Lebanon suffers from 24-hour blackout, food poisoning and business closures due to fuel crisis

Lebanon suffered a blackout over the weekend, leaving its population of 6 million without central production power for 24 hours.

The national electricity company said in a statement that the shutdown of the country’s two main power plants, due to fuel shortages, had “directly affected the stability of the power grid and led to its complete blackout, with no possibility of resuming power. operations in the meantime. “

Electricity came back on Sunday evening after the central bank gave the Energy Ministry a $ 100 million loan to buy fuel and keep its factories running. Authorities had warned that the blackout would likely last for several days.

The crisis is creating a nightmare for the inhabitants of the country, but it has been brewing for a long time.

Gas shortages may sound familiar – the UK and the rest of Europe are in the throes of a growing fuel crisis, which has caused panic buying and erratic behavior in many people who never imagined deal with such shortages.

But for Lebanon, the same problem has been a reality for months – just another battle in the long list of crises that have left the country with multiple daily blackouts, a banking and economic crisis, food shortages, overwhelmed hospitals and a currency spiral driven by volatile black market exchange rates.

While walking through the capital Beirut – a once flourishing city often referred to as the “Paris of the Middle East” – at any time of the day one can see storefronts closed or operating in the dark, with those in the dark. Chance to have access to fuel by relying on backup generators to keep the lights on. When the electricity is cut, many traders refuse to sell anything other than water, as volatile minute-to-minute changes in the value of the Lebanese pound mean that the price of goods can change from a period of electricity to the other.

And hundreds of businesses destroyed in the devastating explosion at the Port of Beirut in August 2020 are gone for good. With little state aid, gutted bars and other businesses with their blown entrances and guts full of debris remain on the city streets.

“It’s catastrophic,” Rabih Daou, owner of a small grocery store in Beirut’s Geitawy district, told CNBC at the end of September, from his shop, darkened during one of the country’s many daily power cuts. He pointed to the empty shelves of the refrigerator, where a single small refrigerator worked, containing a few dairy products.

“We can’t buy a lot of things. We can’t buy cheese and ham, we have to buy them in small pieces, because we don’t always have electricity and people are always afraid,” he said. -he adds.

A less talked about consequence of the fuel and electricity crisis in Lebanon has been widespread cases of food poisoning, as grocery stores, restaurants and households struggle to keep produce fresh amid blackouts and summer heat. Most of Beirut has had no electricity at night since the start of summer. Consumption of meat and dairy products has dropped dramatically, according to residents.

“They don’t want to buy ham, cheese and yogurt because they are afraid that if we don’t have electricity the food will not be good,” Daou said.

Decades of corruption by sectarian party leaders and warlords who still hold power since the Lebanese civil war of 1975-1990 have devastated the country’s finances and public services.

For years Lebanon has experienced daily blackouts due to its grossly mismanaged electricity sector. But the Lebanese population was used to this; those who could afford generators used them to maintain power, including many businesses across the country, and outages were generally predictable and short-lived.

However, since the nationwide fuel shortage began in early summer, even back-up generators – which run on fuel – can’t always come to the rescue. Many residents cannot use their cars, and some lines to gas stations stretch for miles, sometimes with drivers leaving their vehicles and fighting.

Lebanon imports more than 80% of its food and goods, including fuel. The smuggling of fuel into Syria by the militant and political group Hezbollah and the hoarding of fuel by other groups and companies to sell it on the black market at higher rates have helped to drain the country’s supply and inflate the costs.

And Lebanon’s central bank is now restricting imports of subsidized fuel because it runs out of dollars it had used to support its economy. The central bank was slow to extend lines of credit to fuel importers and service stations, and has now ended diesel subsidies.

This has made the product unaffordable for many Lebanese of 6 million people, 78% of whom have fallen into poverty in the past two years, according to the World Bank, in one of the deepest depressions of modern times.

Lebanon’s central bank did not respond to a request for comment from CNBC.

The official exchange rate for the Lebanese pound has been set at 1,500 lire to the dollar since the 1990s. However, the actual exchange rate for cash on the black market has hovered between 13,000 and 18,000 lire to the dollar in September. It is currently trading around 19,250 to the dollar.

Marwan Sweidan runs a popular ice cream shop called Smushkies in the Mar Mikhael district of Beirut. He says he’s fortunate enough to be able to afford fuel for his own generators, without which it would be impossible to keep his wares cool and business open. But to do that, he needs dollars.

“You can buy unsubsidized diesel, but you have to pay for it in dollars,” he said. “It’s like $ 600 a tonne; the cost has gone up a lot, and there are so many new costs that just popped up for electricity, which made it a lot more difficult.” This is the first time that the Lebanese government has fixed the price of a commodity in dollars.

Physics student Antonella Hajj Nicolas spends hours at Smushkies just for the electricity. “Since last night, we have no electricity at home, the generator is not working. This place has electricity and wifi, so I came to study for my exams for a few days,” he said. she told CNBC. As for perishable foodstuffs, her family cannot store them at home either.

“We don’t have food in the fridge because we don’t want to poison ourselves… we buy our food every day, on the spot,” she said.

Lebanon has one of the highest debt to GDP ratios in the world.

Since the onset of its financial crisis two years ago, when the country defaulted on its massive debt – including $ 31 billion Eurobonds which remain in circulation – the Lebanese economy has been in free fall which s ‘accelerates quickly. Governments and institutions that have pledged aid to the country are still refusing it due to a lack of confidence in the government’s ability to implement reforms and root out corruption, and Western officials have expressed concern over the the prospect of new instability or state collapse in a country that is home to numerous political groups and armed militants.

Mass protests in Lebanon began in October 2019 as the currency collapsed, ultimately losing 90% of its value. Lebanese depositors were excluded from their foreign currency accounts, and those who kept their deposits in lire saw their lifelong savings wiped out.

Dede el Hayek, a grandmother who ran a once busy snack bar in a residential area of ​​Beirut, now spends her days alone in the dark entrance of the store, occasionally chatting with neighbors. Since she couldn’t afford the fuel to run a generator, she had to shut down her business and now sleeps in a cot in the store’s back room.

“I don’t have enough money to run the generator. I haven’t worked for three months,” she said, pointing to empty shelves. “No one comes here anymore.”