Libya considers sale of nine state firms
Tripoli, October 29, 2013
Libya is considering the sale of a steel plant and eight other state companies as part of efforts to overhaul an inefficient industrial sector, a government minister said.
Outside its wealthy oil sector, Libya's economy is hampered by inefficiency, a lack of private capital and bureaucracy, the legacy of decades of state control during the era of Muammar Gaddafi.
Since Gaddafi's overthrow in 2011, the government has been trying to convince local and foreign investors to inject fresh funds and expertise into ailing industrial plants, some of which are working well below capacity or have been closed.
So far it has had little success, partly because of fighting among rival tribal militias and attacks by Islamist militants - security is so bad that the prime minister was briefly kidnapped earlier this month.
Political infighting has complicated plans to overhaul legalisation and ready firms for sale; strikes at oilfields and ports have hurt oil and gas production, disrupting power supplies to households and companies.
But in a first, concrete step towards privatisation, the government has launched a process to estimate the value and performance of nine firms which could be sold, Industry Minister Suleiman al-Fitouri said in an interview as part of the Reuters Middle East Investment Summit.
Among the firms are the Misrata steel mill company, a soft drinks firm and a factory for truck trailers in Tajoura near Tripoli, he said.
"We need to evaluate first, then we make the decision," Fitouri said. "I think the valuation will take some time, maybe three months."
Misrata-based Libyan Iron and Steel Co (Lisco) is one of north Africa's largest steelmakers, with an annual capacity during normal times of 1.6 million tonnes. Power shortages have forced it to slash output and shut one of its two steel melting shops, company officials told Reuters in September.
Investors could buy up to 100 per cent of firms on sale or operate them under public-private partnerships, Fitouri said without being more specific.
The government would also consider reviving efforts to sell the Abu Kammash petrochemicals plant, which has been shut down. "There were some (bidding) rounds for partnership or full investment but these were not successful," he said.
The Gaddafi government originally planned to sell the company and list it on the stock market.
Fitouri acknowledged that foreign investors were reluctant to enter Libya because of the security situation, but said some were still expressing interest.
To improve legal security, a major concern for foreign firms, the government will prepare a new investment law to bring legal protections in line with international standards, he said without providing details.
Another potential problem for Libya's privatisation plans is that investors may want to trim companies' workforces - a politically sensitive step which could be particularly risky because of the volatile security environment.-Reuters