Lebanon has reached agreements to secure more fuel supplies from Iraq, the two countries said Tuesday, as Beirut struggles to generate more electricity to emerge from several years of economic crisis. Baghdad has agreed to increase the volume of heavy fuel oil supplied under an existing agreement by 50% to 1.5 million metric tons this year, Lebanese Energy Minister Walid Fayad said in a statement confirmed by the Iraqi prime minister’s office. Iraq has also reached a trade agreement to supply 2 million metric tons of crude oil per year to its neighbor, Fayad added. This was also confirmed by Baghdad.
Getting out of the crisis
Under the heavy fuel oil agreement, first concluded in July 2021, Iraq provides the Lebanese government with fuel oil in exchange for services, including health care for Iraqi citizens. Lebanon then exchanges the heavy fuel oil for diesel for use in its power plants, which have been operating for decades at partial capacity but were almost de facto shut down during the financial crisis that affected the state’s ability to purchase fuel. Fayad said that the two million tons of crude in the trade agreement would also be traded. The agreement includes a deferred payment mechanism for six months from the date of receipt, it said in a statement, “with no provision for financial interest and at a price that reflects competitive international prices.”
Fayad told reporters earlier this month that the two agreements were part of Lebanon’s efforts to improve electricity supply. As Lebanon struggles to overcome its economic crisis, these agreements with Iraq will increase fuel supplies, which should help produce more electricity and ease energy shortages in the country. The lack of electricity has had a devastating impact on the Lebanese population, with frequent power outages affecting essential sectors such as hospitals, businesses and homes. These agreements offer a glimmer of hope for the Lebanese who aspire to an improvement in their living conditions. However, it remains to be seen whether these measures will be sufficient to provide a sustainable solution to the long-term energy and economic crisis afflicting the country.
