The National - News

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

- NADA MAUCOURANT ATALLAH

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

 ?? AP ?? Critics say the plans for a $122m expansion of Rafic Hariri Internatio­nal Airport in Beirut are opaque and fraught with risk
AP Critics say the plans for a $122m expansion of Rafic Hariri Internatio­nal Airport in Beirut are opaque and fraught with risk

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