PowerChina officials met with representatives of the Lebanese Ministry for Energy and Water to discuss constructing two 500-megawatt power plants in northern and southern Lebanon.
The search for investors in Lebanese power plants has resembled a complex soap opera rather than political reality. Tenders were made and cancelled for Deir Ammar power plant, north of Tripoli, by Cypriot, Spanish and German firms, Future Movement MP Ghazi Youssef said in an interview with Executive magazine in 2015.
Work on the Deir Ammar power plant has been stalled ever since. There was a minor breakthrough in May when the Lebanese cabinet agreed to change the current “engineering, procurement and construction contract” to a “build, operate and transfer contract” but Deir Ammar’s future remains unclear.
Sepco, a subgroup of PowerChina, was interested in Deir Ammar but “refused to sign some of the conditions, saying it could not be done,” Youssef said. Now, PowerChina is back and interested in new assets.
“PowerChina is very likely to sign a contract to build two new 500-megawatt power plants, which would be sufficient to cover Lebanon’s energy deficit,” a source said.
Such a deal would be significant progress for Lebanon’s energy sector. The country has suffered from electricity shortages since the end of the civil war in 1990. Residents of Beirut are often without electrical power for three hours day. In some regions, blackouts last up to 12 hours.
Building more fossil fuel-burning power plants may be the best solution to the energy crisis, especially if oil can be substituted with relatively clean-burning natural gas. Offshore oil and gas exploration began this year but won’t yield short-term results. Progress is also blocked by the Central Committee of Generator Owners, a powerful syndicate for which the energy deficit provides a lucrative income.
Eliana Ibrahim, president of the China Arab Association for Promoting Cultural and Commercial Exchange, is an advocate of allowing diesel operators to have a stake in local power plants. “The answer is simple. The Lebanese government should give shares in the new power plants to generator owners. Without incentives, nothing is achieved,” she said.
“PowerChina has three conditions before investing,” Ibrahim said. “First, it wants a guarantee from a global institution, such as the World Bank. The World Bank’s commitment was pledged during the CEDRE conference, so this shouldn’t be a problem. Second, it needs safety for its workers, which is dependent on regional security. “
“The third condition is that the investment will make a profit. PowerChina’s experience in Saudi Arabia has been very profitable; it successfully made a $3 billion deal to develop a port owned by Aramco. PowerChina have the resources to provide 100% investment in the new power plants but it wants a local partner who could provide up to 20% of the funding. It is very important that Lebanon shows local commitment.”
The Arab Weekly