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Libya Infrastructure - Growth Expected to Return in 2010

- Mokhtar Thabet

Thursday, 25 February 2010 14:55

The tremendous growth in Libya’s construction sector since 2003, when UN sanctions were lifted, was blunted in 2009 by the global recession. After seeing year–on-year (y-o-y) growth as high as 28% in 2007, industry value real growth fell into negative territory at -1.18% for 2009.
According to new report, The sector still remains relatively small – valued at just US$3.84bn – but growth is expected to return in 2010 with sector value rising to US$6.12bn by 2014. Total capital investment as a percentage of GDP is set to remain constant over the forecast period at 8.58%.

Libya Infrastructure Report 2010 issued by Business Monitor International stated that major projects have continued to focus on Libya’s utilities sector as foreign companies have entered the country with the aim of improving infrastructure in relation to energy. A joint venture between Russia's Technopromexport and Libya African Investment Portfolio announced a fund of US$6.73bn for power projects in Africa, including a 1250km, 400kV transmission line in Libya.

Water sanitation has also been a key priority in 2009, with Daewoo Motor Sales of South Korea, Impregilo Lidco of Italy, Hyflux of Singapore and Punj Lloyd of India all signing multimillion-pound contracts to build networks for drinking water, sewage water and storm water.
A water purification and fluid treatment company has won a contract to build two desalination plants.

In June 2009, Singapore's plants in Tripoli and Benghazi, in Libya. Hyflux signed a memorandum of agreement with the commercial arm of the Libyan Ministry of Utilities, General Desalination Company (GDC), which allows Hyflux to jointly invest in and develop two reverse-osmosis desalination plants in Libya. Libya improved its score for its business environment, along with fellow oil producer Algeria, which secured the top spot in our ratings.

Overall, the country placed third with a score of 51. Libya also scored well for project finance, scoring 49.7 overall, behind Algeria and Morocco. Despite strong inputs as a result of continued international investment, the country raised a number of concerns for project finance.
This was due to weak contract enforceability and unpredictable government intervention, which in turn raised price risks for energy and transport assets, and low scores for the rule of law.

The outlook for Libya remains positive despite the tightening of infrastructure budgets in the region as a result of the global recession. Libya’s position as an energy exporter guarantees foreign interest in development projects particularly given its proximity to Europe and the recent defrosting of political relations.
Large-scale energy projects designed to transfer North African energy resources to energy-hungry European states also offer significant upside potential for growth. The Mediterranean ring project in nearby Morocco and proposed European investment in Maghreb solar power are set to propel future growth. (Libya Infrastructure Report 2010 by Business Monitor International)

Global Arab Network

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Last Updated on Thursday, 25 February 2010 15:15

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