Libya is an oil-rich country, but it imports most of its fuel needs because its refineries do not produce enough to meet local needs (European Archives)

The British newspaper The Guardian quoted Libyan officials as saying that the smuggling of their country's subsidized oil to the Rapid Support Forces is fueling the ongoing war in Sudan, and they pledged to investigate the smuggling, which they described as "rampant."

According to the newspaper, Presidential Council President Mohamed Al-Menfi will begin an investigation this week, and it is likely that it will also include widespread fuel smuggling operations and the main beneficiaries of them.

The newspaper pointed to accusations “ranging from extravagance to corruption,” adding that it is “not only an internal Libyan issue.” It quoted Libyan officials as saying that “large-scale smuggling helps provide fuel for the paramilitary Rapid Support Forces fighting in Sudan, a point highlighted in a recent report submitted to the United Nations Security Council.”

The newspaper warned that some of the money may also go indirectly to the Russian-backed Wagner Group, which has now been renamed the “African Legion.”

“The Wagner Group is sponsoring this fuel across the border into Sudan, and if we close the border between Libya and Sudan to get fuel, the war in Sudan will end,” a Libyan official told the Guardian. “It is not a high-tech war like in Ukraine, it is an old war with SUVs.” "Without fuel, you will end."

Gasoline is sold at a discount of 90% from the market price, but the smuggling of subsidized imported oil causes suffering to Libyans (European Republic - Archive)

Import and support

Although Libya is an oil-rich country, it imports most of its fuel needs because its small local refineries do not produce enough to meet local needs. Instead of direct support, the government in Tripoli sells imported fuel at heavily subsidized prices. Gasoline is often sold at a discount of up to 90% from the market price.

Fuel oils, which include heating oil, diesel oil and heavy fuel, are sold on average 70% cheaper than the government purchase cost. Officials say that up to 40% of imported fuel - worth billions - is then re-exported and smuggled out of the country to make a profit.

The latest power struggle came to light when the Governor of the Central Bank of Libya, Sadiq Al-Kabir, wrote an open letter to the Tripoli-based Libyan Prime Minister, Abdul Hamid Al-Dabaiba, about public spending. Since then, the two men have traded accusations, and the United Nations has threatened to explode allegations of state-sponsored corruption over the state of Libya's finances.

The Central Bank Governor pointed out that about two million people are on public sector salaries, and that these salaries represent 60% of public spending. Subsidies, especially fuel subsidies, rose from 20.8 billion dinars (3.4 billion pounds sterling) in 2021 to 61 billion dinars (about 7 billion pounds) in 2022.

The governor said that the numbers “revealed a defect, distortion, and mismanagement in fuel subsidies,” and there is no convincing answer to this increase. Al-Kabir wondered, “How is it possible to use the state’s reserve to buy a liter of fuel for a dollar and resell it for 3 cents so that smuggling gangs can benefit from it?”

Dabaiba responded by saying that there was no economic crisis, and rejected calls to impose a 27% tax on foreign exchange transactions with the aim of reducing the value of the dinar. He said public finances were in strong shape, a view rejected by Al-Kabir, who said the country was facing a large budget deficit.

It is noteworthy that the value of the Libyan currency has decreased by 78% against the dollar since 2016. An internal National Oil Corporation document issued in September 2023 indicates that the inflated cost of subsidies has become nearly half of energy revenues.

Sources say the majority of imported fuel comes from Russia via third parties, and is sold illegally to Europe at a huge profit by smugglers, leaving ordinary Libyans in often hours-long queues to get gasoline.

Source: British press