Lebanon is a geopolitical energy emergency

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Words are too weak to describe the horror caused by the powerful August explosion in the port of Beirut. The dead, the injured, the homeless population, the damage, everything is appalling. It is not just a scar in the capital of Lebanon, but a disaster. It will require exceptional, continuous, and transparent means to repair the physical and psychological damage that it caused.

The country was already on the brink before the blast. Nothing was going well in Lebanon, a country that was once the Switzerland of the Middle East. Having visited it thanks to my Lebanese friend for 45 years, I have the memories of its enchanting nature, its biblical, Hellenistic, and Roman history and culture, and its warm-hearted people. Yet nothing was right in this beautiful country. The political structure that dates back to 1943 makes it difficult to manage a country that is split between ethnic groups, religions and political visions that are far too numerous for a country that is only 250 km long and only 45 km wide. That’s not to mention the meddling of Iran, which controls Hezbollah and intends to maintain its position in Lebanon as part of its mission to destroy Israel.

The Lebanese pound, in spite of the numerous wars and crises of the last 50 years, had always maintained its parity with the American dollar because the Lebanese banking system was so solid. Massive transfers of US dollars, exhausted the Lebanese bank’s foreign currency, which resulted in an 80% devaluation. The transfers were organized by Hezbollah to Iran to help Tehran somehow overcome the American oil embargo.

The Lebanese, who still believed in their country, are now ruined. Last year’s protests, when urban waste was no longer being collected due to a lack of transparent management, will also be remembered. As it is in many other countries, all too often, corruption is present when it comes to waste management.

It is that word, “corruption, that plagues the country. When there is no democracy, it becomes widespread and destroys efficiency and economic development. Unfortunately, this is also what has happened in the field of energy.

A few years ago, when he returned from Lebanon as part of a European project, a colleague from the Italian Ministry of Energy spitefully said, “we are going to talk to them about renewable energy when they need basic infrastructure and not luxury energy”. What he meant was that Lebanon needs to be electrified with cheap and abundant energy and not with renewable energies.

Instead, electricity in Lebanon is scarce and expensive because of corruption. It is controlled by the national company, Electricity of Lebanon, whose generation capacity is 90% thermal (2,764 MW) and 10% hydraulic (252.6 MW). The Jounieh power plant, located just eight kilometres northeast of Beirut, has a capacity of 1,200 MW and is fuelled by fuel oil. In developed countries, no one produces electricity from fuel oil anymore, because, on the one hand, it is too expensive compared to all other solutions, but on top of that it pollutes the atmosphere with emissions of sulphur oxides and heavy metals. This solution should be banned, but it is still in force in Lebanon.

In reality, a good part of these installations are outdated or out of order due to lack of financial means. Their availability is chronically uncertain given their obsolescence. They produce too little for the country’s needs, which leads to frequent shutdowns. On average, there are 10 hours of electricity shutdowns in the country per day.

To remedy this situation, the government has had to utilize power station boats belonging to the Turkish company Karadeniz, which run on heavy fuel oils supplied by the Lebanese government. Karadeniz is paid according to the electricity connected to the network. When you think that even the International Maritime Organization is beginning to admit that heavy fuel oil must be replaced in international shipping because it pollutes so much, it is surprising to think  that this extremely polluting solution has been adopted by Lebanon.

Since electricity is an indispensable requirement for so many services, the Lebanese make extensive use of diesel generators. There is at least one in every one of the 980 villages that make up the country. It is estimated that there are about 5,000 of them are in operation, each servicing some 400 homes. Households do not hesitate to connect to these local generators by choosing the power supplied, as the bill is in amperes. When all these generators are in operation, the installed capacity is 8,800 MW, which is much more than the installed capacity of EDL. Although this calculation is approximate, this shows the magnitude of the electricity problem in Lebanon. One can imagine both pollution and energy – and therefore economic – inefficiency for, all in all, a poor service.

A man stands on a bridge overlooking the damaged Beirut port and grain silos following the August 4 explosion that destroyed the port. EPA-EFE/NABIL MOUNZER

What can be done? It is urgent to seriously electrify Lebanon. I wrote a book last year entitled The Urgency of Electrifying Africa, but it is just as urgent to do so in Lebanon. The government is aware of this and in May a call for tenders was being prepared. According to the Minister of Energy, Raymond Ghajar, “China had recently expressed interest”, but four major players in the energy world are also on the way (the German company Siemens, General Electric from the US, Mitsubishi of Japan and Ansaldo from Italy).

But how can the corruption risks that have been amplified by the explosion in Beirut be avoided? By the BOOT (Build Operate Own Transfer) method. Often countries invite companies to a tender to build power plants and then manage them themselves. Given the latent corruption and political instability in many countries, investment by private companies is at risk, which is why companies, such as Coface, which specialise in country risk analysis, offer expert advise investors. But here the risk, measured against the alder tree of recent and current history, is too great. It would be necessary to use the BOOT where the key word is ‘own’. The power plant remains the property of the investor and the investor is paid for the electricity supplied.

At the end of the repayment of the investment, the power plant can – if desired – be taken over and managed by the state. Some would say that this is a trusteeship. That may be the case. But what’s better? To continue with a situation that is inefficient and inappropriate for our times, or to provide an immediate solution that would finally offer electricity to a population that was suffering and will suffer even more?

A second suggestion to finally renew Lebanon’s energy situation is to use, as Jordan is doing, Israeli natural gas. Israel has 463 billion m³ of methane under the Eastern Mediterranean Sea. This abundance is of interest to the EU, which, despite its Green Pact, has its eye on this gas, because no one is fooled.  We will not be able to do without fossil fuels any time soon. Lebanon would greatly improve its environment by abandoning its obsolete power plants, its decentralized generators, all its non-solutions which are polluting and inefficient, and use modern gas power plants instead, and in particular Israeli gas. This would partly resolve the risks of corruption, which is an indispensable step for the renewal of the country.

Of course, for a new energy policy to be implemented, Lebanon, which is still officially at war with Israel, would have to overlook the massive Iranian presence in Lebanon. French President Emmanuel Macron wants to reset the institutional framework in Lebanon by integrating Hezbollah, a party allied to Iran which believes that Israel should be eliminated from the map of the Middle East.

Georges Malbrunot, a leading Le Figaro reporter who was taken hostage by Hezbollah for several months, deplored the meetings between Macron and representatives of Hezbollah. They will certainly not help to consider this option. The Israel-UAE peace agreement of August 13, however, should encourage Beirut to do the same. Paradoxically, without Macron’s strategy, there would be hope for a radical change in Lebanon.

What do the Lebanese want? To perpetuate the chaos, instability and corruption that leads to the exodus of qualified people by pleasing Iran? Or to start rebuilding their country with the indispensable foundation of any modern society.

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