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Factsheet September 4, 2020

Q&A: Bisri Dam Project Cancelation

1. When and why has the Bisri Dam project been cancelled?

On September 5, 2020, the World Bank (WB) notified the Government of Lebanon (GOL) of the partial cancelation of disbursements under the Water Supply Augmentation Project (Bisri Dam Project), effective immediately, due to non-completion of the tasks that are preconditions to the commencement of construction of the Bisri Dam. 

2.  Why was the Bisri Dam project under partial suspension? And what were the requirements that the GOL needed to fulfil to prevent project cancelation?

The Bisri Dam project had been under partial suspension since June 26, 2020 after the WB had, since early January 2020, repeatedly raised its concerns over issues adversely affecting the successful implementation of the project.  The WB had established July 22, 2020 as a deadline for the GOL to meet all the requirements in a manner satisfactory to the Bank for said partial suspension to be lifted. The GOL subsequently requested a three months extension of this deadline to achieve progress on a number of requirements. Taking into consideration the constraints imposed by COVID-19, the WB agreed to a six weeks final extension ending on September 4, 2020. The WB indicated that the suspended portion of the Loan would be cancelled unless it receives satisfactory evidence that:

(a) GOL has finalized the Ecological Compensation Plan (ECP) following due process and in consultation with key stakeholders by no later than September 4, 2020;

(b) GOL 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.

The GOL submitted a draft ECP on August 12, 2020, and the WB provided its comments on August 25, 2020.  To date, these comments have not been addressed to the satisfaction of the WB and stakeholder consultations have not taken place. The GOL submitted a Memorandum of Understanding (MoU) for the O&M arrangements on August 24, 2020. The MoU departs from the requirements of the Loan Agreement and the WB 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 WB is not in a position to determine that the covenant in the Loan Agreement addressing the O&M arrangements has been complied with. Finally, the contractor has not been mobilized at the worksite.

As of the agreed deadline of September 4, 2020, the WB has not received satisfactory evidence that the three required actions have been achieved. The cancelation of the Bisri Dam project came into effect on September 5, 2020.  

3. What does partial cancelation mean?

The canceled portion of the loan is US$244 million. Partial cancelation means that disbursements under certain components of the loan are canceled and thus no longer possible. Exempt from the cancellation at this time are the following expenditures: (a) Project Management Unit staff contracts; (b) audit contract; and (c) consultancy and works related to environmental and social safeguards. These exemptions are necessary to ensure that the fiduciary, the social and the environmental standards of the Bank are complied with.

4. When will the Bisri Dam Project by finally canceled? And under which conditions?

The cancellation of the remaining undisbursed funds will take place once all fiduciary and environmental and social requirements applicable to the Project have been met.

5. What is an Ecological Compensation Plan? What should it include in the case of the Bisri Dam for example?

The Ecological Compensation Plan (ECP) is part of the Environmental and Social Impact Assessment (ESIA) required to be prepared under the project. The ECP is a plan to compensate for unavoidable impacts on biodiversity and ecosystem services through measures that will be implemented outside the reservoir area, so that overall there will be “No Net Loss” or a “Net Gain” in biodiversity and ecosystem services. Some of the activities the ECP covers include: reforestation of some flora species, management of forests to minimize fire risks, recreation of degraded habitats (such as abandoned quarries and sandpits), and providing protection to selected habitats.

6. The Government of Lebanon held a public dialogue on the Bisri Dam project in July 2020. What does the World Bank think of this public dialogue and its outcome?

While not being a condition for lifting the suspension, the WB had repeatedly stressed upon the critical need to maintain an open, transparent and inclusive consultative process around the project and requested to receive an update on the GOL’s ongoing engagement with Lebanese stakeholders.

Given strong stakeholder concerns about the Project, the WB had requested the GOL to launch an open and transparent public dialogue to address the concerns raised by citizens and civil society groups. The WB understands that a number of project opponents decided to boycott the dialogue held at the Grand Serail on July 8 and 10, 2020 because of some reservations. While the WB respects the decision, the WB invites all stakeholders to maintain an open, transparent and constructive engagement process for the ultimate benefit of Lebanon and the Lebanese people.

The WB had also encouraged the GOL to engage with an independent third party to initiate dialogue with all stakeholders and requested it to provide an update on the on-going actions to engage all Lebanese stakeholders on the Bisri Dam project.

7. Has the WB taken every possible step to address the problems that have stopped the project going forward?

The WB sent six letters this year to former and current Prime Ministers of Lebanon (January 11, January 28, March 12, and May 20, June 26 and July 28, 2020). The letters asked for time-bound actions on public dialogue, ecological compensation plan, benefit sharing program, operation and maintenance arrangements of the dam, and contractor resuming mobilization on site.  The WB team has also been undertaking frequent supervision missions on average every two months and following up closely with project partners on timely implementation and progress.

