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Lebanon’s power problems: serious talk but no easy fixes | Business and Economy News

Beirut, Lebanon- Lebanon’s continuing economic crisis has created a fuel shortage, adding extended power cuts to the miseries of Lebanese already dealing with skyrocketing inflation and shortages of other basic goods.

While experts have said a proposal recently put forth by the US ambassador here to revive a transnational gas pipeline running from Egypt to Lebanon could help alleviate the problem, it is far from a long-term solution for the country’s continuing failure to generate sufficient electricity.

“It’s not a new idea. From 2009 to 2010, gas was being pumped through Egypt to Jordan and through Syria to Lebanon,” Diana Kaissy, a board member of the Lebanese Oil and Gas Initiative and an expert on energy governance, told Al Jazeera.

That arrangement, using the Arab Gas Pipeline, ended when Lebanon defaulted on payments and attacks on the pipeline in Egypt disrupted supplies. Studies are also still needed to address what damage Syria’s war may have done to the pipeline.

“Technically speaking, it could be done by the end of this year if there is serious political will,” Kaissy said.

Energy ministers from Egypt, Lebanon, Syria and Jordan met in Amman on Wednesday. The gathering happened on the heels of a meeting between Lebanese and Syrian officials last weekend that marked the highest official meeting between the two countries in years.

The ministers affirmed on Wednesday their willingness to facilitate transfers of gas to Lebanon. Lebanese officials have said the World Bank has offered to provide funding for the gas, but provided no other details.

Buildings are seen at night during a power cut in some areas in Beirut, Lebanon [File: Mohamed Azakir/Reuters]

Lebanon in the past two years has been offered a number of international loans and grants, including from the IMF, on the condition that the country implement reforms with regards to transparency and corruption — something its governing class has not yet done, even as the country sinks deeper into poverty and dysfunction.

A World Bank spokeswoman told Al Jazeera on Tuesday that the Bank was unable at this time to give details of what may have been discussed.

Potential hurdles

However, there are other potential political hurdles. The United States currently sanctions Syria’s energy sector, but Dorothy Shea, the US ambassador to Lebanon, has said those restrictions could be eased.

The US proposal was widely seen in Lebanon as a rebuttal to a plan put forth by Hezbollah leader Hassan Nasrallah to import fuel from Iran – a proposal that could land Lebanon in violation of US sanctions against energy exports from that country.

Nasrallah has been vocal about the plan for some time. He gave a speech in August announcing when the first ship would leave Iran, shortly before Shea announced the pipeline initiative.

“It would have been possible to do that years ago when Lebanon requested some exemptions from the Caesar Act (US sanctions on Syria), so obviously it’s the Iranian ship that pushed things forward,” Marc Ayoub, an energy researcher at the American University of Beirut’s Issam Fares Institute, told Al Jazeera.

“I think it has to do with the US-Iran conflict at its best — they provide tankers, we will provide gas, that’s how the game goes,” Ayoub said.

Others disagreed.

“This is something that has been in the making for several months,” independent energy consultant Jessica Obeid told Al Jazeera.  “The timing of it is weird. But you cannot just bring several countries and decide on something like this, there are logistics that need to be in place, the willingness of countries to sell something to Lebanon without Lebanon being able to pay for it.”

Lebanon’s Energy Minister Raymond Ghajar, attends a news conference with Jordan’s Minister of Energy and Mineral Resources Hala Zawati, Syria’s Minister of Oil and Mineral Resources Bassam Tohme and Egypt’s Minister of Petroleum and Mineral Resources, Tarek El Molla in Amman, Jordan [Alaa Al Sukhni/Reuters]

Whatever the politics, Lebanon’s state-run power plants have been insufficient for decades, and the generating power produced by Egyptian gas would fall far short of plugging the entire hole. The current proposal sees it being sent to a power plant in northern Lebanon and generating about 450 megawatts of power.

“Lebanon needs around 3600 megawatts,” Kaissy said. “We are currently producing 700 megawatts. So it would be substantial.”

Those 700 megawatts translate to about two to three hours of power a day across the country.

“It is a temporary solution, but it will fill a gap since we are going into the end of [government fuel] subsidies without any plausible solution for people,” Ayoub said.

Another issue that could get in the way is that Israel sells gas to Jordan via the same pipeline, requiring a technical change in the pipeline’s flow or possibly the construction of a new pipeline.

“Although Lebanon would be dealing with [and paying] the Egyptian side, Egyptian gas is likely going to be swapped with gas from Leviathan (an Israeli gas field) to allow it to be transported via the AGP. If this is indeed the case, are Lebanese authorities willing to sign off on that?” asked Mona Sukkarieh, a political risk consultant and co-founder of Middle East Strategic Perspectives.

“Already, there is Israeli gas to Jordan through the Arab Gas Pipeline — so are you going to construct a parallel pipe? All of these require technical expertise, and all of these should be discussed,” said Laury Haytayan, an oil and gas expert.

On Tuesday, there were rumours that the end of government fuel subsidies was imminent, a move that would make fuel unaffordable for many Lebanese, but that some hoped would at least address supply problems for consumers. Whatever the case, many Lebanese are adjusting to a harsh new reality — that for years their currency had been overvalued, and that they now need to adapt.

“We have changed — everything has changed between last year and this year. The lifestyle, the dream we had the last 15 years — now, we’re living the reality we should have lived the minute we stepped out of the civil war,” Kaissy said. “We’re really now adjusting to the currency’s true value, and you can’t have a middle-income family having three cars.”

The country’s lack of strong governance also leaves many with little hope of improvement anytime soon.

“As long as there is an economic crisis, we cannot expect solutions,” Ayoub said. “If you have no solutions and no agreement for the macroeconomic policy — I think in around two years we can get back on track if there is someone who is willing to make reforms.”


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