Libya’s eastern-based administration has consented to the proposal to terminate fuel subsidies

In a statement issued on Wednesday, Libya’s eastern-based administration announced that it had reached an agreement on a proposal to terminate fuel subsidies and would establish a mechanism to execute the agreement.

The proposal was not further disclosed by the administration of Osama Hamad, which is a rival to the internationally recognized government in Tripoli.

Nevertheless, it is uncertain whether Hamad’s government will be able to execute the proposal in the divided nation.

According to the Global Petrol Prices online tracker, a liter of petroleum in Libya, a member of OPEC, is priced at a mere 0.150 Libyan dinars ($0.03), making it the second-cheapest price in the world.

In the aftermath of a 2011 uprising against former dictator Muammar Gaddafi, smuggling networks have thrived amid the political crisis and armed conflict that ensued. In 2014, the nation was divided between the eastern and western administrations, which were at conflict.

According to a report by the World Bank, the annual value of fuel smuggling from Libya is at least $5 billion.

In a meeting with the deputy governor of the Central Bank of Libya (CBL) in Tripoli, Mari Barrasi, and four members of the bank’s board of directors, Hamad in Benghazi approved the subsidy-scrapping proposal.

The Benghazi branch headquarters of the CBL was the location of the meeting.
In 2023, the eastern parliament appointed Hamad to succeed Abdulhamid Dbeibah, who had been installed through a U.N.-backed process in 2021 that the parliament claimed had lost its legitimacy.

In January, Dbeibah, who is based in Tripoli, stated that he would subject the issue of removing petroleum subsidies to a public survey. However, he has not taken any further action on this matter.

According to CBL data, the total cost of petroleum subsidies from January to November of this year was 12.8 billion Libyan dinars. The official exchange rate is 4.8 Libyan dinars to one dollar.