Betting On Libya's Future

The demise of Gaddifi has unleashed a treasure trove of opportunity, but one that’s fraught with risk.

By Robert Bailey

The demise of the Libyan dictatorship has thawed long frozen relations with the Gulf that could lead to wide-scale investment in a country whose political idiosyncrasies for decades denied it viable links to the region and the global economy.

An estimated $200 billion of investment opportunities will emerge over the next ten years according to the French Business Council, which recently took a large group of company representatives to Libya. They and others from countries that supported the overthrow of the regime are anxious to capitalise on the goodwill that has been generated.

In Dubai, a Libya Strategic Investment Forum was organised by the Chamber of Commerce recently, it also supported a Libya Infrastructure and Rebuild conference in the emirate.

The big question is whether the timing is ripe for these initiatives. Even though the National Transitional Council (NTC) is proposing a $54 billion budget in addition to an un-quantified emergency budget for 2012 it has little or no ability to enter into long-term contracts simply because it is an interim government.

Nevertheless observers believe that with its significant energy resources that have still to be exploited, and a potential to become an important aviation and logistics hub between Africa, the Middle East and Europe, Libya has the potential to rapidly expand its economic base.

However, there is a growing sense of unease at the slow progress in establishing any firm central authority. Recently there have been calls for eastern Libya to break away from Tripoli and there is concern is that Libya may face years of instability.

Until a functioning national army and police force is formed the existence of armed, tribally and community-based militias represent a threat to stability.

Members of the militia in Zintan, southwest of Tripoli, for example, still hold Saif al-Islam Qaddafi prisoner in spite of demands that he is handed over to the council in Tripoli.

In spite of uncertainties, work towards agreeing a constitution in mid-2012 goes on though the head of the NTC, Mustafa Abdel Jalil has stated that “if there is no security, there will be no law, no development and no elections.”

Even after such elections it may take some time before a new administration is bedded in and confident enough to award significant contracts.” The interim government in principle is unwilling to take decisions with long-term consequences, and lacks the resources to do so which is frustrating for the conduct of business,” says Oliver Miles a former British ambassador to Libya and now a director of MEC International.

SIGNS OF RECOVERY

But negatives can be overstated.

Physically the country is returning to normality. Telephone links have been reconnected between east and west and, at least, in Tripoli electricity supplies as well as water and sewerage networks are functioning.

Qatar Airways resumed flights to the Libyan capital in February. The airline had been among the first to re-open flights to Benghazi in the east. Alitalia has also restarted services to Tripoli.

Royal Jordanian is flying to Tripoli and Benghazi again as well as to Misrata. The latter has a large medical traffic carrying patients for treatment to Amman.

Emirates began flights to Tripoli again at the end of March. KLM/Air France and British Airways also resumed service. Meanwhile Turkish Airlines has launched scheduled freighter flights to Libya’s Mitiga airport, east of the capital.

Air Malta and Egyptair resumed flights to Tripoli last November and Lufthansa in February. Antonio Tassone, the German airline’s general manager in Tripoli, commented that “the resumption of our flights is a strong and important signal to Libya and the western business community that we are confident to be back.”

Progress on unfreezing assets combined with the unexpected speed with which oil production has returned to nearly three quarters the pre-revolution level, mean that the government is able more or less to pay its way are other positive indicators.

Having plunged below 100,000 barrels-a-day at the peak of fighting upstream production of crude is reported to be around 1.4 million b/d. Pre-war levels of 1.7 million b/d will be reached by the middle of 2012 predicts Christophe de Margerie CEO of France’s Total.

International oil companies with existing contracts are beginning to return. The National Oil Corporation has said that seismic surveys have resumed at concessions run by Arabian Gulf Oil Company while fresh exploration is due to begin in the Sirte basin. Italy’s Eni has resumed offshore exploration 100 kilometres offshore Tripoli.

The Libyan stock market reopened in March albeit in more modest premises on the outskirts of Tripoli. The market though had just five stocks with another eight still to provide up to date financial information.

General manager Ahmed Karoud says that five initial public offerings may come to the market this year including oil and construction companies. There are also plans to list the country’s two mobile operators.

However, optimism needs a reality check. Few are likely to commit to long- term large scale investments where there is chronic political instability particularly if property rights are difficult to enforce and where commercial infrastructure lags far behind others in the region.

