“Part” of Iraqi oil supports broken electricity “in vain” … Will it last?

"share" Trusted Iraqi oil "empty" A broken current ... Will it last?

Khaled Abu Shakra wrote in “Nidaa Al-Watan”:

Lebanese who sleep in a dream about electricity are most afraid of waking up again and again from a nightmare of faded promises. From the commitment to provide electricity 24/24 until 2015, the energy ambition has been redirected not to fall into complete darkness by the end of 2021. The only positive paradox is that the promises have become more modest, but on the other hand, reliance on temporary solutions and uncertain results have remained commonplace since he began talking about sector reform.

An agreement recently reached with the Iraqi side guarantees that Lebanon will receive a million tons of “fuel oil” in tenders for “Spot Cargo”, which the factories burn. The companies that win the tender get the price of heavy black fuel from Iraq. In the end, Lebanon pays Iraq a price within its borders in pounds. And for the latter he is free to buy all the necessities of goods, services and advice from Lebanon. This is in theory, but in practice the default life is no later than 4 months, not a year. Factories consume 3 million tons per year, which means that the quantity is only enough for a third of the year. It is likely that this one-time contract cannot be renewed. Finally, Iraq was ultimately embarrassed that it did not move forward with the agreement, after agreeing in advance to help fraternal Lebanon. Also, the services that Lebanon can provide are declining every day more than the day before. In practice, this means that this solution will partially provide electricity by the end of 2021. This is if we assume that there are no urgent obstacles related to tenders, fuel quality and its compliance with factory specifications and the possibility of smuggling part to Syria.

The problem continues

The first problem with this business is that it may not provide electricity for 10 hours a day, as some would like. “Based on our experience on the Electricity Board, consumption can be streamlined to extend the time period as long as possible, especially if there is no solution on the horizon,” he says. Member of the Board of Directors of Electricité du Liban, Eng. Tariq Abdullah, and “it is possible that feeding hours from Electricité du Lebanon do not exceed 4 or 5 hours per day in the coming period, with the aim of using one million tonnes for eight months instead of four.” This assumption, based on concrete facts, means that demand will for diesel continue to grow to run private producers. As the latter (the number is estimated at about 7,000 generators across Lebanon) consumes about 500,000 liters of diesel every hour. This means that between 8 and 9 million liters of diesel per day are needed to cover between 16 and 18 hours of power outages. With the disappearance of the dollar and the distillation of credit, the electricity problem will not be solved, even partially. Assuming the abolition of fuel subsidies after two months, as the agreement provided for when streamlining and reducing subsidies to 3,900 Syrian pounds, the high costs will deprive many families of securing electricity from private producers.

Is transparency ensured?

It seems that the agreement with the Iraqi side is the only solution now available to us to avoid falling into complete darkness, but from Abdullah’s point of view, this should not mean “lack of transparency, whether in an agreement signed with Iraqis or companies. which will enter the “replaced” door. Lebanese market, so as not to repeat this ambiguous file in the contract, and to contain unfair and unjust clauses that harm the Lebanese side in case of trouble or conflict. Lebanese who benefit from the service and pay for it the right to see contracts and be aware of all agreements ”. Lebanon’s acute need for fuel oil and the intertwining of commercial and political interests may force officials to overlook some points that are not in the public interest. For example, we go back to the contract signed in 2005 with Sonatrach, which has been opaque for more than 15 years. The contract, which then stipulated that the company would not be responsible for quality after testing and loading into tankers, led Lebanon to problems with unauthorized handling of specifications and damage to laboratories and made the task of prosecuting and aggravated liability.

Pay Lebanese!

In principle, the value of the work is estimated at about half a billion dollars. A ton of fuel equals 7 million barrels, whose value, at today’s price ($ 72 per barrel), is about $ 504 million. The question here is what exchange rate Lebanon will pay for the goods. All that has been learned so far, through a statement by Energy Minister Raymond Ghayar upon his return from Iraq, is that “the Iraqi state has agreed to open an account with the Lebanese Bank through which it buys goods and services within Lebanon and does not export a single dollar abroad. are paid in Lebanese pounds according to the price in Lebanon. Therefore. We will not touch the reserve requirement. “Ensuring that the approved price will not be based on an exchange rate of £ 1515 leaves us with three options: £ 3900, a parallel market price or a third agreed price. Logic also assumes that the market price is crossed, first because it is too high and second because it is unstable. So all that remains is a price of £ 3,900 or any other agreed higher price that can pay the price of services, especially medical, in Lebanese hospitals that Iraqis desperately need. However, in all cases it should be paid on the basis of a minimum price of 3900 Syrian pounds to an account of not less than two thousand billion pounds. That means, according to Abdullah, “more money is printed, an additional inflationary burden and a higher exchange rate.” Accordingly, Abdullah believes that “it is the duty of the Ministry of Energy to announce the contract and inform the Lebanese people of the amounts they will bear in exchange for fuel imports. And to know whether the companies that previously supplied oil will be the same ones to supply Lebanon with fuel as a result of this agreement. If yes, on the basis of which agreements “. Responding to the possibility of not publishing the contract, Abdullah says: “Minister Ghajar is known to be academic, transparent and eager to respect the principles and I expect him to take the initiative to publish the contract and publish all the details of the technical work after the logistical preparations are completed. that there are Hidden Pillars, because transparency is indivisible. “

There is a possibility of smuggling

It is true that the possibility of smuggling “fuel oil” to Syria remains much smaller than the possibility of smuggling diesel and gasoline, but according to Abdullah, “there are many corrupt people, and when there is interest in them, they are willing to smuggle air and make money. “If there are interests and coverage, the lesson remains transparent before application.”

The patching no longer works

All we are doing from 2019 until today is “injecting” into the institutions with “morphine”, waiting for the new government to agree on a rescue program with the International Monetary Fund. Therefore, “everything that happens at the level of state institutions in general, and electricity in particular, is spinning,” from Abdullah’s point of view, “because the best electricity plan we put into practice today requires at least two years to start delivering the desired results. In addition, there are two very difficult years for the state and we are forced to cut them from time to time by begging, and often “stretch out” the rest of the savers’ money and spend about $ 3 billion. Before that, there is no solution for stable electricity departure of power ships in September, are not able to produce more than 1,600 megawatts “, while the actual need exceeds 3200 megawatts. Especially in summer.

Two important things, from Abdullah’s point of view, remain to mitigate the crisis: waste reduction, which is expected to increase significantly after 2019 and exceed 45 percent, and this can only be done by decision-making and implementation, eliminating violations, and activating collections. The second is the formation of an important government with exceptional powers that is negotiating a real reform agenda with international institutions and the International Monetary Fund, accompanied by House of Representatives legislation to stop the collapse. Any other words are a waste of time and an absorption of more energy and opportunity.

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