Into the darkness: Lebanon's 'generator mafia' warns it will switch the lights off

In Lebanon these days, the only thing keeping the lights on during ever-lengthening nationwide blackouts is a cartel of businessmen known locally as the generator mafia.

For years private generator owners have reaped fat profits by charging a hefty premium to supply a gap in the electricity market. But amid Lebanon’s economic collapse, business is no longer booming – and the head of the “generator mafia” is today threatening to plunge Lebanon “into darkness”.

“Be ready in two days: We’re going to hand our generators over to the government and tell them it’s their problem to deal with. We cannot keep going,” Abdo Saade told the Telegraph on Monday during an interview at his Beirut apartment.

Mr Saade is the head of the private generator owners’ syndicate of Lebanon, a group of several thousand businessmen who are today supplying most of the power across the tiny Mediterranean nation.

Lebanon started using private generators to cope with power outages during its 15-year civil war, when many in the syndicate got their start in the business.

“We came to fix a small gap in the market,” says Mr Saade, a 60-year-old veteran of the war who has the scars to prove it.

That gap proved lucrative and generator owners have continued operating in a largely unregulated grey market since the conflict ended in 1990. Though state company Électricité du Liban (EDL) is the sole legal power provider, it has always lacked the capacity to supply 24/7 electricity.

Today private generators are tucked down alleys, in basements and in vacant lots across Lebanese towns and cities, their rhythmic hum part of the country’s soundscape. Viewed from the hills above the capital, the Beirut peninsula is often shrouded in a yellowish layer of smog to which generator fumes are a prime contributor.

Successive governments have failed to fix power shortages, instead making – and then failing to implement – numerous plans to privatise and liberalise the market. Projects to build new power plants and install a nationwide metering system became mired in mismanagement and corruption.

Along the way, the government spent phenomenal sums on subsidising consumption.

As Lebanon entered a severe economic crisis in 2019, the country’s public debt had surpassed nearly 170 per cent of GDP, one of the highest rates in the world.

An estimated 46 percent – or $45 billion – of this enormous burden is associated with spending on the electricity sector, according to Marc Ayoub, an energy expert at the American University of Beirut. “The electricity sector is a contributor to the crisis we are in,” he says.

As the crisis has deepened, foreign reserves have shrunk and the government has cut the amount of imported fuel it supplies to EDL. Earlier this month the country's two biggest power stations shut down entirely for several days.

Beirut – once a shimmering city where the searchlights of nightclubs prowled the night sky – is these days a glum place, left without street lamps, or even functioning traffic lights much of the time.

Power outages that once lasted two hours can now stretch to days, leaving private generator owners supplying more power than the state.

“We’ve exchanged roles,” says Mr Saade.

While generator owners once grew wealthy off monthly profits of up to 30 percent, “those days have ended,” he says.

In recent months the government phased out fuel subsidies, meaning diesel now costs ten times more than it did pre-crisis. Generators that are not designed to run 22 hours per day must be maintained with imported spare parts that are paid for in dollars.

Customers meanwhile are still paying in the local currency, which has lost over 90 percent of its value against the dollar.

While private generators are technically illegal, the government recognises their role by setting monthly tariffs. Though subscription costs have increased roughly tenfold since the start of the year, Mr Saade says this is not enough.

“If this continues, 80 percent of generator owners won’t be able to continue,” he says, calling on an essentially bankrupt government to reintroduce subsidies. “We’re heading into darkness.”

Many Lebanese are unsympathetic to Mr Saade’s position.

Over 82 percent are now so poor that they cannot afford at least one essential service, according to the United Nations.

This means that many, like Khoudor Al-Akhdar – a 35-year-old salesman – have forgone their generator subscription.

“The price is not realistic, I feel like I’m just giving benefit to the black market,” Mr Akhdar says from a Beirut cafe where he now spends his days working and charging his mobile phone.

For Lebanese struggling to put food on the table as hyperinflation wipes out the value of their salaries, electricity is rapidly becoming an unaffordable luxury.

“If you try to negotiate the price with them, they say take it or leave it. They act like thugs, like gangsters. They won’t compete with each other – they’re literally a cartel,” Mr Akhdar says.

Mr Saade acknowledges that “people are shouting and screaming,” when they receive their monthly generator bills but insists the government is to blame. “It’s not our responsibility to fix this problem.”

Here he has a point, according to Ziad Hayek, a Lebanese economist.

“The main problem of power generation in Lebanon is not this local generator mafia, they’re just parasites,” says Mr Hayek.

In the early 2000s Mr Hayek headed a privatisation council that created a plan to reform the electricity sector. He later grew disgusted with Lebanon’s politicians and now lives abroad.

“These people are criminals,” he says of Lebanon’s political class, accusing them of corruption and squandering billions of dollars on subsidising the electricity sector.

In his Beirut apartment, Mr Saade is quick to distance himself from the country’s reviled politicians and is eager to show that he is suffering too.

“Look, we’re on the same schedule as everyone else,” he says as the lights in his living room flicker and die.

With additional reporting by Angie Mrad