CHRISTINA ABI HAIDAR WP 6.1 FINANCING MECHANISM LEBANON

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1 CHRISTINA ABI HAIDAR WP 6.1 FINANCING MECHANISM LEBANON.

2 Relatively high solar expositions More than 300 days per year Electricity generation problems leading to blackouts Blackouts being compensated by private generators Lebanon

3 NEEAP Adopted by the Lebanese government in initiative related to energy efficiency and renewable energy One specific initiative (number 5) related to public street lighting (PSL) aiming at the introduction of energy efficient and solar powered PSL.

4 NEEREA National Energy Efficiency and Renewable Energy Action A financing mechanism developed jointly between the ministry of energy and water, the ministry of finance, the Central bank of Lebanon, the LCEC and supported by the EU Cited as one of the best financing mechanism by the IFP

5 NEEREA It played a major role in the development of RE and EE markets in Lebanon More than 160 Million USD in loans

6 The Municipalities and RE Municipalities profited from the installation of more than 3800 PV PSL poles all over Lebanon. There still a major need for the installation of higher numbers of PV PSL. Essentially because blackouts are causing normal PSL to function in average one night every two nights

7 PSL The sector of PSL was identified as being a priority for the municipalities Take advantage from the high solar potential in Lebanon NEEREA was not accessible to municipalities Find a new financing mechanism for municipal solar PV projects

8 The purpose of this task is to identify and design the most suitable incentive tool to strengthen the promotion of distributed solar technologies in Lebanon. We are working on developing an incentive tool tailored for public implementation through municipalities with the possible collaboration of the private sector within the regulatory framework of the country and while keeping to the strategic direction provided by the MED DESIRE WP6 Coordinator and LCEC task referent.

9 Consultations and researches have been conducted in order to assess the expected technological needs of the targeted public entities (the municipalities) in line with the following selected : Public street lighting (PSL) Public municipal buildings (PMB)

10 The NEEREA loan National Energy Efficiency and Renewable Energy Action It is currently not being accessed by the municipalities and its main beneficiaries are the private sector. In its legal context there are no explicit constraints to the municipalities access to the NEEREA loan but severe implicit constraints need to be dissipated. Allowing this access is at the core of our work. In the event of this access not being granted to the municipalities, NEEREA also in its structure could be used as a master plan for the development of a similar financing mechanism targeting the interested municipalities.

11 Preliminary Findings: In fact the legal investigation that has been conducted in the course of our study has revealed a legal potential the municipalities withhold: the municipality shall hereby enjoy legal personality as well as financial and administrative independence. By Law, the municipalities have the right to open bank accounts as well as the right to profit from financial aid, donations, and loans similarly to any commercial institution BUT upon restrictions.

12 In accordance with the Municipal Act, municipal revenues include: Fees collected directly from taxpayers Fees collected by the central government, independent entities, or public institutions on behalf of municipalities and distributed directly to each municipality Fees collected by the Central authority on behalf of municipalities and deposited in the Independent Municipal Fund (IMF) to be later distributed to municipalities.

13 By reviewing the current state of key aspects of municipal finance in Lebanon and recommending ways to modernize them. Modernization of municipal finance in Lebanon will involve introducing changes to the policy, legal and operational environment that governs municipal finance practices.

14 In regard of all the above, the ongoing work on WP6.1b for Lebanon has revealed an interesting potential combination of the different options that were preliminarily explored.

15 Our works have explored the possibility of implementing the potential financial mechanisms, which were identified as: Auto Financing through loans from commercial institutions, grants, etc Private Public partnership between ESCOS and municipalities (PPP) Access to municipal fund through union of municipalities (UOM) Access to municipal fund through the independent municipal fund (IMF)

16 The outcome will be a financial mechanism that most probably will resemble the well established, very functional and continuously growing NEEREA loan. With the added possibility of accessing grants matching a percentage of the investment made by the municipalities, which could be sourced by the union of municipalities fund or the independent municipal fund.

17 The Private Public partnership between ESCOS and municipalities (PPP) option that was initially targeted becomes then a sub section of the wider potential that is now being explored for the beneficiaries with the added possibility of simply contracting the private sector for the execution of works financed by the targeted mechanism to be implemented.

18 GOING FORWARD Consultations will help determine the plausible paths to be further explored

19 THANK YOU

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