Lebanon moves forward with $250M World Bank loan to reform power sector

3^min

Report by Bassam Abou Zeid, English adaptation by Mariella Succar

Billions of dollars have been spent on Lebanon’s electricity sector, yet the country still suffers from a lack of reliable power. The World Bank has repeatedly called for reform due to mounting financial losses and has required a set of changes as a condition for providing a development loan.

Several of these reforms have been implemented or are underway. Électricité du Liban (EDL) has completed four key measures: raising electricity tariffs, calculating the cost of revitalizing the sector, establishing a mechanism to convert funds from Lebanese pounds to U.S. dollars, and conducting a financial audit covering 2020 to 2022.

The most significant reform—currently being led by the Ministry of Energy—is the appointment of an independent regulatory authority. The World Bank considers this step essential for generating financial returns, which EDL has not seen in decades.

In September, the World Bank approved a $250 million loan for Lebanon’s electricity sector. The loan became available for implementation on April 23, following its signing by Finance Minister Yassine Jaber during the IMF and World Bank Spring Meetings.

Jaber noted that the World Bank’s approval process for the loan differs from that of the IMF, which has separate requirements and procedures.

The loan will fund several electricity-related projects, including the construction of solar power plants capable of generating 150 megawatts in the Baalbek-Hermel region.

These projects will be awarded through tenders that must meet World Bank standards.

Additional components include the development of a new transmission network, the creation of a control center for smart meters, and the reconstruction of the electricity distribution control center that was destroyed in the Beirut Port explosion.

These efforts aim to reduce technical losses, which currently account for an estimated 15% of unbilled electricity.

Lebanon has a timeline of three to five years to complete the project. The World Bank will provide ongoing oversight, disbursing funds in phases contingent on verified progress. EDL will be responsible for repaying the loan.