INTRODUCTION
For more than five years, power cuts and total electricity blackouts have been a prevailing feature of Libyans’ daily life. Depending on the time of the year, power cuts range from four hours to over fifteen hours a day. The peak is the summer season as most houses in Libya have air conditioners because of the hot weather, which subsequently overburdens the half-functioning power system in the country.
To a greater extent than other public services, the continual disruption of the electricity service in Libya has devastating consequences for the Libyan economy. In a survey by the World Bank in 2020, almost 70% of the companies surveyed reported power cuts as either a major or severe constraint to their company’s growth, surpassed only by macroeconomic instability as the most frequently reported constraint to businesses in Libya. Reliance on an obvious substitute for grid electricity – diesel generators – is hindered by two factors.
First, diesel is in short supply across Libya, only available in the black market at a much higher price.
Second, many small companies cannot afford sufficiently large generators or the cost of regularly buying diesel from the black market, which makes such an impact disproportionate, affecting poorer people and businesses significantly more.
Beyond the economy, the power cuts disrupt other essential public services such as water supply and healthcare. Libya’s capacity to generate and transmit electricity has deteriorated considerably over the last decade.
Libya has 15 power plants with a combined power generation capacity of 10,400 megawatts (MW). However, for a multitude of reasons, this full capacity is never reached. For instance, in summer 2020, the peak load was 7,500 MW while the available power generation was only 3,800 MW, resulting in 18 hours of power cuts per day.
In non-peak times, these power plants generate 4,351 megawatts of electricity, around 43% of its full capacity. In addition, among the 63 power stations spread across the country, 23 are not functional.
This is met with an extremely high consumption of electricity by Libyans. On average, Libyans consume three times more than their neighbors in Tunisia and Egypt: 4.8 MWh per year per capita, as opposed to 1.3 and 1.7 for Tunisians and Egyptians, respectively. Such a high consumption rate is partly a result of the highly subsidized electricity tariffs and the government’s inability to bill and collect these tariffs from users and institute a progressive tariff framework.
These policy and infrastructural failures have resulted in a power grid that fails to meet demand at the best of times and occasionally shuts down entirely According to Libya’s nationwide service provider, Libya will need 11,134 MW by 2025, more than twice its current de facto power generation. When considered with the political and security environment in Libya, a total collapse to the electricity system in the country is not impossible. This situation is the outcome of several intertwined factors.
First, the continuous state of conflict in the country has resulted in substantial damage to the sector’s infrastructure, shutting down several power plants and stations completely. For instance, the Southern Tripoli power plant, which has a power generation capacity of 659 MW, generated zero megawatts during 2020 due to the war in Tripoli.
Furthermore, the lack of security led to the departure of many foreign experts on whom Libya is heavily reliant, given the lack of local expertise, which undermined the maintenance of the power plants and stations. Due to the absence of security, the electricity network has suffered from an increasing number of acts of vandalism and theft, especially of conductors, wires, and other electrical equipment.
Second, beyond the impact of the conflict and the general security situation, the electricity sector suffers from deeper issues that stem from how the sector is institutionally organized and regulated.
Despite significant funds allocated by all post-2011 governments, institutional and legal bottlenecks have stalled necessary reforms and strategic investments in the sector, perpetuating or intensifying existing challenges. This policy paper unpacks these institutional and legal challenges and proposes practical policy recommendations for the sector.
INSTITUTIONAL AND OPERATIONAL CHALLENGES
The electricity sector is run by a single, nationwide service provider: the General Electricity Company of Libya (GECOL).
GECOL is a state-owned enterprise that was established in 1984. With a total of more than 45,000 employees across the country, it is in charge of the entire electricity system, from power generation, transmission, and distribution to maintenance of grids and power plants, as well as operational and policy planning and development.
In other words, GECOL has a total monopoly over the electricity industry in Libya. GECOL is governed by a government appointed Board of Directors and a General Assembly that is chaired by the Prime Minister. Despite appointing 35 ministers covering almost all affairs that can be possibly managed by a government in Libya today, the Government of National Unity did not designate a ministry for the electricity sector.
