Bloomberg: Libya's $1 billion in backlog of fuel debt threatens supplies
Libya's dues to fuel suppliers reach nearly $1 billion after the end of the oil swap program three months ago.
The arrears owed by the National Oil Corporation will triple by the end of the year if payment is not made.
The National Oil Corporation: Failure to allocate funds threatens to disrupt essential services such as power plants and transportation.
Source:
Bloomberg
Libya has accumulated about $1 billion in arrears to fuel suppliers after the country ended its controversial oil swap program about three months ago, according to people familiar with the matter.
The state-owned National Oil Corporation (NOC) is likely to triple its arrears by the end of the year if it doesn't start paying them, according to two people familiar with the matter, who requested anonymity because the information is private. The company's inability to pay threatens the availability of products such as gasoline in a country plagued by political unrest.
Libya's Oil-for-Fuel Swap Mechanism
Despite having Africa's largest oil reserves, Libya relies heavily on imported refined fuel due to a lack of refining capacity. The swap mechanism allowed the National Oil Corporation (NOC) to pay for purchases in crude, a measure that allows it to avoid immediate cash payments. However, Libya's Audit Bureau called earlier this year for the system to be discontinued, citing its inefficiency.
The Libyan Oil Ministry did not immediately respond to a request for comment.
Libya heavily subsidizes fuel prices, with gasoline and diesel costing $0.027 per liter, among the cheapest in the world, according to an online global gasoline price tracker. This is less than the cost of a bottle of water in the country. In December, a UN panel reported that some cheap imported fuel was being smuggled abroad for higher prices.
Libya's Central Bank Crisis
People familiar with the situation said that the National Oil Corporation (NOC) has been unable to pay for fuel imports from its profits from crude sales because these revenues must be deposited directly into the central bank. The country is run by two separate governments, vying for control of the oil sector and the central bank.
This situation reflects the deep divisions that have existed in Libya since the ouster of Muammar Gaddafi in 2011. Severe fuel shortages led to crowding at gas stations last year and led to the suspension of the head of the state-run fuel distribution company, amid growing discontent across the country.
The National Oil Corporation (NOC) urged the government to allocate the necessary funds to pay for fuel imports, warning that any failure to do so would disrupt essential services such as power plants and transportation, according to a letter dated January 19 and signed by the NOC chairman and seen by Bloomberg.
The ltter stated that the company requested the implementation of a new payment mechanism to ensure timely disbursements of fuel budgets, through letters of credit from the Central Bank.