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How Egypt is Playing a Crucial Role in Libya’s Reconstruction Strategic Investments?


The historical bond between Egypt and Libya is multifaceted. At the forefront of this connection is the dynamic economic relationship. Recent developments indicate positive changes in the near future, especially with Libya’s initiative to open communication channels with various parties to support its reconstruction efforts.

A Glimpse into the Past: Libya, grappling with an internal economic crisis and shortage of essential commodities, had earlier opened its borders to neighboring countries. This move paved the way for flourishing trade between Libya and Egypt. Moreover, Egyptian labor flowed into Libya in unprecedented numbers.

Reviving Old Agreements: Both nations are working diligently to activate a joint trade agreement signed in 1990. Alongside, there’s an emphasis on the accord related to transportation and passengers, which now requires modifications to align with global economic dynamics and the specific economies of the two nations.

Recent Economic Collaborations: A high-level Egyptian-Libyan committee convened in Cairo, culminating in the signing of a strategic framework for economic cooperation. The objectives include:

Identifying potential investment projects and determining the number of Egyptian workers required in Libya.Propelling Libyan investments in Egypt with the Egyptian side presenting investment opportunities worth around 8 billion dollars through projects like:

The Fourth Toshka Project that relies on Nile waters.The Farafra lands in the New Valley, depending on groundwater.

Specific projects in industries, mining, and energy, including plans for a natural gas pipeline from Tobruk to Alexandria and constructing a petroleum refinery west of Alexandria with Libyan financing.

Libya’s proposed involvement in mazut manufacturing at the Asyut refinery.

Initiatives in transportation and infrastructure.

Speedy evaluation of the joint industrial and free service zone from Marsa Matrouh to Tobruk.

Land offers in New Cairo or the 6th of October city to establish “Al-Fateh City”, emulating Sheikh Zayed City.

Libya’s proposal to accommodate 250,000 Egyptians and regularize the status of Egyptian workers in Libya.

Investment Milestones: By 2008, Libyan investments worth one billion dollars were funneled into the Egyptian market, predominantly in developmental projects within agriculture and industry sectors. Furthermore, in March 2008, agreements were inked to boost Libyan investments in Egypt to 3 billion and 15 million pounds, spanning across seven domains.

The pinnacle of these collaborations was the establishment of five joint ventures to transfer natural gas to Libyan households and factories and the creation of the first bank and insurance company in partnership with Libya.

Concluding 2008, Egypt and Libya agreed to invest 5 billion dollars in three energy projects in Egypt, encompassing the construction of a new refinery with a capacity of 250,000 barrels per day, the modernization of an old Egyptian refinery, and the inauguration of 500 barrel stations in Egypt.

Egypt and Libya, bound by history, are now further strengthening their ties through robust economic collaborations. As Libya marches towards reconstruction, the mutual relationship is not only beneficial but vital for the stability and prosperity of the entire region.

The High Egyptian-Libyan Joint Committee held its tenth session in December 2009 in the Libyan capital. It discussed several important issues, including:

Giving a significant boost to increasing the trade exchange between the two countries, both exports and imports, and emphasizing the importance of informing investors from both sides about the potential and latent investment opportunities each country has to offer.Activating the “four freedoms” agreements, increasing Libyan investments in Egypt, especially in the tourism, hotel, and petroleum sectors.

Discussions included executing and establishing a petroleum refinery in Assiut and a project to establish a joint fishing company between Egypt and Libya.Discussing the activation of establishing Al-Fateh City in the Fifth Settlement and setting up joint projects in Sub-Saharan African countries.

Exploring projects of Egyptian electricity companies regarding electrical interconnection between Egypt and Libya.Discussing the participation of Egyptian contracting companies in the urban development of Libya, along with the establishment of a joint outlet between Egypt and Libya to facilitate the transition for individuals, trucks, goods, services between the two countries, and then from Egypt to Tunisia through Libya.

Establishing five committees to regulate the status of Egyptian labor in the Libyan Jamahiriya.An agreement in the field of cooperation between the Egyptian Stock Exchange, the Libyan Securities Market, and the Egyptian Clearing Company, which includes information exchange, technical cooperation, staff training, expertise transfer, as well as a framework agreement between the Libyan Securities Market and the Egyptian Clearing Company to introduce a new system for trading some new financial innovations.

Facilitating investor activities in both countries to implement various industrial projects in fields like energy, health, construction and building, foodstuffs, and ready-to-wear clothing.Enhancing cooperation in the field of petroleum, natural gas, and petrochemicals.

Discussing the establishment of a free industrial, commercial, investment, and service zone between the two countries.Signing a memorandum of understanding for cooperation in the field of research centers and technology.Signing a memorandum of understanding for cooperation in the field of participation in international exhibitions and markets.

On the commercial relations front, the volume of trade doubled in 2008, reaching 869 million dollars compared to 448 million dollars in 2007. It’s worth noting that the potential and productive capacities of the two countries enable them to achieve further growth, especially considering the large market size in both countries and the comprehensive development they are witnessing in all fields.

Relations between Egypt and Libya are characterized by the presence of a large number of economic institutions and companies in Egypt with Libyan participation. As of November 2009, there were about 324 companies, with more than 55% of them having a Libyan majority. These companies have varied activities, including service, tourism, agriculture, construction, industry, and communications.

