Libya and the UAE have launched a Dh11 billion (US$2.99bn) joint investment fund to assist the development of both countries, in a deal that could also result in Emirati companies managing some of Libya's ports and airports.
Talks are being held between the general board for privatisation and investment (GBPI), a government body that attracts foreign investment into Libya, and the UAE's Ministry of Economy.
"It will be investing in both countries, in the UAE and Libya, and they will have joint investments in projects together," said a member of the Libyan government close to the talks, who asked not to be named.
Libya has recently courted foreign investment following the end of two decades of US-led sanctions, and is starting to attract large-scale investments.
The Libyan government is also seeking an agreement that would allow UAE companies to take over the management of some of the country's ports. In addition, two of the UAE's airport operators are said to be in the running to take over the management of Tripoli International Airport, he added.
The fund, which is separate from either country's sovereign wealth funds, will be "jointly managed at a governmental level, under the umbrella of the economic ministry and the GBPI", the official said. "We have very good relations between Libya and the Emirates, and they have now got experience in construction, in manufacturing and experience in management."
The volume of trade between the UAE and Libya has reached about $1bn dollars in recent years, according to the Ministry of Economy.
An agreement is yet to be made on which sectors the fund is seeking to target. However, at a meeting last week between Sultan al Mansouri, the UAE Minister of Economy, and Al Baghdadi Ali al Mahmoudi, the Libyan prime minister, both countries stressed the need to seek "joint investments in communications, infrastructure, tourism and agriculture sectors", according to the UAE state news agency WAM.
John Hamilton, a researcher at Cross-Border Information, a risk monitoring research firm, said the deal followed a series of joint investment funds set up between the UAE Government and its neighbours in the region.
"It sounds absolutely par for the course," he said. "They've set one up with Qatar and they've an increasing amount of joint finance deals with countries in the Gulf."
However, deals between the UAE and Libya have been few and far between, he added.
"What the Libyans would be really keen on would be any sort of deal which would bring money into their downstream revenues and power projects."
However, he said up until now, many of the Libyan government's large-scale projects, such as the expansion of Tripoli airport, had run into difficulty.
"They were allocated quite substantial budgets but because of difficulties with corruption and reorganisation of the government, a lot of the money hasn't made it to the projects," he said.