Lebanon hikes fuel prices to shore up forex reserves

AFP , Tuesday 29 Jun 2021

Lebanon hiked fuel prices by more than 30 percent Tuesday as it reduced subsidies that have eaten away at the central bank's foreign currency reserves amid a painful economic crisis

Motorbike drivers wait to get fuel at a gas station in the southern suburb of Beirut, Lebanon, Sunday, June 27, 2021 AP

Lebanon hiked fuel prices by more than 30 percent Tuesday as it reduced subsidies that have eaten away at the central bank's foreign currency reserves amid a painful economic crisis.

Petrol and diesel prices went up sharply, according to a revised price list published by the official National News Agency (NNA), in a week when a steep currency devaluation sparked angry street protests.

The fuel price rises, which will sharply affect the cost of other key commodities, come as Lebanon grapples with an economic crisis branded by the World Bank as one of the world's worst since the mid-19th century.

The Lebanese pound -- which has been pegged at 1,507 to the US dollar since 1997 -- sold for more than 17,000 to the greenback on the black market this week, a record low.

Waiting in a crowd of scooters lined up for fuel, Noor al-Dean Radwan said life in Lebanon had become intolerable.

"We are disgusted with this life, we can't do it anymore... every day we wait for more than one hour at the gas station," the 37-year-old told AFP.

"We are going to start killing each other for fuel."

The price of 20 litres of 95-octane petrol shot up nearly 16,000 pounds ($10.60 at the official rate) to reach 61,000 pounds ($40.60), according to NNA.

The price of the same amount of 98-octane petrol climbed by 16,300 pounds ($10.80) to reach nearly 63,000 pounds ($42).

Meanwhile, the price of diesel reached 46,100 pounds ($30.70), up from 33,300 pounds ($22.20).

The new prices came after weeks of long queues at petrol stations that had started rationing gasoline and diesel fuel amid shortages.

"What happened in recent days at gas stations is unacceptable," President Michel Aoun said on Tuesday, criticising the "humiliation" he said the population was subject to.

- Power outages -

Fuel importers blamed the crisis on a delay by the central bank in opening credit lines to fund fuel imports.

For their part, Lebanese officials said smuggling to Syria and stockpiling by fuel distributors had contributed to shortages.

The central bank used to fund 85 percent of fuel imports at the official exchange rate of 1,507 Lebanese pounds to the dollar while importers fund the rest of the cost at the street rate.

But the government last week authorised the funding of fuel imports at the weaker exchange rate of 3,900 Lebanese pounds to the dollar instead of the official peg to ease the crisis.

The central bank Monday said it would open credit lines for fuel imports based on the new exchange rate in compliance with the government's decision.

Fadi Abu Shakra of the union of fuel distributors told NNA on Tuesday that six tankers had started offloading fuel shipments that would boost supply in the coming days.

But reduced congestion at gas pumps will be offset by higher transportation and electricity costs that will trickle down and affect a wide range of goods and services, including bread and flour.

Subscriptions to private generators which in some regions operate for 22 hours a day would become especially expensive.

With half the population living below the poverty line and the minimum wage standing at the equivalent of about $39 a month, many will lose access to power.

Lebanon's fuel shortages have already forced the state electricity company to ration power supply in recent weeks, causing disruptions in hospitals and government buildings.

Despite mounting international pressure, political leaders widely blamed for the economic crisis have made matters worse by failing to agree on a new cabinet.

The government of caretaker premier Hassan Diab resigned in the wake of last summer's port explosion in Beirut that killed more than 200 people.

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