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The World Bank informed the Lebanese government of its decision to cancel the unspent sums of the water supply augmentation project (Bisri Dam Project) due to the lack of implementation of the elements that constitute the preconditions to start building the dam.
The value of the canceled portion of the loan is $ 244 million and the cancellation will be effective immediately. Please note that some categories of expenses related to financial procedures, supplies, and social and environmental protection requirements will remain exempt from cancellation at this time.
It should be noted that the Bisri Dam project has been in partial suspension since June 26, 2020, after the World Bank has repeatedly expressed, since the beginning of January 2020, its concern about issues that negatively affect the success of the implementation of the project. The World Bank had set July 22, 2020 as the deadline for the Lebanese government to comply with all the terms required by the World Bank to lift the aforementioned partial suspension, provided that the suspended part of the loan was otherwise canceled.
In response to a request from the Lebanese government to extend the deadline set by the bank on July 22 for a period of three months, and in the face of restrictions arising from the Coronavirus (COVID-19) pandemic, the World Bank agreed to extend the deadline for six weeks, ending September 4, 2020. The bank has indicated that it will be canceled. The suspended portion of the loan unless it has received satisfactory evidence of the following: (a) The government has completed the development of the Ecological Compensation Scheme in accordance with due legal process and in consultation with key stakeholders no later than 4 September 2020; (B) That the government has finalized the operation and maintenance arrangements no later than August 24, 2020; (C) The presence of the contractor in the workplace no later than September 4, 2020.
On August 12, 2020, the Lebanese government presented the draft of the ecological compensation plan, and the World Bank sent its comments on it on the 25th of the same month. To date, the government has not addressed these observations as required by the World Bank and has not consulted with stakeholders.
The government presented a memorandum of understanding on operating and maintenance arrangements on August 24, 2020. This memorandum of understanding violated the provisions of the loan agreement and, consequently, the World Bank requested more details on the institutional and financial mechanisms applied between the Ministry of Energy and Water and Beirut and Mount Lebanon Water Corporation. Without this information, the World Bank cannot determine the government’s compliance with the terms of the loan agreement.
Finally, the contractor, to date, has not been incorporated into the workplace.
In summary, as of the agreed deadline of September 4, 2020, the World Bank has not received satisfactory evidence that all three required items have been met. Consequently, the aforementioned cancellation has come into effect.
Furthermore, the World Bank has repeatedly emphasized the adoption of an open, transparent and inclusive consultation process on the project, and requested that it be provided with an update on ongoing communication between the government and Lebanese stakeholders. The World Bank also asked the Lebanese government to consider using an independent third party to initiate a dialogue with all stakeholders.
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