LEBANON: FUEL AND ELECTRICAL POWER STATUS AS OF

C O N F I D E N T I A L SECTION 01 OF 04 BEIRUT 002587

SIPDIS

SIPDIS

NSC FOR ABRAMS/DORAN/SINGH/HARDING

E.O. 12958: DECL: 08/10/2016
TAGS: ECON IS LE MOPS PGOV PREL PTER SY ENRG
SUBJECT: LEBANON: FUEL AND ELECTRICAL POWER STATUS AS OF
AUGUST 10

Classified By: Ambassador Jeffrey Feltman. Reason: Section 1.4 (b).

SUMMARY
--------------


1. (C/NF) The fuel and electrical power shortages in
Lebanon have become serious. Lebanon's economy is operating
at greatly reduced leels through austere rationing of
gasoline, reduced consumption in the transport sector,
selective brownouts of the electrical power grid. Some
increase in the availability of black market gasoline is
enabling both the transport and electrical power system to
sputter along. Embassy Beirut, through the DART team, has
received dire warnings from the NGO community that hospitals
and water systems have only days of private fuel stocks
remaining, if there were to be a total loss of the national
electric power grid, an event that has not (yet) occurred.


2. (C/NF) Despite the above-mentioned ameliorating factors,
the situation is approaching criticality and requires
immediate action. Embassy Beirut, along with Embassy Tel
Aviv, Embassy Nicosia, and CTF-59, has expended considerable
resources in attempting to expedite both the delivery of fuel
oil to at least one of Lebanon's primary power plants, as
well as the delivery of gasoline/diesel to the transport
sector. These efforts have been continuously frustrated by
either the reluctance of fuel providers to deliver the fuel
to storage facilities in Lebanon because of the war
conditions, or by poor execution by GOL authorities and fear
of some Lebanese to implement approved plans.


3. (C/NF) To place it in terms of brutal prioritization,
the gasoline/diesel supply for the transport sector is being
resupplied (albeit at a much reduced rate) by rapidly
expanding black market deliveries from Syria. Because of
this development which provides some quantities to private
consumers (albeit at great profit to the Syrians),Embassy
Beirut suggests that all efforts from Washington and the
field should be directed toward the delivery of fuel oil to
the country's power generation plants, and specifically the
Zouk facility, located 10 kms north of Beirut, which is
capable of providing a reduced, but sufficient, amount of
power to the entire national grid for an extended period --
provided it has the fuel.


4. (C/NF) Additionally, despite numerous news reports that
fuel deliveries to Lebanon have been held up by lack of IDF
clearances, to our knowledge, no fuel delivery has been
stopped for this reason -- delayed, yes, but not stopped. We
salute our colleagues in Embassy Tel Aviv for their patience
and diligence in working through the permit issues. End
summary.

TALE OF TWO TANKERS
--------------


5. (SBU) As previously reported in numerous channels, two
tanker vessels (M/V Aphrodite and M/V Torm Gunhild)
contracted by the GOL to provide fuel oil to Lebanon's two
primary power plants (Zouk in Beirut and El Beddaoui in
Tripoli) have steadfastly refused to leave their berths in
Cyprus, despite the intensely coordinated offer of U.S. Navy
escort.


6. (C/NF) As a result of the ship owners' intransigence --
which ship officials claim is due to the war-like conditions
existing in Lebanon -- the GOL eventually contracted an
Algerian "lighter" vessel, the M/V Oued Gueterini, to proceed
to Larnaca, Cyprus to offload 2,200 metric tons of fuel oil
from the Aphrodite and then bring this fuel oil to the Zouk
power plant north of Beirut. Once begun, each round-trip
shuttle of the Oued Gueterini between Larnaca, Cyprus and
Beirut, Lebanon would take approximately 24 - 36 hours
(including loading and offloading). Despite numerous
attempts and much conflicting information from the GOL,
Embassy Beirut does not yet have an arrival time in Cyprus
for the first run of the M/V Oued Gueterini.


7. (C/NF) We have contacted CTF-59 for locating data on
this vessel from their tactical maritime plot so that we can
determine an accurate timeline.

ELECTRICAL POWER PRODUCTION STATUS
--------------


8. (C/NF) Even though each run of the Oued Gueterini would

BEIRUT 00002587 002 OF 004


only deliver 2,200 metric tons of fuel, this would be
sufficient to keep the Zouk power plant running. The Zouk
power plant can provide electricity to the entire national
grid, but at reduced output. (Note: Lebanon's national grid
normally produces 1,200-1,500 megawatts of power each day --
production is now down to approximately 500 megawatts. This
results in 6-12 hours of electricity brownout/blackout each
day -- depending on locale and consumption demand. End Note.)


