The National Oil Corporation (NOC) has announced that it will stop working with the oil-for-fuel system for fuel supplies starting from March next, based on a request from the Audit Bureau. The NOC called for the necessary budgets to be provided for fuel supply operations.

In a letter to the Minister of State for Cabinet Affairs of the Government of National Unity, the Acting Head of the NOC, Masoud Suleiman, said that if the fuel budget account is not funded, the NOC will not be held responsible for the return of traffic congestion or any disruptions at power stations or other vital facilities due to the loss of funds caused by delayed or failed payments.

Suleiman also noted that there is still time to adopt a payment mechanism from the relevant authorities to be implemented starting from March 2025. He explained that he received verbal approval from the Audit Bureau last Thursday to continue working with the oil exports compensation system to meet local market needs for the month of February only, until the Central Bank of Libya is ready to provide the fuel budgets.

The Audit Bureau had previously called for the cessation of the oil-for-fuel trade system for fuel supplies starting from 2025. However, the NOC pointed out in a letter to the Bureau, dated January 7, 2025, that it would be difficult to stop using the trade system at the beginning of the year, as the supplies for December had already been allocated according to this system. It also proposed continuing temporarily until the Central Bank could activate the payment mechanism through letters of credit.

The NOC clarified that the delay in releasing budgets from the Central Bank of Libya and the Ministry of Finance was the main reason for the use of the trade system, as it was unable to secure the necessary financial allocations for fuel supply on time. It confirmed that it had provided official clarifications about the consequences of this delay, but the relevant authorities had not taken the necessary measures to address it.

In his letter to the Government of National Unity, dated January 19, Masoud Suleiman stated that the NOC would stop, starting from March 1, 2025, payment in kind mechanism to its partners, Al-Waha Oil Company and Eni for gas supplies, and would cease crude oil trade with fuel in compliance with the Audit Bureau’s directive.

The NOC had previously confirmed that the monthly estimated value of the country’s fuel needs amounted to $750 million, which included the cost of supplying natural gas to power stations.