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Brooke F Adams  08/07/2006 02:30:34 PM  From  DB/Inbox:  Brooke F Adams

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UNCLAS        TRIPOLI 00378

SIPDIS
CXCAIRO:
    ACTION: ECON
    INFO:   POL IPS FCS PA FAS DCM AMB AID MGT

DISSEMINATION: ECON
CHARGE: PROG

VZCZCCRO813
RR RUEHEG
DE RUEHTRO #0378/01 2121416
ZNR UUUUU ZZH
R 311416Z JUL 06
FM AMEMBASSY TRIPOLI
TO RUEHC/SECSTATE WASHDC 1051
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUEHTRO/AMEMBASSY TRIPOLI 1180

UNCLAS SECTION 01 OF 03 TRIPOLI 000378 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON LY PGOV
SUBJECT: LIBYA COMMERCIAL NEWS SUMMARY-JUNE/JULY, 2006 
 
 
---------------------------- 
 
Oil and Gas Sector 
 
---------------------------- 
 
¶1. (SBU) Repsol said it will increase its production in Libya by 
66%, reaching 415,000 barrels per day by 2010.  Following the 
discovery of 21 wells in the last three years, Repsol's reserves 
in Libya will increase an estimated 10% over the next five 
years. Repsol, currently the biggest foreign company in Libya 
handling 15% of its oil production, is investing about 5 billion 
dollars in the country.(Source: 
http://www.akhbar-libya.com/HYPERLINK 
"http://www.akhbar-libya.com/"www.akhbar-liby a.com, 6/21) 
 
¶2. (SBU) The CEO of the Italian ERG Group said that his company 
is hoping to increase its share of service stations in Italy and 
is expecting Libya to reach a decision regarding the sale of 
Tamoil in Europe by the end of this year. According to current 
market evaluation, Tamoil is worth about 2 billion dollars. 
(Source: Al Quds Al Arabi, 6/24) 
 
¶3. (SBU) Shukri Ghanem, chairman of the National Oil 
Corporation, met with the French minister of Industry and Energy 
to discuss ongoing oil and gas cooperation between the two 
countries. The French minister stressed his country's wish to 
import gas from Libya to satisfy its growing needs. The role of 
French companies in the field of manufacture of petrochemicals 
and fertilizers was also discussed. (Source: 
http://www.manara.org/HYPERLINK 
"http://www.manara.org/"www.manara.org, 6/27) 
 
¶4. (SBU) The Libyan government has given permission to Sirt Oil 
Company to complete the execution of two gas pipelines leading 
from Tripoli to Khums and Tripoli to Milleta via international 
bidding. The Tripoli-Khums line will provide 106 million cubic 
meters of gas per day to South Tripoli Electricity Power Station 
and to the Suk Elkhamis Cement Factory, as well as supply 
households in Tripoli with natural gas.  The second pipeline 
aims to provide some 200 million cubic feet of gas per day to 
the Zawiya Power Station. (Source: Al Quds Al Arabi, 7/13) 
 
--------------------------------------------- ------------------ 
 
Construction and Infrastructure Development 
 
--------------------------------------------- ------------------- 
 
¶5. (SBU) The Libyan government announced plans to allocate 765 
million dollars to develop the iron and steel industry over the 
next three years. The GOL plans to raise production capacity of 
the state-owned Misurata Iron & Steel Company to 2 million tons 
annually. New leadership may bring increased resources to the 
company, which underwent a failed attempt at privatization two 
years ago.  (Source: http://www.aljazeera.net/HYPERLINK 
"http://www.aljazeera.net/"www.Aljazeera.net, 6/8) 
 
¶6. (SBU) According to Maal & Amaal newspaper [Money & Business], 
Libya imported about 100,000 tons of cement in June. A source 
from the National Company for Development and Real Estate and 
Tourism Investment said that the company is executing a contract 
to import 4 million more tons of cement to cover a shortage in 
the market.  (Source: HYPERLINK 
"http://www.ljbc.net"www.ljbc.net,  6/18) 
 