9. (C/NF) In addition to power generators run by fuel oil,
Lebanon also produces 75 megawatts of hydroelectric power
each day (roughly 5 percent of total normal production)
which, unless destroyed by air strikes, will always be
available. But EDL, the national power company, plans to
limit this power strictly to essential government and health
services, if it becomes the country's sole source of
electrical power and remains unharmed by the Israelis.


10. (C/NF) Finally, as of August 9, Lebanon is once again
receiving approximately 100 megawatts of electrical power
from Syria through a high-capacity transmission line in the
north. One tower in this Syria-Lebanon transmission line was
destroyed by an air strike early in the conflict, but line
integrity has now been restored and power is flowing as of
yesterday. This additional input of 100 megawatts will allow
the Zouk and El Beddaoui generation plants to further reduce
their fuel consumption and stretch their dwindling supply
fuel still further.


11. (C/NF) Due to the unreliability of earlier information
from the Ministry of Energy and the Government's senior
energy advisor, Embassy Beirut has sent one of our commercial
staff to the Zouk power plant to check first hand both power
output levels and actual fuel remaining in its storage
facility. If this information can be obtained, Embassy will
forward to all addressees.

GASOLINE STATUS
--------------


12. (C/NF) As of August 10, approximately 50 percent of the
gasoline stations are now closed in the Beirut area -- with a
higher proportion closed in other areas of the country.
Those that are open have either a 10 or 20 liter limit (the
20 liter limit is often given only to "regular" customers).
The stations sell their stock until they reach a
self-determined limit and then close down. As a result, the
queues for gas are longest in the early morning -- depending
on the station, the queues range from 5 to 30 vehicles.
Bribery does occur. To date, the lines have been orderly.


13. (C/NF) Over the past few days, a fairly efficient
gasoline/diesel black market has emerged -- albeit one that
profits those who we least like to see gain at Lebanon's
expense, the Syrians and those who cooperate with them in
Lebanon. Those who are willing to take the risk drive into
Syria on secondary or tertiary roads and come back with a
30,000 liter gasoline load that they can sell at well over
100 percent markup, perhaps higher. Reliable data is
difficult to obtain, but the Embassy received a report from
an industry source that approximately 30 trucks made the run
on August 9. If this information is accurate (a rather big
if),this number of trucks would meet roughly one day's
supply at current reduced consumption rates. This supply, of
course, always runs the risk of being interrupted by Israeli
airstrikes on trucks, border crossings and roads; it hardly
counts as reliable.


14. (C/NF) Finally, to clarify the facts behind a recent
attempt to ameliorate the gasoline situation, an intensively
coordinated (Embassy Tel Aviv and Embassy Beirut) gasoline
truck convoy from Jiyeh to Dora on August 9 did not take
place. Despite assurances as late as 2100 on August 8, the
company involved claimed at the last minute that it could not
persuade its truck drivers to make the run. The owners also
said they were afraid that some drivers, for financial gain,
would try to leave the return (loaded) convoy en route, and
place the entire convoy in jeopardy. PM Siniora told the
Ambassador separately that he feared a mad dash rush for
supplies from all over the country once word got out that the
Jiyeh facility was open -- Siniora felt that the LAF would be
unable to control who got into the facility, which risked
putting the whole fuel storage area at risk of Israeli
attack. We have informed the owners and Siniora that, given
the work that went into coordination for tanker convoys that
never took place because of Lebanese decisions, this option

BEIRUT 00002587 003 OF 004


is now closed.

BOTTOM LINE
--------------


15. (C/NF) Gasoline/Diesel: Due to an emerging black
market and greatly reduced consumption, we now believe
gasoline/diesel stocks in the retail transport market will be
sufficient for at least another week, perhaps longer, but
with less and less gasoline and diesel available each day.
It is estimated that an undetermined number of trucks each
day are entering from Syria -- at roughly 30,000 liters per
truck. As a result, Embassy Beirut believes it is best to
concentrate resources on the alleviation of the short supply
of fuel oil for Lebanon's electrical power generation system.


16. (C/NF) Electrical Power Generation: Due to the impact
that extended blackouts would have on water, sanitation, and
public health, Embassy Beirut believes all efforts should
concentrate on the delivery of fuel oil to the Zouk facility.
Most health and public utilities have varying quantities of
fuel for private generators once the national grid shuts
down, but we do not want to get into that situation.


