Buffeted by chaos, Libya faces energy, budget crunches

Libya05 March 2014, Cairo — Already buffeted by lawlessness and seemingly unending political turmoil Libya is now facing budgetary and energy crunches, say top officials.

Libya’s oil production plummeted just over a week ago after armed groups shutdown a major oilfield in the southwest of the country, piling on a further challenge for the country’s beleaguered government, which has been unable to engineer an end to a seven-month oil blockade by unruly militias.

The shutdown of the el-Sharara oilfield in the Murzuq desert is adding to government budget woes created by the blockade of key oil-exporting ports by federalist militias who want semi-autonomy for eastern Libya. Libya’s energy industry provides more than 90 percent of state revenues and accounts for 70 per cent of the country’s GDP.

El-Sharara was only restored to full production in January, a restoration cited by Libya’s Prime Minister Ali Zeidan as one of his signature achievements. With revenue worries mounting, the head of the parliamentary budget committee, Mohammed Abdallah, is warning the country faces a budgetary crunch, posing “a very big danger” for Libya.

Libya’s oil output has now fallen to 230,000 barrels a day; far short of the 1.4 million bpd it reached before the oil blockades. El-Sharara has a 340,000 bpd capacity.

Libya has the largest oil reserves in Africa. Even so, Zeidan’s government, which managed to exploit political factions in January to prevent the interim parliament, the General National Congress, from passing a vote of no confidence in it, has already incurred a deficit of nearly four billion dinars ($3.2-billion) this year alone.

It has presented a six-month budget to the GNC, which would see a jump in public sector wages. Many of the untruly militias are on the government payroll – an attempt by Zeidan to placate them, say analysts.

With government revenue drying up, the government is also faced with a worsening domestic energy crunch-one likely to deepen public disaffection with the country’s fitful and violence-plagued transition from autocracy to democracy.

The militias have added to energy-generating shortfalls by damaging and looting several of the country’s aged and poorly maintained power plants.



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