Lebanon hikes fuel prices to shore up forex reserves

BEIRUT — Lebanon hiked fuel prices by more than 30 per cent Tuesday as it reduced subsidies that have eaten away at the central bank's foreign currency reserves amid a painful economic crisis.

Petrol and diesel prices went up sharply, according to a revised price list published by the official National News Agency (NNA), in a week when a steep currency devaluation sparked angry street protests.

The sharp fuel price rises came as Lebanon, a small country of six million people, grapples with an economic crisis branded by the World Bank as one of the world's worst since the mid-19th century.

The Lebanese pound, which has been pegged to the dollar at 1,507 since 1997, sold for more than 17,000 to the greenback on the black market this week, a record low.

The price of 20 litres of 95-octane petrol shot up nearly 16,000 Lebanese pounds ($10.6 at the official rate) to reach 61,000 pounds ($40.6), according to NNA.

The price of the same amount of 98-octane petrol climbed by 16,300 pounds ($10.8) to reach nearly 63,000 pounds ($42).

Meanwhile, the price of diesel reached 46,100 pounds ($30.7), up from 33,300 pounds ($22.2).

The new prices came after weeks of long queues at petrol stations that had started rationing gasoline and diesel fuel amid shortages.

Fuel importers blamed the crisis on a delay by the central bank in opening credit lines to fund fuel imports due to depletion of foreign currency reserves.

For their part, Lebanese officials said smuggling to Syria and stockpiling by fuel distributors had contributed to shortages.

The central bank used to fund 85 per cent of fuel imports at the official exchange rate of 1,507 Lebanese pounds to the dollar while importers fund the rest of the cost at the street rate.

But the government last week authorised the funding of fuel imports at the weaker exchange rate of 3,900 Lebanese pounds to the dollar instead of the official peg to ease the crisis.

The central bank on Monday said it would open credit lines for fuel imports based on the new exchange rate in compliance with the government’s decision.

Following the central bank announcement, the energy ministry said that fuel tankers docked in Lebanese waters had started offloading fuel shipments that would boost supply in the coming days.

Fadi Abu Shakra of the union of fuel distributors told NNA on Tuesday that six tankers had started offloading shipments and they would soon be distributed to gas stations across the country.