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Gas stations shut down across Beirut following price dispute

25 February 2011

BEIRUT: President of the Gas Stations Syndicate Sami Brax said Thursday that 60 percent of gas stations in Beirut have shut down due to a shortage in gasoline reserves following the halt of fuel supply by fuel importing companies.

By Thursday evening panicked Lebanese drivers flooded gas stations across Beirut forming long lines in the hope of filling their tanks amid fears of a protracted crisis.

Fuel importers say they have cut off supplies due to continuing revenue losses as a result of the Energy and Water Ministry’s failure to issue updated prices on the cost of gasoline in tandem with the rising cost of oil on international markets.

Caretaker Energy Minister Jibran Bassil has refrained from issuing gasoline price updates for the past four weeks in what is seen as a protest against other political factions that have refused to honor his proposed gasoline tax cut of LL3,000.

Gasoline prices, which are set by the Energy and Water Ministry, are usually updated on a weekly basis to reflect the changing price of oil.

Importers say they have refused to sell gasoline to stations at the existing prices because they do not reflect recent increases in the price of oil.

As a result, stations are quickly running out of supplies.

“We currently do not have any fuel reserves because we began selling our stocks a few weeks ago when the debate between ministries over fuel tax cut started,” Sami Brax told The Daily Star. He blamed Bassil for not issuing the weekly updates and said fuel importing companies would only resume supplies when prices are updated.

Meanwhile, the syndicate of Lebanon’s taxi drivers threatened to organize strikes and protests if gasoline prices did not come down.

They have demanded that the price of gasoline, which currently stands at LL36,300 per 20 liters, be fixed at LL25,000.

The dispute over gasoline supplies began earlier this month when Customs authorities refused to lower gasoline tariffs in accordance with Bassil’s proposed tax cut.

Some analysts and legislators have argued that Bassil does not have the authority to pass the cut, arguing that tax cuts must be initiated by the Finance Ministry and later approved by the president and the prime minister.

However, the Higher Council on Accounting issued a statement Tuesday supporting Bassil’s right to cut gasoline taxes, his office said. It said that relevant government bodies need to respect Bassil’s decision and enforce the tax cut.

In reaction to Bassil’s reading of the HCA’s statement, caretaker Finance Minister Raya Hassan told broadcaster LBC Thursday that Bassil failed to mention the great impact the tax cut would have on the treasury’s revenues.

She said that the HCA must abide by the decision of the Council of Ministers at the end of the day, adding that the tax must be implemented in a legal framework. “In the absence of a government, such a decision can only be implemented by taking an exceptional approval from caretaker Prime Minister Saad Hariri and President Michel Sleiman,” she said.

Hassan also said that she has proposed a LL5,000 reduction in the price of gas. She said Sleiman has decided to present the case to the legislation and consultation body. “The body’s decision will come out on Friday to decide whether an exceptional approval can be given in the absence of a government or not,” she said.

Bassil’s initial refusal to publish the weekly gasoline prices earlier this month prompted the president of the association of Oil Importing Companies Maroun Chammas to warn that firms will stop supplying gas stations with fuel and energy commodities if the weekly updates of gasoline prices were not issued.

After three weeks of negotiations between the different concerned parties, Chammas implemented his warning by justifying it with the huge losses suffered by fuel importing companies since the beginning of this crisis.

“The absence of weekly price updates has been impacting our daily import programs and many of our shipments have been canceled due to the lack of storage space since we have a large quantity of oil commodities and the gas stations have been very cautious in their purchases lately,” he said.

© Copyright The Daily Star 2011.