Libya is not an easy market; the security situation remains a challenge and the government is focusing much of its efforts on creating a safe and secure environment for its citizens. The new National Congress is also devoting a lot of its time to constitutional matters and ensuring that its new Ministers and heads of institutions have the right credentials to lead the country forward in a fair and transparent way. Because of these enormous challenges, there has not yet been the level of focus and progress in the planning, development and execution of much needed new infrastructure projects that some had hoped for.

Given the above, consultants, contractors and developers of infrastructure projects should continue to focus their attention on future opportunities in the country. Assuming that the security situation continues to improve, there are going to be tremendous opportunities in just about all sectors. Oil and gas will clearly be a main priority, but education, healthcare, utilities, housing and IT have all been identified as critical needs for the country.

Renewables

The Ministry of Electricity & Renewable Energies in Tripoli have recently announced that they are committed to solar as an energy source, planning for 3% of the country's capacity to be met by renewables by 2015 and 20% by 2020. Libya has the second highest levels of solar radiation in the world, whilst high average wind speeds in several locations also make it an attractive destination for wind farms. Evidence of the government's intentions towards green energy has recently been demonstrated by the Undersecretary's announcement in January 2013 that a new 650 M/W solar plant is to be built in Obari in the south of the country.

More recently, in April 2013, the Ministry of Energy announced that it was preparing tenders for two new solar plants.

Other plans previously announced by the Libyan government for renewable energy include:

  • thermal heating plant with annual production capacity of 40,000 units
  • wind farm projects in Dernah, Al Maqrun, Emslatah, Tarhunah, Asaba, Gallo, Almassara, Alkofra, Tazarbo, Aljufra, Ghatt, Ashwairef,  and Sebha
  • feasibility studies for a 100MW concentrated solar power plant at Sebha, a 50MW CSP plant in Ghadames, and a 15MW photovoltaic plant in Shahat

Conventional power

Libya continues to experience a shortfall in power and as the country begins to grow and develop, the country's limited power generation capabilities will come under increasing stress. Grid connections allowing the country to import power from Egypt and Tunisia will provide temporary solutions for the country but going forward, the country will need to build new plants. For the time being, it is almost certainly the case that these new plants will be built on a conventional procurement basis with foreign contractors being asked to tender for the works. Going forward, however, there is some discussion about moving to build-own-transfer style independent power projects. This style of procurement was under discussion prior to the revolution but it is going to be quite a challenge to execute any project on a structured finance basis unless and until various legal reforms are made to the existing legislative framework, including the ability for financial institutions to take a proper security package.

Healthcare

At present, those with the financial resources to do so will almost certainly seek to travel outside the country for healthcare services. Libya's healthcare system prior to the revolution was poor and after the revolution the system has simply been unable to cope. One critical problem is the lack of primary health care facilities, such as local clinics and district hospitals. Libya has less than 1500 of these, for a population of 6.5 million. Additionally, many of the healthcare workers in Libya prior to the revolution were foreign. Most left the country during the revolution and have not returned.

A direct result of the lack of domestic services is that tens of thousands of Libyans are currently receiving healthcare abroad, which costs the Government millions of dollars per day. The system has also been abused by many people who have used the chaotic post-revolution period to make overseas trips and seek expensive overseas treatment in contravention of the policies and guidance laid down by the competent authorities.

The Government therefore urgently needs to build new facilities, manage those facilities properly and train staff to provide the levels of healthcare services that the Libyan people so desperately need. The specific sectors where there appear to be immediate opportunities for international healthcare infrastructure players are building and managing new primary healthcare facilities (possibly on a PPP basis) and providing new laboratory and radiology facilities for the country.

In order to move forward with some of these initiatives, various difficult bureaucratic processes and unclear guidelines need to be addressed by the competent authorities. In particular, the Government needs to give investors comfort that licences granted to private clinics will not be revoked without due cause in accordance with proper due process. At present, many private sector investors are deterred by the fear that their licences may be revoked after they have expended significant time and resources developing new facilities.

On the plus side, the development of a fledgling private healthcare insurance market is sending the right signals to healthcare investors that demand for new private sector facilities will continue to increase in the future, as more individuals take out these types of policies.

