The Lebanese authorities and their Iraqi counterparts are expected to sign an agreement this week allowing the purchase of one million tonnes of Iraqi fuel oil for Lebanese power plants, said the Ministry of Energy and Water Resources.
Thus, Iraq should make available to Lebanon 1 million tonnes of crude oil which would still have to be refined in Iraq even before being sent to Lebanon. This should meet the specifications of the various Lebanese power plants.
This information comes at a time when a serious electricity shortage has been affecting Lebanon for several months now due to the inability of the Banque du Liban to honor its promises to grant the lines of credit necessary for the unloading of the tankers present on the along the Lebanese coast after its available monetary reserves collapsed while it refuses to resort to compulsory monetary reserves including for the purchase of drugs for people suffering from cancer or chronic diseases.
This electricity shortage has a domino effect with shortages of fuel oil for generators, particularly hospitals and bakeries. Eventually, the water supply could even be threatened, estimates a new UNICEF report.
For the time being, current information indicates that the financing of this purchase would not drain compulsory monetary reserves but would be in exchange for services rendered, in particular in the medical or agricultural sector. Another lead, the opening of an account of the Iraqi Central Bank at the Bank of Lebanon and the fact that the money would remain in Lebanon and would not be transferred abroad.
This quantity of fuel oil could thus allow the operation of the Lebanese power stations between 6 to 7 additional months and the reduction of the rationing imposed on the population from 8 pm to 10 am.
Currently, the Electricité du Liban could only produce 800 megawatts per day against a total capacity of 1,950 megawatts due to the lack of fuel oil while the importing companies demand to be paid in foreign currency.
Some experts also believe that the end of subsidies granted to this sector and the rise in tariffs is now inevitable. The latter has remained unchanged since the late 1990s. Also, the Lebanese authorities subsidized to the tune of one and a half billion annually the Electricity of Lebanon in order to compensate for its losses, that is to say the equivalent of the cost of fuel oil used by its power stations. A report from the Ministry of Finance estimated the cost of subsidies granted since 1997 at $ 25 billion.