Sunday, 17 October 2021

Lebanon’s telecoms sector days from collapse as fuel crisis deepens

by Harry Baldock, Total Telecom
Wednesday 06 October 21

The worsening financial crisis in Lebanon has made diesel scarce – so much so that state-run network operators may soon have to shut down

Lebanon’s ongoing financial crisis is reaching fever pitch for the nation’s telecoms sector, with the national Parliamentary Media and Communications Committee this week warning that the nation’s networks were on the brink of collapse. In fact, the state-run telcos only have enough diesel remaining to keep networks operational for a few days.   “The quantity of diesel at Lebanon’s state-owned Touch and Alfa mobile companies and the state-run telecommunications company Ogero…

Lebanon’s ongoing financial crisis is reaching fever pitch for the nation’s telecoms sector, with the national Parliamentary Media and Communications Committee this week warning that the nation’s networks were on the brink of collapse. In fact, the state-run telcos only have enough diesel remaining to keep networks operational for a few days.
 
“The quantity of diesel at Lebanon’s state-owned Touch and Alfa mobile companies and the state-run telecommunications company Ogero, which operates fixed lines and fixed internet, is enough to run for only a few days, otherwise telecom services will crumble,” said the committee.
 
Last month, the Lebanese telecoms industry was already beginning to show signs of struggle, with fixed-line operator Ogero being forced to shut down services in parts of the country temporarily due to a lack of fuel.
 
“Our services have stopped temporarily within the range of the Barouk, Halba, and Qoubayat centres until we are resupplied with diesel fuel,” Ogero said in a statement. 
 
The financial crisis itself dates back to 2019, when various financial pressures related to national debt saw the black-market exchange rate for the Lebanese pound to the US dollar rapidly diverge from the official exchange rate. Exacerbated by the coronavirus pandemic in 2020 and impact of the enormous explosion in Beirut port, over the subsequent year consumer prices have skyrocketed and imports have been crippled. 
 
By May, the country’s GDP had fallen by a fifth, dropping by $11 billion.
 
Now, in 2021, the crisis is only deepening as the Middle Eastern nation rapidly runs out of fuel. Two weeks ago, the state electricity company Electricite Du Liban said that the country was at risk of total blackout as their fuel supplies ran critically low. 
 
In fact, the crisis had grown so bad that terrorist organisation Hezbollah has been brokering emergency fuel shipments from Iran in recent months. 
 
For the country’s telecoms industry, this fuel shortage means a very real possibility of having to cease service. As a result of the crisis, Lebanese operators have been forced to buy their fuel in US dollars rather than local currency, further complicating matters. 
 
“It turned out that Touch and Alfa, which get diesel from oil facilities, now have to pay for it in dollars, so now government institutions are required to pay in dollars. This is complicated because companies do not have the right to buy with dollars from the market, and this increases the cost, and this foreign currency is not available,” explained MP Hussein Hajj Hassan, who headed the Committee.
 
To make matters worse, the financial crisis is making maintaining the telecoms networks expensive, with prices for spare parts soaring ¬– an especially pressing issue since theft of equipment has also increased throughout the crisis.
 
Earlier this week, the Committee agreed to “open an additional credit for Ogero to meet its needs for fuel and spare parts, at a value of LBP350 billion in the 2021 budget” as well as urging the government to put a “clear mechanism” in place between the various government, telecoms, and oil organisations to ensure that diesel purchases can take place in Lebanese pounds.
 
Exactly how long these emergency measures will sustain the telecoms industry is unclear, but one thing is certain: the collapse of the internet will have enormous consequences for a nation already stretched to the limit. 
 
 
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