Telecoms

The two major players in this sector are the General Posts and Telecommunications Company (GPTC) and the Libyan Posts, Telecommunications & Information Company (LPTIC). Both of these are state-owned entities and to date, there is no private sector participation in either the telecoms or internet service provider market. The Government flirted with the idea of bringing in private sector investment expertise prior to the revolution, and is now actively looking at options as to how it might do this.

In April 2013, it was announced that the Libyan Ministry of Communications and Informatics had appointed a high-level committee of telecommunication experts and lawyers from the ministry as well as from outside to draft a new Telecommunication Act that will replace the existing legislation.

The stated aims of the new law are:

  • to create an independent telecommunication regulatory authority, with clear and transparent terms of reference that set out the authority's functions and powers;
  • to promote and protect competition in the telecommunication market;
  • to ensure delivery of the highest quality of services at competitive prices to end users across the country;
  • to encourage Libya's private sector to participate in building and improving telecommunication services in the country.

It is still uncertain whether private sector participation will be done through issuing new licences to international companies, allowing the private sector to buy into the existing state-owned incumbents, Libyana and Al Madar, or simply by offering management contracts to international companies to come in to re-organise and modernize the existing state owned enterprises. Whichever option is selected by the Government, it seems inevitable that we are going to see opportunities for the private sector to participate in this industry.

In addition, Libya is developing a national frequency plan covering the frequency range from 8.3 kHz to 275 GHz, which is expected to be delivered by mid-May 2013.

Waste Management

Rapid population growth, changing consumer habits, transportation difficulties and environmental challenges relating to economic growth have led to a significant increase in the amount of waste produced in Libya and it is currently piling up across the country; at the entrance to cities, on main streets and within residential neighbourhoods.  It includes household rubbish, construction rubble, industrial and agricultural waste products and medical and radiological hazards.

Thus far a shortage of (1) machinery and equipment necessary for the process of collection, transport and final disposal, as well as (2) trained and qualified specialists in waste management, means that waste produced is not being effectively managed and is beginning to have a serious detrimental affect on Libya's society and economy.

In July 2012, details emerged that the Libyan government had issued a major waste management tender on a build-own-transfer basis, covering waste collection and management for the entire country for a period of ten years and the government announced prequalification for construction of landfills for hazardous and non-hazardous waste. Earlier this year, the Prime Minister acknowledged the problem of mounting waste in Libya and stated that international companies will be invited to tender if local companies were unable to carry out the work.

Banking

The Libyan banking sector is supervised by the Central Bank of Libya, which is responsible for the licensing and supervision of commercial banks and regulating credit and interest. It is also the main shareholder of most banking assets in Libya. While there has been an increase in privatization in banking, much of the sector remains under Government control.  Libya has a total of 17 commercial banks but the banking sector remains dominated by four companies, three of which are state-owned: Gumhouria, Sahara, Wahda and National Commercial Bank. These four account for about 90% of total bank assets. 

Whilst there is great optimism for the future, the reality is that Libya is a difficult market to operate in. According to the Global Competitiveness Report 2012-2013, Libya is ranked 140 out of 144 in financial market development whilst access to financing is the third most problematic factor for doing business behind corruption and inefficient government bureaucracy. Until a clear regulatory system is established and the commercial banking sector's infrastructure is reformed these problems will continue to restrict growth.

The banking sector is set to undergo a process of modernisation with the introduction of new ICT systems, the launch of new products and services, and the development of a sales and marketing culture. Under the new Libyan authorities, these developments should gather pace. A renewed commitment to improved transparency, the strengthening of internal governance and the creation of a functioning bond market to help smaller businesses raise money to fund new projects and expansion plans will create further opportunities for international partners.

In 2012 an Islamic banking law was approved which will introduce Sharia-compliant banking within the country. The Libyan authorities envisaged several options for Islamic banking services including the granting of licence to conventional banks to open branches or windows for Islamic finance and permitting conventional banks to adopt Islamic banking. In March 2013, the governor of Libya's central bank said the Libyan government will soon be ready to issue licences for Islamic banks. However, as at the date of this article, no such licence has been issued.

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