The Ministry of Energy proposes to increase the price of gasoline to finance electricity contractors: the scarcity of dollars threatens darkness


All sectors are falling on the impact of the dollar scarcity. The electricity sector, despite its poor conditions, is still minimally resilient. However, the cry of suppliers, contractors and service providers threatens the possibility of stopping services in the sector, which leads again to concern about the possibility of complete darkness. This is an actual disaster awaits the people, if the concerned parties do not intend to find radical solutions. But in light of the current reality, everyone realizes that things are going for the worse. The phrase “disaster” appears on every tongue. More than one company wishes to leave, realizing that all the profits it can collect is no longer worth even the guarantees laid down. Nevertheless, everyone is talking about steadfastness, but that the Ministry of Energy and then the Bank of Lebanon meet them in the middle of the road. It is no longer able to work in light of the unpaid dues on the one hand, and it is forced to cover most of its expenses in dollars. The EDL is drowning in debt. Its low revenues contributed to an increase in its deficit, making it unable to even pay suppliers’ dues in lira. Even if it did, it would mean that they lose more than 500 percent of their money because of the difference between the official exchange rate of the dollar and the market rate. All equipment and spare parts are imported in dollars, and in light of being deprived of hard currency, they are unable to meet their needs.

(Marwan Buhaider)

Before the exchange rate crash, none of the contractors objected to receiving his dues in lira, even though the contracts specify the dollar as the currency of the contract. This is normal when the exchange rate was fixed, but after its price on the black market reached 8,000 pounds, in exchange for the stability of the official rate at 1515, it was no longer possible to catch the lira. And because none of the companies is prepared to suffer such a loss, this seemed to pave the way for the possibility of legalizing the import of necessary equipment and spare parts, and thus gradually stopping work. The conversation includes all levels of work here: production, transportation, distribution and contracting.
At the beginning of the summer, these companies breathed a sigh of relief. It was agreed with the Banque du Liban to secure some of its dues in dollars. The agreement stipulated the division of payments between the cash dollar, the dollar and the pound. It included all contractors, especially companies operating and maintaining factories, Turkish ships, and companies of service providers … But this agreement was short-lived. In the Ministry of Energy, it is confirmed that the Banque du Liban stopped paying, after appointing the governor’s deputies who asked to review these agreements. As a result, service providers received only one or two fresh dollars. Turkish ships, due to the huge amount owed to them (about $ 150 million), received more payments. But that all came to a complete halt in October. There are those who link this cessation to the frequent talk of cessation of support. The one who took charge of the foreign transfers was the Deputy Governor of the Central Bank of Lebanon, Salim Shaheen. He had questioned the possibility of companies transferring their profits abroad, asking for guarantees that this would not happen. Yesterday, a meeting was held between representatives of the companies providing services and the bank, to try to answer a number of observations made, and to confirm that a third of the dues that can be obtained in dollars are barely sufficient to secure the equipment necessary to maintain the continuity of distribution and secure customer services.
Company sources indicate that the meeting was very positive, as the Deputy Governor affirmed the keenness on the sector and its continuity. In exchange for the bank’s fear of transferring corporate profits abroad under the pretext of paying international suppliers, it was agreed that the bank would transfer the required sums to suppliers directly, without going through service providers, noting that this agreement covers the current and next year. While the representatives of the companies came out reassured about the course of the meeting, one of them considered that the lesson remains in the speed of implementation, because the more time passes, the greater their inability to do maintenance work and install equipment. The sources assert that their words are not a threat, but rather an expression of a fait accompli that all those contracting with the state suffer.

The Ministry of Energy proposed reducing gasoline subsidies (increasing its price) to finance the needs of the electricity sector!

