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French Version

Port Authority, private operator bicker over war tab

Beirut's Port Authority and the private company managing the port are battling over compensation for what the private company spent to keep the facility running during the two-month Israeli naval blockade this past summer.

The private company - the Beirut Container Terminal Consortium (BCTC) - spent about $700,000 during the blockade and wants compensation from the Port Authority, according to BCTC chairman and CEO Ammar Kanaan.

The two sides negotiated Saturday morning and still need to agree on who will cover some $500,000 in wages paid to BCTC workers during the blockade, Kanaan told The Daily Star Saturday. The BCTC would cover most of the other expenses, he said.

Kanaan first disclosed the details of the conflict when he spoke at a reconstruction conference in Beirut November 9.

He said that the negotiations were not acrimonious, adding that the issue should be resolved this month.

"There's been a very positive reaction on [the Port Authority's] part to close this matter very quickly," Kanaan said.

"We are making tremendous headway," he added.

Port Authority head Hassan Qoreitem said the two sides were working toward a mutually acceptable solution.

"We will give [Kanaan] what we believe is his due," Qoreitem said. The Port Authority is "fair. We do not take advantage of our dominant position," he said.

The BCTC will submit to the port this week a detailed breakdown of the BCTC's war-related costs. Under the contract between the BCTC and the port, the Port Authority must pay all additional costs if it instructs the BCTC to continue operating the port when a force majeure such as the blockade occurs. The conflict between the Port Authority and the BCTC arose over the Port Authority's instructions and which costs qualify as additional.

The sharpest disagreement revolved around the BCTC's decision to keep operating the port - Qoreitem said the BCTC had no choice but to continue working, while Kanaan said the BCTC could have closed the port and instead chose to continue operations out of a "sense of responsibility," and so the Port Authority should assume a fair burden of the costs.

"We did not cease operations for a day," Kanaan said. "We delivered containers under bombing. I could have caused severe damage to the Port of Beirut [by closing]. I could have hurt the Lebanese economy. I didn't, and we should share the cost. That shouldn't be rewarded with a position that says, 'It's your problem.'"

"No, I don't agree," Qoreitem said. "I think his contract forces him to [keep working]."

Kanaan had said the Port Authority's wartime instructions were "wishy-washy," but Saturday he revised his position and said the Port Authority had instructed the BCTC to continue running the port. From a legal perspective, this new position enables the BCTC to argue that the Port Authority must pay all additional costs, should the issue go to arbitration. Under the contract, the two sides will go to the Chamber of Commerce for arbitration proceedings if they cannot reach a negotiated settlement.

The two sides agreed Saturday that the BCTC will bear equipment-maintenance costs during the blockade, and the BCTC says it is "inclined to accept" that it must bear $200,000 in insurance payments made during the blockade.

The Port Authority will compensate the BCTC for expenses stemming from the war, such as handling and storing empty containers left at the port during the war. The bulk of the remaining costs - about $500,000 - represent what the BCTC paid workers during the blockade.

The BCTC took over management of the port in 2004. The Port Authority brings in revenue of $60 million annually against annual spending of $30 million. More than 90 percent of Lebanon's imports come through the port.

Beirut,12 04 2006
The Daily Star
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