Libyan projects: Working against the clock

19 October 2007

With the 40th anniversary of the creation of the Libyan republic approaching, Tripoli is struggling to complete its project schedule.

Driving through Tripoli, the reminders of the 1969 revolution and its leader are incessant. The capital’s roads are lined with giant billboards depicting the omnipresent Colonel Muammar Gaddafi often shown alongside the number 38 to represent, in years, the duration of his rule.

The patriotic displays will be far grander in 2009 when Libya celebrates the 40th anniversary of the coup d’etat, which ended the reign of King Idris I. But fireworks and billboards is not all that Tripoli is hoping to have to show for its jubilee. Ask most contractors in Libya what the deadline for the projects they are working on is and you are likely to be astounded by the unanimity of their responses. The date on everyone’s lips is 1 September 2009, the 40th anniversary of the abolition of the monarchy and the creation of the Libyan Arab Republic.

Having done very little in the way of building infrastructure for the past 38 years, Tripoli is now making up for lost time. It has set itself the gargantuan task of completing a wide range of projects across various sectors in just two years.

One sector that has been exempted from the deadline is oil and gas. ‘Oil and gas cannot be put in the same category there is prerequisite engineering and technology needed,’ says a senior National Oil Corporation executive. ‘It cannot be done, it is humanly impossible.’

Major projects in the sector, therefore, will not be affected, but smaller projects may be completed in time. ‘If there are ongoing projects which will normally meet that date, then yes,’ he says. Apart from this, it seems no area will remain untouched. The project list is endless. It includes power and desalination plants, tourism developments, hotels, housing units, airports, harbours and roads, to name a few.

‘Libya was under the cloud of sanctions and out of the global community for so long,’ says a project manager of a foreign construction company. ‘Now, they want to turn the place into Dubai in two years. It is a pretty tall order.’ And while contractors in the Jamahiriya may cite the date of the anniversary as their deadline, many also snigger when asked whether it is a realistic target. ‘They are saying all projects should be completed by 1 September 2009,’ says the general manager of a foreign engineering company. ‘Even Gecol [General Electricity Company of Libya] is saying all power projects should be completed by this date. But this is physically not possible at this stage. It is not possible within two years.’


It is not that Tripoli does not have the money to make it happen oil revenues reached $31,500 million in 2006 but based on past performance, Libya is not known for its ability to take on mega-projects and deliver them on time.

Significantly, there does not appear to be one unified masterplan to guide the country’s rapid development. Instead, each ministry has drawn up its own wish list of projects and is pursuing it quite independently.

Global material shortages are likely to impact the government’s plans. ‘Every contractor is worrying about shortages of construction materials: cement, steel bars, aggregates, sand and stone,’ says the general manager. ‘This will be one of the biggest problems for the executions of all projects.’

This is likely to be felt only once construction actually begins. ‘Now there is no lack of material,’ says a construction firm’s business manager. ‘But starting from February 2008, there will be a big shortage. Now everyone is in the mobilisation phase.’ Construction material will have to be imported in large quantities, a situation complicated by global demand outweighing supply.

In addition to shortages and high material costs, there are not enough companies to carry out the work. Eager to make the most of the opportunities on offer, some contractors have overestimated their capabilities and overstretched themselves. This has, in turn, raised questions about the quality of the work being delivered.

‘Companies have signed too many big projects and they don’t know how to handle it,’ says the business manager. ‘Because of the lack of companies, the work is being given to whoever is capable.’ Strict rules governing the entry of foreign labourers into Libya mean that contractors are finding bringing workers into the country and retaining them difficult.

‘We’re not allowed to bring in Egyptian labour,’ says the business manager. ‘The borders have been closed [to labourers] for a few weeks, so the price of Egyptian labour has gone up. Indian labourers are all going to Qatar and Dubai and the cost of labour from the Philippines is sky high right now.’ This is not the last of the problems contractors are facing. Last year, Tripoli issued decision 443, which requires foreign companies to form joint ventures with local companies if they wish to pursue business opportunities in Libya. As a result, many projects have been awarded to local firms, but foreign companies have been allocated the more complex work. ‘After [decision] 443, most projects have been distributed to Libyan companies,’ says the head of a foreign construction company. ‘The companies that have already been nominated for projects are now searching for foreign companies capable of executing them as subcontractors. Any foreign company does not like to work in partnership.’ Tripoli seems to have recognised that enforcing the decision now would only result in major delays to its projects. And so it has begun issuing decisions to exempt foreign companies from decision 443.

‘There was a time when they were very serious and were running after you to take a local partner,’ says the business manager. ‘Now they want performance, so they don’t really care.’

All a foreign company needs to do is demonstrate that the project it is working on is urgent. ‘Now 90 per cent of projects are urgent,’ he says. ‘If it is an urgent project, the client will even go and register your company for you.’

Officially, decision 443 still stands, but the vigour with which it is enforced varies. ‘There has been a dispensation extending the time for foreign companies to organise themselves to the end of 2007,’ says a Tripoli-based consultant. ‘Companies that have been here a long time have not yet complied, but newcomers have complied because it is difficult, if not impossible, to register a branch afresh.’ So what work has started already and how much progress has been made? The accounts from those based in the country vary. ‘Libya is a construction site,’ says the building company head. But it may all be too little too late. ‘If they had started aggressively one year ago, they would have more time.’

Others say not much is happening. ‘There has been no movement on new projects, says the business manager. ‘There are big posters and billboards of new projects, but nothing has started. There must be a miracle for all of it to finish.’

So far, the most visible transformation has been the levelling of many areas of Tripoli to clear the ground for new infrastructure. ‘All the old buildings have been demolished,’ he says. ‘About 20 kilometres on the coast from Tajura to Regatta [residential village] have been demolished.’

Not everyone is as pessimistic. ‘It is true there has been an enormous amount of clearance and nothing has physically gone up yet, but it is early days,’ says the consultant.

‘From early next year you will see a lot of cranes in Tripoli,’ says the general manager of the engineering company. ‘You can easily feel that a construction boom has already started in Tripoli.’

Airport construction

Ground has in fact already been broken on several projects. Work on three new airports in Tripoli, Benghazi and Sebha has started. Libya watchers were surprised by how quickly the contracts on the projects were awarded, testament to the political will to see them completed in time. When fully operational, Tripoli International Airport will be able to handle 20 million passengers a year, Benina Airport in Benghazi will handle 5 million and Sebha will have capacity of 3 million.

But even the airports are unlikely to be fully completed two years from now. ‘They will not be finished 85 or 90 per cent of the work will be completed,’ says a source close to the projects. ‘The terminals and towers will be finished, but some things which do not affect the opening of the airport will be delayed.’ This is certainly one way for the country to meet the deadline. Projects will be finished, but not completely finished. ‘Some very specific parts of projects can be completed, but after the opening ceremony, work may go on until it is finished,’ says the construction company head. It is expected that while many of the planned hotels will have their soft openings in September 2009, they will not be fully operational for some time after that.

Libya may be taking on more than it can reasonably deliver in the two-year period it has set itself as a target. It is unlikely that 1 September 2009 will be as great a success as Tripoli would like everyone to believe. ‘There is a party that needs to happen, but I have my doubts about whether expectations will be met,’ says the foreign project manager.

Whether all of Libya’s plans materialise in time for the anniversary of the revolution is perhaps less important than the fact that 38 years of neglect seem to be coming to an end. Tripoli has finally taken the decision to make projects happen.

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications