The executive summary of US State Department’s 2023 Investment Climate report on Libya, published last week, says despite the high potential for domestic and foreign investment in Libya due to its reconstruction needs, unmet consumer demand, and rich natural resources, the country still faces a difficult investment environment.
It says the Tripoli-based Libyan government has shown an interest in attracting more foreign investment and collaborating with foreign companies. However, the country’s foreign investment prospects remain hindered by threats from non-state militias, foreign mercenaries, and extremist and terrorist groups.
It says investment is also constrained by an unclear bureaucracy, complications resulting from the division of state institutions, burdensome regulations, and widespread corruption in public administration.
In addition, the Libyan government has a long track record of not complying with contractual obligations and timely payments. The sectors that have historically received the most significant investment in Libya are oil and gas, electricity, and infrastructure.
It says while it has a unified interim government based in Tripoli and recognised by the international community, the Tripoli government’s influence is limited outside of Tripoli and certain areas in the northwest.
Oil production at 1.2 million bpd
The report confirmed that Libya holds Africa’s largest (and the world’s ninth largest) proven oil reserves and Africa’s fifth largest gas reserves. Hydrocarbon exports contribute approximately 97 percent of government revenue. Libya’s oil production has been making a gradual recovery from repeated attacks on oil infrastructure by ISIS-Libya and other armed groups in 2016, a nine-month forced shutdown in 2020, and a fourth-month partial shutdown in 2022. Production has reached 1.2 million barrels per day (bpd) as of March 2023.
NOC v Ministry of Oil and Gas
The National Oil Corporation (NOC), an independent, apolitical institution, continues to lay the groundwork for the long-term development and stabilization of the energy sector. The Ministry of Oil and Gas has attempted to exert political control over the NOC, at times complicating matters for companies working in the sector.
Investment Law of 2010
The main legal framework for promoting foreign investment is the Investment Law of 2010. This law was passed before the 2011 revolution that overthrew the Gaddafi regime and removed many FDI restrictions and offered various incentives to stimulate private investment. No significant laws related to investment have been enacted since. There are no measures related to the pandemic or green issues that have an impact on the investment climate.
Deeply rooted corruption
According to Transparency International and numerous well-informed local contacts, corruption is deeply rooted in Libya and is prevalent at all levels of public administration. The lack of clear and accountable mechanisms for managing oil reserves and revenues, awarding government contracts, and implementing often vague regulations continue to give government officials ample opportunities for rent-seeking and corrupt activities.
