June 3, 2019 / 6:34 PM / 12 days ago

Lebanon electricity reform plans stalled by court appeal

BEIRUT, June 3 (Reuters) - Lebanon’s constitutional court ruled on Monday to halt part of a power sector reform plan that seeks to reduce state subsidies which have led to one of the world’s heaviest public debt burdens.

Lebanon’s decades-old electricity crisis has pushed it to the brink of financial ruin. Power cuts have long hobbled the economy and subsidies helped rack up public debt equivalent to 150 percent of gross domestic product (GDP).

Steps towards fixing the power sector are seen as a critical test of the government’s will to launch reforms which would help Lebanon unlock billions of dollars of foreign support pledged last year.

The Lebanese government approved a reform plan in April that aims to boost generation capacity, reduce losses in transmission and eventually raise consumer electricity tariffs.

The court accepted an appeal on Monday regarding a key part of the plan, a move that stops the tendering process for the construction of six new power plants, state news agency NNA said.

“The goal of the appeal is for us to forbid violating the laws when it comes to awarding contracts,” Sami Gemayel, one of 10 lawmakers who appealed the plan, tweeted.

The MPs have questioned the legality of the plan, which would allow the cabinet to give licenses for power plants instead of a regulatory body that has not been set up.

Last month, Lebanon’s government agreed a 2019 budget — which has been sent to parliament for debate and approval — to bring its public finances under control, but it faces an uphill struggle to restore investor confidence. (Reporting by Ellen Francis; Editing by Catherine Evans)

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