Document of The World Bank
FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 43358-50
PROJECT APPRAISAL DOCUMENT
ON A Public Disclosure Authorized
PROPOSED LOAN .
IN THE AMOUNT OF US$25.0 MILLION
TO THE
GREATER AMMAN MUNICIPALITY
WITH A GUARANTEE OF THE HASHEMITE KINGDOM OF JORDAN
FOR AN Public Disclosure Authorized AMMAN SOLID WASTE MANAGEMENT PROJECT
August 28,2008
Sustainable Development Department Middle East and North Africa Region Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective August 18,2008) Currency Unit = Jordanian Dinar (JD) JD0.709 = US$l US$1.41 = JD 1 FISCAL YEAR January 1 - December 31
ABBREVIATIONS AND ACRONYMS
CAS Country Assistance Strategy CDM Clean Development Mechanism CERs Carbon Emission Reductions CFE Carbon Fund for Europe DOE Designated Operational Entity EB Clean Development Mechanism Executive Board EC European Commission EPC Executive Privatization Commission ERPA Emission Reductions Purchase Agreement ESIA Environmental and Social Impact Assessment ESMP Environmental and Social Management Plan FM Financial management FMS Financial management system GAM Greater Amman Municipality GHG Greenhouse gas IUR Interim Unaudited Report JD Jordanian Dinar kwh Kilowatt hour LFG Landfill gas MENA Middle East and North Afnca METAP Mediterranean Environmental Technical Assistance Program MoE Ministry ofEnvironment MoF Ministry ofFinance MoPIC Ministry ofPlanning and International Cooperation MSW Municipal solid waste MSWM Municipal solid waste management MW Megawatt NPV Net present value PDD Project Design Document PSP Private sector participation RPF Resettlement Policy Framework SWM Solid waste management SWMDP Solid Waste Municipal Disposal Plan USAID United States Agency for International Development
Vice President: Daniella Gressani Country Director: Hedi Larbi Acting Sector Manager: Jonathan Walters Task Team Leader: Jaafar Sadok Friaa FOR OFFICIAL USE ONLY
THE HASHEMITE KINGDOM OF JORDAN AMMAN SOLID WASTE MANAGEMENT PROJECT
CONTENTS
Page
I. STRATEGIC CONTEXT AND RATIONALE ...... 1 A . Country and sector issues ...... 1 B. Rationale for Bank involvement ...... 5 C . Higher level objectives to which the project contributes ...... 6
I1. PROJECT DESCRIPTION ...... 6 A . Lending instrument ...... 6 B. Project development objective and key indicators...... 6 C . Project components ...... 7 D. Lessons learned and reflected in the project design...... 8 E. Alternatives considered and reasons for rejection ...... 9
I11. IMPLEMENTATION ...... 10 A . Institutional and implementation arrangements ...... 10 B. Monitoring and evaluation of outcomes/results ...... 11 C . Sustainability ...... 11 D. Critical risks and possible controversial aspects ...... 12 E. Loadcredit conditions and covenants ...... 14
IV. APPRAISAL SUMMARY ...... 14 A . Economic and financial analyses ...... 14 B. Technical ...... 15 C . Fiduciary ...... 16 D. Social ...... 17 E. Environment ...... 18 F. Safeguard policies ...... 19 G. Policy Exceptions and Readiness ...... 20
Annex 1: Country and Sector or Project Background ...... 21
Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ...... 25
I I This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization . Annex 3: Monitoring and Evaluation Arrangements...... 26
Annex 4: Detailed Project Description...... 29
Annex 4 bis: Attached Carbon Finance Operation ...... 32
Annex 5: Project Costs ...... 35
Annex 6: Implementation Arrangements ...... 35
Annex 7: Financial Management and Disbursement Arrangements ...... 38
Annex 8: Procurement Arrangements ...... 43
Annex 9: Economic and Financial Analysis ...... 53
Annex 10: Safeguard Policy Issues ...... 68
Annex 11: Project Preparation and Supervision ...... 88
Annex 12: Documents in the Project File ...... 89
Annex 13: Statement of Loans and Credits ...... 90
Annex 14: Country at a Glance ...... 91
Annex 15: Map 36439 ...... 93 THE HASHEMITE KINGDOM OF JORDAN
AMMAN SOLID WASTE MANAGEMENT PROJECT
PROJECT APPRAISAL DOCUMENT
MIDDLE EAST AND NORTH AFRICA
MNSSD
Date: August 28, 2008 Team Leader: Jaafar Sadok Friaa Country Director: Hedi Larbi Sectors: Solid waste management (85%);Sub-
Sector ManagedDirector- : Jonathan D. Walters national government administration (15%) Themes: -Pollution management and environmental health (P) Project ID: P104960 Environmental screening category: A
Lending:v Instrument: SDecific Investment Loan
[XI Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other:
For Loans/Credits/Others: Total Bank financing (US$m.): 25.00
Borrower: Greater Amman Municipality (GAM) Guarantor: Government of Jordan Responsible Agency: Greater Amman Municipality
Project implementation period: Start January 1,2009 End: December 3 1, 2013 Expected effectiveness date: January 1,2009 Expected closing date: June 30,2014 Does the project depart from the CAS in content or other significant respects? [ ]Yes [XINO Re$ PAD I. C. Does the project require any exceptions from Bank policies? Re$ PAD IKG. [ ]Yes [XINO Have these been approved by Bank management? []Yes [XINO &[]Yes [X No Does the project include any critical risks rated “substantial” or “high”? []Yes [XINO Ref: PAD III.E. Does the project meet the Regional criteria for readiness for implementation? [XIYes [ ]No Ref: PAD IKG. Project development objective Ref: PAD ILC., Technical Annex 3
(i)Environmentally upgrade and expand the existing municipal solid waste landfill to meet the city’s disposal needs up to 2013 and generate electricity while mitigating GHGs; and
(ii)Improve the cost effectiveness of the existing municipal solid waste collection and transport system and improve overall cost recovery.
Project description [one-sentence summary of each component] Re$ PAD ILD, Technical Annex 4 Component 1: Institutional Strengthening and Capacity Development. This component will finance technical assistance and capacity building activities benefiting GAM departments involved in the planning, development, operation, and evaluation of MSW services. This component will also finance (a) technical assistance to GAM in operating the landfill site and monitoring the LFG recovery contract; and (b) engineering services for supervising all civil works contracts, including construction of cell 3 and upgrade of the existing leachate treatment facility.
Component 2: Infrastructure Development : This component includes three subcomponents aimed at improving the cost recovery and effectiveness of disposal and transfer, strengthening management and capacity expansion of the existing landfill, and using LFG to generate electricity. The investment activities are: (i)Landfill construction and upgrade of leachate treatment facility; (ii)Construction oftwo transfer stations; and (iii)Design, Build and Operation ofan LFG recovery system.
Component 3 : Project Management Component. This component will finance necessary technical assistance to the Project Management Unit (PMU).
Attached Carbon Finance Operation: The World Bank as a trustee of Carbon Funds will purchase part of the CERs resulting from the project, amounting to 0.9 to 0.95 million tons of C02 equivalent (tC02e) ofCERs from 2009 to 2014.
Which safeguard policies are triggered, if any? Ref: PAD IKF., TechnicalAnnex 10 Environmental Assessment (OP4.0 1): The proposed Solid Waste Project has been classified as Category A because ofits potential impacts on environment and natural resources. An ESIA was prepared in compliance with the requirements of the Jordanian regulations as well as the Bank guidelines and procedures including OP4.0 1 “Environmental Assessment”. The ESIA report was based on studies, field investigations, and public consultation including consultation with affected population groups and key stakeholders and NGOs. An ESMP was also prepared and related costs estimated as part ofthe above ESIA report.
Involuntary Resettlement (OP/BP 4.12): Some of the project’s physical components may result in involuntary resettlement and/or land acquisition. OP 4.12 on Involuntary Resettlement is thus triggered, and a RPF has been prepared. An RPF is the instrument used, because the exact nature and extent of land acquisitionhesettlement resulting from the project are not yet known. In the context of this project, this applies to the construction of transfer stations which may - depending upon the location chosen - entail some degree ofland acquisition and/or resettlement.
Significant, non-standard conditions, if any, for: Re$ PAD III.F :None Board presentation: Tentatively scheduled for September 30,2008
Loadcredit effectiveness: Tentatively scheduled for January 1, 2009
Covenants applicable to project implementation: None (TBC during negotiations)
I. STRATEGIC CONTEXT AND RATIONALE
A. Country and sector issues
1. During the last five years, Jordan has maintained its strong economic performance; real GDP growth remained high at 6.4 percent in 2006. The expansion was broad, led by the manufacturing, construction, and service sectors. Continuing robust demand in these sectors is explained partly by high liquidity in the region. Capital inflows as well as tourist travel to Jordan have reached record levels. The strong economy has helped boost public revenues, while public spending has remained under control, resulting in a lower public deficit. However, increasing he1 prices combined with high demand in the economy has stoked inflationary pressures, leading authorities to tighten monetary policy. The current account deficit narrowed in 2006, but remains high at 13 percent of GDP. Avoiding excessive overheating of the economy remains a challenge, which the government has been addressing through several instruments, including higher fees for real estate, higher central bank interest rates, tighter bank supervision, and lending constraints for investors in the Amman Stock Exchange.
2. Jordan’s political stability provides an environment that is conducive to reform despite continuing security threats and regional tensions. The top political reforms include expanding political freedoms and social participation, removing remaining gender discrimination, and enhancing judicial independence and fairness. The Cabinet, reshuffled in November 2007, is pursuing its mandate to implement the National Agenda, which was translated recently into a medium-term plan identifying policy priorities.
3. Despite continuing economic growth, environmental degradation, which the Mediterranean Environmental Technical Assistance Program (METAP) estimated to cost 3.1 percent of GDP (2003), affects the health of Jordanian citizens, interferes with Jordan’s access to the environmentally conscious EU market, and jeopardizes the country’s high tourism potential. Solid waste is an important component of the country’s environmental agenda, due to the relatively high rate of per capita waste generation in urban areas (0.9 kgl persod day) and the fast pace ofpopulation growth, estimated at 2.3 percent, pushed upwards in recent years by the flow ofmigrants from neighboring countries such as Iraq and the West Bank.
4. With respect to solid waste, it is anticipated that the quantity of municipal waste will continue to increase in the years ahead in tandem with population and consumption growth, and would thus affect the quality of life in Jordan. Currently, the production of municipal waste in Jordan is estimated at 1.5 million tondyear, and is projected to reach 2.5 million tondyear by 2015. The collection rate is estimated at 90 percent in urban areas and 75 percent in rural areas. About 50 percent of the waste generated is sent to 21 open dump sites that lack essential facilities or infrastructure.
5. Jordan has recently strengthened the sector’s legal framework by adopting regulation for the management of solid waste (Regulation No. 27 of 2005), however, in terms ofpolicy, planning, financing, management, organization and enforcement, progress remains to be made. Although Jordan does not yet have a solid waste management (SWM) policy, the Government has adopted a series of enabling elements toward solid waste sector reform that represent a sound framework in the short term, including:
1 6. The solid waste sector is among the target areas of the Government’s National Agenda (NA) for Sustainable Development: The NAYwhich represents the Government’s policy for a ten-year period (2006-201 5), has established the following four objectives to be attained in the waste sector: (i)extending waste service coverage by providing financial, technical and human resource capacity-building to empower concerned authorities; (ii)promoting environmentally sound solid waste disposal and treatment; (iii)minimizing generation of solid waste; and (iv) maximizing environmentally sound solid waste reuse and recycling.
7. Designation of the Ministry of the Environment (MoE) as the agency responsible for developing a SWM policy and laws and regulations of the waste management sector. The Ministry has received technical assistance from the European Commission (EC) to train staff and to assist in drafting framework waste regulations. The purpose of the regulations is to provide for: (a) minimization of waste generation and reduction of its harmfulness (hazardous characteristics); (b) promotion of the re-use of feasible components of waste; (c) a high level of protection of the environment, human life and health; and (d) sustainable development through protection of natural resources. The United States Agency for International Development (USAID) will be supporting the MoE to develop enabling legislation and its internal capacity through the Sustainable Achievement of Business Expansion and Quality (SABEQ) program. Assistance will also include preparation of environmental licensing, including establishing benchmarking, standards and guidelines for SWMfacilities.
8. Encouraging Private Sector Participation in Infrastructure, as stated in the National Privatization Law No. 21 of 2000 and Jordan’s National Privatization Strategy, which calls for the restructuring and privatization of public institutions, increasing private sector investment in infrastructure, and attracting foreign technology and know-how. The Executive Privatization Commission (EPC) was set up to stimulate and drive the privatization program. The EPC is prepared to assist in private sector participation (PSP) in Municipal Solid Waste Management (MSWM) where needed.
9. Adopting a National Energy Strategy, which calls for, inter alia, the development of renewable and sustainable energy. In view of the increase in energy prices, the Government has set an objective of producing 10 percent of its energy consumption with renewable sources of energy by the year 2020. Landfill gas-to-electricity investments are among the potential projects that should contribute to this goal.
10. The metropolitan area of Amman, the capital city of the Kingdom of Jordan, accounts for more than half of Jordan’s population, 80 percent of the country’s industrial sector, and 55 percent of total employment. In recognition of the expansion of the city and the integration of nearby villages and suburban developments, the perimeter of Greater Amman Municipality (GAM) was extended in 2007 to include seven additional districts, bringing the total area of GAM to 1,680 km2 and its population to 2.2 million. This population figure does not include seasonal laborers, or, more importantly, Iraqi citizens, the latter of whom are estimated to total 750,000 for Jordan as a whole.
11. To achieve the optimum balance of healthy growth and quality of life, GAM has recently developed, with support from the World Bank, USAID, Agence Franqaise de Developpement and the European Investment Bank, an ambitious Master Plan that provides a framework for
2 infrastructure, planning and zoning, transportation, service provision, and PSP in municipal services for the next two decades. This plan is considered the city’s blueprint for sustainable development and for the achievement of the objectives outlined in the National Agenda. It was designed to guide the growth of Amman and address environmental protection, culture and heritage, transportation and infrastructure, and community development.
12. At the heart of the Master Plan is the improvement of municipal services, including those related to MSWM. This is consistent with the National Agenda, which considers MSWM to be one ofthe major issues in Jordan.
Key Sector Issues
13. About half of the active landfill sites in Jordan adopt, open dumping as a disposal method. Even in sites that adopt landfilling, disposal practices are often inadequate in terms of the environment and work safety. The disposal of special and hazardous waste (including industrial wastewater, farm waste, and hospital and medical waste) in ordinary landfills is not uncommon. Recognizing the strategic relevance of the sector, the National Agenda established a number of targets for improved SWMin Jordan, including an increase in the percentage ofMSW disposed of in an environmentally sound manner (from 50 percent in 2003 to 60 percent and 70 percent in 2009 and 2013, respectively), as well as the percentage ofrecycled and reused solid waste (up to 8 percent in 2009).
14. With a flow of 2,400 tons ofwaste per day, GAM accounts for approximately 50 percent of Jordan’s total MSW. In contrast to other areas in Jordan, however, GAM has a hlly functional waste management system that handles all types of solid waste (household, construction, etc.). The municipality directly manages the collection of waste throughout the city, its transfer at three transfer stations, and disposal into the A1 Ghabawi landfill, located approximately 23 km from the city center. In addition to managing its own solid waste, A1 Ghabawi landfill receives part ofthe waste ofZarqa and Russeifeh municipalities.
15. GAM’S SWM is remarkable in several respects. First, GAM collects MSW on a daily basis from almost 100 percent of its residents. Second, through automatic charges levied through electricity bills and commercial solid waste fees included as part ofbusiness licensing, it has one of the best solid waste cost recovery rates in the Middle East and North Africa (MENA). Finally, there are effectively no scavengers - licensed or illegal - at the controlled landfill outside ofthe city. On the whole it is a remarkable accomplishment.
16. However, there are serious inefficiencies in SWM, and the costs of providing services are quite high. The municipality has been working to increase revenues related to SWM, but it needs to improve its efficiency in terms of collection, transfer, and disposal, including generating revenues from recoverable materials and landfill gas (LFG) recovery. MSWM in Amman is faced with the following issues:
17. Ineffective institutional organization and a lack of technical capacity to plan, operate, monitor and evaluate MSW services: GAM is responsible for providing MSW services within the metropolitan area, while the MoE is responsible for monitoring and regulating SWM in terms of environmental and public health protection throughout the country. Within GAM, many
3 departments are involved in providing solid waste services, but mandates are not clear regarding several main functions, including policy setting, strategic planning, monitoring and evaluation, communication and awareness, etc. Also, the efficient provision of MSW services is currently constrained by lack of coordination between the concerned departments for SWM-related investments and operations, from design and construction through operation, coupled with a lack of formal procedures in nearly all aspects ofMSWM, and poor technical oversight ofdisposal.
18. Insufficient disposal capacity has negatively affected the environmental performance of the existing landfill: In 2003, following the adoption in 2002 of a Solid Waste Municipal Development Plan (SWMDP), GAM established a new semi-controlled landfill at A1 Ghabawi. While waste disposal practices being followed in the new landfill represent an improvement in terms ofthe environment and work safety compared with the older Russeifeh Landfill (which has been decommissioned and is now receiving only construction waste), the current disposal practices at A1 Ghabawi are not acceptable in environmental, technical and operational terms. As a result of limited capacity and experience, the expansion of the site’s disposal capacity has been seriously delayed, which has resulted in waste disposal in the first cell far beyond its capacity - Cell 1 was designed for a total capacity of 2 million tons, but has received about 3.6 million tons. In addition, the current practices ofLFG and leachate management are inadequate, a fact that is compounded by the excess waste in Cell 1.
19. Increased transfers from general revenues to cover solid waste service costs: A strong revenue base, anchored mainly in property taxes and service fees, enables GAM to maintain a balanced budget. However, SWM revenues do not currently cover SWM costs. Preliminary estimates indicate that in 2007 the financing gap between SWM costs and revenues was approximately JD 8 million, despite an effective system of collecting household tariffs via electricity bills and a recent increase in the tariff from 14 JD to 20 JD per household per year. Unfortunately, because of the inability to track SWM costs over time, there is no way to calculate the pattern of cost recovery over the last several years. However, based on estimated expenses for 2007 only, cost recovery of total expenses (including capital expense depreciation) was about 63 percent, resulting in significant transfers from general revenues to cover costs.
20. Compared to many other municipalities in the MENA region, Amman does a significantly better job at both providing SWM services and recouping costs from its customers. That said, there is scope for both reducing costs - through improving the efficiency ofwaste collection and transfer - and strengthening revenues through the sale ofcarbon emission reductions (CERs) and energy generated through LFG, as well as, potentially, the collection and sale of recyclable materials.
21. High collection and transport costs: the network ofthree transfer stations is inadequate for the geography and topography of GAM, which stretches over a large and hilly area. The large distances covered daily and the obsolescence of the waste collection fleet are responsible for high collection and transport costs, which account for approximately 80 percent of total SWM operating costs.
22. Private sector participation in SWM is still in its infancy in GAM: a pilot scheme of privately managed waste collection covering 10,000 households was launched in 2007. In contrast, despite a provision for private sector recycling at A1 Ghabawi, recycling has not yet
4 started. GAM senior management expressed strong willingness for significant involvement ofthe private sector in MSWM, but GAM needs a strategic action plan for such participation, as well as technical and managerial capacity for ensuring proper contracting and supervision.
23. Untapped carbon market opportunities: As a developing country (non-Annex B Party) that has ratified the Kyoto Protocol, Jordan is eligible to participate in the flexibility mechanisms enabled under the Kyoto Protocol such as the Clean Development Mechanism (CDM). Waste disposed in landfills generates gases typically composed of 50 percent methane (a greenhouse gas [GHG]) that can be captured and flared or used to produce electricity. CERs generated through LFG recovery can be sold to Part 1 country entities to generate revenue for the improvement of current SWM practices.
