Fueling progress: Lebanon and Iraq sign agreements to boost electricity sector

Lebanon and Iraq recently signed Memorandums of Understanding (MoU), amounting to a maximum of $1.8 billion, to facilitate the supply of crude and fuel oil to Lebanon's struggling electricity sector.

The agreements were signed during a meeting between Lebanese Energy Minister Walid Fayyad and Iraqi Oil Minister Hayan Abdul Ghani in Baghdad.

The expected quantities of crude oil and fuel oil are set at 3 million tons and 500,000 tons, respectively, and will be allocated for the benefit of Electricité du Liban (EDL).

The first MoU pertains to extending an existing fuel oil supply agreement, which was set at 1 million tons annually but has now been increased to 1.5 million tons per year. Lebanon will cover the cost of this quantity through services, goods, and other means.

The second MoU outlines a new agreement under which Iraq will supply Lebanon with 2 million tons of crude oil annually, amounting to a financial value of $1.2 billion.

These MoUs are expected to transition into formal contracts in the upcoming weeks. Lebanon hopes that this increased fuel supply will contribute to raising the daily electricity supply to 10 hours, alleviating the current severe power shortages in the country.

However, a significant challenge for the Energy Ministry remains the payment method for this fuel, especially considering the new contract's value in dollars.

Despite Lebanon's ongoing financial and liquidity crisis, Iraq continues to work on providing the country with essential fuel for its electricity sector.

The evidence suggests that Iraq is willing to offer further support, provided Lebanon demonstrates genuine commitment to reforming its electricity sector and financial situation, ensuring timely fulfillment of its financial obligations.