Beirut’s controversial $122m airport terminal deal cancelled after outcry
▶ Critics highlight lack of bidding process and transparency on how contract was awarded to Irish company
Lebanon’s government has cancelled a $122 million airport terminal contract three days after it was announced, amid public outcry.
Caretaker Minister of Public Works and Transport Ali Hamie said the decision followed a request from Hezbollah, the powerful Iran-backed political party that he represents in the government.
It also came after discussions on Thursday with the parliamentary committee on public works, representatives of the Court of Audit, and the director of the Public Procurement Authority, Mr Hamie said.
“Although the project of constructing the new terminal for travellers is of great importance, in the wake of the legal controversy taking place in the country … I announce courageously that we terminate the contract and that we consider it not to be in effect,” he said.
Mark Daou, one of the 13 opposition MPs in parliament, said the reversal showed ministers can be held accountable.
“In this case, we were able to protect the current laws on public procurement, which provide a transparent framework to award such projects,” he said.
Mr Hamie announced on Monday that the government had awarded a contract to build and operate a new terminal at Beirut’s Rafic Hariri International Airport for 25 years through a mutual agreement with Lebanese Air Transport and Irish airport company daa International.
Daa is a state-owned company that operates the Dublin and Cork airports. Its subsidiary, Aer Rianta International, has been operating Beirut duty free since 1996 with Phoenicia Trading, owned by Lebanese businessman Mohamed Zeidan. LAT is the ground handling company for Beirut’s airport, with Saudi Prince Turki
bin Muqrin among its key shareholders, according to the Lebanese trade register.
However, the absence of a competitive bidding process for a contract valued at more than $100 million brought public criticism and opposition from civil groups and some MPs.
Critics said the agreement could breach the law on public procurement passed in 2021 to enhance transparency in awarding public contracts.
The international community praised the law as a positive step towards adhering to global standards and made its implementation a prerequisite for providing crucial financial assistance to Lebanon.
Mr Hamie, daa and the press office of the Irish Ministry of Transport did not respond to requests for comment.
Karim Daher, an international
lawyer and board member of Aldic, the Lebanese association for taxpayer rights, said the cancellation of the contract was an “important step”.
Aldic, along with nine other civil society groups, issued a petition denouncing the contract.
“Civil society organisations campaigned for the passage of the new law and will continue to do so to ensure its full implementation,” Mr Daher said.
“It is one of our many ongoing battles for greater integrity,
transparency, and accountability in Lebanon.”
He also questioned why Mr Hamie submitted the contract for review after it was signed.
The cancelled contract was on a build-operate-transfer basis, a common arrangement in which the state grants a concession to private companies to finance, build and operate a large infrastructure project that it cannot fund on its own.
It granted the consortium the right to operate the airport terminal and collect revenue for 25 years. Control of the airport terminal would then return to the state.
“These contracts are highly lucrative for private companies,” Mr Daher said.
Mr Hamie said he would take part in a meeting of the parliamentary committee on public works next week to “review the
details of the new terminal project”, including the reasons for the project, its objectives, its legal framework, financing and the expected benefit to the state.
The companies could challenge the decision and appeal for compensation. Alternatively, they may choose to accept the decision to maintain a positive relationship.
Beirut airport’s sole terminal was built in 1998 and has not undergone expansion in more than 20 years, leading to overcrowding and delays.
Lebanon’s infrastructure has suffered from three years of an unprecedented economic crisis, following decades of reckless spending of public funds by the state.
This often involved profitable infrastructure contracts being awarded to companies with political connections.
Mark Daou, one of 13 opposition MPs, said the reversal showed that ministers can be held accountable