The power plant in Zouk, Lebanon, just north of the capital of Beirut. (Credit: Philippe Hage Boutros/L’Orient-Le Jour)
BEIRUT — Caretaker Energy Minister Walid Fayad told L’Orient Today Wednesday that he has proposed to the Iraqi authorities that Lebanon would raise its electricity tariffs in order to be able to pay for a potential new fuel deal with Iraq. A previous deal under which Lebanon received fuel oil for its power plants via Iraq is set to expire in September, and Lebanon has yet to pay the money owed under that agreement.
Here’s what we know:
• In July 2021, Lebanon signed a deal with Iraq in which Lebanon would get fuel oil — via a complicated arrangement under which Iraqi fuel would be swapped for other fuel of a grade that can be used in Lebanon’s power plants – for a year to help Lebanon deal with its electricity crisis. In return, Lebanon was to provide Iraq with “services” which are to this day not identified and not implemented.
• In an interview with L’Orient Today after attending the Public Works Transportation, Energy and Water parliamentary committee on Wednesday, Fayad said that increasing tariffs would actually “save the Lebanese on the cost of their private generator bills, and at the same time we would be able to pay for the fuel we are getting.”
• “I still have to convince the Lebanese people of this choice as well as the whole political class, which is even harder,” he said.
• During a visit to Iraq on July 5, Fayad had said that the Iraqi finance minister expressed “willingness to look into the potential of the extension of the [Iraqi fuel] deal and upgrading it to secure a sustainable process that benefits both parties.”
• Fayad also said on Wednesday that, although he thanks the Iraqi authorities for all the efforts with Lebanon. “The decision to renew the deal is theirs, whether they want to renew it on the current terms or on [other] terms that would suit the interest of both parties.”
• The caretaker Energy Minister went on to say that for Lebanon to pay for the fuel deal already in place with Iraq, it has to “identify the services that the Iraqis can benefit from and the party that would receive such a service.” “This is not my responsibility but I will be working on it,” Fayad said. He said the central bank and the Ministry of Finance are ultimately responsible for the financial side of the deal.
• Fayad added that he is also searching for other Arab countries that might be willing to provide fuel. He cited Algeria as one possibility.
• The deal signed between Lebanon and Iraq, which is currently the only source of fuel for Lebanon’s state electricity, expires in ٍSeptember.