Fossil Fuel Dependency Is the Real Cause of Lebanon’s Energy Crisis

Lebanon’s energy crisis is nothing new. Intermittent blackouts and crumbling infrastructure have been a problem for decades. But with the total collapse of the country’s energy and financial systems in 2019–21, the situation became radically worse. Human Rights Watch reported in 2023 that most households had only a few hours of electricity provided by the grid, seriously limiting access to health, education, and water, and contributing to the country’s economic crisis.¹

Plagued by constant blackouts, Lebanese households have long relied on expensive subscriptions to private diesel generators. And even these subscriptions are insufficient: maintaining two air-conditioning units and a fridge (a necessity in Lebanon’s increasingly hot summers) costs around $200 a month—a huge sum for many families in a country where the GDP per capita is under $3,500.² Some 20 percent of the poorest households don’t even have access to a generator at all.³

There is blame to go around for the Lebanese energy crisis and the costs it has imposed. A popular antagonist is the so-called generator mafia—the private generator owners whom many in Lebanon accuse of price collusion. Then, there is the dysfunctional and unresponsive Lebanese state. Finally, there is the cartel of fuel importers, organized as the Association of Petroleum Importing Companies (APIC).⁴

But while the “generator mafia” and the dysfunctional Lebanese state make for easy targets, the root cause of Lebanon’s energy crisis is actually something far more basic: the country’s structural dependency on fossil fuel. This dependency drains scarce foreign currency, exposes households to volatile global fuel prices, and locks the state into a clientelist arrangement with the fuel import cartel.

This report draws on three years of PhD fieldwork, including fifty interviews with generator owners, import company representatives, government officials, civil society activists, and citizens, to map the extent of the complications that Lebanon’s fossil fuel dependency causes for the country. This profound problem has many vested interests, and will not be easy to remedy. However, a progressive energy strategy—backed up by the right policies from the United States and multilateral donors—can start Lebanon down a better path, by prioritizing ending fossil fuel reliance and delivering affordable public infrastructure.

Lebanon, Fossil Fuel State

In Lebanon, despite a recent solar boom, national energy demand is still largely met through imported fossil fuels: heavy fuel oil for power plants, gasoline for cars, and diesel for neighborhood generators. In a country famous for its supposedly laissez-faire economics, the state imports large amounts of heavy fuel oil for its thermal power plants at Deir Ammar and Zahrani. Attempts to make the switch to gas or utility-scale renewables have been sabotaged by protracted feuds among the country’s aging political class, the recent economic crisis, and sanctions on Syria that had, until last year, prevented the revival of the Arab Gas Pipeline, which had been the country’s main source of natural gas.⁵

As a result of these dynamics, Lebanon spends exorbitant amounts on importing petroleum, diesel, and heavy fuel oil. Between 2000 and 2022, importing fuel cost the country $57 billion dollars, or 7.4 percent of Lebanon’s GDP.⁶ While much of this was for private consumption, the Lebanese state continues to pay for significant fuel imports from exporters, including European refiners, Arab national oil companies, and the United States. Such imports expose Lebanon’s severely constrained fiscal space to the turbulence of global fuel markets.

Figure 1

The country’s power plants continue to rely on heavy fuel oil. Faced with increasingly few options as its creditworthiness craters, the Lebanese state has resorted to desperate measures, in recent years importing Iraqi fuel oil that it has no ability or intention to pay for.⁷ These measures come on the back of the 2020 Sonatrach scandal, in which Lebanese trading companies, the Lebanese government, and the Algerian state oil company (Sonatrach) ran a conspiracy to sell contaminated fuel to the power plants, paying Lebanese civil servants gold and cash to turn a blind eye to low-quality imports. Last fall, an exposé showed that, since 2021, Lebanon had imported millions of dollars in sanctioned Russian fuel at up to 70 percent over its market value.⁸ Remarkably, however, other countries have also sold hundreds of millions of dollars of heavy fuel oil to Lebanon, most notably the United States and Mediterranean refinery centers including Greece, Turkey, and Italy (Figure 2).