In the electricity field, Egypt and the Libyan Jamahiriya are on their way to full integration in the electricity sectors after linking their grids into a single network and exchanging energy in both directions. This aims to utilize surplus energy during peak times economically.

Efforts are also being made to bolster this cooperation by upgrading the connection lines from 220 volts to 400 and 500 volts to enhance cooperation.

On August 6, 2012, during the visit of Libyan Prime Minister Abdul Rahman Al-Keeb to Egypt and his accompanying delegation, which included ministers of Labor, Economy, Education, Justice, Scientific Research, Higher Education, Agriculture, Livestock Wealth, Finance, and the Libyan Chief of Staff, the two countries agreed to tighten control measures on their shared border crossings.

This was to prevent smuggling activities that negatively impact local industries in both countries, in addition to its adverse effect on Egypt’s customs duties and tax revenues.

Both sides agreed to complete the electronic link project between the labor ministries in the two countries to document contracts of Egyptian labor and discuss outstanding issues regarding compensation for individuals and companies affected by the Libyan revolution.

The Egyptian government emphasized its commitment to provide all forms of support to Libya and expressed Egypt’s readiness to assist in the institutional building processes in Libya by offering technical support, along with training for Libyan cadres.

Cooperation in the energy sector

On December 23, 2016, two days after the launch of the Elephant and Sharara fields in southwest Libya, with a capacity of 270,000 barrels per day, a delegation led by Mustafa Sanallah, the head of the Libyan National Oil Corporation, arrived in Cairo to discuss cooperation with the Egyptian Ministry of Petroleum to rehabilitate energy industry facilities in Libya.

The Elephant and Sharara fields in southwest Libya are under the control of the Libyan army. For their production to reach the Zawiya refinery on the coast in the Tripoli region, the oil facilities guard and the Zintan brigades agreed to open the “Rayana valve” to allow the passage of oil to the Zawiya refinery, which produces propane (LPG) and butane.

Egypt has been importing large quantities of propane and butane since the sudden collapse of its gas production in 2011.

There are several obstacles facing the increase in economic cooperation between Egypt and Libya. They are the main reason behind the current decline witnessed by cooperation indicators and trade movement between the two countries in recent years. Trade volume decreased from $2.5 billion in 2010 to about $500 million in 2018.

The value of trade between Egypt and Libya saw a noticeable increase during the first quarter of 2021, recording $245.017 million compared to $171.118 million during the first quarter of 2020, an increase of 43.2%.

The foreign trade bulletin issued by the Central Agency for Public Mobilization and Statistics, which “Echo of the Country” obtained a copy of, clarified that the trade balance between the two countries is in favor of Egypt by approximately $187.497 million during the first 3 months of this year.

The trade exchange value between Egypt and Libya jumped in March of the past year by 172.6% to reach $105.443 million compared to $38.68 million in March 2020.

There was a 32% growth in Egypt’s exports to the Libyan market.

The value of Egyptian exports to the Libyan market increased during the first quarter of 2021, recording $216.257 million compared to $164.186 million during the same quarter of the previous year, a growth of 31.7%.

Egyptian exports to Libya saw a significant increase in March by 54.7% to reach $92.713 million compared to $34.592 million in March 2020.

It was announced that two memoranda of understanding were signed between the two countries. The first pertains to electronic exchange, and the second is in the field of higher education.

Cooperation in the energy sector

On December 23, 2016, two days after the launch of the Elephant and Sharara fields in southwest Libya, with a capacity of 270,000 barrels per day, a delegation led by Mustafa Sanallah, the head of the Libyan National Oil Corporation, arrived in Cairo to discuss cooperation with the Egyptian Ministry of Petroleum to rehabilitate energy industry facilities in Libya.

The Elephant and Sharara fields in southwest Libya are under the control of the Libyan army. For their production to reach the Zawiya refinery on the coast in the Tripoli region, the oil facilities guard and the Zintan brigades agreed to open the “Rayana valve” to allow the passage of oil to the Zawiya refinery, which produces propane (LPG) and butane.

Egypt has been importing large quantities of propane and butane since the sudden collapse of its gas production in 2011.

There are several obstacles facing the increase in economic cooperation between Egypt and Libya. They are the main reason behind the current decline witnessed by cooperation indicators and trade movement between the two countries in recent years. Trade volume decreased from $2.5 billion in 2010 to about $500 million in 2018.

The value of trade between Egypt and Libya saw a noticeable increase during the first quarter of 2021, recording $245.017 million compared to $171.118 million during the first quarter of 2020, an increase of 43.2%.

The foreign trade bulletin issued by the Central Agency for Public Mobilization and Statistics, which “Echo of the Country” obtained a copy of, clarified that the trade balance between the two countries is in favor of Egypt by approximately $187.497 million during the first 3 months of this year.

The trade exchange value between Egypt and Libya jumped in March of the past year by 172.6% to reach $105.443 million compared to $38.68 million in March 2020.

There was a 32% growth in Egypt’s exports to the Libyan market.

The value of Egyptian exports to the Libyan market increased during the first quarter of 2021, recording $216.257 million compared to $164.186 million during the same quarter of the previous year, a growth of 31.7%.

Egyptian exports to Libya saw a significant increase in March by 54.7% to reach $92.713 million compared to $34.592 million in March 2020.

Source: Egypt Today

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