24. While LFG recovery and use for electricity generation has been piloted at the older Russeifeh site, which has 3.5 MW of installed capacity, there is at present no LFG capture in place at A1 Ghabawi, which results not only in global environmental impacts linked to the emission ofGHG, but also in national losses in terms of foregone revenues from power production and from the sale ofCERs under the CDM.
B. Rationale for Bank involvement
25. The proposed Amman Solid Waste Management Project would be the first Bank operation in Jordan to systematically address municipal solid waste management issues and initiate steps towards integrated and efficient MSWMwhile mitigating negative environmental effects at both the local and global level. The Government sees the proposed project as a model for other municipalities in Jordan to enhance their MSWMsystems.
26. The Government views the Bank as an important partner in supporting GAM’Simprovement of its MSWM and in taking advantage of the international carbon market due to its ability to provide an integrated package of investment financing, purchase of CERs, and technical assistance. The Bank’s recognized technical expertise makes it an important partner in addressing the complex environmental, social, economic, and institutional issues and arrangements associated with sustainable and affordable SWM services. Additionally, the Bank has been able to leverage its experience with carbon finance operations in the solid waste sector in the design ofthe landfill itself, so as to maximize potential CER revenues.
27. The Bank’s extensive experience in financing large municipal development projects and its prior experience in the successful implementation of the Jordan Community Infrastructure Development Project as well as the ongoing Regional and Local Development Project, combined with its broad understanding ofmunicipal strategic planning and measures to improve the quality and cost effectiveness of solid waste services, enhance the likelihood of a positive outcome of the proposed project.
28. The project is consistent with the 2006 Country Assistance Strategy (CAS) for Jordan, which underscores the significance of the environmental agenda and its linkages with local development. On solid waste in particular, the CAS highlights the increasing drain of public hnds for SWM and calls for innovative solutions. The proposed project builds on the inclusion in the CAS of a Carbon Finance operation in the solid waste sector by proposing an integrated
5 approach, whereby the Bank provides loan financing for physical and institutional strengthening investments, as well as purchases the CERs resulting from some ofthose investments.
29. Finally, the project is also consistent with the Bank’s strategy, endorsed by the Board in December 2005, to further engage in carbon finance, focusing on three objectives: (i)to ensure that carbon finance contributes to sustainable development; (ii)to assist in building, sustaining, and expanding the international market for CERs; and (iii)to further strengthen the capacity of developing countries to benefit from the emerging market for CERs.
C. Higher level objectives to which the project contributes
30. This project conforms to the objectives of Jordan’s National Agenda, particularly those related to environmental sustainability within the chapter on infrastructure development. Regarding solid waste, the main recommendations of the Agenda are to develop solid waste management policies, promote environmentally sound disposal sites, encourage recycling, and minimize solid waste generation. In the context of environmental sustainability, the Government of Jordan intends to carry out projects with World Bank assistance, including projects aimed at bolstering its efforts toward sustainable development based on its commitments in Johannesburg and Kyoto, in addition to the water, sanitation, and agriculture sectors to which the Government ofJordan has allocated a sizable share ofits public expenditure.
31. The project also supports the CAS’S cross-cutting theme of environmental protection and is consistent with specific objectives of the CAS, including objective ii (supporting local development through increased access to services and economic opportunities) and objective iv (restructuring public expenditures and supporting public sector reform).
11. PROJECT DESCRIPTION
A. Lending instrument
32. The project involves a Specific Investment Loan (SIL) to GAM. The Loan will be guaranteed by the Government of Jordan through a Guarantee Agreement to be signed between IBRD and the Government ofJordan.
B. Project development objective and key indicators
33. The development objectives of the proposed project are to strengthen the operational, financial, and environmental performance of MSWM in Amman. Specifically, the project will help achieve the following:
(i)Environmentally upgrade and expand the existing municipal solid waste landfill to meet the city’s disposal needs up to 2013 and generate electricity while mitigating GHGs; and
(ii)Improve the cost effectiveness of the existing municipal solid waste collection and transport system and improve overall cost recovery.
6 34. The Key Performance Indicators are the following:
0 Percentage of collected municipal solid waste disposed of and managed in a sanitary landfill increased from 0 to 80%;
0 160,000 MWh generated through the LFG recovery system by 2013; and
0 The cost recovery ratio for SWMimproved from 63% in 2007 to 75% by 2013.
C. Project components
35. Component 1: Institutional Strengthening and Capacity Development (US$l.8 million): This component will finance technical assistance and capacity-building activities benefiting GAM departments involved in the planning, development, operation, and evaluation of MSW services. This component, which will build on the recommendations regarding organizational restructuring in the Master Plan (see para. 1l), will include: (i)support for strategic planning in SWM systems including collection, recycling, sorting, transfer and landfilling, and updating of procurement guidelines, regulations and practices in GAM; (ii)support for piloting private sector participation in SWM services in GAM; (iii)development of information systems to track technical, environmental and financial performance ofMSW services; and (iv) development and implementation of a public information, education, and communication program.
36. This component will also finance (a) technical assistance to GAM in operating the landfill site and monitoring the LFG recovery contract; and (b) engineering services for supervising all civil works contracts, including construction of cell 3 and upgrading of the existing leachate treatment facility, and the construction ofthe two new transfer stations.
3 7. Component 2: Infrastructure Development (US$34.1 million): Component 2 includes three subcomponents aimed at improving the cost recovery and effectiveness of disposal and transfer, management strengthening and capacity expansion of the existing landfill, and using LFG to generate electricity. The investment activities are:
Sub-comuonent 2. I: Landfill construction and upgrade of leachate treatment _facilitv: The sub-component would finance civil works construction of cell 3 at the existing A1 Ghabawi landfill and the upgrading of the existing leachate treatment facility. It is expected that the two works would be undertaken under a single civil works contract in order to maximize synergies in the work.
Sub-component 2.2: Construction of two transfer stations: Under this sub-component, the project will expand the transfer system by financing the construction and equipment of two new transfer stations to service the North-west and South-west areas of Amman. These two facilities aim at increasing the proportion ofMSW transported through transfer station from 75% to 95% and thereby reducing the cost of collection and transfer of municipal solid waste in Amman.
Sub-component 2.3: Design, Build and Operation (DBO) of an LFG recovery system: Under this sub-component, the project will finance the design, supply, installation, commissioning and initial operation for 5 years ofan LFG recovery system (extraction of
7 LFG and energy generation) for cells 1, 2, and 3 at a1 Ghabawi landfill. The sub- component will include final capping of these cells as well as upgrading of the leachate drainage system in order to maximize LFG recovery. The total capacity of the power plant to be installed during the project period will be 6 MW. Implementation ofthis sub- component will also enable income generation from the sale ofCERs and electricity.
38. Component 3: Project Management (US$0.6 million): Component 3 will finance necessary technical assistance to the Project Management Unit (PMU), which is being established to undertake the day-to-day management of the project. The technical assistance to the PMUwill facilitate the PMU’s overall supervisory, coordinating, and monitoring role.
39. Attached Carbon Finance Operation: The World Bank has entered into an agreement with GAM to purchase part of the CERs resulting from the project, amounting to 0.9 to 0.95 million tons of C02 equivalent (tC02e) of CERs from 2009 to 2014. Given the current market, the emissions reduction purchase agreement (ERPA) is valued between 8 and 9.5 million Euros. The World Bank CER purchase is on behalf ofthe Carbon Fund for Europe (CFE).
40. Payments of CER revenues will be made annually subject to verification by an independent Designated Operational Entity (DOE) accredited by the CDM Executive Board (EB) established under the Kyoto Protocol. The World Bank’s Carbon Finance Unit will support GAM financially and technically in project registration, verification and certification of CERs generated by the project.
41. In accordance with rules governing the CDM, a portion of the carbon revenues is to be allocated to sustainable development. GAM has already agreed with the MoE that 15 percent of the carbon revenues will be allocated to support pollution abatement activities as part of the Environment Protection Funds Program housed at and managed by the MoE.
D. Lessons learned and reflected in the project design
42. Countrywide: This project would be the first World Bank-assisted solid waste management project in Jordan and the only Bank loan to the city ofAmman during the last twenty years. The Bank’s recent experience in Jordan’s municipal sector includes the Jordan Community Development Project (closed in June 2004) and the ongoing Regional and Local Development Project (approved in November 2006). One ofthe valuable lessons learned from these projects is that attention needs to be paid to the sustainability of investments at the municipal level, in particular by strengthening the financial and technical capacity ofmunicipalities.
43. Worldwide: World Bank experience internationally with MSWM projects was taken into account during project preparation. The Lebanon Solid Waste Management Project, the Tunisia Sustainable Municipal Solid Waste Management Project, the Olavarria Methane Capture Project (Argentina), the Mexico Second SWM Project, the Bosnia and Herzegovina SWM Project, and recent solid waste sector work in India highlighted issues common to such projects and provided important lessons, including the following:
44. Inadequate technical capacity for strategic planning and private sector participation: Local government managerial capacity and experience in developing policies and strategic plans for
8 private sector participation, as well as technical capacity to ensure proper contracting, supervision and monitoring hnctions, are keys to project success. In addition, the private sector on many occasions has not performed at the technical level expected and/or at acceptable costs, and government counterparts have lacked the ability to monitor and enforce contracts. Previous experience clearly points to a need for good planning and the benefits of phased private sector participation in order to build government capacity, particularly for solid waste collection services. Technical Assistance within this Project will be in conjunction with the recommendations of the Master Plan, which, among other tasks, is proposing an appropriate organizational structure for SWMwithin GAM’S administration. Institutional strengthening will be provided in the context ofthe new operational and managerial structure.
45. Overestimation of LFG systems performance: The preliminary results of the verifications of several Bank-hnded and other LFG projects show that projects have delivered fewer CERs than forecast in the Project Design Documents (PDDs). The main reasons include: (a) estimations from too-optimistic models due to lack of experience and insufficient attention paid to the project environment; (b) high leachate levels and/or unstable waste mass, which negatively affect the generation and collection of LFG; (c) delays in implementing the LFG system as well as in equipping the site with appropriate CER monitoring and recording equipment; and (d) poor design and operation.
46. Public participation and communication: Experience clearly demonstrates that without strong public participation and communication to address public concerns, projects that depend on changes in public behavior are likely to fail.
47. In addition, the Project took into consideration the Bank’s experience in Jordan within the framework of METAP, particularly the EU-funded Regional Solid Waste Management Project. The project covers eight countries of MENA and is aimed at enhancing the capacity of the region’s countries (including Jordan) to implement integrated MSWM. Under the METAP project, Jordan received, inter alia, technical assistance for institutional analysis and reform, the promotion of private sector participation in municipal waste, and the development of a monitoring unit ofprivate sector contracts in Madaba, as well as training in waste management. The institutional component of this Project will, among other things, help implement and apply the results ofthat technical assistance.
E. Alternatives considered and reasons for rejection
48. Several alternative investments were considered during the project design phase, and the SIL was judged the most appropriate alternative. This instrument, as well as the activities it is intended to finance, are in line with the Government’s current policy, which is oriented toward concurrently improving infrastructure and strengthening institutions, rather than toward structural reform or macroeconomic policy reform, for which a development policy loan would have been more appropriate. In the context ofa SIL, several alternatives were considered:
49. Pursuit of a country-wide program: This option was not considered due to the embryonic stage of disposal and treatment of MSW in properly engineered sanitary landfills. It will be important first to establish, on a pilot basis, the institutional and financial instruments and the corresponding investments in a municipality, such as GAM, that has a sound base to manage
9 complex arrangements. Once a strategy for PSP and experience in contract management has been developed, that experience can be expanded to other municipalities, including, perhaps, with World Bank support.
50. Full private sector contracting of MSWM: Moving much more quickly toward comprehensive contracting of all MSWM services was considered, and in fact would have been supported at the highest level of GAM. However, there are a number of preparatory initiatives that are required in order to prepare for significant participation of the private sector. Key issues that need to be addressed include: (i)strengthening the management capacity of GAM to ensure PSP implementation support; (ii)strengthening understanding of SWM cost structures and cost recovery; and (iii)the development of operational and supervisory guidelines for SWM. These prerequisites are being addressed both through the project and through EU and USAID assistance. This operation as designed with gradual private sector involvement, starting with the LFG recovery component, while preparing the base for greater involvement ofthe private sector in other segments of SWM. Neighboring countries have tried to pursue large-scale private sector participation without these prerequisites, which has led to contract and service disruptions and serious delays ofpayment.
5 1. Selection of LFG-to-electricity option vs. LFG collection and flaring: LFG recovery (collection and electricity generation) has proven to be economically and financially viable and is thus the recommended option under both the feasibility study and the PDD. In addition, Jordan has an objective of producing 10 percent of its primary energy from renewable resources, and this investment supports that goal.
52. Assessment of composting vs. landfilling: Consideration had earlier been given under the solid waste master plan study for composting, but this was ruled out as not being economically or financially feasible, in particular due to high investment costs and lack of domestic market demand for compost in Jordan.
111. IMPLEMENTATION
A. Institutional and implementation arrangements
53. The project will be implemented by GAM. An Advisory Committee consisting of the City Manager of GAM, the Deputy City Manager for Planning and Economic Development, the Deputy City Manager for Public Services, and representatives from the Ministry ofPlanning and International Cooperation, the MoE, and the EPC has been established by Mayoral Decree and will provide strategic guidance to and overall monitoring of the project. In addition, the Advisory Committee will facilitate coordination and collaboration between the various GAM departments involved and help in duplicating the project in other municipalities in Jordan.
54. A PMU has been established within GAM by Mayoral Decree. It will be responsible for day- to-day management ofthe project and will be the counterpart to the World Bank for all technical, fiduciary, and environmental matters. The PMU will be responsible for: (i)the overall supervision of the project; (ii)ensuring compliance with the IBRD legal agreement and the EWA; (iii)supervising the technical assistance related to Component 1; and (iv) coordinating
10 with the various GAM departments in the implementation and supervision of contracts under Component 2.
55. The PMU will be established and financed by GAM. Staff will consist of (i)a full-time project manager; (ii)a full-time solid waste technical specialist seconded from GAM’S Environment and Cleanliness Department; (iii)a full-time financial management specialist seconded from GAM’S Financial Department; (iv) a part-time environment specialist; (v) a full- time procurement specialist seconded from GAM’s Department of Procurement and Tendering; and (vi) a full-time administrative assistant. GAM will also provide office space, office equipment, computer and telecommunications equipment for PMU staff, and a vehicle dedicated to the project for work-related transportation.
56. The PMU will report directly to the office of the Mayor, but will work closely with the Environment and Cleanliness Department of GAM, which is responsible for MSW services. GAM’s technical capacity will be strengthened both through technical assistance and through project implementation itself, as most ofthe PMU staff will be seconded from GAM’s technical and managerial departments.
57. Implementation period: The project will be implemented over the 2009-2013 period, with significant advanced procurement starting in 2008 for the infrastructure component.
B. Monitoring and evaluation of outcomedresults
58. GAM will be the borrower and the implementing agency. The PMU will be responsible for progress reports and will make sure that procurement reports and Interim Unaudited Reports (IURs) are submitted to the Bank on time. Performance indicators will be monitored and regularly reported in progress reports (see Annex: 3: Results Framework and Monitoring).
59. With the support of the project, the PMU will house and manage an information system for results evaluation and monitoring. This information system would be expected to continue to function beyond the life of the project, creating the core data source for evaluating and monitoring the performance of solid waste services within Amman. Funds would be available to develop such an information system under Component 1 ofthe project.
60. Bank supervision will be carried out a minimum of twice yearly during the implementation of the project, and Bank staff will assist GAM in project execution and monitoring of project performance, particularly in terms of LFG collection and electricity generation. This will minimize the delivery risks in terms ofCER and electricity sales and will subsequently maximize project revenues and economic benefits.
C. Sustainability
61. One of the core goals of this project is the improvement in GAM’s cost recovery of SWM services. Investments in transfer stations and in LFG recovery are specifically designed to reduce costs and to generate income, respectively, and thereby to promote the sustainability of investments. The financial analysis undertaken as part of project preparation indicates that the net financial returns of the project over a 20-year period are over US$44.5 million, or a net
11 present value of US$18.4 million (discounted at 8 percent). In addition, the project will contribute to improvements in the cost recovery ratio for the sector - currently, cost recovery is estimated at 63 percent; it is expected to increase to approximately 75 percent by the end of the project.
62. In terms of institutional sustainability, proposed technical assistance and contracting arrangements are designed to promote improved SWM and the long-term sustainability of new arrangements. Technical assistance includes assistance to develop a strategic action plan for an integrated and affordable solid waste management system and to promote and pilot PSP in providing solid waste services, as well as to strengthen GAM’Scapacity in institutional aspects of SWM - e.g., collection optimization, contract and performance management, benchmarking, and monitoring. The project-supported public awareness and communication program is intended to educate residents not just on their rights with respect to SWM, but on their responsibilities as well. In addition, technical assistance related to supervision ofinvestment and operations contracts in solid waste disposal is designed to train GAM staff in contract and performance management and to prepare them for later contracting in solid waste collection. The close working relationship among PMU and Environment and Cleanliness Department staff will also promote institutional strengthening and sustainability ofproject investments.
63. It is important to emphasize how the above technical assistance will combine with the DBO contracts financed by the project and with expertise within the PMU to build GAM capacity to provide efficient and sustainable SWM services. Until now, GAM has always directly run SWM, but has lacked an overarching strategic vision and the ability to view the entire scope of SWMtasks. GAM management recognizes the need to outsource to the private sector in order to improve overall efficiency, but at present they do not have the capacity or experience to set service expectations, contract with providers, or monitor performance.
64. The project promotes a gradual shift to increased PSP in SWM. The DBO contract will support overall SWM through revenue generation, as well as provide a learning opportunity for SWM staff in contract performance supervision. It is envisaged that this experience, combined with development of the PSP strategic action plan, will lead to at least one, if not several, contracts for municipal solid waste services by the end of the project. This expertise will be developed within the PMU, but with close coordination with GAM’S Environment and Cleanliness Department; it is envisaged that the technical and institutional expertise developed within the PMU will form the core of the solid waste team within the Environment and Cleanliness Department, leading strategy, monitoring, standard setting, cost analysis, and private sector contracting for the sector going forward.
D. Critical risks and possible controversial aspects
65. The analysis of the critical risks associated with the project are summarized in the matrix below:
12 Risks Rating Comments and/or Mitigation Measures Lack of coordination among Moderate An Advisory Committee including heads of GAM departments may affect concerned departments was established to project implementation and ensure coordination and provide guidance results. during implementation. It will report to the Mavor. Lack ofimplementation capacity, Moderate A strong counterpart team is being resulting in delays in project established by GAM. implementation. Counterpart funds are secured through line items within GAM’s annual budget. Advanced procurement for the DBO contract for the LFG recovery system started in May 2008.
Lower-than-anticipated levels of Moderate Estimates of LFG recovery used in the PDD LFG could lower electricity and and in revenue projections are quite carbon revenues, thereby conservative, having used both a reducing the project’s financial conservative LFG production rate and viability. collection efficiency rate. It is highly likely that targets for flaring and for electricity production will be met.
Difficulty in securing sites for the Moderate During project preparation, an extensive transfer stations because of decision-making process was undertaken environmental or social concerns regarding site selection for the transfer of potentially affected stations. A list of potential sites taking into communities. consideration social and environmental criteria and public/municipal ownership of land was agreed on. Final selection of the two sites is not expected to be an issue.
Political commitment to PSP Low The team considers the likelihood ofthis risk may wane, resulting in delays to to be quite low. Jordan has consistently contracting. been a leader in the region in PSP and privatization, and the benefits to efficiency and productivity are well known and accepted in Jordan. The EPC has extensive experience with privatization and PSP and has committed to worlung with GAM.
