Assad’s latest electricity decree a “new corruption gateway”: experts

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Enab Baladi – Muhammed Fansa

The newly-issued Electricity Law No. 41 by the head of the Syrian regime, Bashar al-Assad, has its echoes about its purpose and the extent of its impact on the people’s lives as it enables the Ministry of Electricity to license investors wishing to implement independent traditional generation projects without the obligation to purchase electricity.

The decree, ratified on 29 October, amended some provisions of the Electricity Law No. 32 of 2010.

The Public Corporation for Electricity Transmission and Distribution or the electricity company in the governorate undertakes the transfer of electricity to main subscribers or subscribers on medium-voltage or for the purpose of export, at the request of the licensee, and within the technical capabilities and capacity limits available for the transmission or distribution network.

This requires an agreement concluded for this purpose in exchange for fees for using transmission or distribution networks.

The electricity corporation can also, when its technical capabilities are available, purchase electricity surplus to the consumption needs of those authorized for conventional generation, provided that its network is not connected to the transmission or distribution network on medium voltage and at its expense and on the terms and prices of the Electricity Ministry.

The corporation shall announce requests for proposals to invite investors to implement power generation plants based on renewable energy sources and to purchase the produced electricity at the prices that are contracted with the investor.

After obtaining the license, the investor can implement power plants based on renewable energy sources, sell the produced electricity to main or medium-voltage subscribers, or export it through the transmission network and sell it to low-voltage subscribers using private networks.

The corporation is obligated to purchase the electricity produced from renewable energy generation stations, and it can also buy the produced electricity at prices agreed upon with the investor.

“Gateway to corruption”

The Minister of Electricity, Ghassan al-Zamel, confirmed that the amendments to the three articles of the Electricity Law allowed the owner of any generation facility with renewable or conventional energies to sell on medium-voltage lines on an independent outlet according to prices determined by the ministry, and also allowed purchases from the owner of a generation facility licensed on low-voltage lines.

Sinan Hatahet, Syrian researcher, told Enab Baladi that the amendments to the Electricity Law relate to the production of electricity, not its distribution, as the distribution is still monopolized by the electricity company unless the private producer is in direct contact with the residential or industrial units.

The decision with these amendments focused on allowing the production of electricity through thermal energies such as fuel, after production was limited to renewable energies such as photovoltaic and wind energies, according to the researcher. It also allowed producers from the private sector to sell electricity to whomever they wanted, while it was previously stipulated that it be sold to the Ministry of Electricity.

According to Hatahet, if the producer is at a far distance from the consumer, he will be forced to sell electricity to the ministry authorized to transport it according to the prices it sets, which explains the law as “far from privatization,” but rather it is a system of “partnership between the public and private sectors.”

The new system delegates some tasks to the private sector that the public sector cannot undertake. Hatahet believes that the new system allows businessmen close to the regime to enter into electricity production as a “gateway to corruption.”

What will prove the existence of suspicions of corruption is the selling price of electricity that will be approved by the ministry after these projects. If the price is significantly higher than the cost of production, this confirms that the law opened a “door to corruption” that is greater than simply delegating part of the burdens of the regime’s government to the private sector, Hatahet said.

The current cost of producing a kilowatt in Syria is 800 Syrian pounds, according to al-Zamel, while it is sold on average to domestic consumers at a value of 20 pounds by the Ministry of Electricity.

Khaled Turkawi, a researcher and lecturer specializing in economic affairs, agreed with Sinan Hatahet that the latest legislation has nothing to do with privatization “at least in the foreseeable future,” as it preserves state institutions working in the electricity sector and seeks to establish new private companies.

Turkawi told Enab Baladi that the prices would be high for the private sector and would remain unchanged for the year, i.e., electricity would become available to whoever pays, while those who remain on the regular electricity subscription (from the Electricity Ministry) would get two or three hours of electricity per day.

Does it legalize “ampere” generators?

Al-Zamel stressed that the current amendments do not represent legislation for “amperes” (a common name for generator electricity in Syria) because the law gave investors the possibility of selling medium-voltage electricity to support industrialists, while electricity for “amps” is sold on low-voltage.

While it was stated in the last paragraph of the amendments that the investor has the right, after obtaining the license, to sell subscribers on low voltage using private networks.

Ampere is a well-known local name for generator electricity in Syria, which citizens rely on in light of the electricity cuts in various Syrian regions. Its price is linked to the price of diesel, as the owners of electric generators depend on it to operate the generators.

Researcher Hatahet believes that the Western sanctions imposed on the electricity sector in Syria are “very extensive,” as it is not possible for an individual or company to purchase high-production power plants, while they can buy small-capacity generators, the researcher expected that the law would be an entry point for “legalizing amperes.”

He also considered it a future entry point for “imposing taxes” on the private sector represented by small and middle-income people.

This is in line with the regime’s approach in recent years in searching for ways to impose new royalties and taxes.

The economist, Khaled Turkawi, did not rule out that the amendments would “legitimize the amperes” because the regime seeks to secure electricity in any way, whether with large generators, clean energy generation operations, or large stations.

The Minister of Electricity, al-Zamel, stated during his interview with the state TV that the government “turns a blind eye” to the sale of “amperes” due to the poor electrical conditions in the country, but it opposes this approach.

To evade Western sanctions

Al-Zamel stressed that “new laws must be issued that contribute to overcoming the imposed sanctions” in cooperation with investors, in what he described as an “attempt to circumvent” the wide sanctions imposed on the sector.

It is what prevents the import of spare parts necessary for the operation of power plants, as all power plants in the country except for one are established by Western countries.

According to the state-run Tishreen newspaper, “The society is a partner and responsible with the government in solving economic problems and crises that are not unique to a specific sector.”

This decision is the “first” to open investments in other sectors, most notably the construction sector, experts say.

Hatahet doubted that the new law would be able to create a new environment for producing a sufficient amount of electricity to meet local needs due to the presence of Western sanctions that deter any investor from purchasing large-capacity generators.

Economist Turkawi expected that Iranian government companies or those close to them would benefit from the Electricity Investment Law, as no one can protect these investments except them, as well as businessmen close to the regime.

The electricity needs of the regime-controlled areas are about 6000 megawatts, while the amount generated has reached 2000 megawatts so far, according to the Electricity Minister.

The last ten years have exacerbated the service conditions related to electricity to a large extent in the areas controlled by the Syrian regime, as the per capita share of the state’s electricity consumption has become 15% of what it was in 2010, according to a research study prepared by the two researchers, Sinan Hatahet and Dr. Karam Shaar in September 2021.

 


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