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French Version

Failure of cellular auction and tender will have long-term fall out (Daily Star)

Investors concerned for country’s reputation abroad

The recent failure of the government to launch its first auction and tender of the cellular networks will leave its mark on the country for many years to come.

The effects will only become more visible and painful as politicians continue their endless squabbling about the merits of privatization.

Meanwhile, the government wants to restart the entire auction and tender process on the grounds that four companies pulled out of the bidding for mysterious reasons.

It is also reluctant to award the management contracts to LibanCell and Investcom because of an ongoing legal dispute between the two firms and the Telecommunications Ministry.

But many believe that the outcome of this auction and tender was inevitable because some politicians were reluctant to give away the money-generating telecommunications sector.

The debate between supporters and opponents of privatization has reached a point of no return amid signs that the public debt will exceed the $36 billion mark by the end of 2004. “I honestly don’t care who is right or wrong. What I care about is Lebanon’s reputation abroad,” one frustrated investor said.

He said that politicians did not consider this aspect of the issue. This statement reflects the general mood among many companies and investors who are increasingly concerned about the effect of the results of the tender on the country.

Privatization is one of the few options the government has to ease the public debt.

Prime Minister Rafik Hariri, who skillfully managed to get a $4.4 billion soft loan pledge from donor states during the “Paris II” conference in November 2002, will have a lot of explaining to do.

Hariri told 18 countries and international organizations that the government could generate $5 billion from privatization and securitization of the cellular sector. The political climate of the country, including his public rift with President Emile Lahoud, interfered with Hariri’s ambitious plans and he fell far short of projected earnings.

The question that lingers in the minds of all investors is why the government bothered to invite firms to take part in privatization if it never intended to follow through with the plans.

Privatization advocates argue that transferring a state-owned entity to the private sector should be seen as more than just a way to wipe out public debt.

Economist Kamal Shehadeh has said repeatedly that privatization would encourage companies to invest more in the telecommunications and electricity sectors.

But this perception does not enjoy the support of some politicians who are apparently worried about losing their leverage in companies marked for privatization.

Hariri and his supporters believe that one way to end political meddling in the affairs of state-owned companies is to pass them to the private sector.

Most of the state-owned companies suffer from numerous ailments such as inefficiency, corruption and redundancy. “Privatization is our only hope to get rid if these problems,” one investors said, adding that politicians are not eager to take Lebanon into the 21st century.

Beirut 19-01-2004
Osama Habib
The Daily Star

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