Cablegate: Libya Commercial News Summary-June/July, 2006

Brooke F Adams 08/07/2006 02:30:34 PM From DB/Inbox: Brooke F Adams





DE RUEHTRO #0378/01 2121416
R 311416Z JUL 06



E.O. 12958: N/A


Oil and Gas Sector


1. (SBU) Repsol said it will increase its production in Libya by
66%, reaching 415,000 barrels per day by 2010. Following the
discovery of 21 wells in the last three years, Repsol's reserves
in Libya will increase an estimated 10% over the next five
years. Repsol, currently the biggest foreign company in Libya
handling 15% of its oil production, is investing about 5 billion
dollars in the country.(Source:
""www.akhbar-liby, 6/21)

2. (SBU) The CEO of the Italian ERG Group said that his company
is hoping to increase its share of service stations in Italy and
is expecting Libya to reach a decision regarding the sale of
Tamoil in Europe by the end of this year. According to current
market evaluation, Tamoil is worth about 2 billion dollars.
(Source: Al Quds Al Arabi, 6/24)

3. (SBU) Shukri Ghanem, chairman of the National Oil
Corporation, met with the French minister of Industry and Energy
to discuss ongoing oil and gas cooperation between the two
countries. The French minister stressed his country's wish to
import gas from Libya to satisfy its growing needs. The role of
French companies in the field of manufacture of petrochemicals
and fertilizers was also discussed. (Source:
"", 6/27)

4. (SBU) The Libyan government has given permission to Sirt Oil
Company to complete the execution of two gas pipelines leading
from Tripoli to Khums and Tripoli to Milleta via international
bidding. The Tripoli-Khums line will provide 106 million cubic
meters of gas per day to South Tripoli Electricity Power Station
and to the Suk Elkhamis Cement Factory, as well as supply
households in Tripoli with natural gas. The second pipeline
aims to provide some 200 million cubic feet of gas per day to
the Zawiya Power Station. (Source: Al Quds Al Arabi, 7/13)

--------------------------------------------- ------------------

Construction and Infrastructure Development

--------------------------------------------- -------------------

5. (SBU) The Libyan government announced plans to allocate 765
million dollars to develop the iron and steel industry over the
next three years. The GOL plans to raise production capacity of
the state-owned Misurata Iron & Steel Company to 2 million tons
annually. New leadership may bring increased resources to the
company, which underwent a failed attempt at privatization two
years ago. (Source:
"", 6/8)

6. (SBU) According to Maal & Amaal newspaper [Money & Business],
Libya imported about 100,000 tons of cement in June. A source
from the National Company for Development and Real Estate and
Tourism Investment said that the company is executing a contract
to import 4 million more tons of cement to cover a shortage in
the market. (Source: HYPERLINK
"", 6/18)

7. (SBU) Accompanied by a representative from the US based
Valmont company, Libyan leader Moammar Qaddafi toured Qararat
al-Qataf in Wadi Sawf Ajeen, one of the agricultural investment
areas cultivated through water of the Great Man-Made River
Project (GMMRP). Valmont demonstrated its own technology being
implemented at the GMMRP, including the use of axel irrigation
equipment. (Source: HYPERLINK
"", 6/26)

8. (SBU) The Secretary of the People's Committee of the Railway
Company signed a contract to construct 34 concrete bridges at a
value of 40 million Libyan dinars to be built over 18 months
from Tripoli to Misurata, covering 231 km. The contract was
signed with the Turkish based Mitch Company. Libya is the only
North African country without a railway system. The designated
routes are part of a planned network to link Libya to the rest
of Africa. (Source: HYPERLINK
""www.akhbar-liby, 6/29).

9. (SBU) Several Libyan cabinet members visited the eastern
region of the country and outlined plans to further develop its
infrastructure. Highlights include the planned construction of a
new port at Ras El-Hilal, additional pipe networks from
desalinization plants, 10,000 new housing units, extending
private loans worth up to 257 million Libyan dinars to start
small businesses, construction of new bridges, and installation
of a secondary runway at Tubrouk airport. (Source:
"", 7/02)

10. (SBU) The Assistant Secretary of the General People's
Committee announced the planned construction of two new
skyscrapers in Tripoli and Benghazi. The GPC created a committee
to complete measures to incorporate the company that will
execute the skyscrapers project, at an estimated cost of 500
million Libyan dinars. ( Source: HYPERLINK
"", 7/24)


Foreign and US Investment


11. (SBU) The Libya General Post & Telecommunications Company
(GPTC) organized its Second Annual Exhibition for
Telecommunications & Information Technology in mid-July. IBM,
NCR, Microsoft, Hewlett Packard, Oracle and Motorola were
represented at the conference. A conversation with a senior
manager from GPTC revealed that it has reached an agreement with
Oracle after more than a year of negotiation, mainly due to
Oracle's readiness to provide training to Libyans in the field.
The source from GPTC also stated that it is their policy to
engage companies bidding for projects or tenders including
training. "The model will be adopted with anyone wishing to do
business with GPTC."

