Libya's interior minister, Fathi Bashagha, is calling on the country's internationally recognised prime minister, Faiez Serraj, to end the virtual fuel monopoly held by Libya's four main petrol station operators.

In a letter to Serraj, Bashagha says that the companies prefer to import fuel on letter of credit (L/C) terms rather than purchase domestically produced fuel, even though it is available.

Supplies disrupted

Bagasha says the four companies - Sharara, Al-Rahila, Oil Libya, and Express Way - had failed to withdraw their daily allocated volumes of fuel from state-owned Brega Petroleum Marketing Company (BPMC) despite long running fuel shortages that have resulted in long queues at petrol stations.

In his letter, the interior minister speculates that the companies may even be deliberately obstructing fuel distribution so they can obtain permission to import fuel directly from abroad rather than buy it locally from National Oil Company subsidiary, BPMC.

L/C preference

The four companies are periodically allowed to open hard currency L/Cs in order to import fuel when BPMC has insufficient supplies from the Brega refinery to meet the retailers' demand.

The companies prefer this because importing fuel is much more profitable. This is because the retailers make a profit on the exchange process and sell fuel locally at the subsidised rate.

BPMC sells fuel at fixed wholesale and retail prices to limit profit margins.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.