Oil-Rich Libya Suspends Fuel-Supply Tsar As Filling Stations Run Dry

(Bloomberg) -- Libya’s premier suspended the head of the state fuel-distribution company after a severe shortage this week, the latest in a string of firings and probes targeting oil officials. 

Prime Minister Abdul Hamid Dbeibah prohibited Brega Oil Marketing Co. Chairman Fouad Belrahim from working while an investigation is under way, according to a decree published Wednesday. 

The nation — an OPEC member — has seen miles-long lines at filling stations across the country due to a severe fuel shortage, amid a lack of refining capacity and smuggling of cheap gasoline and diesel. It’s added to angst in a nation mired in turmoil since the overthrow of Moammar Al Qaddafi in 2011, with separate governments vying for control over the oil sector, the nation’s economic lifeline.

The internationally recognized government in Tripoli will examine the causes of the shortage, “identify those responsible for it and propose urgent solutions to end it,” the notice said. The National Oil Corp. will assign a board member to assume the duties of the chairman during the suspension period, it said.

The move is the latest in a series of decisions by Dbeibah’s government targeting oil officials as it tries to exert control over the sector. It’s also facing a showdown with the central bank, which manages billions of dollars in oil revenues, as the long-time governor refuses to step down amid criticism of his handling of funds.

Power struggles in Libya frequently affect oil production, with protests bringing output at some fields to a standstill. Limited refining capacity has also contributed to a relative scarcity of motor fuels in the domestic market. 

The country heavily subsides fuel, with both gasoline and diesel costing $0.031 a liter — among the cheapest in the world, according to the Global Petrol Prices online tracker. That’s less expensive than a bottle of water in Libya. Crude prices in the country are on par with those for the refined products.

Those conditions have created a dramatic rise in fuel smuggling, with profiteers snatching up inexpensive fuel and hoarding it or selling it in markets where it can fetch a higher price.

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The oil ministry itself is in a state of disorder following actions earlier this year. In March, then-Oil Minister Mohamed Oun was suspended for two months pending an investigation into alleged violations related to wasting public money. Acting minister Khalifa Abdul Sadiq was arrested this month over allegations of unlawfully authorizing the disposal of about €457 million ($500 million) for a foreign oil company. 

In 2021, Oun attempted several times to suspend the long-standing head of the NOC, Mustafa Sanalla — who exited the post at gunpoint in mid-2022 amid political unrest that sent oil output to less than 700,000 barrels a day. The nation pumped about 1.2 million barrels a day in July, according to data compiled by Bloomberg. 

Chronic power cuts and fuel shortages — especially in the south, where people have long complained that oil revenue wasn’t being distributed fairly — have led to protests. Dbeibah is seeking to avoid a shutdown of oil fields, a key revenue source, amid the stalemate with the central bank.  

Authorities in Tripoli have tried to remove subsidies on fuel to reduce the burden on the budget and contain fuel smuggling, but that decision was scrapped following protests. Personal vehicles are vital in the country, which has scant public transport. 

To address the current shortage, Dbeibah has instructed the interior minister to make fuel-distribution companies open closed petrol stations.

(Updates with additional details from third paragraph.)

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