Energy Minister Jo Sadi traveled to Qatar on Thursday to advance negotiations on a proposed investment program to rehabilitate Lebanon’s power sector. The discussions focus on the implementation and financing of a plan to build two new production plants and secure long-term natural gas supplies at competitive rates.
Proposed Qatar Investment Details
The initiative, which emerged in mid-October, outlines the construction of two power plants in Deir Ammar and Zahrani, each with a capacity of 825 megawatts, totaling 1,650 megawatts. The proposal also includes investments in renewable energy, specifically 440 megawatts of wind power, and battery storage systems.
Under the plan, Qatar would supply liquefied natural gas (LNG) through a 20-year contract and develop the necessary infrastructure for import and regasification. The project is structured as a Build-Operate-Transfer (BOT) model, meaning Qatari entities would handle funding, construction, and operations without requiring initial capital from the Lebanese Treasury.
Did You Know? The proposed infrastructure plan also includes provisions to begin importing approximately 300 megawatts of electricity from Syria.
Covering imported gas costs through consumer payments
While the BOT model relieves the government of immediate investment costs, the project does not provide free electricity. Lebanon remains responsible for the cost of imported gas and operational expenses, which must be covered by consumer payments and future contractual obligations. The project’s success in lowering electricity costs depends on achieving competitive gas prices and efficient plant management.
Even with lower production costs, financial viability remains uncertain without broader systemic improvements. Potential surpluses for Electricité du Liban depend on the institution’s ability to reduce technical and non-technical waste, improve revenue collection, and maintain the distribution network.
Expert Insight: The transition of the power sector from a state-funded burden to a self-sustaining entity hinges on the state’s capacity to enforce structural reforms. Without addressing collection rates and administrative inefficiencies, lower fuel costs alone may not be sufficient to stabilize the sector’s finances.
Coordination with International Financial Institutions
Finance Minister Yassin Jaber met with a delegation from the International Finance Corporation (IFC) last Wednesday to discuss the Qatari project. The discussions emphasized that increased production capacity must be linked to comprehensive reforms within Electricité du Liban, particularly regarding distribution, collection, and management.
Jaber stated that increasing output is insufficient if the institution cannot secure its own revenue streams without relying on the Treasury. Investors are seeking clear payment guarantees and a stable legal environment to mitigate financial and political risks. The sector’s current challenges include accumulated debts from public institutions, the need to activate a regulatory authority, and ongoing damages to the network in the south.
Future Steps in Negotiations
Following the current round of meetings in Qatar, a Qatari delegation is expected to visit Beirut next week. Prime Minister Nawaf Salam and Minister Sadi are then scheduled to travel to Doha to finalize the agreement. While the project faces significant complexities, its potential implementation is viewed as a move to break the current stagnation in the power sector.
Securing cheaper natural gas to establish financial surplus
What is the primary financial benefit for Lebanon in the proposed deal?
The deal aims to secure natural gas at prices lower than those currently available in neighboring countries. This could allow Electricité du Liban to sell electricity at a rate that covers production and operational costs, potentially creating a surplus for network maintenance.
What are the conditions for the project to succeed?
Success is contingent upon implementing structural reforms, including improving management, enhancing collection of electricity bills, and reducing technical and non-technical waste. Investors require stable legal and administrative environments to ensure they can collect their dues without the state Treasury bearing additional burdens.
What is the role of the Lebanese Treasury in this proposal?
Under the BOT framework, the Qatari side is responsible for the initial funding, construction, and operation of the plants. However, the state remains responsible for paying for the imported gas and the electricity purchased, which is intended to be financed through consumer collections.
How will the government ensure the necessary administrative reforms are completed to support this new infrastructure?
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