Lebanon hikes fuel prices to shore up foreign currency reserves

BEIRUT — Lebanon hiked fuel prices by more than 30 percent on Tuesday as it reduced subsidies that have eaten away at the central bank’s foreign currency reserves amid a painful economic crisis. 

Petrol and diesel prices went up sharply, according to a revised price list published by the Energy Ministry, in a week when a steep currency devaluation has sparked angry street protests.

The sharp fuel price rises came as Lebanon, a small country of 6 million people, grapples with an economic crisis branded by the World Bank as one of the world’s worst since the mid-19th century.

The lira — which has been pegged to the US dollar at LL1,507.5 since 1997 — sold for more than 17,000 to the greenback on the black market this week, a record low. 

The price of 20 liters of 95-octane petrol shot up nearly LL16,000 Lebanese pounds to reach 61,000 pounds. 

The price of the same amount of 98-octane petrol climbed by LL16,300 to reach nearly LL63,000.

Meanwhile, the price of diesel reached LL46,100, up from LL33,300 pounds.

The new prices came after weeks of long queues at petrol stations that had started rationing gasoline and diesel fuel amid shortages.

Fuel importers blamed the crisis on a delay by the central bank in opening credit lines to fund fuel imports due to the depletion of foreign currency reserves.

For their part, Lebanese officials said smuggling to Syria and stockpiling by fuel distributors had contributed to shortages. 

The central bank used to fund 85–90 percent of fuel imports at the official exchange rate of LL1,507.5 to the dollar while importers funded the rest of the cost at the street rate. 

But the government last week authorized funding fuel imports at the weaker exchange rate of LL3,900 to the dollar instead of the official peg to ease the crisis. 

The central bank said on Monday it would open credit lines for fuel imports based on the new exchange rate in compliance with the government’s decision.

Following the central bank’s announcement, the Energy Ministry said fuel tankers docked in Lebanese waters had started off-loading fuel shipments that would boost supply in the coming days.

Fadi Abou Chakra of the fuel distributors’ union told the NNA on Tuesday that six tankers had started off-loading shipments and that they would soon be distributed to gas stations across the country.