Beirut — Lebanon signed a contract to mediate Iraq’s fuel sales on Saturday in hopes of mitigating a serious financial and energy crisis in a small country in the Mediterranean, Lebanese and Iraqi media reported.
The agreement allows Beirut to resell one million tonnes of heavy oil from Iraq (fuel that Lebanon cannot use at its power plants) to companies that provide fuel that can be used for Lebanon the following year.
Lebanon will provide Iraqi services in exchange without providing details, said Energy Minister Raymond Gajar. Local media said Iraq would benefit from Lebanese medical services and agricultural consultants.
Swaps estimated by Ghajjar, valued between $ 300 million and $ 400 million, could provide a short rest in Lebanon’s worsening power outages and fund underfunded governments. But the solution of structural power in a sector full of corruption and political interference is never seen.
Since the end of the 15-year civil war in 1990, power outages have been a fixture in Lebanon, and small countries have relied on imported fuel. But as the government tackles unprecedented financial problems and considers raising fuel subsidies, the problem is exacerbated.
“The Iraqi state has agreed to open an account at the Central Bank of Lebanon in exchange for this fuel. This account is managed by the Iraqi Ministry of Finance, which purchases services within Lebanon … in Lebanese pounds.” Ghajjar said. Lebanon will then resell the fuel in exchange for factory-usable fuel.
“I hope other Arab countries will follow suit and give us this opportunity,” he said at Beirut International Airport, returning from Baghdad.
A statement from the Iraqi Prime Minister’s residence said that one million barrels of fuel oil would be provided to Lebanon in exchange for services and products, but neither side would immediately mention what these are. It was.
Lebanon’s state-owned utility recently supplies electricity within four hours a day, and the main provider remains a private generator operator. Diesel supply is declining and long lines are growing daily outside the gas station.
Government officials have also complained about widespread smuggling into neighboring Syria. Syria faces an economic crisis after a decade of war.
Last year, Lebanon defaulted on its external debt and struggled to pay its suppliers. Central banks have restricted credit to the purchase of basic supplies such as fuels and medicines.
The energy crisis has reached an unprecedented level in Lebanon. Generator operators warned on Friday that the engine would need to be shut down as diesel shortages worsened and black market prices reached exorbitant levels.
While some Lebanese bakeries have completely shut down their ovens, hospitals are allocating consumption and shutting off air conditioning in the waiting area. Supermarkets warn that power shortages threaten products and endanger food safety.
UNICEF of the United Nations Children’s Fund warns that most water pumps will gradually cease nationwide over the next four to six weeks, putting more than four million people, including one million refugees, at risk of losing access to safe water. doing.
Sarah El Dive