The drop in the international oil prices will greatly benefit Lebanon's electricity sector which has cost the country around half of its public debt over the past 30 years, Lebanese experts said.
Lack of electricity in Lebanon has been a problem for many years, as successive governments have failed to build power stations to solve the electricity problem in the country.
Instead, the government decided to buy electricity from the Turkish power barges docking off shore, which cost more than generating it on land.
In recent years, the budget deficit of Lebanon's state-run electricity company Electricite Du Liban's (EDL) has ranged between 1.5 billion U.S. dollars and 2 billion dollars per year, depending largely on oil prices in international markets.
Losses in the country's electricity sector are also blamed on the government policy adopted in 1994, whereby electricity tariffs were fixed on the basis of the then oil price of 16 dollars per barrel.
"Lebanon today has a historic opportunity to adopt a new formula which would oblige citizens to pay an electricity bill that changes according to the international oil prices," Patrick Mardini, president of the Lebanese Institute for Market Studies, told Xinhua.
"This would spare EDL any losses and save the government from further deficit in its balance of payments," Mardini said.
U.S. West Texas Intermediate futures fell 7.97 percent on Monday to settle at 26.08 dollars per barrel, while international benchmark Brent crude futures dipped 3.1 percent to 33.05 dollars per barrel.
Mardini explained that the government did not adopt this formula earlier lest people should complain since oil prices were high in the past few years.
Majdi Aref, a senior policy analyst at the Lebanese Institute for market studies, told Xinhua that the drop in international oil prices will allow the Lebanese to enjoy longer hours of power supply.
Demand on electricity has increased in the past years following the influx of more than 1 million Syrian refugees from the war-torn country.
Currently, Lebanon's electricity supply capacity is only 1,500 megawatts while the demand exceeds 2,700 megawatts.
Aref explained that Lebanon was supposed to witness around 17 hours of power cut this year because citizens cannot afford their electricity bills given their dire economic conditions.
"But since oil prices have dropped and the government has allocated 1 billion dollars for EDL this year, we are not supposed to be witnessing severe power cuts," Aref said.
In addition, the drop in the oil prices will increase revenues of the government from petrol which is fixed at 23 dollars per 20 liters, he noted.
Meanwhile, Nassib Ghobril, head of the economic research department at Byblos Bank, believes the government should not have imposed a floor on petrol prices because citizens would have benefited from the drop in oil prices and spent their money on other needs.
However, Ghobril noted that the drop in international oil prices will reduce Lebanon's import bill since hydrocarbons make up around one third of the country's imports.
"This is positive because when the import bill drops, we witness positive changes to the balance of payments and foreign currency reserves of the central bank," he explained.
This is also an opportunity to reform the electricity sector by allowing the private sector to generate electricity.
"The government must decentralize production and allow the private sector to generate electricity," he noted.
Editor:Cherie
