January
2001
Lebanon
Master Report
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Lebanon Master Report |
This is the final Alternative Networks report on Lebanon as the ESIS project ended in January 2001. This Master Report covers the whole period of the ESIS project surveying the Mediterranean Area, March 1999 - January 2001 inclusive.
According to expert advice no alternative networks will exist in the country before the privatization process is launched. Since the privatization law has been recently voted by Parliament, no specific action has been taken to implement it. The privatization process had been previously declared by the outgoing Prime Minister Dr Salim AL HOSS to happen probably in 2001. It is now declared to happen soon by the new Prime Minister HARIRI. However, no tangible sign has been perceived yet despite a much more readiness by the new government to take such steps.
1. The interaction between business and regulatory constraints.
The Lebanese economic system is marked by a strong and old liberal tradition especially if compared to the prevailing situation in the neighboring Arab Countries. Surprisingly however, the Government in Lebanon has maintained a long tradition of monopolistic practice especially in the telecommunications and energy sectors. In spite of that, the macroeconomic policy remained very open and liberal especially so in what relates to the freedom of circulation of persons, of goods and services, and capital. This stance prevailed even during the most difficult periods of the military turmoil that stretched over fifteen years from 1975 until 1989.
www.kullunamassoul.com>. Some of these difficulties are being overcome by the implementation of a ‘one stop shop’ procedure under the authority of IDAL the Investment Development Authority of Lebanon reporting directly to the Prime Minister.1.1 The regulatory background
The legal system in Lebanon has been influenced by the French legal doctrine for historical reasons linked to the French mandate. The Civil Code, the Code of Obligations and Contracts, the Commercial Code and the Code of Money and Credit constitute a sound and secure basis for all types of business activities. However, because of the long lasting turmoil (1975-1989), some legal texts are no more adapted to the fast changing business environment. A special reform committee composed of magistrates from the Ministry of Justice along with experts from various governmental bodies as well as members of Parliament has been set up to modernize the legal system. The updating process is evolving in parallel with a sustained effort to enact new laws to serve the needs of the organizations in a rapidly changing economic environment. Important examples in this respect are the law on Intellectual Property rights voted in 1999 and the law on privatization voted in early 2000. A recent draft concerning the legality of the electronic signature has been adopted by the Council of Ministers and transmitted to Parliament for discussion. Until now this draft has not been voted.
As to the performance of the Lebanese judiciary, many officials and international experts consider that the system is presently overworked and understaffed. Some court cases could therefore stretch over a long time.
1.2 Business constraints and entry barriers
In spite of the openness of the economy and its liberal tradition, there are some sectors where the law is setting some limitations to the activity of foreigners. The real estate sector is the most common example (although a recent revision of this law is under consideration). Some other cases exist where activity, though not a state monopoly, is restricted to a small number of operators as is the case in the audiovisual business (see reg report). In the banking sector, also, certain restrictive regulations exist concerning the activity of foreigners. Apart from these specific instances, the press is often reporting cases of corruption as well as bureaucratic procedures hindering the development of sound market transactions. A recent NGO has brought to the attention of the public the necessity of combating corruption in the Public Administration <
1.3 Attitude of the incumbent operator towards alternative network providers.
As mentioned in the report on the regulatory environment, the trend is presently towards privatization of some public utilities. In case this privatization is launched, it is assumed that free competition will have better chances to prevail. The privatized bodies will, therefore, have to adjust to a new environment. It is unrealistic to think that influential figures in the Administration will easily accept such limitation to the power they presently have. Indeed this is a main reason behind some parliamentary opposition to the privatization option. The High-ranking directors in the MPT and the Ministry of Hydraulics and Electricity are recurrently criticizing the intended policy of privatization. This overall mood concerning the privatization option could change with the present government that took office after the elections of August-September this year.
1.4 Ongoing regulatory developments concerning alternative networks.
Apart from the recently voted legal framework permitting the privatization process to start, no new regulatory developments seem to be expected shortly. The law provides for the setting up of a High Privatization Council (HPC), composed of the Prime Minister and the Ministers of Finance, Economy, Labor and Justice. Ad hoc panels of experts will support it. This HPC will have a role even after the privatization takes place in order to monitor unauthorized changes in foreign ownership and full compliance with the law. A regulatory authority will also be created to protect the consumer interests and safeguard free and fair competition. It is obvious that the spirit of this law is targeted through bringing a wide range of international investors into the Lebanese economic sectors especially in the telecommunications sector.
2. Inventory of the major "public utilities" with a potential for use in IS applications.
www.sodetel.net.lb) (a mixed capital company where 50% belongs to the Lebanese State, 40% to France Telecom and 10% to Telecom Italia) has launched an upgraded proprietary network at the end of 1999. Libanpac, which is a national network for data transmission X25, is offering telecom link services among different locations all over the Lebanese territory. Sodetel has also upgraded its Internet services through an international link right to the backbone of France Telecom at Bagnolet in France.2.1 Types of companies offering networks.
Lebanon has no natural resources except water, which is available from ground water, springs and boreholes. The main river sources are the Litani River and the Awali River (south), Nahr Ibrahim and Nahr ElKalb (north). The Assi River (Bekaa) is for a short stretch in the Lebanese territory then flows north into Syria.
