August 23, 2024
By Nasser Kandil
- Purchasing fuel to power Lebanon’s electricity grid has long been a major drain on the national budget, both before and after the October 17, 2019 crisis. Successive governments and the Parliament consistently avoided linking electricity tariffs to a realistic pricing and collection plan that reflected the actual cost of electricity, especially when fuel was being purchased with foreign currency.
- The reason for this avoidance was clear: it was easier to sidestep the difficult truth that needed to be conveyed to the people. The public demanded an end to waste and corruption before they could be asked to pay the real cost of electricity. This situation is reminiscent of what former Central Bank Governor Riad Salameh did when he sold the illusion of a stable exchange rate and high purchasing power to Lebanese citizens, allowing them to purchase cars on instalment plans, hire domestic workers, and take vacations multiple times a year. Then, one day, they woke up to find that they had unknowingly been spending their own deposits, which had been used to maintain the artificially low dollar exchange rate. Similarly, with electricity, Lebanese citizens eventually realised they were paying exorbitant sums to private generator owners – amounts that would have been significantly lower if they had paid the true cost to Electricity of Lebanon.
- The collapse hit Lebanese households from all sides. Even when the exchange rate plummeted, those in power managed to shield themselves by transferring their money abroad, while ordinary citizens were left without access to their deposits. When Electricity of Lebanon finally adjusted the tariffs, it did so haphazardly, without a clear plan to phase out private generators. Today, Lebanese citizens find themselves paying both for private generators and hefty electricity bills to the national grid, with the total cost now exceeding what they previously paid to generator owners before the tariff hike.
- This is a harsh reckoning between the Lebanese people and their state. However, both the people and the state must acknowledge the generosity of the Iraqi government, which, on behalf of the Arab world, extended a helping hand to Lebanon. It is widely known that the oil-for-services agreement was a significant sacrifice on Iraq’s part for Lebanon. Iraq repeatedly renewed and expanded the agreement to meet Lebanon’s needs, often with little more than promises of repayment. Even when Lebanon managed to pay some of its dues, some invoices remained outstanding, yet Iraq continued its shipments.
- Just recently, Lebanon was on the brink of complete darkness due to mismanagement – or perhaps corruption – God only knows. But while these issues are significant, the priority is to overcome the crisis. At this critical moment, Algeria, under the leadership of President Abdelmadjid Tebboune, took a noble and generous stance by sending a ship loaded with fuel as a gift, with no strings attached. Every Lebanese citizen should express their heartfelt gratitude to Algeria and its president for this gracious gesture, just as thanks are owed to Iraq.
