The EDL headquarters, devastated by the explosion at the port of Beirut on August 4, 2020. (Credit: L'Orient-Le Jour)
While its employees are on strike to protest the refusal of the Finance Ministry to grant them performance bonuses provided for in Decree No. 13.020 of 28/2/2024, Electricite du Liban (EDL) is almost out of fuel and risks a complete blackout once again in the coming days unless the problem, on which the Energy and Water Ministry is banking, is resolved.
This is what EDL announced in a press release on Wednesday, confirming information that L'Orient-Le Jour had been able to obtain from two well-informed sources.
The public supplier stated that "no cargo has been delivered under the swap agreement concluded between the Republic of Iraq and the Republic of Lebanon ... neither during the month of July nor during the month of August to date."
It was announced on July 27 that it had shut down one of the production units at the Zahrani plant "as a precaution" due to a delay in the delivery of a fuel shipment, the supplier added that it had been forced to shut down the Deir Ammar site on Wednesday morning. These two thermal power plants are the largest in the country and, above all, the only ones for which EDL regularly receives fuel, while those at Jiyeh and Zouk have been shut down for some time.
Later on Wednesday, the syndicate of EDL's employees announced in a statement that it decided to continue its strike until next Monday, "in order to allow time for the negotiations promised by the Minister of Finance," who was supposed to meet with the syndicate today but did not "for unknown reasons."
Network stability at risk
EDL said it may be able to continue operating the remaining production units at the Zahrani plant to continue supplying the country's infrastructure, but it will not last beyond Aug. 17. The supplier also fears that it will not be able to guarantee the stability of the network, given the low level of available production compared to demand.
"EDL will not be able to hold out beyond that," assured the first informed source who works for the supplier. In a statement to the media, the contents of which we have confirmed, the caretaker energy minister, Walid Fayad, said that the fuel exchange contract between Iraq and Lebanon was still in force and that the ministry was awaiting "an official notification of a loading date for the crude fuel" delivered by Iraq – which Lebanon then exchanges for refined fuel with which it can fuel its power plants.
"This could happen in the next ten days to two weeks, and by then what the Zahrani plant can provide is 200 MW, which is enough for vital public services and a one or two-hour cap for citizens if possible," it said. "After the next shipment is delivered, things will go back to how they were" and EDL will be able to mobilize "600 MW and provide between 5 and 6 hours of power per day."
The reason for the blockage
The second well-informed source explained that the blocking of deliveries planned under the swap agreement put in place since summer 2021 is rooted in malfunctions in the deferred payment mechanism for cargoes delivered by SOMO, the Iraqi state public agency responsible for marketing the country's hydrocarbons.
"EDL has been collecting enough funds to pay for its fuel since the collection of bills was improved and the rates were adjusted. But it is at the level of converting these funds into dollars in Lebanese pounds that things are stuck," explained this second source, referring to "political and religious" blockages at the level of the Finance Ministry and the Central Bank (BDL).
In his statements, Fayad attributed the delay "to the fact that the Central Bank is not transferring the amounts due to Iraq" while waiting for Parliament to be convened to vote on a law that covers the execution of the swap contract during its second and third year of execution. Without this law, the monthly loading must be subject to "mediations" with Iraqi officials in order to obtain "exceptional authorizations" that delay the delivery process.
A third source said that BDL is surprised by the current situation, stating that the institution gave its green light "a week ago" for EDL to have access to its funds to finance its fuel purchases and wonders "if communication is going well between the electricity supplier and the Energy Ministry.
Caretaker Finance Minister Youssef Khalil did not respond to L'Orient-Le Jour's calls seeking clarification.
EDL, which already had a chronic deficit in electricity production before the crisis that erupted in 2019, has seen its situation worsen due to growing financial difficulties and increasingly tired infrastructure, partly due to excess demand from Palestinian and Syrian refugee camps. Since the summer of 2021, the shipments of Iraqi fuel oil that it exchanges for diesel supplied by third-party companies under a dedicated mechanism have been its only source of fuel.
The situation of EDL had partially improved in recent months, despite some episodes similar to the one it is currently experiencing. Despite the security situation that has become tense over the past ten days due to the Gaza war and its spillovers into southern Lebanon, importers continue to receive fuel. The Iraqi fuel issue was the focus of an official visit by caretaker Prime Minister Najib Mikati to Baghdad last July.
This article originally appeared in French in L'Orient-Le Jour.
