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Cablegate: Lebanon: Severe Power Cuts and Increased Gas And

VZCZCXRO9918
RR RUEHAG RUEHBC RUEHDE RUEHDF RUEHIK RUEHKUK RUEHLZ RUEHROV
DE RUEHLB #0896/01 1680500
ZNR UUUUU ZZH
R 160500Z JUN 08
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 2268
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLETIVE
RHEHAAA/NSC WASHDC
RUEATRS/DEPT OF TREASUY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS SECTON 01 OF 02 BEIRUT 000896

SENSITIVE

SIPDIS

STATE FOR NEA/ELA
STATE PASS USTR
TREASURY FOR MNUGENT AND SBLEIWEISS
USDOC FOR 4520/ITA/MAC/ONE
NSC FOR ABRAMS/SINGH/YERGER/DEMOPOLOUS

E.O. 12958: N/A
TAGS: ECON EFIN PREL PGOV LE
SUBJECT: LEBANON: SEVERE POWER CUTS AND INCREASED GAS AND
TRANSPORTATION PRICES HIT CITIZENS (ECONOMIC WEEK IN REVIEW, JUNE 9
- 15, 2008)

CONTENTS
--------

-- CONTROVERSY BETWEEN FINANCE MINISTRY AND POWER COMPANY LEAD TO
SEVERE POWER CUTS
-- GAS PRICES REACH RECORD HIGH, PUBLIC TRANSPORT FARES ALSO RISE
-- FINANCIAL INSTITUTE DISCUSSES PLANS FOR IPR TRAINING PROGRAM,
SEEKS U.S. ASSISTANCE
-- ARAB INVESTORS AWAIT 2009 ELECTIONS TO MOVE ON MEGA PROJECTS
-- GOL AND THE FOOD AND AGRICULTURAL ORGANIZATION LAUNCH THREE
PROJECTS VALUED AT OVER $6 MILLION
-- HOUSING PROJECT IN TYRE AIMS AT REDUCING FISHERMEN
IMMIGRATION
-- FITCH'S INFLATION VULNERABILTY INDEX RATES LEBANON AS SECOND MOST
VULNERABLE IN MENA REGION
-- LEBANON FALLS IN COUNTRY CONNECTIVITY SURVEY

CONTROVERSY BETWEEN FINANCE MINISTRY AND
POWER COMPANY LEAD TO SEVERE POWER CUTS
--------------------

1. (U) It is expected that power outages will be reduced in
frequency after Finance Minister Azour approved opening $140 million
Letters of Credit for fuel imports for national power utility
Electricite du Liban (EDL). Azour indicated that EDL is using power
cuts to put pressure on the GOL and Treasury to settle its fuel
bills as EDL suffers from chronic deficits. Azour believes poor
management and maintenance are causing power cuts.

2. (SBU) Meanwhile, EDL Chairman Kamal Hayek told us June 12 that
EDL had to impose severe power cuts that reached four hours in
Beirut and 9-12 hours in other regions daily as of last week because
of shortage in fuel and gasoil reserves. He said he warned Azour in
writing about the shortage in oil reserves two weeks ago and urged
the opening of L/Cs for oil imports. He rejected Azour's public
statements that increased power rationing was not due to shortage in
fuel/gasoil, but to problems in production and in programming oil
imports. Power cuts are expected to drop starting early next week
as fuel/gasoil tankers unload in storage tanks.

GAS PRICES REACH RECORD HIGH,
PUBLIC TRANSPORT FARES ALSO RISE
--------------------

3. (U) The Ministry of Energy and Water raised the prices of 20
liters of gasoline by slightly over one dollar on June 11, so that
the price of 95-octane is $21.2 per liter and the price of 98-octane
is $21.8 per liter. Private sector economic and business officials,
as well as member of the labor and agricultural sectors have
expressed their concerns on the effects of this rise on production
and how it will affect the most recent increase in the minimum wage.


4. (U) Even before the most recent hike in gas prices, the Ministry
of Transportation raised the fares of public transportation (buses
and shared cabs) by around 33 percent, effective from the first week
of June.

FINANCIAL INSTITUTE DISCUSSES PLANS
FOR IPR TRAINING PROGRAM, SEEKS U.S. ASSISTANCE
--------------------

5. (SBU) On June 12, Econ staff met with the head of the Financial
Institute, Lamia Moubayed, to discuss ways Post can assist in
implementing a one to two year training program at the Institute for
Customs officers on IPR enforcement. Working in collaboration with
the Brand Protection Group (BPG) -- an association of leading local,
regional, and international manufacturers and distributors aimed at
combating counterfeiting -- the Financial Institute hopes to use the
skills and experience of those that post has already sent on IPR
training, as well as bringing U.S. IPR experts to train local
officers and improve IPR enforcement. In addition, Moubayed made a
strong pitch for a U.S. expert to assist in engineering the program.


ARAB INVESTORS AWAIT 2009 ELECTIONS
TO MOVE ON MEGA PROJECTS
--------------------

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