EDL Bleeding Clogged by Drowning Oil Prices

By June 2016, records of Lebanon’s Ministry of Finance indicated treasury transfers to EDL amounted to $334.40M compared to $627.54M in H1 2015.

The decline may seem economically revitalizing vis-à-vis the notorious barometer of EDL’s productivity; nonetheless, the tightened Transfers Account surrenders mainly to the oil market price-effect. The downward trend of EDL Transfers was driven by the 31.47% decline in Average Prices per Barrel of crude oil, which dropped from $57.47 in 2015 to $39.39 in 2016.

On the counter part, the volumes of imported fuel and gas witnessed yearly spikes of 1.09% and 10.48% respectively in the first six months of 2016.

Moreover, EDL’s contribution to the total oil bill shot up from 2.4% to 9.1% by June 2016. This is mostly linked to the contracting oil bill during the first half of 2016.

Effectively, payments made to oil suppliers KPC and SPC witnessed a 47% compression originating from 2015’s US$618.7M bill and 2016’s US$327.7M.

In its turn, the recessive Debt Service trait of the Transfers Bill declined by 25% in 2016.

Last but not least, drowning oil prices on EDL’s operations decreased the share of Transfers from the government’s primary expenditures as it dropped from 13.9% to 6.9% by June 2016.

 

EDL and MoF Contributions of the total oil bill by June

 EDL Bleeding Clogged by Drowning Oil Prices

 

Source: MoF

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