GCC'S ROLE

It has been suggested that GCC investors may be more culturally adept working within the currently constrained business environment than Western companies. Whether this is true or not time will tell but there is certainly growing Gulf interest in Libya.

Arriving on Etihad’s inaugural flight to Tripoli in January and accompanied by a 100-strong business delegation, Anwar Gargash, UAE Minister of State for Foreign Affairs declared that “right now our target is to play an important part in Libya’s rebuilding and create viable long- term partnerships.”

The Gulf states, Qatar in particular, played a prominent role in the campaign to oust Gaddafi providing combat aircraft for the NATO air mission as well as material and logistical support to the rebels.

Doha’s help extended beyond military and diplomatic support by marketing a million barrels of oil for the NTC at a crucial phase allowing the rebels to pay salaries in Benghazi.

In addition, Qatar helped launch Libya al-Ahrar in Doha to transmit television programmes and news. The UAE’s telecoms company Etisalat helped restore mobile communications services providing a satellite feed for the rebels after Tripoli cut of cellular links.

In spite of the goodwill generated by such support, Gulf as well as Western interests will be nervous about the Finance Ministry’s review of all contracts signed under the previous regime.

How far this will focus on firms from countries that failed to support the rebels internationally and go easy on those states that provided diplomatic and material military support remains to be seen.

Before the uprising Qatari Diar Real Estate Investment Company had lined up $10 billion of investments with the Libyan Economic and Social Development Fund for a hotel and real estate developments near Tripoli

Dubai-based Al-Ghurair Group, hopes to restart output within months on a joint venture in Libya’s largest refinery at Ras Lanuf and to almost double the present 220,000 b/d capacity over four years.

The group is also assessing openings in other sectors including contracting, civil and mechanical engineering as well as food production. According to Mashreqbank CEO Abdul Aziz Al Ghurair, UAE investment could increase from $2 billion to $5 billion within five years.

In 2009, Abu Dhabi-based Oasis International Power was set to take over a planned power plant at Tripoli West to be built as Libya’s first independent power plant.

An engineering, procurement and construction contract valued at $1.4 billion was awarded to South Korea’s Hyundai Engineering & Construction.

Others are looking at new opportunities. Advisers working for Mohammed Alabbar, a Dubai businessman, chairman of real estate firm Emaar and a partner in Africa Middle East Resources (AMER), an emerging commodities supply chain company, have reportedly been assessing the viability of bauxite and other natural resources in Libya.

Abu Dhabi’s Al Maskari Holding is backing a $3 billion project to build an integrated energy hub involving solar and conventional generation to provide electricity for domestic use and export to Europe via southern Italy.

DP World has held exploratory talks with Libya’s interim officials on ideas for management of the country’s ports. Interim transport minister Yousef El Uheshi has said the sector needs billions of dollars of investment for the expansion and modernisation of ports and dredging to allow larger vessels access.

According to DP World’s chairman Sultan Ahmed bin Sulayem “we have always been interested in Libya and we are continuing our discussions with them.”

Conversations are likely to be extended though especially in a country where privatisation issues have yet to be tackled. “If they sort out their issues, you will see a lot of UAE companies coming in here, says Al-Ghurair,” but cautions “if it turns out to be a very slow process, they will go somewhere else.

Source: Gulf Business

Niger nationalises state telecoms firm

Niger's parliament voted on Wednesday to nationalise the west African nation's telecoms firm Sonitel, backing away from a planned privatisation after a previous 31 billion CFA francs accord with Libyan company LAP Green foundered.

Niger said in August that it would launch a new bidding round for the company and its mobile arm SahelCom, which has 2.5 million subscribers and competes with Bharti Airtel, Atlantique Telecom's Moov and France Telecom in the Nigerian market.

"By this vote, the Niger Telecommunications Company (Sonitel) has been nationalised and the capital is wholly owned by the state," said Hama Amadou, president of Niger's national assembly after the vote.

Amadou said the nationalisation would allow the government to carry-out investments in the company over the next five years.

Sonitel was previously controlled by a Chinese-Libyan consortium, Dataport, but the Niger government scrapped that deal in 2009, partly because of a lack of investment.

