Libya's eastern-based government agrees to proposal to end fuel subsidies

Libya's eastern-based government said in a statement on Wednesday that it had agreed on a proposal to end fuel subsidies and would prepare a mechanism to implement the agreement.

The administration headed by Osama Hamad, a rival to the internationally recognised government based in Tripoli, did not disclose further details about the proposal.

It is unclear if Hamad's government will be able to implement the proposal in the divided country, however.

In OPEC-member Libya a litre of gasoline costs just 0.150 Libyan dinars ($0.03), the second-cheapest in the world according to the Global Petrol Prices online tracker.

Smuggling networks have flourished amid the political turmoil and armed conflict that followed a 2011 uprising against former dictator Muammar Gaddafi. The country became split in 2014 between warring eastern and western administrations.

Fuel smuggling from Libya is estimated to be worth at least $5 billion per year, according to a World Bank report.

The subsidy-scrapping proposal was approved by Hamad in Benghazi in a meeting with the deputy governor of the Tripoli-based Central Bank of Libya (CBL), Mari Barrasi, and four members of the bank's board of directors.

The meeting was held at the CBL's Benghazi branch headquarters.

Hamad was appointed in 2023 by the eastern parliament to replace Abdulhamid Dbeibah, who had been installed through a U.N.-backed process in 2021 that the parliament said had lost its legitimacy.

Tripoli-based Dbeibah said in January that he would put the issue of removing fuel subsidies to a public survey, but he has since taken no further action on that.

The cost of fuel subsidies from January to November of this year totalled 12.8 billion Libyan dinars, CBL data shows. The official exchange rate is 4.8 Libyan dinars to $1.