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WEEKLY NEWSLETTER
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Lebanon
Index
There were widespread problems confronting the power and
refining industries in the mid-1980s. The two industries are
closely related because Lebanon relies primarily on oil-fired
stations for electricity. By 1984 approximately 71 percent of the
country's electric power output came from oil. Although the
overburdened power stations suffered continual maintenance
problems, the country managed an impressive recovery in this sector
following the 1975-76 fighting.
Before the Civil War, eleven major power stations, linked in a
common distribution network, supplied most of the country's
electricity. In 1974 Electricity of Lebanon (Electricité du Liban--
EDL), the state power organization, produced 1.7 billion kilowatthours of electricity, while smaller power companies produced a
further 296 million kilowatt-hours. In this period, 41.5 percent of
power was hydroelectric.
Heavy fighting in 1976 damaged several thermal power stations
and transmission lines, so that hydroelectric power accounted for
70 percent of the country's total power output of 1 billion
kilowatt-hours that year, 2.25 billion kilowatt-hours in 1980, 2.4
billion kilowatt-hours in 1982, and 2.8 billion kilowatts-hours in
1983. But this impressive increase masked severe strains on the
system.
Israeli strikes against southern Lebanon in July 1981 damaged
the Az Zahrani refinery, which provided fuel for Al Jiyah, the
nation's biggest power plant. Electricity had to be purchased from
Syria, but by then this was not a serious problem because most of
the major Lebanese and Syrian power grids had been united under a
project launched in 1977. Lebanon's ability to import electricity
from Syria proved especially important after the 1982 Israeli
invasion. During the invasion and siege of Beirut, the lines from
Al Jiyah were completely cut. On several occasions after that,
fighting in the Israeli-controlled area interrupted power
transmission. At the end of 1983, all eight high-tension lines
connecting the Al Jiyah and Litani power stations (at Jun and Sadd
al Qirawn) with the national grid were out of service. The Zuq
Musbih power station, located north of Beirut, had to fill the gap,
but the supply had to be rationed.
Lebanon had long sought to expand power generation capacity.
The European Investment Bank financed the installation of three 60-
megawatt units at Al Jiyah and two 125-megawatt turbines at Zuq
Musbih under a 1977 program. A 1981 expansion program, assisted by
the European Community (EC), achieved additional increases in
capacity at both stations. In late 1985, Austria agreed to finance
construction of a new 75-megawatt steam turbine power station south
of Tripoli. The plants, however, were frequently overloaded in the
mid-1980s, especially when even one of them was out of service.
Constant operation of the Zuq Musbih plant during troubled times in
the south meant that regular maintenance could not be carried out.
EDL estimated in 1986 that the annual cost of meeting Lebanon's
electricity demand for the next 7 years would be US$150 million. It
was not clear where this money would come from. Throughout the
Civil War, EDL had suffered from financial problems and had found
it difficult to collect current and overdue payments from its
customers. Illicit tapping of power lines cut into revenues, and
the transmission and distribution system badly needed updating.
Nonetheless, EDL continued to supply power to most of the country
most of the time.
The government's problems in financing oil imports caused
problems for the country's petroleum refineries at Tripoli and Az
Zahrani. Oil supplies came primarily from Iraq and Saudi Arabia,
but deliveries were erratic, coming sometimes by pipeline,
sometimes by ship. Political considerations forced the line from
Iraq to close in the early 1970s. The latter reopened but closed
again in 1981. The Saudi Trans-Arabia Pipeline (Tapline) to Az
Zahrani closed down in the mid-1980s.
Deliveries by ship posed problems. Refineries seldom had more
than a few weeks' supply in stock and they had often only a few
days' supply. The oil storage tanks in the East Beirut suburb of
Dawra caught fire on at least two occasions in the 1980s during
clashes. Some petroleum and products, however, entered the country
through the illegal ports.
The Az Zahrani refinery, owned by a United States consortium,
the Mediterranean Refining Company (Medreco), a joint venture
between Mobil and Caltex, suffered from Israeli assaults and from
its exposed position in Al Janub Province. It was on the fringe of
Syrian-controlled territory and did not enjoy the protection of
UNIFIL troops stationed nearby. Operating conditions of the
refinery, located in guerrilla-held territory, were already
difficult but became untenable as the area switched from
Palestinian to Israeli control in 1982. The flow of oil from Saudi
Arabia was constantly interrupted, largely because the Lebanese
government failed repeatedly to pay its oil bills promptly. After
years of problems, the company ended operations on September 30,
1986, handing over its assets to the Lebanese government without
compensation.
In 1973 the Lebanese government had nationalized the oil
refinery at Tripoli, formerly owned by the Iraq Petroleum Company
(IPC). But unlike many Third World nationalizations, this move did
not reflect any change in the country's fundamentally capitalist
approach to business in general and foreign investment in
particular. It was administratively necessary after Baghdad had
nationalizated the much more important IPC installations within
Iraq itself and after Syria had taken over IPC's trans-Syrian
pipeline and terminal at Baniyas, Syria. IPC disputed the Tripoli
takeover, and the Lebanese government offered compensation. The
matter was referred to arbitration but remained unresolved in the
late 1980s.
The Tripoli Oil Installation, as the new state concern was
called, comprised a 35,000 barrel per day
(bpd--see Glossary)
refinery and a small spur of the old IPC pipeline through Syria.
Until 1976 Iraqi crude continued to reach Tripoli via the refinery
and was used primarily to meet domestic oil requirements. Normally,
the refinery met about one-third of the country's gasoline
requirements and about half of its other fuel needs. But in 1976,
the Iraqis ceased pumping crude to the main Syrian export terminal
at Baniyas and thus halted direct supplies to Lebanon. With the
start of the Iran-Iraq War in September 1980, the pipeline was
reactivated. Although Lebanon reached an agreement with Baghdad in
November 1981 to reactivate the Tripoli spur, the deal collapsed
when Syria announced the following April that it would not allow
Iraq to use the pipeline. The Iraqis agreed, instead, to pipe 3,000
bpd of crude to Dortyol in Turkey and then ship it to Tripoli by
tanker. Heavy fighting between rival Palestinian groups in late
1983 badly damaged the refinery. It was not until August 1984 that
repairs were completed and production was resumed at an initial
rate of 20,000 bpd. Iraq again agreed to provide crude by tanker,
and between 1984 and 1987 the refinery ran on varying mixtures of
Iraqi and Saudi crude.
Data as of December 1987
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