¶7. (SBU) Accompanied by a representative from the US based 
Valmont company, Libyan leader Moammar Qaddafi toured Qararat 
al-Qataf in Wadi Sawf Ajeen, one of the agricultural investment 
areas cultivated through water of the Great Man-Made River 
Project (GMMRP). Valmont demonstrated its own technology being 
implemented at the GMMRP, including the use of axel irrigation 
equipment. (Source: HYPERLINK 
"http://www.ljbc.net/"www.ljbc.net, 6/26) 
 
¶8. (SBU) The Secretary of the People's Committee of the Railway 
Company signed a contract to construct 34 concrete bridges at a 
value of 40 million Libyan dinars to be built over 18 months 
from Tripoli to Misurata,  covering 231 km. The contract was 
signed with the Turkish based Mitch Company. Libya is the only 
North African country without a railway system. The designated 
routes are part of a planned network to link Libya to the rest 
of Africa. (Source: HYPERLINK 
"http://www.akhbar-libya.com/"www.akhbar-liby a.com,  6/29). 
 
¶9. (SBU) Several Libyan cabinet members visited the eastern 
region of the country and outlined plans to further develop its 
infrastructure. Highlights include the planned construction of a 
new port at Ras El-Hilal, additional pipe networks from 
desalinization plants, 10,000 new housing units, extending 
private loans worth up to 257 million Libyan dinars to start 
small businesses, construction of new bridges, and installation 
of a secondary runway at Tubrouk airport.   (Source: 
http://www.manara.org/HYPERLINK 
"http://www.manara.org"www.manara.org, 7/02) 
 
¶10. (SBU) The Assistant Secretary of the General People's 
Committee announced the planned construction of two new 
skyscrapers in Tripoli and Benghazi. The GPC created a committee 
to complete measures to incorporate the company that will 
execute the skyscrapers project,  at an estimated cost of 500 
million Libyan dinars. ( Source: HYPERLINK 
"http://www..net"www.ljbc.net, 7/24) 
 
---------------------------------------- 
 
Foreign and US Investment 
 
---------------------------------------- 
 
¶11. (SBU) The Libya General Post & Telecommunications Company 
(GPTC) organized its Second Annual Exhibition for 
Telecommunications & Information Technology in mid-July. IBM, 
NCR, Microsoft, Hewlett Packard, Oracle and Motorola were 
represented at the conference. A conversation with a senior 
manager from GPTC revealed that it has reached an agreement with 
Oracle after more than a year of negotiation, mainly due to 
Oracle's readiness to provide training to Libyans in the field. 
The source from GPTC also stated that it is their policy to 
engage companies bidding for projects or tenders including 
training. "The model will be adopted with anyone wishing to do 
business with GPTC." 
 
¶12. (SBU) Afriqiya Airlines signed a memorandum of understanding 
to buy up to 14 A-320 and six A-330 airplanes in a deal worth 
1.7 billion USD. The head of the Libyan African investment fund, 
Bashir Saleh, said that the aim is "to have a partnership with 
Europe to develop Africa in all sectors: aviation, construction 
and tourism. Our goal is development in Africa." The chairman of 
Afirqiya, Sabri Shadi, said that the purchase "is a new 
beginning for aviation and transportation in Libya, and I think 
we will see more demand for new airplanes from Airbus or 
Boeing." Delivery of the planes is set to start in 2007. 
(Source: HYPERLINK 
"http://www.akhbar-libya.com"www.akhbar-libya .com, 7/18 -- See 
also Septel.) 
 
