Lebanon’s Public-Private Partnership Woes: A Deep Dive

Lebanon’s Public-Private Partnership Woes: A Deep Dive

In a troubling trend, Lebanon finds itself grappling with an absence of competition in its Public-Private Partnership (PPP) endeavors. When the Lebanese government solicits bids for the management of various public services, such as postal services and port management, a disconcerting pattern emerges—there is typically just one bidder.  While Lebanon’s macroeconomic conditions undoubtedly contribute to the challenge, they only scratch the surface of the problem. In light of these pressing concerns, LIMS has released two exclusive policy briefs that shed light on the root causes of this pervasive issue.

The first policy brief delves into the impracticality of Public-Private Partnerships in Lebanon. Political discord has thwarted the appointment of the Higher Council for Privatization and Partnerships, rendering the PPP framework unworkable. Even in the hypothetical scenario where the council is in place, the legislation remains unattractive. For relatively straightforward projects, the process of preparing for partnership projects under existing laws can span an excessive three to four years—a glaring mismatch for projects with potentially short lifespans. Moreover, the legislation fails to differentiate between projects based on their complexity, subjecting all contracts to the same intricate mechanisms and procedures.

The second policy brief highlights the barriers inhibiting the involvement of small and medium-sized enterprises (SMEs) in public procurement, despite comprising a staggering 95 percent of the country’s businesses. The limited participation of SMEs in public procurement contracts is attributed to a multitude of factors, including prolonged delays in payment, difficulties in accessing procurement-related information, and onerous conditions. To redress this imbalance, the brief advocates for mandatory contract splitting by buying entities, the implementation of reasonable financial guarantees that do not stifle SME participation, and the reduction of unwarranted rules and conditions.

Above all, resuscitating private sector investment in Lebanon necessitates a departure from the norm of reinforcing monopolies. Historically, public-private partnerships and public procurement have often been structured to enhance monopolies. The victor typically secures the right to operate as a monopoly, pledging payments to the government in exchange for this privilege. Unfortunately, such monopolies invariably translate to exorbitant prices and subpar services for consumers, burdening Lebanese businesses with inflated operational costs and stifling growth.

The path forward, LIMS contends, hinges on dismantling these monopolies rather than fortifying them. By opening the provision of services—such as mail delivery, internet access, or vehicle inspections—to multiple companies to operate, Lebanon can empower consumers with choices and erode the need for excessive regulations and protracted procedures that span four to five years.

  • LIMS Exclusive: The Partnership Law With The Private Sector Does Not Fit The Lebanese Reality After The Financial And Economic Crisis,              August 11, 2023: Limslb, Article AR
  • LIMS Exclusive: Small And Medium Enterprises Are “Deprived” Of Entering The “Public Procurement Market” And Miss Out On The Economy With A Real Growth Opportunity, August 14, 2023: Limslb, Article AR
  • Economic Landscape | The Solution To The Electricity Crisis Is Getting More And More Complex, August 22, 2023: Al Jadeed, TV Interview AR