BEIRUT -- Lebanon's caretaker government Wednesday approved opening credit lines totaling $116 million to help fix its crippled state electricity grid.
The cash-strapped country for over two years has struggled with rampant power cuts that have crippled much of public life, worsening a broader economic crisis that has pulled over three-quarters of the country's population into poverty. Today, households only receive about an hour of state electricity per day, with millions now relying on expensive private generator suppliers to power their homes.
Lebanon's state electricity company has bled state coffers dry for decades, costing the government over $40 billion with annual losses of up to $1.5 billion. The country's two main power plants have occasionally broken down and require heavy maintenance. The World Bank and International Monetary Fund say restructuring the country's energy sector is a key reform for the country to pull itself from the mire. Lebanon has instead relied on renewing a fuel barter deal with Iraq.
Caretaker Prime Minister Najib Mikati's government agreed to open a credit line of $62 million for a shipment of fuel at the port, and an additional $54 million to provide maintenance for the country's rundown Zahrani and Deir Ammar power plants.
“If we didn’t agree on this, we wouldn’t have any fuel by the end of the week, especially with the delay of the Iraqi fuel arriving,” Mikati said at a press conference following the meeting. “I believe if we succeed at resolving the electricity crisis, though I believe we're still at the beginning, we would solve over 50 percent of Lebanese's problems.”
Kamal Hayek, chairman of Lebanon's state electricity company, told reporters that the crippled company has 800 billion Lebanese pounds in the central bank that have lost significant value during the economic crisis due to the country's ongoing currency devaluation, dropping from over $500 million before the crisis to roughly $16 million. He urged the central bank to let them convert the money to dollars so they can be spent on the company. The pound has lost over 90% of its value against the U.S. dollar since 2019.
Many in Lebanon blame its ruling elites for the country's compounding crises, accusing them of decades of rampant corruption and financial mismanagement. Experts criticize the state electricity company for its financial squandering and lack of transparency and for years have called on it to be restructured to be more effective and transparent.
Lebanon last year signed two World Bank agreements with Syria, Jordan and Egypt. The arrangement would bring in Jordanian electricity and Egyptian natural gas through Syria on the condition that Lebanon would increase its outdated state electricity tariffs and establish a regulatory authority as part of wider sector reforms. The World Bank has not yet signed off on the deals to put them into effect, as Lebanon has not yet established a regulatory authority for its state electricity company.