Lebanon extends first licensing round deadline


The deadline to place bids in Lebanon’s first licensing round was extended from September 15 until October 12, 2017, Minister of Energy and Water Cesar Abi Khalil announced in a statement on September 7.

The authorities insist this is a technical postponement. “Technical” is the adjective local authorities like to use when they want to convey a message that the delay is not a result of deadlock or a major obstacle, but the result of a technical glitch that can be overcome. For instance, parliamentary elections, due this year, were postponed until spring 2018. Passing a new electoral law meant that a technical postponement was inevitable to properly prepare for the elections.

The main reason for the bid round extension, beside the usual argument of allowing more time for companies to prepare their bids, is that the Parliament has yet to approve the petroleum tax law. And, although the tender could theoretically proceed with the existing fiscal framework, in addition to a stabilization clause inserted in the EPA to reassure companies, this simply does not send out the right signals to investors. Some of those considering to bid did not hide their frustration. But if the absence of the petroleum tax law is so critical (as anybody would expect it to be), one wonders why the bid round was relaunched earlier this year (once again) despite an incomplete legal framework.

The tax law is on the agenda of the upcoming parliamentary session scheduled for 19-20 September. That’s 4-5 days past the initial deadline for the first licensing round, as set in the roadmap announced in January 2017. September 15 did not come as a surprise, but few were bothered by a sense of urgency. The parliamentary debate is expected to be heated and will be an indicator whether the political class intends to proceed smoothly with the tender or not. Recent tension among the various factions in the government may threaten the entente cordiale we have witnessed since it was first formed. IF this is not managed, it might affect decision-making.

Update: Parliament approved the Petroleum Tax Law on September 19, with minor amendments. The legal framework governing the first licensing round is now complete.