Italian Prime Minister Silvio Berlusconi, on a brief visit to Libya, has opened the first section of a new 2,000km North African coastal highway, according BBC.
It will eventually link Tunisia on Libya`s western border with Egypt, its eastern neighbour.
His visit is to mark a year since Italy and Libya signed a friendship treaty.
However, he will not attend events marking the 40th anniversary of the military coup d`etat that brought Libyan leader Muammar Gaddafi to power.
The highway ceremony took place against a huge photographic backdrop of Mr Berlusconi shaking hands a year ago with Col Gaddafi, when the two countries signed a treaty of friendship settling all past disputes inherited from the days when Libya was an Italian colony.
An aerobatic team of the Italian airforce screeched overhead leaving green vapour trails - Libya`s national colour - in a salute to Italy`s former North African colony.
Mr Berlusconi unveiled a plaque commemorating the beginning of the construction of the new coastal highway in the presence of the Libyan leader.
It was Italy`s fascist dictator Benito Mussolini who built the present narrow two-lane coastal road, a feat of military engineering in its day.
This week Col Gaddafi is celebrating the 40th anniversary of the military coup which brought him to power in 1969, making him the longest serving head of state in both Africa and the Arab world.
Mr Berlusconi did not accept Col Gaddafi`s invitation to stay on for the celebrations, which include a session on Monday of heads of state and government of the African union of which Colonel Gaddafi is currently president.
Italy is now poised as a major beneficiary of future trade deals with the fast-developing North African country.
The $5bn (£3.1bn) new highway will be paid for by a tax on the profits of the Italian national oil company ENI, which has signed lucrative deals with the Libyans for future oil exploration and extraction in the Libyan Desert and offshore.