Lebanon headed for new blackout without funds for EDL

Lebanon’s power plants will gradually begin shutting down as of May 18 if Electricite du Liban (EDL) fails to secure necessary funds for fuel, according to the head of the parliamentary energy committee, Nazih Najem.

Najem warned that the Zouk power plant will stop operating as of May 18, while other plants are likely to follow in June.

With both the economic crisis and the Central Bank’s dwindling foreign currency reserves in full swing, EDL has struggled to secure necessary funds used to import fuel.

According to Lebanon’s Official Gazette, the Constitutional Council suspended an advance of $200 million to EDL –a short-term solution that was originally approved by Parliament in March to secure electricity fuel for two and a half months at most.

Turkish power-producing barges blocked

On Wednesday, Financial Prosecutor Judge Ali Ibrahim issued an order to prevent two Turkish power barges from leaving Lebanon.

The judge suspects three individuals were paid $7 million in commissions following the contract renewal between Lebanon’s Energy Ministry and Turkish companies Karadeniz and Karpowership. Investigations into financial brokerages led to the arrests of Ralph Faysal (who has ties to Gebran Bassil and is Turkish company Karadeniz’s agent) Fadel Raad (who received a commission from the agent) and Hasan Amhaz.

The contract prohibits any commissions, and fines the two companies a hefty fine if any personal deals are made. Prosecutor Ibrahim seized the barges “in order to guarantee the state’s rights to collect the $25 million penalty clause.”

Floating power plants, which Lebanon began to use in 2012, produce around 25 percent of the country’s electricity.

Due to corruption and resource mismanagement, state transfers to EdL amount to almost a quarter of the government’s budget deficit.

Problems with Iraqi fuel

In July 2020, the Lebanese government began formal talks with the Iraqi government on the exchange of fuel for industrial and agricultural products. 

Over a million litres of fuel were donated in September 2020. Following examination, the fuel was marked as unsuitable for Lebanese power plants, rendering the donation useless.

Lebanese power plants are accustomed to burning heavy fuel oil (HFO), while Iraqi fuel is known as high sulfur fuel oil (HSFO). By importing HSFO, Lebanon would have to go against its own laws due to its commitment to protect air quality in the country.

This did not stop both parties from engaging in talks. In April 2021, Lebanon and Iraq agreed to exchange 500,000 tons of fuel annually for medical expertise. Caretaker Prime Minister Hassan Diab was meant to visit Iraq to discuss the matter further, but the meeting was then postponed and a new date has yet to be set.

Lebanese minister blames smuggling for fuel shortages

The country has been experiencing chronic fuel shortages for a few months now, largely driven by the smuggling of subsidised fuels into neighboring Syria.

Just last night, the army stopped a pick-up truck from smuggling large quantities of fuel and petrol on the Akkar-Hermel road.

Throughout April, fuel prices have been steadily rising and petrol stations across the country have been forced to reduce their opening hours and ration their products in order to accomodate customers amidst the crisis.

Caretaker Energy Minister Raymond Ghajar pinpointed smuggling as the underlying reason for the lack of fuel, with the army foiling a number of smuggling operations in areas that include Zahle and Baalbek.

The Syrian government raised petrol prices by over 50 percent in March, as per a report by France 24. Lebanese fuel, in contrast, only costs around $25, which many financially-comfortable Syrians prefer to buy. 

In smuggling the fuel to Syria, smugglers are able to make massive profit turnovers. Many have had to resort to desperate means to obtain income in light of the economic crisis, as the minimum wage is currently valued at around $50 per month.