Transfers from GAM’s general Low GAM’s first priority in all areas is financing budget are insufficient to fully necessary services from the general budget, fund SWM services. and there are no rules requiring cost recovery from user charges. In addition, the shortfall in SWM cost recovery is approximately 4 percent of GAM’s total revenues, and therefore not a burden on the budget.
13 Risks Rating Comments and/or Mitigation Measures A significant portion of the Moderate GAM will include on a yearly basis sufficient allocations within its budget for the project. The allocation will be for the loan proceeds as well as for the counterpart funding.
Changes in GAM’s leadership Moderate The establishment of a strong Advisory cause delays in project Committee with key representatives from implementation GAM and other governmental agencies will support project implementation.
Overall Project Risk Rating Moderate
E. Loadcredit conditions and covenants
66. There are no specific effectiveness conditions.
IV. APPRAISAL SUMMARY
A. Economic and financial analyses
67. The economic andflnancial analysis of this project consists of (i)a cost-benefit analysis of the project comparing the capital and operating costs of the project to the benefits produced by this operation in the form of revenues from the sales of CERs and electricity and cost savings from a more efficient transfer system; (ii)an analysis ofthe financial returns ofthe project; (iii) an analysis ofSWM cost recovery at GAM; and (iv) an analysis ofGAM’s debt capacity.
68. The methodology used for the economic appraisal is a cost-benefit analysis based on the comparison between a defined Do-Nothing scenario and a defined Do-Something scenario. The economic analysis considers the project investment and operating costs and the following main benefits: (i)cost savings from collection and transfer through the implementation ofthe two new transfer stations; (ii)carbon emission reductions through the implementation of the LFG recovery system; and (iii)sales ofelectricity produced by the LFG-to-electricity plant.
69. The economic analysis indicates that the investment component of the proposed project is economically viable, returning a positive Net Present Value (NPV) of US$16.9 million, following an incremental investment of US$23.5 million. The EIRR is 37 percent and the estimated B/C ratio is 1.63, which, since it is greater than one, supports a decision to invest in the project. Sensitivity scenarios have been run and show that the proposed investment is relatively robust to defined variation in key parameters of interest, with significant changes in both the capital costs ofthe project or the LFG production (which would affect the income from CER and electricity sales) still resulting in a positive NPV. Moreover, even without CER revenues; the project is still economically viable, returning an NPV of US$ 2.1 million and an EIRR of 12 percent.
70. Thefinancial analysis of the project is also based on the comparison between a defined Do- Nothing and a defined Do-Something scenario. The financial benefit will be derived from CER
14 revenues through the implementation ofthe LFG system and sales of electricity produced by the LFG-to-electricity plant, and costs savings in collection and transfer. The financial costs include the project investment costs and increased operating costs due to the implementation ofthe LFG recovery system and the LFG-to-electricity plant.
71. The financial analysis indicates that the investment is financially viable, returning a positive NPV of US$18.4 million at a discount rate of 8 percent, following an investment of US$23.5 million. The financial internal rate of return is 30 percent, which is well above the cost of financing. The sensitivity analysis reveals that the proposed investment is relatively robust to defined variations in key parameters ofinterest, with significant changes in both the capital costs ofthe project and LFG production still resulting in a positive NPV at the 8 percent threshold and a higher FIRR than the cost offinancing for GAM.
72.SWM cost recovery is estimated to have been approximately 63 percent in 2007, with transfers from GAM’s general budget above revenues from user fees of about JD 8 million, or approximately 4 percent of GAM’s total revenues. Projections were made of hture cost recovery given expected growth in municipal waste generation, inflation, and costs and revenues generated by the project, indicating that cost recovery would be about 86 percent in the first year of revenues from LFG recovery, and averaging about 79 percent until 2013. Cost recovery projections were undertaken up to 2020; due to underlying higher costs than revenues and gradually decreasing CER and energy revenues, cost recovery gradually falls to approximately 68 percent in 2020. However, this assumes that there are no increases in household solid waste fees over the entire period of the review; in fact, it is highly likely that GAM will raise fees periodically to meet increases in underlying costs.
73. GAM’Sdebt capacity: As GAM is the borrower ofthe proposed loan, GAM’s debt capacity was analyzed and projections estimated. On the whole, the proposed World Bank loan is a minor part of GAM’s overall financial responsibilities, and there are no financial impediments to the city’s borrowing from the World Bank. GAM has remarkably low debt levels, as GAM’s revenues easily cover its operating costs and the majority of its capital expenditures. GAM’s debthcome ratio is currently approximately 40 percent, due to a recent bond issue of JD 60 million. Given the estimated disbursement schedule ofthe Bank loan and repayment schedules of the bond issue, the debthncome ratio falls steadily, reaching 5 percent in 2018 and continuing to fall after that. Barring an unexpected and drastic increase in new borrowing, debt service (i.e,, all principal and interest payments) is correspondingly small. Debt servicehncome ranges from an estimated 7 percent and 2.5 percent between 2008 and 2018.
B. Technical
74. The project is technically sound, and the investment as well as the institutional components of the project were selected based on an updated solid waste master plan and a comprehensive feasibility study prepared by an international engineering firm. Over the past 30 years the technology for extraction and utilization of LFG has developed to the point where today there are more than 1,300 plants worldwide in operation. Approximately 750 of these plants have been established in Europe and 425 in the United States. The technology to be used for the proposed LFG-to-electricity plant will be selected from well proven technologies through international competitive bidding and using a performance-based DBO contract.
15 75. For the extensiodupgrade of the existing disposal site, the design of the new cell and the upgrade of the existing leachate treatment facility were reviewed and improvement measures were integrated into the bidding document for the related civil works. The operation of these facilities will be performed by the Environment and Cleanliness Department ofGAM. However, the project will finance technical assistance and capacity-building activities to ensure enhanced disposal practices while preparing the required environment for cost-effective and sustainable private sector takeover of the whole site in 2014 for a 15 year-period. To avoid any overlapping responsibilities between GAM and the LFG operator for the first three cells, the latter will not undertake its activities before the relevant cell is full and temporarily capped. Final capping, collection of LFG, leachate management inside the cells and electricity generation from LFG will be under the full responsibility ofthe LFG operator.
76. The institutional component and its related TA and capacity-building activities are intended . to introduce state-of-the-art management tools to GAM as well as a strategic action plan for PSP. It is expected that by the end of the project, GAM will be able to structure, contract, and monitor the private sector in complex and ongoing SWM operations.
C. Fiduciary
77.Procurement: GAM will be the implementing agency and will be responsible for procurement under the project. The capacity of GAM to carry out procurement activities was assessed during project preparation and was deemed adequate. Although GAM is not familiar with Bank procedures, its Department of Procurement and Tendering staff are competent in the procurement area and are well versed in the major differences between the Bank’s directives and Jordanian procurement legislation. However, in order to familiarize GAM staff with Bank’s directives, procurement training has been included within Component 3 of the project. The Department of Procurement and Tendering of GAM intends to strengthen procurement procedures and to bring them up to modern standards as part of ongoing strengthening of GAM administration and management.
78. Procurement will be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” dated May 2004 and revised October 2006, “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” dated May 2004 and revised October 2006, and provisions stipulated in the Loan Agreement.
79. A Procurement Plan has been prepared and is provided in Annex 8. Project procurement management will be located within the PMU, which will have a full time procurement specialist seconded from GAM’SDepartment ofProcurement and Tendering.
80. Overall procurement risk is assessed to be moderate. Procurement arrangements are detailed in Annex 8.
8 1. Financial Management: GAM generally follows the same processes and procedures in financial management (FM) as the national government and is subject to verification by Jordan’s Court of Accounts. A number of issues identified in the FM assessment indicate that there are risks in the current reporting system operated by GAM for its day-to-day financial activities, and that it should not be used for project financial management. This is due largely to an ongoing
16 major project to shift GAM’s financial management to a modern system that will include: (i)a chart of accounts with functional, economic, and organizational coding, (ii)implementation of the Oracle Financials suite, and (iii)shifting to accrual accounting. These changes will take two to three years at a minimum. In the meantime, it is not possible to use existing or transitional systems for project financial management.
82. Measures mitigating the above risks have been agreed upon with GAM and are being implemented. These measures include: (i)installation of a ring-fenced accounting system to support the financial management accounting, reporting and internal control requirements ofthe project; (ii)production of monthly, quarterly and annual financial reports to track the project’s status; (iii)secondment of a financial management specialist from GAM’s finance department to oversee the financial management arrangements in compliance with the Bank’s fiduciary guidelines; and (iv) an annual audit for the project undertaken by an independent external auditor, acceptable to the Bank.
83. The Project FM activities will be located within the PMU, which will have a financial management specialist seconded from GAM’s finance department. The financial specialist has been identified by GAM management and has participated in the Project appraisal mission. A Designated Account (DA) will be established at the Central Bank ofJordan and will be managed by GAM’Sfinance department and supported by the PMU. The PMU, on an annual basis, will manage the inclusion of GAM counterpart funds and the loan proceeds into GAM’s annual budget process. Project expenditures will be allocated within the GAM budget starting fiscal year 2009.
84. The project’s financial statements will be audited on an annual basis by an independent external auditor, acceptable to the Bank, in accordance with internationally accepted auditing standards. The audited financial statements will be submitted to the Bank no later than six months following the close of each fiscal year being audited.
85. GAM’s audited financial statements, audited by an independent external auditor, will also be remitted to the Bank on an annual basis six months after the end ofthe fiscal year.
86. The Overall FM risk is assessed to be moderate. FM arrangements are detailed in Annex 7.
D. Social
87. The project is not expected to have serious social issues, however, because of the potential for involuntary resettlement and/or land acquisition due to the siting ofthe two transfer stations financed by the project, O.P. 4.12 on Involuntary Resettlement is triggered, and a Resettlement Policy Framework (RPF) has been prepared.
88. An area of concern regarding social impact is the situation ofwaste pickers. Although there are no established waste pickers on A1 Ghabawi landfill or at the existing transfer stations, waste pickers do go through waste discarded by residents and businesses to collect items ofvalue. Very few (less than 5-10 persons) cross the fences ofthe landfill illegally at night. Component 1 ofthe project includes support for the promotion ofrecycling activities as part of PSP development, as well as for the design and implementation of a public awareness and communication program.
17 Studies under the component will pay explicit attention to social issues in general and to the role ofthe “upstream” waste pickers in particular. In addition, research and planning for recycling in Amman will consider waste picking activities. This will build on related previous studies and activities, e.g., a recent EU study on recycling and recent efforts by the MoE to engage civil society in such efforts.
89. A socio-economic survey will be carried out during the initial stages of project implementation to obtain more accurate information about the waste pickers at the source. This group, which consists of several thousand persons, represents the poorest section of the population. The study should include an estimate of the number involved, where they work, organization, what is being picked, links to middle-men, potential sources of conflict, the role of NGOs, etc. Experience from other parts of the world stresses the importance of establishing channels of communication with waste pickers. This assessment is part of a study planned to be carried out with the support of a USAID grant managed by the Bank and executed by the EPC in close coordination with GAM.
90.Based on the findings of the survey and recommendations of the EPC-managed study, follow-up activities should be considered with the aim of improving the current situation of the waste pickers. This would potentially allow for better organized participation of the poorest sections ofthe population as well as improved recycling by linking waste picking and recycling activities. The study will further explore options with regard to the hiring ofwaste pickers for the collection and sorting of recyclable materials. Options should be based upon the findings of the socio-economic survey, but may include the formalization of current activities, e.g., by giving waste pickers licenses, as has successfully been done elsewhere. The role of the private sector, civil society and GAM would have to be clarified at a later stage. However, in view of the intention of GAM to ultimately privatize SWM, links to the private sector would be given particular attention in the socio-economic study.
E. Environment
91. An Environment and Social Impact Assessment (ESIA) was carried out during project preparation and was found to be in compliance with Bank safeguard policy OP 4.01 as well as with Jordanian environmental regulations.
92. According to the ESIA report, the proposed project will have a strong positive impact on the overall environment of the project area while addressing global environmental issues i.e. mitigating GHGs. It will particularly address the deficit in municipal solid waste disposal capacity, improve disposal practices, and address related gas and leachate management issues, hence mitigating negative impacts of the existing disposal facility on the environment and natural resources.
93. The project will contribute to global climate mitigation through the reduction of 2.8 million tons of C02eq during a 21-year period while generating 565,000 MWh of electricity. It will mobilize additional revenues that will be used to enhance SWM cost recovery in Amman and to financially support sustainable development activities through the allocation of 15 percent of carbon revenues to Jordan’s Environmental Protection Fund.
18 94. Other substantial benefits are related to the rationalization of collection in underserved districts in terms of transfer. The operation of the two planned transfer stations in conjunction with the existing ones will reduce the overall trips made to the landfill. This will decrease traffic levels, which will have a positive impact on roads and street users ofthe surrounding areas.
95. Major adverse impacts associated with the project are leachate management and polluting discharges and odor and gas emissions. The design of the proposed project took into consideration these potential impacts; appropriate mitigation, monitoring and institutional strengthening measures are part ofthe project and are reflected in the related Environmental and Social Management Plan (ESMP) as well as in the project budget in the amount ofUS$490,000
96. Other impacts: There may be adverse environmental impacts during the construction phase; however, they are short term, reversible and unlikely to be significant. Typical impacts are noise nuisances, air pollution due to dust formation, safety hazards from construction activities, etc. Good construction practices will be included in the bidding documents of contracts and would mitigate most ofthese temporary impacts to acceptable levels.
F. Safeguard policies
97. The table below indicates that only the Environmental Assessment and Involuntary Resettlement policies will apply to the project. The detailed assessments and agreed actions are described in Annex 10.
Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [XI [I Natural Habitats (OP/BP 4.04) [I [XI Pest Management (OP 4.09) [I [XI Physical Cultural Resources (OP/BP 4.1 1) [I [XI Involuntary Resettlement (OP/BP 4.12) [XI [I Indigenous Peoples (OP/BP 4.10) [I [XI Forests (OP/BP 4.36) [I [XI Safety ofDams (OP/BP 4.37) [I [XI Projects in Disputed Areas (OP/BP 7.60)* [I [XI Projects on International Waterways (OP/BP 7.50) [I [XI
98. Environmental Assessment (OP4.01): The proposed Solid Waste and Carbon Finance Project has been classified as Category A because of its potential impacts on the environment and natural resources. An ESIA was prepared in compliance with the requirements of Jordanian regulations as well as Bank guidelines and procedures, including OP 4.01 “Environmental Assessment”. The ESIA report was based on studies, field investigations, and public consultation, including consultation with affected population groups and key stakeholders and NGOs. An ESMP was also prepared and related costs estimated as part ofthe above ESIA report.
* By supporting theproposedproject, the Bank does not intend to prejudice thefinal determination of the parties’ claims on the disputed areas
19 99. The ESMP specifies the appropriate environmental management and supervision mechanisms, mitigation measures, environmental monitoring plan, training activities and budget allocation necessary to implement the proposed mitigation measures and to strengthen the Borrower’s capacity in terms of environmental management. The ESMP will be closely monitored during supervision missions, and will be presented as part ofthe progress reports to be submitted by GAM to the Bank.
100. As part of its mandate to monitor project implementation, the PMU, in close coordination with GAM’S Environment and Cleanliness Department, will ensure the implementation of the mitigation measures and will address any additional issues that might be identified during project implementation. An environmental specialist will be hired to assist the PMU in supervising the implementation ofthe ESMP.
101. Involuntarv Resettlement (OP/BP 4.12): Some of the project’s physical components may result in involuntary resettlement and/or land acquisition. OP 4.12 on Involuntary Resettlement is thus triggered, and an RPF has been prepared. An RPF is the instrument used, because the exact nature and extent of land acquisitionhesettlement resulting from the project are not yet known. In the context of this project, this applies to the construction of transfer stations which may - depending upon the location chosen - entail some degree ofland acquisition and/or resettlement.
102. The key purpose of the RPF is to establish resettlement objectives, principles, organizational arrangements and funding mechanisms for any resettlement operation that may be necessary during the implementation ofany of the subprojects. When during implementation the exact extent of land acquisition and/or resettlement becomes known, Resettlement Action Plans (RAPS)or abbreviated RAPS- depending on the scale and severity of impacts - are prepared. If land acquisition and/or resettlement will be required, it should be noted that this process must be completed prior to the start ofphysical works, in this case prior to the construction ofthe transfer stations.
G. Policy Exceptions and Readiness
103. The project does not require any exceptions to Bank policies and meets the regional criteria for readiness for implementation set forth in the procurement and financial management assessments.
20 Annex 1: Country and Sector or Project Background
104. During the last five years, Jordan has maintained its strong economic performance. Real GDP growth remained high, at 6.4, percent in 2006. The expansion was broad, led by the manufacturing, construction, and service sectors. Continuing robust demand in these sectors is explained partly by high liquidity in the region. Capital inflows as well as tourist travel to Jordan have reached record levels. The strong economy helped boost public revenues, while public spending has remained under control, resulting in a lower public deficit. However, increasing fuel prices combined with high demand in the economy has stoked inflationary pressures, leading authorities to tighten monetary policy. The current account deficit narrowed in 2006, but remains high at 13 percent of GDP. Avoiding excessive overheating of the economy remains a challenge, which the government has been addressing through several instruments, including higher fees for real estate, higher central bank interest rates, tighter bank supervision, and lending constraints for investors in the Amman Stock Exchange.
105. Jordan’s political stability provides an environment that is conducive for implementing reforms despite continuing security threats and regional tensions. The top political reforms include expanding political freedoms and social participation, removing remaining gender discrimination, and enhancing judicial independence and fairness. The Cabinet, reshuffled in November 2007, is pursuing its mandate to implement the National Agenda (NA), which was translated recently into a medium-term plan identifying policy priorities with linkages to financing plans.
106. Despite the continuing economic growth, environmental degradation in Jordan, which the Mediterranean Environmental Technical Assistance Program (METAP) estimated to cost 3.1 percent of GDP (2003), affects the health ofJordanian citizens, interferes with Jordan’s access to the environmentally conscious EU market, and jeopardizes the country’s high tourism potential. Solid waste is an important component of the country’s environmental agenda, due to the relatively high rate of per capita waste generation in urban areas (0.9 kg/ person/ day) and the fast pace of population growth, estimated at 3 percent, pushed upwards in recent years by the flow ofmigrants from neighboring countries such as Iraq and the West Bank.
107. With respect to the solid waste sector, it is anticipated that the quantity of municipal waste will continue to increase in the years ahead in tandem with population and consumption growth, and would thus affect the quality of life in Jordan. Currently, the production of municipal waste in Jordan is estimated at 1.5 million tondyear, and is projected to reach 2.5 million tondyear by 2015. The collection rate is estimated at 90 percent in urban areas and 75 percent in rural areas. About 50 percent ofthe waste generated is sent to 21 open dump sites that lack essential facilities or infrastructure.
108. The Government of Jordan considers Municipal Solid Waste Management (MSWM) to be one of the major issues throughout the country and in particular for Greater Amman. Although Jordan does not yet have a SWM policy, or a legal and regulatory framework, the Government has adopted a series of enabling policies and reforms that point toward good compliance with modem SWM policies. These enabling policies represent as such a sound
21 framework in the short term for defining and testing the elements ofa SWM policy and reform in the sector. These enabling polices are:
109. The Government’s National Agenda for Sustainable Development - which is the Government’s policy for 2006 to 2015 - has established the following four objectives to be attained in the waste sector, namely:
1. Extending waste service coverage by providing financial, technical and human resource capacity-building to empower concerned authorities to extend safe waste collection and disposal services to all people in urban and rural areas;
2. Promoting environmentally sound solid waste disposal and treatment by (a) disposing of a continuously increasing proportion of solid waste in an environmentally sound manner; (b) establishing programs to prevent or mitigate the environmental impacts of the existing disposal sites, and (c) by establishing environmental and health-quality guidelines and standards governing MSW disposal and disposing ofsolid waste in accordance with these guidelines and standards;
3. Minimizing generation of solid waste by (a) inducing beneficial changes in lifestyles, production and consumption patterns, through economic or other instruments, and (b) reducing the production and consumption of containers and packaging materials, especially those that are non-biodegradable; and
4. Maximizing environmentally sound solid waste reuse and recycling by: (a) establishing and implementing programs for efficient separation of different types of solid waste at the point ofgeneration to facilitate recycling and reuse; (b) establishing and implementing a national program for solid waste recycling and reuse; and (c) establishing a technical unit responsible for collecting and disseminating solid waste recycling and reuse information and techniques.
