Caretaker Minister of Public Works and Transport, Ali Hamieh, and airport director Fadi Hassan at a press conference last Wednesday, March 22, 2023. (Credit: Ministry of Public Works and Transport)
Reaching the boarding gates on time at Beirut’s airport is often an accomplishment, especially during the overflow of peak seasons and religious holidays.
The issue is nothing new. In 2018, authorities started plans for expanding the airport, which still has only one terminal. It was built in 1998 and can accommodate six million passengers per year.
But this capacity has been exceeded since 2013. Airport figures estimated a peak of 8.8 million travelers passing through Beirut in 2018. This year, they expect 7.2 million people.
The airport file, which had been left neglected in the drawers of successive governments, was suddenly revived this week by the caretaker Minister of Public Works and Transport, Ali Hamieh. Hamieh has plans to open a second airport terminal by March 2027. This new terminal could accommodate up to 3.5 million passengers per year.
Last Monday at the Grand Serail, Hamieh announced this plan alongside caretaker Prime Minister Najib Mikati and Irish Minister of State James Browne, whose country will help operate the new terminal. News of the initiative was well received by Lebanon’s tourism sector.
The sector “has been waiting for this for a long time,” Jean Beyrouthi, president of the Syndicate of Owners of Beach and Seaside Resorts, told L’Orient-Le Jour.
Caretaker Tourism Minister Walid Nassar referred to the airport’s expansion as a “necessity.”
A presentation video detailing the project was posted on Twitter and information quickly spread throughout the media. What particularly captured people’s attention was the project’s cost. Estimated at $122 million, the hefty price tag raised questions about Lebanon’s ability to finance such a project in the midst of economic disaster.
Hamieh responded to the question of finances on Wednesday in a press conference, which he held jointly with airport director Fadi Hassan. At the conference, he presented the reasons, objectives, cost and timeline of the project, which is expected to begin moving in the coming weeks.
Prospects of the airport's expansion has inflamed the local press, social media and many political opponents of the Hezbollah-affiliated minister.
The real controversy over the airport’s expansion, however, stems from concerns over the legality of the project itself.
International investors
With the Lebanese government clearly unable to finance the project, the caretaker minister has called upon the Irish company, Dublin Airport Authority International (DAA International), to fill this purpose. Partly owned by the Irish government, the organization specializes in the creation, management and operation of international airports and it previously developed three airports in Saudi Arabia.
In Wednesday's press conference, it was revealed that Hamieh’s ministry signed a memorandum of understanding with DAA International last Monday, allowing the latter to finance the four-year construction of the terminal.
The terminal is to be managed by the Lebanese Air Transport (LAT) company, which has been overseeing a large portion of ground airport activities since 1958, as well as the Saudi group Asyad Holding (already invested in LAT), a financial consultant with knowledge of the project told L’Orient-Le Jour. The source requested anonymity to preserve their employment.
According to Hamieh, the project is expected to create over 2,500 jobs, increase the number of flights (including those of budget airlines) and destinations and bring in “fresh” currency to Lebanon.
Hamieh has promised the Irish company all the profits generated by this second terminal until 2052.
Profits will primarily come from duty-free taxes, aircraft parking fees, maintenance, subcontractors and passenger taxes, according to an anonymous source close to the matter. The source added that many investors have already taken positions in the future terminal, particularly for commercial leasing.
“Certainly, Lebanon is currently going through a dark tunnel, but the return to the light will come faster than we imagine,” continued the source. “The country will soon enter the beginnings of a better period than when it was nicknamed the Switzerland of the Middle East.”
Mutual agreement
The memorandum of understanding signed last week is only a first step in the process. An official contract between the Transport Ministry and the Irish company has not yet been signed.
The contract should be signed “between May and July,” said the same anonymous source.
This will give the caretaker minister plenty of time to settle the legal implications that have come up since Monday, namely the contractual nature of the “mutual agreement” between the two parties, which bypasses the Public Procurement Regulatory Authority (PPA).
Jean Elliye, the director of the PPA, declined to comment on the procedure’s legality and stated that he wishes first to study the relevant documents, which he requested from the caretaker minister on Wednesday morning.
Elliye stated in a March 24 press release that the files will be in his hands “at the beginning of next week” and that he would later “ issue a legal opinion” on the matter.
On Friday, the Court of Auditors requested the same documents for the purpose of review.
Among the initiative’s critics is Forces of Change MP Mark Daou (Aley) who called the project a “blatant violation of the law on public contracts.”
Daou’s sentiments were shared by a lawyer and a public procurement expert, who both spoke to L’Orient-Le Jour on condition of anonymity. They requested anonymity due to the sensitivity of the project.
According to the public procurement expert, Hamieh’s move is a contradiction of both legitimacy and power, since the current government is serving in caretaker mode and therefore does not have full powers.
Caretaker Tourism Minister Walid Nassar, on the other hand, refutes this argument. Nasser posits that since the Lebanese state is not paying for the terminal’s construction, Hamieh is free to pursue the matter at his own expense. Nassar also mentioned that he is waiting for a legal analysis of the case.
“In Lebanon, over the past 30 years, [the principle of] ‘sharing the cake’ has been associated with corruption, when it is not,” Nassar said. “The challenge in this dossier is not so much the qualification of the contract and its financing, but rather the state's ability to supervise this dossier throughout its duration.”
Public-private partnership
“Even if the [Lebanese] state isn't paying for the terminal, it is still a national public asset. The many risks it involves apply to everyone and this is for 25 years, which is a quarter of a century,” said the public procurement expert.
“Even the state's supervision constitutes a risk. Where is the feasibility study for this project? The legal justification given by the caretaker minister is unjustifiable.”
“Ali Hamieh claims to rely on a law granting his ministry a special set of rules dedicated to the airport,” the lawyer explained. “However, this law dates back to 1947 and is no longer in force since Law No. 48 was passed in 2017 … and Law No. 244 passed in 2021 governing public markets,” said the anonymous lawyer.
According to the 2021 law, “all public contracts are competitive and must therefore automatically go through a tender process. Fully granting a public asset to a private company is one of the exceptions to this law, but this concession must go through a law passed in Parliament,” the lawyer said.
“This is not an empty space that we would sell to a company, but rather a space on which we will build public infrastructure that will be later returned to the state. Therefore, it is not an auction, as the minister tries to make it out to be, but a public-private partnership. Anyone can go on Google or even ChatGPT to understand what this means and realize the minister's contradictions.”
On March 24, ten civil society organizations, including the Lebanese Association for Taxpayers' Rights and Information (ALDIC), the Gathering of Lebanese Business Leaders (RDCL) and the NGO Kulluna Irada, issued a joint statement denouncing Hamieh’s methodology and the violations of the public procurement law.
One public procurement expert summarized the matter as follows: “We have moved from financial engineering to legal engineering.”
This article was originally published in French in L’Orient-Le Jour.