¶13. (SBU) In an effort to increase foreign investment by 
streamlining the process for investors, the Secretary of 
Economy, Trade & Investment, Al-Tayeb Al-Safi, announced the 
creation of a "one window" policy where investors will be 
directed to the Foreign Investment Encouragement Board to 
finalize all of their paperwork. The Board will also serve as a 
"one-stop" source of information for those seeking to invest in 
Libya. Similar announcements have been made in the past on this 
issue. (Source: Libya Alyoum, 6/18 ) 
 
------------------- 
 
Labor Market 
 
------------------- 
 
 ¶14. (SBU)  In a series of speeches broadcast on the official 
JANA news agency leading up to the commemoration of the 37th 
anniversary of the Al-Fatah Revolution, Qaddafi addressed 
professional organizations including economists, doctors, and 
engineers,  announcing his objection to foreign employment in 
the private sector at the expense of the Libyan people. He 
underlined that the issue of employing Libyans is linked to the 
issues of social justice, freedom and dignity of Libyans.  He 
specifically noted that future work on the Great Man-Made River 
Project, a $20 billion, 20-year-old venture to pump water from 
beneath the Sahara to northern cities, should be done almost 
exclusively by Libyans. "The new phase which starts as of today 
requires that nothing be built by foreigners, and whatever is 
built in Libya will be by Libyans, or else nothing would be 
built, because we do not want to deceive ourselves." It is 
important to watch for future GPC proclamations to study the 
true effect of the speech.  In a speech this past January, 
Qaddafi called for the hiring foreign companies to build the 
country, allowing the opening of branches of foreign banks 
"because they have capital to invest" This speech also does not 
seem to coincide with recent government regulations to 
facilitate banking transactions and reduce foreign investors 
costs. 
 
¶15. The GOL said it is taking steps to reorganize and reduce the 
number of employees in the public sector, which currently stands 
at 900,000.  The government says it is planning to provide loans 
to public sector employees to set up private businesses as an 
incentive for early retirement. The government announced a 
re-distribution of the workforce within the public sector, with 
priority given to the tourism sector. (Source: HYPERLINK 
"http://www.ljbc.net"www.ljbc.net,  06/07) 
 
¶16. The Secretary of Manpower, Training, and Employment, Matug 
Matug, officially announced the termination of Salary Law No.15, 
which placed strict salary caps on state employees in all 
sectors. The law, passed in early 1980s, has been gradually 
phased out over the passed several years in some institutions, 
such as Tripoli Medical Center, in an effort to keep qualified 
doctors in the country. Effective July 1, public companies can 
now officially set the wages of their employees. (Source: 
Tripoli Post,  6/24) 
¶17. Libyan businessman in the tourism sector and officials from 
the GOL took part in a contentious meeting on foreign investment 
in tourism, led by the Secretary of the General People's 
Congress (Prime Minister), ElBaghdadi ElMahmoudi.  Husni Bey, 
deputy chairman of the Libyan Businessmen Council, argued that 
government policies favored foreign investors, citing the fact 
that Libyan tour companies were barred from providing services 
to tourists during last March's eclipse event. The Secretary of 
Tourism, Ammar Eltayif, argued that Libyans should be given the 
same incentives as foreign companies  such as tax and customs 
exemptions. He also emphasized the need for investment in the 
hotel sector, citing that only 2000 rooms in Tripoli  are 
suitable for tourism lodging. He also pointed out that only 30% 
of the people working in the tourism industry are Libyan. 
(Source: Al Quds Al Arabi, 7/9) 
 
------------------------ 
 
Stock Market 
 
----------------------- 
 
¶18. The capital of the Libyan stock market has been set to 20 
million Libyan dinars and 2 million shares. The value will be 
deducted from this year's annual budget. The Libyan government 
has made it mandatory for all public and private companies with 
a capital of more than 1 million dinars to offer their shares in 
the stock market. The Libyan stock market was established 
approximately two years ago through the Central Bank of Libya. 
Shares in a number of public companies were offered including 
the shares of the biggest cement company valued at 600 million 
dinars. (Source: Al Quds Al Arabi, 6/10) 
BERRY