110. The Ministry of Environment (MoE) has been designated the responsible ministry for developing a SWM policy and laws and regulations for the waste management sector. The Ministry has received technical assistance from the European Commission to train staff and prepare a draft framework for waste regulation whose purpose is to provide for (a) minimization of waste generation and reduction of its harmhlness (hazardous characteristics), (b) promotion of the re-use ofcomponents of waste in an environmentally friendly manner; (c) a high level of protection of the environment and human health; and (d) sustainable development through protection and conservation ofnatural resources. In view ofthe MoE’s additional needs both in terms of enabling legislation (regulations and instructions) and of capacity development, the United States’ Agency for International Development (USAID) will support through its Sustainable Achievement ofBusiness Expansion and Quality (SABEQ) program the preparation of an environmental licensing framework, which will also include establishing benchmarks, standards and guidelines for SWM facilities.
111. Consistent with the National Privatization Law (No. 21 of 2000) and the National Privatization Strategy, which calls for the restructuring and privatization of public institutions, increasing private sector investment in infrastructure and attracting foreign technology and know
22 how, the Government would like to encourage private sector participation in infrastructure services, including in S WM. The Executive Privatization Commission (EPC), which was established to stimulate and drive the privatization program, is prepared to assist in private sector participation in MSWMwhere needed.
112. In addition, the Government has adopted a National Energy Strategy, which calls, inter alia, for the development of renewable and sustainable energy. In view of recent increases in energy prices, the Government has set an objective ofproducing 10 percent ofits primary energy generation with renewable sources of energy by the year 2020, including with landfill gas.
113. On the basis of these enabling policies, GAM has already embarked on a series of implementation actions. These are:
1. Financing a master plan for GAM, including the reorganization of GAM and its services toward greater private sector participation. H.E. the Mayor intends to eventually privatize all aspects of MSW services, and has requested the Bank’s assistance in developing a strategy toward that objective. The project has included a study as part ofits institutional development component.
2. Extending collection in all the major districts, rehabilitating three transfer stations, and constructing two new ones in order to ensure optimal effectiveness for short and long haulage of waste for disposal at El Ghabawi landfill.
3. Upgrading El Ghabawi landfill according to best-practice standards for both design and operation, and contracting the private sector for the collection, treatment and disposal of medical waste.
4. Contracting the private sector to construct and operate a recycling facility for high-value non organic material. A pre-feasibility review is being undertaken with the assistance of the European Commission.
5. Designing and implementing two Clean Development Mechanism (CDM) projects for electricity generation from LFG, contributing to meeting the target for the use of renewable energy. The Finnish Government has supported an LFG-energy plant at Russeifa landfill, whereas the subject project includes support for an LFG-to-eelectricity plant at A1 Ghabawi. The facility at A1 Ghabawi is to be designed, constructed and operated entirely by the private sector.
114. The project responds to the major elements ofthe four objectives ofthe National Agenda for establishing a modern SWM system in GAM. The project is also consistent with the privatization policy and the renewable energy targets through the following interventions:
0 MSW Strategic Planning. The institutional development component will finance the development of a strategic plan to help in establishing goals, objectives, and investment plans towards the promotion ofan integrated and affordable SWM system.
23 0 Monitoring/supervision of MSWM services. The institutional development component will finance the services of an engineering consulting firm to monitor, supervise and provide on-the-job training for the operation and maintenance ofA1 Ghabawi landfill; 0 Communication with MSWM producers. The institutional development component will also finance a communication strategy and awareness campaigns to promote change in behavior, recycling and waste minimization; 0 Provision of solid waste disposal services. The infrastructure component of the project will establish the necessary performance standards and benchmarking requirements for the design, construction and operation ofA1 Ghabawi landfill; 0 Private sector participation. The project will finance, as part of its infrastructure component, the services of a private sector operator for the LFG-to-electricity facility using a design-build-operate (DBO) contract; and 0 Reductions in greenhouse gas emissions. The project will contribute not only to the reduction of greenhouse gases at the global level, but will also improve the local environment. It will contribute to the reduction of public investment requirements and provide access to the world market in carbon credits.
24 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies
Sector Issues Project Name PDO Rating Low-income, refugee, and squatter settlements in Jordan were suffering from a long-term lack of Jordan: Community S essential physical and social infrastructure, including Infi-astructure adequate water supply and drainage, school, Development Project community, and health center infrastructure, (closed) transportation infrastructure, and sewage treatment and solid waste management. In addition, institutions responsible for providing infrastructure and services lacked the capacity to adequately perform their responsibilities.
Jordanian municipalities, with the exception ofAmman and a few other large cities, lack the financial and Jordan: Regional and S institutional capacity to manage core services and make Local Development sustainable infrastructure investments. In addition, Project (ongoing) intergovernmental systems and institutions to support and oversee municipalities are weak, and the fiscal transfer system needs to be restructured.
A high percentage ofsolid waste in Tunisia is disposed ofin open dumps, resulting in environmental damage, Tunisia: Sustainable S particularly around the larger cities and along the coast. Municipal Solid Waste The landfill serving Tunis is approaching full capacity, Management Project and will have to be expanded. An earlier experiment in (ongoing) subcontracting SWMhas failed in many municipalities, resulting in a need to rethink the approach. Cost recovery is only 15 percent, and there is an urgent need to improve SWMfinancing.
Following the end ofthe civil war, there was an urgent need to invest in core solid waste infrastructure -waste Lebanon: Solid Waste U disposal (landfills, in particular) and collection facilities Management Project (containers and compactors), in particular. In addition, (closed) government institutions responsible for SWMneeded urgent capacity building.
25 Annex 3: Monitoring and Evaluation Arrangements
Strengthen the operational, financial, and environmental performance of MSWMin Aman. Specifically,
(i)Environmentally upgrade and - Percentage of collected municipal To monitor environmental expand the existing municipal solid solid waste disposed of and managed performance at both the local and waste landfill to meet the city’s in a sanitary landfill increased from global level. disposal needs up to 2013 and 0 to 80% generate electricity while mitigating - 160,000 MWh generated through GHGs. the LFG recovery system by 20 13 (ii)Improve the cost effectiveness of - Cost-recovery ratio for SWM To evaluate achievement of the PDO the existing municipal solid waste improved from 63% in 2007 to 75% and to inform GAM management collection and transport system and by 2013. regarding cost efficiency and cost improve overall cost recovery recovery.
Intermediate Outeome Indicators
Disposal capacity to satisfy Disposal infrastructure constructed Management information and Amman’s needs up to 2013 is in at A1 Ghabawi landfill for a total project progress reporting place capacity of 8 million tons ofwaste.
Appropriate leachate treatment Discharge from the leachate Management information and capacity in place treatment facility meets Jordanian project progress reporting. standards. Revenues generated from the LFG- 160,000 MWh by 2013 produced To assess the performance ofthe to-electricity plant and connected to the electricity grid LFG-to-energy component
To gauge LFG recovery system as a model for other landfills.
Revenues generated from CER sales 950,000 tons ofCERs (as C02 To assess the performance of the equivalent) generated by 2013 LFG recovery system.
To gauge LFG recovery system as a model for other landfills.
Reduction in collection and transfer The ratio ofkilometers travelled by Management information and costs per ton of waste in the districts collection vehicles in the districts project outcome monitoring served by the new transfer stations served by the new transfer stations to the total tons ofmunicipal waste collected in those districts (hs/ tons) is reduced from 5.5 to 2.5.
A monitoring and evaluation system Sector monitoring reports produced Management information is in place to track sector costs and on a quarterly basis to management. performance
26 .
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d 0 0 x z Annex 4: Detailed Project Description
Component 1: Institutional Strengthening and Capacity Development Component
115. The primary objective of Component 1 is to finance technical assistance and capacity building activities benefiting Greater Amman Municipality (GAM) departments involved in the development, planning, operation, and evaluation of municipal solid waste management. The component will include the following activities:
116. Sub-component 1.1: Technical Assistance to GAM, including: (i)supervision of the contract to construct two transfer stations, and ofthe contract for landfill construction and upgrade of the leachate treatment facility; and (ii)technical assistance to GAM for supervision ofthe DBO contract and the operation ofGhabawi landfill.
117. Sub-component 1.2: Support for Strategic Planning, Private Sector Participation, and Monitoring and Evaluation
0 Support to GAM to define strategic actions toward the establishment of a sustainable and affordable municipal solid waste management (MSWM) system from collection to recycling, sorting, and transfer to landfilling and that will satisfy the city’s needs during the upcoming fifteen years. Those actions will cover policy, the institutional and legal framework, investment planning, financial management, cost recovery, and opportunities for enhanced recycling and recovery activities. This activity will also include review of the current GAM procurement regulations and guidelines, and support GAM in upgrading its procurement procedures.
0 Support to GAM in exploring opportunities and defining appropriate options for private sector participation in providing MSW services. Under this activity, technical assistance and capacity-building activities would support GAM’Scontracting, supervision and monitoring.
0 Development and implementation of an overall SWM performance monitoring and evaluation system, including information systems to track technical and financial performance ofMSWM services.
118. Sub-component 1.3: Development and Implementation of an Information, Education, and Communication Program: This sub-component will finance public information and education campaigns to raise public awareness and build partnerships in various areas of SWM. This activity will also finance a sustained awareness campaign involving the production of education and learning materials and their systematic dissemination. Attention will be given to working with NGOs and informal organizations.
29 Component 2: Infrastructure Component
119. This component includes three subcomponents aimed at improving the cost effectiveness of SWM transfer and disposal, strengthening the management of the existing landfill, reducing methane emissions (and generating emission reductions credits) and generating electricity. The main investment activities under this component are as follows:
120. Sub-component 2.1: Landfill construction and upgrade of the leachate treatment facility: Under this sub-component, the project will finance civil works construction of cell 3 of a1 Ghabawi landfill. This cell will have a capacity estimated for 2-3 years based on an average quantity of waste of about 3,000 tons per day. The construction is based on a design prepared by an international consulting firm in 2003, which was updatedoptimized by an international expert during preparation. This sub- component will also finance upgrading of the existing leachate treatment facility. These two works will be undertaken under a single civil works contract in order to maximize synergies.
12 1. Sub-component 2.2: Construction of two transfer stations: This sub-component will finance the construction and equipment oftwo transfer stations aimed at reducing the cost of collection services in the North-west and South-west areas of GAM. These two transfer stations will help ensure that 100 percent of waste collected transits through transfer stations, thereby reducing total transit costs. The project feasibility study validated the final selection ofthe sites, capacity, technical specifications and related cost estimates.
122. Sub-component 2.3: Construction of an LFG extraction system and LFG-to- energy plant: Under this sub-component, the project will finance the design, supply, installation, commissioning, and initial operation of an LFG recovery system (extraction of LFG and energy generation) for cells 1, 2, and 3. This sub-component will also include final capping of cells 1, 2, and 3, as well as upgrading of the leachate drainage system, with the objective of generating and extracting the maximum amount of LFG. Implementation of this sub-component will enable income generation from the sale of emission reductions credits (through the related Carbon Finance operation) and energy sales.
Component 3: Project Management
123. A Project Management Unit (PMU) has been established to ensure day-to-day management of the project. This component will provide technical assistance to the PMU to assist it in fwlfilling its overall supervisory, coordinating, and monitoring role. This component will also support all project management activities, including technical issues, procurement, and financial management.
30 124. The schedule below indicates the timing for the infrastructure works and operations.
Table 1: Planning Tablefor Infrastructure Component
2008 2009 2010 201 1 2012 2013 Landfill Cells I Cell 1 Cell 2 Cell 3 Cell 4 Gas to Electricity I4MW (IMW
Leachate treatment
Transfer Stations
Legend Tendering Construction Operation by GAM Operation by PSP Capping and LFG equipment
31 Annex 4 bis: Attached Carbon Finance Operation
Background:
125. The Bank manages a pool of funds contributed by governments and companies in OECD countries to purchase project-based greenhouse gas emission reductions in developing countries and countries with economies in transition. The emission reductions are purchased through one ofthe Bank’s carbon funds on behalf ofthe participants within the framework ofthe Kyoto Protocol’s Clean Development Mechanism (CDM) and Joint Implementation.
126. Unlike other World Bank development products, the World Bank Carbon Finance Unit does not lend or grant resources to projects, but rather contracts to purchase emission reductions in the form ofa commercial transaction.
127. The purchase contract is a performance-based contract. Payments to GAM will be triggered by successful verification of the reduction of methane emissions by an independent and accredited designated operational entity (DOE) under the rules of the Kyoto Protocol.2 The quantity of CERs to be contracted, the length of time over which the purchase will be made, the price paid, advance payment, and other conditions have been finalized between the World Bank and GAM during negotiations of the Emissions Reduction Purchase Agreements (ERPA). IBRD is responsible for the preparation of the Project Design Document (PDD), hiring of a DOE, registration of the project with the CDM Executive Board, annual verification by DOE, and certification by the Executive Board.
128. The Bank’s carbon finance operations have demonstrated numerous opportunities for collaborating across sectors and have served as a catalyst in bringing climate issues to bear in projects in several sectors, including solid waste management. The Bank is making every effort to ensure that developing countries such as Jordan can benefit from international efforts to address climate change. A vital element ofthese efforts is ensuring that developing countries are key players in the emerging carbon market for greenhouse gas emission reductions.
Carbon Finance and the Amman SWM Project:
129. As a developing country (non-Annex B Party) that has ratified the Kyoto Protocol, Jordan is eligible to participate in the CDM under the Kyoto Protocol. As per Kyoto Protocol guidelines, a Designated National Authority (DNA) has been established at the Ministry of Environment (MoE) to ensure that all CDM projects meet Jordanian criteria and requirements. The Protocol commits industrialized (Annex 1) signatory countries to reduce their carbon emissions by an average of 5.2 percent below 1990 levels in the first commitment period (2008-2012). To meet these commitments in the most
* The DOE has two functions: 1) to validate and subsequently request registration of a proposed CDM project activity; and 2) to verify emission reduction ofa registered CDM project, to certify it as appropriate and to request the CDM Executive Board to issue CERs.
32 effective manner, the Protocol's Article 12 enabled industrialized countries to receive credits for financing carbon emission reduction projects in developing (host) countries. Although host countries have no commitments for emission reduction targets under the Protocol, they can benefit from activities under the CDM.
130. Municipal solid waste disposed in landfills generates gases typically composed of 50 percent methane, a potent greenhouse gas (GHG) that has 21 times more global warming potential than carbon dioxide. Methane can be captured and flared or utilized in energy production. Those emission reductions can be negotiated for sale to Annex 1 Parties, to generate revenues for the improvement ofSWM practices and disposal.
13 1. The proposed project is the second blended operation, and the first landfill gas-to- energy project in the Middle East and North Africa region. It has been designed in an innovative manner to address landfill operations, proper closure and aftercare, as well as utilization of the landfill gas to generate energy. The project's design follows the main regional recommendations for best practices in CF, namely, mainstreaming CF in regular lending operations.
Emission Reduction Purchase Agreement (ERPA) of the project:
132. The World Bank-managed Carbon Fund for Europe (CFE) will purchase the CERs resulting from the landfill gas-to-energy component of the Amman Solid Waste Management Project up to 2014. The design of the project will be significantly influenced by the attempt to optimize the amount of CERs to be delivered and purchased through this transaction.
133. The CFE will purchase 0.9 to 0.95 million tons of C02 equivalent (tC02e) of CERs from April 1" 2009 to December 31St 2014 generated from the project. Table 1 below summarizes the CER potential estimated in the PDD. The ERPA has been negotiated between the Bank and GAM and is expected to be signed by September 30, 2008.
134. The carbon revenues would pay for more than 70% of the total investment costs for the landfill gas collection, flaring and energy generation systems. In addition, revenues from the sale of electricity are estimated at 26 million Euros. Under the ERPA terms, GAM will receive an advance payment equivalent to 25 percent of the estimated revenue from IBRD's purchase ofCERs.
33 Table 1: Emission reductions potential.
Year' I Annual estimation of emission 1 reductions in tons of C02 2009 158,545 I 2010 I 175.376 I 201 1 200,5 12 2012 216,258 2013 240,87 1 2014 256,397 2015 272,004 Total estimated C02e reductions over the first crediting period (tons of C02e) 1,5 19,963 Total number of crediting years over the first
crediting_. period 7 Average reduction over the first crediting period (tons of C02e) 217,138
34 Annex 5: Project Costs3
1 1. Institutional Development Component I Total cost in I WB Loan I CALM 1 Comments USD 1.1.1. Technical support for supervision of the DBO 500,000 500,000 contract and operations of Ghabawi 1.1.2. Technical assistance to GAM for the 300,000 300,000 supervision of civil works (transfer stations, leachate treatment facility and cell 3) 1.2.1. Support for strategic planning 500,000 450,000 50,000 1.2.2. Support for piloting pnvate sector participation 200,000 200,000
2.1.1. Upgrade ofthe existing leachate treatment plant 2,000,000 1,650,000 350,000 The same contractor will 2.1.2. Construction of cell 3 4,500,000 3,700,000 800,000 undertake 2.1.1 and 2.1.2 for a total estimated amount of US$ 6.5 million. 2.2. Construction and equipment of two new transfer 3,000,000 2,400,000 600,000
2.3.1. Capping and equipment of cells 1, 2 and 3 with The DBO contract will
LFG system and operations of LFG system 7,000,000 5,700,000 1,300,000 include 2.3.1 9 2.32 and 2.3.2. Construction of LFG-to-electricity plant 11,100,000 9,000,000 2,100,000 2'3'3 for a amount Of US$24.6 million. 2.3.3. LFG system operation (including LFG-to- 6,500,000 0 6,500,000 electricity) for 5 years Subtotal I 34,100,000 I 22,450,000 I 11,650,000 I
All costs are estimated excluding taxes given that environmental projects in Jordan are eligible for tax exemption. Front-end Fee is calculated on the basis of0.25 percent of the loan amount.
35 Annex 6: Implementation Arrangements
The implementation arrangements for the project are as follows:
135. The project will be implemented by GAM. An Advisory Committee consisting of the City Manager of GAM, the Deputy City Manager for Planning and Economic Development, the Deputy City Manager for Public Services, and representatives from the Ministry ofPlanning and International Cooperation, the Ministry ofEnvironment, and the Executive Privatization Commission has been established by Mayoral Decision and will provide strategic guidance to and overall monitoring of the project. In addition, the Advisory Committee will facilitate coordination and collaboration between the various GAM departments involved and help in duplicating the project in other municipalities in Jordan.
136. A Project Management Unit (PMU) has been established within GAM by Mayoral Decision. It will be responsible for day-to-day management of the project and will be the counterpart of the World Bank for all technical, fiduciary, and environmental matters. The PMU will be responsible for: (i)the overall supervision of the project; (ii) ensuring compliance with the IBRD loan agreement and the Emissions Reduction Purchase Agreement (ERPA); (iii)supervising the technical assistance related to Component 1; and (iv) coordinating with the various GAM departments in the implementation and supervision ofcontracts under Component 2.
137. The PMU will consist of: (i)a full-time project manager; (ii)a full-time solid waste technical specialist; (iii)a full-time financial management specialist seconded from GAM’s finance department; (iv) a part-time environment specialist; (v) a full-time procurement specialist seconded from GAM’s Department of Procurement and Tendering; and (vi) a full-time administrative assistant. GAM will also provide office space, office equipment, and computer and telecommunications equipment for PMU staff, and a vehicle dedicated to the project for work-related transportation.
