Tripoli based Libyan Prime Minister, Abdel Hamid Aldabaiba’s public outburst against the General Electricity Company of Libya (GECOL) during Saturday’s Cabinet meeting and the return of lengthy power cuts and the unexpected blackout - raise many questions about the sector and Aldabaiba’s policies and management.
As Aldabaiba said in the Cabinet meeting, broadcast live, Libyans had presumed that the matter of electricity shortages was indeed behind them. This, as Aldabaiba pointed out, after billions were spent by his government on the sector and Libya experienced three-years of relative stability in power supplies.
However, power stations are part of a wider circle beyond extra money, equipment, maintenance and new or improved power stations.
A guaranteed supply of fuel to power stations
For one, power stations depend on stable fuel supplies. The supply of their fuel is the responsibility of the National Oil Corporation (NOC).
The discovery of new, or the development of existing oil and gas fields and their network of supply pipelines to power stations, is the responsibility of this government through its NOC. These fuel supply developments take several years to implement and need to be planned years ahead.
The Aldabaiba government needs to ensure that the NOC has enough funds to invest in new fuel discoveries to ensure that future fuel supplies to power stations are guaranteed. It is pointless to spend billions on power stations – as Aldabaiba has done - if they cannot be fed with fuel.
Gas exports to earn dollars or gas for power generation?
Aldabaiba is also faced with the dilemma of having to make the difficult political and economic decision on gas exports to Italy. He must decide whether he is to continue to export at the same rate to earn much needed hard currency for spending on a plethora of other sectors, including food imports and preserving the exchange rate of the dinar – or reduce gas exports to generate enough electricity?
Pricing and rationalisation of consumption?
Another issue that is part of the wider circle and that must be considered is the rentier-social contract dynamic regarding the pricing and consumption of electricity in Libya.
Electricity is heavily subsidised and its price is ridiculously low. Libyans expect to be supplied with electricity - and at cheap prices.
Libya’s rentier-social contract dynamic
This expectation is part of a wider rentier-social contract dynamic. Successive governments have failed to improve standards of living and supply ‘public goods’ including good education, healthcare, public transport, value-added industries and productive jobs.
Post the 2011 February revolution, governments have failed to supply basic state institutions including safety and security, availability of cash at banks, a strong local currency and direct flights to most countries, for example.
For example, an average house in Libya pays about LD 75 per month (£ 7.50) or LD 900 (£ 90) per year. This subsidy is unsustainable and disincentivises rationalisation of consumption. This lack of incentivisation to reduce consumption can easily be seen when driving about in Tripoli through the number of lights turned on in average stores or fruit and vegetable shops. This, despite the government hiking the tariff for commercial consumers and installing prepaid electricity meters.
More subsidised electricity generation encourages more consumption?
There is also a case for saying that the more electricity Libya seems to generate (about 10,000 MW) at these consumer prices – the more its population seems to consume. This so-called induced demand theory suggests clearly the well-known fact that the current retail price is not right. This, especially as the standard of living has quickly improved for most Libyans while the price of electricity has remained very low.
Is Libya’s electricity crisis a problem of mismanagement?
However, many of Libya’s neighbouring states, of equal or much lower GDPs or GDP per head, seem to be able to maintain more stable power supplies. Why has Libya then failed to get a grip of its electricity supply issue? This may suggest the problem is one of management - or mismanagement or governance - and not of money or the post-war effects of the 2011 revolution?
The need to seriously expand the use of renewables
Another matter that Libya cannot afford to continue to ignore and kick into the future, is the serious adoption of renewables. It beggars belief and seems totally counterintuitive that Libya has not heavily invested and adopted the use of renewables. This falls squarely on the shoulders of the Aldabaiba government.
Was Aldabaiba deflecting blame for the power cuts crisis?
Finally, it must be asked: was Aldabaiba being disingenuous in his public outburst during the broadcast cabinet meeting?
Was he fully aware of GECOL’s warnings about the possibility of power cuts and thus the real causes of the power cuts and the blackout? Was he shocked by Saturday’s sudden total blackout and, panicking in anticipation of a public onslaught, decided to deflect blame and throw GECOL under the bus?
Hopefully, the head of GECOL will get over the shock of being publicly lambasted and the fear of being sacked and make a public statement to clarify the facts.
Time will tell, but some hard decisions need to be taken by the Aldabaiba government beyond simply continuing to throw hard currency money at the electricity generation crisis – money desperately needed in many other sectors.
The provision of electricity is a necessity for development of many of Libya's other sectors and a very low need on Maslow's hierarchy of needs. Libya cannot truly progress if the basics are not in place. It needs to move beyond basic provisions to start to seriously think about and develop alternative sectors to hydrocarbons.
Power provision is a basic of economic diversification. It needs to be sorted out as soon as possible to the extent that we take it for granted again.
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