The World Bank has reportedly notified the Lebanese Government of its decision to cancel the undisbursed funds under the Water Supply Augmentation Project (Bisri Dam Project) due to non-completion of the tasks that are preconditions to the commencement of construction of the Bisri Dam.
The canceled portion of the loan is US$244 million and the cancellation is effective immediately, reports revealed, noting that certain categories of expenditures related to fiduciary and environmental/social safeguards requirements will remain exempt from cancellation at this time.
The Bisri Dam project had been under partial suspension since June 26, 2020 after the World Bank had, since early January 2020, repeatedly raised concerns over issues adversely affecting its successful implementation.
The World Bank had established July 22, 2020 as a deadline for the Lebanese government to meet all the requirements in a manner satisfactory to the Bank for partial suspension to be lifted.
The government then requested a three-month extension of the July 22 deadline set by the World Bank and taking into consideration the constraints imposed by coronavirus pandemic, the World Bank had agreed to a six weeks extension ending on September 4, 2020.
In particular, the Bank wanted to receive satisfactory evidence that: (a) the Government has finalized the Ecological Compensation Plan (ECP) following due process and in consultation with key stakeholders by no later than September 4, 2020; (b) the Government has finalized the Operation and Maintenance (O&M) arrangements by no later than August 24, 2020, and (c) the contractor is mobilized at the worksite by no later than September 4, 2020.
Further attempts have been made by the Lebanese government, but no concrete progress have been registered in the file.
Lebanon was already suffering from multiple crises prior to the tragic blast in the port of Beirut on August 4 which has caused devastating losses on the human, social and economic levels. This latest 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 recent Beirut Rapid Damage and Needs Assessment, prepared by the World Bank in cooperation with the United Nations and the European Union, identifies critical recovery needs in the immediate and short-term to provide immediate relief to the most severely affected population, create short-term jobs, repair housing, provide shelter and restore services of micro and small businesses that employ thousands of Lebanese.
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