138. An organizational chart of GAM’s new structure showing the PMU and its linkages to GAM’s departments is shown below.
36
Annex 7: Financial Management and Disbursement Arrangements
Executive Summary
139. A financial management (FM) assessment of Greater Amman Municipality (GAM) took place and identified that GAM generally follows the same processes and procedures in financial management as the national government. A number of issues identified in the assessment indicate that there are sufficient risks in the current system that it could not be used for the financial management ofthe project. This is due largely to plans to implement a major project with the objective to shift GAM’s financial management to a modern system that will include: (i)a chart of accounts with hnctional, economic, and organizational coding, (ii)implementation of the Oracle Financials suite, and (iii)shifting to accrual accounting. These changes will take two to three years at a minimum. In the meantime, it is not possible to use existing or transitional systems for project financial management.
140. Measures mitigating the above risks have been agreed upon with GAM and are being implemented. These measures include: (i)installation of a ring-fenced accounting system to support the financial management accounting, reporting and internal control requirements of the Project; (ii)production of monthly, quarterly and annual financial reports to the Bank and GAM to track the project’s status; (iii)a financial management specialist seconded from GAM’s finance department to oversee the financial management arrangements in compliance with the Bank’s fiduciary guidelines, while working closely with GAM’s Director of Finance; and (iv) an annual audit of the project by an independent external auditor acceptable to the Bank.
141. Project FM will be located within the Project Management Unit (PMU), which will have a financial management specialist seconded from GAM’s finance department. This financial specialist has been identified by GAM.
142. Based on the mitigation measures agreed upon with GAM, the overall risk level ofthe project is considered to be moderate.
Risk Assessment and Mitigation:
143. GAM’s overall financial management is handled by the Finance Department, which develops GAM’s annual budgets, processes all disbursements made by GAM’s various departments (with the exception of petty cash accounts managed by the departments), and tracks expenditures against approved and revised budgets. Budgets are classified in six major categories - revenue, salaries and wages, operating expenditures, transfers, other operations and maintenance, and capital expenditures. The structure does not include functional classifications, which makes it difficult to identify costs of operations that are distributed across different departments (for example, of solid waste management).
38 144. The current system is not able to monitor the project accounts and provide sufficient assurances for reliable control of the project. This assessment is based on several factors:
0 The financial systems and the underlying chart of accounts will be undergoing major changes over the next several years as GAM moves to a new chart of accounts that includes functional, economic, and organizational coding;
0 GAM has purchased licenses for the Oracle Financials suite for governments. Implementation should begin in late 2008, and it will take approximately two years to implement only the first three modules (general ledger, accounts payable, and accounts receivable). GAM will also be re-engineering all underlying financial processes and procedures;
0 GAM plans to move to an accrual basis of accounting in tandem with implementation ofOracle;
0 GAM does not have an independent internal audit function.
145. For the above reasons, the key risk mitigation measure is to locate the FM fimction within a PMU. The PMU staff will include a full-time financial management specialist who will, among other tasks, review requests for payment and ensure that such invoices are approved as per GAM controls, prepare regular financial reports, and coordinate the work of the external auditor who will be assigned to perform the project audit.
Implementing Entity:
146. The project will be implemented by GAM, a public institution that operates independently of the government and has its own systems of financial management and controls. Its governance structure features a Municipal Council, headed by the Mayor, who is appointed by the Prime Minister of Jordan. The Council approves all policies and related decisions regarding the operation of the municipality. Decisions relating to new or amended bylaws and financial statements are referred to the Prime Minister, under whose oversight the municipal government operates.
147. GAM has designated project management authority to a PMU, which reports directly to the Mayor. The PMTJ will be responsible for day-to-day management of the project, and will be the counterpart of the World Bank for all technical, fiduciary, and environmental matters.
Internal controls
148. The project’s expenditure cycle will follow the controls specified in Jordan’s financial bylaws applied by GAM. These include: (i)technical approval of the department involved, (ii)review and approval by GAM’Sfinance staff, and (iii)review of payments by the controller who checks the accuracy of the payment and its compliance with the laws applicable in Jordan. These controls will be complemented by the
39 verification and approval by the PMU financial management specialist as well as the PMU technical staff.
149. Accounting, Financial Monitoring and Reporting: The PMU will procure and install a financial management information system that is capable ofgenerating necessary financial reports, including sources and uses of funds, cash withdrawals, cash forecasts, and Designated Account (DA) reconciliation. It is recommended that simple, off-the- shelf software be procured for this purpose. The format, content, and frequency ofthese reports were agreed upon during project appraisal. The PMU’s Financial Management System (FMS) will prepare, at a minimum, quarterly interim un-audited reports (IURs), which will be submitted to the World Bank 45 days after the end of each calendar quarter.
150. Flow of Funds: In addition to allocations to the DA from the IBRD loan account, GAM contributions to project expenditures will be approved as part of GAM’Sannual budget process. The PMU will be responsible for submitting withdrawal applications with appropriate supporting documentation for expenditures incurred. Deposits into and payments from the DA to pay contractors, consultants, suppliers and others will be made in accordance with the provisions of the loan agreement. Replenishments ofthe DA will follow Bank procedures.
15 1. Financial Reporting: In order to comply with the Bank’s reporting requirements as well as track amounts spent under the project by category, component and activity, GAM, through the PMU, will be required to generate reports showing the sources and uses of funds, a listing of contracts and the general status of the project. These reports will be issued as follows:
Quarterly: The project will be required to generate quarterly IURs and submit them to the Bank as part ofthe project’s progress report. These reports consist ofthe following:
0 Financial reports: to include a statement of sources and uses of funds, quarterly cash forecast, an expenditure report comparing actual and planned expenditures by activity, and a DA reconciliation statement.
0 Contracts listing: to include a listing of all contracts showing amounts committed and disbursed under each.
Annuallv: Audited Project Financial Statements (PFS) will be prepared annually following the cash basis of accounting and will be submitted to the Bank within six months from year end. The PFS will include:
- Statement ofsources and uses of funds, indicating sources offunds received and project expenditures; - Appropriate schedules classifying project expenditures by component, showing yearly and cumulative balances; - DA reconciliation statement reconciling opening and year-end balances; - Statement of payments made using Statements Of Expenditures (SOEs) procedures as defined in the legal agreement; and
40 - Statement of project commitments, i.e., the unpaid balances under the project’s signed contracts.
152. Auditing: The following audits will be undertaken on an annual basis.
a. Project Audit: An independent private-sector auditor will undertake annual audits for the project. Terms ofreference for the audits will reflect the nature of the Project. The audit report and opinion, accompanied by a management letter, will cover the project’s financial statements, reconciliation and use of the DA, use of direct payments, and withdrawals based on SOEs. The audit should be submitted to the Bank no later than six months following the close of the fiscal year. The audit should encompass all project components and activities as a whole under the Loan Agreement.
b. Entity Audit: A copy of GAM’Saudited financial statements will be remitted to the Bank along with the project audit. This audit should be re-emitted to the Bank six months after the end ofGAM’S fiscal year.
153. Statements of Expenditure (SOEs): SOEs will be used for all expenditures relating to (i)goods under contracts costing less than US$200,000, (ii)civil works firms contracts costing less than US$lOO,OOO equivalent each, and (iii)individual consultant contracts costing less than US$50,000 equivalent each, under such terms and conditions as the Bank shall specify by notice to the borrower. The supporting documentation will be maintained at GAM and will be made available for review by Bank supervision missions upon request. Documentation relating to SOEs should be retained for up to one year from the date the Bank receives the audit report for the fiscal year in which the last withdrawal application from the loan account was made.
154. Designated Account: A special purpose bank account - the Designated Account (DA) - will be used to hold project funds and from which disbursements to contractors, consultants, and other Project vendors will be made. No payments for goods or services other than those related to the Project will be made from the account. It has been agreed that GAM will establish the DA at the Central Bank of Jordan. The DA will have a ceiling of US$ 2.0 million (representing approximately four months of eligible expenditures financed by the loan). Authorized signatories, names and corresponding specimens oftheir signatures will be submitted to the Bank prior to the submission ofthe first withdrawal application.
41 Allocation of Loan Proceeds
Category Amount ofthe Loan Percentage of Expenditures to Allocated be financed (expressed in USD) (exclusive of Taxes) (1) (i)Works under Parts 2(a) 21,657,000 90% of Foreign Expenditures; and 2(c) of the Project 90% of Local Expenditures (ex-factory cost), and 70% of (ii)Works under Part 2(b) 2,590,500 Local Expenditures for other of the Project items procured locally.
(2) Consultants’ services, 690,000 90% for firms within territory including training of the Borrower; 95% for services of individual consultants within territory of the Borrower; and 90% of foreign expenditures. (3) Front-end Fee 62,500 Amount payable pursuant to Section 2.03 ofthis Agreement in accordance with Section 2.07 (b) of the General Conditions TOTAL AMOUNT 25,000,000
155. World Bank Supervision: Financial management of the project will be supervised by the Bank in conjunction with its overall supervision of the project. Initially this supervision will be performed on a quarterly basis; the frequency will be reduced after year one of the project life. Supervision will review work done by the PMU and ensure that the system is maintained in a consistent manner. The supervision plan will include detailed training activities regarding Bank guidelines and procedures in order to support the PMU financial management specialist.
42 Annex 8: Procurement Arrangements
General
156. Procurement for the proposed project will be carried out in accordance with the World Bank "Guidelines: Procurement under IBRD Loans and IDA Credits" May 2004, revised October 2006, and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers", May 2004, revised October 2006, and the provisions stipulated in the Loan Agreement.
157. National Competitive Bidding (NCB) will be carried out with procedures acceptable to IBRD which allow: (a) an explicit statement to bidders of the evaluation and award criteria; (b) national advertising with public bid opening; (c) sufficient time for bidders to submit bids (a minimum of thirty days); (d) no preference margin to national contractors; (e) foreign bidders to participate in NCB if they so wish; and (f) contract award to be made to the qualified bidder whose offer is substantially responsive and lowest evaluated. The methods to be used for the procurement under this project, and the estimated amounts for each method, are summarized in Table A. The threshold contract values for the use ofeach method are set in Table B.
158. Overall, the Jordanian procurement legislation for goods and works is in line with the Bank's guidelines for procurement, and the country has adequate control organizations. However, substantial divergences exist in the procedures for the selection and employment of consultants which, following local legislation, are based on open competitive bidding. Under the project, Jordanian implementing agencies would apply the Bank's procedures.
NCB Provisions and Conditionalities
159. Except in the cases provided for below, goods and works shall be procured under contracts awarded on the basis ofparagraphs 3.3 and 3.4 ofthe guidelines and paragraphs below. Contracts for goods and works procured under the National Competitive Bidding procedure shall comply with the following:
(a) Standard bidding documents approved by the Bank shall be used. (b) Invitations to bid shall be advertised in at least one widely circulated national daily newspaper and bidding documents shall be made available to prospective bidders, at least twenty-eight (28) days prior to the deadline for the submission ofbids. (c) Bids shall not be invited on the basis ofpercentage premium or discount over the estimated cost. (d) Bidding documents shall be made available, by mail or in person, to all who are willing to pay the required fee.
43 (e) Foreign bidders shall not be precluded from bidding and no preference of any kind shall be given to national bidders, to that end, having a presence in the Borrower’s territory should not be a condition for bidding. (f) Qualification criteria (in case pre-qualifications were not carried out) shall be stated in the bidding documents, and if a registration process is required, a foreign firm determined to be the lowest evaluated bidder shall be given reasonable opportunity of registering, without any hindrance i.e. no non- registration status should be considered as a non-eligibility-to-bid criterion. Additionally, one envelop system shall be used. (g) Bidders may deliver bids, at their option, either in person or by courier service or by mail. (h) Except for late bids, bids shall be opened in public in one place preferably immediately, but no later than one (1) hour, after the deadline for submission of bids, and prices for all bids will be read out in this public session and no disqualification shall be made at that stage. (i)Evaluation ofbids shall be made in strict adherence to the criteria disclosed in the bidding documents, in a format, and within the specified period, agreed with the Bank. (i) Bids shall not be rejected merely on the basis of a comparison with an official estimate without the prior concurrence ofthe Bank. (k) Bids shall be solicited and contracts shall be awarded on the basis of unit prices, and not on the basis of a schedule ofrates, and award will be based on all items included within the bid or the lot in case ofmultiple lots. (1) Split award or lottery in award ofcontracts shall not be carried out. When two or more bidders quote the same price, an investigation shall be made to determine any evidence of collusion, following which: (A) if collusion is determined, the parties involved shall be disqualified and the award shall then be made to the next lowest evaluated and qualified bidder; and (B) if no evidence of collusion can be confirmed, then fresh bids shall be invited after receiving the concurrence ofthe Bank. (m)Contracts shall be awarded to the lowest evaluated and qualified bidder within the initial period of bid validity so that extensions are not necessary. Extension of bid validity may be sought only under exceptional circumstances. (n) Extension ofbid validity shall not be allowed without the prior concurrence of the Bank: (A) for the first request for extension if it is longer than eight (8) weeks; and (B) for all subsequent requests for extensions irrespective of the period.
(0) Negotiations shall not be allowed with the lowest evaluated or any other bidders. (p) Re-bidding shall not be carried out without the Bank’s prior concurrence.
44 (9) All contractors or suppliers shall provide performance security as indicated in the contract documents. A contractor’s or a supplier’s performance security shall apply to a specific contract under which it was furnished.
Works
160. The civil engineering works to be financed under the project include:
Landfill construction and upwade of leachate treatment -facilitv: The project will finance civil works construction of cell 3 of a1 Ghabawi landfill. This cell will have a capacity estimated for 2-3 years based on annual quantity ofwaste ofabout 3000 tons per day. The construction will be based on the design prepared by Cabinet Merlin in 2003 (updated in 2008 with the feasibility study). This sub-component will also finance upgrading ofthe existing leachate treatment facility. It is expected that these two works will be undertaken under a single civil works contract in order to maximize synergies in the work.
ii) Construction of two transfer stations: The project will finance the construction and equipment of two transfer stations aimed at reducing the cost of collection services in the North and South-East areas of GAM. These two transfer stations will help ensure that 100% of waste collected transits through transfer stations (thereby reducing total transit costs). The ongoing feasibility study will validate the final selection of the sites, capacity, technical specifications and related cost estimates.
iii)Construction of a landfill zas (LFG) extraction svstem and LFG-enerm dant: The project will finance the design, supply, installation, commissioning and initial operation of an LFG recovery system (extraction of LFG and energy generation) for cells 1, 2 and 3. This sub-component will also include final capping ofcells 1, 2, and 3, as well as upgrading of the leachate drainage system, with the objective of generating and extracting the maximum amount of LFG. Details of the LFG extraction and energy production system are provided in Annex 5.
161. The bidding documents for the Design-Build-Operate contracts of the project component on the recovery and treatment of biogas were developed during Project preparation. The DBO bidding documents developed in the context of the Local Government Finance and Development Project (P048588) in the Philippines were used as the basis for preparing new documents for the project. These documents were the subject ofa preliminary review by the procurement, legal, and regional units.
162. According to estimates, the overall value of these contracts amounts to roughly the equivalent of US$36.8 million including contingencies. The works for installing the gas recovery system will be awarded by International Competitive Bidding, while contracts valued at US$2.6 million or less will be awarded using National Competitive Bidding (NCB) procedures, taking due account of the provisions set forth above and using bidding documents acceptable to the Bank. For the NCB documents model we will use the Bank’s standard documents, which will be prepared by the Borrower for review by the Bank.
45 163. Although all the contracts for gas recovery and gas flaring fall below the NCB threshold, they will be awarded by International Competitive Bidding (ICB).
Goods
164. The purchase ofgoods, such as computer hardware, software, and other computer equipment, will be handled under technical assistance contracts for institutional support and the pilot activities.
Consultants’ services
165. The services of consultants, for an overall amount equivalent to US$2.6 million for technical assistance and studies, will be provided by national and international consultants. Requests for expressions of interest in consulting services expected to cost more than the equivalent of US$200,000 are to be published on the UN Development Business web site and in its publication, and in at least one national daily newspaper. For all contracts in amounts exceeding US$200,000, the Quality- and Cost-Based Selection (QCBS) method will be used using the Bank’s standard Request for Proposal (WP) documents.
166. For contracts with an estimated value equal to or greater than the equivalent of US$lOO,OOO, but less than the equivalent of US$200,000, the selection method may be Quality-based Selection (QBS) or selection based on the consultants qualifications.
167. For contracts below the threshold of US$lOO,OOO, selection may be made based on Consultants Qualifications, in accordance with the provisions of para. 3.1 and 3.7 of the consultants guidelines. If needed, selection may be made under a Fixed Budget, or Least-Cost Selection method. Individual consultants will be selected and employed in compliance with the provisions ofparagraphs 5.1 to 5.4 ofthe Guidelines.
168. Single-Source Selection of a consultant for reasons specific to the project is not currently foreseen, but should it prove warranted it must be carried out in compliance with the provisions ofparagraphs 3.9, 3.10, 3.11, 3.12, and 3.13.
169. For contracts valued at less than the equivalent ofUS$200,000, the short list may include only national consultants if a sufficient number of Jordanian firms exist and if those firms are cost competitive. However, if foreign firms express interest, they may not be excluded from consideration.
170. Training and workshops will be carried out on the basis of approved programs on a yearly basis. The programs will identify the general framework of training and similar activities for the year, including the nature and objectives of the training and workshops, institutions where the training/workshops would be conducted (selection of institutions and justifications thereof), cost estimates and contents of the course, the number of participants, cost estimates, and translation of the knowledge gained in the actual implementation ofthe project components.
46 Evaluation of GAM’s capacity to execute procurement activities
171. GAM’s capacity to execute procurement activities was assessed during the preparation phase, and filed with the project documents. Although the agency is not familiar with Bank procedures, its staff are competent in the procurement area, although they apply GAM’Sprocedures, and are well versed in the major differences between the Bank’s directives and Jordanian procurement legislation. Our assessment indicates the procurement risk is average; however, the designation of a project coordination unit is desirable for its successful execution. (See the implementing provisions in Annex 6).
172. GAM will be the principal agency responsible for overall coordination of procurement procedure in the context of the project, including the capacity building components. GAM has little experience with carrying out projects financed by the Bank, but a sizable number of it s staff has experience in the various stages of procurement. However, the project involves the intervention of several different operational divisions; consequently, a project management group will be named and made responsible for monitoring proper project execution.
Expenditure category Method to be used (US% M) ICB(1) NCB(2) Other(3) NBF(4) Total
Works 36.8(24.3) 36.8(24.3)
Goods 0
Consultants’ services 1.O (0.7) 1.6 2.6 (0.7)
Table B: Prior Review Thresholds Thresholds for Procurement Methods and Prior Review - Expenditure Contract Value Procurement Contracts Subject to Category (Threshold) Method Prior Review US $thousands 1. Works 12500 ICB All <2500 NCB First contract I 2. Consultancy I I I I - Services >IO0 QCBS All - Firms =
47 D. Procurement Plan
I.General Name of project: Amman Solid Waste Management Project. Borrower: Greater Amman Municipality. Lender: International Bank for Reconstruction and Development (World Bank Group). Loan agreement signed on: n.a. Project execution:
works 1.2.1. Support for strategic planning in SWM systems in GAM GAM 1.2.2. Support for piloting private sector participation in SWM 1.2.3. Support for the design of an appropriate M&E system 1.3. Public awareness and Communication 2. Infrastructurecomponent 2.1.1. Upgrade ofthe existing leachate treatment plant 2.1.2. Construction ofcell 3 2.2. Construction and equipment oftwo new transfer stations GAM 2.3.1. Capping and equipment of cell 1,2 and 3 with LFG system and oaerations of LFG svstem 2.3.2. Construction ofbiogas to electricitv alant I 2.3.3. LFG system operation (including LFG to electricity) for 5 I years 3. Project Management Unit 3.1. Project Manager 3.2. Procurement Specialist 3.3. Financial Management Specialist 3.4. Solid Waste Specialist GAM 3.5. Environmental and Social Safeguards Specialist 3.6. Procurement ofproject financial management systems 3.7. Annual Proiect Audits I 3.8. Procurement training
Date of Bank approval of procurement plan: Date of General Procurement Notice: Period covered by the procurement plan: 18 months beginning.
