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Iraq to provide Lebanon with fuel for another year: Lebanon PM

A tanker carrying fuel oil from Iraq is anchored off the Zahrani power plant near the southern Lebanese city of Sidon (Saida) on September 18, 2021
— Beirut (AFP)

Iraq has agreed to renew a one-year deal to provide Lebanon with fuel for its power plants in exchange for in-kind services, Lebanon's Prime Minister said in a statement Thursday.

Iraq signed an agreement in July 2021 to give cash-strapped Lebanon one million tonnes of fuel oil to help keep the lights on as the country grapples with power cuts up to 23 hours a day during an unprecedented economic crisis.

"The Iraqi government, headed by Mr Mustafa al-Kadhemi, approved in a meeting today... to extend the supply of fuel to Lebanon... for a period of one year, under the same conditions as before," Lebanese Prime Minister Najib Mikati's office said in a statement.

For the past year, Lebanon's power plants have depended on the deal with Iraq to produce one to two hours of electricity per day.

Residents in the poverty-stricken country largely rely on expensive private generators for power the rest of the time.

The Iraqi oil cannot be used directly by Lebanon's power stations, so Beirut will continue to buy compatible fuel from other providers which will receive the Iraqi oil in exchange.

At the time of signing, last year's deal was worth $300-$400 million, Raymond Ghajar, the Energy minister at the time had said.

As fuel prices shot up, the deal is now worth an estimated $570 million, Lebanon's Energy Minister Walid Fayad told AFP last month.

An Iraqi ministerial delegation is expected to visit Beirut shortly to agree on the in-kind services that Baghdad wants in return for the fuel, Fayad said.

Iraq is a member of the Organization of the Petroleum Exporting Countries (OPEC) but suffers from its own electricity shortages.

Lebanon is battling one of the planet's worst economic crises since the 1850s, and the state-run electricity company faces dire cash shortages.

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