According to Libyan officials, they will examine claims of extensive mismanagement within the National Oil Corporation, as they believe that widespread smuggling is contributing to the ongoing conflict in Sudan.
This week, Mohamed al-Menfi, who is the chair of the presidential council, will begin an investigation. The inquiry will likely also investigate the common occurrence of fuel smuggling and who benefits from it.
The claims, which include wasteful spending and unethical behavior, extend beyond just issues within Libya. Authorities reported that extensive trafficking was aiding in the supply of fuel to the Sudanese paramilitary force known as the Rapid Support Forces. This was emphasized in a recent report presented to the United Nations Security Council.
Part of the funds may potentially be indirectly allocated to the Russian-backed group, Wagner Group, currently renamed as Africa Corps.
Even though Libya has large reserves of oil, it relies heavily on importing fuel as its refineries are not sufficient to meet domestic demand. Rather than directly providing aid to those in need, the government in Tripoli offers imported fuel at heavily discounted prices. Gasoline is often sold at a 90% discount from its market price.
The price of fuel oils, including heating oil, diesel oil, and heavy fuel, is usually 70% lower than what the government pays for them.
According to authorities, up to 40% of fuel that is brought into the country is subsequently illegally exported, resulting in a lucrative profit of billions of dollars.
Since the 2011 uprising backed by NATO that deposed Muammar Gaddafi, Libya has been under the control of two separate administrations in the eastern and western regions of the country. Despite numerous attempts by UN officials to organize nationwide elections and establish a united government, these efforts have been unsuccessful.
The most recent battle for power emerged when the governor of the central bank in Libya, Sadiq al-Kabir, penned a letter to the prime minister, Abdel Hamid Dabaiba, based in Tripoli. In the letter, al-Kabir raised concerns about excessive government spending. This has sparked a heated exchange between the two individuals, with accusations of corruption within the government potentially being exposed.
The bank’s governor, adopting the role of the guardian of the nation’s public finances, pointed out that nearly 2 million people were on the public sector payroll, and state sector salaries alone represented 60% of public spending.
The amount of subsidies, specifically for fuel, increased from 20.8 billion dinars (£3.4 billion) in 2021 to 61 billion dinars in 2022.
The stated numbers exposed an “imbalance, distortion, and mismanagement” in fuel subsidies, according to him. Additionally, he was not given a satisfactory explanation for the increase.
Kabir inquired about the logic behind using the state’s reserves to purchase a liter of fuel for a dollar and then selling it for only 3 cents, ultimately benefiting smuggling gangs.
Dabaiba responded by stating that the country is not currently experiencing an economic crisis and rejected the suggestion of implementing a 27% tax on foreign exchange transactions in order to decrease the value of the currency. He asserted that the government’s financial situation is stable, but Kabir disagreed and argued that the country is actually dealing with a significant budget shortfall.
According to a document from the National Oil Corporation, dated September 2023, the cost of subsidies in Libya has risen to nearly 50% of energy revenues, resulting in a 78% depreciation of the currency against the dollar since 2016.
According to reports, most of the fuel that is brought into the country is sourced from Russia and funneled through third parties in Turkey. The smugglers make a significant profit by selling it illegally to Europe, causing regular citizens in Libya to face long wait times for gasoline.
According to one government representative in Libya, the Wagner Group is transporting fuel across the Libyan-Sudanese border. If this border is closed for fuel, it could potentially bring an end to the conflict in Sudan. Unlike the technologically advanced warfare seen in Ukraine, this is a more simplistic war that heavily relies on 4×4 vehicles. Without access to fuel, it would be forced to come to a halt.
Source: theguardian.com
