
Electricité du Liban headquarters in Beirut. (Credit: Philippe Hage Boutros/ L'Orient Le-Jour)
BEIRUT — Caretaker Energy Minister Walid Fayad announced Wednesday evening that Iraq has greenlit supplying Lebanon with fuel. This decision comes as Lebanon's two remaining operational power plants have either suspended or rationed production due to a financial dispute over fuel purchases.
The risk of a blackout loomed over the country after the Deir Ammar plant ceased operations on July 6, followed by the partial suspension of the Zahrani plant the next day. Electricité du Liban (EDL) justified its decision by citing "financial disputes involving the Lebanese and Iraqi governments as well as the Banque du Liban (BDL)," which had prevented the unloading of two ships carrying 30,000 tons of fuel each. However, Fayad clarified that the issue was "legislative and legal, not financial," referring to the absence of a law formalizing the fuel exchange mechanism established in the summer of 2021 between Lebanon and Iraq.
Iraq's fuel supply approval to help Lebanon avoid blackout
In a statement released Wednesday evening, Fayad said he "received a call from the director-general of the Iraqi oil company SOMO and the Iraqi Oil Ministry, informing him that Iraqi Prime Minister Mohammad Shia al-Sudani had agreed to load the fuel ship blocked in Iraq, in solidarity with Lebanon." This will allow the unloading of two fuel oil shipments at the Zahrani and Deir Ammar plants.
Fayad explained that this decision follows interventions by caretaker Lebanese Prime Minister Najib Mikati and himself with several parties, including the Iraqi Oil Minister, the Iraqi president and the Iraqi embassy in Lebanon, to prevent the country "from plunging into total darkness." Fayad also noted that the 2021 agreement between Lebanon and Iraq was "based on a relationship of trust built with his Iraqi counterpart, which is reflected in the relationship with the Iraqi government."
Under this agreement, Lebanon receives fuel oil that is unusable by EDL plants, which it then exchanges through a tender mechanism for other types of fuel compatible with Lebanese facilities. In return, the Finance Ministry deposits an amount equivalent to the supplied quantities into an account at the BDL, so that Iraqi authorities spend these sums exclusively in Lebanon in exchange for services — the nature of which has not been specified in the agreement.
Fayad told L'Orient-Le Jour on Wednesday that Lebanon had asked Sahara Energy, the company that won the last tender, to deliver the cargo intended for EDL at the same time it receives its cargo from Iraq on one of its ships waiting there. However, Iraqi authorities had "blocked this mechanism" because Lebanon "has not transferred the amounts due to Iraq for several months," he noted.
"We're five months behind schedule, and Parliament needs to approve a law for transferring $174 million."