Libya is considering the creation of funds to manage investment in infrastructure pledged by defense and security companies to win government contracts, according to consultancy Blenheim Capital Services Ltd.
Blenheim has held initial talks with Libya’s interim National Transitional Council with a view to being taken on as an adviser to help set up the so-called offset funds, Chief Executive Officer Grant Rogan said in an interview in London yesterday.
“The Libyans are at this stage looking at non-defense and security expenditure where offsets can play a constructive role,” said Rogan, who will be traveling to Tripoli over the next two months. “We are in early dialogue with them in looking to define how offsets could support their social agenda in rebuilding the country.”
Libya is primarily seeking to secure its borders and rebuild armed forces, Rogan said. It also has an arsenal of aging Russian and eastern European defense equipment, he said. Nations are increasing the emphasis placed on securing investment in oil infrastructure, hospitals and roads in return for awarding weapons orders to companies. In India, the percentage of the contract value for 126 combat jets is 50 percent offsets, among the highest.
Rather than handing money directly to projects, the sums are placed into funds that are regulated by the Financial Services Authority, according to Blenheim, which advises governments and companies on the creation of offsets-related funds.
TAV Havalimanlari Holding AS, Turkey’s biggest airport operator, got an invitation from Libya to rebuild the airport in the western city of Misrata today.
Governments normally contact Blenheim months before they develop a procurement plan, Rogan said.
“The process has started,” said Peter Wezeman, a senior researcher on the arms trade at the Stockholm International Peace Research Institute. “We have to assume that a large part of the Libyan armed forces and arsenal are in a bad state. I would expect them to be quite careful at the beginning. They don’t necessarily have hostile neighboring countries, so I don’t expect them to start buying combat aircraft and tanks.”