Financial ruin is looming for every household in Lebanon, with the latest blow being the electricity crisis that has seen the state electricity company declare that it can no longer supply electricity to the population for days a time.
This has become a nightmare for salaried employees, students and parents and even for people still enjoying high purchasing power.
The leaders of Lebanon have not delivered electricity for a full 24 hours a day since the country’s civil war ended some 30 years ago. As a result, the business of private generator owners, or private neighbourhood suppliers, called the “generator mafia,” has grown up and flourished.
Today, these local suppliers can charge customers a fortune because of ever more expensive fuel oil just to keep a few lights on during the day during the more and more frequent cuts in the mains power supply. These cuts can last several hours at a time, as the state electricity company can no longer provide continuous electricity.
The Lebanese government had earlier promised reforms to the international donors taking part in the Cedar Conference on Lebanon, including reforms to the electricity sector. However, since 2017, no government has managed to bring about lasting economic improvements, and today it is hoped that money can be found from international donors to fix the country’s electricity sector.
According to Marc Ayoub, an energy policy researcher at the Issam Fares Institute for Public Policy and International Affairs at the American University of Beirut (AUB), Lebanon produces up to 600 Megawatts (MW) of electricity nationally, which was reduced last weekend to 200 MW. But even 600 MW only provides enough electricity for two hours of power a day to Lebanon’s different regions.
Ayoub said the current situation had been caused by a lack of fuel and of the money to buy it from abroad aside from Iraq, and that these factors had prevented the country’s power stations from producing electricity.
But these were not the only problems, Ayoub said. “There has been an absence of vision in the whole sector, and that has been the main source of the problem,” he commented.
With electricity now either intermittent or non-existent in much of Lebanon, people are asking how essential services can continue to run, including the country’s hospitals. President of the Syndicate of Private Hospitals in Lebanon Suleiman Haroun told Al-Ahram Weekly in a telephone interview that Lebanon’s hospitals are now only treating emergency patients.
Routine and other treatments are not being delivered, including for Covid-19.
Another problem is food security, since the lack of electricity does not only make the preparation of food difficult, but it also introduces problems into producing, processing and preserving it. Many Lebanese bakery owners say that the lack of electricity has meant they are unable to produce bread. People are also not able reliably to preserve food in freezers or fridges.
Nora, a housewife in Beirut, now only cooks enough for her family’s daily needs. She is concerned at the threat of food poisoning if food cannot be properly preserved or prepared owing to the increasing power cuts.
Her son, Sami, a student, has had his studies interrupted by the lack of electricity. If the local generator cuts out as often as the state electricity supply, it will mean he will have great difficulty continuing his studies.
President of the Lebanese Association of IT Professionals (LAITP) Rabih Baalbaki told the Weekly that most battery packs are not powerful enough to sustain Internet connections when sources of electricity are down, and that this will have an impact on the country’s currently hybrid educational system.
He said that homes should install solar-power generator to provide electricity and schools should move back to in-person teaching owing to the lack of power.
Many Lebanese citizens now spend all their monthly incomes paying electricity bills, and even then the money is sometimes not enough, according to economist Iyad Khalil, who predicts even more difficult days ahead for the country’s middle classes.
Once they have spent all their money on electricity, there will not be enough left over to buy other essentials including food, he said, let alone pay for the education of their children and healthcare. The crisis will thus drive an increasing number of hitherto middle-class families into poverty, he said.
Khalil said the situation would also have a huge impact on the industrial sector, with factories unable to function and leading to further lay-offs. If companies import fuel at their own expense, this will lead to higher inflation, he said, making it impossible for many to afford even locally produced products.
Lebanese products will not be able to compete on the international markets at higher prices, meaning Lebanon will suffer from a worse balance-of-payments crisis.
The effects of the electricity crisis will affect tourism in Lebanon, as restaurants will not be able to safely preserve food or even to serve meals. Tourism in Lebanon has been low this year, and not only because of the Covid-19 pandemic.
In May, according to restaurant owners, there was a boom in tourists from Iraq, Kuwait, Saudi Arabia and Qatar, but this has now declined due to the lack of fuel. Fewer tourists mean fewer dollars, adding to the already dire situation, since without dollars coming in from outside Lebanon, the government will be obliged to use whatever reserves are left in the Central Bank.
This could lead to further stress on an already collapsing financial system, leading to the failure of some Lebanese banks.
According to Khalil, such factors will continue the economic crisis Lebanon has seen since last year, and the inflation rate will remain high. Money provided to Lebanon by the International Monetary Fund (IMF) should have been used to fix the country’s electricity industry, he said.
A few weeks ago, a new government was formed in Lebanon under the new Prime Minister Naguib Mikati after a year without prime minister. Mikati has been seeking help from various countries and international agencies, but these will not succeed, said economist Ali Hadadah, if the government does not show that it is serious about economic reforms.
In comments to the Weekly, Hadadah said that the new government was still made up of members of Lebanon’s traditional political class and its main interest was in preparing for the next elections, slated to take place in 2022.
*A version of this article appears in print in the 14 October, 2021 edition of Al-Ahram Weekly
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