Electricity Subsidies in Lebanon: Benefiting Some Regions More than Others

Electricity Subsidies in Lebanon: Benefiting Some Regions More than Others

Electricity Subsidies in Lebanon: Benefiting Some Regions More than Others

By : Eric Verdeil

While the recent political showdown over where to connect the Esra Gul barge to Lebanon’s power grid is indicative of the country’s unequal electricity supply, it also unearthed something more fundamental, namely, how electricity subsidies exacerbate geographical and social inequalities. Indeed, one major problem facing Electricité Du Liban (EDL) concerns the fact that production costs exceed revenues from consumers. For many years, the difference has been covered/subsidized by the state but these subsidies impact citizens differently depending on where they reside.

More precisely, because the periphery have access to a smaller supply of electricity per day, they incur greater generator use costs than those living in the central agglomeration, particularly municipal Beirut. Consequently, my recent study demonstrates that effective subsidies disproportionately benefit wealthier households and in particular those who live in Beirut, as the latter are supplied with more power on a daily basis compared to other regions.[1] Therefore, electricity subsidies exacerbate both geographical and social inequalities.
 
While the production cost of electricity—indexed to the international hydrocarbon market—has significantly increased since 1994, prices have not been reevaluated in that period. According to the National Electricity Strategy Plan of 2010, the price represented on average only 55% of the production cost per kilowatt hour. While the price structure should reflect a principle of fairness and employ progressive rates designed to ease the burden for small consumers—among whom are the country’s poorest people—a 2009 World Bank study reported the opposite. In fact, fixed costs added onto an EDL bill resulted in small consumers (who use up to 300-kilowatt hours) paying disproportionately more of their income toward energy bills than larger users. Practically, the more they consume, the more users are subsidized by the state. This is not an open and deliberate subsidy, but rather a largely unseen mechanism at work.
 
In fact, the study highlights geographic variances that result from the length of time that power is supplied. This adds an essential component to the distortion caused by this effective subsidy. Since 2006­-2007, Beirut has received on average nineteen to twenty-one hours of electricity per day, while other regions have received only twelve to fifteen hours if not less (depending on the time of year and in which year data was gathered). The capital's residents use more public electricity by default and consequently benefit more from subsidies.
 
This hypothesis was tested using official data from the 2010 National Strategy Plan, the aforementioned 2009 World Bank study, and geographical data on EDL customers and their consumption that was collected and mapped in Atlas du Liban and published by Institut Français du Proche-Orient in 2016. These results provide an estimate valid for 2009 but their scale remains comparable to the present, even when taking into account variations linked to oil prices. As the latter increase, so do subsidies.
 
The total amount of subsidies granted in 2009 was of the order of $495 million, which is worth comparing to the technical and non-technical "losses" (thefts and non-payments) that politicians usually focus on and which, in the same year, totaled nearly $300 million. If we then look at the geographical distribution of these unintended subsidies, greater Beirut enjoys 58% of total subsidies even though it represents only 43% of users. This is the country's most developed region and its population is, on average, wealthier. Beirut proper receives 21% of subsidies (that is, about $100 million per year) while it accounts for 13% of users and, more importantly, is supplied with power for much longer periods. Antelias (a northeastern suburb of Beirut) receives 17% of subsidies for 12% of users, and Chiyah 19% of subsidies for 17% users. These two regional districts, which have a rather high consumption profile, must nevertheless pay heavy charges due to power being supplied for less than fifteen hours a day. Three other regions receive subsidies greater than the size of their populations: Bikfaya, Keserwan, and Saida. Conversely, the poorest peripheral regions of Baalbek, Joub Jannine, Nabatieh, Sour, Tripoli, and Akkar-Minnieh receive proportionally 50% less than the share of users living there.

The least wealthy regions are dually punished as their consumption profile is very low and sometimes power is supplied for barely twelve hours a day, resulting in them receiving a smaller share of the subsidy compared to the number of users living there.

