Libya: Turkey is leading the way on reconstruction projects

By Sarah Vernhes
Posted on Monday, 1 November 2021 12:01, updated on Monday, 2 May 2022 11:06

Libya’s prime minister Abdelhamid Dabaiba at Turkish Enka power plant’s construction site in Tripoli in May 2021. Muhammed Ertima/ANADOLU AGENCY/AFP

Several international groups are eyeing the Libyan market, which is worth an estimated $111bn. Ankara is currently ahead of its Italian, Chinese and French competitors, but political instability could change the situation.

Airports, roads, power plants… The list of infrastructure projects is growing in Libya. In this country ravaged by conflict ever since Muammar Gaddafi’s regime fell in 2011, the reconstruction market is now worth almost $111bn.

These juicy contracts are whetting international appetites even though the top priority is to recommence work, which the revolution halted, on old construction sites. Prime Minister Abdelhamid Dbeibeh made this announcement on 27 August when he launched the Reviving Life development programme.

It is very difficult to go from Tripoli to Benghazi and to obtain the necessary travel permits. The country is still very much split into two parts.

However, there are several obstacles dampening the enthusiasm of the international groups. Firstly, the state is still operating without a budget, and the National Oil Company, whose oil is the country’s main source of revenue, is embroiled in political battles. Secondly, the hope generated by the establishment of the interim Government of National Unity (GNU) in March is fading, as the outcome of the December elections becomes more uncertain.

On the ground, divisions remain extremely palpable. “It is very difficult to go from Tripoli to Benghazi and to obtain the necessary travel permits. The country is still very much split into two parts,” says a French businessman in Libya. According to Libyan economist Suleiman Alshahomy, “the current instability is too great to allow foreign companies to return.”

A government under influence

However, this situation has allowed Turkey and its groups to do well. In the wake of 2011, it had left nearly $29bn in unfinished projects. Ankara retains a stronghold on the GNU, of which Dbeibeh is an ally. It had supported Fayez al-Sarraj’s former government by taking a position in the western part of the country in 2009.

This alliance was finalised with the signing of the bilateral maritime, defence and commercial agreements. In Tripoli and Misrata, delegations of Turkish businessmen followed one another, and companies signed memorandums of understanding (MoUs) in rapid succession, in particular, with the giant Albayrak, which is close to the Ankara government.

The influential Foreign Economic Relations Board of Turkey (Deik) has been acting as a bridgehead and clearing the way. Its chairman, Murtaza Karanfil, is operating in Libya through his conglomerate, Karanfil Group. In February, Karanfil, who is active in construction, inaugurated one of the largest concrete plants in the country, for a total investment of $50m.

Turkish groups are also making their mark by building power stations that are managed by the General Electricity Company of Libya (Gecol). Given the repeated power cuts, one of the government’s top priorities is to improve and repair the country’s electricity network.

In June, Enka, another Turkish construction giant, began to work on the 671 MW power station located west of Tripoli, in partnership with Germany’s Siemens Energy, with whom it is also undertaking the construction of a 650 MW solar power station in Misrata.

The two projects cost €700m ($810m). A third Turkish company, Rönesans Holding – which is led by Erman llicak, who is reputedly close to President Recep Tayyip Erdogan – has been entrusted with a project to build three other power stations.

Beijing’s great return

“China, along with Turkey, will be one of the big winners when it comes to reviving old contracts and the reconstruction market,” says Alshahomy. Xi Jinping has remained neutral in the conflict between the western and eastern camps, so that he can protect Chinese economic interests in the region. According to the economist, “Libya represents an important market for China, as it forms part of its strategy of economic deployment in Africa.”

Beijing was very active before the revolution and, in 2011, had a turnover of nearly $18.8bn in Libya. The state-owned China State Construction Engineering (CSCE) group is negotiating the relaunch of construction projects in Benghazi, including 20,000 homes. It had planned to invest a total of $2.67bn in these projects, only half of which have been completed.

China, in collaboration with its state-owned groups National Pipeline Corporate, Sinopec Group and China National Offshore Oil Corporation, was also building oil infrastructure.

Cairo repositioning itself in the west

Cairo, which has joined forces with the eastern general, Khalifa Haftar, is hoping to regain a foothold in this neighbouring market. President Abdel Fattah al-Sissi thus re-established the channels of communication with the Tripoli government back in April.

Egypt’s objective is to complete the 585km highway project linking Salloum to Benghazi, which costs an estimated $190.6m.

Despite the large number of business delegations, Egyptian groups will also have to wait until after the elections have taken place before venturing into the country, as Nasser Bayan, head of the Egyptian-Libyan Chamber of Commerce, said on 22 August.

Rome and Paris struggling

In spite of its good relations with the GNU and Misrata’s powerful businessmen, Italy is struggling to weigh in against Turkey. Nevertheless, Rome has resurrected its 400km coastal road project linking Musaid to Al Marj, in the north-eastern part of the country. In 2008, Gaddafi and Silvio Berlusconi signed off on this €963m ($1.1bn) project – financed by the Italian government – which was seen as compensation for Rome’s colonial past. The works, announced for spring 2022, will be piloted by the Italian group Salini Impregilo Group.

As for the French groups, led by the construction group Vinci, they remain in the background, for the moment. Although the Medef is actively holding meetings to allow firms to prepare for their return to the Libyan market, final details are still pending.

Beyond Ankara’s growing influence in Tripolitania, this withdrawal is also symptomatic of the diplomatic policy of the Élysée, which has supported General Haftar, who exerts influence outside Tripoli and Misrata, especially in Cyrenaica, in regions that have not launched such important projects.

The influential builder Albayrak

Already active on the continent, the Turkish construction giant Albayrak Group has launched its offensive on the Libyan markets. The Istanbul-based conglomerate, which is owned by the Albayrak family and is close to President Erdogan, is chaired by Omer Bolat, former president of the Islamist employers’ organisation Müsiad.

In August, in the wake of the alliance forged between Ankara and the Tripoli government following Haftar’s attack on Tripoli in 2019, Albayrak Group – as well as its compatriot Rönesans Holding – submitted an application in the hopes of winning the contract to build a new terminal at Tripoli International Airport.

The Libyan Civil Aviation Authority had estimated that the airport expansion would cost a total of $2.1bn. Albayrak is also negotiating the Misrata Free Zone (MFZ) port terminals’ concession contract. This is a strategic move, given that the MFZ is Libya’s most important logistics hub.

Understand Africa's tomorrow... today

We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.

View subscription options