Lebanon signs agreements with Iraq to increase fuel supplies and address electricity crisis

Lebanon and Iraq said today, Tuesday, that Lebanon has concluded two agreements to obtain more fuel supplies from Iraq, at a time when Beirut is facing difficulties in boosting electricity production to help it get out of an economic crisis that has been going on for years.

Lebanese Energy Minister Walid Fayyad said, in a statement confirmed by the Iraqi prime minister’s office, that Baghdad had agreed to increase the volume of heavy fuel oil supplies to Lebanon under an existing agreement by 50% to 1.5 million tons this year.

Fayyad said Iraq had also agreed to a trade deal to supply Lebanon with two million tons of crude annually. Baghdad also confirmed this agreement.

Under the heavy fuel oil deal, which was first agreed in July 2021, Iraq will supply fuel to the Lebanese government in return for services including health care for Iraqi citizens.

Lebanon then swaps the heavy fuel oil for gas oil that can be used in power plants, which have operated for decades below full capacity but have all but stopped working during the financial crisis that has hit the country’s ability to buy fuel.

Fayyad said that the two million tons of crude that Lebanon will receive under the trade agreement will also be exchanged.

He added in a statement that the deal includes a deferred payment mechanism for a period of six months from the date of receipt without any financial interest, and at a price that takes into account competitive international prices.

Fayyad told reporters earlier this month that the two deals were part of Lebanon’s attempts to improve electricity supplies.

(Reuters)