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Libya
The new gateway to Africa, open for business [ go to first page of report ]
Introduction - Libya and The African Union - Macroeconomic outlook -
Attracting foreign capital - Industry - Untapped energy resources - Bank liberalisation -
Tourism: A promising sector - Transport and Infrastructure


Leaving aside the oil sector, two infrastructure projects have dragged the interest of the Libyan Government and with it a big bulk of the funds of the development program budgeted for the next years. We are talking about the Great Man Made River Project and the Railways project.
The main purpose of the Great Man Made River Project, the pride and joy of the Al Fatah Revolution is to convey the underground water of the southeastern and southwestern desert area in Libya to the coastal area of the Mediterranean Sea. The project would provide drinking water and water for agriculture and industries to the Mediterranean cities and areas along the waterway. The project has been recorded in the Guinness Book of Records (1993) with respect to cost, period of construction, number of personnel involved, equipment and technology used. Dong Ah, a Korean company, was the main contractor for the first half of the project, valued at US$ 10.2 billion, and is in charge of the planning, construction and operation.
The first phase of the project was commissioned in 1990, and completed in November 1994. The system is able to supply two million square metres of water per day to Benghazi, the second-largest city in Libya in the east half of the Mediterranean coast. The second phase of the project completed the water supply section for the main city of Tripoli, and it was finished in September 2000. The pipeline is 1,670km long and 4m in diameter. Costing $6.16 billion, it will bring 2.5 million tonnes of water to Tripoli. Another system brings one million square metres per day to the Jeffara plain has been completed.
The third of the five phases of the project is carrying a considerable delay due to several reasons, but recent announcements have shown that the works will start soon: SNC-Lavalin, a Canadian construction and engineering company, has been awarded a US$ 310 million contract to renovate and start up a Great Man Made River pipe plant at Sarir in south- eastern Libya. The project is to manufacture 15,000 new pipe sections that will be used to build the extension pipelines planned for the third phase. SNC-Lavalin was due to start work in June 2003 and expects to take 20 months. The company will also use some of the new pipe sections to repair parts of the 1,500-km first phase pipeline that runs from the Sarir and Tazerbo well-fields to Benghazi, and which have fallen victim to unexpected corrosion. Meanwhile, Nippon Koei of Japan is reported to be carrying out preliminary design work for the third phase. Tenders are expected to be issued in 2004, five years behind schedule. Nonetheless, with an estimated price tag of US$ 2 billion for the third phase, foreign contractors are understandingly eager to get a share of the work.
The final phase would connect the first and second phases, and there will be installed two power stations to pump the one million square metres/ day of water. It will also involve the incorporation of two additional well fields. There will be a number of reservoirs constructed that will be refilled in periods of low-water demand.
The delays, construction difficulties and gigantic cost of the project have raised reasonable doubts about the efficiency and profitability of the overall project. Is the water need of the country so huge? Wouldn't several water desalination plants at a sensibly lower cost satisfy the water demand?
The questions are recurrent, but the Government goes ahead with the project, now directed by a former Prime Minister, and designs its policies accordingly: "We would like to focus very much in investment projects using this water, basically agriculture and animal stock projects. For this sector it has been allocated already a high percentage of the development funds. For this reason, we are concluding several agreements with foreign companies that are interested in investing in these projects, like for example in the Benghazi plains," explains Dr. Baghdadi Mahmudi, Deputy Secretary General of the General People's Committee for Production Affairs.

Dr. Baghdadi Mahmudi

And finally, what counts for the Leader of the Revolution, first supporter of the project, and the Libyan people is the magnificence of one of the most important engineering constructions in the world, that has brought abundant fresh water to a land that since immemorial times has suffered from water shortages and limited agriculture.

Linking Libya to Africa
The second pharaohnic project, inspired by Col. Gadaffi himself, is giving an answer to an everlasting problem in such an big country: transportation and communications with neighbouring countries. The Railways project plans to build around 3,170 km. of railway in two main directions: one starting at the Tunisian border, in the east, to the Egyptian border in the west, throughout the coast, which has a length of about 2,100 km. The other one will extend from Syrte in the north to Sabbah in the south, throughout the desert, with an approximate length of about 1,000 km.

This "T" like network has a final aim that is to play a key role in a big corridor that will connect Europe with Africa: From Spain to Morocco, Algeria, Tunisia, Libya, Niger, Nigeria, etc. "This will be very useful and profitable, because it will connect the countries producing raw materials and agriculture products with the industrialised countries in Europe. I think this will reduce significantly transportation costs. It will also connect the entire Arab world, from Morocco to Saudi Arabia and the Gulf countries," explains Eng. Abdussamad Ali, chairman of the Committee created to manage the Railways construction project.

Eng. Abdussamad Ali

The Libyan Leader does not hide his keenness on the project and has reiterated the importance of the proposed Trans-Saharan railway line, saying it would facilitate the movement of peoples and goods between countries bordering the Sahara desert. "We need to catch up on the time wasted and reduce the distances separating us," he underlined in one of his speeches, where he described the project as "strategic"' and with high priority, at the same level as his multi-billion project of the Great Man Made River Project.
The construction stage of the Railways project might take from five to seven years, in words of Eng. Abdussamad Ali, and the engineering works will be awarded to either foreign or local companies through a bid process and following a particular scheme, the Build, Operations and Transfer (BOT). "This means that we divide the project in different sections, from one location to another, one or two thousand kms., and the company or group of companies can do everything by themselves: infrastructure, signalisation, station construction, locomotives, and even the railway management for that section. The company will benefit from all the revenues coming from this investment and the property of all will revert to the Government in let's say 30 or 50 years. This period of time depends on the negotiation," explains Eng. Abdussamad Ali.
The question of the profitability in a US$ 10 billion project is unavoidable, especially when we talk about a transportation method as classic as the railways in a country as vast as Libya. Eng. Abdussamad Ali justifies the magnitude of the project when he says that "we are not talking only of a commercial investment. This is a highly strategic project, and not only for Libya, but for the rest of the world. It is true that we have an excellent road network (32,000 km.), but the railways will play an important role in the transport of manufactured goods and raw materials in a very economic and environment friendly way. And also will enable bigger trade and will prevent road deterioration and traffic accidents," concludes.


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