Iraq approves fuel shipment to Lebanon despite unpaid dues

Shafaq News/ Lebanese Energy and Water Resources Minister Walid Fayyad announced on Thursday that the Iraqi government has agreed to unload a shipment of fuel despite Beirut's outstanding financial obligations to Baghdad.

In a statement reported by Lebanese media, Fayyad said he received a phone call from the Director General of the Iraqi State Oil Marketing Organization (SOMO), informing him of Iraqi Prime Minister Mohammed Shia Al Sudani's decision to authorize the unloading of the fuel ship in solidarity with Lebanon and its people. "This will allow two shipments of gas oil to be offloaded at the Zahrani and Deir Amar power plants."

This decision follows a phone call between Lebanese Prime Minister Najib Mikati and his Iraqi counterpart. Minister Fayyad also conducted several discussions with Iraqi oil minister Hayan Abdul Ghani, the Iraqi government, and the Iraqi embassy in Lebanon to address the fuel payment crisis and avert a complete blackout in Lebanon.

Ealrier, Fayyad announced that Iraq's State Oil Marketing Organization (SOMO) had suspended the unloading of fuel shipments to Lebanon due to non-payment of dues for the second consecutive year.

Fayyad stated that "for the fifth month in a row, the Central Bank of Lebanon has not transferred the payments for the fuel shipments to the Iraqi government's account. Consequently, Lebanon is financially exposed to Iraq, as the dues have not been paid for the second year in a row," according to the Lebanese newspaper Al-Akhbar.

He warned that Lebanon would face a complete blackout in three days.

According to Fayyad, "Official correspondence between Lebanese ministries (Energy and Finance) indicates that the Central Bank has only transferred $118 million to the Iraqi bank account and subsequently stopped transferring the dues for four fuel shipments, totaling $132 million for 2023."

"It is worth mentioning that the number of shipments received and payable for 2023 is eight, and there are 12 additional shipments for 2024, of which two have arrived, but their payment is not yet due."

Lebanon signed an agreement with Iraq in July 2021 to import one million tons of fuel oil to alleviate the country's electricity crisis. The first shipment arrived in Lebanon on September 16, 2021, carrying 31,000 tons of the material.

The Iraq-Lebanon energy exchange agreement stipulates that Iraq provides Lebanon, which is experiencing its worst economic crisis, with heavy fuel oil in exchange for "services and goods" that Iraq will receive from Lebanon.

In August 2022, the Iraqi Cabinet approved the extension of the agreement to sell fuel oil to Lebanon, stating that this decision comes in response to the difficult circumstances faced by the Lebanese people.