Figure 2

While generator owners and fuel importers accrue profits, the Lebanese state apparatus plays a major role in sustaining the country’s dependency on fossil fuels—and bears responsibility for many of the attendant policy failures. One recent example of such failures was the government’s inability to agree on a location to construct a floating re-gasification storage unit that would allow Lebanon to import natural gas.⁹ Another, less-discussed example is that of the fuel price schedule, a regularly updated document that stipulates the price ceiling that fuel companies can sell at while baking in various fees and commissions for fuel importer and gas station owners. Researcher Marc Ayoub has shown that these fees form a significant amount of the overall price of gasoline and diesel.¹⁰ A state organ, the Consumer Protection Directorate, periodically confirms that gas stations are selling at the regulated price, fining stations that fail to do so. In effect, the Lebanese state all but guarantees revenue to the fuel importers, ensuring the smooth flow of fuel and removing any incentive to establish alternative mass transportation networks, such as buses or trains.

Between 2000 and 2022, importing fuel cost the country $57 billion dollars, or 7.4 percent of Lebanon’s GDP.

Lebanon has thus fallen into a fossil fuel trap: its economy is simultaneously dependent on and rendered bankrupt by expensive, price-volatile imported hydrocarbons. (Several countries around the world, including Yemen and Nigeria, are in a similar trap.¹¹ These countries spend significant sums of money importing fuel, enabling domestic actors to massively profit from these essential goods and forcing public authorities to spend vast amounts of money subsidizing them.)¹²

Thinking about Lebanon through the lens of fossil fuel dependency highlights the ways in which the Lebanese state is implicated in the country’s energy systems. Far from being a “failed state,” the Lebanese government apparatus is in fact a regulated energy import machine, with the state operating hand in glove with a fuel import cartel that benefits from fixed profit rates.

Scapegoating the “Generator Mafia”

The term “generator mafia” is a popular shorthand in Lebanon for the country’s private generator owners, but it risks obscuring a more complex landscape of decentralized energy provision in Lebanon today. Distinct generator models, variation in revenue by geography, and the role of other actors along the fossil fuel supply chain all suggest that not everyone in this supposed mafia profits equally. Examining different kinds of generator owners reveals that many are simply entrepreneurial businessmen who got lucky, while others engage in more mafia-like activities and use violence to seize and maintain control over subscriber areas.

Yet it is fair to say that Lebanese generator owners, as a group, do make a great deal of money. World Bank estimates from 2020 suggested that large generator owners were earning hundreds of thousands of dollars in profits every month.¹³ Media reports about the generator mafia coincide with a spike in generator imports that began in the middle of the 2000s (shown in Figure 3).¹⁴ Generator owners’ monopoly power allows them to dictate prices to their subscribers and pass on additional costs, including the increased cost of fuel during periods of fuel shortages. There is also anecdotal evidence suggesting that generator owners collude to punish subscribers who try to switch providers. (It is worth noting that Lebanon is not unique—there has been a rise in the usage of diesel generators globally, although owners’ efforts to organize are significantly more advanced in Lebanon than in other countries.)¹⁵

Figure 3

Lebanese generator owners’ profits have continued in spite of the solar boom that has occurred in Lebanon since 2021, when a fuel shortage prompted hundreds of thousands of households to purchase rooftop solar arrays and battery storage.¹⁶ In cities, however, where poorer households struggle to purchase solar and where rooftop space is frequently limited and contested, diesel generators are still the principal source of electricity supply for many.

However, generator owners make very different amounts of money depending on where they are located. A 2023 survey indicated that Beirut residents are much more likely than residents of other governorates to pay higher monthly generator subscriptions, with 72 percent of respondents paying $100 or more in monthly fees.¹⁷ Generator owners attribute higher costs in Beirut to higher municipal taxes and rental costs, but these expenses clearly do not justify the exorbitant difference in prices.¹⁸

Generator owners have also demonstrated a capacity to mobilize and act in concert—though within limits. As the state attempted to regulate the sector throughout the late 2010s and early 2020s, generator owners grew worried about the risk to their profitability. They formed the Association of Generator Owners in Lebanon, staged public protests around the country, and appeared on TV shows to advocate for themselves. Their first conference, staged in the middle of 2018, attracted hundreds of attendees. Yet the group’s social media page suggests that the owners’ appetite for mobilization has faded over time. While the group gathered for at least one annual conference, its public protests dwindled in the 2020s, and generator owners stopped appearing on TV debate shows.¹⁹

A generator owner in the northern Lebanese city of Tripoli employs over a hundred people and maintains a standing militia of around thirty men.

