By Nohad Topalian | 2023-09-08

BEIRUT -- Hizbullah and its allies are behind the waste, corruption and theft plaguing the Electricity Corporation of Lebanon (EDL), analysts say, with the latest electricity crisis once again threatening to plunge Lebanon into darkness.

In mid-August, Tripoli's Deir Ammar power plant and al-Zahrani power plant in the south of the country ceased production following the state's failure to pay overdue fees worth $83 million to parent company Primesouth.

That crisis was resolved after Prime Minister Najib Mikati pledged to pay $7 million of the total amount EDL owed to the company.

MTV reported that the $7 million was paid from funds Lebanon received from the International Monetary Fund (IMF), after acting Central Bank governor Wassim Mansouri "refused to pay from the bank's reserves."

The electricity deficit in Lebanon constitutes more than 40% of public debt.

The World Bank is insisting that reforms such as the reduction of waste and theft and the appointment of an electricity regulatory body be carried out before the struggling Mediterranean country can be granted an electricity loan.

The electricity crisis is "the most complex problem that Lebanon has faced since 2008, due to the ballooning annual deficit at EDL," energy analyst Mohamed Basbous told Al-Fassel.

EDL used to borrow about $1.5 billion annually, then $3 billion annually after 2019, "without paying back any of it to the state treasury, as required by law," he said.

Up until 2019, there was 51% waste, while today it is 88.5%, indicating that "theft and non-collection continue," Basbous said, adding that the Ministry of Energy's plan to stabilize the electricity sector "did not solve the problem."

Meanwhile, the proposal to acquire electricity from Iran being pushed by those close to Hizbullah "would expose Lebanon to sanctions," he added.

No solution from Iran

Power outages in Lebanon are "a chronic problem that has been going on for decades," writer and economic analyst Antoine Farah told Al-Fassel.

"Some, led by Hizbullah, have tried to promote cooperation with Iran as a solution to the crisis, even though many obstacles preclude this," he said.

"The sanctions imposed on Iran prevent the official Lebanese authorities from cooperating with Iran in the area of energy," he added.

Lebanon rejects this cooperation, he said, while at the same time Iran is unable to provide the country with electricity because it faces its own financial and economic problems that prevent it from helping Lebanon.

Additionally, any such assistance from Iran "would constitute a provocation and a challenge to the international community," he added.

Those pushing Iranian power as a solution for Lebanon are intimating this would be free of charge, Farah said, "and this is not true."

"The solution to the electricity problem will not be through Iran," but rather through the establishment of financial balance at the EDL, Farah said, but "this can be achieved only by stopping waste and theft and improving collection."

Exacerbating electricity deficit

The responsibility for Lebanon's failure to reliably supply electricity for more than three decades rests with Hizbullah and the Amal movement, economist Violette Ghazal al-Balaa told Al-Fassel.

The duo "took over the Ministry of Energy in the mid-1990s and bequeathed it to their political ally the Free Patriotic Movement [FPM]," she said.

Despite its claims of championing reforms, however, FPM "did not set out to apply Law 642, which stipulates the appointment of a regulatory body for the sector," she said.

"The practices of the Shia duo [Hizbullah and Amal] and the FPM exacerbated the electricity deficit, which burdened the treasury and depleted the dollar reserves at the Central Bank," al-Balaa said.

Political ambitions turned the once-profitable EDL into "Ali Baba's cave," she said, which prompted the World Bank to stiffen its conditions for financing energy projects to include subjecting the EDL to financial auditing.

The World Bank also called for the establishment of a regulatory body for the sector and the recovery of the cost of consumed energy, al-Balaa said.

The danger "lies in the maneuvers made by the Shia duo and their ally, the FPM, suggesting that the solution to the current crisis is by drawing electricity from Iran," she said.

This suggestion "was pushed by some of the ministers affiliated with those powers, without regard for its consequences for the Lebanese."

Al-Balaa emphasized Tehran's inability to provide energy to Lebanon.

Many regions of Iran are suffering from an electricity rationing crisis, she said, while it is impossible for Lebanon to pay in US dollars and it is unable to secure fresh dollars.

"Furthermore, the risk of violating the US sanctions imposed on Iran and its repercussions on Lebanon would mean more economic isolation," she said.