Lebanon's ongoing economic crisis has further deepened as unpaid bills to Iraq exacerbate the country's chronic electricity shortages. The delays in fuel shipments, attributed to Lebanon's failure to pay for previous supplies, have left the nation grappling with widespread power cuts and disruptions to essential services, Iraqi officials told The National.

The country has recently depended on a deal with Iraq to supply fuel for its power plants, enabling the state electricity company, Electricité du Liban (EDL), to provide just over four hours of electricity per day. However, recent fuel shortages culminated in a 48-hour blackout, forcing Lebanon to seek alternative energy sources amid its severe economic downturn.

The agreement with Iraq, first signed in 2021 and renewed twice, allows Lebanon to pay for the fuel in local currency, which Iraq can use to purchase goods and services in Lebanon. Due to the incompatibility of the heavy fuel supplied by Iraq with Lebanon’s power plants, the deal permits Beirut to swap the fuel on the international market for other types, such as low-sulfur or gas oil. Despite these provisions, experts have described the deal as a "ticking bomb," fraught with logistical and financial challenges.

The National cited a senior Iraqi government official saying the recent delay in fuel shipments was directly linked to Lebanon's outstanding payments under the previous contract. The official revealed that while Iraq is committed to resuming shipments, it has refused Lebanon's request to waive the debt. 

The official revealed that Iraq would resume fuel shipments but would not cancel the outstanding debt. Figures from the Lebanese Ministry of Energy indicate that the account designated for Iraqi funds at Lebanon's central bank contains only $550 million, representing the value of the first year's imports only. This suggests that Iraq has struggled to obtain payments for fuel supplied in 2022. 

Another Iraqi official indicated to The National that a modest discount was offered for future fuel exports because Baghdad had already consented to payment in installments. However, there were concerns that the discount could negatively impact potential revenue. Sources provided varying estimates of Lebanon's debt to Iraq, with figures ranging from $700 million to $900 million.

Iraq has cited "technical and logistical reasons" for the delay in shipments but has reiterated its "sincere commitment" to Lebanon. Iraqi government spokesman Bassem Al Awadi emphasized that Iraq remains dedicated to the agreement with Lebanon, highlighting a strong fraternal, national, and humanitarian bond between the two nations during these challenging times.

The consequences of the delay have been immediate and severe. Over the weekend, EDL was forced to shut down its last operating power plant in Zahrani, located in southern Lebanon, as it ran out of gas and oil. The closure has had far-reaching impacts, disrupting operations at key infrastructure sites, including Beirut's airport, ports, water pumps, sewerage systems, and prisons.

Speaking to The National, Jean Gebran, the director general of Beirut and Mount Lebanon Water Corporation, expressed the gravity of the situation, noting that their power consumption is too high to rely on private generators, leaving them unable to provide water for several days.

Amid the turmoil, former General Director of General Security Abbas Ibrahim, who brokered the original deal with Iraq, criticized Lebanon for failing to uphold its commitments.

"We have not fulfilled our promises to provide services to our dear Iraq, nor to pay the money as we recently renewed the pledge," Ibrahim stated on X, formerly known as Twitter.

In response to the crisis, Algeria has offered to provide fuel aid to Lebanon following a phone call between Lebanese Caretaker Prime Minister Najib Mikati and Algerian Prime Minister Nadir Larbaoui. Algerian Energy Minister Mohamed Arkab confirmed that a “donation” of fuel would be forthcoming, with further details to be negotiated.