The Egyptian gas and Jordanian electricity deals to Lebanon come as part of the debt-laden country’s efforts to meet the growing needs of its people, especially with the approaching summer season.
Lebanon concluded two separate agreements with Egypt and Jordan to import gas and electricity, in an effort to solve the chronic electricity crisis that began to worsen two years ago, according to information monitored by the specialized energy platform.
The Minister of Energy in the Lebanese caretaker government, Walid Fayyad, blamed the new conditions set by the World Bank; It is considered the main reason for blocking the Egyptian gas and Jordanian electricity deals to Lebanon, according to a report published by the “argusmedia” website.
The World Bank had tied the financing of the two deals to a number of reforms in the energy sector. Chief among them is raising the electricity tariff subsidized by the government, auditing the accounts of the Electricité du Liban, and appointing the governing body for the sector, which has not been achieved in light of the current political and financial conditions.
The Egyptian gas and Jordanian electricity deals to Lebanon
Lebanon is suffering under the weight of severe economic and energy crises. This led to a dramatic drop in the value of the local lira, an increase in inflation rates and fuel prices, in addition to cutting off electricity for long hours throughout the day.
On June 21, 2022, Lebanon and Egypt concluded an agreement to import 650 million cubic meters of gas annually through the Arab gas pipeline passing through Syrian territory, up to the Lebanese Deir Ammar power station. This contributes to adding 450 megawatts to the capacity of the Lebanese electricity grid.
Lebanon and Jordan also agreed to import about 400 megawatts through the Syrian electricity network.
It is expected that the two agreements – if implemented – will allow the addition of between 6 and 8 hours of electricity, in addition to 4 hours provided by the government throughout the day.
The implementation of the Jordanian electricity deal to Lebanon was scheduled to start in March 2022, and Egyptian gas at the end of the same year, according to the report, which was reviewed by the specialized energy platform.
In a related context, Human Rights Watch accused the Lebanese government of causing widespread power outages. For its failure to run the Electricity Corporation for 30 years, in addition to following unsustainable policies and clear negligence, as a result of elite control over resources, corruption, and special interests.
The organization also pointed to the spread of polluting diesel generators among citizens who can only afford their high costs, saying: “Access to stable electricity in Lebanon has become a service that only the rich can afford, deepening the country’s deep-rooted inequality, and pushing people towards more poverty.”
New terms of the World Bank
The Lebanese government – for its part – clears its name and says that it has fulfilled all conditions, foremost of which is the audit of the Electricité du Liban accounts.
On the other hand, the Lebanese Minister of Energy says that the World Bank has added new conditions, indicating a “shift” in the bank’s vision of the two deals, in addition to a growing decline in interest.
Fayyad pointed out that the reason behind this shift may be the US sanctions on Syria. Lebanon’s cooperation with Damascus to implement the two deals may also subject it to sanctions, according to the Caesar Act that came to light in 2019 to force Syrian President Bashar al-Assad to find a political solution to the war. Continuing eligibility for more than 10 years.
--“The Egyptian gas and Jordanian electricity deals to Lebanon are the most natural step and the most strategic solution, or partial solution, to our energy crisis,” says Fayyad.
He added, “From the outside, it appears as if the World Bank is not pushing towards financing the file.. But without that, we have to wonder if the matter is related to sanctions or political affairs.”
Inspite of that; It appears that the government has not fully complied with some of the World Bank’s original terms, a source familiar with the discussions between the two sides revealed to Argos Media.
He said, “With regard to auditing the accounts of the Electricité du Liban… Yes, they appointed a consultant, then asked someone to collect money for that audit, and they were unable to pay for that.”
He stressed, “There are no new conditions.. The conditions today are the same as they were before.”
Alternative agreement with Iraq
In a related context, the Lebanese Energy Minister revealed new efforts to get out of the energy crisis through cooperation with oil-rich Iraq.
Fayyad says that there are ongoing talks to renew a previous agreement concluded in mid-2021, according to which Beirut would obtain one million tons annually of heavy fuel oil for the benefit of the Electricité du Liban, in exchange for services and goods.
The agreement is expected to expire in November of this year, but efforts are underway to renew it soon, according to Fayyad.
The energy minister said there was strong support in Iraq for renewing the agreement for another year, potentially including larger volumes.
He added, “We are talking about increasing the quantity, and also about the possibility of concluding another agreement to buy fuel from Iraq on a commercial basis, with payment later.”
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