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governmentNovember 26, 2020

Lebanon Might Be Heading For An Energy Crisis


The contract between the Lebanese government and Sonatrach, the Algerian company that has been supplying Lebanon with fuel for more than a decade, ends next month, with no replacement available yet.

In light of the contract’s nearing end, the government is supposed to have launched a transparent international tender to find a replacement for securing the country’s fuel needs.

However, no such tender has been launched yet, which is raising serious fears that Lebanon will plunge into total darkness with the start of the new year, considering that the contract with Sonatrach ends on December 31st.

Back in June, the company said that it would not renew its 3-year contract with the Lebanese state after a scandal involving tainted fuel.

The Ministry of Energy and Water is currently working on the contract’s specifications – a prerequisite for launching a tender to secure a contract with an alternate fuel supplier.

However, even if the specifications, which need to be approved by the Cabinet before being sent to the Tenders Department, are approved in time, there will likely be some difficult obstacles ahead of the government in regards to signing a new deal.

One of these is the question of how the government will go about convincing a new company to secure fuel for Lebanon – a bankrupt country going through its worst economic crisis to date.

Also, there’s the problem of how Lebanon plans to actually pay for such a company, considering the severe shortage of U.S. dollars in the market and the central bank’s repeated warnings about its dwindling foreign currency reserves.

All things considered, Lebanon might be heading for a new crisis involving its already poorly-developed energy sector.

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