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French Version

Recession and tensions keep ports in doldrums hopes for recovery hinge on stability - The Daily Star

Imports plunged by a whopping 12 percent, and exports remain minimal despite relatively handsome gains

The year 2002 brought several good signs for Lebanon's maritime industry, which is struggling to against the effects of a stubborn recession and continued regional instability.

The Port of Beirut, Lebanon's largest, finally bought equipment and drafted plans to bring an operator to turn the facility into a cargo transportation hub in the next few years. Lebanon's second-largest maritime facility, the Port of Tripoli, signed an agreement with the European Investment Bank extending about $45 million for proposed plans to expand the facility. These two developments offset a year marred by continued recession that has stunted growth in maritime traffic.

Recession and other events contributed to a 12 percent drop in Lebanon's import bill through November 2002, compared with the same period of 2001. Exports, on the other hand, continued their rally with a 20 percent increase. But exports still amounted to only one-seventh of imports. The arrival of gantry cranes at the Port of Beirut in early 2004 should increase efficiency.

The Beirut Port Authority chose a Chinese firm to equip the facility with cranes needed to run a container terminal capable of meeting officials' lofty goals for the port. The Authority also contracted an American firm to formulate options for hiring an operator to run the cranes.

The cranes and the new terminal will be key to increasing activity at the Port of Beirut, which currently only serves a domestic market plagued by waning consumer power. The port has been pushing to become an international cargo transportation hub since 1998, when the government signed a management contract with a Lebanese-Emirati consortium to operate the terminal.

Dubai Port Authority (DPA), along with Lebanese firm PDG, were supposed to run the terminal and supply the cranes under a furnish-operate-own contract. But DPA, which entered into a technical joint venture with PDG, pulled out of the deal in mid-2001, bringing the project back to square one. The Beirut Port Authority had spent millions of dollars to build the terminal and expand its facilities while waiting for the cranes to arrive.

In 2002, a new director at the port decided to open a bid to buy the cranes, without waiting for an operator. He then commissioned American consultancy Cornell to draw up technical specifications for another tender to be opened in 2003 to line up an operator and prepare the terminal for the new cranes.

Despite the port's turbulent history, it has managed over the years to bring in roughly $70 million in annual revenue from port fees alone, not including customs revenue. But activity at the port is feeling the pinch of recession.

The introduction of a 10 percent value-added tax in February did not help, either. In the first 1 months of 2002, the port registered $65.2 million in revenue, a 3.36 percent drop from the same period of 2001. Total TEU (twenty-foot equivalent units) traffic at the Port of Beirut dropped by 0.53 percent to 272,247 through November 2002, compared with the same period of 2001.

In 2002, the port only managed to recover a few of the tourists it lost at the end of 2001, due to higher insurance costs for cruise ships in the wake of Sept. 11. The number of tourists coming to the port dropped by 32.5 percent to 2,864 in the first eleven months of 2002, compared with the same period of 2001.

Aside from the recession, other events that dampened activity at the port include the two-year-old intifada, higher war risk insurance, and now the possibility of a war on Iraq. These factors have slashed Lebanon's import bill by 12 percent to $5.09 billion in the first 11 months of 2002, compared with the same period of 2001.

Although exports are increasing, by around 20 percent a year, they remain minimal. To help boost exports, the Port of Beirut Authority reduced export fees for the second straight year. A war on Iraq would not be likely to bring good news for the port in 2003, only higher costs.

Attacks on a number of ships in the Gulf in 2002 did not raise insurance costs for ships docking in the Port of Beirut, but a war would be a different matter. The scope of war risk insurance, according to maritime officials, would depend on the longevity of the war, which countries choose to participate in it and which bases will be used to launch attacks.

Beirut 14-01-2003
Dania Saadi
The Daily Star

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