The potential impacts of privatization in the Lebanese electricity sector from a legal perspective

Abstract

Lebanon’s economic growth trajectory has been affected by domestic and regional political events, as consumer and investor confidence has withered. The 1975-1990 civil war weakened the government’s ability to provide public services and provided further space for the private sector participation. PPP’s are not new in Lebanon; the country has a long history of private sector participation in the delivery of public infrastructure services especially in the electricity sector which traces back to concessions. The energy sector in Lebanon is a key contributor to the country’s current fiscal constraints. In 2002 the Lebanese government passed the Electricity law nº462 which called for the unbundling of the sector and the creation of a regulatory authority and allowed for private sector participation in generation, transmission and distribution activities. Despite the huge financial support and the existing legal framework for this sector unfortunately the 462/2002 Law is not applicable and the electricity supply system is still dominated by the state owned Electricité du Liban which suffers from poor financial conditions and is heavily dependent on the government budget subsides for operations and investment. The electricity sector is in need for an urgent reform. Privatization of EDL if applied correctly by applying a clear legal framework may be a solution to decrease all accumulated problems facing the electricity sector in Lebanon.