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UPDATE 2-Lebanon energy ministry delays petrol tender one week

Reuters | Updated: 02-12-2019 16:27 IST | Created: 02-12-2019 16:27 IST
UPDATE 2-Lebanon energy ministry delays petrol tender one week

Lebanon's energy ministry delayed a fuel tender by one week on Monday to allow for more competition as it seeks to stave off supply shortages during the worst economic crisis in decades.

The ministry is trialling a state tender for 150,000 tonnes of 95 octane gasoline and has received offers from two companies. The tender, which aims to supply around 10% of the country's needs, is a first in import-dependent Lebanon, where private companies usually procure fuel.

Gas stations suspended a strike on Friday to hold talks with authorities, after shutting down across the country and complaining of losses from buying dollars on the black market. Caretaker Energy Minister Nada Boustani has said private buyers recently sought to hike petrol pump prices to compensate for the rising cost of dollars on the parallel market, now the main source of hard currency.

The country's economic crisis has been long in the making and now come to a head. The Lebanese pound has slumped as much as 40% below the official dollar peg rate in recent days on the parallel market and a hard currency crunch has left many importers unable to bring in goods, forcing up prices. Since protests erupted on Oct. 17 and with political gridlock over forming a new government, pressure has piled on the financial system. Banks have curbed U.S. dollar withdrawals and blocked nearly all transfers abroad.

The central bank said in September it would prioritize foreign currency reserves for fuel, medicine and wheat, though buyers must still supply 15% of their dollar needs. Fuel imports had since resumed, but traders were asking for 100% of the bill in U.S. dollars to keep buying.

Boustani said on Monday she hoped the central bank would re-evaluate its plan to deal with the ministry under the same mechanism that covers 85% of the dollar need for importing fuel, rather than all of it. "We took the decision (to postpone) to guarantee more competition and get the best prices for the Lebanese state," she told a press conference.


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