Red diesel gets the red light: Lebanon's diesel crisis explained

In this crisis it is all about the colors: red is impossible to find while green is impossible to afford.          

The Lebanese are currently facing a diesel crisis in light of the freeze on sales of red diesel and the availability of green diesel but at exorbitant prices. After the cabinet’s decision to subsidize a 20-liter can of red diesel by 3,000 LBP the real fight to locate the fuel had begun, especially from local gas stations.          

The president of the Oil Importing Companies in Lebanon, Maroun Chammas, told LBCI that there are many reasons behind the freeze on red diesel sales. Among those reasons is that the quantity of red diesel available on the market provided by oil facilities in Tripoli and Zahrani is simply not sufficient to meet demand. Chammas said that prices skyrocketed shortly after the cabinet’s subsidy announcement when the public rushed to gas stations buying up as much red diesel as they could transport and store.         

Chammas said that the draft law eliminating the VAT on red diesel has now been presented to parliament and will also contribute in aggravating the crisis. He revealed that during the Public Works Committee meeting tomorrow, they will consider eliminating the VAT on green diesel as well in order to prevent monopolies and price gouging.          

Chammas stated that the state has the right to import red diesel and that the company with the highest bid buys the oil on behalf of the state and the combined companies receive only 35% of their red diesel from the Tripoli and Zahrani refineries. He added that on the 18th of this month the decision to lift subsidies will expire.