The deal with Libya's Lap Green was scuppered after the firm was unable to meet the terms of the deal following UN sanctions against the government of Muammar Gaddafi.

Source: Business Day Online

Libyan oil minister says output about 1.5 mln bpd

Libyan oil production has climbed to about 1.5 million barrels per day (bpd) and the North African country hopes to reach pre-conflict levels by mid-year, Oil Minister Abdulrahman Ben Yazza told a news conference on Monday.

"We have reached 85 percent (of pre-conflict levels)," Ben Yazza told the Oil & Gas Libya 2012 conference. "We hope to reach our target by the middle of this year."

Libya produced 1.6 million bpd before last year's uprising, which led to the ouster and killing of leader Muammar Gaddafi, brought flows to a virtual standstill.

Libya this week hosts its first oil and gas conference since the end of last year's war. (Reporting by Marie-Louise Gumuchian and Ali Shuaib; editing by Jason Neely)

Source: Reuters 

Good News from Libya

A storefront along Tripoli Street in Misrata. Credit: Yuri Kozyrev—NOOR for TIME

Slowly but surely, the revolution in Libya is bringing stability and making progress. Yesterday, 
he Zintan Brigade turned over control of the Tripoli Airport to the Libyan government. Two days ago, 
Libyan Airlines started regular flights to Malta and the Zintan Brigade are now making plans to transfer 
their prize catch, Saif Qaddafi, to the NTC as well.

A four day conference, Infrastructure Libya 2012, backed by the ministries of Planning
and of Communications, and Oil and Gas Libya 2012, hosted by the Oil Ministry at the Tripoli
International Fairground, begins on Monday. Companies from Canada, Egypt, France,
Germany, Italy, Malta, the Netherlands, Tunisia, Turkey, UAE, UK and USA, as well as those from
Libya, are expected to attend. Even the Russians and the Chinese are negotiating their return to
Libya. Libya just bought 50,000 tons of Russian wheat.

Even the bad news has a good side. Last Thursday, when Amnesty International reported on the
death by torture of yet another black man from Tawargha in a Misrata detention center, it was the
headline in the decidedly pro-revolutionary Libyan Herald, indicating that the revolution is willing
to look honestly at itself, warts and all. And while, as I have said before, even one such death is
one too many, the fact that AI found only one such death in the two months since their earlier
report of more than a dozen killed by torture between September and February, indicates that
things are trending in the right direction.

More importantly, the root of these abuses, the make shift prisons setup by various revolutionary
brigades to contain the counter-revolutionaries immediately after the victory, is being dealt
with. On Wednesday, the Justice Ministry announced that it had taken over control of 30 such
detention centers from the thuwar.

So while, armed clashes, continue to cause trouble, there were reports of renewed fighting in
Kufra today after a seven week lull, and the flood of illegal immigrants from sun-Saharan Africa
continue to be a problem without solution, the country is rebuilding. The Sirte Local Council has
collected 1.5 billion LD in claims for damage caused by the heavy fighting there, and even in the
heavily damaged buildings on Tripoli St. in Misrata, which saw some of the heaviest bombardment
of the war, flower and dress shops can be seen to open in the bombed out remains.

As Abigail Hauslohner reported today on the Libyan Tweepforum:

all along Tripoli Street, there is also rebirth, and there is hope. New billboards and storefronts have sprung up from the city’s ashes. Uniformed traffic cops in white gloves patrol intersections—despite the absence of a fully functioning central government. And construction workers in orange vests clear rubble and tend to new flowers in the grassy medians. Stores selling wedding dresses and school supplies have re-opened their ground floor display windows; even as the gaping holes caused by rockets and tank shells remain to be fixed just above. “There are a lot of signs of war but you can see that there is life,” Yuri says. “There is life in different ways, girls on the street, boys on motorbikes, and flower shops.”

By Clay ClaiborneFollow (@Clayclai)

Source: Dailykos

Libya on Recovery Path but Faces Long Rebuilding Effort

• Libya faces urgent, costly task of rebuilding its economy
• Improved institutions, management of resources to help unleash potential
• IMF remains committed to helping Libya through capacity building

Libyan oil production has recovered faster than expected following the overthrow of Muammar Gaddafi, but the country faces the challenges of building modern institutions, repairing infrastructure, and diversifying the economy, a senior IMF official said.

