Government

The House of Representatives is the legislative branch of the Libyan government. It has 200 seats and its current president is the independent politician Aguila Salah Issa. The House of Representatives took power on 4 August 2014, taking over from the General National Congress (GNC).

Libya has seen a succession of transitionary governments since its 2011 revolution.

The National Transitional Council (NTC) announced the death of Colonel Muammar Gaddaf on 20 October 2011 and interim leader Mahmoud Jibril declared Libya liberated on 23 October.

The NTC handed over power to the 200-member GNC in July 2012, following Libya’s first democratic elections. The GNC was tasked with overseeing the creation of the country’s constitution and the transition to constitutionally backed elections. It was given 18 months to complete the process, but failed to find agreement on the constitution during its tenure.

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Recent history and politics

Libya became independent in 1951 after a period under UN administration following the end of Italian rule in 1943. Prior to 1911, the country had been under the control of the Ottoman Empire. Former leader, Gaddafi, came to power in a military coup in 1969 in which he took power from King Idris. Although the nephew of King Idris, Crown Prince Sayyid Hasan, was crowned the new monarch, political power was transferred to Gaddafi as Brother Leader and Guide of the Revolution.

Gadaffi introduced a political system based on what he called the Third Universal Theory. The system is supposed to be implemented by the Libyan people themselves via a form of direct democracy. It is a vision that Gaddafi strived to internationalise, using oil funds in the 1970s and 1980s to take his ideas abroad and undermine the alternative Marxist and capitalist visions.

Under Gaddafi, the legislative, or Jamahiriya, comprised Local People’s Congresses in each of the 1,500 urban wards, 32 Shabiyat People’s Congresses for the regions and the National General People’s Congress. These legislative bodies were represented by corresponding executive bodies the Local People’s Committees, the Shabiyat People’s Committees and the National General People’s Committee (cabinet). The decision-making power of these bodies was defined by the Revolutionary Command Council.

The political system was based on the political philosophy of the country’s revolutionary leader Gaddafi, as stipulated in his Green Book. In practice, the leader enjoyed almost total executive power. Prior to the uprising in Libya, Gaddafi had not appointed a successor although his second son, Saif al-Islam was considered an obvious choice.

Libya was in political isolation between 1992 and 2003 following a terrorist attack that downed a Pan American Airlines flight over Lockerbie in the UK. UN sanctions were suspended in April 1999 and lifted in September 2003 following resolution of the Lockerbie case. In December 2003, Tripoli agreed to end its programme to develop weapons of mass destruction, which brought the end of US and European sanctions against the country. The US resumed full diplomatic relations with Libya in May 2006 and a month later removed the label of state sponsor of terrorism from the country.

Economy

The lifting of US and international sanctions promised to herald the dawn of a new era of economic growth in Libya, but plans to diversify the economy have largely failed. Bureaucratic wrangling continues to hinder the country’s economic development after three decades of stagnation.

The Libyan economy remains heavily dependent on revenues from the oil sector, which contribute about 95 per cent of export earnings, 25 per cent of gross domestic product (GDP) and 60 per cent of public sector wages. The global drop in hydrocarbon prices in 2009 reduced Tripoli’s tax income and constrained economic growth. Substantial revenues from the energy sector together with a relatively small population mean that Libya has one of the highest GDPs per capita in Africa. Unfortunately, only a fraction of this reaches the lower tiers of society.

In March, the GNC passed a LD66bn ($51.6bn) budget for 2013, LD2bn lower than the record-breaking LD68bn budget passed in 2012. The most urgent concern for the interim government is the provision of basic services. The government’s priority is clear: water, power and roads are given an allocation of 60 per cent of capital expenditure in the 2013 budget. Housing, healthcare and education are the next sectors of importance.

Oil & Gas

Libya has the largest proven oil reserves in Africa, estimated to be about 46 billion barrels. Some 80 per cent of deposits are located in the Sirte Basin in the northeast.

The country has proven gas reserves of 53 trillion cubic feet, the fourth highest in Africa after Nigeria, Algeria and Egypt and some analysts believe that it may have twice that if unexplored areas are taken into account. In the past five years, the country’s gas production capacity has nearly doubled to almost 1 trillion cubic feet a year, due mainly to the commissioning of the Western desert gas project and the associated Greenstream export pipeline to Italy.

