Turkey plans to sign a preliminary $2.7 billion compensation deal 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 projects were disrupted by turmoil when rebels overthrew Muammar Gaddafi nine years ago and have been hit again by ongoing fighting.
A significant hurdle to reinvigorating investment is uncertainty regarding unpaid debts. Muzaffer Aksoy, chairman of the Turkish-Libyan Business Council, said the countries were close to signing a Memorandum of Understanding (MoU).
“Work on the MoU regarding old contracts is reaching an end. The problem of unpaid debts, damages and a letter of guarantee will be solved,” Aksoy told Reuters.
Set to be signed later this month or in February, the deal will encompass a $1 billion letter of guarantee, $500 million in damages to machinery and equipment and unpaid debts of $1.2 billion, he said.
With current projects in Libya on hold due to fighting, the backlog of Turkish contract work in Libya is $16 billion, including $400-500 million for projects not yet started, Aksoy added.
Turkey and Russia are increasingly involved in the conflict, with Ankara backing the internationally recognised Government of National Accord (GNA) in Tripoli, while Moscow largely backs forces in East Libya led by Khalifa Haftar.
Haftar’s forces would not let up in a military campaign against rival 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.
Turkish contractors with projects in Libya had not been able to travel to the country since April due to fighting.
“New contracts were signed: projects like power stations, housing, business centres. Signatures for letters of credit for some of these concluded. Since April they have not been able to go for security reasons,” Aksoy said.