According to reports, the Ministry of Energy proposed in the coordination meetings to reduce gasoline subsidies by five percent (from 90 to 85 percent), provided that the funds that could be saved from the subsidy relief, estimated at $ 300 million annually, would go to the contractors contracting with the state. The ministry’s pretext is that this amount can guarantee the stability of the electricity sector, without the cost being great for people, as the price of a can of gasoline is supposed to rise between one thousand, one thousand and 250 pounds only.
The “Carradins” company, which has arrears of the state amounting to 150 million dollars, equivalent to 10.7 million dollars a month, has previously written to the ministry calling for adherence to the contract (payment in dollars). Sources report that the company, which supplies 27 percent of the total electricity production, did not threaten to leave, but hinted at him. However, these sources confirm that the company will remain, and all it requires is cooperation to maintain its ability to provide the service. Therefore, it was agreed that she would receive a third of her monthly dues in dollars, in exchange for the remaining two-thirds in dollars and Lebanese pounds. However, like others, this month she did not receive her dues in US dollars. Sources from the Ministry of Energy confirm that the Central Council has become more strict in monitoring the dollars leaving Lebanon. Therefore, the stoppage is related to making sure that the money is going.

Turbines in Deir Ammar and Zahrani will need complete maintenance by the manufacturer in the coming months

The worst is yet to come. Prime South, which operates the Zahrani and Deir Ammar plants, and MEP, which operates the new Zouk and Jiyeh plants, are struggling to acquire spare parts that will ensure the sector’s operation. MEP, which has not received its dues for nine months, also wrote to EDL more than once. One complaint: We are no longer able to ensure the continued functioning of the laboratories, due to the lack of liquidity. Prime South, for example, is facing a more serious problem. Although it shares the same suffering with MEP, the fear that the Deir Ammar and Zahrani plants will stop grows more acute, given that they secure the largest percentage of production. That is not all. Previously, the CEO of Prime South met the deputy governor of the Banque du Liban, to urgently release a sum of money in fresh dollars. In the factories, in addition to regular maintenance, the turbines are subject to a comprehensive maintenance every 40,000 hours (between four and five years). This measure, depending on the contract, can only be taken by the turbine manufacturer. November is the time for comprehensive maintenance for one of the turbines in Deir Ammar, while maintenance of two turbines will follow in Zahrani in the spring. This maintenance process costs 10 million euros per turbine, and is supposed to be prepared two months in advance. This did not happen, but the promise to pay the money at the beginning of this month was not fulfilled either. This leads to the possibility of extending the turbine extinguishing period to more than two months (the turbine can be shut down on schedule even if maintenance begins, because operating it increases the damage that could be caused). The Minister of Energy, in turn, confirms that the matter is urgent, but he is waiting for the Bank of Lebanon.

When does the restoration of the Electricity of Lebanon start?
Lebanon electricity workers are worried about their fate. The lack of action by those concerned in the administration of the corporation, the Ministry of Energy and the government, in order to restore the central building of the corporation before the onset of winter, raised many questions to them. Therefore, on the agenda of the Union of Workers and Employees of the Corporation, at its regular meeting yesterday, one item: “The fate of the workers and employees and the fate of the central building of Electricity Lebanon after the catastrophic August 4 explosion and its negative effects on the institution’s building and its employees. The Syndicate expressed its “apprehension about what is being hatched for the workers, employees and the establishment after nearly three months have passed since the explosion”, asking why there is no direction for those concerned to begin the restoration.
Accordingly, the Syndicate gave all officials “an opportunity until the end of the current month to take appropriate decisions to initiate the necessary reforms related to the central building, and if it does not perceive any positive thing, the thing is based on it.”
On the other hand, the Minister of Energy, in his speech to Al-Akhbar, was surprised by the link between the fate of the workers and the fate of the central building, stressing that the permanence of work was beyond discussion. As for the restoration of the building, he explained that this would require complex mechanisms and an exorbitant cost, as the costs of the restoration are estimated at 16 million dollars, as are the costs of rebuilding the power station that lies below the building. He said that the ministry is awaiting the resolution of the financing issue, whether it will be secured through donors or through a loan obtained by the state. But in both cases, he indicated that even if the business did start today, it would take about two years to finish. For this reason, the “Electricity of Lebanon” intended to distribute workers and employees between the prefabricated rooms that were installed in the outer courtyard of the building and between the factories and stations … It also seeks to rent a new building to replace the central building until it is restored, noting that a meeting is held today for this purpose. Large contractors, to demonstrate their ability to contribute to the costs of equipping the building.

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