Page 138 - Lybia Flipbook

Of Black Gold and Lights: Advancing the Energy Transition
Libya is one of the most energy-rich countries in the world. It is among the top ten coun- tries in oil and reserves, its natural gas endowment is also very substantial, and its geographic location near Europe facilitates low-cost transport of oil and gas to its primary purchasers. At current prices of between 60 USD and 90 USD a barrel and production rates of around 1.2 million barrels a day9, oil generates an income of over 30 billion USD annually. Libya’s GDP per capita is one of the highest in Africa, allowing it to amass impres- sive foreign currency reserves and ample savings in the sovereign wealth fund.
Oil and gas money was used from the start to invest heavily in creating a fully integrated national electricity grid, making Libya one of the first African countries to provide practically all its citizens with electricity. Transmission lines were also built to connect the grid to Egypt and Tunisia to facilitate electricity trade and create greater resilience in case of shortages.
Generating and distributing electricity has been crucial for development and stability. The water system is almost entirely dependent on electrical power, the health system requires it to operate medical equipment, and businesses need it to function. Electricity is required to cool buildings and people in the summertime, heat them in the winter, and keep the lights on. Given the importance of electricity in so many aspects of daily life, it is little wonder that shortages often lead to visceral responses. Libyans may have become used to disruptions due to conflict and
utility failures, but extended blackouts, like the ones experienced in 2018, quickly become intolerable, leading people to express their outrage in the streets.
There are many challenges facing the electricity sector.
Ensuring maintenance and continually upgrading the existing system are among the most immediate, but the most impactful and difficult to address are the subsidies. The price of electricity remains very low at 0.04 dinars (about one US cent) per kilowatt-hour for residential consumption, and 0.08 dinars for businesses, and collec- tion is patchy at best. Further, the cost of fossil fuels for Libya’s electricity generation is almost entirely covered by the government. Unfortunately,
The drawbacks of the subsidy system do not end there. At only 0.03 USD a liter, the price of gasoline has not increased since 1978 and is among the cheapest in the world. The relatively high gasoline prices in neighboring states make the profit margin for smugglers incitingly attractive, with tens of millions of dollars’ worth of gasoline being smuggled abroad annually. This not only means that Libya ends up subsidizing gasoline for other countries but, paradoxically, it causes shortages for its citizens. These shortages are particularly acute in the southern region, where frustration often leads to protesters shutting down oil and water production.
Fuel and electricity subsidies also inhibit Libya’s transition to a cleaner and less expensive energy system. Artificially low costs make it difficult for new
technologies to enter the market – who wants to pay more for a service that has been almost free in the past? As a result, despite an extraordinary potential to generate solar energy at a cost far below that of its current system, the subsidy regime simply crowds out any investments in renewables. Consequently, the
country remains stuck in its existing system, unable to join the rest of the world in moving towards renewables.
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the low cost of using energy
encourages more consump-
tion and less efficiency. A case
in point, when tariff collection
effectively stopped in 2013 amid
civil unrest, national electricity
consumption nearly doubled.
Although bill payment is improv-
ing, electricity costs remain low,
and there is little incentive to avoid wasting electric power, leading to lights staying on in the daytime and air conditioners humming into empty rooms. The result is that Libyans consume two to four times more electricity than their neighbors, and the country has the highest carbon emissions per capita in Africa.
“Libya, the land of abundance,
I describe it in Amazigh words: ‘dys ass dadyas’ There will come a day when goodness
will spread. These are lines from a song of the Amazigh Spring.” Taher, 29 years