Fuel crisis roils Lebanon
Al-Monitor | August 19, 2021
On Aug. 15, the Lebanese woke up to the news of a fuel tank explosion in the town of al-Tleil in the Akkar region of northern Lebanon that took place in the early hours of the morning. The explosion killed 28 and injured at least 79 civilians and soldiers, according to the Lebanese Health Ministry.
The charred bodies and the burned persons who were rescued were transferred to Akkar, Tripoli and Beirut hospitals. However, the Health Ministry called for sending severe cases abroad for treatment amid the lack of medicines and medical supplies and the difficulty in providing burn treatment in Lebanon. The official National News Agency said some burn victims were airlifted to Turkey on Wednesday.
In an Aug. 15 statement, the Lebanese army said the explosion occurred as its members were distributing gasoline to citizens from a fuel storage tank it had seized. The tank was hidden on a land plot used to store pebbles. The army said it was investigating the circumstances that led to the blast.
Mixed reports emerged on the causes of the explosion. Some said a lighter was ignited, while others say gunfire was shot following an argument and hit the gasoline tank. No official statements have been issued, but the son of the owner of the land where the fuel tank exploded was arrested.
The explosion sparked widespread anger in the region where it occurred. Many Lebanese rushed to blame the authorities for their negligence and corruption that pushed citizens to store fuel following its depletion from the market.
The detonation of the fuel tank came less than two weeks after the first anniversary of the Beirut port explosion. The Lebanese people are still waiting for the facts behind the Aug. 4, 2020, blast to be established; the political class has been accused of obstructing the investigation.
An acute fuel shortage crisis is hitting Lebanon hard. Gasoline is being smuggled into neighboring Syria or hoarded and then sold by profiteers on the black market at high prices, amid the cash-strapped government’s inability to secure the import of fuel due to the economic and monetary crisis that has afflicted the country since the end of 2019.
Meanwhile, the country’s fuel consumption has increased over the past few months as electricity production dropped, causing power rationing of up to 22 hours per day and an increased dependence on private generators. This has left many areas in almost-total darkness at night.
The crisis was further exacerbated last week after the Central Bank’s decision to end its subsidies for imported fuel and extend a line of credit for fuel imports based on the parallel exchange rate for the Lebanese pound, which has been hovering around 20,000 pounds to the dollar. Most recently, the central bank had been offering credit for fuel imports at the rate of 3,900 pounds to the dollar. The pricing standoff pushed gas stations to halt the sale of fuel under the rationale that their supply had run out.
The day before the explosion in Akkar, the Lebanese army had embarked on a campaign to raid closed gas stations and redistribute hoarded fuel to residents without compensation. The army was able to discover large quantities of fuel stored in many Lebanese regions at a time when citizens had been lining up for hours at gas stations.
As the fuel crisis worsens by the day, residents started storing fuel cans in their homes, a dangerous practice that could lead to explosions. The Central Bank’s decision to lift fuel subsidies, which had been discussed for months, will inflate prices of all fuel-based goods and services.
The acute shortage of fuel, especially diesel, has started crippling various economic sectors, most notably the health, food and transportation sectors.
The crisis also left government and private hospitals in critical shape as they run off fuel. Several hospitals issued a distress call, including the American University of Beirut Medical Center, Beirut Al-Makassed General Hospital and Al-Hayat Hospital. Many hospitals were forced to reduce electricity consumption and turn off air conditioning in several wards despite the blistering summer heat.
The president of the Syndicate of Private Hospitals, Suleiman Haroun, said that hospitals are in danger and that patients will not find hospitals to turn to if sufficient quantities of fuel are not secured. “The quantities extended to the hospitals that sent out pleas for help are barely sufficient for a few days. Private hospitals, which are now being drip-fed, need about 350,000 liters of diesel per day,” he told Al-Monitor. “The crisis is worsening and we need solutions. The monthly fuel needs of hospitals should be secured in their own tanks because they program their medical services and operations on a monthly basis.”
In turn, the vice president of Consumers Lebanon, Nada Nehme, warned of the impact of the fuel shortage on the safety and quality of foodstuffs. She told Al-Monitor, “We advise people to reduce their consumption of food items that need refrigeration, such as meat, cheese, dairy and ice cream, because they pose a danger to their health. We call on people to resort to traditional methods of preserving food, such as canning and drying foodstuffs, until the end of this period of intermittent power cuts, which has a very negative impact on food safety.”
Several basic commodities such as bread have largely vanished from store shelves as the cost of transportation increased. Many shops and businesses were forced to cut losses and shut their doors. Even the internet service saw its quality degrade.
The collapse of the national currency against the dollar and the decline in the pound’s purchasing power has helped push Lebanon into a stifling economic crisis. Prices of goods and services have skyrocketed as the purchasing power of salaries remained unchanged.
The Central Bank’s decision to lift fuel subsidies comes as a fatal blow to the Lebanese, especially those with low incomes, as many will not be able to afford to go to work due to the high cost of transportation. Many will not be able to secure their minimum food needs.
Statistics issued Aug. 11 by Information International, a Beirut-based research and consultancy firm in survey research, said the end of fuel subsidies will make the prices of gasoline and diesel jump more than quadruple.
Patrick Mardini, an economist and head of the Lebanese Institute for Market Studies, praised the decision to lift subsidies. He told Al-Monitor, “Lifting subsidies would bring back fuel to the market, end the rationing of electricity by private generators, and allow institutions to return to work and production.”
He added, “The next step is to improve the purchasing power of the citizen by capping the dollar exchange rate. This may be achieved by establishing a monetary council to strengthen the Lebanese pound.”
Other economists concurred with Mardini on the need to lift subsidies but disagreed on the timing. For example, despite an absence of public transportation, Lebanese workers have not been offered an alternative to secure fuel to get to their jobs.
Meanwhile, as a substantial chunk of the population plunges into poverty, a cash card program aimed at offering struggling citizens a safety net has yet to be approved.
“The scarcity of fuel has caused the closure of a number of enterprises who had to send their employees home,” Mardini said. “Lifting subsidies and securing fuel will allow these institutions to reopen and increase their production in order to be able to increase the salaries of their employees.”