8. Will local communities be affected by the cancelation of the project? If so how?

Any infrastructure project creates new jobs, and the Bisri Dam Project is no exception. These jobs provide opportunities for the local communities. In addition, the Bisri Dam is meant to establish a Benefit Sharing Program (BSP) to help local communities. These job opportunities during construction, and the BSP after the construction, will be lost as a result of the project cancelation.

9. Who will be impacted the most by the cancelation of the project?

Over 1.6 million people living across Greater Beirut & Mount Lebanon (GBML), including 460,000 people living on less than $4 a day, will not have reliable access to clean water.

Households will not be able to depend on the public water network and will be forced to continue to rely on expensive alternative water sources such as tankers and bottled water. The cost of water from tankers can be as high as US$20 per cubic meter in some areas (sometimes higher than US$20 in the summer and during droughts), and is significantly higher than the water fee from the Beirut Mount Lebanon Water Establishment.

10. If the reason to cancel the project is civil society’s opposition to it, this opposition has been there for a couple of years.  So why cancel it now?

The project has been canceled due to the lack of progress in implementing the project and in completing the tasks that are preconditions to the commencement of construction of the dam, namely, adoption of the ECP, and agreement on the O&M arrangements.

11. Will the WB reallocate the funds from the project to other emerging needs? How will that reallocation happen?

Even prior to the tragic explosion in the port of Beirut on August 4, which resulted in devastating losses on the human, social and economic levels, Lebanon was already reeling from multiple crises. 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.

Crises like these often cause a change in national priorities to meet emerging needs. The WB is helping countries around the world to re-channel available resources to emerging, more acute priorities. The WB is ready to work with the GOL if it makes such a request.

12. According to the project documents, the Bisri Dam was designed to resolve severe and chronic water shortages in Greater Beirut & Mount Lebanon area. Are there any alternatives to provide access to water to the 1.6 m people in GBML?

The detailed analysis of the Bisri Dam Project indicates that the dam is essential to secure water in the GBML area, in conjunction with other existing sources of water, such as groundwater and springs. Currently, there is no alternative that can be readily implemented to secure the volume of water that the Bisri Dam would secure in summertime. During the design of the project, the GOL commissioned a detailed Analysis of Alternatives which showed that a combination of non-dam and dam actions was required to increase the volume of water provided to the GBML area in the long-term, based on technical, economic, environmental and social considerations.

13. According to media reports, 861 landowners in the Bisri Valley have been paid a total of US$155 million in expropriation fees. Will this money be reclaimed if the project is cancelled? If so, by whom? The GOL? The WB? How will this money be reclaimed?

The GOL has processed 99.8 percent of the expropriations required for the dam, and thus owns the land. The Government will decide on how to use the land in the future. The Government will repay this part of the loan, per the payment schedule agreed upon during project preparation.

14. There has been about $197 million already disbursed for this project, including for the expropriation of land and property in the dam site area. How will these funds be recouped? Will you expect private property owners to return these funds?

The World Bank receives its repayment from governments, not from individuals. The GOL will repay the loan, per the disbursement schedule agreed upon with the Bank.

15. Is the WB going to compensate the residents of Bisri valley for the destruction of history and biodiversity caused by the project?

The construction of the Bisri Dam has not started yet; however, there were early stages of mobilization. A limited number of trees (primarily citrus trees) were cut at the area where the contractor mobilized on the expropriated land, according to the permit provided by the Ministry of Agriculture. The GOL, as the owner of the land, will make decisions on the future use of the land.

16. Do you think that the WB failed in its handling of this project? We know that the WB discusses and agrees on projects that it funds with governments, but don’t you think civil society should be part of consultations on projects before they are approved?

Under the WB policies, governments conduct consultations with civil society on every project, and the Bisri Dam was no exception. The GOL conducted consultations during the preparation and implementation of the project between April 2012 and May 2017. Public meetings and focus-group discussions were held with beneficiaries, people affected by the project, NGOs, and civil society groups. Meetings were announced through local newspapers, and several representatives from NGOs and civil society groups attended the sessions. The project also has a Grievance Redress Mechanism (GRM) that affected people have access to and have used, and all the requests made through the GRM have been addressed. Citizen engagement is a critical part of all World Bank projects, including full disclosure of safeguards documents and available GRMs.

The WB has been responsive to all requests for meetings and additional information regarding the design and implementation of the project as and when requested by various stakeholders.