BEIRUT: The Lebanese government owes contractors around $200 million for bills that have accumulated since 2011, the head of the Contractors Association said, warning that many would freeze projects if the payments were not settled soon. “It has been 15 months since many contractors received any payments and banks are no longer giving out loans to contractors because they feel the government is constantly procrastinating in making the payments,” Fouad al-Khazen told The Daily Star.
Khazen said the association, which represents 2,000 contractors, had met with caretaker Prime Minister Najib Mikati and Mohammad Safadi, the caretaker finance minister. He said it was to meet with caretaker Public Works Minister Ghazi Aridi next week.
“We are hoping for a quick solution that suits all parties because if the initiatives fail ... contactors will not be able to keep working and ongoing projects would be suspended,” he said.
“If you have a car that ran out of fuel, it would not take long before it actually stopped.”
Last week, the association said public-works contractors would shut down businesses and lay off workers if the payments were not released.
An industry source told The Daily Star that Mikati suspended payments after several ministries awarded projects in an “arbitrary” manner for roads, water networks and other infrastructure across Lebanon.
Finance Ministry officials were not available to comment on why the funds had not been released.
Asked how construction contractors were affected by the decline in the real estate market, Khazen said the lower number of apartment sales had not yet translated into a significant decline for the industry.
“Wherever you go, you can see cranes and towers being constructed in Beirut. ... So far there are no serious problems facing private sector contracts,” he said.
The construction sector has been facing slowed activity as new construction permits posted significant declines since last year.
Construction permits dropped 16.2 percent in the first six months of 2013 following a drop of 11.7 percent in 2012, the most recent figures show. Real estate transactions fell by more than 5 percent in the first seven months of 2013
The real estate market has undergone a shift in demand over the past two years, with the majority of buyers and renters opting for small apartments and shying away from large luxurious ones.
Close to 52 percent of residential permits in the first half of 2013 were aimed at apartments no more than 150 square meters, according to a report by Bank Audi.