The increase in Libya’s electricity production over the last year has led to the country’s total fuel bill skyrocketing to US$ 12 billion per annum.
The revelation was made by Farhat Bengdara, the Chairman of the state National Oil Corporation (NOC) during an expanded meeting with the Tripoli based Libyan Prime Minister Abdel Hamid Aldabaiba.
Bengdara said electricity generation consumes more than US$ 8 bn per annum while nearly US$ 4 bn to supply fuel for other uses.
Committee to determine Libya’s actual fuel needs
Bengdara added that there is no mechanism for determining the quantities of Libya’s actual needs for petrol and diesel.
The NOC chairman proposed forming a committee of the Ministries of Economy and Trade, Planning, Finance, and the Oil and Gas as well as the General Electricity Company of Libya (GECOL) and the NOC, to determine the actual fuel needs for electricity and other fuel stations.
The Prime Minister issued instructions to all relevant institutions to pay attention to this file, and to present the results within two weeks, to provide realistic figures on expenses, needs, and the general perception, whether for purchasing fuel or subsidies for citizens instead of fuel subsidies.
Reading between the lines: Fuel smuggling and subsidy reform
While the government report of the meeting does not spell it out, the meeting was, on the one hand, discussing the issue of fuel smuggling that is leading to a huge import bill in hard currency, and on the other hand, the subsidy of fuel provided to the General Electricity Company of Libya and transport fuel provided to the end users.
Governments since the Qaddafi era have talked about subsidy reform for fuels, but none have had the political courage to implement. Under the Qaddafi regime, petrol prices were increased briefly before the Mahmoudi Al-Baghdadi government was forced to backtrack in fear of a public backlash.
Analysts say if a strong dictatorship under Qaddafi was unable to increase fuel prices, what chance is there for much weaker transitional governments post 2011.