Objective of subsidies
The subsidies were aimed at first to prevent generator owners from increasing the subscription fees in parallel with the increasing diesel prices, which did not materialize, and second, to provide affordable heating for the residents of mountainous areas and Beqa’a.
State of stations
Amidst the absence of official statistics, reports estimated the following:
There are 2403 gas stations in Lebanon, 1298 of which are licensed and 1105 are not. Around 1442 out of these stations are owned by 14 major companies.
There are 1700 tankers, 1300 of which are registered in the syndicate and 400 that are not.
Diesel distribution and supervision
The Ministry of Energy and Water adopted a mechanism whereby it delivers red diesel at subsidized prices to accredited distributors and hands a copy of the quantities delivered to each distributor to the Ministry of Economy and Trade. In their turn, the distributors submit to the Ministry of Economy and Trade lists signed by gas stations reporting the daily quantities received by the latter. The Ministry of Finance’s auditors supervise these statements and verify the validity of their content. However, this mechanism failed to generate the accurate supervision which makes sure subsidized diesel is being provided to citizens, not only to distributors and gas stations. On January 18, 2012, the last day of the diesel subsidies’ phase, oil facilities in Tripoli and Zahrani delivered diesel at subsidized prices. That same day, the Minister of Energy issued a decision dictating the sale of red diesel at unsubsidized prices and that decision was to take effect starting the next day. This move allowed distributors and gas stations to benefit from the price variance.
The Ministry of Economy and Trade reported that the Ministry of Energy and Water did not send the usual daily receipts to validate the processes of distribution and delivery to consumers. Furthermore, the increase in the number of red diesel distributors from 90 to 200 and the limited number of auditors at the Ministry of Economy and Trade have helped minimize the supervision. It also turned out that the diesel quantities delivered to consumers, particularly in the Beqa’a, the south and the cold mountainous areas where heating is essential, were scarce. Hence, distributors and gas stations were the main beneficiaries of subsidized diesel prices to the detriment of consumers and LBP 22.5 billion were wasted.