Lebanon’s State Electricity Company: A Pawn for Political Corruption

Lebanon is crippled by frequent power cuts as corruption keeps hindering the improvement of the country's energy sector. (AFP)
Lebanon is crippled by frequent power cuts as corruption keeps hindering the improvement of the country's energy sector. (AFP)
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Lebanon’s State Electricity Company: A Pawn for Political Corruption

Lebanon is crippled by frequent power cuts as corruption keeps hindering the improvement of the country's energy sector. (AFP)
Lebanon is crippled by frequent power cuts as corruption keeps hindering the improvement of the country's energy sector. (AFP)

All year long, electricity is at the heart of the Lebanese people’s concerns. It is also at the heart of the country’s staggering $80 billion public deficit with the sector costing it $36 billion a year.

This reality can be blamed on political corruption that has for years plagued the sector.

Former Energy Minister Mohammed Abdul Hamid Baydoun told Asharq Al-Awsat: “It is part of political bribery.”

Politicians always set their sights on the Energy Ministry whenever a new government is being formed, heedless of the label of corruption that will follow them.

Lebanon’s electricity crisis began during the country’s 1975-90 civil war, which destroyed many of its power plants. The people had to contend with gas lanterns to compensate for their lack of power. Now, 28 years later, not much as has changed and the country still suffers from frequent power cuts. There appears to be no light at the end of the tunnel because politicians would rather fill their own pockets than tackle years of incompetence in such a vital sector.

Experts agree that the solution lies in modernizing laws linked to Electricite du Liban (EDL), the state-owned company that runs the sector. The current laws in place are outdated and a lack of coordination between the concerned ministries has rendered work in the sector inefficient and ineffective.

Baydoun said: “The company cannot be fixed.”

“When I assumed the energy portfolio, I managed to draft the privatization law that never materialized,” he continued.

“Current EDL director Kamal Hayek has proven that he cannot limit the losses in the firm. The situation at EDL has not changed since he assumed his post in 2002,” he told Asharq Al-Awsat.

Despite this 15-year failure, nothing has been done to change it, he stressed.

Dr. Mohammed Basbous, a leading member of the Progressive Socialist Party, told Asharq Al-Awsat: “The energy sector is the greatest source of waste in the Lebanese economy.”

There are vacancies in 50 percent of EDL and only two representatives remaining in a seven-member board of directors, he stated. A law was issued in 2011 to fill these posts and, yet, seven years later, nothing has been done.

Moreover, six months were given in 2011 to the formation of a regulatory authority, which has not yet seen the light, Basbous added.

The extension of the term of current officials at EDL are therefore all illegal, he noted.

Furthermore, vacancies, he said, are being filled with unproductive employees. The absence of a regulatory authority is also limiting interaction between the energy minister and any potential cooperation partner to just these two sides, meaning talks between them are not being monitored and violations go unchecked.

Unimplemented plan

Baydoun said that when current caretaker Foreign Minister Jebral Bassil served as energy minister, “he concocted a theory that regulatory authorities infringe on the minister’s privileges.”

On the contrary, “regulatory authorities are formed to protect general sectors from political meddling, to ensure the rights of the consumer and to put in place set prices,” he continued. “Politics must not impose such prices.”

An expert at a firm specialized in modernizing the energy sector told Asharq Al-Awsat: “Technically, we have a plan, but it has not been implemented.”

Speaking on condition of anonymity, he added: “The plan calls for the formation of a regulatory authority and separating the sector’s three main divisions: power plants, networks and distribution and tax collection.”

“EDL was supposed to be restructured and its rules were supposed to be modernized. The private sector was supposed to renovate power plants and take part in the distribution and tax collection process, while the state would keep control of the grid,” he explained. “The plan, however, was hindered by corruption and political disputes.”

Lebanon’s two most important power plants are the Deir Ammar plant in the North and al-Zahrani in the South.

Baydoun said: “They were constructed to work on gas, not regular diesel fuel, before a mechanism to import gas was even put in place. They have been operating on the most expensive kind of diesel fuel since 1996. Just imagine the waste.”

“Ironically enough, efforts are underway to import liquid gas when Lebanon is lying on a natural gas field,” he remarked bitterly. The import of gas requires the establishment of dedicated ports.

