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THE FIRST YEN LOAN TO THE REPUBLIC OF LEBANON
Assistance for Post-Civil War Reconstruction

The OECF (The Overseas Economic Cooperation Fund; President, Chairman of the Board, Akira Nishigaki) is providing the Republic of Lebanon with a Loan for the COASTAL POLLUTION CONTROL AND WATER SUPPLY PROJECT amounting to 13,022 million Yen. The Loan Agreement was signed today at OECF's Head Office in Tokyo by Mr. Nishigaki, President, Chairman of the Board, OECF and Dr. Nohad Georges Baroudi, Secretary General of the Council for Development and Reconstruction.

It is the first loan of OECF to be provided to the country, and with this loan, OECF now has provided loan to 85 countries.

The amount and conditions of the Loan are as follows.

1. Loan amount and conditions

ProjectAmount
(Million Yen)
Interest Rate
(% p.a.)
Repayment Period
(Grace Period)
Tying Status
Coastal Pollution Control and Water Supply Project13,0222.5 (construction)
2.1 (consultant service)
25/7 yearsGeneral-Untied

2. Project Description

COASTAL POLLUTION CONTROL AND WATER SUPPLY PROJECT

(1) General Information of the Republic of Lebanon

Lebanon is a country with the population of 3.5 million and area of 10,500 km2. Because of its geographical location-facing the Mediterranean Sea and being at the crossroads connecting Europe, Asia and Africa-its economy has traditionally been driven by the service sector, such as trade, tourism and finance. As a result of its history of domination by foreign powers, there are now 14 to 17 different religions and sects in the country, Christianity and Islam being the most influential.

After gaining independence from France in 1943, Lebanon has established itself as the center of trade, finance and commerce in the Middle East, with the background of the oil boom in the region. In 1975, the growing ethnic/religious tensions amounted to a civil war in which various groups fought for political and economical interests. The civil war lasted for 15 years, until 1990.

After the end of civil war, the first parliamentary election in 20 years was held in September 1992. The new government, led by Prime Minister Hariri, started a full-scale reconstruction of the war-torn country and since then, the Lebanese economy is recovering steadily. Between 1992 and 1995, the average GDP growth rate has been 6.5%, inflation rate kept at around 10%, and the Lebanese Pound relatively stable at around 1,700 per US dollar.

(2) Background and Need for the Project

In order to reconstruct the basic infrastructure damaged by the long civil war, the Lebanese government conducted a damage evaluation study with the assistance from the World Bank, European Investment Bank, and European Union. Based on the evaluation, the government established the Emergency Rehabilitation and Reconstruction Plan. In the water supply sector, the war-damaged facilities are causing serious water shortages. In the sewerage sector, because of insufficient treatment facilities, waste water is released into rivers without appropriate treatment. This leads to contamination of underground water and threatens the living environment of the public. Also, the contamination of coastal line by sewerage is a serious problem for districts which rely on tourism, such as Saida and Kesrouane. It has also become a regional concern shared by Mediterranean countries of Europe and North Africa. Under these circumstances, the rehabilitation of water supply and sewerage facilities is urgently needed.

(3) Purpose and Content of the Project

The purpose of the Project is to alleviate the problem of water shortage and coastal pollution, by strengthening the related facilities in four major urban areas of the coastal zone-Saida, Sour, Kesrouane, and Nabatiyeh. In addition to OECF, the World Bank, the European Investment Bank, the European Union, and the Arab Fund for Economic and Social Development are providing funds for the Project. The portions of the Project under the OECF loan are as follows.

- Improvement of Sewerage System in Saida
- Improvement of Water Supply System in Kesrouan

Saida is the third largest city in Lebanon. Since the sewerage network constructed before the civil war is not functioning, sewage and waste water is running directly into the rivers. This is causing contamination of rivers as well as of the coast line, and posing a danger for the living environment of citizens. In the coast area, there is a medieval Crusade castle of historical importance, and the water pollution is lowering its touristic value. The OECF loan will be used to construct (i) sewer network with a length of 37.8km; (ii) trunk sewer with a length of 6.8km; (iii) two pumping stations; and (iv) a preliminary treatment plant with a capacity of 33,600m3/day.

Kesrouane is located on the coast 20 km north of Beirut. It has about the same population as Saida and is one of the most rapidly developing districts. Recently an increasing number of companies are moving from Beirut into the district's central city, Jounieh. In this district, the demand for water in 1995 was about 46,000m3/day and is estimated to grow rapidly to about 55,000m3/day in 2005. On the other hand, the current water supply capacity from existing water source is only about 27,000m3/day, and there is already a large gap between demand and supply. The OECF loan will be used for (i) expansion of the Madiq water intake; (ii) construction of transmission facilities including 44.5km of transmission mains, 5km of trunk mains, and 13 pumping stations; (iii) construction of distribution facilities including 22 service reservoirs and 202km of distribution mains; (iv) supply of operation control and monitoring equipment.

The proceeds of the loan will be used for procurement of goods, civil works, and consulting services for the above mentioned OECF portion of the Project. This Project is cofinanced by the World Bank, the European Investment Bank, the European Union, and the Arab Fund for Economic and Social Development.

The executing agency for the Project is the Council for Development and Reconstruction (P.O. Box 116-5351 Tallet El Saray, Beirut, Lebanon; TEL:961-1-643980, FAX:961-1-864494), with cooperation from Ministry of Hydraulics and Electrical Resources.

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