Broadly, there are three categories of generator owners: small (those who own one or two generators), medium (those who own three to five), and large (those who own many, including across different parts of an urban area). Most of the generator owners interviewed for this report fell into the first two categories. These were often men from working-class backgrounds who had either technical electrical qualifications or had taught themselves skills in electrical maintenance. They typically employed a small team of Syrians or Egyptians whose jobs included repair work and bill collection. On occasion, generator businesses were family affairs, with relatives dispatched to collect bills while the patriarch or adult sons sat in the office.

By contrast, some generator owners operate sprawling fiefdoms and remain answerable to few. Such is the case with a generator owner in the northern Lebanese city of Tripoli who employs over a hundred people and maintains a standing militia of around thirty men. An interview conducted with him for this report indicated that his group has been implicated in turf wars over the right to provide electricity to specific neighborhoods of subscribers.²⁰ What is more, an interview with a local political analyst also suggested that the generator owner acts beyond the influence of the local political party, giving the lie to the conventional wisdom that generator owners operate in tandem with local political parties to extract rents from the population.²¹ Disputes over generator subscriptions have led to occasional outbreaks of violence in Tripoli in recent years—and it is by no means the only city to experience violence related to generators.²²

Fuel Smuggling

Another aspect of Lebanon’s fuel economy that receives much blame for high household costs is the smuggling of fuel between Lebanon and Syria. While Lebanon’s regulation of Syrian workers has been very strict, contraband (including narcotics) continues to flow into Lebanon, while fuel products continue to flow into Syria. As in other countries, smugglers arbitrage the difference in prices for a given commodity on either side of the border. Fuel smuggling reached its zenith during the period when the Lebanese central bank used an exchange rate mechanism to subsidize imported fuel to protect consumers during the years immediately following the 2019 economic crisis. Simultaneously, however, Syria experienced the imposition of the United States’ Caesar Act sanctions, which, while they were in effect from 2020 to 2025, denied Syria access to international energy markets, caused major domestic fuel shortages, and drove up the prices of diesel and gasoline.

Security arrangements at the Syrian border have also, at times, encouraged smuggling at the border. While Bashar al-Assad was in power in Syria, significant lengths of the Lebanese–Syrian frontier were controlled by Hezbollah and the Syrian Army’s 4th Division, led by Assad’s brother, Maher al-Assad. Control of the border thus meant an ability to charge border fees as well as profit-making opportunities arising from selling cheap fuel subsidized by Lebanese taxpayers on the Syrian market.

Fuel smuggling from Lebanon to Syria boomed as a consequence. During 2020–22, it was common to see dozens of fuel trucks making their way to the Syrian border on a daily basis. There was also smuggling in remote areas away from border crossings. On the assumption that a hundred trucks crossed the border each day during this period, research suggests that, between September 2019 and September 2021, Hezbollah and the Syrian army may have raised $1.5–$3.4 billion in revenue from exploiting the gap between the two fuel prices, which could reach $1.80 per liter, as well as around $3.4 million in border fees.²³ The spread in fuel prices meant that every truck that crossed the border during this period generated around $33,000 in revenue, adding up to millions over time.

Of course, the situation has since changed significantly. The Lebanese central bank gradually began phasing out the fuel subsidy starting at the end of 2022, and the collapse of the Assad government in December 2024 and reconfigurations in Lebanon’s political economy have led to a more assertive Lebanese state at the border. And, as noted above, the United States lifted its sanctions on Syria last year. Yet ongoing fuel shortages in Syria mean that informal demand for fuel products imported to Lebanon remains, and fuel smugglers operate in plain sight in the no-man’s-land between the Syrian and Lebanese borders.²⁴

The Fuel Cartel

As this report has shown, the two groups most often blamed for Lebanon’s hardships—generator owners and fuel smugglers—did in fact significantly profit from and contribute to fuel shortages in 2019–22, when gasoline and diesel imports were heavily subsidized. But these groups are not actually the source of the problem: they sit downstream from more powerful actors, like state regulators and fuel importers, the latter of which form a state-backed cartel.

