COVID-19 Measure: Read Full Magazine Here. Lebanon’s power sector serves as one of the most flagrant examples of the consecutive cabinets’ failures to locate and implement solutions. It has cost the Lebanese government an estimated $2 billion yearly and a total of 45% of National debt, all while the country still lacks 24/7 power supply.
The failure has created frustration at the popular level, and proposed plans are criticized by a cross-section of political parties and energy experts.
The deal was refused by the Central Inspection Board for its lack of transparency and was also refuted by two big political parties which were represented in the cabinet, the Lebanese Forces and the Progressive Socialist Party (PSP).
The latter prepared a comprehensive study about the sector and its rehabilitation projects and presented it to the cabinet in 2018. It considered that “any attempt to resolve this crisis must commence through drastic reform steps in the electricity institution and the sector. Investment in the sector without reform is futile and will lead to additional squandering of funds.”
The party proposed several steps, beginning with appointing a new board of directors for Electricite du Liban (EDL).
“The possibility of creating two new electrical power plants with the capacity of 500 megawatts each is possible and can be put into service in June 2020,” said power expert Mounir Yehia who participated in drafting the PSP plan in 2018.
It called for “expanding the spread and adoption of alternative (renewable) energy and its distribution to the Lebanese consumer through the exchange of energy with the network and correct billing based on modern systems instead of the current Net Metering and customs exemption of imported equipment for this purpose.”
In electricity, an initial reduction of 50% of losses in 2018 through the commitment to address technical and non-technical losses and the implementation of administrative reforms are essential to revive the electricity sector. Commitment to achieve financial balance by the beginning of 2020 by reducing the total electrical losses (technical and non-technical) from the high level (50%) to no more than 12% must be an attainable goal, the PSP plan stated.
Electricity will remain a hot topic for the new government. Analysis presented in the year 2018 is still valid in line of the continuous failure in the implementation of unrealistic sector plans during 2018-2020. The Lebanese population and the international agencies and communities were chocked when the new Lebanese government announced the adoption of the same electricity plans. No reforms were adopted despite the continuous pressure by CEDRE and international agencies (WB, EU, and other funding agencies)
Lebanon will seek $10bn to $15bn in external financing and officially devalue its currency by half by 2024 in an effort to address the deepest financial crisis in its history, according to a leaked government plan.
The government will seek "massive external financial support to backstop the economy, made conditional upon the implementation of a comprehensive recovery plan able to restore confidence and reverse the current trends," the plan says. "It is difficult to imagine Lebanon coming out of such a deep crisis without the support of the international community at large."
However, it is important to remember that Lebanon was supposed to implement a series of reforms to unlock $11bn in soft loans that were pledged to Lebanon by the international community at the CEDRE donor conference two years ago, mostly for infrastructural projects, but the country never did that.
Additionally, the global economic downturn triggered by the coronavirus pandemic has pushed nations to look at their own needs first, making generous aid pledges to Lebanon less likely to happen.
Considering all above evidence, it's worth noting that the BUSINESS LIFE reporter had the opportunity to meet with the reputable Dr. Mounir Yehia and uncover the following valuable information about Lebanon and about the Near East Engineering & Development Services company (NEEDS.)
Dr. Mounir Yehia is a former Professor at the American University of Beirut, former Chairman of the Electrical Engineering Department (1986-2000), former member of the Board of Directors of the Lebanese Electricity Company (1992-1997, 2000-2002), and former Advisor to Abu Dhabi Water and Electric Authority leading the digital transformation of ADWEA and affiliated companies: ADDC, AADC, ADSIC, and others (2000-2011).
Dr. Mounir is the author of two unique books and has supervised several advanced research programs at AUB, MIT (Massachusetts Institute of Technology -Boston), and the Lebanese National Research Council. He has more than 70 papers published in international Journals and Conference Proceedings.
Dr. Yehia is the Founder of the "Digital Utility" Model, presented at the largest utility platform in Europe in the year 2000 for the transformation of the Electric and Water Utilities for the 21st century.
Dr. Yehia initiated and directed a number of unique programs in regional utilities: Power System Planning and Analysis, Geo-spatial modeling of network infrastructure, distribution control and management centers, large scale implementation of smart metering, energy storage facilities, demand-side management programs, utility information technology applications, and the transformation of public and private enterprises to the digital environment.
Dr. Yehia is an active consultant in the development of integrated national planning and policy programs, deregulation and restructuring of power and water utilities, utility bench-marking platform, radical outsourcing of electricity utility services to private sector, energy and distribution management systems, smart grid strategies, and energy efficiency programs,
Dr. Yehia is known as an Advisor to high level decision makers, directors, and managers in the development of business vision, the recommendation of re-engineering and transformation programs, the enhancement of the decision making process, the analysis of investment policies, and the execution of benchmarking studies. His academic and professional backgrounds had a considerable impact in topics related to the evaluation of asset operations, the identification of asset reinforcement programs, the strengthening of capacity building programs, and the integration of modern economic principles and financing models within the utility business environment.
