Lebanon faces total darkness as Iraq halts fuel shipments over unpaid dues

Shafaq News/ Lebanese Energy and Water Minister Walid Fayyad announced that Iraq's State Oil Marketing Organization (SOMO) has suspended the unloading of fuel shipments to Lebanon due to non-payment of dues for the second consecutive year.

Fayyad stated that "for the fifth month in a row, the Central Bank of Lebanon has not transferred the payments for the fuel shipments to the Iraqi government's account. Consequently, Lebanon is financially exposed to Iraq, as the dues have not been paid for the second year in a row," according to the Lebanese newspaper Al-Akhbar.

"If the issue of funding for Iraqi fuel shipments is not resolved quickly, Lebanon will face a complete blackout in three days," he warned, explaining that "the problem is well-known to everyone: we need to pay for the fuel, and any hope that Iraq will waive this payment is misplaced."

Fayyad emphasized that "the crux of the problem is that the agreement with Iraq requires legislation by the Lebanese Parliament to allocate credits in the budget, allowing the Central Bank to settle the payments in the Iraqi account. Without this, the acting governor of the Central Bank of Lebanon, Wassim Mansouri, refuses to take any financial steps that are against the law."

According to Fayyad, "Official correspondence between Lebanese ministries (Energy and Finance) indicates that the Central Bank has only transferred $118 million to the Iraqi bank account and subsequently stopped transferring the dues for four fuel shipments, totaling $132 million for 2023."

"It is worth mentioning that the number of shipments received and payable for 2023 is eight, and there are 12 additional shipments for 2024, of which two have arrived, but their payment is not yet due."

Lebanon signed an agreement with Iraq in July 2021 to import one million tons of fuel oil to alleviate the country's electricity crisis. The first shipment arrived in Lebanon on September 16, 2021, carrying 31,000 tons of the material.

The Iraq-Lebanon energy exchange agreement stipulates that Iraq provides Lebanon, which is experiencing its worst economic crisis, with heavy fuel oil in exchange for "services and goods" that Iraq will receive from Lebanon.

In August 2022, the Iraqi Cabinet approved the extension of the agreement to sell fuel oil to Lebanon, stating that this decision comes in response to the difficult circumstances faced by the Lebanese people.