Why Libya Struggles to Turn Infrastructure Investment Into Bankable Projects

India's National Investment and Infrastructure Fund closed its second infrastructure fund at INR 19,000 crore, about $2 billion, on August 31, reaching more than 60% of a target of roughly $3.2 billion. According to NIIF's official announcement, it expects to mobilize another $950 million in co-investment capital alongside the fund.

The first close was anchored by the Government of India and backed by investors including AustralianSuper, CPP Investments, a subsidiary of the Abu Dhabi Investment Authority, Ontario Teachers' Pension Plan and Temasek, alongside major Indian financial institutions.

Reuters separately reported the $2 billion first close, the $3.2 billion target and the Indian government's 49% ownership stake in NIIF.

The significance for Libya lies less in the amount raised than in how the capital is organized.

NIIF gives institutional investors a structure through which they can invest in infrastructure without treating every project as a direct exposure to the Indian government. Its own description of the strategy emphasizes local project origination, sector expertise, active governance, co-investment access and long-term asset management. The additional $950 million in expected co-investment capital is especially relevant because participating investors can put capital into selected transactions rather than simply increasing their exposure to the fund as a whole.

Libya has already shown that individual infrastructure and industrial projects can attract significant private capital. What it has yet to demonstrate at scale is an institutional mechanism capable of repeatedly turning infrastructure needs into prepared, financed and investable projects.

What Is India's National Investment and Infrastructure Fund?

NIIF describes itself as India's sovereign-anchored alternative asset manager. According to its August 2026 fund announcement, it manages more than $7 billion in equity capital commitments across infrastructure, private markets, growth equity and climate investments.

Infrastructure Fund II is focused on energy, transport, digital infrastructure, urban infrastructure and electric mobility. Its investor base matters because it includes some of the world's largest pension and sovereign institutions.

AustralianSuper, CPP Investments, Ontario Teachers' Pension Plan, a wholly owned ADIA subsidiary and Temasek are among its international investors. Indian participants include ICICI Bank, HDFC Bank, Axis Bank, Kotak Life Insurance and HDFC Life Insurance.

Those investors provide evidence that NIIF is functioning as an institutional investment platform rather than simply another public spending vehicle. NIIF says its infrastructure strategy combines project origination, sector expertise, active governance and co-investment through a single institutional relationship.

Its first infrastructure fund invested across renewables, power transmission and distribution, battery storage, roads, ports, logistics, airports, data centres and smart metering.

Libya cannot reproduce that model at India's scale. The mechanism is more relevant than the size.

Why Libya's Infrastructure Problem Is Institutional, Not Just Financial

Libya's economy remains heavily dependent on hydrocarbons. The World Bank's Libya country overview reports that oil and gas accounted for about 65% of GDP, 93% of exports and 72% of government revenue in 2024.

That gives the state access to substantial resource income, but public revenue does not automatically translate into bankable infrastructure.

At the same time, individual projects show that private and foreign capital will enter Libya when the commercial proposition and counterparties are sufficiently defined.

In Benghazi, TOSYALI SULB is developing a direct-reduced-iron complex. Midrex and SMS group announced in February 2025 that the first DRI phase would consist of a 2.5 million tonne annual cold DRI plant using MIDREX Flex technology. The project remains under development rather than commercial operation.

In Misurata, the Free Zone signed a long-term public-private partnership in January 2026 with Maha Capital Partners and Terminal Investment Limited, the investment and operating arm of MSC Group. According to the Misurata Free Zone, the project is intended to modernize and expand the port toward a stated capacity of 4 million TEUs annually.

The Libyan Customs Authority described the investment value as $2.7 billion.

Food manufacturing offers another smaller-scale example. Arab Finance reported a €14 million greenfield processing and packaging project between Tetra Pak Egypt Area and Zulfa in Benghazi. The 140,000-square-metre facility was planned with mixing, UHT and pasteurization systems and three initial production and filling lines for milk and juice.

These projects differ substantially in sector, scale and financing structure, but together they establish an important point: Libya is not a market in which private capital is categorically unwilling to invest.

The difficulty is creating a repeatable process that can convert a larger pipeline of ports, energy networks, industrial infrastructure, water systems, transport assets and public services into projects that investors can evaluate on consistent commercial terms.

