110 LIBYAN COMPANIES PRIVATIZED: HEAD OF LIBYAN PRIVATIZATION AUTHORITY REPORTS ON CONTINUED PROGRESS

C O N F I D E N T I A L SECTION 01 OF 02 TRIPOLI 000925



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STATE FOR NEA/MAG; STATE PLEASE PASS TO USTR; COMMERCE FOR NATE

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E.O. 12958: DECL: 11/19/2019

TAGS: ECON, PGOV, EFIN, EPET, LY

SUBJECT: 110 LIBYAN COMPANIES PRIVATIZED: HEAD OF LIBYAN

PRIVATIZATION AUTHORITY REPORTS ON CONTINUED PROGRESS



REF: TRIPOLI 869



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CLASSIFIED BY: Gene A. Cretz, Ambassador, U.S. Embassy Tripoli,

Department of State.

REASON: 1.4 (b),(d)

1. (C) Summary: Dr. Mahamud Ahmed Al-Ftise, head of the

Libyan Privatization and Investment Authority, told Econoff

November 10 that Libya's efforts to privatize its state-owned

enterprises (SOEs) are progressing and that 24 companies have

been privatized in 2009, resulting in a total of 110 companies

privatized in Libya since the process began four years ago. The

Authority has also established a "one-stop shop" facility for

foreign investors, designed to ease access to government offices

ranging from visas to customs. Al-Ftise requested U.S.

assistance in providing training to the Authority's Training

Department, as well as to the newly privatized Libyan companies.

He also invited U.S. firms to bid on any of the companies

undergoing privatization. End summary.



2. (C) During a November 10 meeting, Dr. Mahamud Ahmed

Al-Ftise, Secretary of the Libyan Privatization and Investment

Authority, reported that Libya's efforts to privatize its

state-owned enterprises (SOEs) were moving forward, with 24

companies privatized this year. He said that in total, the

Authority had worked to privatize 110 companies since the

process began about four years ago. Al-Ftise noted that the

Authority's future plans included privatization of oil service

companies, which currently make up 49 percent of the companies

own by the National Oil Company (NOC). Additionally, 25

industrial plants are slated to be privatized in the next few

years, including a steel mill. As an example of how the

privatization process functions in Libya, he explained that

ten-percent of the shares of the steel mill would be offered on

the Libyan Stock Market, and over the long-run, the mill would

be completely privatized. He characterized the entire

privatization process as completely "transparent." [Note: This

contradicts information we have received during separate

meetings on the privatization process, as reported reftel. End

note.]



3. (C) When asked whether foreign companies had purchased any

of the newly-privatized Libyan firms, Al-Ftise said that foreign

firms had not expressed much interest in the "old factories."

He explained that the Authority encourages buyers to purchase

not only the assets of formerly state-run companies but also to

keep existing employees on the payroll. [Comment: This is

often an unattractive prospect for foreign investors, as Libya's

state-owned companies are infamous for low productivity and

over-staffing due to Libya's generous labor laws. End comment.]

In what he termed as a "trade-off," he explained that the

Authority would charge a lower price if the buyer accepted a

company with its current employees.



4. (C) According to Al-Ftise, the Privatization and Investment

Authority does not widely advertise which companies will be

available for purchase, but rather, it has adopted a more

targeted approach towards possible buyers, both Libyan and

foreign. He said U.S. investors would be welcome to bid on any

of the available companies and he cited a chemical plant as a

potentially interesting property (the General Company for

Chemical Products at Abe Kamash, near the Tunisian border). He

noted this chemical plant would need to transition away from

using mercury in its production, and an American firm might have

expertise in this particular area. [Comment: Econoff has visited

the area near the factory and Libyans living nearby have

reported wildlife with genetic abnormalities, even showing

photographs of two-headed fish. It is doubtful an American firm

would want to take on liabilities associated with using mercury.

End comment.]



ONE-STOP SHOP OFFERS GOVERNMENT SERVICES: GREAT IDEA BUT IS

ANYONE HOME?



5. (C) The staff of the Privatization and Investment Authority

took Emboffs on a tour of the new "one-stop shop" for investors

seeking information and help in entering the Libyan market. The

"shop" features desks for representatives of the various

government offices that investors need to contact in order to do

business in Libya, such as tax, electricity, industrial zones,

manpower (labor),customs, and immigration (covering visas).

During our visit, however, only one desk was occupied

(immigration).



U.S. TECHNICAL ASSISTANCE WOULD BE WELCOME



6. (C) According to Al-Ftise, the newly-privatized companies

may have training needs that the U.S. can help with, including



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training for their boards of directors on their roles and

responsibilities, as well as the need for technical assistance

in areas such as marketing, quality assurance, and operational

management. Al-Ftise further requested that the U.S. provide

Arabic speaking consultants to provide training and technical

assistance to the Authority's ten-person Training Department.



BIO NOTE

7. (C) Al-Ftise received a scholarship from the Libyan

Government to study in the U.S. and earned his BSc in Industrial

Engineering from the University of Toledo (Ohio) in 1981. He

then went to Hungary, where he received his PhD in Project

Management in 1996. Between his return from Toledo in 1981 and

taking up his PhD studies in Hungary in 1996, he worked for the

General People's Committee for Industry and Minerals. Al-Ftise

is married with five children and has several grandchildren.

While in the United States, he and his wife had a daughter, who

is a US citizen. She is a dentist and lives in Libya. He speaks

English fluently and speaks (but does not read) Hungarian.



COMMENT



8. (C) The Privatization Authority appears to be making

progress, in terms of transferring 110 state-owned enterprises

to private ownership. The Authority now has new offices in

downtown Tripoli (as opposed to shabby offices in a former

factory in the suburbs) complete with its "one-stop shop" to

facilitate foreign investor access to government services. As

reported in reftel, however, the privatization process is not

readily transparent, and many of the companies are reportedly

not being awarded on a competitive basis, with certain

beneficiaries appearing to be regime loyalists. We will

follow-up with Al-Ftise on his requests for training and

technical assistance. End comment.

CRETZ