Page 14 - AfrOil Week 50 2020

AfrOil POLICY AfrOil

The Central Bank’s internationally recognised branch is in Tripoli (Image: CBL.gov.ly)
ICG: Questions about handling

of Libyan oil revenues persist

LIBYA THE ceasefire deal that has allowed Libya to these funds.
bring more than 1mn barrels per day (bpd) GNA adopted this new procedure without
of crude oil production capacity back online taking legal, regulatory or administrative steps
since September may soon founder, owing to to retire the old payment mechanisms, ICG
questions about the handling of petroleum reported. It also did so on a temporary basis,
revenues, according to the International Crisis saying that the new arrangement would remain
Group (ICG). in place for 120 days, on the assumption that the
Last week, ICG, a Brussels-based non-gov- parties would be able to make substantial pro-
ernmental organisation (NGO), reported that gress towards the formation of a new govern-
the parties to the ceasefire were not making ment and the reunification of the Central Bank’s
much progress in talks on the formation of a two branches before the end of the year. As the
new unity government and the consolidation end of the 120-day period approaches, though,
of the two branches of Libya’s Central Bank. a final deal between GNA and LNA remains
The bank has been split into two branches since elusive.
2015. One of these is in Tripoli, the home base
of the Government of National Accord (GNA), Central Bank vs. LFB
and enjoys widespread international recogni- In the meantime, the Central Bank has called for
tion. The other, which has little recognition, is the restoration of the previous payment arrange-
in the eastern part of the country, where GNA ments. According to ICG, if GNA acquiesces,
holds no sway and the dominant party is the Lib- LNA might restore the blockade it imposed
yan National Army (LNA), a militia headed by on Libyan oil facilities in January. Such a move
Khalifa Haftar. would force NOC to cut production and exports
These discussions on the reunification of the once again, while also depriving the country of
two branches are likely to affect the oil industry, crude export earnings.
as the Central Bank typically plays a key role in As such, NOC has made a case for keeping
collecting crude export revenues and handing the new mechanism in place so that production
them over to the Libyan government. operations can continue without any disrup-
Until recently, international oil companies tions. However, this solution presents a different
(IOCs) made payments to the Libyan Foreign problem, as it would prevent the Central Bank
Bank (LFB), which then automatically trans- from receiving the money it needs to make man-
ferred the money to its parent organisation, datory payments to the budget.
the Central Bank. During the ceasefire talks ICG urged the parties to seek a solution to
in September, though, GNA agreed to a new their disagreements over oil revenues, describ-
procedure. ing the issue as crucial to Libya’s economic and
Under the new arrangement, Libya’s National social functioning.
Oil Corp. (NOC) must deposit oil export earn- “Settling the feud over control of the Libyan
ings into its LFB account on a temporary basis Foreign Bank is urgent, as is finding a compro-
and then keep them there until a unity gov- mise on how to manage Libya’s oil revenues,”
ernment can be formed. LNA insisted on this it said. “To achieve the latter, the two sides will
change, noted ICG, because of its long-standing need to reach a new agreement – one that strikes
concerns about the Central Bank’s handling a balance between, on one hand, providing
of crude revenues. Haftar and his allies have Haftar and his foreign backers with guarantees
repeatedly accused the bank of preventing Lib- that incoming oil sales revenues are safeguarded,
ya’s eastern regions, along with other areas out- and, on the other, tapping oil revenues now to
side Tripoli, from collecting their fair share of cover public expenditures throughout Libya.” ™

P14 www. NEWSBASE .com Week 50 16•December•2020