Why are vehicle registration service rates changing?

The duration of Inkript's contract will be extended to make up for periods of registration center closure.

Why are vehicle registration service rates changing?

A man carrying vehicle registration plates at the Nafaa in Dekwaneh. (Credit: Mohammad Yassine/L'Orient Today)

After months of closure, Lebanon’s vehicle registration departments, known as the Nafaa, reopened last Tuesday, but at limited capacity. The five Nafaa centers, located in Dekwaneh (Mount Lebanon), Zahle (Bekaa), Saida (South Lebanon), Nabatiyeh (in the governorate of the same name), and Tripoli (North Lebanon), experienced frequent closure since 2019.

The reason behind these closures is two-fold.

On one hand, an investigation was launched into alleged corruption of Nafaa officials, leading to a six-month closure that began at the end of 2022.

On the other, there was conflict between the Traffic and Vehicle Management Authority (TVMA) and its specialized information security provider, Inkript Identification Technologies SAL.

After a week of negotiations between the two parties, the Nafaa was reopened.

The issue is expected to be resolved in the coming days, and prices of new driver’s licenses, vehicle registration certificates, and other services provided by Inkript on behalf of the Nafaa, will likely be raised.

Driving licenses

One of the Lebanese subsidiaries of the Resource Group Holding, Inkript, successfully secured multiple contracts through public tenders issued by the Lebanese authorities during the 2010s.

One of these contracts, tendered by the TVMA, a government institution affiliated with the Ministry of Interior and Municipalities, involved the provision of various specialized services on behalf of the Nafaa.

This time around, the objective is the same delivering a range of services on behalf of the Nafaa.

“The call for tenders, with specifications approved by the government, was won by Inkript in competition with five other candidates, including international companies offering the lowest price and the most suitable technical proposals,” said Nathalie Haddad, Communications Manager at Inkript, to L’Orient-Le Jour.

Spanning seven years and valued at $174 million (including VAT), the contract accounts for the supply of four specific products: biometric driving licenses, vehicle registration certificates, license plates, and RFID (radio frequency identification) chips. Additionally, it includes a service for deploying the necessary IT infrastructure for these products, involving a team of over 100 field employees.

“There are other services planned, but these are supplementary to the core services,” Haddad said.

She also noted that the TVMA’s decision aligns with the introduction of the new Highway Code, which was approved in 2012 but only became effective in 2015, after all the requisite regulations were put in place.

The implementation of Inkript's mission, as outlined in its contract, also faced delays for the same reasons. While the company signed its contract in 2015, it wasn’t until September 2016 that the issuance of the first license plate marked the start of the 7-year period stipulated in the contract.

The impact of the crisis

Everything went smoothly until 2021. The crisis was in full swing, the Lebanese lira collapsed and the LL 1,507.5 to the dollar rate was still being used to charge the products Inkript delivered.“We then asked the TVMA to specify the quantity of products it wished to order within the limits of the expected amounts, given that the execution orders were in lira, but that we had to pay for our supplies in fresh dollars,” said Haddad.

However, the TVMA did not respond to Inkript’s requests, and the company continued to deliver a small part of the products requested for 2021 and 2022, while the lira continued to devalue. Besides requiring readjustment, royalties paid to Inkript by the TVMA have been suspended since early 2020. In the meantime, the cabinet attempted to resume operations with a decision issued on April 14, 2022, but without success.

This situation persisted until 2023, and the disagreement between the TVMA and Inkript peaked in July. The TVMA accused Inkript of holding Nafaa hostage, so that it could be be paid in dollars. Meanwhile, the company claimed it was unable to continue fulfilling its obligations until the TVMA specified the quantities and services to be provided and adapted a method of payment.

On Aug. 31, the Court of Audit issued an advisory opinion stating that Inkript could be prosecuted, but only for having shut down the systems and cutting electricity on Nafaa’s premises, and not for failing to perform the services under its contract.

Parliament in charge

The matter finally arrived at the parliamentary Public Works Committee, where discussions flared at a meeting held on the same day as the publication of the Court of Audit’s opinion.

The committee’s chairman, MP Sagih Attieh, was particularly scathing. He told L’Orient-Le Jour that “Inkript’s directors (...) should currently be in prison, as they are working without an official contract or agreement with the government.” Attieh’s accusation was rejected by the company. The MP also believes the Inkript's contract price is too high.

Attieh also said that the Public Works Committee tried to initiate dialogue with the company to “clarify their legal status and negotiate the exorbitant amounts they are demanding,” but that its management “categorically refused,” and threatened to launch an investigation. The same day, the committee announced that a call for tenders would soon be made to replace Inkript.

Asked immediately after, the former president of the State Shura Council, Judge Chukri Sader, refused to give his opinion on the substance of the case, but said he is surprise that the option of making a new call for tenders had not been put on the table well before Inkript’s contract was due to expire. Although Inkript’s contract was supposed to expire this September, its duration actually needs to be extended by at least two years to compensate for the various interruptions and delays in the execution of its contract.

While everything seemed to indicate that the stand-off was set to last, the Traffic Management TVMA took everyone by surprise on Monday when it announced the Nafaa’s reopening the next day. When contacted, Inkript told L’Orient-Le Jour that negotiations began before the weekend and resulted in an agreement which normally provides for an amendment to the rates to be paid for each category of products supplied by Nafaa.

“The new rates are currently being studied and the process could take several days,” said Marwan Abboud, the TVMA acting Director General on Monday, following a meeting with Inkript. Therefore, it remains uncertain if Nafaa operations will be up and running again next week, like the TVMA announced Monday.

This article was originally published in French in L'Orient-Le Jour. Translation by Joelle EL Khoury. 

After months of closure, Lebanon’s vehicle registration departments, known as the Nafaa, reopened last Tuesday, but at limited capacity. The five Nafaa centers, located in Dekwaneh (Mount Lebanon), Zahle (Bekaa), Saida (South Lebanon), Nabatiyeh (in the governorate of the same name), and Tripoli (North Lebanon), experienced frequent closure since 2019.The reason behind these closures is...