Payment proves tricky in post-conflict Libya

LONDON (Reuters) - Getting paid has outstripped security as the biggest issue for many companies returning to war-worn Libya, putting on ice crucial work until the emerging government can pay, delegates at a conference said.

Initial excitement from companies that rushed to return to Libya to bag a slice of an estimated $200 billion (128 billion pounds) reconstruction programme has been tempered by concerns over payment for deals signed under former leader Muammar Gaddafi.

The practicalities of receiving payment for future contracts in a country whose assets are frozen and which has a limited banking system also loom large, as well as the difficulty in identifying Libyan partners who will ensure deals are honoured in a country in political flux.

One firm at the conference held this week has deployed two 60-tonne specialist landmine clearing vehicles to Libya and has teams poised to begin work, but the government's cash-flow problems and banking difficulties have led to delays.

"We are waiting for the government to have enough money to pay us to start clearing mines," said Carl Nisser, director at ERW Solutions, which clears mines and explosives. "The British banks do not want us to work in Libya because they do not want to accept money from Libya, and that is another problem."

Libya's leadership has expressed growing frustration that three months after Gaddafi's ouster, only a fraction of the Libyan assets frozen as part of sanctions against his administration, estimated at $150 billion, has been released.

Gaddafi was forced from power in August but by late November only about $18 billion of the $150 billion in seized assets had been released by special dispensation from the U.N. Security Council's sanctions committee.

Diplomats said last month that of the $18 billion, only about $3 billion had been made available to Tripoli.

CHASING PAYMENT

For contractors of all nationalities, securing payment for current or previous projects dominated conference discussions on rebuilding Libya, with over 500 small- to medium-sized businesses represented, many of whom supply larger firms.

"In my view there were probably more people there concerned about what had happened in the past than what was going to happen in the future ... what happened in the past with regards to recovering debt," said Malcolm Goodson, managing director of IOMEK, which makes modular control rooms and workstations.

Libya's new interim rulers have pledged to honour contracts signed under Gaddafi, as long as no corruption was involved.

The transitional administration is also not expected to sign any major deals until next year's elections.

Polls for a new government are due in seven months, and are likely to be contentious given the many regional and tribal groups currently jockeying for influence in Gaddafi's wake.

That has raised concerns among some businessmen about finding legitimate Libyan partners who can ensure contracts are honoured despite a shifting political landscape.

"Going forward the issues of actually being paid and finding the right person to do business with is critical, absolutely critical," Goodson added.

One small firm that supplies parts to the oil industry said it had been approached to do business in Libya, but it was still chasing payment for deals done before the February Libyan uprising that marked the beginning of Gaddafi's end.

"We are owed money for work undertaken before the revolution, and while we don't intend to turn away new business, we are mindful to get the correct balance between supporting the people of Libya while protecting our established business," said Liam Dargan of Boomrealm International.

Despite the difficulty of doing business, many still see prospects in Libya, an oil exporter and where the United Nations predicts strong economic growth, as worth the effort.

"Our advice, when it comes to doing business with Libya, can be summed up in the words: 'strategic patience and persistence'," said British Minister for Trade and Investment Stephen Green, one of the conference backers.

(Reporting by Lorraine Turner and Mohammed Abbas; Editing by Helen Massy-Beresford)

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