Dr. Mounir was directing, over his 30 years of experience, a portfolio of projects exceeding 5 billion USD. He is one of the top 5% most viewed LINKEDIN profiles worldwide for the year 2012 as noted by Senior Vice President Deep Nishar.
Dr. Mounir Yehia is currently the Chairman of the Near East Engineering and Development Services company and was leading the management of a unique program in Lebanon and the middle east region (2010-2016): radical outsourcing of electricity utility distribution services to the private sector. The program “Distribution Service Provider” included building the first large scale Smart Grid by rolling out 1.2 million smart meters to cover all the customers of Lebanon, integrated with the re-engineering of distribution networks, and introducing the comprehensive utility benchmarking platform (the program was not completed due to full absence of proper governance of the power sector).
Established in 1997, Near East Engineering and Development Services (NEEDS) is a pioneer consulting and engineering company providing advanced digital and smart solutions and services to its clients, especially in educational technology. NEEDS is committed to lead the Digital Transformation of the business in the 21st Century towards an overall business sustainable environment with ultimate professional integrity.
NEEDS provides engineering consulting services in the fields of energy systems and electrical and water networks serving the Middle East market’s needs.
NEEDS was awarded The Trophy “Grand Prix Du Public” at Smart Grid Paris - 2014 on June 11, 2014.
BL: How is it possible to achieve radical outsourcing of the electricity utility distribution services to the private sector? Why?
Dr. Mounir Yehia: Two major problems are known to most in the distribution utilities in the region: the high technical and non-technical losses, and the absence of defined KPI for the quality, cost, and sustainability of the services. These problems are associated with financial constraints facing the policy makers in this sector. The radical outsourcing of technical and commercial activities of the distribution services to the Private Sector opens a great opportunity to modernize the sector by introducing proper planning programs and advanced metering technologies, building IT platform, and achieving a breakthrough in the overall operational and service environment at no cost to the utilities. The consistent reduction in losses will be enough to finance the required projects . NEEDS was able to achieve remarkable results in loss reduction in several Arab utilities and lately in the Muscat Distribution Electricity Company.
BL: Do you agree with the position announced by all previous ministers of Water and Power that the only solution available is leasing gigantic power-generating ships instead of constructing new power plants?
Dr. Mounir Yehia: No. The Power generating ships were part of a temporary solution proposed in the 2010 policy paper. First, the ministry did not develop a mixed plan for temporary power such as ships, distributed power rental facilities, renewable energy and others..., Second, the ministry used the temporary solution as a permanent solution. Lebanon paid around $1 bn for the ships to produce electricity over the last seven years without gaining any new generation facilities. Instead, the country should have been able to own 1000 MW generation capacity since the year 2015 and for the next twenty years. Moreover, the prices that were paid for the ships per KWH, the energy production management, and the sales require to be investigated. The ships were being paid 5.8 cents/KWH which was then reduced to 4.9 cents/KWH while a price of 2.5 cents/KWH should have been reached by 2015.
BL: As summer approaches, higher load is expected on the electrical network, with increasing demand and less supply, what is the solution to this recurring dilemma?
Dr. Mounir Yehia: The solution is simple. Lebanon can get 500 MW distributed power rental facilities to be connected to at least 20-30 HV/MV substations and manage more than 500 MW of available distributed generation at peak time which will lead to 20-22 hours of supply for the coming two-three years. At the same time, Lebanon can build different types of generating capacity, including renewable, to reach a continuous power supply. However, Generation is just one component of the power sector technical pillar. In parallel, the financial, institutional, and legal pillars should be developed to reach the sustainability of the sector’s operation and development.
BL: What about Smart Grid?
Dr. Mounir Yehia: Smart Grid is a reality. Lebanon has a golden opportunity to put in place a pragmatic program and build a smart grid in 2 years. In this case, the sector would become self-financed and would cease its debt impact on the fiscal budget. The new totally transformed sector would include less centralized generation, more microgrid components of the most efficient energy mix (with substantial solar facilities), direct generation at the household and municipality levels, Net-dual metering process, full flexible transmission networks, efficient distribution services, and robust load management programs. In brief, a high reliability and quality of supply at a minimum cost with positive impact on the overall economic development of the country.
BL: What about Digital Utility?
Dr. Mounir Yehia: Digital Utility is the backbone for the smart transformation of the power sector. The Digital Utility transformation aims at reducing capital investment, increasing operational efficiency, maintaining high quality of services, and adopting the business-driven approach.
