Electricité du Liban's devastated headquarters in Beirut. (Credit: Joao Sousa / L'Orient Today)
Lebanese Ministry of Energy and Water Walid Fayad announced in a Friday statement that he has launched three tenders to purchase fuel oil shipments compatible with the Electricité du Liban's (EDL) power plants: grade A fuel oil, grade B fuel oil and gas oil.
The announcement was made following the green light given by Prime Minister-designate Najib Mikati and Banque du Liban (BDL) Governor Riad Salameh to release the necessary funding. The fuel will allow EDL to provide between 8 and 10 hours of power per day, a significant jump from the virtually zero hours currently offered.
The statement said the provided funds are expected to be between $100 million and $150 million per month for six months. The bid winners will be announced in November so deliveries can be made between Dec. 1 and 10, 2022.
Until then, Lebanon can only rely on the few hours of power produced from fuel oil supplied via the barter agreement concluded in July 2021 with Iraq. A shipment of 30,000 tons was announced yesterday while another is expected soon, at a date that was not communicated.
On Monday, authorities began negotiations to ensure sufficient funding to supply EDL with fuel oil for six months, on the condition that EDL repays the BDL to recover the balance of the bills already issued and increase electricity tariffs in the short term.
These tariffs have been frozen since 1994, but senior officials have agreed in recent months to increase them substantially — 10 cents to 27 cents per kilowatt hour, depending on consumption — compared to tariffs in Lebanese lira equivalent to less than one cent at the current exchange rate (LL 37,000 to the dollar).
The fact that EDL's tariffs are frozen at such low levels is part of the structural problem that prevents the state-owned electricity supplier from being financially viable enough to purchase its own fuel oil.
The tariff increase is part of the reforms requested by both the International Monetary Fund — from which Lebanon has requested financial assistance — and the World Bank to finance part of the US initiative to bring in Egyptian gas and Jordanian-generated electricity to temporarily boost EDL's capacity.