Libyans to vote in nationwide referendum on lifting petrol subsidies

Prime Minister Abdul Hamid Dbeibah's decision to remove the subsidies has faced backlash

Abdul Hamid Dbeibah, Prime Minister of Libya's Tripoli-based government, said he did not want 'citizens to be affected' by the removal of petrol subsidies. AFP

Libya’s Tripoli-based government will hold a national referendum on whether or not to remove petrol subsidies, Prime Minister Abdul Hamid Dbeibah has said.

The decision follows Mr Dbeibah’s announcement last week that his government was planning to remove the subsidies.

“We do not want the citizens to be affected even if there was a one-in-a-million chance,” Mr Dbeibeh said in a speech at the local council heads’ forum on Thursday.

Libyans who fear the decision could drastically drive up petrol prices expressed their anger online.

“This [lifting petrol subsidies] would make people's struggles worse, especially with irregular salary payments, high cost of living and the inability of people to buy even daily necessities,” one Facebook user said.

“The decision to lift petrol subsidies … carries many negative effects that pose harm to all Libyans,” another user said, commenting on a Facebook post by the prime minister last Thursday.

A Libyan news account on social media platform X, appears to show a video of demonstrations in the south-western city of Zintan against the removal of subsidies, but The National could not independently verify its content.

In Libya, a litre of both crude oil and diesel costs $0.03, the second cheapest in the world, according to the Global Petrol Prices online tracker.

However, cutting subsidies will heavily affect Libyans' petrol purchasing power, as the average public sector salary is $240, according to salary tracker Bdex. The public sector accounts for 85 per cent of employment in Libya, reported the World Bank.

The decision, which will drive up the price of petrol for ordinary Libyans, comes with substantial risks given the tense situation in the North African country and protests at several oilfields and refinery plants.

Libya remains divided between the Tripoli-based Government of National Unity and the Government of National Stability based in the east of the country, after years of civil war.

Mr Dbeibah defended the move to lift the subsidies, saying it stemmed from necessity.

“We do not have a problem with citizens, car drivers or even bakeries that need this [petrol], we have an issue with smugglers, vandals and criminals who will face the law and go to prison from now on,” he said.

According to a recent study, Libya loses at least $750 million annually as a result of petrol smuggling.

Subsidies allocated for the sector have exceeded $12 billion in 2022, an increase from $7 billion in 2021.

“Every year we lose 60 billion [Libyan] dinars ($12.4 billion) in petrol subsidies, this constitutes half of the Libyan state budget,” Mr Dbeibah said during his speech.

The Libyan Government of National Unity suggests changing the subsidy system to grant citizens a specific quota of money or coupons to purchase petrol, depending on their needs.

“We will determine the specific price citizens should pay depending on their, or their families’ needs … If they do not have money they will get it for free sometimes but if they do have, they need to pay like everybody else,” Mr Dbeibah said.

The rival Benghazi-based administration rejected the decision, calling it “hasty” and “inconsiderate” of Libyans' dire economic situation.

“Such decisions cannot be taken by any party in such a hasty manner and without conducting the necessary study of its consequences, dimensions and damages,” rival Prime Minister Osama Hamad said on January 11.