The Cabinet meeting at the Grand Serail in Beirut, on Aug. 14, 2024. (Credit: X/@grandserail)
Wednesday's Cabinet meeting was supposed to be a meeting mainly focused on the national emergency plan prepared by the government. However, the electricity dossier, introduced via an appendix to the agenda added the day before, became one of the key topics of the Cabinet meeting convened by caretaker Prime Minister Najib Mikati.
During the traditional press briefing after the meeting at the Grand Serail, caretaker Minister of Information Ziad Makary announced that an agreement was reached to "purchase part of the necessary fuel" to prevent Electricité du Liban (EDL) from shutting down all its power plants.
Contacted, caretaker Minister of Energy and Water Walid Fayyad (affiliated with the Free Patriotic Movement, whose ministers boycott government meetings in the absence of a head of state) indicated that three measures he had introduced to the agenda had been approved, as confirmed by one of the meeting minutes released at the end of the day.
Payment in Lebanese Pounds and Spot Cargo
The first approved measure allows EDL to use funds in Lebanese pounds, collected from bills paid by administrations, public institutions, and other offices, to begin settling the bill for 430,000 tonnes of fuel delivered by Iraq under the "swap" agreement initiated in the summer of 2021. This agreement allows the public electricity supplier to exchange a portion of the crude oil provided each month for fuel compatible with its power plants. According to the adopted decision, payment must be made via a transfer to the Iraqi Central Bank account registered at the Banque du Liban (BDL). The total of 430,000 tonnes corresponds to one-third of what Iraq committed to deliver during the last annual renewal of the agreement, minus 70,000 tonnes absorbed by Ogero, the operator responsible for managing fixed telephony and internet services.
The second measure involves requesting the Ministry of Finance, administrations, institutions, and other offices, as well as EDL, to establish a simplified mechanism to implement the first measure "in the shortest possible time." The measure specifies that the advance of 6,850 billion Lebanese pounds (76 million dollars at the rate of LL89,500 per dollar) already granted to administrations, institutions, and offices to cover their electricity bills from November 2022 to June is sufficient to cover the amounts that need to be paid for the fuel, pending settlement of bills beyond this period.
Finally, the Cabinet authorized the Ministry of Energy and Water to select a bidder for the tender launched on June 10, 2024, to purchase a cargo of 30,000 tonnes of fuel on the spot cargo market (i.e., a one-time shipment without a long-term contract or recurring schedule). "This shipment, expected around Aug. 20, will help minimize EDL's blackout period," the minister said. The public supplier indicated last week that it has enough fuel to last until Aug. 17, with the next shipment of Iraqi fuel expected towards the end of the month.
Walid Fayad emphasizes that delays in fuel deliveries, which could cause this new blackout episode for EDL, are related to delays by the BDL in executing payments promised to the Iraqis. "The BDL requires special authorizations for each payment, and a law needs to be adopted to resolve this issue once and for all," the minister explained, noting that the ball is now in Parliament's court.
The financial problems of the EDL, which have impacted its production and supply for many years, worsened with the onset of the economic crisis that began in 2019. However, the various measures implemented over the past three years have somewhat improved the situation in recent months.
This article originally appeared in French in L'Orient-Le Jour.
