Muzaffer Aksoy of Turkish-Libyan Business Council says a preliminary $2.7 billion compensation deal will be signed in February for work carried out in Libya before 2011 civil war that ended Muammar Gaddafi's rule.
Turkey plans to sign by February 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.
Muzaffer Aksoy, chairman of the Turkish-Libyan Business Council said the two countries were close to signing a Memorandum of Understanding (MoU).
"Work on the MoU regarding the old contracts is reaching an end. The problem of unpaid debts, damages and a letter of guarantee will be solved," Aksoy told Reuters news agency in an interview.
Turkish businesses have long been active in Libya but their projects were disrupted by turmoil when Muammar Gaddafi was overthrown nine years ago, and have been hit again by ongoing fighting there.
A significant hurdle to reinvigorating investment has been uncertainty regarding unpaid debts.
Set to be signed later this month or in February, the deal will encompass a $1 billion letter of guarantee, $500 million in damage to machinery and equipment and unpaid debts of $1.2 billion, Aksoy said.
With current projects in Libya on hold due to fighting, the backlog of Turkish contract work in Libya amounts to $16 billion, including $400-500 million for projects which have not yet begun, Aksoy added.
Buoyant Libyan-Turkish trade
Turkey and Russia have become increasingly involved in the conflict, with Ankara backing the internationally recognised Government of National Accord (or GNA) in Tripoli, while Moscow has largely backed the illegal militia led by a rogue army general and warlord Khalifa Haftar.
Haftar's militia said on Thursday they would not let up in their military campaign against rival factions in Tripoli, appearing to reject a call by Russia and Turkey for a ceasefire.
Turkey and Libya signed a military cooperation agreement during a visit by Libya's leader Fayez al Sarraj to Istanbul in November.
Both sides also signed a maritime jurisdiction agreement giving Turkey rights to large swathes of the eastern Mediterranean where gas reserves have recently been discovered. Turkey has also deployed few dozen troops there to support GNA against Haftar's offensive.
Despite the disruption, Libyan-Turkish trade remains buoyant, with Turkish exports reaching $2 billion annually and imports at $350 million, Aksoy said.
However, Turkish contractors with projects in Libya had not been able to travel to the country since April due to fighting.
"New contracts had been signed: projects like power stations, housing, business centres. Signatures have been signed for letters of credit for some of these. However, since April they have not been able to go for security reasons," Aksoy said.