The World Bank has cancelled $224 million in funding for Lebanon's controversial Bisri dam project over the government's failure to fulfil "tasks that are preconditions to the commencement of construction", the organisation said in statement on Saturday.
"The cancelled portion of the loan is $244m and the cancellation is effective immediately," the World Bank statement read.
Plans to build the Bisri dam were partially suspended in June over World Bank concerns Lebanon's government had so far failed to implement the project.
The Lebanese government was initially given a deadline of 22 July, which was later extended to 4 September, to resolve the World Bank's concerns and start construction at the worksite but failed to do so, triggering cancellation of the funding.
"In sum." the statement read, "as of the agreed deadline of Sept. 4, 2020, the World Bank has not received satisfactory evidence that the three required actions have been achieved. Consequently, the above-mentioned cancellation has entered into effect."
The project, which was intended to alleviate Lebanon's chronic water shortage problem, was initially proposed in 1953 and formally adopted by the Lebanese government in 2014.
The Bisri dam was meant to provide drinking water for approximately 1.6 million people in the greater Beirut and Mount Lebanon area, where residents spend up to 15 per cent of their incomes on alternative water supplies, according to World Bank statistics.
However, the Bisri dam project has long faced criticism from civil society activists and local residents who claim the ecological and environmental effects of the plans will devastate the surrounding landscape.
Critics have said the dam, which would be built along two seismic fault lines, could increase the risk of earthquakes and other natural disasters.
Activists have also pointed to the potential destruction of sites of important cultural heritage, which would have to be moved to make way for the construction of the dam, as a reason the project should be scrapped.
Funding for the project was initially deferred in April over concern Lebanon was struggling to cope with a debilitating economic crisis compounded by the coronavirus pandemic.
At the time, the World Bank said it was open to suggestions on how the funds could be redirected to support residents through the national lockdown.
The World Bank remains prepared to work with Lebanon's government in the wake of the 4 August blast to redistribute the Bisri dam funding "to respond to the emerging needs of the Lebanese people", according to Saturday's statement.
It is not immediately clear if the Lebanese government has proposed plans to redistribute the World Bank funding.