With the lifting of most United Nations sanctions, the bulk of frozen assets abroad have been released and normalization of the banking system is under way.

But, in an interview, the head of the IMF’s team on Libya, mission chief Ralph Chami, said the North African country faces many immediate and longer-term challenges that need to be addressed. He added: “Libya could realize its great potential if the right institutions and policies are put in place.”

A staff team from the IMF’s Middle-East and Central Asia Department, led by Chami, prepared a report entitled “Libya beyond the Revolution: Challenges and Opportunities”. Speaking to IMF Survey—the IMF’s online magazine—Chami discusses recent developments and looks at what it will take for the Libyan government to overcome the steep challenges ahead, rebuild the economy, and address the people’s aspirations.

IMF Survey online: How is Libya faring after the revolution? Is the economy getting back on its feet?

Chami: The conflict had a severe impact on the economy and especially on the hydrocarbon sector, which is the main source of public revenues and foreign exchange. During the uprising, oil production dropped precipitously from 1.8 million barrels a day to only 22,000 in July of 2011. Since the conflict ended, the production of oil has recuperated faster than expected.

Reconstruction efforts should boost nonhydrocarbon output in the coming years. In addition, the assets that were frozen during the revolution have been largely unfrozen as most UN sanctions were lifted. So there is no longer a shortage of foreign exchange, and normal imports have resumed.

IMF Survey online: What are the challenges facing the Libyan economy in the near term?

Chami: In the short term, the country faces complex and costly tasks. Coming out of the conflict, Libya needs to rebuild infrastructure and address the humanitarian needs of its people. There is a need to restore the functioning of the banking system and to consider medium-term implications when making decisions about public spending. Safety and security are also important because these would facilitate investment and the return of expatriate workers. Many well-educated Libyans live abroad and, as in other Arab Spring countries, the diaspora could come back to help rebuild the country.

IMF Survey online: How did the government respond to the peoples’ demands after the uprising?

Chami: Before the revolution, growth was not inclusive. Like in other Arab Spring countries, economic opportunities were not shared fairly among different segments of the population. Unemployment rates and the incidence of poverty have been surprisingly high for such a resource-rich country. Those reasons, combined with a lack of representation, contributed to the revolution. To respond to the needs and aspirations of the people, the government has started to increase subsidies and provide public-sector employment, especially, for young people.

IMF Survey online: What is your assessment of the measures that the government has introduced in responding to those demands?

Chami: Spending on wages and subsidies is truly needed to ease the social pressures in the near term. But, to ensure that these social protections can continue to be provided over time, the priority should be to design a well-targeted social safety net. Increasing wages and public sector employment have resulted in a 60 percent increase of the wage bill in 2011. The cost of subsidies has also gone up significantly.

While we understand the need to provide employment, we think it should be productive employment. We also understand the need to provide subsidies, but untargeted subsidies do not necessarily help the people they are supposed to help. In contrast to generalized subsidies that benefit everyone, well-targeted schemes provide assistance only to those most needy. So, fiscal discipline is needed in the coming years.

The government should make sure that the short term does not trump the long term. My advice is: in addressing temporary problems, policymakers should come up with measures that are not inconsistent with long-term overarching developmental needs. For example, we do not want to solve the problem of unemployment by providing employment for everybody in the public sector, because that would not be the most desirable permanent solution.

IMF Survey online: What are the medium-term challenges that Libya has to deal with?

Chami: Libya faces many structural problems including a lack of institutions, weak governance, and chronic structural unemployment. Over the medium term, Libya will need to build its institutions and respond to the demands and aspirations of its population. To achieve this, Libya needs to diversify its economy away from oil dependence. There is also a need to create an enabling business environment that will facilitate private sector–led growth and job creation. Areas where the business environment needs improvement include governance, transparency, accountability, rule of law, property rights, and access to finance. In addition, there will be a need to put in place an efficient social safety net to protect the most vulnerable groups of the population.

IMF Survey online: What are Libya’s economic prospects now?

Chami: Despite the challenges in the period ahead, the revolution could unleash Libya’s huge economic potential by promoting greater inclusiveness and transparency, and enhanced governance. Combined with sound management of resources, these positive factors can leverage the country’s inherent strengths: a dynamic and young population, an abundant wealth, a beautiful coastal line, access to key markets, and a privileged geographic position.

