Improved Electricity Distribution in Lebanon Prompts Extension of MIGA Guarantees
WASHINGTON DC, April 29, 2019 – Following a successful run at improving electricity distribution in northern Lebanon, MIGA, a member of the World Bank Group, has extended its guarantees in support of the ongoing design, upgrade, maintenance and operation of an electricity distribution network in northern Lebanon.
The guarantees, amounting to $35.5m, are being issued to Butec Utility Services (BUS) equity holders Butec International Limited (Cyprus) and El-Sewedy Electrometer Egypt, against the risks of Breach of Contract, and War and Civil Disturbance.
The project, which also entails improved meter reading, bill collection and customer relationship management, is backed by the extension of a distribution support contract between the national utility Electricite Du Liban (EDL) and BUS for an additional four years.
“While much remains to be done in providing reliable and continuous power across Lebanon, we are pleased with the progress that has been made to date,” said MIGA EVP & CEO Keiko Honda.
The on-the-ground results so far have far exceeded the benefits estimated in 2013, the first phase of network improvement effort. Whereas 1.3 million people were expected to be reached through the initial project, some 2 million were reached by 2017. And where the distribution network was to span 10,000km, by 2017 the network was double that, at 20,000km.
Since its creation five years ago, BUS has expanded operations to cover 3,000km2, or 30 percent of the country, stretching from northern Beirut to the northern borders of Lebanon. BUS has already helped meet the needs of Lebanese consumers, reduced losses by nearly 50% and increased revenues for EDL.
The project is part of a longer-term World Bank effort to help reform Lebanon’s power sector, improve service delivery, and rationalize public expenditures through private investments.
Despite the achievements, Lebanon’s power sector remains a critical bottleneck in the economy and a drain on the state budget. Various operational and financial inefficiencies prevent EDL from being commercially sustainable on a standalone basis.
“MIGA’s continued support and intervention during difficult times played a crucial role in mitigating project risks and in enabling us to make tangible achievements in the Lot 1 area” said BUS General Manager Fady Abou Jaoude.
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war & civil disturbance; and offering credit enhancement to private investors and lenders.
Since its creation, MIGA has directly supported over $52 billion in investments for over 850 projects in 111 developing countries.
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