The water sources in Lebanon are controlled by the Ministry of Hydraulics and Electricity Resources which overseas the 22 water authorities on the national territory. These Water Authorities are in charge of the day to day running of the water network system and are mainly financed, for running this activity, through customer payments. The central government provides for the amounts needed as investments in heavy equipment and building.
Two major projects are now being considered to enhance the water network system in Lebanon. The Awali-Beirut conveyor is contemplated as a means to alleviate the shortage of water in the capital. An investment amounting approximately to $150 millions seems necessary for this 33-km conveyor. The implementation could be granted to a foreign company on a BOT basis.
The other big water project concerns the Bisri dam on the Awali River situated to the south of the country. No clear option however has been taken until now concerning the financing of this project estimated to about $160 millions.
The network of Lebanese roads is well distributed throughout the country. It comprises more than 6000 km of roads. However, all structures are not similar as they vary in width, load capacity and condition. International roads stretch over 530 km, primary roads over 1650 km, secondary roads over 1340 km and local roads over 2810 km. The coastal highway stretches from Tyre in the south to Akkar in the north, Beirut being in the middle. Another highway links Beirut to Damascus crossing mount Lebanon and the Bekaa valley. A new highway is presently being built, over a length of 60 km approximately, and involving the construction of 34 bridges, 10 viaducts and 9 intersections. It will link Beirut to Damascus through the border city of Masnaa and from there to all neighboring Arab Countries. The financing scheme of this "Arab Highway" seems to be a BOT contract over a thirty years period.
The public authority in charge of generating, transmitting and distributing power in Lebanon is Electricité Du Liban (EDL). This entity reports to the Ministry of Hydraulics and Electrical Resources. Founded in 1954, EDL has always been the official monopoly provider of electricity in Lebanon. Two concessions were granted by EDL to two small companies for power distribution in the region of Zahlé (Bekaa valley) 30 000 customers and in the coastal region of Jbeil (Byblos). An old concession for generating and distributing electricity in the north (Kadisha valley) has been recently bought by EDL.
The overall production of electricity in Lebanon is close to 1500 MW with the following repartition by type: 1030 thermal, 280 hydraulic, and the rest from gas turbines. This supply is considered enough to meet the demand and provide electricity 24 hours a day but due to some failure in the distribution system, some regions in the country do not enjoy that much hours of power supply. Repeated bombing of distribution stations in the neighborhood of Beirut by Israeli planes has restricted the power distribution in most regions of the country.
The power system in Lebanon is undergoing some extension through new power plants as domestic and industrial demand is expected to grow. EDL’s experts are participating in many international committees for renewable energy resources including wind and solar power, but no feasibility studies have been made so far.
2.2 Types of operators using the networks.
The only authorized operators using the network are from the public sector: either Ministries or Public Entities under the tutelage of a Ministry.
2.3 Types of services offered by the operators on the network.
None of the operators mentioned above is providing services other than what is genuinely of its own business. However, the 2 GSM operators who are granted licenses since 1994 are planning to offer microwave data transmission services. The system will probably use conventional microwave transmitters and use the network of the GSM relay stations to carry the signal. This evolution is pending the privatization process. It is worth noting that the cellular companies are now in conflict with the MPT concerning the transformation of the BOT agreement into a licensing scheme. The press is reporting since the month of June on the possibility of a third operator to be authorized with UMTS technology and the participation of the Ministry of Posts and Telecommunications.
Sodetel (
Two new items could have interesting repercussions on the possible availability in the near future of alternative networks.
1. According to press reports appearing recurrently around mid February, the Lebanese Government is reported to have signed with the international carrier Skybridge a memorandum of understanding whereby Lebanon would become an equity partner and service provider in the Middle-East and North Africa. According to further information taken from the website <
www.skybridge.bc.ca>, the President and CEO of Skybridge are quoted to have said: "This memorandum of understanding is a step forward in our relationship with this country. The Ministry of Post and Telecommunications has clearly understood all the competitive advantages the country could benefit from with a system such as Skybridge in order to bring Lebanon to the leading edge of satellite broadband multimedia communications".As an access system, Skybridge will complement and extend terrestrial networks and help operators to solve the "last mile" problem by providing an instant broadband connection to users that previously only had narrowband access. The Skybridge system will help optimize the use of the radio frequency spectrum by operating in the Ku-band and its services will be delivered locally through national and regional telecommunications operators and other service providers.
The system has a wide range of capabilities, as it will support in addition to traditional telecom services:
Since February 2000, the political picture has changed as Lebanon has now a new government. It is therefore unclear whether the government of Mr. HARIRI will pursue in the same direction.
2. The MPT / OGERO authority is announcing that ISDN lines are expected very shortly. Although no date for the implementation has been clearly stated, an invitation is addressed to the potential customers to call on OGERO in case they want to discuss "requirements for the ISDN BA service". For this purpose, OGERO has published a brochure presenting a short explanation of the ISDN service and the benefits it can provide to its user.
In a recent press conference the Director General of Equipment and Maintenance at the MPT and the Director of the OGERO Authority have presented new services to be implemented on the fixed telephone network such as call waiting, caller identification, call forwarding, call diverting and conference calls.
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