“Why are we even building ports? Syria, Iraq and Iran all lie on gas fields. Pipes to import them already exist, while we are paying billions of dollars to import liquid gas?” he asked incredulously.

That is not all.

Basbous said: “The main flaw in the energy sector is the massive amounts of waste. Technical waste in companies usually lies at around 10 to 15 percent in Lebanon. Non-technical waste, including illegal connections and tampering with electricity meters, has led to the waste of 40 percent of generated power.”

During the April CEDRE donor conference, the director General Electric declared that his company was ready to build within six months power plants that can meet all of Lebanon’s energy needs, at a surplus even, and operate them at costs less than what the country was paying. His proposal fell on deaf ears, said Basbous.

As for EDL’s financial deficit, it can be blamed on several reasons, such as government decisions to exempt some regions from the power bill for security and social reasons. Other regions have been exempted for political reasons, while influential powers do not pay their power bill.

Moreover, electrical meters are not added to new consumers, meaning they will use more power without even paying for it. An aging power grid also compounds the problem. Current consumers are also using less power and relying on their own generators.

More waste

Between 2012 and 2013, waste exceeded 51 percent, said Basbous. This figure dropped to 35 percent when private companies took over tax collection. However, they became complacent when they realized that no one was supervising them and they were not being held accountable for their work.

The CEDRE conference demanded that Lebanon reduce its deficit by 5 percent in five years, meaning 1 percent each year, he added. Some have proposed that energy taxes be increased to tackle the deficit, which is the laziest solution because it requires the least effort to implement.

Raising taxes will not put an end to the waste because some people are not even paying their bills or stealing electricity from the grid. So whether taxes are raised or not, only paying consumers will be affected, he explained.

“Such an unjust decision will only increase non-technical waste,” he told Asharq Al-Awsat.

Furthermore, Baydoun criticized power-generating ships that were brought in in 2010 when Bassil was energy minister.

“Such a method is only used during times of wars or major crises. They are short-term solutions, not ones that last eight years and counting,” he said.

A third ship is reportedly coming to Lebanon. It was said that it will offer 200 megawatts for free for three months, while Lebanon will cover fuel costs, ship maintenance and employee salaries.



Iran Loosens Import Restrictions on Foreign Cars, iPhones to Mask its Economic Woes

Visitors gather around a car on display at the 6th International Tehran Auto Show and related industries, just outside Tehran, Iran, Thursday, Jan. 30, 2025. (AP Photo/Vahid Salemi)
Visitors gather around a car on display at the 6th International Tehran Auto Show and related industries, just outside Tehran, Iran, Thursday, Jan. 30, 2025. (AP Photo/Vahid Salemi)
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Iran Loosens Import Restrictions on Foreign Cars, iPhones to Mask its Economic Woes

Visitors gather around a car on display at the 6th International Tehran Auto Show and related industries, just outside Tehran, Iran, Thursday, Jan. 30, 2025. (AP Photo/Vahid Salemi)
Visitors gather around a car on display at the 6th International Tehran Auto Show and related industries, just outside Tehran, Iran, Thursday, Jan. 30, 2025. (AP Photo/Vahid Salemi)

All architecture student Amirhossein Azizi wanted for his 19th birthday was the latest iPhone — and for Iran's cash-strapped theocracy, it was just the gift they needed as well.

Just buying a top-of-the-line iPhone 16 Pro Max in Iran's capital cost him on the day 1.6 billion rials ($1,880). An additional 450 million rials ($530) is required for import fees and registration on government-managed mobile phone networks.

“I’m very happy to own one of the most expensive phones in the country," Azizi said. His father, Mohammad, laughed nearby and added: “Maybe if they had to earn the money themselves, they wouldn’t be so quick to spend it.”

The purchase is only possible after Iran lifted import bans on expensive goods like foreign cars and new iPhones, yielding to public demand for the products while also trying to mask the dire straits of its economy, The AP reported.

While being described as a way to boost Iran's much-vaunted “resistance economy," the decisions trapped Iranians into buying more affordable locally produced vehicles long derided as “death wagons” and boosted the prices of aging, second-hand iPhones.

They also provide Iran with much-needed tax revenues as its government struggles under international sanctions over its nuclear program. Uncertainty over how US President Donald Trump will deal with Iran also has put pressure on its rial currency, which sits at record lows against the dollar.

