“We have lost 40 years” is a familiar refrain in Libya. It is a reference to the decades of under-investment in the country’s now crumbling infrastructure. But the investment now under way shows Tripoli is trying to make up for lost time.
Since 2003, when the UN voted to end 11 years of sanctions on trading with Libya, the number of projects to upgrade housing, utilities, roads and airports has grown from virtually nothing to several thousand.
Many of those projects date back to 2007, when plans were put in place to mark the 40th anniversary of the revolution that brought Muammar Gaddafi to power with a series of major public building projects.
Unfortunately for the regime, not all projects will be ready on time. Most are either still in the planning stage or under construction.
The difficulty in realising the ambitious plans highlights the obstacles to doing business in Libya. Problems in securing visas for construction workers, an opaque bureaucracy and delays in paying contractors are the three main problems cited by construction companies.
Even in the face of these challenges, Tripoli’s multi-billion-dollar spending plans are attracting international firms, thanks to the recession in other markets around the world.
“We started the bidding process for our project in mid 2008 at the height of the global economic boom,” says the manager of one Tripoli construction project. “We were calling companies to see if they were interested in tendering for packages but they did not return our calls. Now the chairmen of the same companies are coming to Libya looking for business.”
One of the biggest projects conceived in 2007, and one that has attracted a wide range of international firms, is the construction of a new airport for Tripoli. The progress on the project also highlights many of the issues facing companies working in the country.
Contracts were signed between July and October 2007, with a completion date set for 1 September 2009.
France’s Aeroports de Paris was appointed as designer, supervisor and project manager for the project. A joint venture of Brazil’s Ode-brecht, Athens-based Consolidated Contractors Company (CCC) and Turkey’s TAV was awarded the contract to build two passenger terminals under a ‘cost-plus’ agreement, which offers some protection to contractors against rising costs. Odebrecht holds 50 per cent of the joint venture and the other firms have 25 per cent each.
In November 2008, another French firm, Vinci Construction, won the contract to build the control tower, in a consortium with the Libyan Development Company (Lidco), and a joint venture of Germany’s Strabag and Lidco is building a new highway to the airport. Bids for the apron, taxiway and runway packages are still being evaluated.
Although the government identified Tripoli airport as a ‘fast track’ project in 2007, leading to construction work starting before the design was fully developed, the project will still not be finished for at least another two years.
The cost of the project has also been rising, leading to an intense round of renegotiations.
The airport’s west terminal will now be built without the interior being fully fitted out, while the contract model is likely to be changed to a ‘remeasurement’ contract, under which the contractor is paid for each unit of work completed.
With few skilled local subcontractors to work on specialist construction projects, contractors rely on foreign labour. But as Tripoli is reluctant to issue visas to people from certain countries, including India and Pakistan, for fear of being infiltrated by Islamic militants, one of the major challenges has been manpower.
In May, a team of 17 immigration officials set up an office on the airport construction site to try to ease the visa process for the estimated 10,000 workers that will be needed when the level of activity on the project hits a peak next year. One-year visas are typically issued, but multi-entry visas are difficult to secure, making the management of human resources on the airport project complex.
For foreign construction companies wanting to work in Libya, the advice from experienced companies is to be patient. “Don’t take too much on at first, and be open minded,” says Mongi Zeglam, commercial delegate for US logistics company BDP International, which opened a Tripoli office in August 2008 in antici-pation of a rise in industrial projects such as cement and steel factories.
Until the country can ensure a swifter visa and payment processes, taking on major construction contracts in Libya will not be for the risk averse, but some say the situation is improving. “With experience, Libya is getting better every day,” says one foreign contractor.