48 11. Provision of Goods and Services (Other than Consultants)
Prior review by the Bank The following are subject to prior review by the Bank:
(a) Works contracts with an estimated cost equal to or greater than the equivalent of US$2,500,000 (b) The first works contracts concluded using NCB (c) The draft standard ICB documents for works contracts (d) All goods contracts awarded on the basis ofsingle-source selection; and (e) Contract amendments which increase the contract value beyond an earlier threshold
Implementation Manual The procurement and financial management procedures will be set out in detail in the implementation manual being prepared for the project.
Itemization of contracts The provisional procurement plan for the provision of goods and services other than consultants, for the first 18 months of the project and is set out in detail in the tables below.
Use of “Statements of Expenditure”: Not applicable.
111. Selection of Consultants and Training
Prior review by the Bank: The following are subject to prior review by the Bank: (a) Contracts for consulting firms with an estimated cost equal to or greater than the equivalent ofUS$100,000.00 (b) Contracts for individual consultants with an estimated cost equal to or greater than the equivalent ofUS $5 0,000; (c) All consultancy contracts awarded on the basis ofsingle-source selection; and (d) Contract amendments which increase the contract value beyond an earlier threshold.
Local preference To ensure that priority is accorded to identifying qualified national consulting firms, the short list for contracts for which the estimated cost does not exceed US$200,000 may include only national consultants, in accordance with 5 2.7 ofthe Guidelines. However, if foreign firms express interest, they shall be considered.
Use of “Statements of Expenditure” The following may be requested on the basis ofStatements ofExpenditure: (a) Consulting firms’ services for which the contract cost is less than US$100,000.00; and (b) Individual consultants’ services for which the contract cost is less than US$50,000 per contract.
49 Itemization of contracts The provisional procurement plan for consultants’ contracts for the first 18 months and is set out in detail in the tables below.
IV. Project Management Capacity Building The provisional procurement plan for building and strengthening project management capacity is included in the detailed description ofconsultant contract procurement.
E. Advertisement
173. A general procurement notice shall be published in the online edition of the DGmarket and UN Development Business. Specific procurement notices for all ICB works contracts and requests for expression of interest for consulting assignments with firms shall be published in at least two national dailies and the DGmarket and UNDB.
F. Procurement Information and Documentation Filing
174. Procurement information will be recorded and reported as follows:
a) Complete procurement documentation for each contract, including bidding documents, advertisements, bid reception, bid evaluation, letter of acceptance, contract agreement, securities, related correspondence, etc., will be maintained by the implementing entities in an orderly manner, readily available for audit.
b) Contract information will be promptly recorded and contract rosters as agreed will be maintained by the PMU.
c) Comprehensive semi-annual reports will be prepared by the PMU indicating:
i) Status of on-going procurement, including a comparison of originally planned and actual dates ofprocurement actions, including preparation of bidding documents, advertising, bidding, evaluation, contract award, and completion time for each contract, and;
ii) Updated procurement plans, including revised dates, where applicable, for the procurement actions.
G. Fraud, Coercion, and Corruption
175. All procuring entities as well as bidders and service providers, i.e., suppliers, contractors, and consultants, shall observe the highest standard of ethics during the procurement and execution of contracts financed under the project, in accordance with paragraphs 1.15 and 1.16 ofthe Procurement Guidelines and paragraphs 1.25 and 1.26 of the Consultants guidelines. The Anticomption Guidelines apply to the Project.
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- Annex 9: Economic and Financial Analyses
176. The economic and financial analysis ofthis project consists offour parts. The first part covers the cost-benefit analysis of the project. This part compares the capital and operating costs of the project to the benefits produced by the operation in the form of revenues from the sales ofcarbon emission reductions, electricity and cost savings from a more efficient transfer system, The second part presents the financial appraisal of the project, the strategy of GAM and its budget for hauling and dumping solid waste. The third part analyzes GAM’s current cost recovery with regard to SWM and expected cost recovery with and without the project. The fourth part analyses GAM’s debt capacity and its ability to repay the proposed IBRD loan.
I- Economic Analysis:
177. The methodology used for the present economic appraisal is a cost-benefit analysis based on the comparison between the Do-Nothing scenario and the Do- Something scenario. These are defined as the following:
P Do-Nothing scenario: Minimal investment to allow solid waste management operations to be continued in GAM in the current manner, i.e., a business-as-usual scenario without investment in transfer stations, the leachate treatment plant, LFG collection system, and LFG-to-electricity plant. However, in this scenario, GAM would need to invest in the construction ofcell 3.
> Do-Something scenario: Upgrade of current solid waste management practices in GAM through the infrastructure investment component including: (i) construction and equipment of two transfer stations; (ii)upgrade of the existing leachate treatment plant; (iii)construction ofcell 3; (iv) capping and equipment of cells 1 , 2 and 3 with LFG system; and (v) construction of LFG-to-electricity plant.
178. The economic analysis considers the project costs and the following main benefits:
0 Cost savings from collection and transfer through the implementation of the two new transfer stations; 0 Carbon emission reductions through the implementation ofthe LFG system; and 0 Sales ofelectricity produced by the LFG-to-electricity plant.
179. Other general assumptions include:
0 The project evaluation period is 20 years (typical for LFG-to-electricity plants), starting in 2009, when the first expenditure is expected to take place, and finishing in 2029.
0 Costs and benefits are expressed in USD assuming an exchange rate of approximately JD 1 = US$ 1.41.
53 The discount rate traditionally used for World Bank projects is 12 percent.
a) Project Costs:
*:* *:* Investment Costs:
180. The project costs are those related to the infrastructure component only5 and include: (i)construction and equipment of two transfer stations; (ii)upgrade of the existing leachate treatment plant; (iii)construction of cell 3; (iv) capping and equipment of cells 1, 2 and 3 with LFG system; and (v) construction ofthe LFG-to-electricity plant. The total investment cost is estimated to be around US$ 28 million.
I 1. Construction and eauiDment of two new transfer stations I US$3.000.000 I
181. Given that the methodology used for this appraisal considers only incremental costs between the Do-Nothing scenario and the Do-Something scenario and that cell 3 will be constructed in both scenarios, the incremental investment cost to be considered is then US$23.5 million.
*:* *:* Increased Operations and Maintenance costs:
182. The installation of the LFG system as well as the construction of the LFG-to- electricity plant will increase the Oh4 costs ofcurrent solid waste services in GAM. The cost of operating the LFG system and the gas-to-electricity plant has been estimated based on regional benchmarking at about US$ 6.6 million for 5 years, or an average of US$1.3 million per year. After the first 5 years, it has been assumed that operations and maintenance costs ofthe installed 6 MW facility will decrease along with the quantity of gas extracted from cells 1, 2 and 3, which are the only cells within the present project.
183. Increased Oh4 costs resulting from the leachate treatment plant have not been considered because the cost oftreating leachate can be valued at least as the benefit ofnot treating it in the Do-Nothing scenario compared to the Do-Something scenario. Indeed, in the Do-Nothing scenario, not treating the leachate at landfill level will result in a fiture treatment cost to avoid contamination of water resources, which is conservatively assumed to be as high as the cost oftreating it at landfill level.
5 The bulk ofthe project costs are dedicated to the infrastructure component. The institutional component benefits are difficult to quantify, and have not been taken into account.
54 b) Project Benefits:
*:* *:* Savings from collection and transfer:
Currently, about 70 percent ofMSW in GAM are transported via 3 transfer stations: - Sha’er: 45 percent ofMSW quantities and 55 percent ofcollection vehicle loads from November 2006 to October 2007, but progressing and its capacity is being increased by two additional compaction systems. - Ain Ghazal: 10 percent ofMSW quantities and 15 percent of collection vehicle loads. - Yarmouk: 7 percent of MSW quantities and 4 percent of collection vehicle loads.
184. Collection areas in western districts of Amman are about 10 to 28 kilometres away from the closest transfer station, thus have to spend up to nearly 1 to 2 hours in traffic to unload in one of the existing transfer stations and come back to their collection area. With a minimum of2 trips per shift, the collection vehicles may spend up to 3 hours in waste hauling and only 5 hours in collection per shift.
185. With an objective of placing transfer stations within an average of 20 minutes drive for the collection areas in west Amman, each vehicle in these districts would save about 2 hours per shift, increasing the cost-efficiency ofthe collection.
186. The objective is to transfer about 98 percent of GAM’s MSW in the transfer stations to larger vehicles to be hauled to A1 Ghabawi landfill, so that only the MSW collected in small communities and villages within about 15 km of the landfill are transported directly to Ghabawi by the collection vehicles.
187. The construction of the two new transfer stations is expected to improve the productivity and cost-efficiency of the collection, and thus to reduce the collection fleet by the equivalent of25 to 28 vehicles. The reduction ofthe collection cost in the districts served by the two new transfer stations is estimated at about 900,000 JD/year (US$ l,270,000/year) in 2009.
188. After subtracting the new costs related to the two new transfer stations and adding the current operational costs for transfemng and hauling the concerned quantities of MSW from the existing transfer stations, the equivalent cost reduction on the collection and transportation system is about 650,000 JD/year (US$917,000/year) in 2009.
189. The economic benefit increases with the MSW quantities. The calculation of the increase of the economic benefit is conservative as it has been made considering GAM’s average population growth, while most ofthe districts served by the new transfer stations are development areas with a growth rate expected to be higher than average one. The growth rate assumed for the MSW quantities is 5 percent.
55 *:* *:* Carbon emission reductions:
190. The collection and flaring of methane at A1 Ghabawi landfill will enable GAM to sell CERs. The CERs shown in Table 2 are based on the Project Design Document prepared for the registration of the project at the CDM Executive Board.
Table 2: Annual and total emission reduction in tones of C02equivalent Year' I Annual estimation of emission I reductions in tons of C02 2009 158,545 2010 175,376 201 1 200,5 12 2012 216.258 2013 240,871 2014 256,397 2015 272,004 Total estimated C02e reductions over the first crediting period (tons of C02e) 1,5 19,963 Total number of crediting years over the first crediting period 7 Average reduction over the first crediting period (tons of C02e) 2 17.138
191. An estimated selling price of about € 9 (US$ 13.5) per CER (up to 2015) has been applied, and it has been assumed that the Bank would pay 25 percent of the total ERPA amount upfront. Sales of CERs have been assumed for the crediting period up to 2021. It is important to note that this is a conservative assumption given that the project is being registered by the Kyoto Protocol CDM Executive Board for a 2 1-year period.
192. With these assumptions, total carbon revenues would amount to about US$ 3 1.4 million until the end of 2021. The graph below shows the profile of CERs generated during the crediting period considered (2009-202 1).
Table3: CERs estimated during the period 2009-2021
CER in US$
I Year
56 *:* *:* Sales of electricity:
193. The income from electricity production is computed on the basis of 0.04246 JD per kWh (price paid by the Jordanian Electric Power Company (JEPCO) when buying electricity from renewable energy sources). Furthermore, JEPCO pays an extra peak load tariff (so called “Maximum Demand”) price of 99,333 JD, which is an extra bonus price paid to small power producers once a month, if they deliver electricity during that half hour per month where the power company has its highest production. It is also assumed that the LFG-to-electricity plant is being operated 8,000 hours per year. Based on a calorific value ofmethane of5 kWh/Nm3and a power efficiency of36 percent, the power effect and the yearly power production are presented in the graph below. Total income during the project life from electricity sales is estimated to be around US$ 39 million.
Table 4: Power production estimates during the period 2009-2029
Power Production I ---
IPower Production
Year
c) Results of the base case:
194. The results of the economic analysis in terms ofthe Net Present Value (NPV), the Economic Internal Rate ofReturn (ERR), and the Benefit Cost Ratio (B/C) are presented in the following table.
57 Table 5: Results of the economic appraisal
201 6
2018 2019 2020
2022 pE 2025
Indicator Value NPV(k2 12%) USS16.9 million EIRR 37% B/C Ratio 1.63
195. The economic analysis indicates that the investment component of the proposed project is economically viable, returning a positive NPV of US$16.9 million, following an incremental investment of US$23.5 million. The ERR is 37% and the estimated B/C ratio is 1.63, which since it is greater than one supports a decision to invest in the project. d) Sensitivity and Switching Analysis:
196. This section indicates the impact of uncertainty or variation in the key parameters of interest on the economic appraisal ofthe project. Those key parameters are perceived to be the capital costs and the landfill gas production. The impact of defined variation in these parameters is presented in the following table, together with the percentage change in the former necessary to make the project unviable (e.g. NPV becomes negative), also called the switching values. For every scenario, both situations (with and without CERs) are presented.
58 Base Case With CER without CER NPV(@12%) US$16.9 million US$2.1 million EIRR 37% 12%
197. The table reveals that the proposed investment is relatively robust to the defined variation in the key parameters of interest, with significant changes in both the capital costs of the project and the landfill gas production (affecting the income from CERs and electricity sales) still resulting in a positive NPV.
198. The sensitivity analysis also reveals the estimated switching values, with capital costs needing to increase by 82 percent, or landfill gas production falling short of the forecast by 55 percent before the project becomes unviable.
199. It is also important to note that even without CER revenues, the project is still economically viable, returning an NPV of US$ 2.1 million and an EIRR of 12 percent. However, the alternative scenarios show that the situation without CERs is less economically viable, with lower switching values, a lower ElRR and a negative NPV. The addition of CER revenues, even with pessimistic assumptions on gas collection efficiency, improves dramatically the economic viability of the project.
I1- Financial Appraisal of the project:
200. The financial analysis is based on the comparison between the Do-Nothing scenario and the Do-Something scenario. These are defined as the following:
Do-Nothing: scenario: Minimal investment to allow solid waste management to be continued in GAM in the current manner, that is to say a business-as-usual scenario without any investment in transfer stations, the leachate treatment plant, the LFG system, and the LFG-to-electricity plant. However, in this scenario, GAM would need to invest in the construction ofcell 3.
Do-Something scenario: Upgrade of current solid waste management practices in GAM through the infrastructure investment component including: (i)
59 construction and equipment of two transfer stations; (ii)upgrade of the existing leachate treatment plant; (iii)construction ofcell 3; (iv) capping and equipment of cells 1,2 and 3 with LFG system; and (v) construction ofLFG-to-electricity plant.
201. Other general assumptions include:
a The project evaluation period is 20 years (typical for LFG-to-electricity plants) starting in 2009, when the first expenditure is expected to take place, and finishing in 2029. a Costs and benefits are expressed in USD assuming an exchange rate of approximately JD 1 = US$ 1.41. e The discount rate used is the average cost ofcapital for GAM assumed to be equal to the Jordanian Treasury Bond rate at 8 percent. a The inflation rate is estimated to be about 5% over the whole period (2009-2029).
202. The financial benefit will be derived from:
a Carbon emission reduction revenues through the implementation of the LFG system; and a Sales ofelectricity produced by the LFG-to-electricity plant.
203. The financial costs include the project investment costs and increased operating costs due to the implementation ofthe LFG system and the LFG-to-electricity plant.
204. In this section, we only take into account financial cash flows, so savings in transfer costs are excluded. More over, financial cash flows imply that we take into account the effect of inflation on costs and revenues which was not the case for the economic appraisal. The discount rate used in this section is the financial opportunity cost ofcapital for GAM.
60 Table 5: Financial Appraisal of the project
Indicator Value NPV US$18.4 million FIRR 30%
205. The financial analysis indicates that the investment is financially viable, returning a positive NPV of US$18.4 million at a discount rate of 8 percent, following an investment ofUS$23.5 million. The financial internal rate of return is 30 percent, which is well above the cost of financing proposed by the Bank.
206. The impact of uncertainty or variation in the key parameters of interest on the financial appraisal ofthe project has been evaluated. Those key parameters are perceived to be the investment costs, and the landfill gas production. The impact of defined variation in these parameters is summarized in the following table. Table 6: Sensitivity Analysis
Base Case With CER Without CER NPV(@8%) US$18.4 million (US$3.9 million) FIRR 30% 5%
Capital Costs +20% with CER +20% without CER NPV(@8%) US$14.2 million (US$8.1 million) FIRR 22% 2 Yo
61 Landfill Gas Production -20% with CER -20% without CER NPV((38%) US$9.1 million (US$9.9million) FIRR 18% 1%
207. The table reveals that the proposed investment is relatively robust to the defined variation in the key parameters of interest, with significant changes in both the capital costs ofthe project and the landfill gas production still resulting in a positive NPV and an FIRR at the 8 percent threshold. However, the table also shows that the project is not financially viable without CER revenues in all the different sensitivity scenarios presented above.
I11 - Cost Recovery and Projections:
208. As part of the project feasibility study, significant effort was put into estimating the total costs of SWM collection and cleaning, transfer, and disposal for 2007. The Phase Ireport provided the following figures for operational and capital costs6:
Table 9: 2007 SKI4 Operational and Capital Costs (JD) Collection and Transfer Disposal Total Overhead Street Cleaning- Operational 800,000 15,018,000 790,000 633,000 costs 17,241,000 Capital Costs 2,899,000 574,000 1,837,000 5,310,000 Total 800,000 17,917,000 1,364,000 2,470,000 22,551,000
209. Based on a total amount of MSW collected in Amman in 2007 of about 731,500 tons, the cost per ton of all solid waste services in Amman was approximately JD 30 per ton7 The costs of collection and cleaning are estimated at JD 25 JD per ton, while transfer and disposal are JD 2.1 and 3.0 per ton, respectively.
Table 10: 2007 SWM Costs per Ton (JD) Collection and street cleaning 25.0 Transfer 2.1 Disposal 3.0 Total: 30.1
210. Revenues: The main fee charged by GAM for solid waste services is a JD 20/year charge assessed through electricity bills. All households connected to the electrical network are charged JD20/year plus 5 filskWh over 200 kWmonth for the households consuming more than 200 kwmonth) as part of electricity charges. Revenues collected through the fee over the past several years are provided in the table below. The charge per household has not changed since 2003, when it was JD 14/year;
6 Capital costs are estimated annual depreciation costs based on previous years’ investments. 7 This figure also includes the amount of waste disposed of at a1 Ghabawi landfill but collected by other cities or disposed directly by commercial establishments. In 2007, that amount was approximately 159,000 tons, or 18 percent of solid waste disposed at a1 Ghabawi. As the cost of disposal is a relatively small part oftotal costs, this does not greatly affect the per-ton cost ofMSW services in Amman.
62 growth in revenues are the result of growth of Amman and the addition of new households connected to the electricity network.
21 1. Total revenues from waste fees from businesses are significantly lower than those fiom households. Businesses in Amman are granted annual business licenses, from which 20 percent of the total license fee is specified as a charge for waste services. Businesses connected to the electricity network are also charged JD20/year plus 5 fils/kWh over 200 kWmonthfor the business consuming more than 200 kWWmonth) as part ofelectricity charges. GAM reports that in 2008 it began to assess commercial waste service charges on an individual basis, sending small teams of assessors to businesses to calculate a waste fee based on the type of business, number of employees, type and estimated amount of waste generated, etc. It reports, however, that there is yet no clear assessment methodology, and that the exercise has only recently begun. Estimates ofthe amount of revenue this would generate in 2008 varied between JD 500,000 and JD 5 million. While GAM does need to revise the way it charges businesses for waste services, it should clarify the basis on which this exercise is being undertaken, and ensure that the assessment methodology leaves little room for discretion.’
