World Bank urges new Lebanese government to reform power sector

In November, parliament had to approve over $400 million in extra-budgetary spending on fuel to avoid blackouts, adding to Lebanon's spiraling debt.

February 1, 2019 16:04
2 minute read.
World Bank urges new Lebanese government to reform power sector

Lebanon's government palace is seen illuminated purple to mark International Women's Day in downtown Beirut, Lebanon March 7, 2017. . (photo credit: MOHAMED AZAKIR / REUTERS)


Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analysis from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user experience almost completely free of ads
  • Access to our Premium Section
  • Content from the award-winning Jerusalem Report and our monthly magazine to learn Hebrew - Ivrit
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief


BEIRUT, Feb 1 ( - Lebanon's new government should prioritise electricity reform after having spent months wrangling over the cabinet make-up, World Bank and U.N. officials said on Friday, seeking to address daily blackouts and massive costs to the state.

The government was finally formed late on Thursday and Prime Minister Saad al-Hariri said Lebanon needed "bold reforms". It has suffered years of low growth and has one of the world's biggest public debts compared to the size of its economy.

Foreign donors have promised to invest billions of dollars in Lebanon's weak infrastructure to help get its economy moving, but will not release most of the money without steps to curb the deficit.

Hariri's government should prioritize reforms that Lebanon committed to at a Paris conference last year where donors pledged support, said Philippe Lazzarini, the U.N. resident coordinator in Lebanon.

"Making progress on the fight against corruption and reforming the electricity sector will be essential to restore confidence, revitalise the economy and promote growth, stability and employment in the long term," he added.

French President Emmanuel Macron said on Thursday France would "accompany Lebanon on a path of economic and social reforms", especially through implementing the investment program agreed at the Paris conference.

Saroj Kumar Jha, the World Bank regional director for Lebanon, Iraq, Syria, Jordan and Iran, said electricity was "the area where we want to move in very quickly", with the bank bringing concessional funding to help reforms.

Lebanon's power stations use expensive heavy fuel, and state utility Electricite du Liban (EDL) cannot afford to provide 24-hour power, leaving consumers to rely on costly private generators.

In November, parliament had to approve over $400 million in extra-budgetary spending on fuel to avoid blackouts, adding to Lebanon's spiraling debt.


The sector's problems put off investors and create "tremendous fiscal pressure on the government", which sinks large sums in subsidizing state-supplied power, Jha said.

"I would strongly recommend they prioritize the energy sector engagement," he added, saying he believed there was consensus on this within the new coalition government.

However, London-based Capital Markets senior emerging markets analyst Jason Tuvey said he was skeptical the new government could enact major reforms to free the pledged aid.

"Its not clear whether they can actually agree on these measures, so there will be some aid that will continue to be locked up," he said.

Jha wants Lebanon to move ahead with a plan to "corporatize" state power utility EDL and to cut state subsidies of power, while providing a safety net to poorer consumers.

The government also needs to ensure it can attract investors for the process of switching from heavy fuel to cheaper gas, and work on its creaking transmission and distribution, Jha said.

Lebanon hopes to develop its own gas reserves and is exploring offshore, but in the meantime it wants to use imported liquefied natural gas to fuel new power plants and has issued a tender for temporary import facilities.

At the Paris investment conference, Hariri's last government proposed two independent power projects, each with capacity of 500-600 megawatts and needing investment of about $600 million.

Join Jerusalem Post Premium Plus now for just $5 and upgrade your experience with an ads-free website and exclusive content. Click here>>

Related Content

July 20, 2019
Saudi king approves hosting U.S. troops to enhance regional security


Cookie Settings