Cablegate: Lebanon: Energy Minister Not Eager for Privatization,

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DE RUEHLB #1415/01 2731341
ZNR UUUUU ZZH
R 291341Z SEP 08
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 3183
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RHEHAAA/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 02 BEIRUT 001415

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STATE FOR NEA/ELA
STATE PASS USTR
TREASURY FOR MNUGENT AND SBLEIWEISS
USDOC FOR 4520/ITA/MAC/ONE
NSC FOR ABRAMS/RAMCHAND/YERGER/MCDERMOTT

E.O. 12958: N/A
TAGS: ECON EFIN PREL PGOV LE
SUBJECT: LEBANON: ENERGY MINISTER NOT EAGER FOR PRIVATIZATION,
PERCEPTIONS OF CORRUPTION RISING (ECONOMIC WEEK IN REVIEW, SEPTEMBER
22 - 28, 2008)

CONTENTS
--------

-- ENERGY MINISTER NOT EAGER FOR PRIVATIZATION, WORKING ON NEW
TARIFF STRUCTURE
-- LEBANON FALLS IN 2008 CORRUPTION PERCEPTION INDEX
-- NATIONAL COMPAIGN FOR ENVIRONMENTAL PROTECTION LAUNCHED
-- MOBILE PENETRATION RATE REACHES 33.1 PERCENT IN FIRST HALF
OF 2008
-- SAUDI ARABIA GIVES $44 MILLION TO SUPPORT PUBLIC SCHOOLS
-- PUBLIC WORKS MINISTER ANNOUNCES TRANSPORT PROJECTS IN
LEBANON-SYRIA BORDER REGION
-- ITALY GIVES 5 MILLION EURO GRANT FOR NAHR EL BARID
RECONSTRUCTION

ENERGY MINISTER NOT EAGER FOR PRIVATIZATION
WORKING ON NEW TARIFF STRUCTURE
--------------------

1. (U) At a two-day workshop on electricity in parliament on
September 15-16, Minister of Energy and Water Tabourian said that
the best option to solve electricity problems would be continuing
state ownership of the power sector, which is of "strategic
importance," and corporatization of national utility Electricite du
Liban (EDL), pushing it to operate as a private sector company.
Tabourian does not want to include the private sector in current
electricity reforms because he believes private companies will
insist on earning huge profits when selling electricity to EDL.

2. (SBU) In a September 26 meeting with AID Director and EconOff,
Tabourian explained his progress on developing a new tariff
structure, which would reduce GOL subsidies and rationalize
consumption by charging higher rates to the biggest consumers of
electricity. While he had run into a few technical issues, he said,
he would have a plan soon, and was working on building the political
consensus to push the plan though. Finance Minister Chatah told the
Embassy he expects the new tariff structure to save the government
more than $250 million a year.

LEBANON FALLS IN 2008
CORRUPTION PERCEPTION INDEX
--------------------

3. (U) On September 23, the Lebanese Transparency Association (LTA)
held a press conference, simultaneously with Transparency
International's Headquarters in Berlin, to announce the results of
the 2008 Corruption Perception Index (CPI). According to the
survey, Lebanon ranked 102 out of 180 countries, down from 99 in
2007, and 11 out of 20 MENA countries, in terms of perception of
corruption. The index measures the perception of corruption
estimated by public officials and politicians, and focuses on
corruption in the public sector, defined as an abuse of official
power for private interests.

4. (SBU) LTA's co-executive director Khalil Gebara told us on
September 25 that he has not received any feedback from the media or
private and public sector following the announcement. Gebara
believed this was because the public was not surprised and expected
such results, adding that people were disappointed nothing is being
done to combat corruption.

NATIONAL COMPAIGN FOR ENVIRONMENTAL
PROTECTION LAUNCHED
--------------------

5. (U) On September 22, Minister of Environment Antoine Karam, in
collaboration with the UN Development Program (UNDP), launched the
National Campaign for Environmental Protection to raise awareness on
environmental issues. The campaign will feature a series of
billboard and television advertisements starring the current Miss
Lebanon, highlighting ecological damage in the country and costs of
environmental degradation. UNDP resident representative Marta
Ruedas announced that the Ministry of Environment, as the designated
National Authority for the Clean Development Mechanism of the Kyoto
Protocol, has granted UNDP permission to proceed with the Millennium
Development Goals (MDGs) Carbon Facility, a mechanism for the
development and commercialization of emission reduction projects.

BEIRUT 00001415 002 OF 002

MOBILE PENETRATION RATE REACHES
33.1 PERCENT IN FIRST HALF OF 2008
--------------------

6. (U) According to the Arab Advisors Group, Lebanon's two
state-owned mobile operators added 81,266 new subscribers to their
services in the first half of 2008, or a 6.7 percent increase from
the end of 2007. By the first half of 2008, the mobile penetration
rate reached an estimated 33.1 percent. This compares with an 86.6
percent penetration rate in Jordan and 79 percent in Tunisia in the
first half of 2008. Because of high prices and poor service, the
Lebanese mobile market is still below its true potential, the study
noted, and stressed that liberalization should strongly enhance the
market's growth and encourage competition.

SAUDI ARABIA GIVES $44 MILLION
TO SUPPORT PUBLIC SCHOOLS
--------------------

7. (U) During a meeting with PM Siniora on September 20, Saudi
Ambassador Khoja announced that Saudi Arabia would give Lebanon a
$44 million grant to support public school students in Lebanon. Out
of the grant, $20 million would be allocated to cover tuition fees,
$20 million for books for public school students from kindergarten
through grade nine for the 2008-2009 academic year, and $4 million
for the National Council for Supporting Public Schools. Siniora
noted that during each of the two previous academic years, Saudi
Arabia had given Lebanon a $20 million grant for public school
students.

PUBLIC WORKS MINISTER ANNOUNCES TRANSPORT
PROJECTS IN LEBANON-SYRIA BORDER REGION
--------------------

8. (U) Press reported that Minister of Public Works and Transport
Ghazi Aridi visited the northern areas of Akkar and Abboudieh near
the Syrian border on September 25, where he discussed the
rehabilitation of the Abboudieh road and of a train track linking
Tripoli to the Syrian border. These projects would allow easier
access for Lebanese goods to Syria and Arab markets more generally.
Aridi said that Lebanon had signed a contract with a Syrian company
for the track rehabilitation, and that there were discussions with
the Kuwaiti Fund to provide the $33 million in financing necessary
to complete the projects.

ITALY GIVES 5 MILLION EURO GRANT
FOR NAHR EL BARID RECONSTRUCTION
--------------------

9. (U) On September 23, President of the Council for Development and
Reconstruction (CDR) Nabil Jisr signed an agreement with Italy for a
five million Euro grant for the recovery and reconstruction of the
Nahr el Barid camp and its surrounding areas. According to the
Italian Embassy in Beirut, this grant, pledged at the Vienna
Conference in June, comes in addition to Italy's contribution
already channeled through UNRWA and UNDP.

GRANT

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