Libya Already Has Part of the PPP Framework

Libya's position is more developed than it can initially appear.

Cabinet Resolution No. 507 of 2025, issued on July 23, introduced regulations governing partnership contracts between the public and private sectors.

The published legal text covers the preparation, contracting and supervision of PPP projects and provides a formal framework for structuring public-private partnerships.

Libya also has a dedicated Libyan Public Private Partnership Company. Its amended 2022 articles give it a broad mandate that includes finding alternative financing sources for public and private projects, preparing PPP frameworks, creating specialized funds, forming special-purpose companies and managing partnership structures.

That changes the diagnosis.

Libya's problem is no longer accurately described as the complete absence of a PPP framework or institutional mandate. Elements of both now exist.

The more important questions are whether the framework is consistently implemented, whether projects can move through it predictably, whether risk allocation is accepted by international investors, and whether an institution can build a sufficiently large and credible project pipeline to attract long-term institutional capital.

The Misurata port agreement will therefore be worth watching closely. It is one of the clearest large-scale tests of Libya's ability to move from a legal PPP framework to an operating infrastructure partnership.

Why Libya Still Struggles to Turn Projects Into Investable Deals

Four issues remain especially important.

The first is project preparation and selection.

Institutional investors need to know how projects enter the pipeline, how feasibility is assessed, what revenue model applies and how contracts are awarded. Political geography remains unavoidable in Libya, which means a national investment platform would need to demonstrate that commercial and technical criteria can survive changes in political authority.

The second is implementation of the legal framework.

Resolution No. 507 creates a formal basis for PPP contracts. The next test is practical: how the rules work in actual infrastructure transactions, how disputes are handled, how counterparties are protected and whether contracts remain dependable across administrative changes.

The third is sector selection.

Some infrastructure assets have clearer commercial models than others. Ports can generate cargo and terminal revenues. Industrial zones can generate lease income. Telecommunications assets can be supported by subscriber revenues.

Other assets, particularly some public utilities, are more difficult to finance commercially because tariffs may be politically constrained or insufficient to recover costs.

A credible investment platform would therefore need to separate commercially financeable assets from infrastructure that should continue to rely primarily on public expenditure.

The fourth is institutional ownership.

Libya already has several institutions with potentially relevant roles.

The Libyan Investment Authority states that one of its objectives is to invest a portion of its funds domestically on the basis of economic feasibility and to contribute to local development. It also presents independent governance, diversification and risk-adjusted investment as part of its institutional model.

The Libyan Public Private Partnership Company's legal mandate is more directly focused on PPP structures and specialized funds.

The General Authority for Investment Promotion and Privatization also administers Libya's investment framework and investor services under Investment Law No. 9 of 2010.

What is less visible is a single operating platform combining project preparation, infrastructure-sector expertise, fund management and institutional co-investment in the way NIIF currently does.

That is a narrower institutional gap, but also a more useful one to identify.

Libya's Institutional Fragmentation Still Matters

The difficulty of building such a platform cannot be separated from Libya's recent institutional history.

The Central Bank of Libya itself was divided for years between eastern and western branches. On August 20, 2023, the Central Bank formally announced that it had returned to operating as a unified sovereign institution after almost a decade of division.

Its statement also acknowledged the need to continue addressing the consequences created by that split.

The World Bank has continued to identify institutional fragmentation, parallel budget structures and weaknesses in public financial management as constraints on fiscal discipline and public service delivery.

Any proposed infrastructure investment platform would therefore face a credibility test beyond finance.

Investors would need confidence that project selection, governance, procurement and contractual obligations would remain sufficiently insulated from institutional competition.

Creating another public body without solving those questions could add complexity rather than reduce it.

Why Libya Cannot Simply Copy India's NIIF Model

India offers a useful comparison because NIIF demonstrates one institutional approach to mobilizing capital. It is not a blueprint for Libya.

India has substantially deeper domestic capital markets, a larger banking system, more institutional investors and an established infrastructure investment ecosystem.

NIIF itself manages more than $7 billion across several strategies and is now raising its second infrastructure fund from some of the world's largest pension and sovereign investors, according to its official Infrastructure Fund II announcement.

A Libyan platform would begin from very different conditions.

Its initial value would probably come less from raising a multibillion-dollar fund and more from improving project preparation, establishing standardized risk allocation, developing credible contracts and creating mechanisms through which investors could participate in individual projects.

