Turkey aims to sign $2.7 billion deal with Libya over Qaddafi-era compensation
ISTANBUL - Turkey plans to sign a $2.7 billion compensation agreement for work carried out in Libya before the 2011 civil war, a sector official said, seeking to revive stalled Turkish business operations in the conflict-ridden country.
Turkish businesses have long been active in Libya but their projects were disrupted when rebels overthrew Muammar Qaddafi nine years ago and have been hit again by continued fighting there.
A significant hurdle to reinvigorating investment has been uncertainty regarding unpaid debts. Muzaffer Aksoy, chairman of the Turkish-Libyan Business Council, said the two countries were close to signing a memorandum of understanding (MoU).
“Work on the MoU regarding the old contracts is reaching an end. The problem of unpaid debts, damages and a letter of guarantee will be solved,” Aksoy said.
Set to be signed in the coming weeks, the deal will encompass a $1 billion letter of guarantee, $500 million in damage to machinery and equipment and unpaid debts of $1.2 billion, he said.
With projects in Libya on hold because of fighting, the backlog of Turkish contract work in Libya amounts to $16 billion, including $400 million-$500 million for projects that have not begun, Aksoy said.
Turkey and Russia have become increasingly involved in the conflict, with Ankara backing the internationally recognised Government of National Accord in Tripoli, while Moscow has largely backed forces in eastern Libya led by Khalifa Haftar.
Haftar’s Libyan National Army said it would not let up in its military campaign against factions in Tripoli, appearing to reject a call by Russia and Turkey for a ceasefire.
Despite the disruption, Libyan-Turkish trade remains buoyant, with Turkish exports reaching $2 billion annually and imports at $350 million, Aksoy said.
However, Turkish contractors with projects in Libya had not been able to travel to the country since April because of the fighting.
“New contracts had been signed, projects like power stations, housing, business centres. Signatures have been [obtained] for letters of credit for some of these. However, since April they have not been able to go for security reasons,” Aksoy said.