BANGALORE, INDIA--Researched by Industrial Info Resources (Sugar Land, Texas)--Lebanon's Energy and Water Minister, Jebran Bassil, has announced an ambitious plan to solve the country's electricity problem, which has caused severe power rationing for Lebanese customers and an annual bill of almost $1.5 billion for the Finance Ministry, which is being forced to pay the deficit of the state-owned Electricité du Liban (EDL) (Beirut, Lebanon).
The latest plan has been approved by the Lebanese Cabinet and is designed to eliminate gross losses in the power sector, which currently total of $4.4 billion, by 2014, with a reliable, 24-hour electricity service. Under the plan, the current generating capacity of 1,600 MW will be increased to 4,000 MW by 2014 and to 5,000 MW after 2015.
The plan also calls for investments in renewable energy sources, such as wind power and recycled waste. The government estimates that such sources will account for up to 12% of the total power generation by 2014. The Lebanese government is set to allocate $1.55 billion for the plan, with $2.32 billion to come from the private sector and $1 billion to come from donations and soft loans from countries that took part in the Paris III conference, which was set up to assist Lebanon.
Lebanon's power crisis arises directly from the fact that the majority of the country's power plants are fuelled by either fuel oil or gasoil, which has to be purchased at premium prices from nearby countries such as Algeria and Kuwait. In addition, the country's power plants and distribution network are in need of overhauls or replacements.
The plan will be implemented in a two-phased approach. In the short term, the Minister is advocating the installation of private generators with capacities of 300 to 500 MW. According to the Minister, this will help ease the current rationing after 2010, provided funds are made available by the government.
The second phase recognizes the aging electricity sector and proposes the rehabilitation or replacement of the older power plants, which the Minister proposes be handled through private companies under a build-operate-transfer scheme.
The plan calls for replacement plants to use cheaper and more environmentally friendly fuel sources, such as gas. Supplies could be obtained through pipelines crossing Syria, and the government is investigating the construction of liquefied natural gas (LNG) terminals along the coast. The LNG terminals could be serviced by LNG tankers arriving from Algeria and Qatar.
Lebanon signed an agreement in February last year to purchase electricity from Egypt. Under the deal, Egypt supplies Lebanon with between 150 MW and 450 MW through a power grid that passes through Jordan and Syria. However, Egyptian electricity is subject to the peak demands in Jordan and Syria, and was not seen as a complete solution to the power-rationing crisis. The Minister indicated that he also was looking at a possible deal with Turkey to import electricity.
Electricity rationing in Lebanon is necessary because of the shortfall between the current 1,600 MW capacity of EDL and the actual power demand of 2,300 MW. With a projected annual growth rate in Lebanon of about 7%, clearly it is essential that Lebanon update and replace its current power generating capacity, and invest in new power plants.
Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
China remains hungry for commodities and export growth
Resources and commodities ride a dollar price carousel
Inflation in the mining industry and the use of price and cost indices