A Case Study of Public-Private Partnerships in Lebanon’s Power Sector: Do They Deliver?

Abstract

This paper explores Lebanon’s ongoing electricity crisis, exacerbated by the country’s severe economic crisis over the past five years. The electricity sector, which is central to any recovery plan, has long relied on public-private partnerships (PPPs) for both generation and distribution. Historically, PPPs have played a crucial role in bridging supply gaps, managing assets, and rehabilitating infrastructure. Despite this, Lebanon’s national utility, Électricité du Liban (EDL), struggles to meet demand, providing only 2-4 hours of power daily. PPPs, such as independent power producers (IPPs) and distribution service companies (DISCOs), are recommended to address the chronic supply shortage and inefficiencies in the grid. These partnerships offer the potential to leverage private expertise, enhance service delivery, and reduce reliance on Lebanon’s inefficient and polluting fossil fuel generation. However, the success of PPPs in Lebanon has been mixed, with concerns over unmet targets, subpar services and questionable performances. The research looks at different PPP contract types and projects, including concession contracts (e.g., Électricité de Zahlé), BOT contracts (e.g., Sustainable Akkar Wind Farm), PPA contracts (e.g., Karadeniz power barges), and O&M contracts (e.g., BUTEC Utility Services). In a country where political, regulatory and economic risks are high, the challenges of financing high-capital infrastructure projects amidst Lebanon’s defaults and weak sovereign guarantees further complicate efforts. Despite these hurdles, PPPs remain emphasized as a key policy option for addressing Lebanon’s electricity supply challenges and to foster economic recovery. This study critically examines this recommendation, its implications for Lebanon’s energy landscape, and its contribution to an equitable, sustainable and efficient energy future.