Egypt was supposed to supply Lebanon between 150 MW and 450 MW of electricity this month, but the plan has been delayed by the Egyptians.

Energy and Water Minister Alan Tabourian said that Egypt gave no explanation for the delay in the delivery of electricity.

The minister also said that Egyptian gas deliveries scheduled to begin in September of this year would be delayed to January 2008.

Said stressed that Lebanon cannot wait indefinitely for natural gas and electricity from Egypt and proposed instead buying Liquefied Natural Gas (LNG) from Qatar or Algeria.

"We are talking about an investment of nearly $200 million only to build terminals to receive LNG from tankers. The government could have built these terminals three years ago instead of wasting all that time," Said added.

He said that LNG would reduce the energy bill by 30 percent but added that Lebanon still needed to build more power plants to meet growing demand.

At present, Lebanon spends close to $1.5 billion each year to cover the losses of EDL.

Said said the government is no longer capable of investing in the electricity sector because of the high budget deficit. He urged the government to involve the private sector in the construction of new power plants.

The president of the Association of Banks in Lebanon, Francois Bassil, has proposed a plan to transfer production and distribution of electricity to the private sector, while transmission would remain with EDL. Bassil says the plan would reduce the losses of the company.

Bassil's plan, which was submitted to a parliamentary committee, also calls for the formation of a regulatory authority, whose mandate would be to establish a supervisory framework and to set production standards and specifications for quality and sustainability, as well as pricing guidelines.

He indicated that government spending on the electricity sector totaled 17 percent of budget and Treasury primary expenditures during the past 5 years compared to 3.7 percent of such expenditures during the 1997-2001 periods.

Bassil said that public expenditures on the electricity sector are currently equivalent to 4 percent of GDP, compared to 1 percent of GDP during 2001-02.

He noted that the deterioration of the finances of EDL is not just related to the rise in global energy prices, but is linked to a number of factors such as weak administrative and technical infrastructure, rampant theft of electricity, and the inadequate state of production plants across the country.

Bassil's plan also call on the authorities to grant long-term concessions for distribution, fee collections and investment to qualified entities, with each concessionary required to offer between 25 percent and 30 percent of its shares to the public.

"Concession firms will then buy the related installations and assets from EDL based on valuations determined by market prices. The next step would be for concessionaries to buy power from production plants at prices based on formulas set by the regulatory authority and determined according to international standards," Bassil said.

He added that such prices would be reviewed every three to six months to account for changes in the cost of energy. -Daily Star