Lebanon raises fuel prices by 38%

The financial crisis has seen the country increasingly unable to pay for fuel imports

A crowded petrol station on the main road that links Beirut to south Lebanon. AP

Drivers come from every direction to fill their tanks with fuel. AP

Chronic fuel shortages have plagued the country in recent months, with long queues at petrol stations a common sight. AP

Last month, central bank governor Riad Salameh announced that fuel imports would no longer be subsidised. AP

Worshippers listen as cleric Ali Al Hussein delivers a sermon during Friday prayers at a fuel station to protest against the severe shortages. AP

People listen to Al Hussein's sermon in the coastal town of Jiyeh, south of Beirut. AP

Lebanon’s energy ministry has raised the price of fuel by 38 per cent – one of the first moves by Prime Minister Najib Mikati's new government.

The hike, by new minister Walid Fayad, will see the price of 20 litres of 95-octane gas rise from $82 to $113 – almost one-third of the country’s legal minimum wage per month.

Fuel in Lebanon has been heavily subsidised in recent years, giving the country one of the cheapest prices in the world, despite Lebanon not being an oil-producing country and having no crude oil refining capabilities.

Yet a financial crisis has seen the country increasingly unable to pay for fuel imports, leading to huge queues at petrol stations and crippling power shortages across the country.

All the while, tankers loaded with fuel sit off the coast of Beirut, awaiting payment before they can deliver any fuel.

With the new government now trying to tidy its finances, the bloated subsidies bill which extends beyond fuel to basic foodstuffs and medicine is likely to see significant further cuts.

Reforms to the country's subsidies programme have been a major sticking point for Lebanon unlocking international financial assistance.

A de-facto subsidy cut in August saw fuel prices jump 66 per cent, prompting outrage among consumers, for whom a tank of petrol is becoming increasingly unaffordable.

The shortages have seen communities increasingly take the sourcing of fuel into their own hands, with a black market of smuggled fuel becoming increasingly prominent.

On Thursday, the Iran-backed group Hezbollah received its first shipment of Iranian fuel which it said would distribute among communities and civil society groups. The group’s head Hassan Nasrallah said the imports had happened without the consent of the Lebanese government and had been delivered via Syria to avoid falling foul of US sanctions on Iran.