A cold winter in Lebanon

Rita Boulos Chahwan in Beirut , Tuesday 30 Nov 2021

Ongoing fuel shortages will mean a cold winter for many in Lebanon, with imports of diesel by the Shia group Hizbullah unlikely to remedy the situation, writes Rita Boulos Chahwan

A cold winter in Lebanon
Children search for valuables in the garbage next to a market in Beirut (photo: AP)

Lebanon will experience a cold winter this year, with diesel fuel and firewood both being expensive even as many desperate people continue to gather the latter illegally.

The real price of fuel at $700 per ton is not affordable to many people, and the increase in prices of fuel has come at a time when poverty is affecting 74 per cent of the Lebanese population, according to a study by the UN Economic and Social Commission for Western Asia (ESCWA).

In order to address the situation, Secretary-General of the Lebanese Shia group Hizbullah Hassan Nasrallah has announced that a second stage of the group’s fuel distribution will start in the coming days for families living in areas 500 metres above sea level.

“The price will be 100,000 Lebanese pounds less than the market price for every 20 litres of fuel and one million Lebanese pounds less for every barrel,” Nasrallah said.

More than $10 million of free or subsidised fuel from Iran has been distributed in Lebanon since September, he said, adding that $2.6 million worth of such fuel has also been provided for free to Lebanese NGOs, municipalities, government hospitals and other organisations, while more than $7.5 million has been sold at subsidised rates.

“The value of diesel grants provided by Hizbullah throughout the first stage [of the distribution] reached $2,600,000,” Nasrallah said, adding that the value of the subsidies on diesel fuel stood at $7,750,000.

“We have so far hosted four Iranian oil tankers and have used a rather slow and complicated selling and distributing mechanism. But this is normal since the verification process takes some time to ensure that the diesel doesn’t go to the black market,” he added.

According to Lebanese economics commentator Khodor Hassan, Hizbullah’s imports and distribution of Iranian oil is aimed at improving its media image. The group was trying to improve its reputation after its failure to make a difference in the fight against corruption in Lebanon, he said.

In reality, the amount of imported diesel fuel is not enough to cover the beneficiaries’ needs, especially heating for farmers and other institutions, and the imports are also not sustainable, Hassan said.

He said the low prices were the result of Hizbullah’s failure to pay fees and taxes on the imports, as the fuel has been entering Lebanon from Syria illegally. Companies that import fuel legally must pay fees and taxes, he said, adding to prices for consumers.

The experience of the first phase of the fuel distribution related to institutions has also not been encouraging, as many beneficiaries paid for the fuel through the Qard Al-Hassan Foundation, one of the financial institutions affiliated with Hizbullah.

However, having paid, they then did not receive any fuel, forcing them to buy it again at black market prices. Complaints to the Amana Fuel Company, the distributor of Hizbullah fuel, led to claims that the first phase of the distribution had been suspended, with priority being given to the second phase, Hassan said.

The beneficiaries of the Iranian diesel fuel had also been surprised to find that prices had risen with a rise in the exchange rate against the dollar, Hassan said, in parallel with a price schedule issued by the Lebanese Ministry of Energy.

This was despite the fact that the price was supposed to be fixed for each shipment, as payment takes place in advance.

Member of the Progressive Socialist Party’s economic affairs committee Mohamed Basbous said the initiative of Hizbullah had failed to achieve its target, as the price of the fuel had been approximately the same as for legally imported fuel.

Meanwhile, Lebanon’s Central Bank has effectively ended its fuel subsidies, which had drained its foreign reserves during the country’s ongoing economic crisis. Legally imported fuel has been smuggled to Syria, caused the crisis in Lebanon, Basbous said, adding that the quantity smuggled was equivalent to 34 Iranian shiploads of diesel.

According to political activist Mohamed Fakih, Hizbullah’s fuel distribution has electoral ends in view and is intended as a tactic in the upcoming elections. If Nasrallah really had good intentions, his party would support the government instead of trying to “impose” Hizbullah as an alternative to the Lebanese people, he said.

*A version of this article appears in print in the 2 December, 2021 edition of Al-Ahram Weekly.

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