BEIRUT (Reuters) - The Lebanese government approved a power sector reform plan on Monday that aims to boost generation capacity while reducing state subsidies that have led to one of the world’s heaviest public debt burdens.
Steps towards fixing the power sector are seen as a critical test of the government’s will to press ahead with long-delayed reforms and would help Lebanon unlock billions of dollars of financial support pledged last year.
Prime Minister Saad al-Hariri urged rapid implementation of the plan through a public tender process to reduce the pressure on the debt-ridden country’s finances, saying the state budget “cannot bear delay”.
“The problem today is a financial problem and we have to tender out the electricity (plan) as soon as possible,” Hariri said, adding this was a “real” step towards reforming the power sector.
He said the plan would help ease dissatisfaction among the Lebanese people, who had suffered from electricity shortages as officials wrangled over reforms.
Power cuts have long hobbled the economy, while state subsidies have helped to rack up public debt equivalent to 150 percent of gross domestic product.
The plan includes increasing generation capacity, reducing losses in transmission and eventually raising consumer electricity tariffs, officials have previously said.
Energy Minister Nada Boustani told al Jadeed TV broadcaster the plan was a revised version of an earlier plan the cabinet had approved in 2010, saying the onus was now on implementing it.
“If it goes as expected next year, people will witness a big improvement,” Boustani was quoted as saying.
Since the government cannot afford to supply 24-hour electricity, it enforces daily power cuts leaving consumers to pay for expensive secondary supply from local generator companies.
Writing by Tom Perry and Suleiman al-Khalidi; Additional reporting by Laila Bassam, Editing by Alison Williams and Jan Harvey