Lebanon served with $130 million claim

BEIRUT: As if Lebanon's coffers weren't struggling enough, officials were slapped this week with legal proceedings seeking $130 million in damages for their delayed payment for work undertaken to enhance Electricity Du Liban's power grid. 

Danish company BWSC-MAN, tasked with expanding the Jiyyeh and Zouk power plants, called officials for arbitration over the payment after numerous delays and setbacks hindered the completion of the project. 

BWSC-MAN was first awarded the tender in 2013 for the construction of 4 Diesel 18V48/60 engines generating an output of 78 MW in Jiyyeh, and 10 18V48/60  engines generating 194 MW in Zouk. 

After the Ministry of Energy awarded the tender based on a specific set of conditions, it then negotiated revised terms with BWSC-MAN, which the Court of Audit challenged given that the initial contract was altered. 

This prompted the Ministry of Finance to demand the new contract be examined by Cabinet and withhold payment, before a tug and pull ensued with the Ministry of Finance which interrupted the company's operations for over a year before work was resumed. 

After threatening to take the matter before a Paris-based arbitration court, the Ministry of Finance finally capitulated and released the funds, the damage, however, was already done, according to BWSC-MAN. 

If BWSC-MAN is successful in its claim, Lebanon's coffers would be served another blow, with its current economic woes well documented. 

The government debt has continued to grow to alarming levels, equaling a staggering 153 percent of Lebanon's gross domestic product, only behind Japan and Greece.

While Moody’s expects the servicing costs on this debt to absorb 44 percent of the government’s revenues this year, Lebanon’s current account deficit will reach nearly 25.8 percent of GDP, according to the International Monetary Fund.