GE holds talks with Lebanon on revamping utilities sector

Country suffers daily cuts of between three and 12 hours, caused by insufficient capacity and ageing power plants.

A man passes by private generators, which provide electricity, in Beirut, Lebanon March 27, 2019. Picture taken March 27, 2019. REUTERS/Mohamed Azakir

General Electric can help Lebanon, which has struggled for years with power shortages, revamp its utilities sector following a meeting with the country’s prime minister.

Lebanon's premier Saad Hariri met GE’s president and chief executive for the Middle East, North Africa and Turkey, Nabil Habayeb, as well as the multinational’s top executive in Iraq, to discuss strengthening the country’s power sector, which has been the Achilles heel of the government and caused the public debt of the country to swell over the years.

Among initiatives discussed, GE would help Lebanon’s transition to “clean, renewable energy” as well as help convert existing power plants from simple cycle to run on combined technologies, according to a statement released by Mr Hariri's office.

GE, which competes with Germany's Siemens in the Middle East, would help Lebanon "help set up efficient, flexible new power plants that can run on gas and liquid fuels,” the company said in the statement.

The meeting comes amid Lebanese cabinet plans to implement a reform programme to fix a flawed utilities sector and ensure the country enjoys electricity 24/7 with no interruptions. Implementing reform in the utilities sector is one of the key conditions set by international donors following their pledge of nearly $11 billion in subsidised loans for Lebanon last year. The government had hoped to attract multinationals such as Siemens and GE to invest in its electricity sector via tenders.

The country suffers daily cuts of between three and 12 hours a day, due to insufficient production capacity and ageing power plants. Lebanon can only produce 2,334 Megawatts despite peak demand reaching 3,562 MW, according to the energy ministry.

Power outages force Lebanon to depend on neighbouring Syria for electricity imports with the country’s state utility racking up massive debts, which reached $1.8 billion in 2018 and $30bn over the last 25 years. On average the electricity company costs the government more than $2bn a year in subsidies.

One of the key steps to structural reforms of Lebanon's economy and its recovery is to explore “serious revenue-enhancing measures”, accompanied by significant cuts in non-productive expenditures, according to the Institute of International Finanace. If structural reforms are not implemented, Lebanon’s debt-to-GDP ratio is forecast to surge to 180 per cent. It's public debt has increased 1.3 per cent in the first three months of the year to $86.2bn from the end of 2018.