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From darkness to dilemma

EDL’s Pricing Shift and its toll on Lebanon’s residents

by Rouba Bou Khzam

In the midst of Lebanon’s power conundrum, Khaled, a schoolteacher living in northern Lebanon’s Akkar region, tells Executive: “There are relatives and neighbors of ours who sold gold to install solar energy and be able to light a room and a refrigerator to ensure the health of their food, at least. Where was the state electricity at that time?” This sentiment encapsulates the frustrations and challenges faced by Lebanese households in their pursuit of reliable and affordable electricity. He goes on to address what he sees as an injustice in the taxation system. “If [the public utility] Electricité du Liban raised the tariff in exchange for providing us with electricity over a period of hours that would allow us to abandon the generator subscription and install solar energy, then the issue could have been looked at from another angle,” he says. “But it’s unacceptable for the taxpayer to be forced to pay the price of a service that he does not receive.”

Like Khaled and his neighbors, many Lebanese live in monthly or even daily struggles for affordable power. They have in recent years had to contend with outsized electricity bills by nominally illegal private providers, or dip deeply into their savings to foot the bill for solar energy installations, usually a photovoltaic (PV) system and battery. While households grapple with the pressing issue of electricity supply in the best way they can, official state provider Electricité du Liban (EDL) has embarked on its own transformative journey of securing the country’s electricity by introducing a new pricing framework. Gathering anecdotal evidence from Lebanese households and small businesses, Executive examines EDL’s novel approach and dissects the cost versus supply dynamics during the pivotal Q2 and Q3 periods of 2023. The ongoing experiences of individuals from neighborhoods throughout the country portray a reality that extends beyond kilowatts and tariffs, revealing the profound impact of the nation’s power struggles on the daily lives and aspirations of its citizens.

A deficit that spans decades

Amid the profound financial collapse and economic turmoil since 2019, the Lebanese government and EDL were faced with only bad choices in their responsibility to provide citizens with electrical energy. Long practiced subsidy management of public electricity supply became fully impossible in the course of 2021, increasing energy poverty from lengthy power cuts in certain areas to an entire country without state-provided electricity for up to 24 hours, sometimes extending for consecutive days.

Strikingly, this crisis has roots spanning almost three decades, stemming from successive Lebanese governments’ mismanagement of EDL, resulting in widespread power outages. Its intensification into a cloak of darkness across almost all of the national territory was furthered by escalating fuel prices, the Lebanese central bank’s insufficient ability to provide hard currency for oil imports, and resulting challenges in procuring fuel in adequate quality and quantities to secure operation of state-owned power plants.  

Many argue that the electricity sector stands as a key perpetrator behind the country’s financial collapse. According to the World Bank, EDL has been a significant contributor to the high government debt, costing the government over $40 billion with annual losses up to $1.5 billion between 1992 and 2018. 

In response to the escalating crisis, the caretaker government, led by Prime Minister Najib Mikati, convened on January 18th of this year to address EDL’s status. Asserting that resolving the electricity problem could alleviate 50 percent of the country’s challenges, the Mikati administration presented a plan for improving EDL operations and output. Despite the plan’s initial promise to provide eight to ten hours of daily power, after three months, it proved insufficient, limiting supply to two to four hours on average. 

EDL’s new billing system, tying electricity costs to the fluctuating black market dollar, has led to bills exceeding 1,000,000 LL per month, a sharp nominal increase from the previous scenario where a typical monthly bill for the base monthly subscription and respective consumption fees at 10 ampere might range from 50,000 LL to 300,000 LL. Given that a monthly EDL bill of 50,000 LL in the years between 1997 and 2019 was equal to $33.34 and the 1,000,000 LL fee, based on a dollar rate of 43,000 LL to $1 as it stood in December 2022, translated into $23, it is to be noted here that the price hike in EDL charges meant a great burden for earners of lira-denominated wages and salaries but a much smaller adjustment for households with access to dollar-denominated incomes. 

In addition to pre-2022 tariffs not having been adjusted since the mid 1990s, resulting in collections that were — and, according to interviewees, still are — often lagging and haphazard, the state’s self-proclaimed will to reform and improve its monopoly provider EDL was highly distrusted. 

In a press conference held in April 2023, the caretaker Minister of Energy and Water, Walid Fayad, acknowledged a slight relative success in the electricity plan, citing an increase in supply to a maximum of five hours per day. However, he emphasized the plan’s challenges, attributing the limited success to constraints in funding from the central bank and the Ministry of Finance, along with difficulties in procuring fuel. Despite efforts to enhance the electrical supply, citizens have to cope with only four to five hours of EDL-supplied and invoiced electricity at best. 

Citizens, unable to rely solely on EDL, have resorted to private generators and solar energy as their primary power sources despite relatively high fuel costs and steep upfront payments for solar installation. Moreover, when confronted with demands by private generator owners to be paid hard cash (at a rate of near 89,000 LL to $1 throughout most of 2023), heads of households are considering cancellation of EDL electricity meters. Against this backdrop of a pricey and private group of strictly for-profit providers, and a state utility that has up to this time done little to earn the trust of its consumers, it is no wonder that individuals from all around Lebanon tell Executive how they continue to apply new coping strategies in the struggle for daily access to electricity. 

