Libya set to ramp up grains purchases
London, August 31, 2011
Libya is set to step up commercial purchases of wheat and flour in the coming weeks although western sanctions imposed on ousted leader Muammar Gaddafi and worries over port security will hinder the pace of shipments, trade and shipping sources say.
The country's interim council, trying to heal scars left by Gaddafi's 42-year rule, is keen to assert its grip and relieve hardship after six months of war. Libya was a big importer of food before fighting interrupted supply chains.
Trade sources said Libya will aim to import 500,000 tonnes of wheat and 400,000 tonnes of flour in the next two to three months.
"Libya needs a lot of wheat and flour and I expect them to buy a lot in coming weeks," one trader said. "I expect them to buy a major volume of flour initially as much of their infrastructure is literally shot to pieces including their mills."
The National Transitional Council (NTC) has already bought flour in recent weeks, with purchases routed via companies in Egypt and Tunisia and sent mainly by trucks from Egypt.
"Imports of wheat have been made to Egypt which was then processed into flour by Egyptian mills and sent to east Libya," a second trader said. "Deliveries have been made with payment in advance because banks were unwilling to be involved in financing Libyan deals."
Trade sources said wheat deals would be concluded quicker once the NTC took control of Libya's assets. The NTC has signed at least two contracts to buy French wheat using funds unfrozen in France earlier this month.
"No doubt the aid agencies such as the WFP will make a big interim effort to prevent a humanitarian disaster. But Libya will probably be expected to use up some of its massive financial reserves to feed itself," a third trader said.
The World Food Programme is leading a push by United Nations aid agencies to resupply Tripoli after months of conflict and last week's intense fighting left the Libyan capital short of fuel, food, medicine and water.
An estimated $150 billion in sovereign assets once controlled Gaddafi and his inner circle has been frozen abroad by foreign governments and 144 tonnes of gold is held by the Libyan central bank.
The NTC won a $1.55 billion cash injection when the U.N. Sanctions Committee released banknotes in Britain in frozen Gaddafi accounts. The new leaders have said Libya may start pumping oil again in days.
"When the banking system starts working normally and international banks are no longer worried about seeing the word 'Libya' on letters of credit there will be a big rush to get the business," the third trader said.-Reuters
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