The development of a solid digital platform provides a broad mirroring of the physical assets, comprehensive modeling for the physics of the electricity and water flow, and enterprise vision to the business environment. The mirroring process must be dynamic in time and must be able to replicate any changes and new developments in the business reality into the digital environment - independently of the assets’ scale, operational changes, and business processes. The achievement of the Digital Utility is the key success factor to face the sustainability challenge in an investment-intensive environment such as the utility business.
With digital utility, the sector governance, KPI compliance, competition, and transparency become the daily bread of the utility business environment.
BL: What about E-Learning Services and Solutions in the era of COVID-19 and for the future?
Dr. Mounir Yehia: E-Learning services and solutions are considered to be one of the fastest-growing knowledge-based industries and are the most influential on education and corporate training across the globe. Accordingly, NEEDS established a business track of e-Learning that aims at transforming the existing learning practices and strategies via utilizing state-of-the-art technology standards and learning models.
NEEDS’ work over 25 years includes remarkable achievements in the digital transformation of the utility business. It was then natural to expand on developing the digital transformation into the education sector. Since 2017, NEEDS initiated a comprehensive R&D Program and was able to develop a solid platform (Source) for e-learning and overall school transformation into the digital age. The knowledge and experience acquired by NEEDS were used to put the educational digital transformation on track with emphasis on the technology from one side and the process implementation from another side whereas teachers and students are the key owners of the process.
SOrCE “Smart Oriented & Constructive E-learning” solution is the first product of NEEDS. It provides enterprise e-Learning solutions and services and creates dynamic online learning experiences to facilitate digital transformation of the traditional classroom learning environment.
One of NEEDS’ latest related projects is the Training Management System (TMS) at The Center for Educational Research and Development (CERD) which strengthened the evaluation of the pre-service and in-service training for all teachers and invested in national and international assessment studies to support decision-making, improving the quality of education in general and the evaluation of learners in particular.
Also, NEEDS announced the launching of LEARNIT as the first online training Program for Brevet and Baccalaureate official examination to be freely provided for teachers and students. Currently, more than 1000 active users are daily working on the system.
BL: What are the solutions to Electricity pylons that are seen in the city of Sidon in southern Lebanon?
Dr. Mounir Yehia: The Electricity sector is currently characterized by a chaotic environment: The private generators are illegal, however, the ministry of electricity and water (MEW) is issuing monthly guiding tariff for them and the ministry of economy is cooperating with them.. Also, the concessions are being terminated but a special law is being developed to outsource Zahle’s previous concession which will end soon. Aley’s concession is still operating by a temporary committee. Requests are raised everywhere for a regional-based generation company to cover areas such as the South, Jounieh, or others. In brief, a confused institutional, administrative, and management environment “supporting” or “serving” a large-scale corruption at all levels.
The solution is simple: Governance is needed. Fixing EDL is the priority.
BL: Lebanon's power sector serves as one of the most flagrant examples, what were your contributions as power expert in drafting the PSP plan?
Dr. Mounir Yehia: The power sector is a manipulated sector at all levels: technical, financial, institutional, and legal. It serves the full domination of ministerial political Interests over the sector . An “excellent” pipeline for securing financial and service interests of political decision-makers.
The PSP took an advanced initiative on February 2018 by organizing a full day seminar with “Friedrich Ebert Stiftung” where a large number of technical, financial, legal, and political experts participated, with the contribution of MEW. Important papers were presented during the workshop and were integrated into the program of the PSP. My paper included full study of the sector’s losses and the incremental increase of the national debt in the last 30 years based on a comprehensive technical and financial analysis of the sector.
I did participate in many workshops with other political parties, academic institutions (Issam Fares Institute at AUB), and social civic organizations (IC Alumni, Civic Influence Hub, and others). Since 2016, after ending our contractual obligations, I to did approach, in a constructive matter, all stakeholders of the sector (meetings with the President, PM, ministers) to alarm them of the drastic increase of the losses in the sector and the expected catastrophic results by the year 2020 – which eventually happened.
BL: Is it impossible to restore economic prosperity in Lebanon soon? Why?
Dr. Mounir Yehia: Yes. The October 17th revolution is a breakthrough. Change is coming.
Governance, elections, and other objectives of the revolution are going to drive the new generation to change. Large numbers of political, financial, and business players’ names will disappear. In my experience as an ex-AUB Professor for 14 years - where I dealt directly with more than 1000 students - and consultant - where I worked with more than 500 Lebanese engineers and economists - I fully believe in the young generation building a totally different Lebanon.
BL: Is it true that corruption and a 10-year economic slump had led to an acute shortage of United States dollars?
