Lebanon’s infrastructure challenge has grown more acute in the past two years, with the arrival of more than 1.3 million Syrian refugees increasing the strain on existing resources.

The Syrian influx has created a huge need for housing, education and health services, for which the UN High Commissioner on Refugees is responsible.  However, the refugees’ use of electricity and water affects all of Lebanon, highlighting inherent weaknesses in the public infrastructure.

Spending required

Despite a large and modern airport, busy ports and more than 7,000 kilometres of roads, large parts of Lebanon’s physical and social infrastructure are not fit for purpose. Little fresh investment is going into infrastructure rehabilitation or expansion in the wake of a political deadlock that has left the country without a president since May 2014.

The IMF has warned that the authorities’ failure to address infrastructure bottlenecks will reduce Lebanon’s competitiveness and growth potential.

Much of the impetus for invigorating the infrastructure drive lies with the Council for Development and Reconstruction, the government’s executive body responsible for tendering major projects. It works in concert with other state bodies, but all sides have struggled to keep momentum behind project activity in recent years.

Areas of concern

Electricity is a case in point. State-owned Electricite du Liban boasts just over 2,000MW of installed power generating capacity, compared to a peak demand of 3,195MW. That means frequent blackouts and an average power provision of 18 hours a day.

The road network has also failed to keep pace with increased traffic volumes. There is severe congestion on the roads in urban areas, with no public transport alternatives available.

The telecommunications network is another source of weakness. Most measures place Lebanon as one of the world’s worst performers in terms of internet speeds. The Ookla Net Index, which measures internet speeds, puts the country 172nd out of 193 countries rated globally, with an average download speed of just 2.95 mbps.  

Despite boasting some of the region’s best water resources, Lebanon’s water and wastewater networks are also underperforming, with pumping station operations undermined by the unreliable national power system. The national coverage of the water supply and distribution system was 79 per cent before the Syria crisis, however, according to the UN, more than half of the system is past its useful life span. The coverage of wastewater networks was 60 per cent but only 8 per cent of wastewater was treated.

Priority developments

There are some efforts to improve matters, with projects aiming to expand the country’s water and wastewater infrastructure, such as the Greater Beirut Water Supply Project. This World Bank-funded project is designed to increase the provision of drinking water to residents within the Greater Beirut region. Tunnel works are expected to begin by October 2014 and will take four years to complete.

Frequent power blackouts mean that improving electricity supply has risen to the top of the priority list for Lebanon’s infrastructure investment.  The government in 2011 revealed plans to increase generation capacity to 4,000MW by 2014 at a cost of $6.5bn. Little progress has been made.

Tackling congestion

Transport investment is another clear priority, with projections by the Ministry of Public Works and Transport that demand will surpass 5 million car passenger trips a day by 2015, up from 2.8 million in 2007.  

The Beirut Municipality, which has an annual budget of more than $ 1.1bn to spend on infrastructure, developments and services, is looking to move ahead with a major Beirut road project, the Fouad Boutros Highway project, intended to ease congestion in East Beirut. This $75m project would see a 1.3-kilometre four-lane highway built to link Ashrafieh with Charles Helou Avenue by Beirut Port. It has, however, faced substantial opposition from local communities affected by the road.

The scale of the infrastructure challenge means Lebanon will have to attract the kind of funding it last secured in the III conference in 2007. The cost of repairing Lebanon’s water distribution networks alone is estimated to be about $1bn, according to consultancy PwC.

Project finance

Capital spending by the government has been sacrificed to current spending, largely the funding of a significant budget deficit. That leaves few alternative finance options for infrastructure development. Plans for public-private partnerships (PPP) have not advanced, with the framework PPP law awaiting approval. The prospect of seeing privately financed infrastructure projects in the region still seems distant.

Donor financing remains an option, with the likes of World Bank and the US Agency for International Development (USAID) acting as significant financial supporters on a range of infrastructure developments. For example, the World Bank provided $30m in 2013 for public infrastructure rehabilitation, including 175km of road repairs. USAID has contributed about $170m to assist project activity in the education sector, including school building projects.

There is undoubtedly a need for more spending, as Lebanon seeks to catch up with other countries in the region in the quality of its social and physical infrastructure. However, Lebanon’s continued political vacuum, its vulnerability to overspill from the conflict in Syria and a deeply polarised domestic situation mean that the country’s infrastructure deficit is unlikely to be redressed for some time.