Powerful forces within Iran long have been believed to be taking advantage of the sanctions, while those benefiting may just be among the country's most well-off citizens.

"It’s more about perception than reality,” Iranian economist Saeed Leilaz said.

‘Resistance’ economics at play Iran's Supreme Leader Ali Khamenei, now 85, first proposed the idea nearly 15 years ago as Tehran faced its first round of intense sanctions over its nuclear program, which the West fears puts Iran at the precipice of obtaining an atomic bomb. Iran maintains its program is peaceful — even as it enriches uranium closer than ever to weapons-grade levels.

“Sanctions are not new for us," Khamenei said in a 2010 speech. "All achievements have been made and all the great movements of the people of Iran have been launched while we were under sanctions.”

In some ways, it's worked for Iran's ruling clerics since Trump unilaterally reimposed sanctions on Tehran after withdrawing America from the 2015 nuclear deal. Iran struck deals with China to continuing buying its crude oil, likely at a discount.

Those in Iran's paramilitary Revolutionary Guard, which has grown into a major power center under Khamenei, handle the sales — both funding their operations against Israel during the Israel-Hamas war in the Gaza Strip and creating a new wealthy elite loyal to Khamenei.

But for the average person, there's clearly a before and an after for the life under the nuclear deal, which saw Iran agree to drastically limit its enrichment and overall stockpile of uranium.

At the time of the deal, the Iranian rial traded at 32,000 to $1. Now, a decade later, $1 was worth 885,000 rials on Tuesday.

The public's savings have evaporated, pushing average Iranians into holding onto gold, real estate and other tangible wealth. Others pursue cryptocurrencies or fall to get-rich schemes.

Iran lifts car and iPhone import restrictions, seeking cash Iran banned the import of foreign cars in 2017, while not allowing iPhones newer than the 13 to be registered on the country’s mobile phone networks. The phone decision set off a scramble for older iPhones, boosting their price, while used car prices for foreign models remain high as well.

In the last Persian year ending in March 2024, Iran imported $3.2 billion worth of mobile phones, customs data shows. The cut for high-end iPhones makes them a lucrative option to plug some of the gaping holes in Iran's government spending — though Iran's foreign currency reserves remain low due to sanctions.

“Lifting restrictions on a few platforms or allowing iPhone imports are the kinds of steps the government can take quickly and with minimal cost to create a sense of progress,” said Leilaz, the economist.

Such decisions also provide a quick win for Iran's reformist President Masoud Pezeshkian with Iran's elite — though it doesn't address any of the longer-term economic problems.

For cars, former President Hassan Rouhani banned imports of fully built foreign vehicles in 2018, after Trump unilaterally withdrew America from the nuclear deal. While in theory protecting Iranian foreign reserves, it also backed up local automobile manufacturers, whose products have long been criticized for not meeting international safety and quality standards — hence their “death wagon” monikers.

Experts believe if Iran's government allowed more lower-priced, higher-quality imports, the country's automobile manufacturers would lose their edge. Restrictions still limit the number of foreign cars that can come into the country and tariffs that Pezeshkian wants lowered may have been again placed at 100%.

“Since the number of newly imported cars is still limited, only a few people can afford them," said Saber, a car dealer in Tehran who spoke on condition only his first name be used to be able to discuss the issue frankly. "As a result, imported cars have skyrocketed in price on the open market.”

What Trump does carries serious consequences for Iran As Iran's economy worsens, its theocracy worries conditions could again push the public back onto the streets in nationwide protests. That's why officials up to Khamenei have backed the idea of talking again to the West.

While Trump has suggested he wants talks, he signed an executive order Feb. 4 calling for putting “Iran’s export of oil to zero,” including to China, which buys Tehran’s crude at a discount. It also seeks a “snapback” of United Nations sanctions on Iran over its nuclear program. If implemented, they could decimate Iran at a time where its people are looking for any sign of optimism.

That includes a car show in Tehran in late January that featured foreign brands like Mazda, Nissan and Toyota, all sought after by Iranians. However, even with the change, Iran's economy still must exist in a world where the US dollar reigns supreme and its rial continues to fall.

“This biggest problem in this country is that everything depends on the dollar," said Saeed Maleki, standing among the vehicles at the show. "Today they tell you a car costs 3 billion rials. But after a week or a month will they still sell this for 3 billion? No! They will charge me with the new rates.”