Libya has a great potential to diversify meaningfully by having vibrant tourism and service sectors. An undesirable path would be to continue to have an oil-dependent economy in which the government is the main employer and the private sector employs mostly expatriates.

IMF Survey online: How is the IMF helping Libya during the transition period?

Chami: Given the abundant resources Libya possesses, there will be no need for financial assistance from the IMF. What Libya needs in the coming years is technical assistance to build capacity and better manage its wealth. With a mission in late 2011, we have already provided the new government with advice on measures to improve governance at the sovereign wealth fund and, in January 2012, the IMF and World Bank started work with the authorities to strengthen public financial management. In addition, we are resuming technical assistance activities at the central bank.

When the Prime Minister met with the IMF’s Managing Director a few months ago, he explicitly asked for the Fund’s help in capacity building. To this end, the government has requested assistance in reforming the system of untargeted subsidies and an IMF Fiscal Affairs Department expert is to arrive in Tripoli in April. The view is to develop a comprehensive safety net, in an effort to make growth more inclusive.

The Fund will continue to help in the area of public financial management. This includes assessing the financial management of all Libyan funds run by the central bank and the sovereign wealth fund, with the aim of providing recommendations on how to enhance accountability and transparency. The attitude of the new government in this particular area is incredibly positive, and we commend them for that.

(Source: International Monetary Fund Survey)

Libya's fuel sector returns to pre-war levels

Libya's fuel sector returns to pre-war levels - Africa - Al Jazeera English

Oil and gas production in Libya are returning to pre-conflict levels, with many oil-producing facilities up and running after being abandoned during the violence.

Getting the oil sector back on track was a priority for Libya's interim government, but the future of the industry is still uncertain.

Al Jazeera's Omar Al Saleh reports from an oil rig off the Libyan coast.

Libya's NOC confirms 'routine' probe into oil contracts with foreign majors

Libya's prosecutor general is reviewing oil contracts with international oil companies concluded by the ousted regime of Moammar Qadhafi as a routine measure, the National Oil Company's marketing director Ahmed Shawki said Monday.

"We don't have any information about actual investigations inside the NOC. We don't have any issues so far with the international oil and gas contracts, and business is going forward," Shawki told Platts by telephone from Tripoli.

He was commenting on a report in the Wall Street Journal that the transitional government in Tripoli and the US Securities and Exchange Commission were investigating the activities of a number of oil companies such as Italy's Eni, the biggest operator in Libya, and France's Total.

The Wall Street Journal in a report Sunday quoted Abdelmajeed Saad, the deputy Libyan prosecutor, as saying that the companies were being investigated for alleged "financial irregularities."

The newspaper cited a March letter from the prosecutor's office to the NOC internal auditor asking him to supply oil company documents. It said the letter mentions oil transactions between NOC and international traders Vitol and Glencore as examples of documents it was seeking. It added that while the probe is focusing on Qadhafi-era contracts, the letter indicates that the request includes activities during the civil war last year.

But Shawki stressed that the work being carried out by the prosecutor general was a routine review of all production-sharing contracts and oil sales contracts as part of the transitional government's commitment to transparency and to make sure there were no irregularities.

"So far, I don't believe NOC has any problems with international oil companies, or contracts signed during the Qadhafi regime," Shawki said.

"As I said before, this is just a routine due diligence work done by the General Prosecutor for financial and contractual irregularities, and nothing more than this," he added.

Shawki said he could not comment about oil sales contracts concluded by the transitional government during the crisis because he was not involved. 

Neither Glencore nor Vitol could be contacted for comment because of the Easter holiday.

However, both Total and Eni have said that they are cooperating with the SEC investigation.

Eni said in a Form 20-F filing to the US SEC last week that on June 20, 2011, it received from the US regulator "a formal judicial request of collection and presentation of documents (subpoena) related to Eni's activities in Libya from 2008 to 2011."

It added that the subpoena "is related to an ongoing investigation without further clarifications nor specific alleged violations in connection to 'certain illicit payments to Libyan officials,' possibly violating the US Foreign Corruption Practice Act." The company had further received a request at the end of December 2011 for collection of further documentation aimed at integrating the previous subpoena, it said.

