A report published by Tunisie Numérique revealed how southern Tunisia will be affected by steps from Libya's Government of National Unity (GNU) to lift fuel subsidies, noting that Libyan fuel covers about 17% of the country's national consumption.

The report added that fuel smugglers, most of whom are active in Tunisia's southern border governates, have benefited from low fuel prices in Libya, which translates into strong demand for parallel markets. 

It noted that large quantities of smuggled Libyan fuel are distributed in all southern governorates of Tunisia and reach some central provinces that are more than 250 kilometers from Ben Guerdane, which is the main supply area.

According to the report, Libya's recent measures to lift fuel subsidies have caused great concern among traders and smugglers in parallel markets, especially on Tunisia's southern border.

GNU Prime Minister Abdulhamid Dabaiba has recently stressed that the phenomenon of fuel smuggling can only be eliminated by lifting subsidies, and suggested replacing it with a direct cash transfer to Libyan citizens.

He pointed out that half of the Libyan budget is allocated to fuel subsidies, noting that the state buys fuel for about 3.5 Libyan dinars per liter and sells it for 0.15 Libyan dinars.

Libya loses at least $750 million annually due to fuel smuggling and fuel subsidies amounted to more than $12 billion in 2022, an increase of 71.4% compared to 2021.

To implement its plan to lift fuel subsidies, the Dabaiba government formed a committee to discuss solutions and mechanisms for managing the fuel bill as well as determining the quantities that will be granted to local distribution companies, with strict controls so that citizens can properly benefit from the metered quantities.

The committee in charge of the file is expected to complete its work before the end of 2023.

While fuel smuggling wastes public funds in Libya, it represents one a crucial lifeline to southern Tunisian provinces, especially in Gabes, Medenine and Tataouine, where poverty rates reach 17.8 percent and unemployment is as high as 24.8 percent, according to data from the National Institute of Statistics in Tunisia.

Overall, official Libyan estimates indicate that about 25 million liters of gasoline are smuggled per day, of which 4 million liters arrive in Tunisia.

For decades, authorities have been less cautious about the transit of smuggled goods between the two countries in order to ensure social stability in impoverished border areas, prompting proposals for the establishment of a free trade zone as a solution.