It’s not hard to know which companies are part of the fuel importer cartel: their names appear on the thousands of gas stations that line Lebanon’s city streets and country roads. The Lebanese state supports them by maintaining a regularly updated price schedule for fuel products that guarantees profits. This policy, supported by the overvalued Lebanese pound and a lack of sustainable transport policy, has ensured massive demand for automobiles and one of the highest concentrations of gas stations in the world, with around 3,000 gas stations identified by querying the Google Maps API (Figure 4).²⁵

Figure 4

Although French energy company TotalEnergies is not a part of this cartel, TotalEnergies has developed its own “supply cartel” with IPT, another fuel import company. In 2019, these companies signed a strategic partnership whereby TOTSA, TotalEnergies’ global trading arm, would supply fuel to IPT gas stations; TotalEnergies now supplies nearly a fifth of the gas stations on the Lebanese market.²⁶

Focusing on the structural determinants of Lebanon’s fuel chain shines a light on who really profits from Lebanon’s energy sector—its fuel import companies. While generator owners doubtlessly earn significant sums of money, it is the state’s inability to provide reliable electricity and the guaranteed income provided by the state price schedule that have ensured the profitability of the fuel import companies. It is this combination of the state’s dysfunction and the power of the fuel cartel that creates the market for generators. Reform the state’s provision of electricity, weaken the cartel, and fix the country’s ailing power plants, and the expensive generator problem goes away.

Policies to Reduce Fossil Fuel Dependency

There are a raft of progressive energy policies—both international and domestic—that could help Lebanon find a way out of its energy mess. Following are policy recommendations, organized according to the actors that could best realize them.

Multilateral donors, such as the World Bank, the EU, and the UN Development Programme

• Help expand Lebanon’s clean energy infrastructure by scaling up concessional finance tools—grants, guarantees, and blended finance—to de-risk private investment.
• Support regional energy cooperation by enabling feasibility studies and dialogue on cross-border electricity trade, including reactivating the Arab Gas Pipeline, if conditions allow.
• Co-finance Lebanon’s shift to low-emission public transport by supporting a national bus system and “bus rapid transit” lanes in cities like Beirut, Tripoli, and Sidon.

Lebanese policymakers

• Advance community-led renewables by enabling cooperatives and municipalities to legally co-own solar projects, reducing reliance on private generator owners.
• Create a national solar siting consultation that would ensure transparency, local job creation, and equitable land use.
• Create public messaging that emphasizes economic benefits of community-led renewables such as reduced fuel imports, price stability, and lower bills.
• Lead urban resilience efforts like tree planting, green spaces, and building efficiency incentives (for example, insulation and solar water heaters).
• Support diaspora investment by enabling green financial products through local institutions.

Activists

• Promote energy justice by championing cooperative and community-based solar to democratize access and curb reliance on private generators. The transition should be framed as a path to recovery, creating jobs and healthier cities, as opposed to a technical shift.
• Advocate better urban planning, including green corridors, tree planting and accessible public transport.
• Monitor energy consultations to ensure transparency, protect community interests, and push for meaningful citizen participation in implementation.

U.S. policymakers

• Support Lebanon’s energy transition by expanding innovative financing models that lower capital costs.
• Scale equity-based pilot projects, of the type implemented in the past by the United States Agency for International Development (USAID), that would attract private investment without worsening Lebanon’s debt burden.
• Back diaspora-targeted investment tools such as green bonds or transition funds through partnerships with Lebanese and international financial institutions.
• Fund technical training and solar siting consultations that can support renewables-based workforce development and create jobs for Lebanese engineers and technicians.

Of course, the Trump administration’s aversion to foreign aid and its coziness with the oil industry make such policies seem quite unlikely in the short term. For example, USAID funding for Lebanon remains unclear and was already limited prior to the massive cuts enacted in 2025.²⁷ Nevertheless, it is worth noting that the United States could still play an important role, should the political will to do so emerge.