Libya surprised many analysts by restoring oil and gas production to near pre-war levels within a year of the end of the conflict. Crude oil production now stands at around 1.5 million barrels a day (b/d), just below the 1.6 million b/d produced in 2010. The Oil Ministry is now preparing two strategic plans, covering the upstream and downstream sectors, which could be completed by the end of 2013. Officials from the NTC have previously said the country could target production of 2.2 million b/d by 2015 and as much as 3 million b/d by 2020. However, the short term plan for state-owned National Oil Corporation (NOC) will be to increase production to 1.7 million b/d by the end of 2013.

How NOC itself will look over the next few years is also up for debate. In November, the newly appointed Oil Minister Abdelbari al-Arusi proposed a major reorganisation of the country’s oil and gas sector, with NOC to be split into two separate bodies to be headquartered in the capital, Tripoli and Benghazi in the east of the country. Upstream and downstream activities would also be split. The proposal is still being considered by the government, before being sent to the GNC.

Banking  

Libya’s banking infrastructure is very outdated and in desperate need of modernisation. There are no internet or telephone banking systems and customers are unable to get basic products such as mortgages.

The Central Bank is thought to be considering introducing online services for all banks. Libya urgently needs to expand and improve its infrastructure and liberalise the banking sector if it wants to attract foreign investment.

On 9 August 2010 Italian bank UniCredit won preliminary approval to open a subsidiary in Libya. Five international banks lost out, including three Gulf institutions – the UAE’s Emirates NBD and Mashreq, as well as Qatar Islamic Bank (QIB) – which had all been shortlisted for a licence.

The decision by the Central Bank to award only one out of three planned licences highlights Libya’s slow progress in opening up its banking sector to foreign institutions. 

Transport

Libya is investing heavily in its transportation infrastructure, which desperately needs upgrading after years of neglect.

Libya has $2.5bn-worth of airport projects under way. The country’s Civil Aviation Authority (CAA) is executing three major airport projects, including a $1.4bn revamp of Tripoli International airport.

An expansion of Sebha airport is also planned. Libya is not just investing in new infrastructure. The country’s national carrier, Libyan Airlines, has 15 aircraft on order, including seven Airbus A320s, four A350s and four A330s.

A merger between Libya’s two national carriers, Afriqiyah Airways and Libyan Airlines, is due to take place within the next two years.

There are also plans to build a metro network in Tripoli, but these are in the very early stages. A coastal railway to connect Libya with Tunisia has also been planned for some time.

Construction

The Libyan government has launched a large-scale tourism investment strategy that will add an estimated 2,000 hotel rooms in the country by September 2012.  The locations for the planned hotels are Tripoli’s Central Business District, Tripoli East and Tripoli West. The government is in the process of issuing banking and building licences to build and finance the projects.

In 2001, Libya hosted 1.1 million foreign tourists and this rose 34 per cent to 1.5 million in 2009. Independent statistics suggest that figure could increase to 2.5 million by 2015.  

The country also has a number of road projects planned or under way, although many have been placed on hold while the government and its subsidiaries, which dominate the sector, renegotiate contracts with international contractors.

The GNC is reviewing more than 12,000 contracts, worth an estimated $140bn that were awarded under the former regime. With payments on the contracts in arrears, many international companies are unwilling to return to Libya until their status is finalised, but their participation in the economy is essential to get the country back on its feet. The government has agreed to pay companies willing to resume operations 50 per cent of their dues before they start work and the remainder in two subsequent payments.

Power

In the decade up to 2010, power demand growth averaged 8-10 per cent a year, peaking at 5,759MW, driven by population growth and an economy just beginning to open up to investment. Installed capacity totalled 8,349MW in 2010. Of this, half was gas turbine technology, almost 30 per cent was combined-cycle technology, with the remainder comprising steam technology.

The Gaddafi regime forecast power demand would reach 12,600MW in 2015 and 15,000MW by 2020. More than 6,000MW of new capacity was planned or under construction, but delays were frequent. The outbreak of civil war brought all these projects to a halt. Eighteen months later, two problems remain for the power sector. Foreign companies are still negotiating their return to Libya. At the same time, protests at refineries have led to disruptions in gas feedstock and fuel oil supplies, hitting the national grid.

In December 2012, France’s Alstom was awarded a $320m contract by state-owned General Electricity Company of Libya (Gecol) to supply spare parts for 11 gas turbine units at five power plants in Tripoli, Benghazi, Khoms, Zawiya and Zuetina.