Iraq "frustrated" with Lebanon over unpaid fuel debts exceeding $1.5 billion

Shafaq News/ Iraq has expressed "frustration" with Lebanon over its continued refusal to release payments owed for fuel shipments provided to keep Lebanon's power plants operational, a Lebanese official source told Lebanon Debate.

According to the source, the Lebanese state ow the Iraqi government more than $1.5 billion.

Earlier in August, high-level Lebanese sources revealed that Baghdad had declined to renew an agreement with Beirut under which Iraq supplied fuel to Lebanon in exchange for services. The decision was driven by financial concerns, particularly the Lebanese Central Bank's reluctance to open a new $700 million credit line without solid repayment guarantees.

The original agreement, signed in July 2021, involved the delivery of one million tons of heacy fuel oil to alleviate Lebanon's severe electricity shortage. The first shipment of 31,000 tons arrived in Lebanon in September 2021.

The energy exchange deal allowed Lebanon, grappling with its worst economic crisis, to receive heavy fuel oil from Iraq in return for "services and goods." In August 2022, the Iraqi cabinet extended the agreement, citing the Lebanese population's challenging circumstances.

Blackouts have been a constant issue in Lebanon since the end of its 15-year civil war in 1990, with the country heavily reliant on imported fuel. However, the situation has worsened as the government faces unprecedented financial challenges and is considering lifting fuel subsidies.

Lebanon's state electricity company (Electricité du Liban) provides no more than four hours of power daily. Some areas have no electricity, forcing private generator operators to become the primary energy suppliers.