Banking expert Imran Al-Shaibi discussed the size of Libya’s fuel bill, stating that Libya spent approximately $93.3 billion over seven years on fuel and natural gas, averaging $13.3 billion annually.
He noted the sharp increase in 2022, when spending reached $28.27 billion due to Brent crude prices rising to $100 per barrel, pointing out that Libya is completely exposed to fluctuations in global prices without any hedging mechanisms.
He said:
“The gap between cost and selling price (the core of the problem) can be estimated for 2024 as follows:
- Gasoline: 5.44 million tons ≈ 7.35 billion liters
- Diesel: 6.34 million tons ≈ 7.55 billion liters
Domestic revenue at a price of 3 cents per liter amounts to only approximately $447 million, compared with fuel costs of $12 billion.”
He added:
“This means the state recovers less than 4% of the cost, while actual subsidies exceed 96%. The real cost per liter is approximately 70–80 cents, while it is sold for only 3 cents or 15 qirsh per liter, resulting in losses exceeding 95% per liter sold.
Cumulatively, direct subsidies for gasoline and diesel alone exceeded $54 billion during the period.”
He continued:
“Regarding the smuggling indicator, consumption increased from 9.33 million tons to 14.16 million tons (+52%) in six years. Diesel alone increased by 80% (from 3.5 to 6.3 million tons).
There is no population or economic growth that justifies this increase. The most likely explanation is a combination of fuel smuggling to neighboring countries—where the price difference, reaching 25–30 times, makes smuggling the most profitable trade in the country—and excessive diesel consumption in electricity generation through low-efficiency power plants.”
He also explained the opportunity cost of gas, stating that the value of locally burned natural gas reached $41 billion.
He noted that 365 billion cubic feet annually of gas is burned locally, most of it for electricity generation, while a large portion could have been exported to Europe—especially in 2022 when the TTF gas price reached record levels ($40.34/MMBTU).
“Libya burned gas at the highest prices in history instead of selling it,” he said.
He emphasized that the current system is financially unsustainable:
“Subsidies represent the equivalent of 15–20% of GDP and benefit smugglers and heavy consumers more than ordinary citizens.”
He also outlined what he described as the logical reform approach:
- Gradual fuel price increases combined with direct cash transfers to citizens (following models implemented in Egypt and Jordan).
- Digitizing fuel distribution systems to detect leakage.
- Improving the efficiency of power plants to free up gas for export.
He concluded that recovering only 30% of the actual cost would save more than $4 billion annually.
