Lebanon May Face Major Energy Crisis If State Power Producer Unable To Buy Fuel - Source

Lebanon's state energy company, Électricité du Liban (Electricity of Lebanon; EDL), may become unable to purchase the required fuel for the operation of power plants over internal political issues, what can eventually result in a massive energy crisis if the necessary steps on the matter are not taken, a source close to the Lebanese government told Sputnik

BEIRUT (UrduPoint News / Sputnik - 05th March, 2021) Lebanon's state energy company, Électricité du Liban (Electricity of Lebanon; EDL), may become unable to purchase the required fuel for the operation of power plants over internal political issues, what can eventually result in a massive energy crisis if the necessary steps on the matter are not taken, a source close to the Lebanese government told Sputnik.

Lebanon has recently seen a severe shortage of electricity, with the population being provided with energy only for four hours a day. The rest of the time people are forced to buy electricity from owners of private power generators at higher prices. On Thursday, the EDL announced the arrival of ships loaded with fuel to Lebanese ports, what can gradually help to restore the electricity supply.

"If we do not have fuel, we will not have electricity. There are solutions, but they are all linked to political decisions, both within the country and outside of it. And, of course, we need a government. Without a government, there is a problem. Partially, yes, [it is linked] to the formation of a government and the availability of [budgetary] allocations," the source said.

The EDL is still capable of purchasing fuel with funds remaining from a budget adopted for the 2020 financial year, according to the source.

"We had a bit of surplus from the 2020 budget to purchase this fuel, whereas the 2021 budget has not been issued yet, so we do have this possibility. If the 2021 budget would not allocate money to us, then this problem could occur.

But the second problem is that there is the USD [liquidity] problem; if the central bank agrees to provide us with dollars or not," the source added.

In late February, the Al Akhbar newspaper reported, citing Energy Minister Raymond Ghajar, that the remaining funds from the last year's budget would be enough for the company to provide power plants with power until the end of March. Meanwhile, owners of private electrical generators warn the population that they are technically unable to compensate for 15-20 hours per day as an alternative to the state power producer.

"We cannot prepare for a possible crisis, we have no resources to buy spare parts and other materials that are sold in dollars. Electricity was generally given for eight hours [a day], and we could compensate for the deficit. Now, they provide it for three-four hours per day in our district, for instance. If the state does not get fuel for power facilities, it will lead to a serious problem," Hussein Maatuk, a holder of private power generators in the Beirut district of Uzai, said to Sputnik.

Lebanon has been undergoing the most severe economic crisis in its modern history, with a bloated banking sector and endemic government corruption sending the currency tumbling down 80 percent of its value against the US dollar. Increasing poverty and unemployment have driven people to the streets, sparking a major opposition movement in October 2019, but although two governments have resigned, little has been done to address the root cause of the crisis.