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Lebanon This Week 575

March 09, 2019

  • Lebanon's energy mix improving
    The World Energy Council's 2019 World Energy Issues Monitor considered that Lebanon's energy sector is improving due to the diversification of its energy mix amid rising investment in renewable energy technologies. It indicated that hydropower is the predominant source of renewable energy with the highest installed capacity in Lebanon. But it said that the government is working actively to increase the share of solar and wind energy through public-private partnerships and through the adoption of technologies, such as the Concentrated Solar Power and bioenergy technologies. It noted that authorities have already launched several solar PV and wind farm projects under power purchase agreements (PPA). It added that authorities recently committed to improving electricity storage from renewable energy to ensure a stable and secure electricity supply to the national grid. In this context, it said that the Ministry of Energy & Water launched an Expressions of Interest for the construction and operation of solar PV farms and associated battery energy storage components in 2018. The WEC noted that the installed capacity of renewable energy would rise to around one gigawatt, once the solar photovoltaic (PV) and wind farms are operational. Also, the WEC anticipated that efforts by Lebanon's private and public sectors would promote investment in renewable energy technologies in the country, allowing authorities to meet the national renewable energy target of 12% of the country's energy mix by 2020 and 15% of the energy mix by 2030.

    The WEC considered that the energy sector in Lebanon is facing several key challenges. First, it noted that the energy sector is highly subsidized, with subsidies applied to oil products at the final consumption stage, while authorities also subsidize tariffs of Electricité du Liban (EdL) as a way to reduce costs for consumers. It added that the highly subsidized fossil fuel prices are competing with renewable energy technologies, which limits the cost competitiveness of renewable energy. Second, it noted that electricity shortages in Lebanon have been an ongoing dilemma, with frequent electricity outages. It added that the status of the national grid is hindering the development of utility scale projects, such as solar PV plants. In this context, it indicated that EdL is working towards upgrading the infrastructure of the electricity grid in order to handle extra energy capacity and to maximize its use.
     

  • Half of Lebanese firms have females on boards of directors
    A study published by the International Finance Corporation on female participation in boards of directors in Lebanon shows that 50% of surveyed companies have one or more female corporate board members, with women representing 14% of all board members in Lebanon. The study covers a sample of 1,600 Lebanese companies, and uses data collected through an analysis of publicly available information and the Masri enterprise database. It is also based on qualitative analysis, which entails focus groups and interviews with male and female board directors and executives, as well as on an online survey. 

    The study found that gender-diverse boards lead to stronger company performance. It noted that Lebanese firms that have female board members posted an aggregate return on equity (ROE) of 20.7% in the 2014-16 period, which is twice as high as the ROE of 10.3% for corporates with all-male boards. It also indicated that gender-diverse boards showed increased preference for equity financing and less dependence on debt. In this context, it pointed out that the average equity-to-asset ratio of Lebanese companies with gender-diverse boards was 14.7% in the 2014-16 period, compared to a ratio of 2.8% for corporates without female participation. It added that the aggregate debt-to-asset ratio of firms with gender-diverse boards was 12 percentage points lower than the ratio of corporates with an all-male board of directors.

    In parallel, the qualitative analysis of the study shows that female attributes, such as excellent problem-solving skills and sound economic and strategic thinking skills, benefit companies in Lebanon, especially in the areas of risk management and planning, as well as in setting a firm's strategic direction. It also considered that female corporate board members in Lebanon face several barriers. It said that women in the country are subject to societal expectations about their roles, which hinders their ambitions and opportunities. It added that even highly qualified female board members in Lebanon experience marginalization, and have less authority and executive power than their male counterparts.
     

  • Lebanon ranks 29th in emerging markets, 10th in Arab world in terms of logistics infrastructure
    Transport Intelligence, an analysis and research firm for the logistics industry, ranked Lebanon in 29th place among 50 emerging markets (EMs) on its 2019 Agility Emerging Markets Logistics Index. Also, Lebanon came in 10th place among 13 Arab countries and in 13th place among 19 upper middle-income countries (UMICs) included in the survey. Transport Intelligence noted that it updated its methodology for the computation of the index this year to reflect "a more complex, more connected and more divided world", as well as to assess the growth of each market based on its specific drivers and growth inhibitors. As a result, the results of this year's survey are not comparable with the 2018 edition. 

    The 2019 index compares a country's prevailing operational environment to its current logistics opportunities and potential. The index is an average of three equally weighted sub-indices that are Domestic Logistics Opportunities, International Logistics Opportunities and Business Fundamentals. A higher score reflects a better performance on the index.

    Lebanon has a more developed logistics infrastructure than Argentina, Kenya and Ghana, and a less developed infrastructure than Egypt, Ukraine and Pakistan among EM countries. It received a score of 4.71 points on the 2019 index, which is lower than the EM average score of 5 points, the UMICs' average of 5.12 points and the Arab average of 5.08 points. Lebanon's score is also lower than the Gulf Cooperation Council (GCC) countries' average score of 5.55 points, but is higher than the non-GCC Arab countries' average score of 4.69 points.
     

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