Scale could follow later if those institutions developed a track record.

Trying to raise a large fund before establishing those fundamentals would reverse the order.

What Would Structured Infrastructure Finance Look Like in Libya?

A more developed infrastructure finance system would sit between public infrastructure plans and the capital expected to finance them.

For a port project, that could mean defining expected cargo revenue, concession terms, investment obligations and the division of commercial risk before approaching investors.

For an industrial zone, the model might depend on leases, utilities and long-term tenant agreements.

Other projects could require government availability payments, development-finance participation or blended-finance structures because their commercial revenues alone would not support the required investment.

The value of an institutional platform is consistency.

Investors currently evaluating a Libyan project must assess the counterparty, political environment, legal structure, financing model and operational risks of that specific transaction. A platform with a credible pipeline and standardized processes could reduce some of that duplication.

It could also create a clearer role for Libyan banks and international development finance institutions in project financing.

This would not eliminate Libya's political or commercial risk. It could make those risks easier to identify, allocate and price.

Misurata May Be the Most Important Current Test

The Misurata Free Zone port project provides a useful case study because several pieces of the model are already visible.

The agreement signed in January 2026 is a long-term PPP involving Misurata Free Zone, Qatar-based Maha Capital Partners and Terminal Investment Limited, which is linked to MSC Group.

Misurata Free Zone says the project aims to transform the port into a regional transshipment hub with capacity of 4 million TEUs annually.

The Libyan Customs Authority described the agreement as a $2.7 billion foreign investment intended to expand capacity without imposing costs on the state budget.

If the project progresses from agreement into financing, construction and operation as intended, it would provide evidence that Libya can structure large infrastructure projects with international private partners.

It would also expose the limits of the current model.

One successful port transaction does not create a national pipeline. The larger institutional question is whether lessons from projects such as Misurata can become repeatable rather than exceptional.

What Should Investors Watch in Libya's Infrastructure Market?

The first indicator is implementation of Resolution No. 507. The existence of a PPP regulation is useful, but investors will learn far more from the projects that reach financial close under it than from the legal text alone.

The second is the Misurata port development. Progress on financing, construction, governance and operations will provide one of the clearest practical tests of Libya's PPP model.

The third is the role of existing institutions. Any new initiative from the Libyan Investment Authority, the Libyan Public Private Partnership Company or other state bodies to establish dedicated infrastructure funds, co-investment vehicles or standardized project-finance structures would represent a meaningful development.

The fourth is whether Libya can build a pipeline rather than a collection of announcements. Institutional investors need multiple investable opportunities, clear rules and evidence that successful transactions can be repeated.

India's NIIF provides a useful benchmark here. Infrastructure Fund II entered its first close with established investors, an existing investment strategy and a record built through its predecessor fund.

Libya is earlier in that process.

What India's NIIF Model Teaches Libya About Infrastructure Finance

Libya does not need an exact equivalent of NIIF.

It already has an investment law, a PPP company, a new regulatory framework for public-private partnerships, a sovereign investment authority with a domestic investment mandate and several significant private infrastructure and industrial projects.

What remains less developed is the connection between those pieces.

The country needs a reliable process that can identify suitable infrastructure assets, prepare them to investment standards, allocate risk, match projects with the correct financing model and give institutional investors a credible route into individual transactions.

India's experience shows what becomes possible once that institutional layer develops.

NIIF can raise billions of dollars because investors are buying into more than a list of infrastructure needs. They are investing through an established institution with governance structures, sector expertise, a portfolio history and a mechanism for co-investment. Its Infrastructure Fund II documentation illustrates that structure directly.

Libya's current infrastructure development is still largely project-specific.

Misurata, TOSYALI SULB and other investments show that transactions can move forward when the structure and counterparties are sufficiently clear.

The next stage is making that process repeatable.

Research note

This analysis draws primarily on official material from the National Investment and Infrastructure Fund, Central Bank of Libya, Libyan Investment Authority, Misurata Free Zone, Libyan Customs Authority, Libya's published PPP regulations, the World Bank, Reuters and project-specific corporate sources.

Project announcements are treated as announced, contracted or under-development investments unless operations have been independently confirmed. Investment values and planned capacities refer to published project targets and should not be interpreted as completed expenditure or operational output.