17. (C/NF) We are steadily working to execute two
solutions: 1. start the M/V Oued Gueterini shuttle as soon
as possible between Larnaca, Cyprus (where the Aphrodite is
berthed) and the Zouk power plant (north of Beirut); and 2.
determine the status and expedite the arrival of two
follow-on fuel tankers reportedly contracted by the GOL last
week.

COMMENT
--------------


18. (C/NF) For even those Lebanese who do not live or work
in the areas of worst conflict, daily life has deteriorated
to what would have been unimaginable levels as recently as
July 11. For example, milk has disappeared from stores, with
long-life milk supplies depleted and fresh milk unavailable
since the Israeli destruction of Lebanon's only modern dairy
early in this conflict. But the single issue most worrying
to those who still have roofs over their heads appears to be
the growing fuel crisis. Nerves are frayed as people queue
up for rationed gas in those stations still open, and black
market gas and diesel from Syria, marked up several times,
benefit one of the countries -- Syria -- most responsible for
Lebanon's woes. Diesel for back-up generators is
difficult-to-impossible to find, yet hospitals and other
vital institutions may soon rely more on generators because
of the power rationing policies designed to conserve
dwindling power plant fuel supplies. If the national
electrical grid finally shuts down, the humanitarian and
public health crisis will worsen considerably, as sewage
treatment and water pumping stations shut down. In that
event, health officials say they fear cholera outbreaks. Our
Embassy operations now have to take into account much
labor-intensive searching for gasoline and diesel for our own
operations, and our FSN staff is increasingly preoccupied
with trying to find fuel for their own needs. Humanitarian
and emergency relief operations are hindered by the scarcity
of fuel.


19. (C/NF) As this cable illustrates, the heroic but
labor-intensive coordination efforts on fuel deliveries,
carried out by Embassy Tel Aviv, the CCC, staff at this post,
and others, are not the solution. We are grateful for the
creativity, responsiveness and sheer hard work Tel Aviv has
devoted to this issue. But two recent examples show that
coordination, no matter how good, does not ensure adequate
fuel supplies. First, as noted above, the two tankers of
fuel for the Zouk and El-Bedawi power plants refused to
budge, even when Tel Aviv secured the needed Israeli
concurrence and we had arranged US Navy escort: whatever
their real motives, the captains cited fears of sailing
enormous explosive targets into a war zone. (As noted above,
we still hope to deliver fuel from the Aphrodite, one of the
ships, via a shuttle system using a tug-and-barge lighter
system.) Second, regarding gasoline and diesel for vehicles,
excruciatingly designed plans faltered when the owners of the
fuel depot just north of Jiyeh got cold feet. Frustrating as
it was to those who had worked so hard and so diligently to
clear truck convoys to that facility, the owners had a point:
once word got out that tankers were permitted to enter the
facility, there was a danger that trucks from all over the
country (including Hizballah strongholds) would suddenly show

BEIRUT 00002587 004 OF 004


up, demanding fuel and putting the whole facility at risk of
IDF bombardment. (We only wished that this danger had
occurred to the owners before we went through the
coordination process.)


20. (C/NF) We strongly recommend that USG get behind an
initiative now by which, until the Israeli embargo is lifted,
Lebanon's fuel needs are met by blanket Israeli safe passage
of fuel delivery ships. When Israel started blockading fuel
tankers entering the Gaza Strip after the suicide bombs of
the mid-1990s, the USG asked the Israelis to find a solution,
which the Israelis did quickly: they set up fuel pipelines
across the Gaza perimeter fence at Nahal Oz. That system
ensured delivery without the security risk of Gaza tankers
entering Israel or Israeli tankers entering Gaza. That
option doesn't exist here, and Syria has become the default
black market supplier (supplying only those with connections
or lots of cash).


21. (C/NF) But there are other options we hope we can push.
While fuel is obviously a strategic commodity, Israel has
several mechanisms at its disposal to minimize fuel
deliveries to Hizballah. First, major and even most minor
roads are severed, meaning that Israel can keep an eye on the
few passable transportation links to south Lebanon.
Suspicious trucks headed south are apparently already
targeted by Israel. (Indeed, trucks even inside Beirut have
been targeted by the Israelis.) Second, Israel can briefly
stop suspicious ships crossing the blockade line, to ensure
that the ships are carrying fuel and not weaponry. Surely
there are some tanker companies who would not damage their
reputations and other business options by getting into arms
or alien smuggling. As with everything in war, there are
surely risks that some supplies would fall into enemy hands
-- as is surely happening now with some of the black market
supplies from Syria. But those risks are outweighed, in our
view, by the need to address in a sustainable, operationally
viable way, the growing fuel crisis here, with its deep
humanitarian, economic, and psychological impact on the
population. End comment.
FELTMAN