This launching event was part of the 6th edition of the Beirut Water Week (27-29 March 2017, hotel Le Royal – Dbayé) organised under the auspices of H.E Eng. Cesar Abi Khalil, Lebanese Minister of Energy and Water and the leadership of the General Directorate of Hydraulic and Electric Resources. The Beirut Water Weeks are regional reference multi-events bringing together a wide range of stakeholders from the countries around the Mediterranean and beyond to discuss and identify possible solutions to common crucial water management related challenges.
Financing of water projects, also through the involvement of the private and the banking sectors, was one of the core themes of the Beirut Water Week, thus strengthening further the added value and timeliness of the Dialogue.
The first part of the Dialogue’s launching set the scene for the work in Lebanon and included interventions by Dr. Anthi Brouma, Head of MENA Region - GWP-Med and Ms. Anja Nordlund, external advisor to the Governance & Financing Programme.
Current achievements and lessons learnt from the implementation of the Governance and Financing Programme in Jordan, Palestine and Tunisia that can provide useful input to the Lebanese case were presented by Dr. Brouma.
She also elaborated on the proposed work in Lebanon, whose inherent innovation lies with the ‘learning by doing’ approach, where the development of small-scale water projects as pilot/demonstration cases through private sector and banks’ support will guide and enhance constructive discussion and better understanding of required changes in the governance framework. The practical implementation of such projects will be preceded by the identification and elaboration of criteria for bankable water projects, in assistance to the on-going efforts already exerted by the Central Bank in this direction. The planned work follows-up, updates and expands previous relevant interventions by GWP-Med / OECD in the country, including an assessment on the PSP enabling framework (which will be updated in the contest of the planned work) and a dialogue with commercial banks already initiated in 2010 in support of the Lebanese Ministry of Energy and Water and in the framework of the Mediterranean Component of the EU Water Initiative activities in the country.
Dr. Nordlund presented the social aspects of investment, which are considered as important indicators by International banks and other relevant organisations when evaluating their support to potential PPP projects. These include, for example, attention to social parameters, such as ensuring equal opportunities, the respect of workers’ rights, equal access to resources, including water, stakeholders’ engagement and strategic communication, as well as environmental conservation and good governance. The increased attention to such issues stems from the recognition that they are triggers for a better performance, more creativity and innovation, more transparency and less corruption, among others. Examples on how to consider social aspects in PSP were also provided, both for preparatory and implementation phases.
The second Part of the Dialogue’s launching included the presentation of existing experiences inside or outside the water sector in Lebanon that provide useful background and entry points for the discussion on the planned work in Lebanon. Speakers included representatives of the Government and the private and banking sector:
- Mr. Mazen Halawi, Head of Subsidized Loans and Financing Programs at the Central Bank of Lebanon (Banque du Liban – BDL)
- Mr. Ziad Hayek, Secretary General at the Higher Council for Privatisation
- Mr. Ghassan Beidoun, Director General of Exploitation at the Ministry of Energy and Water
- Mr. Nassib Ghobril, Chief Economist and Head of the Economic Research & Analysis Department at Byblos Bank
- Mr. Samir Nasr, Chairman of ECE Capital
- Mr. Jamil Mouawad, Chairman of the Rotary Water Commission
- Mr. Rachad Shawa, Vice-Chairman of the Consultative Council of International Water Bank, MAI Resource International
While recognising the potential for PSP and PPPs to enhance the water sector in Lebanon, particularly under the current situation in the country that is affected by a considerable budgetary debt, the above experts highlighted some urgent needs:
- Review and adapt the existing legal framework to make private sector interventions effective, viable and transparent throughout the project cycle (conception, planning, implementation and maintenance). This concern extends overall to the water-related legislation that is perceived as contradictory and therefore not conducive of such undertakings;
- Increase resources and capacities of the public entities supposed to manage and monitor interventions in the water sector;
- Develop better understanding by the Lebanese Government that financing a project together with a private partner is generally in the state's interest and that this is not an act of privatization since the property/assets will remain in public hands;
- Strengthen capacity in evaluating the risks related to certain projects and establish institutionalised and legal mechanisms to truly share the risks between public and private bodies;
- Have the value-for-money assessment at the top of any selection criteria for PPPs;
- Allow enough time for the negotiation process between public and private actors involved in a potential joint project before commencing the tendering process.
The role of Banks was recognised as most promising because they have large deposits and therefore an essential prerequisite for great lending opportunities.
In this context, the experience of the Central Bank of Lebanon in promoting green energy and environmental projects (including water-related projects) through specific financing mechanisms allowing commercial banks to give loans with very low interest for such projects, provides successful examples in the country on how banks could become key actors in potential PSP projects.
Such financing mechanisms include the National Energy Efficiency and Renewable Energy Action (NEEREA), targeted to residential, commercial, non-profit and industrial users for all energy efficiency and renewable energy projects for new and existing facilities and the Lebanese Environmental Action (LEA) for Water, Air and the Environment that covers a variety of environmentally friendly projects related to recycling, organic farming, ecotourism, landscape, green roofs, green walls, stones cladding, roof tiling, wastewater treatment and rainwater collection. Technical support to applicants is also provided in cooperation with the Lebanese Center for Energy Conservation (LCEC).
An example of how the non-profit sector can support the public water sector was provided by the Rotary Water Commission that is implementing a project aimed at providing clean water to public schools through water filtration systems. 720 schools have been reached already and up to 1200 will be reached in 2018. The project is implemented with the support of different organisations/private companies including banks.
Finally, highlights were provided by a private company (International Water Bank, MAI Resource International) on services it provides to governments in need, including freshwater transfer / water desalination through specialized tanks/boats.
Contribution on the Dialogue’s theme was provided also during other sessions of the Beirut Water Week, for example during the high level opening with the intervention of Dr. Joseph Torbey, President of the Association of Banks in Lebanon or during Session I with the Mr. Karim Osseiran, Senior Expert at the Ministry of Energy and Water.
The Dialogue’s launching event, with the richness of interventions and knowledge shared on the current situation and needs was considered a very positive step for informing about the design of the forthcoming work in Lebanon and for inaugurating a fruitful dialogue among all concerned stakeholders.