German firms unveil $7.2bn proposal to revamp Beirut port

Plan is first 'comprehensive approach' to reconstruction, says country's ambassador to Lebanon

The consortium expects the first phase of work to rebuild the destroyed Beirut port to take about four years. Courtesy Ammar Abd Rabbo

A consortium including German consultancy firm Hamburg Port Consulting and Canada-based real estate company Colliers International announced on Friday a $7.2 billion investment proposal to rebuild the port of Beirut that was destroyed by a devastating explosion last August.

The proposal allocates $1.2bn for infrastructure works, which could potentially be financed by international bodies such as the European Investment Bank, as well as $5bn in private investment, said Hermann Schnell, head of workplace consulting and project management at Colliers International's German office.

In addition to suggesting a new port model, the project aims to attract financing to build affordable housing and rebuild homes damaged by the blast – while preserving the neighbourhoods' cultural heritage.

The consortium advised that the Lebanese government keep the expected $2.5bn in profit in a trust fund supervised by the World Bank, the European Investment Bank and Germany.

But the proposal cannot go forward until the Lebanese government enacts long-awaited reforms to increase transparency and fight corruption, said German ambassador to Lebanon Andreas Kindl.

There is a "consensus in the international community" to help Lebanon "if and when swift and substantial political and economic reforms are undertaken by a government that is willing to do these reforms", he said.

“What you see is a private initiative,” he said. “I think that it’s the first comprehensive approach to a serious redevelopment, not just of the port of Beirut, but also of the surrounding areas … that were destroyed.”

The consortium expects the first phase of the work – including land reclamation and the transformation of the city motorway – to take about four years.

Project leaders, including the Lebanese-German Business Council, met caretaker prime minister Hassan Diab and other high-ranking officials earlier this week.

A large stockpile of unsafely stored ammonium nitrate exploded on August 4, killing over 200 people and destroying more than 30,000 homes. The causes of the disaster are still under investigation.

Mr Diab resigned in the wake of the blast, pushing the country deeper into its worst-ever economic crisis, caused by decades of mismanagement and corruption.

Lebanon is currently paralysed, as his successor, prime minister-designate Saad Hariri, has been unable to form a government due to political infighting.

The consortium proposes the extension of Beirut's port east towards an existing industrial area and the conversion of space not suitable for the port into "community-based real estate development", said Suhail Mahayni, managing partner at Hamburg Port Consulting.

The port’s biggest challenge is “congestion caused by storage areas,” said Lars Greiner, associate partner for the Middle East and North Africa at Hamburg Port Consulting.

The best solution would be to build a bridge towards existing landfills located in eastern suburbs of Beirut, according to Mr Greiner.

Beirut’s giant grain silos, which were damaged in the blast, should be downgraded in size, he said.

“Realistically, the modern trend is for cargo to move through ports, not to be stored in ports,” he said.

Lebanese officials say that France and French container shipping group CMA CGM had also shown interest in rebuilding Beirut's port as a means of securing influence in the region.

Beirut governor Marwan Abboud, who attended the press conference, welcomed the consortium’s proposal.

"Despite our feeling and impression that there's no more hope in the future, someone came from abroad to tell us: 'You are a nation that deserves to live,'" he said.