Lebanon to get six more hours of power a day in Syria-Egypt gas deal, says minister

Plan set to import electricity and gas from Egypt and Jordan through Syria

Lebanon will be able to provide six more hours of power a day through the national grid within weeks after a deal with Egypt and Jordan, Energy Minister Walid Fayad told The National.

The country is suffering a major power crisis with state-run Electricite du Liban recently announcing that it was producing no power as it was unable to import fuel.

The agreement, facilitated by the US and World Bank, requires navigating the region’s complex politics, including US sanctions against Syria and decade-long hostilities between Israel and Syria on one hand, and Israel and Lebanon on the other.

Lebanon will pay Egypt for a yet-to-be-decided amount of gas via a World Bank loan. The gas will go first to Syria to be distributed internally. Syria will then send a smaller quantity of gas to Lebanon via the Arab Gas Pipeline. The difference will be equivalent to an in-kind payment to Syria.

By not paying Syria in cash for its services, Lebanon will work around US sanctions related to the Caesar Act, which threatens sanctions on those people and businesses that work with Damascus in an attempt to avoid normalisation of relations with President Bashar Al Assad’s government after a decade-long civil war that involves numerous cases of potential war crimes.

“By virtue of the deal, the Syrians will have more gas flowing into Syria than gas coming to Lebanon in a way that is equivalent to the service rendered,” said Mr Fayad. “That is one way to do it that’s been [deemed] appropriate [to not] trigger any implications for the sanctions.”

Quote
If we could do more, that would be much better – but at this stage, this is not guaranteed
Energy Minister Walid Fayad

During a visit to Beirut on Wednesday, US diplomat Amos Hochstein said Washington had issued a letter of comfort that will “make this deal possible without any ramifications vis-a-vis the sanctions”, Mr Fayad said.

“This is all being done, prompted and encouraged by the international community and the US administration. So it’s all in line with their recommendations,” he said.

A letter of comfort refers to documents issued to clarify exceptions to sanctions typically for humanitarian or Covid-19 reasons, said Karim El Mufti, professor of political science at Saint Joseph University in Beirut. “Such letters already exist for the medical and humanitarian sectors in Syria.”

Former US president Barack Obama had imposed sanctions on Syria even before the Caesar Act was passed in 2019 during the Trump administration.

Negotiations are continuing with Egypt to decide on the exact quantity of gas that it will deliver to Syria.

“We’re working to finalise it soon. I’m hoping in weeks rather than months,” said Mr Fayad.

The Energy Minister declined to give a figure for the loan requested from the World Bank, which did not respond to a request for comment.

But Marc Ayoub, an energy policy researcher at the American University of Beirut’s Issam Fares Institute for Public Policy and International Affairs, said Mr Fayad’s predecessor, Raymond Ghajar, had asked the World Bank for a $250 million credit support. This means the World Bank would act as a guarantor should Lebanon default on its payment.

This figure is expected to change as energy prices soar around the world.

“The reason that he [Mr Fayad] may have not given a price is because gas prices are increasing, and Egypt might be asking for more,” said Mr Ayoub.

Egypt has given assurances to Syria it will pump gas from its own fields and not use imports from Israel, with which both Lebanon and Syria are technically at war, Mr Ayoub added.

“The pipeline that used to send gas from Egypt to Israel has been inversed to pump gas from Israel to Egypt. This pipeline could be split,” he said.

Mr Ghajar announced in September that Lebanon needed 600 million cubic metres of gas to provide 450MW of electricity, a quantity that matches Lebanon’s only electricity plant that can convert gas into power.

This is roughly equivalent to injecting four additional hours of electricity a day into the national grid.

While it ran out for a time, Lebanon’s state-run national utility company currently generates around four hours of electricity a day, in part thanks to fuel imported from Iraq via another complicated swap deal involving a regional oil company.

Another two hours of electricity a day, or 250MW, are expected to come to Lebanon from an electricity transfer from Jordan via Syria, said Mr Fayad.

Added to the four hours expected from Egypt and the four hours generated today, that brings the total number of hours of power a day to 10.

“If we could do more, that would be much better, but at this stage, this is not guaranteed,” said Mr Fayad.

Electricity transfers from Syria to Lebanon used to be common until 2018, when they ended for reasons that remain unclear.

Syria’s electricity grid has been damaged by its civil war but is being repaired.

“It should be upgraded and usable soon, in a matter of weeks,” said Mr Fayad, who met Syria’s Minister of Electricity Ghassan El Amel in September in Amman, with Egyptian and Jordanian officials.

Joint Lebanese-Syrian teams of engineers recently inspected the gas network in Lebanon and are scheduled to also inspect the gas network in Syria “to make sure it’s suitable,” said Mr Fayad.

The electricity is expected to be transferred from Jordan towards the Syrian border area of Deraa, which was recently the scene of months of fighting, then through Damascus and arrive in Lebanon at Ksara's substation, said Mr Ayoub.

He said the rehabilitation of the Syrian network will take at least three months.

“Informal discussions among officials indicate that Jordan intends to support Syria with spare parts,” he said. “The Jordanians are eager to export electricity because it produces a surplus and they’ll do whatever they can to do it.”

The two deals involving Egypt and Jordan could be financed by separate World Bank loans. “It doesn’t have to be the same [loan] given that each one of those is a project on its own and maybe we don’t want one delaying the other,” said Mr Fayad.

Lebanon’s current power crisis was caused by decades of mismanagement of the country’s finances by its ruling class. The World Bank ranks its two-year economic crisis as one of the worst in the world since the mid-1800s.

But Mr Fayad was hopeful about the two energy deals. “If the terms are done right, and if the money is used properly, this could work in the interest of the Lebanese people,” he said.

Updated: October 22nd 2021, 9:30 AM
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