Dr. Mounir Yehia: Can you imagine that around 50 % of the debt is coming from the power sector? The reason is the corruption on all fronts starting from the decision-making process and ending with the provision of the last service provided to the customer. All my friends and bankers were surprised with my persistent negative analysis of the situation since 2016. I had a complete analysis showing that the power sector and the corruption in major sectors will end with the collapse of the Central Bank by 2020. All my speeches (over 20 presentations) ended with the same slide: Investment and Operation without reforms will lead to losses and collapse ending with an ‘explosion’ / a crime.
BL: What are your comments on the status of the Lebanese banks that have imposed informal capital controls to limit US dollar withdrawals and keep foreign exchange from fleeing the country? What are the circumstances? What are the solutions?
Dr. Mounir Yehia: I hold the Bankers, specially Blom and Audi, highly accountable for their continuous involvement in financing the Central Bank and the Government, and therefore the theft. Yes, they failed to say NO, and they failed to protect the depositors. I am fully surprised that Bankers like Mr. Naaman Azhari are accepting the situations that the Lebanese people are facing. In my case for example, I am struggling to transfer the minimum living expenses to my daughter studying abroad. Moreover, at the time when we were offering free services in e-learning, we were unable to transfer the annual fee of 2000 USD for companies such as Microsoft and Apple in order to keep the service online. This situation is more than a mistake, it is a crime. The crime is growing by keeping the exchange market in the mess that it is in with three different exchange rates for US dollars. In addition, the non-regulated process of dollar withdrawals and transfers are also creating a new dirty business. It seems like the crime is becoming more organized.
Yes, solutions are available. First, we must collectively acknowledge that a crime took place and transparently identify its main players: politicians, the Central bank, and the Bankers. Afterwards, returning the stolen funds would be the first step, followed by transparent transformations of Lebanon’s governmental systems (parliament, cabinet of ministers, judicial system etc..).
BL: What is your opinion on the banks' loans to the government and the private sector? Is there little hope of having these loans being repaid on time or in full?
Dr. Mounir Yehia: The prime accountability falls on the Government. However, the Central Bank (CB) is also responsible for its continuous support to fulfill the budget deficiencies, and indirectly finance the corruption, and pipe the money to political forces specially in major ministries (Electricity, Water, Telecommunications and others) At the time when we were expecting to hear an objection (2010-2019), we were given enough arguments that the CB is in strong position to protect the Lebanese pound and the depositors’ money. Bankers also share a considerable responsibility by allowing the CB to abuse the savings of their customers – mainly the Lebanese population. I have personally raised several alarming concerns to the banking sector about the incremental increase of the public sector’s losses, specifically the power sector. It is an isosceles triangle of responsibility: Politicians are at the top edge while the Central Bank and the Bankers are at equal distances on the two other edges.
Yes, the repayment is possible when these three partners fill in the financial gap they have created. This should be monitored by a strong governing system. Otherwise, a national tribunal, the revolution itself, will take care of it.
BL: Prime Minister Hassan Diab has pledged to protect 90 percent of the country's depositors, most of whom have relatively small accounts, what is your view?
Dr. Mounir Yehia: Prime Minister Diab must keep in mind that the main reason of having him in power is the revolution. The complementary reason is a group of politicians. PM Diab is a scientist and must know that when the main reason / ‘foundation’ falls, ‘the whole building collapses’. The depositors are not part of the above triangle and therefore should not be asked to take the responsibility. They are the victims and not the criminals. I hope that PM Diab will take a strong decision to protect all the depositors excluding the accounts of the triangle edges. I hope – knowing PM Diab personally - that he will not shift the triangle of responsibility into a square and be positioned at the fourth edge.
BL: Lebanon was supposed to implement a series of reforms but never did. How is it possible to make it happen?
Dr. Mounir Yehia: Reforms signify the stop of the piping of the financial resources to the decision-makers and political layers. Are you asking the criminal to turn himself in? Did you ever hear - in the history of all countries - of a gang or mafia that surrendered itself to the law especially when it is protected by the regime itself? The sectarian composition of the country continues to protect the worse criminal practices against the Lebanese population. They stole our parents’ wealth, confiscated our present lives, and are still planning to take over the future of our kids.
To achieve a radical change, the Lebanese population with all its components shall continue the revolutionary path towards building a civic country with a well-defined governance for the operating systems, a highly productive economy, and a fair social policy.
BL: What are your most recent plans for NEEDS and future challenges?
Dr. Mounir Yehia: NEEDS has stopped its activity in the power sector in Lebanon as it is not able to operate with the current high-level corrupted environment. NEEDS will hence only continue working in other Arab countries. For NEEDS, the future challenge is to motivate the utilities to continue developing their digital platform towards building the smart utility business environment with an innovative self-financed transformation process.
