Libya’s eastern based gov’t agrees to cut fuel subsidies to curb smuggling

Libya’s eastern-based government in Benghazi, under the control of forces loyal to military leader Khalifa Haftar, has approved a proposal to reduce fuel subsidies, according to Reuters.

Libya currently offers some of the cheapest fuel prices globally, with a liter of gasoline priced at just 3 cents, making it the second-cheapest in the world, per Global Petrol Prices.

These ultra-low prices have driven widespread fuel smuggling networks that funnel fuel into neighboring countries, where it fetches significantly higher prices. The World Bank estimates that this smuggling costs Libya $5 billion annually in lost revenue. Additionally, the fuel shortages caused by these activities have left ordinary Libyans struggling to find fuel at local pumps.

The International Monetary Fund, along with Libya's western-backed government led by Prime Minister Abdelhamid Dbeibah in Tripoli, has long pushed for the elimination of fuel subsidies. However, such subsidies remain highly popular with Libya’s citizens.

Earlier this year, Dbeibah stated he would consult the public on lifting subsidies through a survey, but no progress on the issue has since been reported. The Benghazi-based government said it would prepare a mechanism to implement the agreement but it’s unclear whether it will be adopted by the rival government.