokerages and empty promises in order to secure an hour or two of electricity. Knowing that it was possible with an amount not exceeding 3 billion dollars to secure electricity 24/24 and sell the surplus to neighboring countries, but this did not and will not happen as a result of taking the sector hostage to narrow personal interests.”
If we want to start from the legal angle, it appears that it is impossible to accept the advance or any financial assistance to the Electricité du Liban. If we proceed from the hypothesis of chaos, the possibilities to meet this scenario have become slim, as neither the treasury contains money nor the treasuries of the Banque du Liban contain dollars.