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Parliamentary Inquiry: About the measures taken to keep Lebanon's international reputation
Published on 10/12/2014

Parliamentary Inquiry

presented by MP Robert Fadel

About the measures taken to keep Lebanon'sinternational reputation and credibility and avoid that a creditor company financingthe Lebanese State has recourse to Paris Club

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Whereas itappeared that the dispute between the Lebanese State and the Danish"BWSC" company –commissioned to build new reciprocating engines in thepower plants of Zouk and Jiyyeh, a project financed by both KWA – HSBC foreignbanks, has escalated due to the State's payment default to the said company, asconfirmed in the letter addressed by the Denmark's Export Credit Agency to theMinister of Finance and the Minister of Energy and Water on 14/10/2014,following the suspension of works by the contractor who probably claimed thepayment of the penalty stipulated in the contract for every day of delay andthat is almost equal to the amount due to the company given that time elapses withoutfinding so far any solution to this problem.

Whereasthis dispute has entailed increasing damages on both Lebanon and the Lebanese, giventhat refraining from installing the engines and integrating them into the grid hasdeprived the Lebanese from additional daily power supply on the one hand, andthat the penalty will cost the Lebanese Treasury huge amounts of money thatwill be added to Lebanon’s electricity sector deficit that stands at more thantwo billion US dollars a year, without making any progress in terms ofservicing the Lebanese citizens on the other hand, noting that what the publicis actually witnessing – according to an official letter addressed to theMinister of Energy and Water (MoEW) and the Minister of Finance by Denmark’s ExportCredit Agency – is a warning of having recourse to Paris Club for thedefaulting States, which is in fact the worst.

Whereas,regardless the fact that each of the two mentioned ministries holds the otherresponsible for this situation, and apart from the ambiguity of the position ofthe Prime Minister on this level, it is worth noting that the severerepercussions resulting from this case are a serious threat and a hard slapthat would affect the international reputation and credibility of Lebanon, ifDenmark’s Export Credit Agency, supported by its government, insists on havingrecourse to Paris Club.

Whereas –from a sovereign angle– we have to be aware of the seriousness of havingrecourse to Paris Club following Israel’s adherence to it, as the twentiethmember, since June 2014, and to understand that this would allow it to aggressLebanon economically in order to hurt it and destroy its reputation andcredibility, noting that Egypt has rushed to settle its due debts amounting to/700/ million US dollars before Israel joined the Club in order to avoidfalling in the Israeli trap.

Whereas –by virtue of our representation of the people– and in order to keep Lebanon’sinternational reputation and credibility towards its creditors and its credit rating,we are tackling this serious issue, refusing to let the political disputes andconflicts destroy the image of Lebanon that has remained pure white even in themost difficult times the country has gone through during the war and in theabsence of the State.

The ParliamentaryInquiry addressed in the context of the regulatory action taken to controlthe works of the government, remains unanswered by the Prime Minister, theMinister of Energy and Water and the Minister of Finance. This inquiry includesthe following questions that need to be answered:

1-     Whois responsible for inflicting Lebanon huge amounts of money such as the penaltyresulting from the payment default to the contractor?

2-     Whatis the position of the Prime Minister regarding the serious stage that thiscrisis reached? What are the measures taken in order to avoid the recourse of Denmark’s Export Credit Agency and the Danish Stateto Paris Club?

3-     Untilwhen the Lebanese citizens will remain underestimated and deprived from thepromised prospective increase in power supply that would have been achievedshould the new equipment be connected to the net, while everyone complainsabout the high cost of private generators?

Based onthe above, we hope that the government, represented by the Prime Minister, theMinister of Energy and Water and the Minister of Finance, answer these questionswithin the legal notice period, in order to act accordingly.