Libya’s National Oil Corporation to end oil-for-fuel system amid budget delays

Libya’s National Oil Corporation (NOC) has announced plans to discontinue the oil-for-fuel system starting in March 2025, following a request from the Audit Bureau.

The NOC has urged the Government to allocate the necessary funds for fuel supply operations, warning that any failure to do so will result in disruptions to critical services such as power stations and transportation. Acting NOC Head Masoud Suleiman emphasized that without sufficient funding, the NOC cannot be held accountable for any operational failures caused by delays or non-payment.

In a letter to the Minister of State for Cabinet Affairs, Suleiman pointed out that although the Audit Bureau had previously insisted on ending the oil-for-fuel system, the NOC would continue using it for February 2025 supplies, given verbal approval from the Bureau. The NOC has also called for the implementation of a new payment mechanism to ensure the timely release of fuel budgets, particularly through letters of credit from the Central Bank of Libya. The failure to secure these budgets in a timely manner has been a significant factor behind the NOC’s reliance on the oil-for-fuel system in recent months.

The NOC highlighted that delays in budget allocations from the Central Bank and the Ministry of Finance had forced it to adopt this temporary solution. It has repeatedly communicated the consequences of these delays to the relevant authorities but has yet to see any action taken. With the country’s monthly fuel needs estimated at $750 million, including natural gas supplies for power stations, the NOC’s decision to halt the oil-for-fuel mechanism could have far-reaching implications for Libya’s energy and transport sectors.