Bisri dam loan balance
cancelled by World Bank

Government did not meet

three conditions in loan agreement

The World Bank has notified the government of its decision to cancel $244 million in undisbursed funds under the Water Supply Augmentation Project (Bisri Dam Project).

The decision, which is of immediate effect, was taken because the tasks that are preconditions for the commencement of construction work at the Bisri Dam were not completed, the World Bank said.

Certain categories of expenditure related to fiduciary, environmental, and social safeguards requirements will remain exempt from cancellation for the time being.

The Bisri Dam project had been under partial suspension since June 26 as the World Bank was, since early January 2020, repeatedly raising concerns about issues adversely affecting its successful implementation. The World Bank had set July 22 as a deadline for the government to meet all the requirements for lifting the partial suspension, in the absence of which the remainder of the loan would be canceled.

The government had asked for a three-month extension of the July 22 deadline in consideration of the constraints imposed by COVID-19. The World Bank agreed to a six-week extension ending on September 4, 2020. It indicated that the suspended portion of the loan would be canceled unless it receives satisfactory evidence that the government has finalized the Ecological Compensation Plan (ECP) following due process and in consultation with key stakeholders by no later than September 4. The government was also required to provide evidence that it has finalized the Operation and Maintenance (O&M) arrangements by no later than August 24, and that the contractor was mobilized at the worksite by no later than September 4.

The government submitted a draft ECP on August 12, and the World Bank provided its comments on August 25. These comments were not addressed to the satisfaction of the World Bank and stakeholder consultations did not take place.

The government submitted a Memorandum of Understanding (MoU) for the O&M arrangements on August 24. The MoU departs from the requirements of the loan agreement and the World Bank requested further details on the institutional and financial mechanisms put in place between the Ministry of Energy and Water and the Beirut Mount Lebanon Water Establishment. Without this information, the World Bank was not in a position to determine that the loan agreement has been fulfilled.

Finally, the contractor was not mobilized to the worksite.

As of the agreed deadline, the World Bank has not received satisfactory evidence that the three required actions have been achieved. This has led to the cancellation.

The World Bank, in a statement reiterated its readiness to work with the government to see how the existing portfolio, including undisbursed amounts from the canceled Bisri project, could be used most effectively to respond to the emerging needs of the Lebanese people.