The President of the Presidential Council, Mohamed Al-Manfi, announced a plan to end the process of exchanging oil for fuel, in a series of tweets he published on the X platform.
According to Al-Manfi, this step comes within the framework of the government’s efforts to enhance transparency and combat corruption in the oil sector, based on the political road map and UN Security Council resolutions.
Al-Manfi stressed the importance of effective Libyan oversight, especially the role of the Supreme Financial Committee in managing oil and gas revenues in a transparent and fair manner.
The President of the Presidential Council explained that the plan includes forming a joint subcommittee affiliated with the Supreme Finance Committee, which includes relevant regulatory bodies and institutions, to enhance the governance of oil marketing contracts and fuel purchases, and to adjust operations according to actual needs.
Al-Manfi stressed that financial reform constitutes a single package that begins with the governance of the central Bank, pointing out the necessity of applying joint national supervision on oil marketing and fuel purchases, and developing effective mechanisms to enhance transparency and accountability.
the Audit Bureau’s report for the fiscal year 2023, which was not officially published and Ahrar obtained a copy of it two days ago, showed the continuation of the approach of exchanging crude oil for fuel, indicating that the volume of support has reached more than 41 billion dinars.
The report revealed that this amount was spent without recording it in the records of the Ministry of finance, which caused the state’s financial statements to be distorted and appear to be false.
Simultaneously occurring, the Chairman of the Board of Directors of the National Oil corporation, Farhat Ben Qaddara, said that fuel payment is not made through oil exchange, but rather through a clearing account mechanism to settle the value of the fuel with the parties that import Libyan oil.
Ben Qaddara pointed out that this mechanism, which was adopted in 2021 by a decision of the Prime Minister, came as a result of the faltering budgets allocated for the supply of fuel, stressing that the clearing account is subject to strict oversight by the Audit Bureau.
Source: Al-Manfi account on the X platform.
How can Libya improve transparency in its oil sector governance?
Interview Between Time.news Editor and Oil Sector Expert on Libya’s Oil Reforms
Editor: Welcome to Time.news! Today, we are discussing a notable announcement made by the President of the Presidential Council, Mohamed Al-manfi, regarding the end of the crude oil for fuel exchange system in Libya. joining me is Dr. Amina fathi,an expert in oil economics and governance.Thank you for being here, Dr. Fathi.
dr. Fathi: Thank you for having me. It’s a pleasure to discuss such a crucial topic for Libya’s economy.
Editor: To start, can you explain the implications of Al-Manfi’s plan to end the oil-for-fuel exchange system?
Dr. Fathi: Absolutely. The decision to halt the oil-for-fuel exchange is a pivotal moment for Libya. This move is designed to enhance transparency and combat corruption within the oil sector—a long-standing issue. By shifting away from this exchange system, the government aims to establish a more straightforward financial mechanism that accurately reflects fuel supply and demand without obscuring financial records.
Editor: Al-Manfi mentioned the formation of a joint subcommittee under the Supreme Finance Committee. How crucial is this oversight in managing oil and gas revenues?
Dr. Fathi: It’s critical. Effective oversight is essential for ensuring that revenues are managed transparently and fairly. The presence of a joint subcommittee means that multiple regulatory bodies will collaborate, which should help in preventing mismanagement. Enhanced governance will likely lead to better accountability in oil marketing contracts and fuel purchases.
Editor: The Audit Bureau’s report indicated continued issues with fuel support, highlighting discrepancies in financial records.What does this say about the current state of Libya’s financial governance?
Dr. Fathi: The discrepancies raised in the Audit Bureau’s report illustrate significant flaws in the financial governance system. Spending, such as the over 41 billion dinars used for fuel without proper recording, distorts the financial statements. This not only misrepresents Libya’s financial health but also undermines trust in governmental institutions. greater transparency is needed to ensure accurate financial reporting.
Editor: Farhat Ben Qaddara from the National Oil Corporation mentioned that fuel payments are now handled through a clearing account mechanism. Could you elaborate on how this mechanism differs from the previous oil exchange process?
Dr. Fathi: The clearing account mechanism enhances accountability. Unlike the oil-for-fuel exchange, which can obscure true financial flows, the clearing account involves direct settlements that are monitored more closely. This system, established in 2021, intends to improve budget management by ensuring that the value of imported fuel is accurately recorded, thus facilitating better oversight by the Audit Bureau.
Editor: What practical advice would you give to the Libyan government to further improve transparency and combat corruption in the oil sector?
Dr.Fathi: I would recommend establishing clear and consistent reporting standards for all financial activities related to the oil sector. Implementing robust auditing processes that have autonomous oversight will build trust among citizens. Additionally, engaging with the international community for best practices in oil governance could help Libya format a more transparent and accountable system.
Editor: what can we expect to see in terms of the impact this plan will have on the wider economy in Libya?
Dr. Fathi: If implemented correctly, this plan could significantly bolster Libya’s economy by bringing in greater investment and fostering public trust. Improved transparency can lead to more efficient use of oil revenues, ultimately benefiting public services and infrastructure. Conversely, failure to execute these reforms could lead to continued financial mismanagement, jeopardizing economic stability.
Editor: Thank you, Dr. Fathi, for your insightful analysis. As Libya embarks on this governance reform journey, the world will be watching closely to see whether these measures lead to a more transparent and accountable oil sector.
Dr. Fathi: Thank you for the chance to discuss this vital topic. I hope to see positive changes in Libya’s oil governance in the near future.