LIBYA COMMERCIAL NEWS SUMMARY-JUNE/JULY, 2006

UNCLAS SECTION 01 OF 03 TRIPOLI 000378 SIPDIS E.O. 12958: N/A TAGS: ECON LY PGOV SUBJECT: LIBYA COMMERCIAL NEWS SUMMARY-JUNE/JULY, 2006 -------------- 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: http://www.akhbar-libya.com/HYPERLINK "http://www.akhbar-libya.com/"www.akhbar-liby a.com, 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: http://www.manara.org/HYPERLINK "http://www.manara.org/"www.manara.org, 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: http://www.aljazeera.net/HYPERLINK "http://www.aljazeera.net/"www.Aljazeera.net, 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 "http://www.ljbc.net"www.ljbc.net, 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 "http://www.ljbc.net/"www.ljbc.net, 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 "http://www.akhbar-libya.com/"www.akhbar-liby a.com, 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: http://www.manara.org/HYPERLINK "http://www.manara.org"www.manara.org, 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 "http://www..net"www.ljbc.net, 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. (Source: HYPERLINK "http://www.akhbar-libya.com"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 costs. ¶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 "http://www.ljbc.net"www.ljbc.net, 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) BERRY