 
Thus, two mechanisms explain the unequal distribution of subsidies: A high level of power consumption—related to higher living standards, better developed economic activities, and more electrical devices being used—and inequalities in power rationing, which facilitate more continuous and therefore higher consumption. The least wealthy regions are dually punished as their consumption profile is very low and sometimes power is supplied for barely twelve hours a day, resulting in them receiving a smaller share of the subsidy compared to the number of users living there.
 
The results do not take into account power consumed by Syrian refugees, who place heavy pressure on public utilities on account of added power demand, sold at a price which does not reflect its production cost. A 2017 study by the Ministry of Energy with UNDP claimed Syrian refugees cost the national economy $330 million. However, most Syrian refugees live outside Beirut and therefore experience the same daily cuts as Lebanese in the same areas. Their average household consumption remains low, meaning they do not benefit more than other users from the subsidy mechanism described in this article.
 
In brief, there is a need to openly discuss how subsidies exacerbate geographical and social inequalities in Lebanon. These inequalities are sometimes justified on account of high levels of fraud and non-payment, which are supposedly higher in peripheral regions. However, there is very little data which shows that more fraud is committed in peripheral regions compared to central ones. Furthermore, since consumption levels are higher in the latter, the cost of fraud is likely higher than acknowledged in regions where fraud is reported in small numbers. In 2009 and 2011, former Energy Ministers Alain Tabourian and Gebran Bassil suggested rebalancing the distribution of electricity. The Council of Ministers refused to adopt this measure, arguing that an increase in the use of generators would no doubt lead to an increase in pollution in Beirut. One can think of other reasons, such as the fact that it is in EDL's interest to favor Beirut where, in comparison to other regions, there is a low level of fraud and therefore the company's revenue is assured. Nevertheless, the analysis presented here highlights the fact that each kilowatt-hour consumed in Beirut costs EDL and ultimately the state a considerable amount of money. In practice, each kilowatt-hour consumed amounts to giving away half a kilowatt-hour, which is a particularly costly gift in the capital, where its habitants are generally better off than the rest of the country. It is not certain that the country can still afford to subsidize electricity rates as EDL buckles under the weight of its debts—debts which current and future taxpayers will have to pay. All in all, it seems unjustifiable that the system's main beneficiaries should be those whose service is least affected.
 
The following link provides access to the study (in French) on which this article is based: <https://rumor.hypotheses.org/4273

[This article was translated thanks to the financial support of AFD to CERI-Sciences Po. It was originally published by the Lebanese Center for Policy Studies in September 2018.]

Past is Present: Settler Colonialism Matters!

On 5-6 March 2011, the Palestine Society at the School of Oriental and African Studies (SOAS) in London will hold its seventh annual conference, "Past is Present: Settler Colonialism in Palestine." This year`s conference aims to understand Zionism as a settler colonial project which has, for more than a century, subjected Palestine and Palestinians to a structural and violent form of destruction, dispossession, land appropriation and erasure in the pursuit of a new Jewish Israeli society. By organizing this conference, we hope to reclaim and revive the settler colonial paradigm and to outline its potential to inform and guide political strategy and mobilization.

The Israeli-Palestinian conflict is often described as unique and exceptional with little resemblance to other historical or ongoing colonial conflicts. Yet, for Zionism, like other settler colonial projects such as the British colonization of Ireland or European settlement of North America, South Africa or Australia, the imperative is to control the land and its resources -- and to displace the original inhabitants. Indeed, as conference keynote speaker Patrick Wolfe, one of the foremost scholars on settler colonialism and professor at La Trobe University in Victoria, Australia, argues, "the logic of this project, a sustained institutional tendency to eliminate the Indigenous population, informs a range of historical practices that might otherwise appear distinct--invasion is a structure not an event."[i]

Therefore, the classification of the Zionist movement as a settler colonial project, and the Israeli state as its manifestation, is not merely intended as a statement on the historical origins of Israel, nor as a rhetorical or polemical device. Rather, the aim is to highlight Zionism`s structural continuities and the ideology which informs Israeli policies and practices in Palestine and toward Palestinians everywhere. Thus, the Nakba -- whether viewed as a spontaneous, violent episode in war, or the implementation of a preconceived master plan -- should be understood as both the precondition for the creation of Israel and the logical outcome of Zionist settlement in Palestine.

