LEBANON’S $122m AIRPORT TERMINAL DEAL MAY END UP BACK AT SQUARE ONE
▶ Critics say tendering process and agreement to hand investors profits from fees and taxes will not work
Controversy surrounds an agreement between Lebanon and private companies to build and operate a $122 million terminal at Beirut’s Rafic Hariri International Airport after criticism of the tendering process.
The deal to extend the airport lacks transparency, critics said.
The questions come as Lebanon suffers a long and damaging economic crisis after decades of profligate spending of public funds by the state.
This commonly involves expensive infrastructure contracts awarded to companies with political connections.
On March 20, Lebanon announced a new terminal for the airport, where about 3.5 million passengers a year by 2027 are expected.
Lebanon’s bankrupt state has turned to the private sector to fund construction through a partnership with the Lebanese Air Transport company, and daa International of Ireland, said Ali Hamie, caretaker minister of public works and transport.
The investors will receive all of the profits generated from fees and taxes for 25 years in exchange for their investment before Lebanon takes control.
Services at the new terminal will focus on low-cost flights and the development is expected to create 2,500 jobs, Mr Hamie said.
The main terminal at Rafic Hariri International was built in 1998 and has not been expanded in more than two decades, resulting in chronic overcrowding and delays.
However, the lack of a tender process for a contract worth more than $120 million has stirred up a backlash from civil society and some MPs, as critics said the deal bypasses Lebanese law.
In 2021, Lebanon’s parliament passed a public procurement law created to increase transparency in public sector purchases, while standardising the tendering process. A statement signed by 10 civil society associations expressed deep concern “at the serious violations” of the law, “which opens the door to corruption and nepotism and allows illegal use of public funds”.
“The principles of transparency and open competition were foregone. Fiscal risks are not clear,” Lamia Moubayed, president of the Institut des Finances Basil Fuleihan, an autonomous body at the Ministry of Finance, told The National.
She said that as it stands the deal presents three types of risks for Lebanon: political, technical and fiscal.
“First, it signals that Lebanon is not serious about implementing public procurement reform, the only structural financial governance reform it has put in place,” Ms Moubayed said.
“Second, the fiscal and technical risks inherent in such projects including budgetary risks, size and nature of guarantees given, financial sustainability, thresholds for quality of services delivery, et cetera, have not been disclosed.
“Risks are inevitable in cases of unsolicited proposals or closed negotiations with private players.
“We cannot assess them properly because access to information is obstructed. Bidding documents, which should be made public as the law requires are not accessible.”
The international community has made the approved procurement law a condition for unlocking financial aid to Lebanon.
The International Monetary Fund said last week that the law was “in line with the best international standards” and stressed the urgency of its implementation.
Critics hold that according to the new law on public procurement, “any public contract is competitive and must therefore automatically be put out to tender,” said international lawyer Karim Daher. Ziad Hayek, the former secretary general of the High Council for Privatisation and Public-Private Partnerships, said the contract seems to qualify as such a partnership.
“According to the PPP law, a feasibility study must be conducted with cabinet approval before launching a tender. The tender must have at least three bidders to be considered valid,” Mr Hayek said.
Mr Daher said there was no third way that would allow the contract to be awarded without first undergoing the tender process.
“Any attempt to do so is a violation of the procurement law or the PPP one,” he said.
Mr Hamie said he turned to a 1947 law regarding the occupation of open lands by airlines, which would give his ministry a special regime enabling him to award the contract through a mutual agreement.
Mr Hamie did not respond to a request for comment. “This law is now obsolete since the adoption of the 2021 procurement law, which includes Article 114 that nullifies any incompatible prior text,” Mr Daher said.
The debate around the deal for the new airport terminal makes its future uncertain.
Jean Ellieh, director of the Public Procurement Authority, the regulator responsible for monitoring public contracting, requested the file from Mr Hamie yesterday.
He told The National he had not received it yet.
This is a public procurement contract and it must be examined as a public contract, Mr Ellieh said.
“We will assess if there are any exceptional circumstances that could justify awarding it without competitive bidding. But I need to review the file before expressing an opinion.”
In addition to the PPA, the Court of Audit, which oversees the management of public funds, has also requested the file for review.
The head of the Parliamentary Committee on Public Works called for a session today with the caretaker minister, representatives of the Court of Audit, and the PPA’s director, to discuss the contentious issue.
“We will confront the minister with his choice not to launch a competitive process,” said Mark Daou, one of the 13 opposition MPs in parliament.
“We hope that this meeting will increase pressure on the authorities to stop the current process and initiate a more transparent one.”
We hope this meeting will increase pressure on the authorities to stop the process and initiate a more transparent one
MARK DAOU
Lebanese MP