Turkey, Libya Tension over Letters of Guarantee

Today's Zaman reports that Libya is seeking to cash in letters of guarantee issued for projects Turkish contractors undertook but had to temporarily abandon due to the revolution.

Libya has recently attempted to convert a letter of guarantee issued for a Turkish contracting firm, a member of the Turkish Contractors Association (TMB), into cash.

Upon the firm's objection, which was based on a Turkish Cabinet decree that went into effect in July 2011, in accordance with UN Security Council sanctions previously imposed on Libya, the Libyan government's move was blocked.

Turkish contractors that had to abandon projects due to violence in Libya -- projects worth a total of $19.1 billion -- are deeply concerned. The Libyan government's cashing of the letters would have serious short- and long-term consequences for the more than 100 Turkish builders in Libya.

The Libyan Foreign Bank is said to no longer accepts letters of guarantee by Turkish banks after Turkey's A&T Bank rejected demands to convert letters of guarantee for projects undertaken by some Turkish firms into cash. The total value of letters of guarantee issued for Turkish projects in Libya is estimated at around $1.5 billion.

Since the civil war started in Libya, Turkish contractors have taken losses in machinery and equipment amounting to around $1.3 billion; the total of overdue payments to Turkish contractors for projects undertaken in Libya is more than $1 billion.

In terms of volume of contracts Turkish contractors got abroad, Libya ranked second after Russia in the 2000-10 period with a share of 12.4 percent.

(Source: Today's Zaman)

No comments yet.

Leave a Reply