For the past two decades, the sector had only two short-lived ministries in spite of the successive governments in Libya that continually expanded the number of ministers in each cabinet. The first was the Ministry of Electricity, Water, and Gas, which was established in 2007 but abolished shortly after in 2009, and then the Ministry of Electricity and Energy, which was established in 2012 and dissolved in 2016.
Since then, the sector has had no designated administrative body, which has left the sector with no direct supervision from a sector-specific governmental entity. GECOL currently reports directly to the government cabinet, which has neither the technical knowledge nor the organizational structure to provide adequate oversight. Given the growing political salience of the power cuts issue, recent governments have allocated a considerable amount of money to the electricity sector.
The fact that the sector has neither a designated ministry nor an independent technical agency leaves the government exposed to the political pressure of a few people in positions of influence. This has led to ill-informed decisions and policies and the obstruction of necessary reform efforts. For instance, in 2009, when the Ministry of Electricity, Water, and Gas was dissolved, the process of unbundling GECOL – breaking it into smaller companies to improve service delivery and accountability – was suspended shortly after.
GECOL, and by extension the entire sector, is controlled by GECOL’s CEO, GECOL’s Board of Directors, and to a much lesser extent, GECOL’s General Assembly, which rarely meets. Despite the government’s huge spending in the sector, the electricity situation in Libya has only deteriorated over time. Over the past ten years, GECOL has reportedly received approximately twenty billion Libyan dinars (4.39 billion USD)
Nevertheless, the electricity supply in the country was almost halved between 2017 and 2020 alone. This drastic drop is due to a number of reasons, some external to the electricity sector and others caused by institutional arrangements and failures. External reasons refer to the general political instability and security situation. The political divide and the subsequent legitimacy crisis of who controls what between the different rival governments undermined these governments’ ability to exert any pressure on GECOL or perform any kind of oversight on its operations and paralyzed any potential for reform in the sector.
Internal reasons stem from how GECOL is set up and operates. Many power plants and stations regularly go offline because of a lack of periodic maintenance, constituting a major reason for the decline in the power supply. Among several other factors, GECOL does not have a tracking system to periodically repair equipment, which means that maintenance is only performed when equipment breaks down.
This practice causes regular disruptions to the network, further damaging the power system. GECOL also has no automated system in place to turn off street lights during the day and turn them on during the night, resulting in considerable electricity waste. Additionally, GECOL is hugely overstaffed. While it currently has more than 45,000 employees, it only needs 14,000 employees, indicating a workforce that is more than three times as large as necessary. As such, a significant amount of government funding goes to salaries rather than essential investment in rebuilding the power infrastructure or improving GECOL’s overall effectiveness.
Although Libya has a specific governmental agency tasked to promote and implement renewable energy projects in the country, Libya currently gets none of its electricity from renewable energy sources. In its 14 years of existence, the Renewable Energy Authority of Libya (REAOL) has failed to exploit Libya’s considerable solar energy potential. This is because REAOL has neither the regulatory power to instruct or enforce policy, nor sufficient funds to roll out any solar power program.
Furthermore, despite its expertise-intensive role, REAOL has mostly administrative staff and lacks technical experts.(44) It has so far only provided off-the-shelf recommendations. Without political will and proper understanding of institutional and legal hurdles for solar energy in the country, these recommendations remain ink on paper. Looking at both private and public sectors, Libya in general lacks the technical knowledge and expertise to be able to introduce renewable alternatives to the current system.
LEGAL CHALLENGES
The electricity sector suffers from weak legal foundations and loopholes, as there is no law specific to the sector. The legal framework for the sector consists of a few laws that regulate the work of specific institutions, not the sector as a whole.
For instance, GECOL’s operations are regulated only by the commercial law, which is not specific to electricity. Moreover, the sector is in desperate need of policy reforms and restructuring such as the unbundling of GECOL, which, among other benefits, will improve external monitoring and accountability and help separate planning from operational tasks.
