The Tripoli based Libyan government, led by Abdel Hamid Aldabaiba, issued a directive yesterday, leaked to local media, instructing the Central Bank of Libya (CBL) to terminate the development agreement signed between the Arabian Gulf Oil Company (AGOCO) and the controversial Arkenu Oil Company.
The letter demands the termination of the agreement within the legal framework, emphasizing the need to avoid harming the interests of the state. Simultaneously, a copy of the correspondence was sent to the Libyan Attorney General’s office for review of the relevant contracts.
The move by Aldabaiba comes in the wake of escalating controversy and public rejection of the Arkenu Oil Company agreement, due to its lack of transparency and accountability to Libyan state monitoring entities. This has been brought to a head by the crashing value of the Libyan dinar and the skyrocketing prices and cost of living. This has led Libyans to ask where their oil money is being spent.
The company, agreed to by Aldabaiba presumably as a part of a complex quid-pro-quo with Hafter, is widely perceived to be controlled by the Hafter family with the destination and use of its revenues – Libyan state revenues – unclear. Arkenu is the only private Libyan oil company licensed to export oil in contravention of Libyan law – an activity historically monopolised by the Libyan state.
Can Aldabaiba stop Arkenu?
It is, nevertheless, unclear if Aldabaiba and the CBL, without proactive international pressure or intervention, are able to prevent the Hafter family from continuing the export of oil through Arkenu as both AGOCO and Arkenu are based in the Hafter-controlled eastern Libyan territories.
Some analysts believe the announcement by Aldabaiba is simply grandstanding and manoeuvring as part of the wider political negotiations with the east. It could be part of efforts to force the Hafters to reduce public development spending to strengthen the foreign exchange value of the Libyan dinar. Equally, Aldabaiba could be using the announcement simply to deflect blame onto the Hafters for the economic woes of the country – manifested in the crash in the foreign exchange value of the Libyan dinar.
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