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French Version

Ministry approves plans aimed at streamlining EDL

Critics dismiss initiative as just another study

As part of a complete restructuring of Lebanon's Energy and Water Ministry, detailed action plans to corporatize Electricite du Liban (EDL) were approved in a meeting that took place at the Grand Serail on Wednesday. In the next four months, a four-company alliance in charge of the restructuring will study EDL's current processes and previous studies done on the company to devise a restructuring plan after which implementation is scheduled to take place.

The firms include Mercados, a Spanish consultancy supporting clients in restructuring energy sectors; ELC, an Italian electricity consulting firm; Rafiq al-Khoury and Co., a Lebanese engineering company specialized in electro-mechanics; and KPMG, a major international auditing firm.

The corporatization aims to transform EDL from a public company into a commercial entity. Three divisions make up EDL: generation, transmission, and distribution. The corporatization involves unbundling each division to create a private administration in each, and in the long run, privatizing all but the transmission division.

The life of the restructuring-study arrangement is around 18 months, during which it is expected to create smaller EDL-owned electricity plants to which current EDL employees would be transferred. It also seeks to construct an effective payroll system, and to assign department managers capable of running the organization.

The private sector will also be involved in the corporatization scheme by allowing them to run the electrical distribution and additional energy production.

"The main long-run objective of the program is to eliminate inefficiency while supplying the consumer with a 24/7, reliable and affordable power supply" Ziad Hayek, head of the Higher Privatization Council, told The Daily Star.

EDL is a perrenial financial burden for the government, requiring more than $1 billion a year to cover its losses.

The government has pledged to privatize some of the production units in EDL and restructure the management.

But critics of the initiative argue that this step is little more than yet another costly study of EDL's processes.

"The meeting included expensive consultants drawing study results of EDL that experts already know" Shafiq Abi Saeed, former director of studies at EDL, told The Daily Star. "It's just a waste of money".

Saeed noted the absence of a regulatory body responsible for drawing up a clear-cut implementation scheme.

"The only way to assure implementation is to first create a regulatory body which will execute the restructuring and privatization program," he argued.

Changes at EDL are part of a broader reform plan approved by the Parliament in 2002.

Successive governments have pledged to cut waste and improve the efficiency of EDL, but each has failed.

While Hayek stressed the importance of the plan's long-term goal, Saeed feared Lebanon faces more power cuts as consumption increases with the increase of the population.

He said most of the existing plants are aging and will eventually produce less electricity.

Beirut 26-09-2007
The Daily Star

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