Lebanon considers dollar payments for electricity amid ongoing challenges

The caretaker Prime Minister, Najib Mikati, swiftly adjourned the Cabinet Committee meeting on electricity at the Serail on Monday.

The session remained undecided on the KALLES electricity ship, which docked off the Zahrani power plant since Friday. The vessel, which has incurred a daily charge of $18,000 due to its unloaded cargo, remains a pressing issue for Lebanon's finances.

The postponed session is now rescheduled for the upcoming Monday, potentially exacerbating the incurred losses. Until then, Lebanon will incur at least $126,000 as a penalty for the vessel's sea stoppage instead of the previously agreed upon seven days.

Additionally, the cost of the cargo, amounting to $29 million, will be factored in, with funds available in the Electricité du Liban (EDL) 's account, albeit in Lebanese lira. There is a dispute over converting it into dollars due to the limited currency availability from the BDL.

During the session, the General Director of EDL, Kamal Hayek, proposed collecting electricity fees in dollars to avoid potential disputes, given that all the institution's payments are in dollars.

According to LBCI's sources, a study is being prepared within the next two days, which will be presented to the Consultations and Legislation Commission at the Justice Ministry for approval.

It is worth noting that two articles in the Monetary and Credit law and Consumer Protection law prohibit such a conversion and require clarification.

EDL will suggest allowing collection in dollars or giving consumers the choice to pay in either dollars or lira at the same value.

However, EDL has approximately $45 million in its account at the BDL in lira. A week ago, the institution submitted a letter to the bank's clearing department requesting converting the amount to dollars, estimating it at $37,252,000. The collection process continues at a good pace.

EDL believes that collecting fees in dollars can reduce demand for dollars and dry up the lira market. It hopes the BDL will reciprocate the intention by converting the amount to dollars, allowing it to function effectively.

There are clear benefits from EDL's perspective, aiming to achieve a financial balance between production costs and collected fees, which remain in lira.

The question remains whether a swift decision to collect fees in dollars will alleviate concerns for all parties involved: BDL, EDL, and even citizens paying the same value in dollars.

The need for bold decisions extends to other domains, including collecting fees in dollars, unless there's an intention to undermine EDL at the expense of generators and beneficiaries, who might be tied to cartels and companies importing oil derivatives.