Many gas stations were shut on Thursday. (Credit: João Sousa/L’Orient Today)
BEIRUT — Despite a partial lifting of subsidies aimed at enabling importers to speed the delivery of fuel to distributors and two price hikes this week, filling up with gas does not appear to have gotten any easier.
On Thursday, cars were backed up outside some gas stations in now-familiar queues, which are scorned on social media as “lines of humiliation.” Other gas stations were closed altogether.
As frustration mounted among fuel consumers, representatives of the commodity’s distributors and gas station owners sought to reassure them that the situation would ease in the coming days as fuel tankers have now, they say, unloaded their cargo, which will be delivered to stations Thursday night and Friday morning.
George Brax, a member of the syndicate of gas station owners, told L’Orient Today that gas stations’ storage tanks had been depleted at the end of last week when they were forced to sell fuel at the previous subsidized rate of LL1,507.5 to the dollar, meaning that it is taking time for stocks to be replenished now that a new rate and new prices have been set.
“Companies are now distributing to the gas stations and we hope we will see some respite at gas stations shortly,” he said, adding that around 120 million liters of gasoline and 110 million liters of diesel had been delivered and describing it as enough for around two weeks.
Fadi Abou Chakra, the head of the fuel distributors’ syndicate, told the state-run National News Agency that distributors had already begun shipping fuel to stations across the country, reiterating that the situation would be eased in the coming days.
But Chakra’s assurances are likely to have been met with limited confidence by those driving from station to station Thursday in search of gas. The syndicate head has periodically offered similar certitude since the beginning of the fuel crisis. On Tuesday he promised the public the situation would improve within two days — which it didn’t.
Mark Daou, an energy sector analyst whose family owns a chain of gas stations, meanwhile told L’Orient Today it was “only a matter of time” before stations’ stocks were replenished as “the product is there and the price set.”
Out of juice
Over the last several months, Lebanon has witnessed shortages and rationing at gas pumps, creating lines that have brought additional misery to daily life and forced motorists to give up long hours of their days to waiting.
A representative from a Beirut-based taxi company told L’Orient Today Thursday that they weren’t able to offer rides outside of the capital because their drivers had not been able to get fuel.
The shortages have also reportedly increased smuggling to neighboring Syria, where fuel subsidized in Lebanon is sold for a higher price.
As the fuel crisis has deepened, tension at gas stations has risen, with repeated reports of fist fights and gunfire breaking out as customers become irritable in the scramble to fill up.
The price hikes and shortages have not only caused issues for vehicles at the pumps. Owners of the diesel-powered generators that many residents rely on to bridge gaps in the state electricity supply say they are struggling to buy diesel and keep their machines running. This means for several hours a day, many homes and businesses are without any source of power at all.
Earlier this week, the director of Lebanon’s largest public hospital, Rafik Hariri University Hospital, said staff had been forced to shut off air conditioning units due to power cuts and difficulties obtaining generator fuel.
Fuel importers and gas station owners have blamed the crisis on the central bank’s failure to open credit lines to pay for imports due to critically low foreign currency reserves.
Among the stations closed Thursday were those operated by Total. In a text message sent to its customers, the company said that a fuel tanker that it brought to Lebanon has been waiting off the coast since June 24 and that it will unload once the central bank has paid up.
L’Orient Today could not reach a representative of Total for comment Thursday, but Brax said he expected the company to receive payment and be able to import fuel in the coming days.
“Usually BDL pays. It may be late, but it pays eventually,” he added.
When contacted Thursday evening, a BDL spokesperson offered no remarks on the payment and directed L'Orient Today to contact the Energy Ministry.
However an Energy Ministry spokesperson made clear to L’Orient Today that “the ministry has no role in the financial dealings of private fuel importers.”“We merely give them the permit to import the product. The [financial] relationship is limited between the company, BDL and the private local bank and the corresponding bank of the company,” the ministry’s spokesperson added.
As an attempt to ease the pressure on Banque du Liban’s coffers and find a solution to the fuel crisis, caretaker Prime Minister Hassan Diab gave exceptional approval last week for fuel imports to be subsidized at a rate of LL3,900.
From late 2019 up until this week, BDL had been subsidizing 90 percent of fuel imports at the official rate of LL1,507.5 to the dollar.
‘Just a morphine injection’
On Tuesday, the partial lifting of fuel subsidies was reflected in prices at the pumps, with the Energy Ministry announcing a 30-40 percent hike. Then, just two days later, prices shot up again.
As of Thursday, the cost of 20 liters of 95-octane gas is LL70,100, 98-octane is LL72,200 and diesel is LL54,400, while the cost of a tank of household gas now stands at LL41,600.
However, both Daou and Brax said the price hike is only a temporary solution.
“Don’t think that the lines at gas stations are over,” Brax said. “They are here to stay. The latest measure is just a morphine injection, but then the pain comes back.”
Just like the previous subsidies, “the whole process is dependent on BDL paying regularly,” Daou said. This is by no means guaranteed as the central bank’s reserves continue to recede.
The only sustainable solution, Daou continued, would be to remove subsidies from fuel entirely and instead provide alternative support, such as targeted subsidies for public transport drivers.
Brax agreed that eventually, subsidies may need to be removed entirely to counter the current pressure on the fuel sector. However, as a first step, he said it was essential that the government works harder to combat smuggling.
On Wednesday, Parliament passed a law that would provide 500,000 Lebanese families with an average monthly payment of $93 — a $556 million program that aims to replace subsidies.
However, the actual rollout of this cash assistance scheme may be a long way off given that how and to whom the money will be paid and how the program will be funded remains to be seen and a plan for removing subsidies has not yet been finalized.