BEIRUT: The World Bank considered the main challenge facing Lebanon’s electricity sector is gaining the trust of consumers as the sector suffers from inadequate supply and a low-quality service, and is dependent on informal private generation that is outside any state supervision, as reported by Lebanon This Week, the economic publication of the Byblos Bank Group. It noted that consumers have little faith in the system and want to see concrete results on credible action.

First, it recommended a more effective and simplified tariff structure. It said the current tariff structure was regressive and would not shield the poor from any future tariff hikes. Also, the inverted tariff block was not progressive because it subsidized all households and effective kilowatt prices differ markedly from the quoted prices, particularly for low-electricity-consuming households.

Second, it advised authorities to keep in mind the priorities in implementing policy measures. It said the burden from the deterioration in Electricité du Liban’s (EdL) services has increased significantly for consumers, despite the fact that the cost of electricity purchased from EdL has remained relatively low.

But it noted that increasing tariffs to cost-recovery levels without improving services would be met with resistance, as consumers must feel that the burden of reform is not placed entirely on their shoulders but rather shared with EdL.

Third, it urged cutting down on electricity rationing, especially in the areas outside Beirut that experience long blackout hours. It said this measure would readjust the rationing burden from the poor to the non-poor.

It noted that keeping rationing in the capital to a minimum gives rise to social inequities, as Beirut households have higher welfare levels and can afford to pay for expensive substitutes, while most households in other regions must choose either to go without electricity or spen significant amounts on private generation.

Fourth, it recommended establishing operating guidelines for the informal electricity sector, which provides up to 30 percent of Lebanon’s electricity and is indispensible to many households.

It noted, however, that the sector lies entirely outside the legal framework and that the sector does not pay taxes to the state. It urged authorities to identify proper operating guidelines that would protect and benefit consumers, while ensuring continued availability of this alternative source.

It advised establishing guidelines to bring private generator businesses into the formal sector that would provide customers with a recourse for losses or damages caused by suppliers, that would allow the state to tax the sector like other businesses, and that would set technical standards for service.