Follow the Fuel

Refocusing attention on who profits from fossil fuels in Lebanon allows a more granular understanding of the country’s perennial energy crisis. Pinning the blame on all generator owners or sectarian politics misses how a small group of fossil fuel capitalists have accumulated enormous wealth from structural faults in the Lebanese economy.

Tracing the efforts of the generator owners to organize shows that they hardly constitute an organized interest group: there are simply too many of them to ensure a coordinated response. And generator owners argue, with some credibility, that blaming them misses the broader point: that they shoulder responsibility for the state’s failure to provide reliable electricity. Moreover, the owners undoubtedly spend significant amounts of time repairing and maintaining their generators, which were never designed to run constantly.

On the other hand, APIC (the fuel importing cartel) is a limited group of corporate entities with significant lobbying power. But this cartel only exists because of Lebanon’s unrelenting reliance on fossil fuels. Adopting the measures outlined above would enable Lebanon to break the cartel’s grip, begin repairing its battered economy, and deliver for its citizens. Many of these proposals are more politically feasible now than in Lebanon’s recent history, with a new government and new energy minister that appear prepared to undertake reforms.

This report is part of “Networks of Power,” a project led by Century International fellow Zachary Cuyler, which aims to map Lebanon’s evolving energy sector and assess the prospects for energy justice.

Header Image: Power lines in Beirut in a 2019 file photo. Source: IMF Focus via Flickr, used with a Creative Commons License.