"Eni is fully cooperating with the US SEC," it said.

Total also referred to an investigation in similar filing to the US SEC.

"In June 2011, the US SEC issued to certain companies, including, among others, Total, a formal request for information related to their operations in Libya. Total is cooperating with this non-public investigation," the French major said without elaborating further.

The investigation comes at a crucial time for the new Libyan leaders as they try to grapple with a surge in violence in the aftermath of the revolution, which ended in October with Qadhafi's ouster and death. 

It also comes as Libya, an OPEC oil producers and major exporter to Europe, is ramping up its oil production, currently estimated at 1.4 million b/d, just short of a pre-crisis level of 1.7 million b/d.

Source: Platts 

The Full Story behind Ban of Libyan Airlines from Operating in EU

Photo: Afriqiyah Airways plane is standstill at an airport. By Dr. Amin B. Marghani On 3 April, the European Commission adopted the 19th update a ruling banning Libyan carriers from flying into EU countries, saying that “following constructive consultations, Libyan authorities decided to adopt strong measures applicable to all air carriers licensed in Libya, which exclude them from flying into the EU until at least November 2012.” However, it is the Libyan Minister of Transportation to blame for encouraging such ruling by the EC Aviation Safety Committee (ECASC) by acknowledging its claims, right or wrong, and volunteered to prevent Libyan air carriers from operating into Europe’s airspace. In its ruling the ECASC used the Libyan minister’s ‘acknowledgement’ to do two things. First, even though there were no grounds to ban Libyan airlines, the uncalled for and clear acknowledgement by the Libyan minister of transportation save ECASC from making any efforts to explain its ban. Secondly, Libyan airlines would have been banned at any time provided that they violated their own Minister’s halt of flights. This way of dealing with such matter has no precedence. A Minister is supposed to protect the country’s interests. The Libyan airlines deserve protection since there were no safety issues related to the airlines, and almost all aircraft maintenance is carried out on Libyan aircraft with Lufthansa Technique, Air France or other European specialised firms. After all airlines are vital because they represent strategic organisations and they are important for the country’s economy and society. The story goes back to September 2011when the Libyan Civil Aviation Authority (LCAA), looked to resume overseeing flight safety after the fall of Gaddafi, the Authority had to start an uphill struggle to come to grips with its responsibilities to oversee and enforce compliance to airworthiness regulations in a situation laden with security and administrative concerns. In the process, two questions were of significance and needed answers: first what to do about outstanding findings which remained unresolved since ICAO audit carried out in 2007, the other is to see that Libyan air carriers resume operations and restore their pre-war network. In this context, LCAA started dealing with the European Commission. The LCAA thought that a few weeks were required before airlines could reposition themselves to resume operations and wrote to the EC, suggesting that in the weeks as such required by the airlines, could be sufficient to mend many of the outstanding issues. LCAA was talking to CAAI, a British CAA consultancy, which would have been on the list of firms who can help effectively. In response, the Libyan CAA was warned by the EC that unless they met a stringent deadline to provide promised information, the matter would be referred to EC Aviation Safety Committee which would ban Libyan Operators. A technical team was quickly formed to make several presentations to Brussels showing airlines had no problems. At the last meeting the Libyan Minister of Transportation decided to head the team and lead the negotiations only to decide banning his own carriers from flying to Europe. Meanwhile, Libyan air carriers are leasing aircraft to resume operations and have to abstain from operating to Europe using Libyan registered aircraft unless the airworthiness is transferred to another country, the aircraft are reregistered in another country or until the EC Air Safety Committee is satisfied that The Libyan Civil Aviation Authority can carry out airworthiness oversight efficiently. Though the ECASC does not ban Libyan air carriers, and was made to show determination from ECASC that air safety is intolerant of less than perfection, this is a case that deserves investigation whether the ruling was genuinely necessary. The problem lies with the Libyan Civil Aviation Authorities (LCAA) as acknowledged by the Libyan Minister of Transport and the ECASC. LCAA has been working to adopt a fast track program to rectify issues but remains constrained by the consequences of war in Libya and continued lack of funding. The LCAA was unable to make good and quickly remedy certain ICAO findings (reported in 2007) after the war and, simply remained not fully ready to implement full airworthiness oversight and to EC satisfaction. Normally, since the shortfall in legislation and regulations and their enforcement is true, the Libyan Government should have sought assistance by negotiating an agreement with a neighbouring country, as permitted under the Chicago Convention, to include Libya in their airworthiness oversight jurisdiction until Libyan Civil Aviation Authority gets ready. But the Minister of Transportation chose to sacrifice the national airlines and request the exclusion of Libyan air carriers from Europe. True the airlines were under scrutiny but not condemned and thus not included in the EU banned airlines list. The Draconian measure explained by the ECASC as a consequence of the request made by the Libyan Minister, distancing itself somewhat from the decision. European Airlines will continue to operate into Libyan Airspace controlled by the same Libyan Airworthiness Authority. That is incredible. If the Libyan authorities asked to ban the Libyan National Airlines, because of the inadequacy of the Libyan Civil Aviation Authority ‘Airworthiness ‘ deficiencies, then European Airlines should abstain from flying to Libya, too? If they don’t, Libyan airlines should be allowed back into European airspace. The Libyan Transport Minister’s abstention order should be revoked, and the Grip of the Transport Minister on the LCAA and airlines should be loosened and the LAW applied. He is supposed to be a politician and leave technical people to do their job. Libya should seek to include its airworthiness enforcement in another country’s civil aviation authority until LCAA becomes fit again. The writer is an air transport consultant. He contributed this article to The Tripoli Post.

