Lebanese caretaker Energy Minister Walid Fayad, during a press conference, on Jan. 16, 2023. (Credit: Philippe Hage Boutros / L'Orient Today)
BEIRUT — Lebanon's caretaker Energy Minister Walid Fayad on Monday announced that he had sent decrees for signature to other ministers to demand a credit advance from the government's treasury amounting to $300 million. The funds are intended to cover the cost of supplying fuel to the country's power plants amid a severe power shortage.
This "initiative," as he presented it during a press conference, comes as the electricity file, including the financing of fuel stocks and a fuel swap agreement with Iraq, is expected to be the main focus of a cabinet meeting scheduled Monday to take place on Wednesday.
The procedure regarding these decisions is dividing Najib Mikati's government. The state-owned Électricité du Liban (EDL) had to shut down its power plants last week due to a lack of fuel, causing political tension between Mikati and the Free Patriotic Movement led by Gebran Bassil.
Mikati says that a cabinet session is needed to approve both the request for funds and the Iraqi agreement, while Fayad, who is affiliated with FPM, believes that a decree from his ministry, signed by the the other ministers, would be sufficient. The FPM and the Lebanese Forces believer that until a new president is elected to replace Michel Aoun whose term ended on Oct. 31, the government should only meet to discuss urgent matters.
Four ships
During his press conference at his ministry's headquarters in Beirut, Fayad explained that out of the $300 million requested, about half will be used to pay, initially, for the cargo of four ships which have been stationed off Lebanon's coast for several weeks as they await payment from the government, and the maintenance costs of the plants.
According to Fayad, two of these vessels are diesel ships, for which financing of more than $60 million was previously agreed with Banque du Liban (BDL) but these funds have not yet been released. The other two vessels waiting to be unloaded contain $45 million of grade A and B fuel oil.
The second half of the requested amount, some $140 million, should be used to keep the plants running and supplied, after the stocks of the four ships have been used. The $300 million would be used until the state begins to collect electricity bills issued on the basis of new tariffs, applicable since Nov. 1. These should be collected by the end of February.
This funding will allow, according to Fayad, EDL to produce four to five hours of electricity per day, half the amount he had indicated in his emergency plan, which the finance minister approved in September.
Fayad also announced, in this context, that he had sent the decrees relating to the funding advance to all ministers and that some of them have already signed them. Fayad stopped short of naming those who he says have signed. According to a version of these texts, distributed to the media by Mikati's press office, ministers affiliated with FPM and with former President Michel Aoun have signed the documents, namely: Abdallah Bou Habib (foreign affairs), Walid Nassar (tourism), Maurice Slim (defense), Henri Khoury (justice), Hector Hajjar (social affairs) and Issam Charafeddine (displaced).
Improvement 'within days'
If the decrees are signed quickly, an improvement in electricity production should be apparent "within days," Fayad said at his press conference.
The caretaker energy minister also announced that he had sent, among these decrees, a text concerning the renewal of the agreement with Iraq for the import of fuel, which facilitates a mechanism through which the Lebanese state can access fuel in exchange for "services." Under this agreement, Iraqi fuel, which is unsuitable for Lebanon's power plants, is bartered with third-party companies. If the procedure goes ahead quickly, "the first boat" should arrive in Lebanon in early February, Fayad said. However, Fayad did not specify whether that boat would contain unusable Iraqi fuel or usable bartered fuel.
Fayad also touched on a US initiative to import Jordanian electricity and Egyptian gas to Lebanon, which is still awaiting funding from the World Bank. He stressed that as soon as the process for the appointment of an independent electricity regulatory body of electricity is finalized, the World Bank will be obliged to endorse this funding, given that other reforms it asked for have been launched. These include the increase in tariffs and the implementation of a strategy to limit electricity waste.
Council agenda
Earlier in the day, the Grand Serail had sent an official invitation to the members of the caretaker cabinet to a meeting scheduled for Wednesday at 10 a.m.
This cabinet is set to convene after the prime minister received conditional approval from Hezbollah, an FPM ally, for such a meeting to go ahead. The condition being that the agenda be limited to the issue of electricity. According to the agenda published by the Grand Serail, the ministers will study several projects for the supply of fuel for EDL, including a draft agreement with Iraq, the increase of a line of credit from BDL or the granting of an advance from the treasury to pay the Bahraini fuel supplier Vitol Bahrain E.C.
Other issues will also be discussed, such as an agreement with the World Bank for a project to combat COVID-19, the maintenance of the Naameh landfill (south of Beirut), the granting of transport allowances to contract employees in public education, and the financing of wheat imports from the World Bank's Special Drawing Rights for Lebanon.
