10 things to watch in 2018

As we move into another New Year, here's the Libya Monitor list of 10 key things to watch out for in 2018.

Elections

Presidential and parliamentary elections are theoretically scheduled to take place this year, though the roadmap and timetable is not clearly defined.

For now, the GNA appears to be attempting to continue work as normal despite its mandate expiring in December.

Future of the CBL

While some efforts were made in 2017 towards unifying the Central Bank of Libya (CBL), little concrete progress appears to have taken place.

Last month the eastern-based House of Representatives (HoR) named Mohamed al-Shoukri as the new CBL governor, in what was nominally an attempt to unify the organisation and again seek to remove Tripoli CBL governor Sadeeq al-Kabir, who rejected the appointment.

In practice, the Tripoli CBL continues to control all oil export revenues.

Airports to reopen?

Libya's aviation sector has been amongst the worst-affected by the instability since 2011.

Worth watching in 2018 will be progress made at Tripoli International Airport, which has been closed since 2014. A contract was signed last July by the GNA transport ministry and an Italian consortium to rebuild a domestic terminal over 18 months, though the status of the project is unclear.

Sebha airport remains closed due to security concerns, despite regular reports of its imminent reopening, while nearby Tamanhint is expected to open to flights "soon" once maintenance work is complete.

Smaller airports at Zintan, Ghadames, Kufra and Ghat remain largely out of action.

The level of traffic through Benghazi's Benina airport - which reopened last year - will also be worth following, especially the possible resumption of more international flights.

CBL reforms

The past few months have seen extended debate about possible monetary and financial reforms, with the Tripoli CBL floating a series of ideas and plans.

These covered subsidies, trade policies and tariffs, and a mechanism for a floating exchange rate, which a CBL official said could range from LD3-5.75. This is against a "real" curent rate of over LD9.5 in the parallel market.

Implementing any changes will be a substantial logistical challenge, however, with dramatic knock-on effects across the economy. There have been no major economic reforms since the 2011 conflict.

Korean firms to return?

South Korean firms are reportedly looking to resume work on various power plants, but it remains to be seen whether security conditions and contractual agreements will enable them to do so.

Meetings have been held in the past few months between the GNA and various firms, including Hyundai, Daewoo and Doosan, which all had significant contracts as of 2011 but have since suspended work.

Following the kidnapping of foreign workers from the Ubari plant in November, Korean firms requested that security plans and guarantees be put in place as a condition of restarting work.

Oil output

Libya’s crude output rose strongly last year - a major bright spot in the economy - and is currently hovering around the 950,000 bpd mark.

The NOC is thought to require significant new funds to ramp up output much further, however, and has been pushing the GNA to finalise its budget as quickly as possible.

The first well in the second phase of Eni's offshore Bahr Essalam gas project set to start production in May, while the Bayda field in eastern Libya is expected to return to its nominal capacity in the first half of the year. 

However further disruption from attacks, closures and random acts of sabotage is likely to hamper the NOC's laudable efforts to boost production and stay out of the political fray.

Tobruq desalination project 

As of last month, installation work on the new evaporator at the Tobruq desalination plant was in its "final phase," suggesting that the upgrade project being carried out by Austria's Wabag is moving along.

This upgrade will raise the plant's capacity from 36,000 to 50,000 cubic meters per day.

Power capacity

Key projects to watch this year will include the planned 650MW Tobruq gas plant, agreed last year in a $400m EPC contract with Greek power firm Metka.

The long-delayed Ubari power plant, in southern Libya, should also theoretically start full operations this year, but has been plagued by security and logistics issues.

Meanwhile Korean firms may return to work on the Tripoli West, Khaleej, and Zueitina power plants, which have a total capacity of 3,000MW.

Siemens has signed two EPC contracts, worth €700m total, that are expected to add 1.3GW of capacity. They involve a 650MW open cycle power plant in Misrata with two F-class gas turbines, and a 690MW open cycle power plant in Tripoli West with four E-class gas turbines.
 
Blackouts continue to be regular occurrences across many areas, however.
 

Overseas trade

Trade levels have dropped sharply in the past few years, partly due to the economic slowdown, security concerns, and ongoing problems at borders.
 
Turkish exports to Libya continued to fall in the third quarter of 2017, for example, down 18% compared to the same period in 2016, while Tunisian exports to Libya dropped by 8.2% y-o-y in the first nine months of 2017.
 
A pick-up this year will depend on domestic demand levels and conditions at the key air, sea and land border points.
 

Cash and electronic payments

Libya continues to suffer from a cash shortage, with withdrawal caps still imposed by banks in most areas.

Both the Tripoli and Bayda CBLs have been printing new money - from the UK and Russia respectively - and it will be worth watching how many new Dinars make it into circulation this year.

A silver lining to this cloud has been more urgent efforts to push mobile and electronic payments.

Many banks have introduced new initiatives for retailers and consumers to access money and facilitate transactions, and this trend looks likely to persist this year.