IFC invests in Lebanon’s energy – LNG Industry

Report on International Finance Corporation (IFC) Investments in Lebanon and Alignment with Sustainable Development Goals (SDGs)

Executive Summary

The International Finance Corporation (IFC), a member of the World Bank Group, has initiated five new investment and engagement projects in Lebanon. These initiatives are designed to stimulate private sector development as a cornerstone of the nation’s economic recovery and reconstruction. The investments strategically target key sectors—energy, finance, and manufacturing—with a significant emphasis on advancing the United Nations Sustainable Development Goals (SDGs).

Analysis of New Initiatives and SDG Contributions

1. Advancing Affordable and Clean Energy (SDG 7) and Sustainable Infrastructure (SDG 9)

   The IFC will act as the lead transaction advisor to the government of Lebanon for a major gas-to-power project. This initiative aims to modernize the nation’s energy infrastructure and directly contributes to several SDGs.

   • Project Components:
     • Development of a Floating Storage and Regasification Unit (FSRU) to import and process Liquefied Natural Gas (LNG).
     • Modernization and conversion of the 465 MW Deir Ammar I power plant into a more efficient independent power producer.
     • Construction of a new 825 MW combined-cycle gas turbine plant, Deir Ammar II.
   • SDG Alignment:
     • SDG 7 (Affordable and Clean Energy): The project will expand access to reliable and more affordable electricity, reducing reliance on inefficient diesel generation.
     • SDG 9 (Industry, Innovation, and Infrastructure): It represents a significant upgrade to critical national infrastructure, fostering industrial capacity.
     • SDG 13 (Climate Action): By transitioning to natural gas, a cleaner fuel source, the project will help reduce the carbon footprint of Lebanon’s electricity sector.

2. Promoting Economic Growth (SDG 8) and Reducing Inequalities (SDG 10)

   A US$10 million financing package will be provided to two leading microfinance institutions, Al Majmoua and Vitas Lebanon. This investment is structured to enhance financial inclusion for vulnerable populations.

   • Target Beneficiaries:
     • Micro, Small, and Medium Enterprises (MSMEs).
     • Women entrepreneurs.
     • Forcibly displaced persons and their host communities.
   • SDG Alignment:
     • SDG 1 (No Poverty) & SDG 8 (Decent Work and Economic Growth): The loans will enable MSMEs to preserve and create jobs, fostering sustainable economic activity.
     • SDG 5 (Gender Equality): The specific focus on women entrepreneurs aims to empower women economically.
     • SDG 10 (Reduced Inequalities): By targeting displaced persons and host communities, the initiative directly addresses economic inclusion for marginalized groups.

3. Fostering Sustainable Industrialization and Innovation (SDG 9)

   The IFC is providing a loan of up to US$40 million to BCI Holding S.A., a regional producer of chemical and packaging solutions. The investment supports sustainable manufacturing and regional expansion.

   • Key Outcomes:
     • Establishment of a dedicated R&D and Innovation Center in Lebanon.
     • Development of a back-office operations hub to support regional growth.
     • Support for SMEs through improved materials and technical assistance.
   • SDG Alignment:
     • SDG 9 (Industry, Innovation, and Infrastructure): The funding promotes industrial growth and enhances innovation capacity through the new R&D center.
     • SDG 12 (Responsible Consumption and Production): BCI will help its SME clients improve quality and reduce waste, promoting more sustainable production patterns.
     • SDG 8 (Decent Work and Economic Growth): The company’s expansion is expected to drive significant job creation.

4. Enhancing Resilient Infrastructure and Industrial Capacity (SDG 9)

   An investment of up to US$30 million in Matelec, a regional manufacturer of power machinery and electrical infrastructure solutions, will support the company’s growth and contribution to industrial development.

   • Primary Objective: To support Matelec’s upcoming infrastructure projects in Lebanon and the wider Middle East and North Africa region.
   • SDG Alignment:
     • SDG 9 (Industry, Innovation, and Infrastructure): The partnership strengthens the availability of high-quality electrical infrastructure, which is fundamental for industrial and municipal development.
     • SDG 8 (Decent Work and Economic Growth): The investment reinforces Matelec’s role in industrial development and job creation across its markets.

Conclusion

The IFC’s recent investments in Lebanon are strategically aligned with both the country’s national recovery plans and the global Sustainable Development Goals. By focusing on energy security, financial inclusion, and sustainable industrial growth, these initiatives aim to build a resilient and inclusive economy, leveraging the private sector as a critical engine for long-term sustainable development.

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 1: No Poverty

  The article discusses initiatives to expand financial inclusion for vulnerable populations, including micro and small enterprises, forcibly displaced persons, and host communities, which is a core component of poverty reduction strategies.

• SDG 5: Gender Equality

  The financing package specifically targets women entrepreneurs, aiming to empower them economically by expanding their access to finance, which directly supports gender equality.

