Lebanon Signs Deal to Sell Iraqi Fuel 07/25 08:30
BEIRUT (AP) -- Lebanon signed a deal Saturday to broker Iraqi fuel sales in
hopes of alleviating a crippling financial and energy crisis in the small
Mediterranean country, Lebanese and Iraqi media reported.
The deal allows Beirut to resell 1 million tons of heavy fuel oil from Iraq
-- fuel that Lebanon cannot use in its own power plants -- to companies who
would then provide useable fuel to Lebanon over the next year.
Lebanon would offer Iraq services in exchange, Energy Minister Raymond
Ghajjar said, without offering details. Local media said Iraq would benefit
from Lebanese health services and agriculture consultancy.
The swap, which Ghajjar estimates is valued at between $300-400 million,
could offer a brief respite to Lebanon's worsening power cuts and bring funds
to its cash-strapped government. But a structural power solution, in a sector
steeped in corruption and political interference, is far from sight.
Blackouts have been a fixture in Lebanon since the end of its 15-year civil
war in 1990, and the small country relies on imported fuel. But the problem has
intensified as the government grapples with unprecedented financial problems,
and considers lifting fuel subsidies.
"The Iraqi state agreed to open an account in Lebanon's Central Bank in
exchange for this fuel. This account is managed by the Iraqi Finance Ministry
through which it buys services inside Lebanon... in Lebanese pounds," Ghajjar
said. Then Lebanon resells the fuel in exchange for fuel it can use in its
"We hope other Arab countries follow suit and give us this opportunity
because it is really a golden opportunity for us," Ghajjar said at Beirut
International Airport upon his return from Baghdad.
A statement from Iraq's Prime Minister's office said the 1 million barrels
of fuel oil would be offered to Lebanon in exchange for services and products,
although neither side immediately mentioned what these were.
Lebanon's state electricity company has most recently been providing no more
than four hours of power a day, leaving private generator operators as the main
providers. Diesel supplies have dwindled, and long queues stretch outside gas
stations each day.
Government officials have also complained of widespread smuggling to
neighboring Syria, which is also facing an economic crisis following a decade
Lebanon defaulted on its foreign debt last year and struggled to pay
suppliers. The Central Bank has been limiting credit to purchases of basic
supplies, including fuel and medicine.
The energy crisis has reached unprecedented levels in Lebanon. Generator
operators warned Friday they would have to turn off their engines as diesel
shortages have worsened and prices on the black market have reached exorbitant
Hospitals are rationing their consumption, shutting off air conditioning in
waiting areas, while bakeries in some parts of Lebanon have stopped their ovens
altogether. Supermarkets have warned that the power shortages threaten their
merchandise and endanger food safety.
The U.N. children's agency, UNICEF, has warned that most water pumping will
gradually cease across the country in the next four to six weeks, putting more
than four million people, including one million refugees, in immediate risk of
losing access to safe water.