The NTC needs to hold the elections to demonstrate to its supporters and opposing factions alike that the ruling council will transfer power and not effectively replace one dictatorship with another. An estimated 3 million Libyans, more than 80 percent of the electorate, reportedly registered to vote.
Once elected, the PNC will appoint a prime minister and a Cabinet and draft a new constitution, which will then face a referendum. Individuals who served under former leader Moammar Gadhafi in the security apparatus, on political committees or in key leadership positions — as well as individuals convicted of crimes — are prohibited from running. The PNC will consist of 200 seats split among three regions: 100 for Tripolitania, 60 for Cyrenaica and 40 for Fezzan.
But tribal and political divisions remain. Of the more than 4,000 candidates registered to run in the elections, more than half are independents. Only seven of Libya's 35 political parties are expected to compete in the elections. Tribal groups such as the Barqa Council, based in eastern Libya's Cyrenaica region, have called for a boycott. In March, the council declared Cyrenaica an autonomous region but said it would continue to recognize the NTC. Though the NTC originated in Benghazi, these developments show how its move to Tripoli has exacerbated the historical Tripolitania-Cyrenaica divide.
In addition, the NTC has already backtracked on plans to exclude parties that are based on religion. This is a necessary move given that at least three of the largest parties — the Party of Reform and Development, the Justice and Development Party, and the National Gathering for Freedom, Justice and Development — are Islamist.
There are also indications that Gadhafi loyalists and former regime figures are in talks with political parties such as the Libyan Muslim Brotherhood-backed Justice and Development Party, and possibly even NTC representatives, to participate in a unity government. Such internal political negotiations for future power-sharing arrangements are partly to blame for the elections delay.
Ongoing Instability
Libya's ongoing security issues are also contributing to the postponement. Armed tribal militias located in Tripoli, Benghazi and elsewhere in the country are functioning as self-appointed security apparatuses and refusing to disarm. Furthermore, previously dormant tribal and ethnic tensions are re-emerging in the desert region of Fezzan.
Clashes across the country are still fairly common. On May 16, a group of unknown armed assailants attacked a hospital and airport in the Berber town of Ghadamis near the Algerian border. Government forces were needed to stop the violence. Other clashes between Arab, African and Berber tribes have occurred in the southern towns of Kufra in February and Sabha in March.
There have been calls from international observers to postpone elections until the militias disarm, a development unlikely to happen any time soon. The continued insecurity, compounded by political instability, makes it difficult for Libya to attract foreign investment, which the country needs to rebuild its lucrative energy industry after decades of isolation and sanctions.
Energy Industry Challenges
Some international oil companies invested in Libya's energy industry during the final years of the Gadhafi regime, but the sector remains underdeveloped with outdated, limited and damaged infrastructure, despite the government's attempts to revive it as quickly as possible. Before the 2011 civil war, Libya produced around 1.6 million barrels per day (bpd) of oil and exported around 1.3 million bpd. By May 2012, production returned to 1.5 million bpd from a low of 45,000 bpd during the fighting, according to a report by Libya's National Oil Corp. But May is the first month since the war with an increase, and there is concern that production may now plateau as Libya reaches the limits of its production capacity.
National security and political progress are key to reviving involvement of foreign multinational corporations in Libyan energy development. After meeting with Libyan officials in late May, British oil firm BP announced that it would resume exploration operations that it had suspended during the war, including a 2007 deal to drill five offshore wells and 12 onshore wells. France's Total SA and Italy's ENI have also resumed operations in Libya.
However, the political uncertainty and lack of security are still driving some energy firms away. Royal Dutch/Shell announced May 28 that it intended "to suspend and abandon drilled wells and stop exploration in [its] Libyan licenses," according to Dow Jones. The report cited tough contract terms and persistent insecurity, including frequent attacks on energy officials, as the main reasons for Shell's decision. The company signed contracts in 2004 potentially worth billions of dollars for exploration and the development of a liquefied natural gas facility. While the announcement may be a negotiating tactic on Shell's part to gain more favorable contract terms, the move will negatively affect the short-term prospects of Libyan energy development. The elections delay also will have a negative impact on the energy sector. International companies would rather postpone investments until after elections to ensure that the government that signs their contracts will remain in power in the near future.
This will hurt Libya's long-term options for developing natural gas since fewer companies will be looking for development opportunities after the United States begins to export shale gas in a few years. The length of the elections delay will determine the depth of its impact on Libya's energy development plans, local politics and national security.
