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The above does not mean anything. The road is long and excessive optimism is out of place. It is true that the companies with which the Ministry contacted responded to their request and expressed their initial desire to cooperate with the Lebanese state to establish power plants, while submitting initial offers. However, these offers did not take into account the country’s financial situation and emerging risks, according to the Minister of Energy. This makes it possible to fear serious amendments that may occur or even explode them, knowing that he did not know if this interest still exists, after information circulated in the ministry about the withdrawal of the Ximens companies.
What delayed the Council’s approval of the memorandum of understanding was not the dispute over its content. Minor adjustments were made to the non-binding document for its signatories, but what happened was that the dispute moved to the starting point. Where will the factories be built? If the electricity plan indicated three places: Al-Zahrani, Deir Ammar and Salata, the government ministers refused to manage the Selata plant. It was also noted that “the French informed Foreign Minister Nassif even that the approval of the electricity plan relates to the construction of two electricity production plants, confirming the futility of establishing the Silata plant, which establishes a additional cost that is not in accordance with the current reality of the state.
In fact, the Silata plant fell out of the plan yesterday, and the government decision called for implementation of the plan, after the Energy Ministry submitted a report on the outcome of the negotiation with the companies, “beginning with Al-Zahrani and completing according to plan. ” That determines, if the negotiations reach a positive result, that the first laboratory will be built in Al-Zahrani, with the possibility that the “Deir Ammar 2” plant will be offered next, in the event that the current obliging company, which you have difficulties to secure the necessary financing for her, decide to retire. The Silata plant should be the last group, if revived.
It is worth noting here that the electricity plan that the Council of Ministers suggests it is implementing has been flown in practice, as it signals the start of works on “Deir Ammar 2” in 2019, while the construction of the Al-Zahrani and Salata factories in 2020. As a result, work on “Deir Ammar 2” has not started, and work is not expected to start on any of the factories this year. The Minister of Energy announced that communications with companies may take three more months. Although it may take months to prepare the condition book, sign contracts, insurance and financing.
As a result, initial bids submitted resulted in some data being collected, including:
The value of the loans that can be guaranteed according to the EPC + F formula (establishment of the factory for the benefit of the state and obtaining financing for it) ranges from 80 percent to 85 percent of the value of the project, always that the state secure the remaining value (previously Rome announced the priority of seeking full financing for the laboratory due to the current situation and the state’s inability to finance).
Financing … highlighted the challenges in building factories
Loan payment insurance guarantees by the Ministry of Finance (this was before the financial and monetary collapse).
Reliance on heavy HFO can hamper the ability to obtain loans, requiring serious research into obtaining natural gas to operate the plants, otherwise the option will be to adopt the more expensive diesel.
In the past, Al-Akhbar previously revealed correspondence by a Chinese company with the Prime Minister and the Energy Ministry, and the Energy Minister confirmed that there is a Chinese interest in investing in power plants. He noted that the Ministry contacted the Chinese ambassador on April 2, regarding China’s previous interest in financing projects to establish factories through Chinese companies specialized in factory construction in accordance with the EPC + F formula (the government turned the BOT page after realizing the difficulty of getting any investor into long risks.) Term in an unstable country, add that this type of contract takes a long time to implement). The Chinese embassy has responded by stating that the China Foreign Contractors Chamber will be contacted to provide a recommendation to relevant Chinese companies that they can cooperate with the Lebanese state to establish factories and secure necessary financing under conditions similar to the rest of the countries, where the loan will be repaid within 10 to 20 years with an interest not exceeding 2.5 percent. The Minister of Energy also indicated that there are two modes of financing, one that requires sovereign guarantees and the other that does not require these guarantees, but rather with different conditions that are determined and discussed at that time.
For this, the approved Memorandum of Understanding (6 pages), in its introduction, establishes that its objective is “to define possible areas of cooperation between the ministry and the company to develop energy production projects in Lebanon and to define a timetable and a action plan necessary to implement these projects after they are duly approved. “
The period of this memorandum was set at six months, except in the case of the development of negotiations, provided that its scope includes the required technical objectives that lead to the construction and operation of the factories, knowing that the signing of this memorandum does not constitute a obligation for the ministry or company to enter into the project contract, unless the parties agree to that. In writing or entered into a binding contractual relationship. This note also does not prevent the Ministry from entering into discussions with any third party.
