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French Version

Higher spending on electricity helps bloat Beirut's budget deficit

'Total waste' at troubled utility

Heavy spending on electricity continues to drain the financial resources of the government, which cites the sector as a major contributor to the overall budget deficit - which reached 26.41 percent of spending (or LL1.919 trillion) in the first seven months of 2007, an increase of 2.74 percent compared to the same period of 2006.

According to a statement released by the Finance Ministry on Thursday, the government's allocations to the electricity sector reached LL943 billion, an increase of some LL579 billion over the same period last year.

But the Finance Ministry gave no explanation for the huge jump.

The government submitted a five-year plan at the Paris III donor conference to reduce public debt and stimulate the economy.

Electricity was one of the key issues raised in the plan and the government pledged to implement a radical restructuring of this sector. Seven months have passed since the Paris III conference, and the electricity problem has grown worse.

Economist Elie Yashoui, who has written several research papers on the problems of electricity in Lebanon, said that heavy-handed intervention by politicians in Electricite du Liban (EDL) is one of the major reasons for the current crisis.

He added that the absence of public bodies which are supposed to monitor the employees and accounts of EDL have encouraged politicians to protect their cronies.

"All of the government bodies that are supposed to monitor the performance and accounts of EDL are practically not functioning and this led to total waste in all the company's departments," Yashoui said.

He added that the Civil Service Council, which is supposed to regularly monitor all government employees, is not doing its job.

"Nobody knows how some of the newly hired engineers were hired and on what basis," Yashoui said.

There are more than 2,200 EDL employees, but most are close to retirement age.

The law prohibits the recruitment of new staff, but the company has hired thousands of part-time workers to carry out maintenance work and collect bills.

However, critics say that most of these part-time workers do not have the necessary experience to carry out their duties.

"Most recently, EDL hired 70 engineers, but we don't know whether these people passed an exam or were chosen by politicians," Yashoui said.

He added that many of the contracts signed with companies to carry out maintenance work on EDL's power plants were approved in an irregular manner which raised the possibility of corruption.

"EDL's board of directors is supposed to review and approve any contract with any firm. But all their prerogatives are now handled by the Cabinet," Yashoui said.

Furthermore, Yashoui said successive governments have spent some $400 million rehabilitating existing power plants and another $1.2 billion building two new ones.

"We have spent so much money and yet electricity faces huge financial losses every year," he said.

The government admits that over $12 billion has been spent since 1994 to cover the utility's perennial deficits.

"The Beddawi and Zahrani power plants, which are supposed to operate on natural gas, are using fuel oil, which is more expensive," Yashoui noted.

He added that electricity theft and unpaid bills represent more than 30 percent of the losses.

"There are prominent politicians who have accumulated millions of dollars of unpaid bills. I want to see someone demanding these politicians settle their bills."

Beirut 31-08-2007
The Daily Star

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