x Abu Dhabi, UAEWednesday 26 July 2017

Libya tries to calm wary investors over review

Libya is seeking to reassure investors concerned about a major review of nearly 10,000 business contracts that were signed by the government of the late Muammar Qaddafi.

A man walks past the Azzawiya oil refinery in Zawiyah, 50km west of Tripoli. Reuters
A man walks past the Azzawiya oil refinery in Zawiyah, 50km west of Tripoli. Reuters

Libya is seeking to reassure investors concerned about a major review of nearly 10,000 business contracts that were signed by the government of the late Muammar Qaddafi.

A group of 20 people appointed by the National Transitional Council (NTC), the temporary government, is scrutinising the contracts to ensure fairness and hunt for evidence of corruption.

"We respect all agreement[s] and the contracts which have been signed by the old regime," said Mustafa El Huni, the deputy chairman of the NTC.

"Naturally there are some contracts which need to be reviewed, but even for those contracts, it will be in the spirit of mutual cooperation," he added. "We have no intention to nationalise or to do something radical. Even if it's an unfair agreement or unfair contract, we'll sit down with a spirit of cooperation and we'll come to agreement with those entities."

The contracts, which span sectors from hospitality to energy and affects investors all over the world, adds to the uncertainty surrounding Libya's future.

Next month, Libyans - including expats in places such as Dubai - are to select a national assembly that will draft the country's new constitution. The Libyan general prosecutor is also investigating domestic and foreign oil companies' records in connection with possible financial irregularities.

Security remains a concern in Libya, where just this month a demonstrator died during a protest outside the prime minister's office and a candidate for the national assembly was killed.

Until late last year, when the review was first announced, contracts with the government appeared to be one of the few things to remain stable in post-revolution Libya.

The NTC, which was established by the rebels during last year's uprising, has said since last summer that contracts signed with the old regime would remain untouched.

"Corruption is unfortunately still there, and unfortunately some of the wheelers [and] dealers who infested Libya in the old days are marketing themselves in the new Libya," said Aref Ali Nayed, the ambassador of Libya to the UAE.

Those signing deals need to ensure their projects share benefits with the Libyan people, he warned in Dubai recently. "If it does, then this project will have long-term success," said Mr Nayed.

"If it doesn't, watch out," he added. "You may be able to pull off the signing of the contract with this government, or with the transitional government, but in the long run you will lose."

If the Twenty Committee, as the 20-strong Libyan review group is nicknamed, were to check every single contract, the process could take three decades, said Adrian Creed, a partner at Clyde & Co, a law firm.

"Some high-level decisions have to be made about materiality or contract threshold because it won't happen otherwise," Mr Creed said.

"Libya has disappointed the investors' community twice before, so if you throw that in the bin it won't send a very good message to the market."

Some argue a good tactic for Libya may be to follow the example of the UK in its infrastructure spending reviews. There, a centralised system has worked through a team of accountants and consultants who swiftly check over contracts, said Hatim Gheriani, the head of global banking and markets for HSBC in Libya.

"Everyone knows what the terms are and therefore everyone gets a good deal," he said.

Mr El Huni sought to answer questions about the extent of the contract review by saying Libya as a nation would not veer towards extremism.

"It will be a moderate country," said Mr El Huni. "It will not be an extremist country economically, politically or even socially. We are a coherent society."

ayee@thenational.ae

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