UPDATE 2-Lebanon to trial gasoline tender amid supply, price concerns

Lebanon's energy ministry will trial a state tender for gasoline next month, caretaker energy minister Nada Boustani said on Friday, in an effort to stave off potential supply shortages brought on by the country's worsening economic conditions. Nationwide protests driven in part by the worst economic crisis since the country's 1975-1990 civil war have shut banks and paralysed the country, limiting the ability of many importers to purchase from abroad.

A state tender for gasoline is unusual in import-dependent Lebanon, where fuel is typically procured by private companies. But Boustani said private buyers had recently sought to increase petrol pump prices to compensate for the rising cost of dollars on a black market since the unrest began.

"It's only the private market that imports this kind of fuel. But we decided to import ourselves as a trial for the moment because of the crisis that has been surrounding this sector," said Boustani. She said the tender would supply about 10% of the country's needs and help to stave off a potential rise in prices.

The tender from the Energy and Water Ministry said Lebanon is seeking 150,000 tonnes of 95 octane gasoline and the deadline for offers is Dec. 2. The country's economic crisis and dwindling hard currency availability has spawned a black market in U.S. dollars, which currently trade about 20% above the official pegged rate of 1,507.5 pounds, raising the costs of imports.

The central bank said last month that it would prioritise foreign currency reserves for fuel, medicine and wheat, but buyers tapping the facility are still required to supply 15% of their own dollar needs. Boustani said the ministry would study the tender results to decide whether to become a long-term buyer, potentially replacing private trade.

"We have to wait for the results and then we will be able to make a long-term decision," said Boustani. Fadi Abou Chakra, spokesman for Lebanon's petrol stations union, said private fuel imports had resumed following the central bank mechanism, averting a potential shortage, but traders required 100% of their dollar needs to keep buying.

Banks, which were shut for half of October, closed again this week over staff security concerns, complicating efforts to deposit cash needed to transfer money abroad. Most transfers out of the country have been blocked except in cases of freshly deposited hard currency.

The deadline for submitting bids in the gasoline tender is Dec. 2 and shipments are expected to arrive about 15 days after its close, Boustani said.

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