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PIRATE: Private Initiative for a Renewable, Affordable and Trustworthy Electricity

In 2015, LIMS designed a program titled “Turn the Light on In Lebanon” to advocate for dismantling EDL’s monopoly and unbundling the electricity sector. We recommended allowing private Independent Power Producer (IPP) and Electric Distribution Companies (EDC) into the market and explained how competition will deliver reliable and affordable electricity supply. The program yielded law 129 of May 2019 allowing private companies to enter the market in a Build-Operate-Transfer (BOT) format. However, market entry was conditioned to government licensing and government never gave licenses.

 

In 2021, LIMS started program PISTOL (Private Initiative for a Renewable, Affordable and Trustworthy Electricity ) to updated the work of 2015 taking into consideration the latest innovation in renewable energy and lithium batteries. PISTOL aims to design a solution allowing Lebanon to leapfrog, skipping further government investment in traditional power plants, the same way some emerging African countries have leapfrogged the need for fixed telecom networks by going directly to mobile phones.

 

In fact, Lebanon is struggling with erratic power supplies that have put hospitals and essential services in crisis mode. The national electricity company Electricite du Liban (EDL) currently supplies a meager 2 to 4h of electricity per day. Households and businesses have no choice but to acquire electricity on the expensive black market of private generators. Private generators are small-scale diesel generators owned and managed by street-smart entrepreneurs. They started as a backup solution providing electricity during the time of EDL rationing and have become today the main source of electricity in the country given the severe outages. Those generators are illegal; yet the Ministry of Energy and Water sets on a monthly basis the selling price of electricity they produce.

 

The electricity problem traces back to Lebanon’s bloated and inefficient national electricity company. EDL has been historically used by policymakers for hiring employees on a clientelistic basis, contracting cronies to build overpriced power plants, and withholding bills collection in some politically affiliated areas. For the past decades, EDL only supplied an average of 12h electricity at loss. Back in 2017, EDL revenues covered only the third of its $1.9 Billion expenditure and the government loaned EDL the remaining $1.27 Billion. In fact, EDL is responsible of around $45 Billion in debt, roughly half of Lebanon’s total debt.

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