Electricity of Lebanon trades in fuel! Phalanges

Amal Khalil wrote in Al-Akhbar newspaper:

EDL has always justified the rationing of limited quantities of fuel oil to operate factories. Despite this, the Corporation sells part of the fuel at a time when the fees and taxes owed by it are not paid for importing fuel, and the purchase fees are not included in its budget.

On September 25, the General Directorate of Investment in the Ministry of Energy and Water received the response of the General Director of the Electricity of Lebanon Corporation for his accountability for “repaying the status of the delivered oil products” to him. Hayek’s response came in response to the Customs Directorate’s request from the Energy and Water Ministry, through the Ministry of Finance, to “take the necessary measures to settle the derivative status and pay the fees and taxes owed by the corporation.”

Since 2005, the Cabinet has allowed the Ministry of Energy to import fuel shipments, for its own account, as required by the Corporation, under purchase contracts signed between suppliers and the Ministry and administered by the General Directorate of Oil. According to the customs book, the shipments dating back to the period between 2010 and 2019 “were consecutively entered under special permissions issued by customs, provided that the data of the consumption status therein would be organized, and the various fees incurred by them would be paid by the institution within a specified period of time”.

In his response, Hayek acknowledged the late payment of duties and taxes on imported fuels. But he confirmed that his institution “had previously organized data on the consumption status of all those shipments and paid a large part of the total amounts owed.” In a remarkable step, he demanded either that “customs determine an acceptable installment mechanism to be able to pay the remaining part due to the enormity of the sums, or that the Ministry of Finance should deduct the remaining amounts directly from the total dues owed by public administrations and institutions in exchange for their contributions to the electricity supply.” He stressed that the institution “is fully prepared to settle the status of the remaining sums as soon as it informs that one of the concerned authorities has adopted either of the two options.”

Thus, the institution that is the most costly to the state is seeking from the state itself to install the fees and taxes due on it or deduct it from the allowances due on electricity consumption for public administrations and institutions, in contradiction to the provisions of the Public Accounting Law that prohibits set-off between liabilities and revenues. Note that the share of the Lebanon Electricity subsidy from the public debt, according to treasury advances between 1997 and 2020, amounted to about $ 34.5 billion, according to the former Director General of Investment at the Ministry of Energy, Ghassan Baydoun. In addition to the costs of building laboratories, developing networks and acquisitions, the burdens of consultants for drawing up and developing plans, and consultants’ fees for setting up books of conditions, supervision, expressing opinions and evaluating proposals (…), to reach about $ 40 billion. And with the imputed interest, this share rises by an additional $ 10 billion. Where do the billions of subsidies go in light of harsh rationing and the ongoing crisis in providing fuel? The most dangerous thing in the contradiction between Customs and the Corporation regarding the presentation of status data for local consumption is that Hayek confirms in his book that he organized these data, while the customs says, “We asked the institution to provide the required customs transactions in payment of special permits whose goods have been withdrawn, and no status data for them have been organized in their regard. In addition, the payment of duties and taxes is not exempt from submitting the customs declaration regarding goods.

The suspicion of waste is reinforced by the custom established by the Corporation to sell its fuel to the oil installations and to the Qadisha Electricity Corporation (privately managed), while it complains of a lack of fuel to operate the plants. In a book dating back to June 2018, the Oil Facilities Administration in Zahrani and Tripoli sent a letter to the Minister of Energy: “Please agree to deliver 6 thousand metric tons of fuel to us from Lebanon’s electricity, and we are ready to pay its price in cash after its cost is determined by the General Directorate of Oil as well. Usual”. The Minister at the time, Cesar Abi Khalil, agreed, before the corporation agreed and received the fuel from the vessel “Havania Victoria”, in the amount of four thousand metric tons, to the Zahrani plant. Does the institution have the power to sell?

An official source in the “Electricity of Lebanon” explained to “Al-Akhbar” that “Lebanon Electricity applies in this regard the instructions of the Minister of Energy, whose approval is made and the price is collected with his approval.” However, where do the sales allowances go if the institution’s rules of procedure do not provide for this type of imports? “I asked the same question without getting an answer,” Baydoun said, referring to a review he made in this regard when he was general manager of investment months ago. Given the pace at which the organization operates, the funds are likely to be unknown. As the audit offices “are still auditing the accounts in 2012 amid a lack of data, including an inventory of fuel stocks and movement, or inconsistencies in data, as occurs in power ships that register two counters, the first for the operating company and the second for the state.”

Regarding the proposal to install or deduct the dues, Baydoun emphasized that the state’s contributions to the corporation are much greater than the bills due to it from public administrations. “Hayek’s priority is to pay the fees of energy contractors in dollars, with the support of the Central Bank of Lebanon, while the payment of state dues is postponed.”