- The Policy Practice (TPP) (lead institution)
- American University of Beirut (AUB)
- Harvard Kennedy School
Lebanon is infamous for corruption in its energy sector. It’s utility – Electricité du Liban (EDL) – is one of the worst performing and most loss-making utilities in the region, largely due to pervasive corruption. Extensive blackouts force consumers to use local private generators – but these are owned by a private ‘mafia’, hugely increasing costs for consumers. However, in the town of Zahle, the local community managed to collectivise supply and push out the generator owners, dramatically reducing corruption, lowering costs and producing 24/7 electricity. This project will explore how this was possible, the role of local women’s groups in fighting for and sustaining this reform, the impact on their lives, and the extent to which this innovation might be replicable in other cities in Lebanon.
Why the electricity sector?
During the 2006-2013 period, transfers to Electricité du Liban averaged 4.4 percent of GDP each year, or 55 percent of the country’s fiscal deficit during those years; Lebanon’s debt-to-GDP ratio would have been 87.8 percent instead of 143.1 percent if the utility had not made these losses. Corruption and inefficiency in the public utility, created the market for private generators. However, corruption in this private market (primarily through the exclusion of local competition) means that this service is extremely high cost – the revenues of private generators are estimated at USD1.7 billion (or 4 percent of GDP). Electricity still ranks as the most binding constraint to doing business in Lebanon. Indeed, Lebanon scores as the second worst country in the world in terms of quality of electricity supply in the 2014-15 World Economic Forum’s Global Competitiveness Index. The World Bank estimates that the stifling of investment caused by dysfunctionality and corruption in the sector costs the economy USD 4 billion for each 1000 MWh not supplied.
The research project
This study has the potential to find institutional innovations that might overcome the deeply ingrained political economy challenges in the electricity sector in Lebanon, that in turn could have a transformational impact, both fiscally and by reducing costs, enabling longer-term growth by Lebanese businesses.
The research will use a qualitative comparative approach from two locations, Zahle and Tripoli. A strong gender lens will be applied in the research method and will focus on two aspects – one linked to energy and economic agency and the other linked to political mobilisation.
The aim is not to devise an anti-corruption strategy per se, but to uncover and understand the one that was devised by Lebanese actors and assess the extent to which it could be scaled up as a response to national level corruption.
This research project is one of nine projects from our grants scheme that aim to tackle corruption in the private sector. Read about the others here.