12. (SBU) Afriqiya Airlines signed a memorandum of understanding
to buy up to 14 A-320 and six A-330 airplanes in a deal worth
1.7 billion USD. The head of the Libyan African investment fund,
Bashir Saleh, said that the aim is "to have a partnership with
Europe to develop Africa in all sectors: aviation, construction
and tourism. Our goal is development in Africa." The chairman of
Afirqiya, Sabri Shadi, said that the purchase "is a new
beginning for aviation and transportation in Libya, and I think
we will see more demand for new airplanes from Airbus or
Boeing." Delivery of the planes is set to start in 2007.
""www.akhbar-libya .com, 7/18 -- See
also Septel.)

13. (SBU) In an effort to increase foreign investment by
streamlining the process for investors, the Secretary of
Economy, Trade & Investment, Al-Tayeb Al-Safi, announced the
creation of a "one window" policy where investors will be
directed to the Foreign Investment Encouragement Board to
finalize all of their paperwork. The Board will also serve as a
"one-stop" source of information for those seeking to invest in
Libya. Similar announcements have been made in the past on this
issue. (Source: Libya Alyoum, 6/18 )


Labor Market


14. (SBU) In a series of speeches broadcast on the official
JANA news agency leading up to the commemoration of the 37th
anniversary of the Al-Fatah Revolution, Qaddafi addressed
professional organizations including economists, doctors, and
engineers, announcing his objection to foreign employment in
the private sector at the expense of the Libyan people. He
underlined that the issue of employing Libyans is linked to the
issues of social justice, freedom and dignity of Libyans. He
specifically noted that future work on the Great Man-Made River
Project, a $20 billion, 20-year-old venture to pump water from
beneath the Sahara to northern cities, should be done almost
exclusively by Libyans. "The new phase which starts as of today
requires that nothing be built by foreigners, and whatever is
built in Libya will be by Libyans, or else nothing would be
built, because we do not want to deceive ourselves." It is
important to watch for future GPC proclamations to study the
true effect of the speech. In a speech this past January,
Qaddafi called for the hiring foreign companies to build the
country, allowing the opening of branches of foreign banks
"because they have capital to invest" This speech also does not
seem to coincide with recent government regulations to
facilitate banking transactions and reduce foreign investors

15. The GOL said it is taking steps to reorganize and reduce the
number of employees in the public sector, which currently stands
at 900,000. The government says it is planning to provide loans
to public sector employees to set up private businesses as an
incentive for early retirement. The government announced a
re-distribution of the workforce within the public sector, with
priority given to the tourism sector. (Source: HYPERLINK
"", 06/07)

16. The Secretary of Manpower, Training, and Employment, Matug
Matug, officially announced the termination of Salary Law No.15,
which placed strict salary caps on state employees in all
sectors. The law, passed in early 1980s, has been gradually
phased out over the passed several years in some institutions,
such as Tripoli Medical Center, in an effort to keep qualified
doctors in the country. Effective July 1, public companies can
now officially set the wages of their employees. (Source:
Tripoli Post, 6/24)
17. Libyan businessman in the tourism sector and officials from
the GOL took part in a contentious meeting on foreign investment
in tourism, led by the Secretary of the General People's
Congress (Prime Minister), ElBaghdadi ElMahmoudi. Husni Bey,
deputy chairman of the Libyan Businessmen Council, argued that
government policies favored foreign investors, citing the fact
that Libyan tour companies were barred from providing services
to tourists during last March's eclipse event. The Secretary of
Tourism, Ammar Eltayif, argued that Libyans should be given the
same incentives as foreign companies such as tax and customs
exemptions. He also emphasized the need for investment in the
hotel sector, citing that only 2000 rooms in Tripoli are
suitable for tourism lodging. He also pointed out that only 30%
of the people working in the tourism industry are Libyan.
(Source: Al Quds Al Arabi, 7/9)


Stock Market


18. The capital of the Libyan stock market has been set to 20
million Libyan dinars and 2 million shares. The value will be
deducted from this year's annual budget. The Libyan government
has made it mandatory for all public and private companies with
a capital of more than 1 million dinars to offer their shares in
the stock market. The Libyan stock market was established
approximately two years ago through the Central Bank of Libya.
Shares in a number of public companies were offered including
the shares of the biggest cement company valued at 600 million
dinars. (Source: Al Quds Al Arabi, 6/10)

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