Even before the killing of ousted leader Muammar Gaddafi on 20 October, a growing number of international corporations and investment funds had been examining investment opportunitiesin Libya, buoyed by the promise of a new era of stability following the overthrow of the Gaddafist regime.

“Before the revolution, our long-term thesis was that Libya was an underdeveloped country with significant natural resources and it was turning around,” says Abdulla Boulsien, a director at Tuareg Capital, the London-based investment firm set up in 2006 to focus on the Maghreb. “Then, there was a huge bureaucracy and a lot of corruption. For us now, the investment opportunities are about five times better, given the NTC’s [National Transitional Council] focus on transparency and accountability.”

In the short term, potential investors are looking for opportunities to work with local and international contracting and engineering companies with experience in Libya, particularly those which specialise in civil infrastructure and oil and gas services, Boulsien says.

Contracts

Contractors with ties to the country say that a number of repair and maintenance contracts have been awarded for work on critical infrastructure including hospitals, roads, water sanitation and power plants, and key oil production facilities and pipelines. Almost all of these have been awarded directly to local contractors.

Boulsien believes that some larger deals for the oil and gas sector have included contracts to supply and repair booster stations on oil transit routes and gas turbines for power plants. Most work on oil and gas infrastructure has been done by state oil firm National Oil Corporation (NOC) and it subsidiaries; the National Transitional Council has largely retained the staff of most major government institutions.

International oil companies (IOCs) with facilities in the country, including Spain’s Repsol, Italy’s Eni, France’s Total, and Wintershall, a subsidiary of German chemicals giant BASF, are yet to send in significant numbers of expatriate staff, although the death of Gaddafi has reassured some oil executives that it will soon be safe to return to the country.

Foreign engineering firms are yet to make inroads in Libya either, although a number have struck up direct negotiations with the NTC for deals to quickly rebuild necessary infrastructure. Again, companies with experience in the country like Austria’s Strabag, Italy’s Tecnimont and Sidem, a subsidiary of France’s Veolia, are unlikely to be penalised for their past work with the Gaddafi regime and could win contracts in civil infrastructure, the oil and gas sector, and desalination respectively in the near future.

The number of contracts the NTC awards in the coming months is likely to be constrained by its limited institutional legitimacy - a national unity government is yet to be formed, and elections for a 200-member council are unlikely to be held until mid to late 2012. “There are unlikely to be any really major deals over the next year or two, until there is a government in place and there are things like proper transparent tendering systems set up,” says a source with close ties to international institutions and NGOs working in the country.

Coordination

The Washington-headquartered World Bank has said that it will assist the NTC in planning and tendering deals to rebuild the country’s infrastructure but, the source says, has yet to form any coherent plans. A number of governmental, international and non-governmental organisations are in the country, another similarly-placed source says. “There are a bunch of people out there seeking to assist, but they aren’t particularly well-coordinated,” he explains.

Meanwhile, businessmen and diplomats report that the NTC has been limiting the number of visas it issues for entry to the country, largely to ensure that they are not bombarded by trade delegations and companies hoping to score big contracts early on. “Trade delegations right now aren’t going to get much more than a handshake, a business card, and a few face-to-face meetings,” says one Libyan-British businessman. “They don’t need a load of people turning up and offering to build massive pipelines right now.”

In the future, Boulsien believes that the “new” Libya could be a great place for savvy investors. He cites a more transparent political landscape, which should save the government billions in revenues lost in the past through corruption, and the likelihood that the country’s eventual government will focus on wealth redistribution, boosting the number of Libyan consumers and their spending power. A more business-friendly climate and better administration are also likely to make the country a prime investment destination, he adds.

However, these conditions are likely to be a long way off.

If the NTC can move quickly to put in place an interim government within the next few weeks, this would provide some much needed stability, Boulsien says. “For now you can forget state and civil institutions, they just need to focus on stabilising things.”