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July 09, 2021 | 10 Pages | English | Ali Ahmad, Mounir Mahmalat, and Jamal Saghir
Lebanon’s Independent Electricity Regulator: Avoiding the ‘Political Economy Trap’

The looming prospect of a complete blackout in Lebanon is rare for a middle-income country. It is in this dire context that electricity sector reforms become indispensable. Chief among these reforms is the creation of an electricity regulatory authority (ERA), an independent institution asked with regulating the sector, particularly the supervision of contracts for electricity production and distribution with private companies. In this brief, however, we argue that the present-day financial, economic, and social crises risk plunging the creation of an ERA into a ‘political economy trap.’ A hastily created ERA, established just to please the international community, can be subjected to an elusive elite-level arrangement that will likely undermine its independence and value as an impartial regulator. The institution would be held hostage to the same mechanisms of rent generation and distribution among elites that have undermined the effectiveness of many other existing regulatory authorities. That way, an ERA would ‘trap’ citizens and the international community in what would be little more than a continuation of the status quo in a more palatable institutional arrangement. Consequently, we recommend that policymakers push for the establishment of an independent ERA as part of a vision for the entire governance of the electricity sector.