PM designate Hassan Diab announced his cabinet lineup on January 21, 2020. To deal with the most severe financial and economic crisis in decades, Diab, and the political parties that have agreed to join this one-sided cabinet, picked a 20-member “rescue team”. Although many of these newly appointed ministers are specialists in their field, this is not the government of independent technocrats that protesters have been calling for since protests broke out on October 17.
On paper, this cabinet’s lifespan could extend until next parliamentary elections, scheduled for May 2022. But it will have to overcome tremendous political and economic challenges to survive that long, the first of which is the parliamentary vote of confidence expected in the coming weeks. Once confirmed, the cabinet will seek to confirm its local legitimacy by addressing protester demands, and receive the backing of the international community by pursuing much-needed reforms to unlock more than $11 billion in soft loans and grants pledged at the CEDRE conference in 2018. But this will not be enough to avoid a total financial and economic collapse. This cabinet will need to take a series of unpopular decisions to tackle the deteriorating situation and that probably explains why the political class chose not to participate directly and picked a “rescue team” that will take responsibility and shoulder the blame.
Raymond Ghajar is the new Minister of Energy and Water. Ghajar, who holds a Ph.D. in Electrical Engineering-Power Systems from the University of Saskatchewan in Canada, joined the Ministry in 2007 as a senior advisor and was directly involved in designing the 2010 policy paper for the electricity sector. Once again, the keyword over the next period is “continuity”. Although Ghajar joined the Ministry prior to 2009, when the Free Patriotic Movement headed it for the first time, he is considered close to Gebran Bassil and was appointed to his current post as part of the quota allocated to the FPM within the government.
The power sector is once again the highest priority for the coming period given the burden it places on the economy, with no guarantees of results if history is any guide. Ghajar will attempt to carry forward the same projects he started working on within the Ministry over a decade ago: ensuring 24-hour electricity and increasing the share of natural gas in the energy mix. These projects were repeatedly hindered by the political class as they involve a reconfiguration and a restructuring of a parallel system that has flourished over the past three decades in the absence of the State and which the political class has directly benefited from. Ironically, Lebanon’s crumbling economy is probably the only chance for progress on this front this time around: the status-quo is a luxury Lebanon can no longer afford.
The oil and gas sector will be his other priority. Over the coming months and depending on the lifespan of this cabinet, Ghajar will oversee the start of offshore exploratory activity and the closing of the second offshore licensing round now scheduled on April 30, 2020. A decision will also have to be made on the results of the FSRU and LNG import tender, knowing that caretaker Energy Minister Nada Boustani has asked the Director of the Lebanese Oil Installations to “revive negotiations with Egypt, or any other side, to secure natural gas for power production”.
The rest of this report – including a profile of the new Minister and an overview of the Ministry’s main projects in the coming period – is reserved for our clients.