1. “‘Cut Off From Life Itself’: Lebanon’s Failure on the Right to Electricity,” Human Rights Watch, March 9, 2023, https://www.hrw.org/report/2023/03/09/cut-life-itself/lebanons-failure-right-electricity.
2. “GDP per Capita (Current US$)—Lebanon,” World Bank Databank, https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=LB.
3. “‘Cut Off From Life Itself’: Lebanon’s Failure on the Right to Electricity,” Human Rights Watch, March 9, 2023, https://www.hrw.org/report/2023/03/09/cut-life-itself/lebanons-failure-right-electricity.
4. Association of Petroleum Importing Companies, https://apic.org.lb/.
5. The Trump administration’s lifting of sanctions on Syria in May 2025 has prompted meetings between regional capitals centred around restarting the long-dormant pipeline, with the latest talks set to take place in February. See “US. Sanctions Relief on Syria Sparks Economic Optimism in Lebanon and Jordan,” Syrian Observer, May 20, 2025, https://syrianobserver.com/foreign-actors/u-s-sanctions-relief-on-syria-sparks-economic-optimism-in-lebanon-and-jordan.html;  “Egypt Prepares to Export Gas to Lebanon via Syria,” Enab Baladi, November 5, 2025, https://english.enabbaladi.net/archives/2025/11/egypt-prepares-to-export-gas-to-lebanon-via-syria/.
6. Author’s calculations based on World Bank GDP and UN Comtrade import data for refined petroleum imports.
7. Nada Maucourant Atallah and Etienne Lefevre, “Lebanon Plans to Rely on Iraqi Fuel Despite Unpaid Bills and Cheaper Alternatives,” The National, June 19, 2024, https://www.thenationalnews.com/news/mena/2024/06/19/lebanon-plans-to-rely-on-iraqi-fuel-despite-unpaid-bills-and-cheaper-alternatives/.
8. Nada Maucourant Atallah, “Lebanon Swindled Out of Millions in Sanctioned Russian Fuel Scheme,” The National, September 15, 2025, https://www.thenationalnews.com/news/mena/2025/09/15/lebanon-swindled-out-of-millions-in-sanctioned-russian-fuel-scheme/.
9. Leila Hatoum, “Why Lebanon’s Electricity Crisis Is So Hard to Fix,” Arab News, June 14, 2020, https://www.arabnews.com/node/1689841/middle-.
10. Marc Ayoub, “How Much Do We Pay the Oil Cartel for Every Can of Gasoline,” Al-Sifr, February 16, 2024, https://alsifr.org/oil-cartel-lebanon.
11. Abeer Al-Eryani (2024). “The Political Economy of Energy Security in Wartime Yemen.” In: Middle East Law and Governance 16.3, pp. 359–370.
12. Ope Adetayo, “Nigeria’s NNPC Says Its [sic] Facing Financial Strain over Costly Fuel Imports,” Reuters, September 1, 2024, https://www.reuters.com/markets/commodities/nigerias-nnpc-says-its-facing-financial-strain-over-costly-fuel-imports-2024-09-01/.
13. Ali Ahmad, Ali, “Distributed Power Generation for Lebanon: Market Assessment and Policy Pathways,” World Bank, May 2020, https://documents1.worldbank.org/curated/en/353531589865018948/pdf/Distributed-Power-Generation-for-Lebanon-Market-Assessment-and-Policy-Pathways.pdf.
14. See, for example, Nayla Razzouk, “Electricity Sharks Invade Lebanon Again,” Agence France Presse, February 15, 2000; “Bassil Works on Renewable Energy,” National News Agency Lebanon (NNA), October 1, 2010, https://advance.lexis.com/api/document?collection=news&id=urn:contentItem:5157-1381-JDJN-61RM-00000-00&context=1519360.
15. Charles Lawrie and Camillo Stubenberg, “Friend or Foe? Diesel Generators and the Global Energy Transition,” Energy Research & Social Science 126 (August 2025): 104–24, https://doi.org/10.1016/j.erss.2025.104124.
16. Zachary Davis Cuyler and Marc Ayoub, “The Future of Lebanon’s Unlikely Solar Revolution,” September 15, 2025, https://tcf.org/content/commentary/the-future-of-lebanons-unlikely-solar-revolution/.
17. World Bank Energy survey (unpublished).
18. dditional debates revolve around whether generator electricity connections are metered or unmetered, with generator owners often insisting that customers prefer the predictability of unmetered electricity connections. Moreover, recent research by the Beirut Urban Lab suggests that, in Beirut, compliance with metering and pricing depends on the political party that dominates any given neighborhood. See “Beyond the Grid’,” Beirut Urban Lab, ArcGIS StoryMaps, September 24, 2025, https://storymaps.arcgis.com/stories/98ae93edc7f44921a6e91fc3a1dc8df1.
19. “Lebanon Generators” Facebook page, https://www.facebook.com/profile.php?id=100066403430582.
20. Tripolitan generator owner, interview with the author, Tripoli, July 24, 2024.
21. Tripolitan political analyst, interview with the author, Tripoli, March 29, 2024.
22. “One Dead, Four Injured in Disputes Connected to Generator Operators in Beirut and Tripoli,” L’Orient Today, February 11, 2023, https://today.lorientlejour.com/article/1327985/one-dead-four-injured-in-disputes-connected-to-generator-operators-in-beirut-and-tripoli.html.
23. Joseph Daher, Nizar Ahmad, and Salwan Taha, “Smuggling Between Syria and Lebanon, and from Syria to Jordan: The Evolution and Delegation of a Practice,” EUI Middle East Directions Policy Brief, April 19, 2022, https://cadmus.eui.eu/entities/publication/c5a8926f-caed-5ff9-b4b3-d7edfa359677.
24. Author’s observations.
25. Charles Lawrie, “‪Fixing Fuel Flows: Petroleum and Finance Trajectories in Lebanon,” Issam Fares Institute for Public Policy & International Affairs, American University of Beirut, November 2024, https://www.aub.edu.lb/ifi/Documents/Fixing-Fuel-Flows-Petroleum-and-Finance-Trajectories-In-Lebanon.pdf.
26. “TotalEnergies Liban and IPT Invest in a Strategic Logistics and Supply Partnership,” TotalEnergies Lebanon, April 24, 2019, https://totalenergies.com.lb/en/ipt-total-partnership; author’s calculations.
27. Zachary Davis Cuyler and Marc Ayoub, “The Future of Lebanon’s Unlikely Solar Revolution,” The Century Foundation, September 15, 2025, https://tcf.org/content/commentary/the-future-of-lebanons-unlikely-solar-revolution/.

Tags: lebanon, fossil fuels, energy crisis