The World Bank on Friday said it was canceling a loan to fund the Bisri dam project in Lebanon that environmentalists claimed could destroy a valley rich in biodiversity.
Located in a valley south of the capital, the dam aims to supply drinking water as well as irrigation for 1.6 million residents.
The dam was partially suspended in June after the Washington-based development lender said it raised concerns about the project's implementation, and gave the government of Lebanon until September 4 to finalize key agreements related to operations and maintenance as well as the environment.
In a statement, the World Bank said it had notified the government that it was withdrawing its financing "due to non-completion of the tasks that are preconditions to the commencement of construction."
The World Bank had committed $474 million to fund the project, of which $244 million have not yet been disbursed.
"The canceled portion of the loan is $244 million and the cancelation is effective immediately," it said on Friday.
Environmentalists and some farmers disputed assurances from the government and World Bank that the dam to be built on a seismic fault line does not increase the risk of earthquakes.
The bank said it remained ready to work with Lebanese authorities to see how existing loans, including undisbursed amounts from the canceled Bisri project, could be used most effectively to respond to the emerging needs of the Lebanese people following the port explosion.
