Caretaker Minister of Energy and Water Walid Fayad. (Credit: P.B.H)
BEIRUT — The Lebanese Energy and Water Ministry announced on Tuesday that the Iraqi government has agreed to increase the amount of fuel Baghdad provides to Lebanon to supply its power plants. Instead of a total of 1 million tons of fuel, Baghdad will supply 1.5 million tons.
The information had been announced in an earlier tweet by caretaker Labor Minister Mustafa Bayram. The caretaker minister indicated that his Iraqi counterpart Ahmad al-Assadi had told him that "the Iraqi cabinet has agreed to increase the donation of Iraqi fuel to Lebanon, from 1 million to 1.5 million tons."
Three agreements
The ministry said that "all remaining quantities in the current agreement to supply Lebanon will be delivered in four shipments, between July and October, and will include double the monthly amount of fuel currently received, i.e., an increase from 80,000 to 160,000 tons of fuel monthly. Contacted by L'Orient-Le Jour, the caretaker Energy Minister Walid Fayad clarified that the countries had agreed to receive all planned quantities, but in a shorter time frame. "Instead of the agreement ending in November, it will end in October," he said.
Secondly, Fayad's ministry announced that the fuel supply contract between the two countries has been renewed for a third year "under the current conditions, but with an increase of 50 percent of the annual quantity supplied, reaching 1.5 million tons of fuel oil."
The contract will come into force in November 2023, according to the minister, and its supply alone will allow the power plants of Deir Ammar and Zahrani to operate at a "capacity of 70 to 80 percent." In addition to the fuel purchased by Electricité du Liban, these quantities will allow the public institution to ensure "more than 800 megawatts" of electricity, Fayad added.
Finally, the ministry said that Beirut and Baghdad have agreed to sign a new state-to-state contract, allowing for "up to 2 million tons of fuel, which will be exchanged according to specifications set by EDL in a transparent process and under flexible conditions, including a deferred payment mechanism for six months from the date of receipt, without interest rates, and at a price that takes into account competitive international prices."
The new contract still needs to be approved by the government. "It should be noted, however, that this mechanism will not generate additional debt to the Treasury: the quantities obtained will be repaid through the deferred payment of bills, as is the case today with EDL," Fayad said.
No bills in 2023
But for that, "the mechanism according to which EDL can collect its bills in lira at the Sayrafa rate plus 20 percent, and then convert them into dollars, from the BDL must be well defined," he continued, which is still not the case, the public institution is still waiting to know how to issue the bills of 2023.
With these three agreements, "Lebanon's electricity production will no longer be limited by the amount of fuel it has at its disposal, but rather by the production capacity of its power plants," the minister stressed.
The announcements follow Fayad's recent visit to Iraq on May 6 and 7, during which he discussed these proposals with the Iraqi prime minister, in the presence of the deputy director general of State Security, Brig. Gen. Hassan Choucair, as well as with all the relevant ministers, with the aim of increasing Lebanon's supply of fuel, and therefore electricity.
Concluded in July 2021 and started the following September, the initial agreement with Iraq was for a quantity of 1 million tons of fuel oil, spread over a period of 12 months, which Lebanon could exchange for other types of fuel compatible with its plants, which is not the case of fuel oil produced by the Iraqi state company SOMO (State Oil Marketing Organization). This agreement aims to meet part of Lebanon's fuel needs for its public electricity. It was renewed in August 2022.