212. Finally, GAM charges large commercial producers of solid waste a per-ton fee of JD 6.5 for collection and disposal (JD 4/ton for collection and JD 2.5/ton for disposal). Commercial producers may deliver waste directly to a1 Ghabawi and be subject to only the JD 2.5/ton charge. Finally, it charges other municipalities a JD 2.5/ton tipping fee for disposal at Ghabawi. These fees are estimated to have generated 17.9 and 12.7 percent of total SWMrevenues in 2005 and 2006, respectively.
Table 11: Summary of Solid Waste Revenues, 2005 - 2008 2005 2006 2007 2008 (estimated) Domestic Fees 5,909,109 8,543,918 11,193,818 13,000,000 Commercial Fees 1,015,348 1,090,000 1,120,000 Not available Large Commercial 1,548,335 1,656,063 1,856,446 2,000,000 and Tipping Fees Total 8,472,792 11,240,000 14,170,264 16,500,000
213. Cost Recovery: Because GAM’S financial management systems are not set up to track total SWM costs, it was not possible to calculate the pattern of cost recovery over the last several years. Based on estimated expenses for 2007 only, cost recovery oftotal expenses (including capital expense depreciation) was approximately 63 percent, resulting in transfers from general revenues to cover costs ofabout JD 8 million.
8 In 2006 and 2007, fees from businesses were approximately 11-12 percent of fees from households, while in 2004 and 2005 fees from businesses were between 17 and 18 percent of household fees. It does not appear at this time that GAM is able to assess whether the amount of waste collected from businesses is in proportion to the fees assessed, and it may be that households are subsidizing commercial waste collection and disposal. This is an issue that should be addressed as GAM improves its oversight of the sector and its information collection.
63 Projected Cost Recovery:
214. Based on current SWM costs and revenues, cost recovery for the sector was projected for the next decade under with- and without-project scenarios. For the without- project projections, the following assumptions were used:
Projections were made based on per-ton costs, which were estimated to increase at the projected rate ofinflation (5 percent). Tons of solid waste disposed at a1 Ghabawi landfill per year were estimated to increase 2.8 percent in 2008 and 2009, 2.7 percent in 2010 and 2011, 2.5 percent in 2012 and 2013, and thereafter on a declining basis, leveling out to a growth rate of 2.2 percent at the end of the period. These increases were provided by the feasibility study. All revenues were based on GAM’S 2008 budgeted figures. Revenues from household waste fees are based on the growth in households and on the annual solid waste fee charged through electricity bills. Households are (conservatively) projected to increase at a five percent annual rate over the next several years, declining to a three percent annual rate at the end of the period. No increases in the fees for solid waste are projected in order to keep year-to-year comparisons simple; however, realistically, GAM is likely to increase rates at some time during the period under review. Revenues from business waste fees are assumed to increase at six percent per year, reflecting both the rate of inflation (five percent) and an estimated three percent growth rate ofthe number or size ofbusinesses. Revenues from tipping fees are expected to increase at the rate of increase ofsolid waste disposed of, or five percent annually. Revenues from energy sales and CER sales are taken from the Carbon Finance Project Design Document. The project induces additional operating costs and investment costs due to the operations of the LFG recovery system. The LFG operating costs are taken directly from the project feasibility assessment; the investment costs are taken from the Carbon Finance Project Design Document, but are recorded according to the depreciation costs, assuming a 20-year deprecation period. New transfer stations and associated investments result in reduced SWM operating costs. These costs are taken from the feasibility assessment.
Because of net revenues generated by the project, sector cost recovery improves for all years ofthe projection. Beginning in the first year ofproject revenues (2009), cost recovery is projected to be 86 percent, which is a 15 percentage point increase over 2008, (and a 23 percentage point increase over 2007). However, this is due to the large up-front payment for CERs. From 2010 through 2014, cost recovery is around 79 percent. From the end ofthe period, cost recovery then falls between 2 and 3 percentage points per year, ending at 68 percent in 20 19.
64 216. The analysis also estimates the amount of transfers from GAM’Sgeneral budget to cover SWM costs not covered by user fees and revenues generated through LFG recovery. In absolute terms, these increase from JD 3.7 million in 2009 (compared to JD 8.3 million in 2007) up to JD 14.0 million in 2019. As a percentage of GAM’Sestimated total revenue, the shortfall rises from 1.5 percent in 2009 to 3.8 percent in 2019.
217. The attached table provides the projected revenues, costs, and cost-recovery ratios.
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218. As part of project preparation, a review and projection of GAM finances was undertaken in order to confirm GAM’s debt capacity and ability to repay the proposed IBRD loan. The analysis indicated that the proposed loan poses no burden regarding either GAM’s overall debthncome ratio or debt service requirements.
219. GAM has a very strong history of revenue generation, and revenues dedicated to operating expenditures are low. While the past pattern ofrevenue growth (an average of 17 percent annual growth in current revenues between 2003 and 2007) may not be replicable in the longer term, GAM has a strong basis for revenue generation. Its main source of revenue is property taxes (it receives practically no revenues from the central government), however, fees related to development (ie., density charges) and the sale of municipal land provide an increasingly lucrative source offimds.
220. Less than half of GAM’s revenues are allocated to current operating expenses, while more than half ofrevenues have been allocated to capital expenditures. Compared to general municipal experience, this is a very low ratio of current/capital expenditures. GAM has an ambitious capital investment program, but it also has a high degree of leeway in terms of its decisions regarding the timing of investments. It has the capacity to front-load investments at this time and borrowing to finance them, while reducing investments and repaying debt in the future.
221. GAM has very little debt relative to its income, and debt service is exceedingly manageable. GAM had its highest debthcome ratio in 2007, at which point new borrowings from local commercial banks and a JD 60 million bond issue pushed its debthcome ratio to 41 percent. Going forward, the debthncome ratio is expected to fall steadily; once the bond issue is paid off (and assuming there is no additional debt other than the World Bank loan), debthncome ratio falls to less than 5 percent.
222. Barring an unexpected and drastic increase in new borrowing, debt service remains highly manageable. Debt servicehcome is estimated to be 7 percent in 2008, but averages about 2.5 percent between 2008 and 2013. From 2014 to 2018, GAM is scheduled to pay off the principal on its bond issue, and debt service is between 6 and 4 percent. After 2018, however, assuming the World Bank loan is GAM’s only debt obligation, debt service drops to less than 1 percent of income. The proposed World Bank loan is not therefore expected to be a burden on the municipality of Amman, and there are no financial impediments to GAM’s borrowing from the World Bank.
67 Annex 10: Safeguard Policy Issues
I.Environmental Safeguards
A. Safeguards Classification
223. The proposed project falls under the World Bank environmental category A classification due to its size, magnitude, severity, and irreversibility of potential environmental impacts. Of the World Bank’s ten safeguard policies, two policies are triggered: Operation Policy (OP) 4.0 1 on Environmental Assessment and Operational Policy (OP) 4.12 Involuntary Resettlement. In order to comply with OP 4.01 a full Environmental and Social Impact Assessment (ESIA) was camed out by a Jordanian independent consulting firm, ECO Consultants, according to the Terms of Reference approved by the World Bank, prepared the ESIA. Furthermore in order to comply with OP 4.12, a resettlement policy framework (RPF) has been prepared and disclosed and is described in section E below.
224. During the ESIA preparation, the borrower consulted with stakeholders twice. The first round of consultation took place during the scoping stage of the EIA and was held on February 5th 2008. This meeting helped the environmental consultant define the scope of work, and focus on the most relevant environmental and social issues, through feedback of the participating stakeholders. A Second Consultation Session was held on June 12, 2008 in which all main findings and recommendations included in this ESIA were presented to the public. During this session, various affected stakeholders were invited once again in order to review and provide feedback on the draft Environmental & Social Impact Assessment (ESIA) draft report and the Resettlement Policy Framework, which both were made available in Arabic in a form understandable to the general public. Approximately 40 people attended the session from different institutions including governmental, non-governmental organizations, civil society and local communities. The remarks and concerns raised during the consultation were included in the ESIA which was finalized during the appraisal mission
B. Analysis of Alternatives
225. An analysis of alternatives was carried out during the ESIA preparation. A number ofthe key alternatives have been included in this report as potential options to be implemented for each project component. For each alternative, the potential benefits and impacts resulting from its implementation have been identified. The ‘no-project’ scenario would result in continuing with the current negative environmental consequences at Ghabawi. Waste management alternatives such as centralization and decentralization of landfill in several areas of GAM were considered, with the conclusion that the current management option ofcentralization, given the generally low capacity oflocal authorities outside Amman, their small budgets, and the lack of experienced engineering staff in the Solid Waste Management sector, represents the best approach.
68 226. Regarding SW transfer procedures and management, the option of constructing 2 new transfer stations is also considered as a positive alternative for improving the existing conditions. In addition, strategic treatment activities at the landfill were examined. Upgrading the Leachate Treatment Plant and constructing the Landfill Gas to Energy Plant, which is the full project alternative, provides the best overall reduction in negative environmental impacts. For the Leachate Treatment Plant, the most effective approach is a combination of several treatments since the proposed treatments will not be effective individually. Moreover, involving the private sector in cleaning and collection, waste transfer and landfill operations could create incentives to better performance, and could produce a better managed site, and reduce negative impacts on the environment.
C. Impacts
227. According to the ESIA report, the proposed project will have a strong positive impact on the overall environment of the project area while addressing global environmental issues i.e. mitigating GHGs. It will particularly address the deficit in municipal solid waste disposal capacity, improve disposal practices, and address related gas and leachate management issues, hence mitigating negative impacts of the existing disposal facility on environment and natural resources.
228. The project will contribute to global climate mitigation through the reduction of 2.8 million tons of C02eq during a 21-year period while generating 160,000 MWh of electricity and will mobilize additional revenues that will be used to enhance SWM cost recovery in Amman and to financially support sustainable development activities through the allocation of 15 percent of carbon revenues to Jordan’s Environmental Protection Fund.
229. Other substantial benefits are related to the rationalization of collection in undersewed districts in terms of transfer. The operation of the two planned transfer stations in conjunction with the existing ones will reduce the overall trips made to the landfill. This will decrease traffic levels, which will have a positive impact on road and streets users ofthe surrounding areas.
230. More specifically, environmental benefits would include : improvements ofhealth & safety conditions for workers and nearby residents to transfer stations; reduction of traffic to Ghabawi Landfill and therefore, reduction of C02 emissions; reduction of potential threats to the soil, sub-soil and groundwater at the landfill site by treating the leachate; reduction of odours at the landfill area and its surroundings by treating the leachate; reduction of GHG emissions such as CH4 and C02 and LFG emissions including local pollutant emissions and trace constituents such as VOCs, by collecting and treating the LFG; improvement of leachate management which reduces risk of groundwater pollution; and improvement of control and monitoring activities reducing potential air emissions and leachate contamination.
231. Socio-Economic Benefits would include reduction ofpotential threats to the water resources and air quality which improves the nearby populations’ environment
69 conditions; employment generation; development of local capacities in building, managing and monitoring LFG collection and power generating equipments; and improvements on public work and safety by reducing LFG migration at the existing disposal site.
232. Negative Impacts: Major adverse impacts associated with the project are leachate management and polluting discharges, and odor and gas emissions. The design of the proposed project took into consideration these potential impacts; appropriate mitigation, monitoring and institutional strengthening measures are part of the project and are reflected in the related Environmental and Social Management Plan (ESMP) as well as in the project budget in the amount ofUS$490,000
233. Other impacts: There may be adverse environmental impacts during the construction phase; however, they are short term, reversible and unlikely to be significant. Typical impacts are noise nuisances, air pollution due to dust formation, safety hazards from construction activities, etc. Good construction practices will be included in the bidding documents of contracts and would mitigate most of these temporary impacts to acceptable levels.
234. More specifically, the potential negative impacts of the construction, and operation phases of the El Ghabawi landfill and the transfer stations are summarized as follows:
Negative Environmental Impacts during construction:
235. A significant potential Impact can be due a decrease of the health & safety conditions of workers as they are exposed to particles and gases emissions as well as handling machinery. Other impacts which are generally unlikely to be significant are related to noise nuisance ofthe area, and increased traffic volumes in the surroundings of the construction works
Negative Environmental Impacts during operation:
236. The following is a summary of the potential significant negative impacts associated to the implementation and operation ofthe project:
0 Groundwater pollution from uncontrolled leachate generation and consequently, increase ofodors at the landfill and surrounding areas.
0 Potential contamination of soil, sub-soil and groundwater from undetected liner leakage
0 Increase of LFG and GHG generation before the LFG to Energy Plant is operational by increasing the landfill capacity, as well as from the proposed leachate treatment.
0 Higher costs associated to the leachate treatment plant construction.
0 Increase of odors from fugitive emissions during handling and treatment of leachate at the landfill and its surroundings.
70 0 Potential risk of accidental spills and discharges, fires or other accidents at the transfer stations and the landfill.
D. Environmental and Social Management Plan (ESMP) and Implementation Schedule
237. All the mitigation and monitoring measures proposed as above mentioned have been defined for each of the construction and operation phases, and synthesized into a ESMP (see table below).
238. The different entities responsible for various aspects of the project and Solid Waste Management have been defined and the specific role of each of them clarified, in order to set out the responsibilities of each entity. The design and construction of all cleaning and collection activities, in addition to the transfer stations and the landfill activities, except for those related to landfill gas, would be the responsibility of the private sector contractor whose performance will be monitored by the Environment and Cleanliness Department of GAM. All activities related to landfill gases, including operation ofthe plant, would be undertaken by another private sector entity.
239. Additionally, a Project Management Unit (PMU) has been established, to be in charge of the management of the project. This Unit should coordinate with the various GAM departments the implementation of all Solid Waste Management activities and supervise all technical, fiduciary and environmental project related matters.
240. The following table includes a summary of the EMSP including the implementation schedule for the actions proposed. The estimated incremental cost ofthe EMSP is US$ 490,000 and divided as follows. This amount was included in the project cost.
Mitigation Plan: US$250,000 Monitoring Plan: US$70,000 Institutional Strengthening US$l70,000 Total US$490,000
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A. Resettlement Policy Framework
241. Since some of the project’s physical components may result in involuntary resettlementAand acquisition, OP 4.12 on Involuntary Resettlement is triggered, and a Resettlement Policy Framework (RPF) has been prepared. An RPF is the instrument used, because the nature and extent of land acquisitionhesettlement of the some of the sub-components are not known at appraisal. In the context ofthis project, the location of the two new transfer stations to be established are not yet determined which may - depending upon the exact location - entail some degree of land acquisition and/or resettlement.
242. The key purpose of the RPF is to establish resettlement objectives, principles, organizational arrangements and funding mechanisms for any resettlement operation that may be necessary during the implementation of any of the subprojects. When the exact extent of land acquisition becomes known, Resettlement Action Plans (RAPS) or abbreviated RAPS - depending on the scale and severity of impacts - are prepared. The resettlement process should be completed prior to the start ofphysical works.
243. The Resettlement Policy Framework (RPF) sets the basis for any subsequent Resettlement Action Plan (RAP). It also represents good project development practice. This RPF has been prepared according to Decree (12) of 1987 (the Land Acquisition Law) of Jordan, and GAM’S internal resettlement principles with due consideration of World Bank Operational Policy (OP) 4.12. GAM’s commitment to such principles is based on the laws ofJordan which ensure that Project Affected Peoples (PAPS) are fairly compensated for any necessary confiscated land. GAM’S principles should include the following aims and objectives:
1- Involuntary resettlement should be avoided, or minimized where unavoidable. 2- Where resettlement is unavoidable, resettlement plans and activities should be part of the project development process. 3- Resettled persons should be provided with sufficient investment resources and opportunities to share in project benefits (i.e. proper compensation for confiscation of lands should be paid). 4- Displaced persons should be fully consulted, and participate in planning and implementation ofresettlement programs. 5- Displaced persons should be compensated for their losses at full replacement cost. In accordance with World Bank OP 4.12 this should take place before the affected parties are displaced. 6- The resettled persons should be assisted in any necessary relocation and provided with support during the transition period. 7- Resettled persons should be assisted with their efforts to improve, or at least restore, their former living standards and income earning capacity.
B Guiding Principles for Resettlement:
80 244. GAM will bind itself to the following principles in regard to any land acquisition as part ofthe proposed works:
Principle 1: Resettlement Must Be AvoidedMinimized: This process will be conducted in full accordance with the Jordanian Land Acquisition Law (LAL) No. 12 of 1987 and its Amendments.
Principle 2: Genuine Consultation and Participation Must Take Place: Compensation requires negotiation and communication with project affected peoples.
Principle 3: A Pre-resettlement Data Baseline will be established: GAM will compile an inventory of landholdings, crops in agricultural land, and buildings to determine fairly and identify what is considered to be a reasonable level ofcompensation..
Principle 4 Assistance for Relocation must be Made Available: GAM will provide assistance to PAPSin the relocation process as necessary.
Principle 5: A Fair and Equitable Compensation Must be Negotiated: Through the LAL of 1987 it is stated that direct negotiation between land owners and the relevant purchasing party (in this case GAM) should ensure a fair and just level ofcompensation.
Principle 6: Resettlement Must Take Place as a Development That Ensures That Directly Affected Communities Benefit:
Principle 7: Vulnerable Social Groups Must Be Specifically Catered For: GAM will take any such groups into consideration in the event that they are identified during the consultation and negotiation
Principle 8: Resettlement Must Be Seen As An Upfront Project: GAM will ensure that compensation costs - if any - are built in the overall project budget as an up-front cost, and that the confiscation budget is ‘ring fenced’.
Principle 9: An independent Monitoring and Grievance Procedure Must Be In Place: GAM will ensure that compensation is placed under bank accounts in their names in accordance with the LAL of 1987 (article 16). GAM will identify an individual who will deal with complaints that local people might have regarding the compensation process.
Principle 10: The Developer Will Accept Responsibility For Resettlement and Ensure That “Best Practice” IsAdopted
C. Process for Developing the Subsequent RAP:
81 245. The World Bank safeguard policy on resettlement (OP 4.12) paragraph G, states: Where large-scale population displacement is unavoidable, a detailed Resettlement Plan, timetable, and budget are required. Resettlement Plans should be built around a development strategy and package aimed at improving or at least restoring the economic base for those relocated.
246. A Land Acquisition PldResettlement Plan will be required in accordance with the World Bank OP 4.12, detailing the manner in which it is proposed the PAPs are to be compensated. Within the framework of a process of public consultation and disclosure, the Land Acquisition Plans that will be developed by GAM - if needed - will be subject to scrutiny by PAPs, the local authorities and the World Bank. The Land Acquisition Plan shall include a surveylcensus of all those who will be affected by the land acquisition. It is essential that consultative mechanisms are put in place. The levels of literacy ofthe PAPS should be taken into consideration, and if needed, the document will be presented to the PAPs in the form ofverbal presentations, to ensure that consultation is as robust as possible.
D. Estimated Population Displacement and Likely Categories of Displacement:
247. Additionally, a Project Management Unit (PMU) has been established, to be in charge of the management of the project. This Unit should coordinate with the various GAM departments the implementation of all Solid Waste Management activities and supervise all technical, fiduciary and environmental project related matters.
248. Although the project so far does not require the resettlement of any people, the need might arise when the locations ofthe two new transfer stations are determined.
E. Eligibility Criteria for Displaced Persons:
249. This section of the RPF details the types of people who will qualify for resettlement assistance and the associated eligibility criteria for assessing this eligibility.
F. Legal Framework:
250. GAM Framework and Authority: GAM has been afforded under Jordanian law the authority to confiscate land for public benefit on the understanding that it provides fair and just compensation to any PAPs. In doing so GAM must ensure that any Land acquisition is undertaken in accordance with Decree (12) of 1987, commonly referred to as the LAL and its amendments. The LAL applies in all cases of land acquisition and to all concerned institutions.
