Engineers and contractors Monday called on the government to either pay its dues or face a potential freeze on all public projects.
The ultimatum came during a news conference organized by the Order of Engineers and Architects and the Contractors’ Association. The order’s president, Fouad Khazen, and the association’s president, Sobhi Bsat, issued a joint statement warning that if the government doesn’t abide by its promised schedule of payments, “then we would call for a general assembly and discuss the immediate stoppage of all work contracted by the state.”
Khazen said Prime Minister Rafik Hariri and Finance Minister Fouad Siniora promised that from July until September the government would make three equal payments of $65 million by the seventh of each month, “and this puts the onus on them to pay us by the seventh of
July as a show of good faith.”
Khazen said his order had been demanding an owed $240 million since last September, “but the government has been stalling us (by) first promising to pay by the end of last year, then saying they would pay on May 15 of this year all our dues up to April 30, 2002, but we were surprised to receive only $42 million so far.”
The government has been rounding down to the nearest $1,000 ­ “a step that is not only illegal but one that will deny us a lot of money,” Bsat told The Daily Star.
The government’s accounting and payment methods ­ usually treasury bills ­ has also angered publicly-contracted firms.
The two organizations also complained that banks are not willing to liquidate the T-bills without charging a 20 percent fee on the amount.
“That means that if I want to cash my T-bill of say $100,000, then the bank would charge me $20,000,” Bsat said, “meanwhile my profit margin is no more than 15 percent, so I am actually losing a minimum of five percent on each project.”
Both engineers and contractors say their situation is critical because they have been unable to collect the owed money, but still must pay banks interest on loans used to finance the purchase of equipment and production materials and cover employee and other overhead expenses.
“Now the government is threatening to fine us if we don’t pay our value-added tax while they have failed to pay us,” said one angry contractor, echoing a complaint heard several times at the conference that attracted around 50 people.
“In all honesty, the government wants us to continue work without pay, and even threatens to take legal action if we stop. This is oppressive behavior from an entity that is supposed to protect our rights,” Bsat said. He added that the “livelihood of thousands of engineers and contractors and their families are at stake,” and vowed not to “idly watch the sector crumble right in front of our eyes.”
The organizations said they prefer to avoid a work stoppage, but argued that payment delays may force their hand.
Khazen said that “wisdom tells us to wait for promises before we use negative action simply because if we want to take the legal route, it might take 20 years before we get our rights with the Shura Council.”
Bsat added: “Unless we absolutely have to, it is not to our advantage to stop work, having (already) mobilized crew, equipment and logistics.”
The same dilemma faces the Association of Private Hospitals, to which the government owes $267 million. Private hospitals have received only 4 percent of this amount in the form of government T-bills, and have yet to receive a schedule of payments for the outstanding debt.
“The government is telling us that as much as we collect we will give you,” a source close to the association told The Daily Star.
But the source said banks are refusing to liquidate the T-bills, forcing hospitals to borrow at their own risk using the T-bills as collateral. But if the government fails to make good on its debts, the hospitals will default on the loans.
“These loans carry 11 percent interest and the reason banks are treating the issue in this manner is that they have been burned by the government in past, when they experienced bad debts in regard to other T-bills,” the source said.
Although there are currently 140 hospitals, 70 percent of the owed money belongs to only 30 percent of those hospitals, usually those that perform critical and complex procedures.
The source said hospitals “will never refuse government patients who are considered emergency cases, but will adopt measures to reduce the risk of not being paid,” starting with making the patient pay in cash and issuing a receipt.
The government, which is supposed to pay within three months of the issuing of a bill, has been delaying payments for around two years now.
“Hospitals are out of liquidity and they owe money to medicine and equipment suppliers and they have to pay their employees and cover maintenance expenses and that’s too much to bear for many,” the source said.
The end result “is an alarming trend where hospitals are raising the ‘for sale’ sign, asking bigger hospitals to buy them out, whereas banks are foreclosing on others,” the source said, adding that for over a year “many hospitals haven’t paid their suppliers and others have been paying half salaries or laying off around 10 percent of their staff.” 

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