The path to petroleum
As the formation of a new government run by the former opposition draws ever nearer, some of the next government’s priorities are starting to take shape. Last month parliament speaker Nabih Berri said to As-Safir that “of course” oil and gas exploration would be amongst the cabinet’s priorities. “Oil exploration is the victim of the current political vacuum,” he said. Berri’s political ally and current caretaker Minister of Energy and Water Gebran Bassil also weighed in last month at a press conference where he announced that the ministry had signed a contract with the French consulting firm Beicip-Franlab to prepare for an eventual oil and gas exploration tender. The consulting firm will work with the Norwegian government and a Norwegian oil firm, PGS (which has conducted several three-dimensional seismic surveys in Lebanon’s offshore area) to finalize nearly 30 implementation decrees, of which 17 are needed before a bidding round can take place, according to advisors from the energy ministry. The ministry hopes to finalize all decrees by July and submit them to a new cabinet, with the assumption of course that there is a cabinet in place at that time. Beicip-Franlab will supervise technical aspects, the Norwegian Oil for Development program will oversee legal and institutional aspects, and PGS will be responsible for marketing and promotion. The ministry hopes that the first licensing round can take place by November with the start of exploration slated for November 2012.
Not so combustible after all
As cries for regime change echo across the Middle East and North Africa, Lebanon has been labeled one of the less likely countries in the region to experience widespread unrest. According to Bloomberg’s Combustibility Index for 20 countries in the MENA region, Lebanon is the seventh least prone to unrest. Countries are scored on a weighted basis from one to 100, with 100 being the most stable. The factors considered are gross domestic product per capita, median age, income inequality, access to information, unemployment and the “repression factor,” which accounts for 50 percent of the basket’s weight. The repression factor is derived from the size of the military per 1,000 persons, tenure of the current head of state, as well as whether his or her background is in the military, if the ruler commands the army, whether the current head of state came to power in a coup or assignation, total military spending and military spending as a percentage of GDP. Lebanon achieved a score of 56.6 while Qatar was deemed the most stable with a score of 78.4. Libya was the least stable at 27.3.
Off the peak
Growth in the number of new cars on the road seems to have peaked in 2009, according to data released by the finance ministry last month showing car sales to have dropped in 2010 from their historical high the previous year. Last year saw 100,354 more cars hit Lebanon’s traffic-jammed roads, constituting a 7.7 percent decline on 2009’s high of 108,739. Used car imports accounted for 60 percent of the total, down from 65 percent the previous year. However, the average prices per car rose last year to $14,216, from $13,446 in 2009 and constituted an estimated 3.7 percent of gross domestic product. Government revenue on car imports also declined marginally last year by 3 percent to hit $1.4 billion. Cars of German origin took the lion’s share of the total, at 37 percent of all vehicles, followed by cars from Japan (25 percent) and the United States (15 percent). Figures from the first two months of 2011, however, show a rebound may be in the works; car sales are up 7.2 percent on last year, with some 3,550 cars sold, according to the Association of Automobile Importers in Lebanon.
Legal action over telecoms
Private Lebanese telecommunications providers are taking their case to the courts once again in a renewed effort to prod the government into increasing the private sector’s share of the industry and adhering to an existing telecom law. Five local private sector firms — two data service providers and three Internet service providers — submitted an official notice to the telecom ministry on March 8, citing unfair practices within the ministry’s plan to introduce third generation (3G) services into the market through mobile operators Alfa and MTC without granting them licenses or frequencies, as reported by Executive last month. The companies also attempted to file a case with the Telecom Regulatory Authority (TRA) on March 14, as the present telecom law gives it the authority to be an arbitrator, but a board member rejected this. The TRA and Charbel Nahas, caretaker minister of telecommunications, were not available for comment. Nahas has stated in the past that he deems the telecom law to be inapplicable, a claim the TRA has rejected.
Still touting the tourist
Tourism has always been one of the mainstays of the Lebanese economy and this year will be no exception, predicts the World Travel and Tourism Council (WTTC), a private international tourism association. According to the WTTC, travel and tourism will directly contribute $3.77 billion to Lebanon’s gross domestic product this year, equivalent to an estimated 9.5 percent of the total. Employment in the industry will reach 122,000, representing some 9.1 percent of the job market. The association forecasts that when the indirect economic effects are taken into account the total contribution of travel and tourism to the country will reach $13.5 billion, or 33.8 percent of total economic activity this year, maintaining 431,700 jobs in Lebanon, or 32.2 percent of the workforce. The WTTC expects the sector to grow at an average rate of 4.3 percent per year in real terms between this year and 2021. Currently, Lebanon ranks 15th globally in its proportion of GDP to travel and tourism revenues.
Cost of living climbs
Living in Lebanon is becoming more expensive. Despite relatively low oil prices through 2010, data released by the official Central Administration for Statistics (CAS) last month showed that in 2010 the consumer price index (CPI), the main measure of inflation, rose 4.6 percent on the previous year. Many economists doubt the accuracy of official CPI figures, however, due to the fact that the baseline is set at December 2007, and the basket of goods and weights are questionable. Nonetheless, a large part of the rise was attributed to a global increase in food prices, which the United Nations Food Price index put at 24.6 percent year-on-year in 2010. Housing, water, electricity, gas and other fuels were the main driver of the index, making up 25.7 percent of the index’s total weighted average. The highest sub-category rise in average prices was clothing and footwear, which saw a striking 20.3 percent increase. By comparison, figures from the private Consultation and Research Institute (CRI) indicate that CPI in 2010 hit 6.2 percent. CRI uses 2004 as the base year and assigns a larger weight to food and beverages than the CAS.
Usual suspects in rich list
The much-heralded billionaire’s survey from Forbes was released last month for 2010 and showed no change in Lebanon’s richest class from the previous year. A total of six people living in Lebanon made the list, all from the Hariri and Mikati families. Current prime minister designate Najib Mikati and his brother Taha were ranked jointly in 409th place with $2.8 billion each, followed by Bahaa Hariri in 459th place with $2.5 billion. Caretaker Prime Minister Saad Hariri is ranked 595th with an estimated fortune of $2 billion. The total fortune of the Lebanon’s billionaires increased 3 percent in 2010 to $13.1 billion. Billionaires of Lebanese descent also made a good showing, starting with the richest man in the world, telecom tycoon Carlos Slim Helu, who has an estimated fortune of $74 billion, followed by Joseph and Moise Safra, who control banking operations in Brazil worth $11.4 billion and $2.4 billion respectively. The richest man in the Middle East, who has a Lebanese mother, was Saudi Prince Walid bin-Talal, with a fortune of $19.6 billion.