Moreover, it is this same logic that sustains the continuation of the Nakba today. As remarked by Benny Morris, “had he [David Ben Gurion] carried out full expulsion--rather than partial--he would have stabilised the State of Israel for generations.”[ii] Yet, plagued by an “instability”--defined by the very existence of the Palestinian nation--Israel continues its daily state practices in its quest to fulfill Zionism’s logic to maximize the amount of land under its control with the minimum number of Palestinians on it. These practices take a painful array of manifestations: aerial and maritime bombardment, massacre and invasion, house demolitions, land theft, identity card confiscation, racist laws and loyalty tests, the wall, the siege on Gaza, cultural appropriation, and the dependence on willing (or unwilling) native collaboration and security arrangements, all with the continued support and backing of imperial power. 

Despite these enduring practices however, the settler colonial paradigm has largely fallen into disuse. As a paradigm, it once served as a primary ideological and political framework for all Palestinian political factions and trends, and informed the intellectual work of committed academics and revolutionary scholars, both Palestinians and Jews.

The conference thus asks where and why the settler colonial paradigm was lost, both in scholarship on Palestine and in politics; how do current analyses and theoretical trends that have arisen in its place address present and historical realities? While acknowledging the creativity of these new interpretations, we must nonetheless ask: when exactly did Palestinian natives find themselves in a "post-colonial" condition? When did the ongoing struggle over land become a "post-conflict" situation? When did Israel become a "post-Zionist" society? And when did the fortification of Palestinian ghettos and reservations become "state-building"?

In outlining settler colonialism as a central paradigm from which to understand Palestine, this conference re-invigorates it as a tool by which to analyze the present situation. In doing so, it contests solutions which accommodate Zionism, and more significantly, builds settler colonialism as a political analysis that can embolden and inform a strategy of active, mutual, and principled Palestinian alignment with the Arab struggle for self-determination, and indigenous struggles in the US, Latin America, Oceania, and elsewhere.

Such an alignment would expand the tools available to Palestinians and their solidarity movement, and reconnect the struggle to its own history of anti-colonial internationalism. At its core, this internationalism asserts that the Palestinian struggle against Zionist settler colonialism can only be won when it is embedded within, and empowered by, the broader Arab movement for emancipation and the indigenous, anti-racist and anti-colonial movement--from Arizona to Auckland.

SOAS Palestine Society invites everyone to join us at what promises to be a significant intervention in Palestine activism and scholarship.

For over 30 years, SOAS Palestine Society has heightened awareness and understanding of the Palestinian people, their rights, culture, and struggle for self-determination, amongst students, faculty, staff, and the broader public. SOAS Palestine society aims to continuously push the frontiers of discourse in an effort to make provocative arguments and to stimulate debate and organizing for justice in Palestine through relevant conferences, and events ranging from the intellectual and political impact of Edward Said`s life and work (2004), international law and the Palestine question (2005), the economy of Palestine and its occupation (2006), the one state (2007), 60 Years of Nakba, 60 Years of Resistance (2009), and most recently, the Left in Palestine (2010).

For more information on the SOAS Palestine Society 7th annual conference, Past is Present: Settler Colonialism in Palestine: www.soaspalsoc.org

SOAS Palestine Society Organizing Collective is a group of committed students that has undertaken to organize annual academic conferences on Palestine since 2003.

 


[i] Patrick Wolfe, Settler Colonialism and the Transformation of Anthropology: The Politics and Poetics of an Ethnographic Event, Cassell, London, p. 163

[ii] Interview with Benny Morris, Survival of the Fittest, Haaretz, 9. January 2004, http://cosmos.ucc.ie/cs1064/jabowen/IPSC/php/art.php?aid=5412