Lebanon Raises Fuel Prices for 2nd Time in 5 Days

Lebanon's new government raised the price of fuel on Wednesday by 16%, the second time in five days, part of a gradual lifting of subsidies in the crisis-struck country.

The new hike brings the price of fuel, in short supply, closer to black market rates and comes after warnings from Lebanon's central bank that it can no longer continue to subsidize fuel purchases that have drained its foreign reserves. The Ministry of Energy announced the new prices in a statement.

The new government, confirmed by parliament this week, said lifting subsidies -- which account for billions of dollars -- would be among its priorities.

The Central Bank said last month it will start extending credit to fuel importers at the market rate, effectively signaling the end of subsidies.

Following Wednesday's fuel price hikes, people will have to pay some ten times more for fuel compared to pre-crisis rates. A common unit of measurement -- 20 liters -- of 95-octane gasoline now costs 202,400 - about $14.45.

With prices rising so steeply, many pumps simply could not handle the new five-digit figures on their screens, and displayed "fail" messages. Several stations shut down while seeking a solution to the dilemma.

The Lebanese currency, pegged for 30 years to the dollar at 1,500 Lebanese pounds for $1, has been hovering at around ten times that rate in the black market. It traded at around 15,400 Lebanese pounds on Wednesday.

To fill a medium-sized vehicle's tank, most Lebanese would now have to pay close to the monthly minimum wage of 675,000 Lebanese pounds, at a time when nearly 80 percent of the population is estimated to live below the poverty line.

George al-Brax, a member of the syndicate of gas station owners, told local media on Wednesday that the latest price hike was not "final," suggesting that prices will soon go up again.

He also cautioned that the imminent lifting of subsidies would not spell the end of long petrol queues which began at the start of summer and have since only gotten worse.

The Energy Ministry's announcement on Wednesday came as many pumps across the country remained closed to customers.

Importers and gas station owners say they are out of stock but authorities have accused them of hoarding supplies to sell at higher prices once subsidies are officially lifted.

Prime Minister Najib Miqati, whose government was sworn in on Monday after 13 months of political paralysis, told CNN this month that 74 percent of more than $10 billion dollars spent on subsidies had been "misused by traders."

Long queues outside gas stations have often descended into chaos or violence and caused major traffic jams. Gas stations ration the amount of gasoline they distribute. Prices of diesel for local power generation -- necessity as national supply is almost non-existent -- have also increased more than tenfold. It is thus nearly impossible for many families to secure electricity for their homes. Many businesses have had to shut down.