Lebanese central bank unable to support fuel purchase: Minister

BEIRUT, Lebanon

Lebanon’s central bank is no longer able to support the purchase of fuel, according to caretaker Energy Minister Raymond Ghajar on Wednesday, who said he quoted the central bank governor.

Ghajar's remarks came during a news conference following the Higher Defense Council meeting headed by Lebanese President Michel Aoun at the Presidential Palace in Beirut.

"Today, our need for electricity is at its peak. Our need is 3,000 Megawatts and our current production capacity, according to the fuel designated for (electricity) generation, does not exceed 750 Megawatts," said Ghajar.

A foreign currency shortage and devaluation of the currency has caused the central bank's reserves of the dollar to dwindle from an average of $38 billion at the end of 2019 to its current average of $16 billion.

Official estimates put the cost of the Lebanese subsidy program for basic materials at about $6 billion annually, half of which goes to subsidize fuel.

Ghajar believes the solution "is to propose a law in the House of Representatives to request the disbursement of credits for electricity in order to purchase fuel designated for generating stations, because it is the best solution for the citizen, even if the tariff is raised on him."

He pointed out that "in the event of stopping fuel subsidies, the price will be liberalized and unified" on all segments.

For the past few months, cash-strapped Lebanon has been suffering from an acute shortage of fuel due to the lack of sufficient foreign exchange which has affected imports, causing frequent power cuts.

The Arab country has witnessed a severe economic crisis in the past two years that has left it on the verge of financial collapse.

*Writing by Ibrahim Mukhtar in Ankara