Here Kurt is giving us a list of opposites:
mulatto albino mosquito (something that's totally unsexual)
libido (a person's overall sexual drive or desire for sexual activity)
As Kurt commented on Teen Spirit, "
the entire song is made up of contradictory ideas".
Some sources indicate that Kurt sings "miskito" instead of "mosquito" with Miskito being an indigenious tribe in Central America, however there's no factual proof of that, since Nevermind album booklet did not contain full song lyrics, only collage of those.