The business of… Beirut
Despite infrastructure challenges, a hefty national debt, and Lebanon’s $4 billion deficit, the business of Beirut is booming.
June 28, 2010 10:48 by kippreport
Regularly scheduled power outages are the status quo in Beirut. They have been for years. Luckier residents face only a 3-4 hour interruption each day, while others deal with blackouts lasting far longer. The “Paris of the Middle East” earns dismal marks when it comes to supplying residents with their basic power needs. Lebanon operates on a 700 MW daily power deficit, and the government has said that the summer months could bring outages totaling 12-16 hours daily in some areas. The beleaguered energy situation is a source of much controversy and consternation in the country.
In 2008, angry protests over the outages turned deadly, when army troops shot and killed eight protestors in clashes turned violent. The state-owned Electricity du Liban is at the center of it all, tasked with the impossible given budgetary and technological shortfalls.
“How to overhaul a utility whose 2,000 staff have an average age of 58, whose tariffs were fixed in 1996 when oil cost $21 a barrel, and whose last audited accounts were issued in 2004?” – Reuters suggested in 2008.
Improvements to the worsening energy situation in the country do not seem forthcoming. Financing of the country’s massive public debt consumes a big chunk of Lebanon’s $13 billion budget, which includes a $4 billion deficit. And while the country’s expanding economy effectively demands a massive overhaul of the energy sector, policy makers are divided on the issue of privatizing. Like most matters of public policy, this one is complicated by sectarian interests of the parties that control the various ministries. Next year, Lebanon will shell out 15 percent of its national budget to fund the power sector, with little in the way of change anticipated.