Lebanese Small businesses hit hard by electricity cuts

Lebanese Small businesses hit hard by electricity cuts

Aug 13 - McClatchy-Tribune Regional News - Dana Halawi and Mohammed Zaatari The Daily Star, Beirut, Lebanon

The Lebanese have survived wars, assassinations and even the global financial crisis. But one thing the citizens of this country can't cope with is the endless electricity rationing which has plunged the country into darkness for the past 20 years.

In cities and towns outside of Beirut, the Lebanese are visibly irritated by the severe electricity rationing and on some occasions have blocked roads with burning tires and rocks to press the government to do something about the problem.

Abdallah Hazim, the owner of a sweets shop, is one of many Lebanese who is fed up with the electricity cuts that plague his neighborhood in Lebanon's northern city of Tripoli.

"I have never thought of leaving Lebanon before but nowadays I am seriously thinking of moving to Bahrain because I am fed up with the electricity situation in this country," he said.

Hazim said he won't be producing ice cream anymore because his losses have lately reached LL800,000 per day.

"I am paying LL120,000 as a monthly subscription in private generators in return for a very limited power capacity," he said. "As you can see, the ice cream refrigerator is empty."

Hazim said he would prefer to be an employee rather than a business owner in Lebanon because he is currently unable to secure a respectable profit. "At least employees receive fixed salaries at the end of each month," he said.

Citizens in the South have been suffering from the same problem for a long time. Many in Sidon spent most of their time during the past two weeks on the beach because of the frequent electricity cuts due to the burning of electric transformers in that area.

"I've been losing a lot of money lately due to continuous electricity shortages," said Samer Zibawe, a meat and fish vendor, who added that he cannot afford to own his private generator. "The electricity shortage is reaching 20 hours per day and I am of course being obliged to get rid of any spoiled meat or melted ice cream."

For their part, housewives are unable to complete their daily house chores as well. "The electricity cuts 10 hours daily and when it comes back it is too weak for me to wash or iron my family's clothes," said Mona Zobaydi. "I feel that my money is going to waste because generators owners have been also resorting to power rationing."

Electricity rationing ranges between six to eight hours in the winter season in most areas. But the problem becomes even more horrendous in the summer season due to the incredible pressure on the aging and poorly maintained electricity plants.

EDL has become a nightmare for successive governments as the cost of financing the losses of the state-run firm mounts every year due to the surge in the prices of oil in international markets.

The annual deficit of EDL is more than $1.5 billion each year, and in some years it has reached $2 billion.

Many energy ministers have submitted plans to solve the electricity problem but once they stepped down and another minister assumed responsibility, these plans were shelved and new ones were introduced.

At one point, the previous government of former Prime Minister Fouad Siniora openly called for the privatization of the sector, arguing that the state has neither the money nor the experience to invest in the construction of new power plants.

But this attempt to turn over the responsibility of running the power grid to the private sector ended in failure as the opposition parties and trade unions viciously fought Siniora's drive to privatize the energy sector.

Against this backdrop, current Energy Minister Gebran Bassil decided to take the middle ground and persuaded both sides that the private sector could play a role in building the power stations, but without agreeing to literally sell them to private companies. This formula apparently pleased the divided Cabinet, which unanimously approved the minister's plan.

The plan calls for allocating $4.870 billion to boost power production from 1,500 MW to 4,000 MW in 2014.

Out of this $4.870 billion, the state will spend $1.550 billion, the private sector $2.320 billion and the remaining $1 billion will come in the form of soft loans from the donor countries.

The plan calls for investing another $1.650 billion in the long run so Lebanon can produce 5,000 MW of electricity.

"If we provided 24 hours of electricity and raised slightly the bill on consumers then Electricite du Liban (EDL) would start making a profit for the first time instead of suffering constant deficit," Bassil said when introducing his plan.

The minister warned that if this plan were not adopted in full then the EDL would continue to bleed financially and total accumulated losses in 2015 would reach $9.5 billion.

Unsurprisingly, some citizens do not feel too optimistic about any new plans because the electricity situation in the country has been the same for years. "I don't think that there will be any changes ever in the electricity situation in Lebanon," said Bassam al-Tom, owner of a sweets shop in Tripoli. "I am 40 years old now and I have been hearing about new electricity plans since I was 18 but nothing has changed since then."

Tom prefers to rely solely on private generators because he already pays a huge bill for that. "I am already paying LL1,600,000 per month for the private generator's subscription and I prefer not to pay for the regular electricity service," he said. "It won't be of any use because it cuts a lot."

Tom's concerns were echoed by the owner of Kassab butchery in Dahiyeh, who said that he would like to switch to relying only on private generators. "The electricity cuts a lot and this is affecting my shop equipment," he said, adding that he paid $840 a few days ago to fix his freezer. "I am already paying LL1,000,000 per month for a private generator subscription, so why do I have to pay a LL900,000 bill for regular electricity which constantly cuts and spoils my equipment?"

He added that he had to get rid of LL2,400,000 worth of meat a few days ago because the regular electricity cuts at night and private generator owners do not provide him with power at that time.