By Sami Zaptia.
London, 9 September 2021:
- LIA invests in LIDCO’s Tripoli Gate 2 project
- Project includes Zumurud shopping mall, 3 office blocks and 5-star hotel
- Project restarted by new Aldabaiba government this March after 10-year halt
- Project is owned by LIDCO/ESDF – part of the multi-phase Tripoli Gate 1/2 & 3 project
- The mixed-use project is implemented by Turkish Renaissance company
- Project located at Airport Road traffic lights
- Project started in 2010 and halted by 2011 revolution
- LIDCO was run by current prime minister Aldabaiba (coincidence?)
- Restart is part of Aldabaiba’s ‘‘Reviving Life’’ plan to restart stalled projects
- Aldabaiba sees reactivation of economy / creating jobs for youth as part of peace plan
- Ramifications for other stalled projects/foreign contractors: Analysis
The Libyan Investment Authority (LIA) announced yesterday the launch of its ‘‘Peace Building’’ project. The project comes within Prime Minister Abd Alhamid Aldabaiba’s Reviving Life development plan.
The project involves LIA signing an agreement with the Libyan Investment and Development Company’s (LIDCO) to finance the part completion of LIDCO’s stalled Tripoli Gate 2 (Bab Tripoli) project. This includes three office blocks, the Zumurud (emerald) shopping mall and a five-star hotel.
The LIA will contribute to the project through the injection of a cash investment. It did not reveal the invested amount.
‘‘No development without peace and no peace without development’’
Speaking at the contract signing ceremony yesterday, LIA chairman Ali Hassan Mahmoud said there can be ‘‘No development without peace and no peace without development’’, underscoring the Prime Minister’s message that Libya needs to restart its economy and employ its youth in the process in order to achieve development and peace simultaneously.
‘‘Reviving Life’’ development plan
It will be recalled that on 27 August Libyan Prime Minister Abd Alhamid Aldabaiba announced the launch of the ‘‘Reviving Life’’ development plan.
‘‘We have developed a solid plan to move the wheel of development and start reviving stalled projects in Libya.
We announce the launch of the development programme for the last quarter of 2021 under the name ‘‘Reviving Life’’ after securing sources of income despite the lack of approval of the 2021 budget.
Development projects will target roads, schools, hospitals, clinics, digging water wells, installing desalination plants, and others’’. Aldabaiba had said.
As part of the Reviving Life plan, two of Libya’s largest state-owned project implementing agencies, the Housing and Infrastructure Board (HIB) and the Organization for the Development of Administrative Centres (ODAC), announced the restart of projects across Libya.
HIB announced that it is reactivating 69 existing projects in eastern Libya, while ODAC announced that it was reactivating 70 existing projects in eastern Libya worth LD 459 million.
The prime minister Aldabaiba connection
Coincidently, or not, Prime Minister Abd Alhamid Aldabaiba, used to be Chairman and General Manager of LIDCO. The prioritisation of his former company’s projects implemented by a Turkish company has been the subject of much comment in Libya.
Ramification for other foreign contractors with stalled projects?
The announcement by Prime Minister Aldabaiba of the restart of LIDCO’s Tripoli Gate stalled project in March this year, and the announcement of his ‘‘Reviving Life’’ development plan last month, as well as the decision by the LIA to launch its Peace Building plan to invest capital in LIDCO’s Tripoli Gate project will be watched closely by many a foreign contractor with stalled Libyan projects.
Foreign contractors will be studying if their projects could also be prioritised and receive an injection of capital to restart them.
It is unlikely that every stalled Libyan construction project will be restarted soon. Some will never see the light of day.
Feasibility studies and prioritization of projects
Successive Libyan governments since the 2011 February revolution that overthrew the Qaddafi regime have created committees and conducted feasibility studies in Libya’s US$ 100 bn-plus stalled projects. Attempts have been made to prioritise them. Many contractors may wish to see the results of these feasibility/prioritisation studies to see where their projects are ranked.
Country-wide demand for housing
For example, there are many projects that are between 50-80 percent completed and there have been calls for the completion of these projects – or at least their prioritisation.
On top of these are all the nearly complete housing projects. These are seen as the least complex projects to complete and the ones that can be easily sold upon completion – thanks to Libya’s acute housing shortage.
Moreover, there is a hunger by local investors to invest in incomplete housing projects, including by local Libyan banks. These are likely to be some form of PPP investment. At least one real estate investment fund has been created by private Libyan banks (see links below).
Settling foreign constructors’ debts
However, before any of this can happen, a legal and financial solution needs to be reached to settle the debts of foreign constructors.
One possible solution discussed with Chinese companies has been compensation for outstanding debts through the award of new contracts (see link below). [/restrict]
‘‘The deal, in which the thorny issue of compensation is addressed by granting additional contracts, is seen as opening the door to completing numerous other housing and infrastructure projects with Chinese and foreign companies.’’