Setting up Business in Libya

Foreign companies wishing to enter & operate in the Libyan market  should set up a local entity, this can be achieved through various method. Some are mentioned below.

Under Libyan law (which remain the same and would probably continue to be in force for a while) it is not permissible to do business in the country without a registered presence.

Below are some of the options:

       Joint Venture (JV): 

The joint venture company is a joint stock company (JSC) with a minimum of 35% Libyan ownership. The minimum share capital of a JSC is one million Libyan Dinars (LYD), at least 30% of which must be paid in on incorporation into a joint account in a Libyan bank, with the remainder to be paid within five years. This vehicle is commonly used for foreign-Libyan joint ventures. Legal and financial advices are essential before heading this route. This option can offer a number of advantages bidding for jobs in country as foreign and Libya operators have a preference for awarding to high-quality local companies where possible

Branch Office:

The registration of a branch office of a foreign company does not require a Libyan partner (or sponsor). However, the foreign company must demonstrate that is has particular experience in its planned area of activity. In addition, the activities which may be performed through a branch are confined to those mentioned in a list published by the Ministry of the Economy & Trade (Not all activities allowed). On registration, the parent company is obliged to deposit a minimum of 150.000 LYD with a Libyan local bank. A branch office has the advantage that the foreign company is not dependent on a Libyan partner. Opening a branch office is a complex process that can take months or more.

Investment Enterprise:

Under Investment Law No. 9 of 2010, investors can establish investment enterprises for activities in all the main industry sectors, with the exception of oil and gas exploration and production. The investment project may be wholly owned by the foreign investor, provided that the amount of the funds invested exceeds five million LYD. The minimum investment is reduced to two million LYD if a Libyan partner holds at least 50% in the investment. An investment enterprise benefits from certain exemptions from taxes and customs duties for the first 5 years. Net profits and dividends are freely transferable and the investor may own real property in Libya. An investment enterprise is particularly suited to a foreign investor wishing to undertake a capital intensive project in the country.

·           Commercial Agency:

Commercial agency and distribution are mainly governed by the Commercial Code which has abrogated the Commercial Agency Law No. 6 of 2004. The Executive Regulations of the Commercial Agency Law No. 136 of 2004 provide an extensive list of goods and services for which a local commercial agent (Only Libyan nationals or privately owned companies) is required (notable exceptions are foodstuffs and construction materials). However, the importation for private use or for the purpose of a specific project does not require a local commercial agent or distributor.

It should be noted that further restrictions, such as limits on foreign shareholdings, are contained in specific regulations, such as those covering oilfield services, banking and insurance.

Structuring business activities in Libya requires finding and choosing a suitable business partner and careful legal planning and, in view of restrictions of foreign ownership, corporate government arrangements are often complex.

To enquire or wish to speak to us about it, please feel free to do so at Email: Info@soclibya.com, Tel: +44 2089878450 or M: +44 7774013043