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French Version

Political infighting over cellular sector continues, ensuring lack of resolution (Daily Star)

Failure to privatize could seriously affect reform in the country

Some analysts fear that the government will waste another opportunity to reduce the $32 billion public debt and turn the economy around. This fear became more real as they watched the live televised parliamentary debate over the controversial cellular issue.

“The heated debate in the parliament over the cellular issue has once again demonstrated that this government is not capable of extricating Lebanon from its current economic problems,” one analyst said. He added that politicians were only interested in scoring points against each other instead of uniting against the problems plaguing the country.

The split between the ministers came to the surface when the deputies grilled the government over its failure to safeguard its rights in the telecom sector.

Some of the opposition deputies, seeking a no confidence vote against the government, were surprised to see Minister of Finance Fouad Siniora and Telecommunication Minister Jean Louis Qordahi giving two different views about the cellular networks.

Siniora said that Qordahi’s figures for the revenues of the cellular sector were not accurate, adding that the minister did not take into account the $180 million that was paid to both Cellis and LibanCell in return for the investment made by the companies. He added that if this was taken into account, the monthly revenue of the cellular networks would be around $44 million a month.

Qordahi said that his ministry had been paying $49 million to the treasury ever since the government took control of the networks. He added that the ministry had spent $40 million in the last 15 months to upgrade the networks.

The government revoked the Build Operate Transfer (BOT) contracts in 2002 to pave the way for the auction and tender of the cellular networks.

Prime Minister Rafik Hariri suggested canceling the BOT contract to silence those who claimed he was protecting the cellular companies.

This very public disagreement comes at a time when the Telecommunication Ministry is inviting companies to bid for a management contract of the two mobile networks.

Five companies have pulled out of the tender and two other are expected to follow suit in the next few days. Qordahi said that the current political climate may discourage more companies from participating in the bidding.

Riad Bahsoun, a leading telecoms expert, said that it would be really embarrassing if less than 24 companies applied for the tenders. He added that no company was taking Lebanon seriously any more after the failure of the country’s first ever auction and tender.

French giant Orange, Detecon, MTC and a Greek company pulled out of the race for different reasons. Some of the companies complained that the conditions set by the Telecommunications Ministry and Higher Privatization Council were impossible to meet.

Only LibanCell and Investcom offered reasonable fees for managing the contracts, but their applications were rejected by the cabinet on the grounds that these two firms had a legal case against the state. “No one knows for sure the true revenues of the telecom sector and this will create a major problem for the government in the future,” Bahsoun said.

Industry analysts said they were puzzled that Qordahi seemed reluctant to disclose the true figures after the Dutch consulting firm KPMG installed special devices to monitor the billing of the two companies.

Qordahi and former Telecommunication Minister Issam Naaman repeatedly accused Cellis and LibanCell of hiding revenues from the state.

Later this year, an arbitration committee based in Paris will rule on the dispute between the state and the current mobile operators. Former prime minister Salim Hoss accused the companies of violating the BOT contracts.

The government claims that Cellis and LibanCell have both exceeded the number of subscribers originally set at 250,000 each. However, the companies rejected these accusations and referred the case to international arbitration.

Although Qordahi is confident of winning the arbitration, some experts say that the companies have prepared the case well and have hired top lawyers.

One telecom expert said that if the international arbitrators passed a ruling against the government, the government could have to pay more than $1 billion in damages. He urged the government to reach an out-of-court settlement to avoid any embarrassments.

Beirut 01-03-2004
Osama Habib
The Daily Star

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