The Power Sector in Lebanon

Guy El Khoury

From Electricity Concessions to National Grid

1885 is generally considered as the birth year of the electricity network in Lebanon. It is the year where the first concession for a network of gas lighting was established in Beirut when the city was still under Ottoman rule. Over the following decades, the development of the electricity infrastructure across the country was carried out by similar independent regional concessions.

Although the electricity network progressively expanded to cover major cities of the country, this scheme of infrastructure development failed to benefit all citizens and regions equally. Industrial development for example was only concentrated in areas where concessions provided reliable supply (Beirut suburbs and Chekka in the North).

It is only in the early 1960s that the improvement of access to electricity became a government priority. In fact, electrification was a key pillar of nation-building efforts spearheaded by president Fouad Chehab (1958 – 1964), who saw extending the electricity network to the entire Lebanese territory and unifying tariff schemes across the country as a guarantee for reliable and equal access to electricity for all citizens.

All regional concessions were thus merged into a single government entity which later morphed into a national utility (now known as Electricite du Liban or EDL) – and was granted a quasi-monopoly on power generation, transmission and distribution of electricity in Lebanon. The success of this enterprise largely contributed to strengthening the position of the government, demonstrating its ability to carry out large-scale projects and its commitment to provide public services to all citizens. Of the 1,100 villages that were not connected to the network in 1962 -out of total of 1,600 villages- only 50 villages were still unconnected to the grid a decade later, in 1974.

Strong economic growth in the 1960s and in the early 1970s and changes in consumer habits -with the widespread adoption of appliances for example-  drove electricity demand upwards, and despite efforts to build additional generation capacity, the reliability of electricity supply was soon degraded.

The Civil War and Chronic Power Shortages

These efforts were entirely undermined when the civil war hit the country in 1975, which led to the destruction of a large share of the infrastructure. In addition, massive internal displacements significantly changed load profiles, thus mis-aligning the regional configuration of the grid, and theft became widespread. The government was essentially paralyzed and could no longer enforce law on all national territories nor ensure sufficient revenues are put to maintain the grid and generation capacity.

Power shortages became the norm and people adapted; customers started using car batteries to supply a TV and a neon light, with batteries being recharged during hours of electricity supply. As power shortages started lasting longer and longer, people shifted to private electricity generators -either small units using gasoline or larger units using fuel oil- to maintain a minimum supply of electricity in homes, schools, and hospitals. Private diesel generators started spreading across the country despite their high costs, and a secondary electricity network developed in parallel to the Electricite du Liban national network. This arrangement allowed customers the flexibility of getting electricity supply from the national grid during hours of supply while relying on their private generators during hours of shortages.

When the civil war ended in 1991, the massive adoption of diesel generators across Lebanon was a clear indication that the issue of power shortages would not be solved overnight. In fact, private investors who bought larger generating units started selling subscriptions to customers – the comfortable margins realized by these businesses and the opportunity for customers to benefit from economies of scale fostered the development of this model across cities and villages. And despite government efforts in the 1990s and 2000’s to reform the sector and invest in infrastructure, the situation did not fundamentally change and consecutive cabinets have failed to effectively reform the sector. A “24 hours per day and 7 days per week” supply of electricity remained an unattainable target.

The enduring situation of power shortages over the past few decades has largely undermined the government’s authority, encouraged inequity between households and allowed for the development of unregulated monopolistic structures of private electricity suppliers.

Public and private electricity connections near a Beirut building. Copyright: Karim Elgendy

Hybrid Legacy Becomes the Norm

As a national utility that was presented as the symbol of progress, EDL was in effect substituted by a network of private diesel generators. The parallel network of private  generators which was first seen as a temporary solution to a deficient supply of electricity, gradually turned into a formalized system and became part of the country’s energy landscape.

The government lost its monopoly on electricity production, and this hybrid system became the symbol of the public adminstration’s lack of control on the state’s affairs. Power shortages are often used in the media as a case in point demonstration of the government’s weaknesses and its inability to provide public service, while diesel generators are frequently cited to support the argument that private sector initiatives can compensate for the weaknesses of governments.

In addition, the lack of adequate energy regulations and law enforcement has encouraged private diesel generators to develop monopolistic structures in the neighborhoods, villages, and cities in which they operate. Since one neighborhood is only served by one supplier, households willing to subscribe to a private diesel generator became subject to a monopoly of their local private supplier, and usually have no leverage to negotiate prices.

Regional and Social Inequity

To complicate matters further, Lebanon’s regions do not get equal supply from EDL -although this is technically feasible to rectify. A 2008 survey by the World Bank demonstrates that the capital Beirut gets an average of 21 hours of supply per day while the Bekaa Valley  is barely allocated sufficient electricity to provide 12 hours of supply.

This disparity in supply quality by EDL together with the unreliability of private diesel generators, and variation in tariffs,  creates a fragment energy landscape similar to the one prevalent before the large reform of the sector in the 1960s – a situation where access to electricity is not guaranteed at the same levels and at the same tariffs across the country.

This situation is also characterized by inequity between households of different social classes, with the poorest households being the most affected. The World Bank’s 2008 survey found that affordability was the primary reason for those who did not recourse to private diesel generators – roughly a quarter of survey sample. Richer households can also afford higher quality service, with private diesel generators subscriptions  typically offered at different tiers.  In order to keep using electricity at the same level as that of EDL supply hours, higher tiers of private generator subscription are required. Households who cannot afford the more expensive higher tier subscription must cut their energy consumption outside of EDL supply hours. This could mean having to turn off home appliances and even lights.

In addition to its impact on economic growth, the current situation of chronic power shortages and fragmented infrastructure has undermined the government’s credibility and exacerbated regional disparities and social inequity. Yet despite the magnitude of these challenges, it was only recently that the government was encouraged to tackle the issue effectively and adopted a plan to reform the power sector (in 2010) with the objective of reaching a 24/7 supply of electricity by 2014.

It is hoped that this plan to ensure a reliable and continuous national electricity supply is successful, and that it forms the basis for a resilient and effective energy landscape that empowers a sustainable economic development for Lebanon.

Guy El Khoury is a management consultant based in Beirut with a focus on energy practice in the Middle East region. He can be reached at Guy [ a t ] Carboun [ d o t ] com.

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