Several different techniques for fuel smuggling have become active along Libya's western, southern and eastern borders. Starting from handheld plastic containers, or those carried on the back of animals to trucks mounted with fuel tanks, in addition to other huge oil tankers, all used by smugglers to transfer large amounts of fuel from Libya to neighboring countries.
Smuggling gangs gain tremendous income out of illegal trade due to the price difference between Libya's neighbors and the price of fuel here. This difference results from the strong subsidy incurred by the Libyan State Treasury, estimated by billions of dollars a year, for oil derivatives.
On the coast, the smuggling is done by fishing vessels off the island of Malta, 160 miles from the Libyan coasts and around the island of Sicily, in the south of Italy, where the smuggled fuel is sold at sea.
Global Petrol Prices website carried out a comparison between gasoline prices in the world, where the average price is ($1.10) per liter.
According to the website, Libya is the second cheapest place after Venezuela in regard to gasoline prices(less than 14 cents/liter of Gasoline) .This decline in fuel prices in Libya is due to the great support provided by the Libyan government for fuel amounting to $ 6.3 billion in 2014, which is considered to be so high in a small country like Libya that has limited population and resources. Unofficial estimates suggest that one-third of this support goes into the smugglers pockets.
The Libyan government's annual subsidy for basic food commodities and fuel is estimated at $9 billion, $6.5 billion of which is allocated for fuel, and $2 billion of this goes to the smugglers pockets. In the west of Libya, the smuggled commodities represent half of the trade exchanges with Tunisia, where fuel derivatives come at the top of the list of the smuggled materials into Tunisia.
The smuggled and inexpensive Libyan fuel became a source of income for the marginalized villages on both sides of the border, where there is a high rate of unemployment and few or no economic development projects.
At times the governments of both countries used to neglect the growing activity of smuggling food commodities , fuel and illegal currency trading for their understanding that any intervention to curb these activities will lead to a real deterioration in the living conditions and security tensions on the Tunisian side of the border. Moreover, acts of violence often used to break out coupled with demonstrations in the Tunisian side when there were restrictions at border crossing points or restrictions on smugglers paths and rugged tracts that link the two countries, leading to exacerbation of the problem.
Not only this, but very low fuel prices in Libya, 12 cents per liter of gasoline, offset the price at the gas stations in Tunisia by ten times, which tempted senior smugglers to put their hands on this lucrative trade through the use of large trucks to transport tens of thousands of liters at a time.
The Tunisian authorities stated that they are working hard to prevent the entry of smuggled fuel, but there are signs that the value of the confiscated fuel is up to tens of millions of dollars in addition to bribes and commissions that security men receive at the border to facilitate the passage of the smugglers and their precious cargoes.
On the other hand, the Libyan south from the town of Ghadames in the west to the desert oasis village of Jaghbub in the east and the oases in the middle of desert witness extensive fuel smuggling movement similar to an active international market that combines the fuel trucks from the north, fuel stations in the south and brokers who run the trading business of hundreds of tons of ready fuel to fill tanks of smuggling cars and trucks across the desert.
The growing smuggling trade across the desert led to economic imbalances that haunt the Libyan authorities.
As per unofficial estimates, two-thirds of fuel destined for use in the south of Libya find their way to sub-Saharan countries where it is difficult to extend government control over large areas and difficult to enable effective control of illegal activities.
The huge profits derived from smuggling resulted in the emergence of ethnic and tribal conflicts between population components that move in a difficult environment over millions of square kilometers from Mauritania in the west to the Egyptian desert in the east and with the availability of thousands of tons of weapons and ammunition remnants of the Gaddafi regime, it is likely that the desert area will remain burning for decades, leaving a bad impact on the fragile fabric of the population composition, difficult to heal in the future.
As for the Libyan-Egyptian border in the east, the level and pace of smuggling of fuel take lower level possibly due to shortages and fluctuation in fuel supplies to the eastern region of Libya in addition to the Egyptian authorities' crackdown on the smugglers.
In the north west of Libya, where the sea has become a public resort to escape the scorching heat and the severe crisis of electricity cuts worsening day after day, the coast is no longer occupied by vacationers only, but has become a maritime outlet for smuggle fuel to Malta and Sicily Island, south of Italy, or to supply ships and fishing boats with fuel at sea.
The Libyan authorities have conducted many contacts with the Italian and Maltese authorities to try to extinguish this phenomenon. The Italian authorities, for their part, arrested some Italian nationals for their involvement in the smuggling of fuel on board a Libyan tanker from the Libyan sea ports to Malta and Sicily. Italy tops the list of major suppliers of fuel and other oil products to Libya.
It can be said that there is an inherited failure among all Libyan governments. Choices remain limited to develop policies and plans to save Libya's wealth from tampering as well as stopping the drain of the financial capacity because of smugglers and those who stand behind them from the corrupt state departments.These governments are unable to impose state security control over borders or stage military confrontations against smugglers.
Hence the most suitable treatment for this phenomenon is supposed to be the economic and financial processing. There was an intention to use electronic cards for fuel supply, but such a thing would not succeed in a country dominated by security tensions and the spread of weapons among the public which threatens that the use of such cards would be a part of the problem instead of forming a solution. Let alone the technical difficulties in applying these cards in gas stations, which are often subjected to vandalism at the hands of abusers, as well as the difficulty in re-equipping the stations with new machines capable of dealing with such cards.
As pressure increases on the state's foreign exchange reserves and the warning of the Central Bank of Libya that the country is heading towards an economic disaster, under increasing steadily pumping fuel in the Libyan market,(an increase of 15% per annum, twice the expected rate of growth in demand for fuel ) in a country of limited population and resources, the option being worked on now by the Libyan government is to cancel fuel subsidies so that the price of gasoline would rise to 34 cents per litre and diesel to 50 cents for per liter.
This price will not have a significant impact in reducing smuggling because prices in neighboring countries are more than double the prices in Libya. For instance, the gasoline price in Tunisia is close to $1.25 per liter, while in Chad the gasoline is sold at 76 cents per liter and diesel at 92 cents per liter. In Niger it’s 87 cents for both gas and diesel.
If the goal is to auto prevent fuel smuggling, the right price in the inside of Libya should be equal to or slightly higher than in neighboring countries, i.e. $1.20 per liter or higher, but this again will result in an unprecedented wave of inflation especially in the light of the Central Bank and the Libyan government's measures to reduce expenditure and the application of strict austerity policies to reduce the demand for foreign exchange to finance imports from abroad.