Lebanon’s Independent Electricity Regulator: Avoiding the ‘Political Economy Trap’
- Ali Ahmad, Mounir Mahmalat, Jamal Saghir
The looming prospect of a complete blackout in Lebanon is rare for a middle-income country. It is in this dire context that electricity sector reforms become indispensable. Chief among these reforms is the creation of an electricity regulatory authority (ERA), an independent institution asked with regulating the sector, particularly the supervision of contracts for electricity production and distribution with private companies. In this brief, however, we argue that the present-day financial, economic, and social crises risk plunging the creation of an ERA into a ‘political economy trap.’ A hastily created ERA, established just to please the international community, can be subjected to an elusive elite-level arrangement that will likely undermine its independence and value as an impartial regulator. The institution would be held hostage to the same mechanisms of rent generation and distribution among elites that have undermined the effectiveness of many other existing regulatory authorities. That way, an ERA would ‘trap’ citizens and the international community in what would be little more than a continuation of the status quo in a more palatable institutional arrangement. Consequently, we recommend that policymakers push for the establishment of an independent ERA as part of a vision for the entire governance of the electricity sector.
Mounir Mahmalat
Former Senior Researcher at LCPS
Jamal Saghir
is Professor of Practice
at the Institute for the Study of
International Development at
McGill University, Montreal; Senior
Fellow at the Payne Institute,
Colorado School of Mines; and
Distinguished Fellow for Economics
and Development at the American
University of Beirut. He is an
expert in International Finance,
Economic Development, Energy,
and Infrastructure, with over 25
years of experience at the World
Bank, where he was Director for
Energy, Transport, and Water
from 2000 to 2010.