• SDG 7: Affordable and Clean Energy

  A significant portion of the article is dedicated to investments in Lebanon’s energy sector, focusing on expanding access to reliable and more efficient electricity, thereby addressing energy poverty and infrastructure deficits.

• SDG 8: Decent Work and Economic Growth

  The investments are explicitly aimed at fueling private sector development, supporting MSMEs, creating and preserving jobs, and stimulating sustainable economic recovery in Lebanon.

• SDG 9: Industry, Innovation, and Infrastructure

  The article details major investments in energy infrastructure (power plants, FSRU), sustainable manufacturing, and industrial development, including the establishment of an R&D and innovation center.

• SDG 17: Partnerships for the Goals

  The initiatives described are multi-stakeholder collaborations, involving international financial institutions (IFC, World Bank), the Lebanese government, and private sector companies, and leverage blended finance mechanisms with other governments (Netherlands).

2. What specific targets under those SDGs can be identified based on the article’s content?

1. SDG 1: No Poverty

   • Target 1.4: By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to… financial services, including microfinance.
     
     The article states that IFC is providing a US$10 million financing package to microfinance institutions to “expand access to finance to micro and small and medium enterprises (MSMEs)… with a focus on forcibly displaced persons and host communities.”

2. SDG 5: Gender Equality

   • Target 5.a: Undertake reforms to give women equal rights to economic resources, as well as access to… financial services.
     
     The financing package explicitly aims to “expand access to finance to… women entrepreneurs,” directly addressing this target.

3. SDG 7: Affordable and Clean Energy

   • Target 7.1: By 2030, ensure universal access to affordable, reliable and modern energy services.
     
     The gas-to-power project’s primary goal is to “expand access to reliable electricity” for the country.
   • Target 7.a: By 2030, enhance international cooperation to… promote investment in energy infrastructure and clean energy technology.
     
     The IFC’s investment to modernize the Deir Ammar I power plant into a “cleaner, more efficient” producer and build the new Deir Ammar II plant is a direct investment in energy infrastructure and cleaner fossil-fuel technology.

4. SDG 8: Decent Work and Economic Growth

   • Target 8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship… and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to finance.
     
     The article highlights that the investments aim to “create much-needed jobs,” “drive job creation and SME development,” and provide financing to “micro and small and medium enterprises (MSMEs).”

5. SDG 9: Industry, Innovation, and Infrastructure

   • Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure… to support economic development.
     
     The article describes the development of significant energy infrastructure, including an FSRU, the modernization of a 465 MW power plant, and the construction of a new 825 MW plant. The investment in Matelec also supports “upcoming infrastructure projects.”
   • Target 9.2: Promote inclusive and sustainable industrialization.
     
     The loans to BCI Holding and Matelec are designed to “support the growth of the manufacturing sector” and “Boost industrial development.”
   • Target 9.b: Support domestic technology development, research and innovation.
     
     The partnership with BCI Holding includes the plan to “establish a dedicated R&D and Innovation Center in Lebanon.”

6. SDG 17: Partnerships for the Goals

   • Target 17.3: Mobilize additional financial resources for developing countries from multiple sources.
     
     The financing involves the IFC (World Bank Group) and a blended finance facility under the PROSPECTS Partnership, “a programme spearheaded by the government of the Netherlands.”
   • Target 17.17: Encourage and promote effective public, public-private and civil society partnerships.
     
     The energy project is explicitly structured as a “public-private partner-ship model,” with IFC advising the “government of Lebanon, working closely with the High Council for Privatization and PPPs and the Ministry of Energy and Water.”

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. For SDG 1 & 5:

   • Financial flows: A US$10 million financing package is being provided to two microfinance institutions. Progress can be measured by the amount of capital disbursed to MSMEs, women entrepreneurs, and forcibly displaced persons.

2. For SDG 7:

   • Installed capacity of power plants: The modernization of the 465 MW Deir Ammar I plant and the construction of a new 825 MW Deir Ammar II plant provide clear metrics for increased generation capacity.
   • Energy efficiency and fuel source: Progress can be measured by the shift from diesel to more efficient combined-cycle gas turbines and the reduction in the overall cost of electricity generation.

3. For SDG 8 & 9:

   • Financial flows to industry: The specific loan amounts of “up to US$40 million” to BCI Holding and “up to US$30 million” to Matelec serve as direct indicators of investment in the manufacturing and industrial sectors.
   • Job creation: The article implies that the number of jobs preserved and created by the supported MSMEs and companies will be a key measure of success.
   • Innovation capacity: The establishment of “a dedicated R&D and Innovation Center in Lebanon” by BCI is a concrete, measurable outcome.

4. For SDG 17:

   • Partnership formation: The successful structuring and implementation of the “public-private partner-ship model” for the gas-to-power project is a key indicator.
   • Mobilized funds: The total amount of investment mobilized by the IFC and its partners (e.g., the government of the Netherlands through the PROSPECTS partnership) can be tracked.

4. Table of SDGs, Targets, and Indicators

Source: lngindustry.com