Lebanon’s government raised fuel prices by more than 35% on Tuesday as it effectively cut subsidies that have eaten away at the central bank’s foreign currency reserves amid a painful economic crisis.
The move is aimed at alleviating crippling shortages but will increase the pressure on impoverished consumers.
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 average price of 95-octane gasoline was set at 61,100 Lebanese pounds ($40.58) per 20 liters, an increase of 15,900 pounds, or 35% higher, the energy ministry said in a document.
The price of the same amount of 98-octane petrol climbed by 16,300 pounds to reach nearly 63,000 pounds.
Diesel prices were set at 46,100 pounds, up 12,800, or 38%, the document showed.
Lebanon’s central bank said on Monday it would start giving credit lines to import fuel at 3,900 Lebanese pounds to the dollar, a weaker rate than the 1,500 pounds previously offered under the subsidy program.
However, dollars were changing hands at about 16,700 pounds on Tuesday on the parallel market, one market participant told Reuters.
The central bank used to fund 85% 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.
A small country of 6 million people, Lebanon is in the throes of a financial crisis described by the World Bank as one of the deepest depressions in modern history.
Motorists have been queuing for hours to get barely any gasoline for the past few weeks, often leading to violent squabbles.
Fuel importers blamed the crisis on a delay by the central bank in opening credit lines to fund fuel imports due to the depletion of foreign currency reserves.
Sporadic roadblocks across Lebanon, with a few protesters blocking roadways by burning garbage containers, have spread in the past few days as frustrations have grown, according to a Reuters witness.
For their part, Lebanese officials said smuggling to Syria and stockpiling by fuel distributors had contributed to shortages.
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.