The government Cabinet Decree No. 33 (2012), which established a ministry for electricity and energy, tasked this ministry to execute reforms, policies, and strategies for the sector. But because the ministry was abolished in 2016, the sector was left to operate in vacuum and the process of GECOL unbundling and sector reform programs were put on hold.
In the absence of an electricity-specific law and clear monitoring processes, the sector continues to be characterized by corruption and mismanagement. Such a law should establish an independent regulatory body to provide oversight on all sector activities, propose electricity tariffs, study the issues that the sector faces, and develop policy solutions. The law should also clarify the essential institutions in the sector and establish a clear division of roles and mandates.
Although there is one single service provider in the sector, there are reportedly 11 other state-owned and semi state-owned companies that operate in the sector as well.
The extent to which these companies currently play any role in the sector should be examined. Without a regulatory framework for the sector and an independent regulatory body, Libya’s electricity service will continue to suffer from corruption, overlapping mandates, little to no government oversight, and inefficiency
RECOMMENDATIONS
Short-term recommendations:
Adopt an electricity-specific law. The absence of a strong and clear legal framework for the whole sector will continue to be one of the main underlying factors undermining reform efforts. The law should define the structure and the institutional framework of the sector and the roles and responsibilities of all actors as well as lay the groundwork for a conducive legal environment for renewable energy and public private partnership models.
Set up a ministry for the sector. The government should build on Cabinet Decree No. 33 (2012), which established the latest electricity ministry in Libya. Among other responsibilities, the ministry should have the mandate to execute the necessary measures to restructure GECOL and other state-owned enterprises in the sector. Furthermore, the ministry should be tasked to design an institutional framework for the development of renewable energy projects in Libya. Empower Renewable Energy Authority of Libya (REAOL) and invest in the country’s solar energy. The Libyan government, in partnership with the private sector, should empower REAOL to support the process of solving the electricity dilemma in a sustainable manner.
Assign regulatory, advisory, and service provision roles in the renewable energy sector. To ensure efficiency, the government should empower REAOL to assume a regulatory role and establish two new agencies. The first would be in charge of assessing and studying renewable energy alternatives for Libya and proposing operational guidelines and standards. The other would be tasked with implementing renewable energy projects and have the mandate to partner with private sector and international companies to fill the expertise gaps in the sector.
Long-term recommendations:
Restructure the sector both at the government level and at the service level. The government should consider this as a starting point for long-term reforms in the electricity sector. Specifically, it should institutionally separate policy making, key functions such as monitoring and oversight, and service delivery. At the service level, the suspended unbundling process, which includes the separation of power generation, distribution and transmission tasks, should be resumed as soon as possible.
Develop local technical expertise. Libya’s reliance on foreign companies and weak inhouse expertise resulted in limited human capacities in the sector. Designing a strategy for building the capacities of the staff and developing the inhouse engineering expertise with assistance from foreign companies would considerably benefit the sector.
Introduce private companies to the sector. With the unbundling of GECOL and venturing toward renewable energy sources, the government should outsource some of the tasks that GECOL and other companies have performed thus far to the private sector through competitive processes to increase efficiency and reduce cost.
Reduce electricity over consumption across the country. The excessive per-capita electricity consumption in Libya causes an inflated demand for electricity that will be unmet even if power generation capacity is greatly increased. Such an issue can only be addressed through adopting new policies for pricing and incentives that will lead to a behavior change and ultimately the reduction of electricity overuse, as well as structural reforms that reduce large-scale systemic power over consumption. Besides these policies, engaging various civil society organizations and media outlets to raise the overall awareness of citizens of the extent of the issue could help reduce over consumption.
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Source: “Challenges And Steps Forward For Public Services Reforms In Libya” by Mohamed Elmagbri, Heba Al-Sheikh, Lamis Ben Aiyad, and Rima Hamidan. Published by The Friedrich Ebert Stiftung.
