privatization


The disastrous Électricité du Liban (EDL) is unable to keep up with the country’s demands for power – a crisis exacerbated by fuel prices – so Jordan and Egypt are lending a helping hand. It is a travesty that a country so rich with water cannot find the long-term will to harvest hydraulic energy to supplement its needs (or provide clean drinking water! – but that is another story).

But of course, it already has been done with even more disastrous results. al-Barid Electricity Company (شركة كهرباء البارد), involving the Khuri family, has a concession from the Lebanese government to operate a small hydraulic power plant which supplies villages in the north with electricity.

In 2004, al-Barid’s workers went on strike to demand some overdue payments. The company at the time claimed that EDL owed it money which needed to be payed before it could pay its employees. It turns out that the company actually owes money to the Lebanese government. The company has not paid its dues since 1995, thereby breaking the law that grants it the concession. When in 2007 Salim Nakat, head of concessions at the Ministry of Energy & Water, tried to get the company to pay its dues, he was removed from his post by Muhammad Safadi – then acting Minister of Energy & Water, today Minister of Economy and Trade. Apparently, Mr. Safadi had electoral considerations.

The issue with al-Barid Electricity has been standing at least since 2002 and so have others, such as Aley Electricity and Jbayl Concession, both for power distribution. If the suspicions are/were well-founded – and it is so in the case of al-Barid – the crisis at EDL and the exorbitant amounts spent on power (25% of GDP) are partly the result of money being funneled into private pockets.

Another reason is discussed in a well-documented paper prepared by the Lebanese Communist Party (in Arabic). $1.38 bn were spent on setting up gas powered plants after the civil war and they remain since their completion in 1999 without gas supply. $370 million a year is being wasted by using fuel instead.

So, EDL is being undermined by its parent Ministry (Amal, Hizballah, and Safadi have taken turns at this ministry). A small sample of using hydraulic power is being used to suck money out of the beleagured public pocket. At the end of the day, we end up having to buy favors from Syria, Egypt, and Jordan for power that we could produce ourselves by investing in clean energy. Only we are too busy being power hungry.

As a follow up on the previous post, al-Akhbar today reports that, according to Jubran Basil, the income provided by the Ministry of Telecommunications constitutes 42% of the entire income of the national treasury. Basil, Free Patriotic Movement minister of telecommunications, reiterates promises that there will be a reduction in mobile connection fees after due study and investment. In the mean time, the government better start thinking of alternative means of balancing its income. Cutting down on ministerial posts could be a start!

Mobile connection in Lebanon is the most expensive in the region where almost 2/3 of the fees is accounted for by overheads and taxes. The new coalition government has retracted previous governmental promises to decrease mobile subscription rates. Apparently, under pressure from Sanioura, the price cut was postponed because the mobile sector provides the main income in (much needed) foreign currency for the public pocket.

More importantly, the decision to postpone price cuts follows an established policy of eliminating competition and insuring maximum profit with the eventual aim of fully privatizing the telecommunications sector. The ridiculous prices the Lebanese pay for their mobile connection is the bait that will lure the highest bid (estimated to be between $5 & $7 bn). This policy, by a self-proclaimed liberal and progressive political elite, has gone hand in hand with monopolizing the market and insuring that any competition is nipped in the bud.

The same strategy is followed by the government owned OGERO with respect to Broadband networking. Lebanese ISP’s pioneering work with Internet in the region came to a near complete halt with the absence of proper infrastructure to develop further. Not only did it take forever for OGERO to install the infrastructure, but now they are making it near impossible for the independent ISPs to run a profitable service. OGERO limits their trunk bandwidth, thus limiting the number of subscribers they can have. OGERO also takes its time processing applications for increased bandwidth, undermining private ISPs ability to meet client demands. The result is that OGERO’s share of the market increases. Why? To better the quality of telecom? Rather, the better to privatize with, my dear!

So, while the private sector pioneered Internet connection in Lebanon, the government slows it down, setting us back 10 Internet years with one of the slowest and most expensive Broadband in the region. Instead of supporting and subsidizing private efforts, the government stabs its own memorandum of understanding with the private-sector in the back. Such is government policy of supporting economic and social growth. All this, and the service sector is considered a priority!

It is quite easy to blame it all on Hariri entourage’s economic policy. But now with the coalition government, it is becoming increasingly clear that mindless privatization at the expense of responsible, planned development and sustainable growth is a trait shared by government and opposition alike – if such a distinction holds at all when it comes to their political programs. Once upon a time, when Hizballah was outside government, Nasrallah called the privatization of the Telecom sector “the biggest looting operation in the history of Lebanon.” Not only is the silence deafening now, but the minister of telecommuncations is non other than Orange golden boy. Known for shooting his mouth off from the position of opposition, Jubran Basil is off to a very good start inside the bastion of bowel movement!