Is it fair to say that the port has been performing reasonably well in 2003?
Yes. Beirut Port has been performing well with regards to imports and total revenues, which increased from $71 million in 2002 to $75 million last year.
A much talked-about issue is the project of putting the port’s container terminal into business. Is the tender for finding an operator progressing?
It is ready. We have completed the tender documents, and they are now with the minister for final approval.
How long until an operator would be able to come in?
In the tender documents, we specified one-and-a-half months to receive responses from interested operators, but we think that we should extend that to perhaps two months. For the phase from awarding the contract, we have scheduled three to four months for the operator to mobilize and start operations. In total, we are talking about half a year.
For what duration will the contract be awarded?
It would be for 10 years, with a possible five-year extension.
A second big issue regarding the container terminal is necessary equipment, which you ordered from China. Are these gantry cranes ready for delivery?
Delivery of all the equipment we bought has already begun. I think the gantry cranes are on a boat and just left China. They require two-and-a-half months at sea because they have to go all the way around Africa. Then they require another two-and-a-half to three months of erection and testing, which, like the operator tender, brings us to the middle of the year.
Did you request a delay of delivery?
There was a delay by two months. Delivery was originally scheduled for end of March. However, we did not actually delay delivery. We pinpointed some issues in a punch list for modifications and we requested the manufacturer to change most of them in China.
Does this delivery provide all the equipment needed for the terminal?
Ideally, we should have four gantry cranes and not three, which means that ideally we should have eight Rubber-Tyred Gantry cranes [RTG] and not six. We opted to buy the strict minimum as an initial step and allow ourselves to buy more when need arises. In our contract, we have an option to buy one more fixed gantry crane and two more RTGs.
Steel prices have gone up. Could that alter prices under the contract option?
The option does not allow for a price hike due to steel price fluctuation. The only price hike is on the euro side. When we signed the option, 25% are to be rescheduled taking into regard euro appreciation.
Considering the total cost of $27 million for the equipment under delivery, you got a good deal?
We got an excellent deal.
As far as construction of the container terminal, is it correct that the total capital investment amounted to $200 million?
It was less than that and it was more than just the container terminal. The investment was closer to $180 million and it included rehabilitation of some of the old parts of the port.
Are the $27 million for the new cranes included in the $180 million or on top of that?
I believe, on top.
Did it incur specific costs for the terminal not to be operational for a period of several years?
Major cost would have been interest expenses, but the port self-financed this project and basically there were no interest-bearing loans involved. We have some maintenance costs, but those are peanuts.
But how would you assess the cost of lost opportunity from the delay?
I believe the cost of opportunity loss is in the extra services that we could have offered, mostly in transshipment, and in the quality of the service that we could have achieved. What the dollar figure for that is, who knows?
Do you consider attracting large carriers for transshipment to Beirut as a realistic vision?
I have been talking a lot with carriers, and the vision varies. There are those who think that it is absolutely impossible to have transshipment here, and then it ranges all the way to those who think that carriers will be lining up to transship out of Beirut. I think if we can sell that product at a good price we will have some transshipment but I don’t believe that we should aim at becoming a transshipment hub the way Dubai or some other ports are. Further expansion of Beirut Port would be very expensive and I do not believe that transshipment revenue would be able to cover such expenses.
Did the delay harm the concept of becoming a transshipment hub?
Today, we have very little, not to say no, transshipment cargo. The studies we have undertaken show that transshipment starts very slowly and tends to increase with time. So, a three year delay is costing some money, but not a lot.
Can you confirm that freight forwarders will be able to establish operations in the Port’s free zone?
Yes, we have been working very closely with customs on that issue and we just modified the rules for the free zone in order to allow logistics companies to operate inside the free zone. This is especially for re-packing, handling cargo for third parties, and to undertake stock control for major companies, in order to make Beirut a center of distribution for the entire Middle East area. This is much more interesting than transshipment alone.
Last month, the port saw disputes and compensation demands over termination of stevedore contracts with the equipment contractors that have been handling cargo at the port. Would you be able to comment on the validity of their demands?
While I understand their demands and might be sympathetic to some of them, legally speaking, I cannot resolve them from where I stand.
Could you give an estimate on the value of their equipment and what amounts these companies might have invested in the past five years?
Since we are not legally bound or allowed to provide any compensation, we didn’t look into this matter. Just as everyone, I have heard of astronomical amounts of money that are supposedly being demanded. I can only say that I think the numbers I heard are far exaggerated.
