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French Version

Privatization of EDL management feasible (Daily Star)

Economist: It's possible for private firm to take over in a month

The privatization of ailing Electricite du Liban's (EDL) management in one month is both feasible and practical, a leading economist said Friday. "I don't see any reason that would prevent the government from privatizing EDL's management in a month," Marwan Iskander told The Daily Star.

The government of Prime Minister Omar Karami promised a skeptical Parliament last week that his government plans to privatize EDL's management in one month in an effort to solve the technical, administrative and financial problems plaguing the state owned electricity company.

EDL has been causing a serious strain on the resources of the government due to the failure of the management to reduce expenses.

Ministers and economists warned on different occasions that the government cannot afford to keep spending money on EDL, adding that the Treasury had spent over $11 billion over the past 10 years trying to fix the company's problems.

"Lebanon will not be the first country to privatize the management of electricity. Egypt and China are excellent examples of state-owned electricity companies run by private firms," Iskander said, adding that the company which wins the contract would collect a percentage of the money saved by the government over EDL.

"A private management can complete the networking of the two gas power plants in Tripoli and Sidon," Iskander said.

The government spent $600 million on the construction of the two plants but failed to build a proper network to distribute electricity to the rest of the country.

Syria was supposed to supply Lebanon with natural gas through a pipeline. But work on this pipeline, which would allow Lebanon to reduce energy cost by at least 30 percent, was delayed for unspecified reasons.

Iskander said if all the power plants worked at full capacity then the government could cut spending at least by 70 percent.

At present, all of Lebanon's power plants operate on fuel oil.

The director general of EDL, Kamal Hayek, said earlier fuel oil represents 70 percent of the company's annual expenses.

The Finance Ministry has been lending money to EDL over the past three years to buy fuel oil from the markets.

Iskander added that Karami can push certain reforms in the energy sector because his government is coherent.

In the past, the government of former Prime Minister Rafik Hariri quarreled over all major economic issues, exacerbating the country's financial problems.

Chafic Abi Said, the former director of studies at EDL, believes privatization of the management may not be sufficient to solve the company's enormous problems.

"I think the government should award concessions to private firms to collect the electricity bills in their areas," Said said.

He added that employees of private firms are more motivated than their counterparts in the public sectors.

The other option the government is considering is buying

Beirut 22-11-2004
Osama Habib
The Daily Star

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