Lebanon Businessnews News

State electricity price
raised to 27 cents/kwh
Almost a 70-time increase but

nearly half the cost of generators

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Electricite du Liban (EDL) said that its board of directors has set the new sales tariff of electricity at 27 US cents per kilowatt-hour (kWh) for monthly consumption above 100 kWh. The tariff will be increased further, to 37 cents/kWh, if State agencies keep on not paying their bills.

The electricity bill will be denominated in lira at the Sayrafa exchange rate. The tariff will be revised every month, or two, based on the actual cost of power generation, taking into consideration global oil prices.

The current average rate, which has not been raised since the 1990s, is around 0.4 cent per kWh, according to the Minister of Energy and Water. The cost of one kWh supplied by private district generators for September is LL16,350 (42 cents at an exchange rate of LL39,000). This rate applies in cities and populated areas. The rate charged in villages and in areas above an altitude of 700 meters is LL17,985 / kWh.

EDL said that in case a number of conditions are not met, it will have to increase the tariff further by an additional ten cents as required by a preliminary study. If these conditions are not fulfilled, EDL will not take responsibility for implementing the national emergency plan for the electricity sector proposed by the Ministry of Energy and Water (MoEW) and which EDL’s board of directors has agreed to, read the EDL statement. The success of the plan requires the approval of MoEW, the Ministry of Finance (MoF), and the Cabinet, EDL said.

The emergency plan aims to provide eight to ten hours of electric supply by day.

The two major conditions for not raising the tariff further are that the State pays for fuels imported from Iraq and for public sector electricity consumption. The State, not EDL, must settle the price of the fuels imported from Iraq and whose annual value is estimated at $460 million on the basis of the Brent oil price of $110 per barrel, EDL said. It also said that the bills of electricity consumption of public administrations and public sector institutions, estimated at $200 million per year, must be paid on a monthly basis and that this sum must be allocated for in the public budget.

EDL also requests the commitments of various ministries, the Central Bank (BDL), and the security forces to ensure financing in hard currency for EDL to enable it to pay its financial obligations in addition to removing illegal connections to the grid in order to reduce non-technical losses.

In parallel to approving the new tariff, EDL’s board asked the Council of Ministers and MoEW to ensure the required supply of fuel oil and gas oil to operate the power plants for five to six months in order to be able to increase power supply before starting to collect the bills according to the new tariff. Another EDL requirement is that BDL commits in writing to convert the amounts in EDL’s account to dollars at the Sayrafa exchange rate.

All stakeholders in this decision are required to provide logistical and political support to ensure the success of the plan, EDL said. These stakeholders include the Cabinet, MoEW, MoF, BDL, Ministry of Interior and Municipalities, Ministry of National Defense, Ministry of Justice, the media, and public institutions and municipalities.

The conditions also include granting financial support as well as health and social benefits to EDL’s employees in addition to providing gasoline and other fuels to EDL to enable it to perform its duty.

EDL said its decision is part of the national emergency plan for electricity and that it takes into consideration the fact that the deadline for the agreement to import fuels from Iraq has come to an end and that decrees, decisions, and laws have been issued and will be issued to provide social assistance and to increase the cost-of-living and transportation allowances to public sector employees.

The risk of a complete blackout could be become a reality in case the Iraqi side decides not to renew the agreement which allows Lebanon to import fuels to operate the power generation plants for one year, EDL said.

EDL said that its decision was also made in light of the delay in receiving financing from the World Bank to import natural gas from Egypt for the Deir Ammar power plant through the Arab Gas Pipeline and because it is still awaiting resolving the issue of ensuring additional financing also from the World Bank to import electricity from Jordan through Syria.
Date Posted: Oct 10, 2022
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