The latest voices of users

In Ain Al-Rummaneh, Beirut, Saeed, a 45-year-old resident, transitioned to alternative energy more than a year ago, driven by the inconsistent rationing imposed by private generator owners. Saeed says that EDL “neglects its responsibilities and allows private generators to exploit the Lebanese population.” On the issue of costs, he says, “I question the logic behind receiving significant bills for minimal electricity supply,” raising concerns about the cost of state electricity reaching exorbitant amounts for just a couple of hours. Emphasizing the energy self-sufficiency he acquired through solar energy, Saeed tells Executive, “I did not invest in a solar installation to become vulnerable to high bills.”

Saeed’s lack of trust in EDL, which he views as “overburdened and worn out,” extends to doubts about the reliability and sufficiency of electricity provision. He sarcastically comments on EDL supplying electricity after midnight, a time he deems unnecessary, then states his reason for canceling the utility’s meter as, “we are accustomed to its absence, so I decided to abandon this service completely.”

Ali, an EDL employee who works directly in bill collection, on the other hand advises against the cancellation of meters, warning citizens about potential regrets if they choose to reverse this decision later on. Ali’s rationale behind this caution is a projected increase in meter installation fees. In his view, the state meter is indispensable, even in the face of perceived service inadequacies. According to him, “citizens, despite having solar energy solutions, still require access to electricity during winter for battery charging due to frequent cloud cover.”

This perspective aligns with Samar’s experience — a mother of three from Aley —who installed a solar energy system two years ago, a move that enabled her to abandon reliance on generators and their burdensome bills. Samar, who recently paid two million LL for state electricity covering the months of November and December 2022, highlights how her reliance on solar energy is seasonally augmented by usage of EDL power: “I depend on solar energy for all daily activities, reserving state electricity solely to charge our solar batteries during the winter days in Aley when sunlight is scarce.”

Adnan, a 60-year-old proprietor of a small hair salon in Aley, echoes the struggles of those grappling with the electricity crisis. Having paid $40 for state electricity covering December and January, Adnan expresses frustration at the predominantly nighttime supply that does not cover hours when customer traffic is highest. For Adnan, installing solar power is not only impractical in the foggy area of Aley where he works, but also expensive, with a system of ten ampere requiring an upfront investment of $4000. Adnan highlights the inadequacy of a $100 subscription fee for a five-ampere generator, prompting him to invest in his own generator, a crucial asset for 90 percent of his business, despite the diesel costs of around 100,000 LL per customer, which amounts to around $1.10 at the time of writing.

For Nancy, a student who hails from the Hasbaya region in southern Lebanon where her family’s home receives three to four hours of electricity per day, the case of EDL is one of deliberate avoidance of responsibility. She and her siblings see a stable electricity supply as “essential for our studies, charging phones, laptops, and accessing the internet,” she tells Executive, adding that her parents bear this increased cost. “In our area, we rely on the uninterrupted subscription of a generator, where the cost increased to $55 from the initial $35,” she adds. 

EDL’s (re)actions of 2023

When EDL initiated the implementation of a new pricing system on November 2, 2022, with bill issuance commencing in February of 2023, it intended to combine a migration to a financially sustainable utility with a strategic move to curb network infringements. The intricacies of this pricing structure were detailed in a statement released by the corporation in November of 2022. The new scheme prices ten US cents for each of the first 100 kilowatt hours, followed by 27 cents for each kilowatt-hour exceeding 100. Additional charges include a fixed monthly tariff of 27 cents per ampere and a qualification allowance of $4.3 for subscriptions previously set at 5,000 LL per month, doubling to $8.6 for subscriptions calculated previously at 10,000 LL per month (which before 2019 equaled to $3,34 and $6.68, respectively).

The corporation clarified that the lira pricing would reflect the dollar exchange rate determined by the central bank. It added that its tariffs would be subject to adjustments every one or two months, under an aim to align prices to end users with real production costs based on global oil and oil derivatives prices.

However, in another statement, EDL disclosed that bills issued for electricity consumption in November and December of 2022 were calculated based on the exchange rate on the Sayrafa platform plus a 20 percent surcharge, amounting to 43,600 LL to the dollar. By this writer’s understanding, this calculation methodology persisted despite fluctuations in the exchange rate at the end of 2022.

Throughout the year to date, the corporation tirelessly reiterated that it cannot sell electrical energy without collecting its dues. In the most recent “final warning” to date, EDL called on public administrations to settle their electricity consumption bills, threatening electricity cutoffs for those defaulting.

Despite state promises to provide eight to ten hours of power per day under the emergency electricity plan from earlier this year, the reality remains stark. Subsequent to the announcement of the emergency plan, the central bank decided to limit financing advances on purchases of fuel for electricity production from $600 million to $300 million. In turn, EDL issued a warning to ministries and public administrations demanding cash payments in Lebanese pounds and not through bank transfers, giving an ultimatum of October 24 before starting to disconnect services to unpaid accounts.

A source at EDL emphasized the irreversibility of this warning to Executive, highlighting the need to combat inefficiencies, especially as EDL activates collections targeting Palestinian and Syrian refugee camps. As state institutions face mounting bills, and households grapple with insufficient power, critics argue that a new pricing system doesn’t resolve decades of mismanagement, and falls short of addressing the issue of inadequate supply.

While Lebanon has passed through another promising summer followed by both an unexpected regional shock and a continued absence of political reform, EDL’s pricing shift did not dispel the fears of the Lebanese, including Khaled from Akkar. He stresses that “regardless of the new tariff, there is no guarantee that the emergency plan will continue. If it stops, the citizen will remain obligated to pay the subscription fee without enjoying a moment of electricity!”

Some interviews have been translated from Arabic to English; names of a few individuals, whose identity is known to Executive, have been changed upon their request.

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Rouba Bou Khzam

Rouba is a journalist at Executive magazine

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