Beirut port blast caused up to $4.6 billion worth of damage

September 2 ------ A new damage assessment following the devastating explosion in the city of Beirut shows the blast caused between $3.8 and $4.6 billion in damage to infrastructure and physical stock. The figures are part of a Rapid Damage and Needs Assessment (RDNA), carried out by the World Bank Group (WBG), in cooperation with the United Nations (UN) and the European Union (EU), and support from Lebanese ministries, civil society organizations and other key stakeholders. Losses including changes in economic flows as a result of the decline in the output of the economic sectors are estimated to be in the range of US$2.9 and US$3.5 billion.

To remind, a massive explosion took place on August 4 in the vicinity of the Beirut Port Complex, wreaking havoc across the city, killing around 200 people, injuring around 6,000, and leaving thousands homeless. The blast is believed to have originated from a chemical storage warehouse where an estimated 2,750 tons of ammonium nitrate got ignited. The material had reportedly been confiscated from a ship a while ago and stored there, but without proper safety measures. The blast closed the city’s port, with all cargo being diverted to Tripoli, as much of the city’s waterfront was damaged.

Companies like CMA CGM and Hapag-Lloyd resumed service to Beirut in mid-August, as it was assessed that the damage sustained by the container terminal in Beirut was minor. According to the assessment, the most severely affected sectors are housing, transport and tangible and intangible cultural assets. Public sector reconstruction and recovery needs for this year and the next are estimated in the range of $1.8 and $2.2 billion, with between $605 and $760 million needed in the immediate term until December 2020, and between $1.18 and $1.46 billion in the short term for the year 2021. The transport sector’s needs are the highest, followed by culture and housing.

The three main economic effects of the explosion are losses in economic activity caused by the destruction of physical capital; trade disruptions; and losses in fiscal revenues for the government. Lebanon was already facing an economic downturn prior to the explosion, driven by the spillovers from the Syria conflict, whereby Lebanon continues to host the largest refugee per capita population in the world; a financial and economic crisis that includes an impaired financial sector, a currency crisis, very high inflation rates, a defaulting public sector; and the effects of the COVID-19 pandemic, the bank explained. “The disaster will not only exacerbate the contraction in economic activity, but also worsen poverty rates, which were already at 45 percent of the population just prior to the explosion,” the World Bank said.

The report recommends that in the port sector for instance, beyond the emergency works needed to ensure Lebanon’s vital imports, the port is rebuilt in a holistic and modern way, better sited and sized, and governed by the most efficient and transparent practices. The World Bank believes that given Lebanon’s state of insolvency and lack of sufficient foreign exchange reserves, international aid and private investment will be essential for comprehensive recovery and reconstruction. “Lebanon’s implementation of a credible reform agenda will be key to accessing international development assistance and to unlock external and private sector sources of financing,” the bank added. International assistance has started to be deployed to Lebanon.

Source: offshore-energy.biz