25 1. The implications ofthe LAL on specific groups are summarized below.
82 252. Land Owners: The LAL specifies in Article 7 that the owner of the property is the person in whose name the property is registered at the Land Registry. If the property is not registered, the person seizing the land on the day of issuance of the Council of Ministers’ Resolution to acquire the land shall, for the purposes of compensation, be considered the owner. This stipulation does not preclude anyone else from claiming ownership through the courts.
253. Compensation for Improvements and Water Rights: Compensation for farmlands may include separately itemized compensations for features such as walls, greenhouses, wells, water rights, etc. The loss ofwater rights also attracts compensation.
254. Crops and Trees: Under the LAL, tree and annual crops are subject to compensation but no guidelines are defined expect that the expropriation shall be in consideration ofa suitable level ofcompensation.
255. Amount of Compensation Payable to Renters: In the event that such individuals are identified, the following compensation will be awarded (as required by the LAL) to tenants proportionately as a percentage ofthe compensation for the plot. The maxima are: 15% if the Compensation is for occupation for industrial or commercial purposes, and, 5% if the property is occupied for any other purpose.
256. The LAL does not preclude private agreements between tenants and owners. In conjunction with other laws, a settlement without the agreement ofthe renter is extremely unlikely.
257. Policies of the World Bank and IFC: In addition to the consideration of the National Legal Framework, the policies of the World Bank need to be addressed given that the Bank will provide a guarantee to the commercial lenders of the project. OP 4.12 sets out three underlying policy principles:
Involuntary resettlement is avoided wherever feasible, or minimized, exploring all viable alternative project designs; Where it is not feasible to avoid involuntary resettlement, activities are conceived and executed as sustainable development programs, providing sufficient investment resources to enable people adversely affected by the project to share project benefits. Displaced persons are to be meaningfully consulted and have opportunities to participate in the planning and implementing of resettlement programs affecting them; and Displaced persons should be assisted in their efforts to improve their livelihoods and standards of living, or at least to restore them, in real terms, to pre-displacement levels or to levels prevailing prior to the beginning of project implementation, whichever is higher.
258. The project is in compliance with OP 4.12 regarding the locations ofthe new cells in the landfill, thus minimizing the number of affected persons whilst also ensuring that there is no need for resettlement ofhouseholds.
83 G. Valuation Methods:
259. According to the LAL of 1987, valuation methods will include the following steps:
1. Demonstration ofpublic benefit from the project concerned. 2. Assessment ofreplacement values ofconfiscated land. 3. Establishment ofCompensation rates for all assets to be confiscated.
H. Entitlement Delivery:
260. Once any compensation amounts have been negotiated and agreed upon, GAM will deliver the compensation to the land owners directly or place it in the Treasury under their names according to the requirements of the LAL of 1987 articles 14 and 16D. The officials at GAM or the Directorate of Land will verify the delivery of the negotiated amount ofcompensation.
261. GAM’Sland acquisition team will monitor the delivery of such funds so as to ensure that all amounts reach all intended beneficiaries.
I. Implementation Process:
262. The fhdamental responsibility for delivery and implementation of the resettlement actions rests with GAM. Current protocol for the land confiscation process lies within the LAL of 1987 and its Amendments. Implementation ofany land acquisition starts with identification of the required land and its owners or PAPs that have any use rights upon that land. GAM has the responsibility of announcing the need for such confiscation and identifying the associated public benefit through two daily newspapers and is then required to allow for a period of 15 days for any responses. The second step is then the application to the Council of Ministers for approval of any necessary confiscation, which will not be given until it is proven that such project is for public benefit, agreement on the appropriate level of compensation with the PAP’S is achieved, and the capability of GAM to pay the agreed compensation is assured. Agreement upon compensation may be achieved through direct negotiation or through the Primary Court of Jurisdiction. Any agreement made by GAM must be agreed by the Council of Ministers. GAM, as developer of the project, is required to work with local officials to identify the public benefits of the project as well as agree to the appropriate level of compensation with the PAPs. Agencies that that could provide assistance in this as necessary include the Ministry of Finance, Ministry of Municipalities, Directorate of Land, Ministry ofAgriculture and Ministry ofEnvironment.
84 J. Funding Arrangements:
263. The overall responsibility of implementation of the confiscation and compensation plan lies upon GAM, and it should provide funding for compensation as part of the project financing. Current practice is for GAM to work closely with different government agencies in Jordan to calculate compensation and make sure that such compensation reaches the appropriate parties.
264. GAM will provide both financial as well as additional administrational and technical expertise to the confiscation and compensation processes. To this end, GAM will be required to:
Coordinate the implementation ofthe confiscation and compensation processes. Ensure that the Guiding Principles are adhered to. Ensure maximum participation ofthe PAPs. Obtain sufficient funds to finance just and fair compensation to PAPs. Accept financial responsibility for payment ofcompensation to PAPs. Ensure monitoring and evaluation of the implementation stages and undertaking of appropriate action to deal with any grievances.
K. Consultation and Participation:
265. The identification of an appropriate level of compensation requires negotiation and communication with all PAPs. Consultation with affected communities will take place in the form of visits by the GAM project management team to various individuals identified as being potentially affected by the proposed development. The project should also be advertised in the press to raise public awareness.
266. An integrated program of consultation was undergone to engage with the general public regarding the construction of the new cells in the landfill. Similar consultation should take place once the locations of the two new transfer stations are determined in order to gain a clearer understanding ofthe PAPs’ opinions on the proposed projects and to allow them to express any concerns. This can start with house to house meetings with local people in the locations of the two new transfer stations to explain the nature of the project and the expected effects and benefits of the project on the surrounding environment and local peoples. Involved parties can be asked to fill a survey questionnaire form in Arabic language. Illiterate persons can be aided by the consultants and other local literate people from the community to fill in the forms. The survey questionnaire can register the areas of concern and provide GAM with those that need to be given more extensive consideration. Based on the results of consultations and such a survey, recommendations can be established for a fair level of compensation where confiscation oflands is unavoidable.
85 L. The Next Steps
267. This section outlines the implementation programme for the preparation, approval and implementation ofthe RPF.
Valuation and Negotiation: Where necessary, GAM will prepare a compensation package for the PAPS. PAPS have the right under LAL to appeal the valuation within 28 days from receipt of notification of the valuation from GAM.
Appeal Lodged. If an appeal is lodged, GAM representatives may seek to negotiate with the affected person. If no agreement is reached the case is referred to the Compensation Review Board (CRE3) [subject to their agreement to act in this project] .
No Response. If the person concerned does not respond to the initial valuation and no further response is obtained within the 28-day period, and provided that reasonable effort is shown to have been made by GAM to contact the person concerned, the draft compensation offer is referred to the CRB for approval. In this case letters ofnotification of approval ofthe compensation will be served.
In the “no response” case, when compensation is awarded but the entitled person has not been identified, the funds allocated for this particular compensation will be retained within the Ministry ofFinance (MoF) in the project’s name until such a time as the rightful recipient can be identified.
Grievance Redress Procedures (Disputes)
Appeals offour types may be made at the respective stage.
Appeal Against the Intent to Expropriate. Up to 15 days after publication ofthe intent to acquire land in the newspapers, written appeals against the project may be lodged with relevant municipalities.
Appeals on the ground of Disputed Ownership. Disputes may arise over who is entitled to compensation. Lack of formal documentation over the status of a piece of land or tenancy agreement may lead to such disputes, affecting the project implementation. In such cases the further verification ofstatus ofthe entitlement by GAM/the relevant parties will be necessary. This may include consideration of a variety of documentation: a) Copies of land titles, mortgage deeds, revenue receipts or other legal tender showing ownership oftenancy; In the case ofrenter farmed or rented land, documentary evidence of the understanding between the landowner and the renter, if available; and, for proof ofresidence, voters list or any other official record.
86 Appeal against the Compensation Valuation. Appeals against assessed levels of compensation will be heard by the CRB. Article 10 of the Jordanian LAL states that failure to agree on levels ofcompensation at this stage could lead to the matter being referred to the Courts.
Appeal to the Courts. Once referred to the Courts the acquisition process is taken out ofthe hands of GAM. The judgment ofthe court is binding on all parties. However, if the land to be acquired is not classed as directly affecting a residential unit, either by demolition or in making the property uninhabitable, the acquisition process will proceed on the basis ofthe last valuation made by the CRB. Any changes on that compensation ordered by the Courts will be settled as required.
Monitoring of Confiscation and Compensation
GAM is responsible for the implementation of any confiscation and compensation plan. GAM will be responsible for providing financing, for compensation and its delivery to the righthl people, and grievances will be properly dealt with. Such financing will be provided for as part of the project cost. Internal monitoring will be conducted through qualified persons within GAM. GAM has a division that deals with the acquisitiodconfiscation of land associated with GAM projects and whose responsibility it is to negotiate appropriate payment for parties affected by GAM projects. External monitoring will be conducted through World Bank Supervision missions. Both monitoring levels should assure that fair and just compensation was delivered to the right individuals.
Budget The actual amount of compensation - if needed - is not yet defined, but will as necessary be built into the overall project budget.
87 Annex 11: Project Preparation and Supervision
Planned Actual PCN review 1211812007 Initial PID to PIC 211212008 Initial ISDS to PIC 3/7/2008 Appraisal 611 712008 6/17/2008 Negotiations 08/04/2008 07/15/2008 BoardRVP approval 0913 012008 Planned date of effectiveness 01/01/2009 Planned date of mid-term review 06/15/2011 Planned closing date 06/30/2014
Key institutions responsible for preparation of the project: - Greater Amman Municipality - Ministry ofPlanning and International Cooperation
Bank staff and consultants who worked on the project included: Name Title Unit Jaafar Saadok Friaa Senior Environmental and Solid Waste Specialist MNSSD Rafaello Cervigni Senior Natural Resources Economist MNSSD Dahlia Lotayef Senior Environmental Specialist MNSSD Mokhtar Abdallaoui-Maan Junior Professional Associate MNSSD Lamis Aljounaidi Junior Professional Associate MNSSD Elisabeth Shenvood Financial Sector Specialist MNSSD Knut @sal Senior Social Development Specialist MNSSD Natasha Hafez Program Assistant MNSSD Ahmed Mostafa Technical Specialist ENVCF Kenneth Mwenda Senior Counsel LEGEM Hyacinth Brown Senior Finance Officer LOAFC Sherif Anf Environmental Specialist Consultant Hans Willumsen Landfill Gas and Waste Mgmt Specialist Consultant Robert Bou Jaoude Senior Financial Management Specialist MNAFM Jad Mazahreh Financial Management Specialist MNAFM Andrew Macdonald Public Sector Management Specialist Consultant Velayutham Vijayaverl Senior Procurement Specialist MNAPR George Khoury Haddad Procurement Specialist Consultant
Bank funds expended to date on project preparation: 1. Bank resources: $230,000 2. Trust funds: n/a 3. Total: $230,000
Estimated Approval and Supervision costs: 1.Remaining costs to approval: $25,000 2.Estimated annual supervision cost: $ 90,000
88 Annex 12: Documents in the Project File
A. Final Scoping Report, GAM, February 2008.
B. Final Draft ESIA Report, GAM, May 2008
C. Solid Waste Management Master Plan, GAM, 2000.
D. Country Solid Waste Management Report, World Bank.
E. Capacity Assessment Report: GAM Solid Waste Management Project
F. Feasibility Study, GAM, May 2008
G. Project Design Document
H. Financial Analysis of Greater Amman Municipality, May 2008
I.PID, PAD, ISDS, and all relevant project correspondence.
89 Annex 13: Statement of Loans and Credits
Difference Between Expected & Actual
Original Amount in US$ M Disbursements Project ID FY Proiect Name IBRD Cancel. Undisb. Orig. Frm Rev’d P100534 2008 JO - Employer Driven Skills Dev. 7.50 7.48 0.08 P100546 2008 JO - Social Protection Enhancement 4.00 4.00 0.32 PO8 1823 2007 JO - Cultural Heritage, Tourism & Urban Dev. 56.00 55.25 4.53 PO70958 2007 JO - Regional & Local Development 20.00 19.40 5.37 PO91787 2005 JO - Public Sector Reform Capacity Bldg. 15.00 14.43 0.41 14.74 PO81505 2004 JO - Amman Development Corridor 38.00 12.89 12.89 PO75829 2003 JO - Education Reform for Knowledge Econ.1 120.00 22.27 21.37 Total 260.50 14.43 121.70 59.30
JORDAN STATEMENT OF FC’s Held and Disbursed Portfolio In Millions ofUS Dollars
Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 2003 Al-Hikma 10.25 0.00 0.00 0.00 10.25 0.00 0.00 0.00 1997 BTC 1.34 0.00 0.00 0.00 1.34 0.00 0.00 0.00 2001 Boscan Jordan 1 SO 0.00 0.00 0.00 1SO 0.00 0.00 0.00 2006 CTI 15.00 0.00 0.00 0.00 8.00 0.00 0.00 0.00 Hikma UK 0.00 0.85 0.00 0.00 0.00 0.85 0.00 0.00 1999 MAICO 0.00 0.25 0.00 0.00 0.00 0.00 0.00 0.00 2002 MEREN 4.40 0.60 0.00 0.00 4.40 0.60 0.00 0.00 2000 SGBJ 0.00 2.09 0.00 0.00 0.00 1.06 0.00 0.00 1996 Zara 0.00 2.97 0.00 0.00 0.00 2.97 0.00 0.00 Total portfolio: 32.49 6.76 0.00 0.00 25.49 5.48 0.00 0.00
Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic.
Total pending commitment: 0.00 0.00 0.00 0.00
90 Annex 14: Country at a Glance JORDAN: JO-AMMAN SOLID WASTE M. East Lower- POVERTY and SOCiAL & North mlddle- Development diamond' Jordan Afrlca Income 2006 Population, rnid-year (millions) 5.6 311 2276 Life expectancy GNI per capita (Atlas method, US$) 2,630 2,481 2,037 1 GNI (Atlas method, US$ billions) 14.7 771 4,635 Average annual growth, 2000-06 Population 2.5 16 0.9 (w GN I Gross Laborforce (%) 3.6 3.5 14 per pnmw Most recent estlmate (latest year avallabie, 2000-06) capita enrollment Poverty (% of population belo wnationalpoverty line) t4 Urban population (x o f to tal popuiatio n) 63 57 47 Life expectancyat birth (yaars) 72 70 71 Infant mortality(per/OOOlivebirths) 22 43 31 Chiidmalnutrition (%ofchildrenunder5J 4 15 U Access to improvedmtersource Access to an improvedwatersource (%ofpopulation) 97 90 61 Literacy(%ofpopulaflonage ?5+) 91 73 a9 Gross primaryenmllment (%of school-agepopulation) 96 1)3 1u -Jordan Male 95 1)B 117 Lo ver-rniddlemcorne gm up Female 96 99 n4
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1966 1996 2005 2006 Economic ratios. GDP (US$ billions) 62 69 P.7 14.2 Gmss capital formatiodGDP 205 294 23.7 26.0 Trade Exports of goods and SeNICeSlGDP 293 529 5t9 50.7 Gmss domestic savings1GDP -56 41 -V.9 -8.0 Gross national savingslGDP 61 262 6.7 4.8 Current account balancelGDP -0.7 -3.2 -I70 -23.0 Interest payments1GDP 3.5 4.9 1.3 Total debtlGDP 78.2 a6.6 60.5 Total debt selvicelexports 8.2 8.2 6.5 Present value of debt1GDP 59.3 Present value of debtlekports 79.1 Indebtedness 1986-96 1996-06 2005 2006 2006-10 (average annual gm wth) GDP 2.6 5.1 72 6.4 5.1 -Jordan
GDP per capita -2.1 2.6 4.6 3.1 2.7 __ Lover-middleincomegmup Exports of goods and sewices 5.6 5.7 5.6 0.7 1t2
~~~~
STRUCTURE of the ECONOMY
1986 1996 (%of GDP) Agnculture 63 38 Industry 24 4 26 1 296 317 Manufactunng 1)6 Q6 82 207 Services 69 3 70 0 676 656 Household final consumption expenditure 79 4 76 6 General gov't final consumption ekpenditure 26 2 773 53 157 Imports of goods and services 55 4 78 2 934 947
1966.96 1996-06 (average annual gm Mh) Agriculture 51 41 Industry 40 77 Manufactunng 54 02 112 QO Selvices t5 42 62 -25 Household final consumption expenditure 19 78 General gov't final consumption ekpenditure -42 39 01 02 03 M 05 Gross capital formation 56 42 50 62 ----Exports -Imports lmporls of goods and sewices 26 79
Note 2006 data are preliminaryestimates This table was produced from the Development Economics LOB database 'Thediamonds showfour keyindicators in thecountry(in bo1d)comparedwthits income-groupaverage If data aremissing,thediamondwiI be incomplete
91 Jordan
PRICES and GOVERNM ENT FINANCE 1986 1996 2005 2006 Domesfic prices (%change) Consumer prices 00 65 3.5 63 Implicit GDP deflator 01 21 4.0 48
Government finance (%of GDP, includes current grants) 01 02 03 M 05 ffi Current revenue 37 1 37 3 33.5 33 9 Current budget balance 137 97 29 41 i GDPdeflator +CPI Overall surplusideficit -10 23 -4.6 -3 4
TRADE 1986 1996 2005 2006 Export and import levels (US$ mill.) (US$ millions) Total exports (fob) 731 1,878 4,289 4,911 Food and iive animais PO 228 490 502 Phosphates 185 181 88 158 I Manufactures 237 750 1,627 1802 Total imports (cif) 2,429 4,340 13,466 11941 Ii0 Food 473 979 1,971 2,185 ' 5000 Fuel and energy 377 53 1 2,328 2.871 Capital goods 404 1127 2,292 2,509 00 01 03 04 06 Export pnce index (2000=?20) 83 IT7 01 144 1 02 05 Import pnce index(2000=X)O) 83 133 156 169 I:J Exports BB Imports Terms of trade (2000=X)O) 130 10 84 85 I I
BALANCE of PAYMENTS 1986 1996 2005 2006 (US$ millions) Exports of goods and sewices 1,803 3,706 6,591 7,186 Imports of goods and sewices 3,316 5,479 11,873 0,421 Resource balance -150 -1,773 -5281 -6,235 Net income - 150 -304 376 273 Net current transfers 1,6l7 1,853 2,747 2,708 Current account balance -46 -225 -2.158 -3,254
Financing items (net) 74 0 2,329 4,009 Changes in net resewes -28 2P -80 -755
Memo: ReSeNeS including gold (US$ millions) MI 1,957 5,517 6,292 Conversion rat e (DEC, lo cal/US$) 03 07 0.7 07
EXTERNAL DEBT and RESOURCE FLOWS 1986 1996 2005 2006 (US$ millions) Total debt outstanding and disbursed 4,832 7,385 7,696 IBRD 28 1 777 925 897 G:582 A:925 IDA 81 67 45 42
Total debt service 594 978 616 IBRD 36 127 136 P3 IDA 1 3 3 3 Compositionof net resourceflows Official grants 455 167 54 1 Official creditors 189 405 -52 Private creditors 434 -159 145 Foreign direct investment (net inflows) 23 16 1,532 Portfolio equity(net infiows) 0 0 60 World Bank program Commitments 78 180 15 0 1 A - IBRD E-Bilaterd Disbursements 83 169 48 43 1 B - IDA D - Othw rmltilaterd F- Private Pnncipal repayments 16 80 76 80 C-IMF G-Short-tern Net flows 67 89 -28 -38 Interest payments 22 49 33 46 Net transfers 45 40 -6 1 -83
Note This tabiewas producedfrom the Development Economics LDB database 9/28/07
92 Annex 15: Maps JORDAN: JO-AMMAN SOLID WASTE
93
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KILOMETERS SEPTEMBER 2008
This map was produced by the Map Design Unit of The World Bank. IBRD 36439 The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries.