LEBANON: EGYPT WILL SUPPLY LEBANON WITH NATURAL GAS

UNCLAS BEIRUT 000658 SIPDIS SENSITIVE STATE FOR NEA/ELA AND EEB/IFD/ODF STATE PASS USTR FRANCESCKI STATE PASS USAID LAUDATO/NANDY/SCOTT TREASURY FOR PARODI/BLEIWEISS/AHERN USDOC FOR 4520/ITA/MAC/ONE NSC FOR SHAPIRO/MCDERMOTT E.O. 12958: N/A TAGS: ECON EFIN EAIR EIND PGOV KFLU LE SUBJECT: LEBANON: EGYPT WILL SUPPLY LEBANON WITH NATURAL GAS STARTING IN AUGUST (ECONOMIC WEEK IN REVIEW, JUNE 1 - 7, 2009) CONTENTS -------------- -- EGYPT WILL SUPPLY LEBANON WITH NATURAL GAS STARTING IN AUGUST -- CABINET PASSES PART OF THE BUDGET -- THREE CONFIRMED CASES OF SWINE FLU HAVE FULLY RECOVERED -- WORLD BANK BEGINS DISCUSSIONS ON NEXT COUNTRY PARTNERSHIP STRATEGY -- GOL LAUNCHES SECOND PHASE OF THE BEIRUT-DAMASCUS HIGHWAY... -- ...AND THE EXPANSION OF TRIPOLI PORT EGYPT WILL SUPPLY LEBANON WITH NATURAL GAS STARTING IN AUGUST -------------- ¶1. (U) Minister of Energy and Water Alain Tabourian announced the signing on April 30 of an agreement with Egypt, whereby Egypt will supply Lebanon with a total of 600 cubic meters of natural gas per year. This agreement is part of the regional power grid project, which includes Lebanon and Egypt. As a first step, starting in August 2009, the supply of gas will be used to operate half of the capacity of the Beddawi power station in the north, and by October, Lebanon is expected to receive enough gas to run the entire station. Tabourian said that by using natural gas instead of fuel oil, Lebanon could save up to $200 million a year. The agreement set a fixed price at which Egypt will supply gas and also called on Lebanon to encourage the use of natural gas in local industries and households. Following the June 7 parliamentary election, the process now begins to select a new prime minister and cabinet. Beginning June 21, Tabourian and all other ministers will be in a caretaker government status until the new cabinet is selected. CABINET PASSES PART OF THE BUDGET -------------- ¶2. (SBU) During its last session before the parliamentary elections, the cabinet separated the budget for the Ministry of Health from the 2009 budget law and endorsed it on June 2. This is the first time in Lebanon's history that the cabinet has passed only a portion of the budget law, and it is unclear whether the cabinet will forward just this portion of the budget to the new parliament. (Comment: The budget process is already far behind. The Lebanese constitution mandates that the cabinet pass a budget law for the following year by September, and send it to parliament for approval before the end of the year. The passage of part of the budget nine months late is par for the course in the Lebanese system. End comment.) THREE CONFIRMED CASES OF SWINE FLU HAVE FULLY RECOVERED -------------- ¶3. (SBU) On May 30, Minister of Public Health (MOPH) Mohammad Khalifeh announced that three cases of swine flu had been confirmed in Lebanon. One Lebanese residing in Spain and two Canadians entering Lebanon suffering from the flu were given the proper medical treatment in time and have now fully recovered, according to an advisor to the Minister. The advisor added that the ministry is implementing all WHO recommendations related to the flu and distributing brochures at Beirut International Airport for awareness. Ministry representatives based at the airport are also available in case of an emergency. WORLD BANK BEGINS DISCUSSIONS ON NEXT COUNTRY PARTNERSHIP STRATEGY -------------- ¶4. (SBU) On June 3, Chris de Clerq, UNDP Project Manager at the Finance Ministry, told us that World Bank Country Manager Demba Ba and Director for the Middle East Department Hedi Larbi met on June 2 with Finance Minister Chatah to discuss the framework for the World Bank's assistance to Lebanon for the next five years, taking into account the GOL's Paris III reform pledges, the recent Cabinet-approved measures to counter the impact of the global financial crisis, as well as the GOL's regional development vision. Bank officials will also meet with representatives of the private sector and civil society and will complete their report in September, to be approved by the Banks' Executive Board in February/March 2010, de Clerq said. ¶5. (SBU) De Clerq added that since the July 2006 war, the Bank's assistance to Lebanon has been based on an interim strategy note that expires in June 2009. Bank officials informed Chatah that they will discuss an interim arrangement on financial and technical assistance with the new government to cover the period until the Bank's Board approves the new Country Partnership Strategy, de Clerq said. GOL LAUNCHES SECOND PHASE OF THE BEIRUT-DAMASCUS HIGHWAY... -------------- ¶6. (SBU) The GOL launched the second phase of the Arab Highway project linking Beirut to Damascus, when Prime Minister Siniora laid the cornerstone for the Mdeirej to Taanayel strip in the Bekaa last month, Dr. Wafaa Charafeddine, advisor to Council for Development and Reconstruction (CDR) Chairman told us June 1. The project is to cost $153 million and will be financed by a $40 million grant from Saudi Arabia and soft loans from the Saudi Development Fund and the OPEC Fund for International Development. Construction of the first phase of the Arab Highway linking Taanayel to Masnaa (border with Syria) is on-going, financed by a soft loan from the European Investment Bank (EIB),she said. The Arab Highway will expedite the transport of Lebanese exports and transit goods to Damascus and from there to Jordan, Saudi Arabia, and the Gul, Ministry of Public Works and Transport director general Abdel Hafeez Kayssi told us June 1. ..AND THE EXPANSION OF TRIPOLI PORT -------------- ¶7. (SBU) The expansion and development of the northern Tripoli Port is expected to resume, as the GOL recently resolved its conflict over technical and financial issues with the Chinese company working on this project, Kayssi told us. He said the GOL has also tasked the company to further dredge the quay from 12 to 15 meters in order to enable large ships to dock. As a result, the cost of the Tripoli port expansion project increased to $50 million, entirely financed by a soft loan from the European Investment Bank (EIB). This project is vital for economic development and job creation in northern Lebanon, said Kayssi, especially with the GOL's plan to create an industrial and Special Economic Zone in Tripoli. This project will enable the Tripoli Port to compete with the Syrian ports of Lattaquieh and Tartous by attracting large ships carrying goods primarily for Iraq, former Chairman of the Tripoli Port Antoine Habib told us June 2. SISON