Legal Analysis Cabinet Resolution No. 790 of 2022 On Reorganization of the Supreme Council for Energy Affairs Preamble. Established pursuant to a law that the Cabinet of the State of Libya meets with competence in establishing public institutions, agencies, interests and companies under the legislation in force. The Cabinet also has the competence to reorganize them, even if established by law, pursuant to the delegation of competences conferred upon it by Law No. 16 of 1991 on the attribution of certain competences to the General People’s Committee (Ministerial Council), namely the Cabinet. The Supreme Judicial Court of Libya has affirmed this approach in several judicial judgements.
The National Oil Corporation’s dependence on the Cabinet was also being worked on in the absence of the Ministry of Oil. General People’s Congress Secretariat Resolution No. 10 of 1979 on the reorganization of the National Oil Corporation – regardless of the jurisprudential controversy of the legality of this resolution, which abrogated Law No. 24 of 1970 on the establishment of the National Oil Corporation – is explicit: “The National Oil Corporation shall enjoy legal personality and shall have full legally competent to achieve its purposes. The Minister of Oil shall have the authority to supervise and control its business.”
However, the competences conferred upon any authority, including the Cabinet, must not exceed the statutory framework and mechanisms, i.e. the legal and administrative channels established by the legislation in force, unless the legislation itself is abrogated or amended by the same authority that promulgated the legislation or by a higher authority.
Non-compliance with this legislative gradation of the legal rule brings the situation closer to the application of the principle of usurpation of power, which opens the door for the judiciary to annul these legislations or certain provisions contrary to it.
In an analytical reading in Cabinet Resolution No. 790 of 2022 on the reorganization of the Supreme Council for Energy Affairs “Resolution” – expanding its membership to include all authorities associated with Libya’s energy field of oil, gas, electricity, renewable energies and State Supervision authorities headed by the Prime Minister – within its legal framework represented in the relevant legislation hereinafter referred to in the preamble of the resolution, and the most important of which is Resolution No. 10 of 1979 hereinafter referred to, the Petroleum Law No. 25 of 1955 and the Resolution to establish and organize the Supreme Council for Energy Affairs Resolution No. 406 of 2009 and to amend it, it is clear that the legislator has expressly left the competence exclusively in the hands of the National Oil Corporation and its Affiliate (Cabinet or Ministry of Oil). Therefore, the Cabinet, legally, shall not initiate on its own the granting of such competencies to a third authority such as the Supreme Council for Energy Affairs. Perhaps the most important of these issues, which its competence is entrusted by the Legislative Authority’s Resolution only by the Cabinet or by the Ministry of Oil, may be found in paragraphs 14, 15, 22 and 26 of article V of the resolution, which are the subject of this comment, respectively:
– Establishing rules and negotiating mechanisms on the extraction and investment of various energy sources and approving partnership agreements and contracts from foreign companies, development and operation agreements and other investment contracts concluded by oil and other energy enterprises.
– Adjudication of applications for renewal, abandonment and waiver of concession contracts.
– Review and approval of investment budgets for energy development, manufacturing and infrastructure projects.
– Study and address the issues referred to it by the Cabinet or its President.
It is worth mentioning that the development of the State’s strategy in the various fields of energy and policies on energy demand management and programs to enhance the capacity of the State in the fields of energy are essential competence of the Cabinet and are undeniable from the legal point of view as long as they comply with the purpose of establishing the Cabinet as the State’s supreme regulatory authority and its counsel in this area, as long as the Cabinet does not interfere with the competencies of the executive authorities regulated by legislation or resolutions of public associations such as the General Electricity Company. This development is due to the granting of executive competencies to the Cabinet instead of its previously advisory competence in view of the Government’s trend to provide financial support for the development of the oil sector, which restricts the National Oil Corporation and the Ministry of Oil from obtaining financial nutrition for the development of the sector because of the Secretary General letter of the General People’s Committee (Previously) Indicative No. 0957 of 3 April 1995, which established a financial mechanism to finance the oil sector through the budget of the State despite the attempt of the Libyan House of Representatives in its letter indicative No. 059 of 20-12-2021 to abolish this mechanism and allow the National Oil Corporation to deduct its budgets through its revenues. The Government is also represented by the Cabinet to abolish this letter by resolution No. 496 of 2021, which was partially withdrawn by Resolution No. 694 of 2021. This confusion reflects the inability of the State, including the Libyan Government, to address this issue legislatively except by reorganizing this Supreme Council and granting it executive competencies, which may, in the future, lead to the breaking up of the General Electricity Company’s legal monopoly in its production and distribution, as well as by promoting the further expansion of the State’s electricity production through renewable and clean energies such as solar energy. Cabinet Resolution No. 830 of 2022 on the mechanism for the payment of energy generated from renewable sources may address some of the legal problems in establishing a mechanism for supporting what is generated from such renewable energies for the consumer and how to introduce it in the public power grid network of the General Electricity Company, whether for the purpose of local marketing or external export as an investment project under the Libyan Investment Law. This comes with the signing of an agreement with the Italian company Eni worth eight billion dollars to develop the infrastructure of the oil sector in Libya’s western region, which is promised significant reserves, as well as the contract to build an oil refinery with an American company in the southern Libyan region.
Finally, despite the legal disagreement between the Libyan Minister of Oil and the Cabinet on the legality of the resolution of reorganizing the Supreme Energy Council on the subject of this paper, the resolution remains in force until what is abrogated by the Libyan judiciary or partially abrogated what is contrary to the legislation in force. Even the Law Department of the Supreme Council of the Judiciary seems not to have been presented with the issue to express its legal opinion in this regard.