TRIPOLI -- Libya's trade and economy minister, Shukri Ghanem, has been appointed prime minister in a cabinet reshuffle amid a call by leader Moamer Kadhafi for key industries, including oil, to be privatized.

The parliamentary General People's Congress also decided late Friday to merge the African unity ministry, headed by veteran diplomat Ali Abdel Salam al-Triki, with the foreign ministry, which will continue to be headed by Abdel Rahman Shalgham.

The moves come amid press reports Saturday that Kadhafi had called for the wholesale privatization of the vital oil and other sectors, complaining the heavily state-run economy was uncompetitive.

Similar measures should be applied to the country's banks, airports, road and "other public enterprises," Kadhafi was quoted as saying.

Ghanem, who also served as Libya's ambassador to the OPEC oil cartel and holds a doctorate in economics, replaces prime minister Mubarak al-Shamekh. His appointment is a reflection of "Libya's new policies of economic openness," another official said, requesting anonymity. An economic source added that the new prime minister "supports economic openness and encouraging foreign investment in Libya."

Oil accounts for nearly 90 percent of Libya's natural resources. Its production quota set by the Organization of Petroleum Exporting Countries (OPEC) stands at 1.3 million barrels a day. Kadhafi also said the privatized oil sector would be allowed to call on foreign expertise to "develop the oil industry, from prospecting to production and marketing."

According to one official, Tripoli is holding talks with several large European companies that have expressed interest in investing in the oil and infrastructure projects, such as a railway network.

But the future of any of these projects depends on whether international sanctions, imposed on Libya in the wake of the 1988 Lockerbie airline bombing, will be lifted.

In late April, Tripoli accepted civil responsibility for the Lockerbie bombing and offered compensation to the victims in the hope of obtaining a lifting of U.S. and UN sanctions.

It is uncertain whether this latest move will lead to a full lifting of the sanctions. The sanctions were eased after Libya handed over two suspects in the Lockerbie case to a Scottish court.

One was sentenced to life in prison and the other was acquitted.

In May 2002, Tripoli launched an ambitious 35 billion dollar three-year investment plan, to include a high proportion of foreign capital (30-40 percent), particularly in the oil and other industrial sectors.

The reshuffled cabinet also includes a new planning ministry, to he headed by al-Taher al-Juhaimi.