Public-Private Partnership Stories West Bank & Gaza: Solid Waste Management Over the last decades, West Bank and Gaza have suffered due to political and economic instability, resulting in years of inadequate infrastructure investment and poor provision of public services to the people of Palestine. The provision of standard municipal public services, especially solid waste management, was of particular concern. In response, the World Bank Group provided an integrated solution to the client, the Joint Services Coun- cil for Hebron and Bethlehem (JSC-H&B), leading to the successful conclusion of the first public-private partnership (PPP) in the West Bank. The World Bank and other donors provided the necessary funding for a new sanitary land- fill at Al-Minya but deemed that the local capacity to manage it was insufficient. Thus, the JSC-H&B sought IFC’s support to find an experienced private sector partner to manage the new facility through a PPP. To improve the sustainability of the project and the sector, the World Bank Group also structured an $8 million output-based grant from the Global Partnership on Output Based Aid (GPOBA*). A Greek consortium, W.A.T.T. S.A.-MESOGEOS S.A. & EPEM S.A., won the tender. The op- erator will be responsible for the operation and maintenance of Al-Minya landfill and two transfer stations at Hebron and Tarqoumiya, which will improve the quality of services, reduce health and environmental risks, and reduce greenhouse gas emissions. The conces- sion was signed in September 2013. This series provides an overview of public-private partnership stories in various infrastructure sectors, The project was implemented with the financial support of DevCo, a multi-donor facility affiliated with the where IFC was the lead advisor. Private Infrastructure Development Group. DevCo provides critical financial support for important infra- IFC Advisory Services in structure transactions in the poorest countries, helping boost economic growth and combat poverty. DevCo Public-Private Partnerships is funded by the UK’s Department for International Development (DFID), the Austrian Development 2121 Pennsylvania Ave. NW Agency, the Dutch Ministry of Foreign Affairs, the Swedish International Development Agency, and IFC. Washington D.C. 20433 ifc.org/ppp The Global The Partnership on Global Partnership Output-Based Aid on Output-Based Aid BACKGROUND minimum of five years with a possible extension of up to two years The Hebron and Bethlehem Governorates are home to nearly one depending on the remaining volume in the landfill cells. This million people in the southern West Bank, who generate about creates an incentive for the operator to extend the landfill life to 500 tons of waste daily. Most of it is disposed of in unsanitary generate further revenue, thereby delaying further investment in dumps, illegally burned, or dumped outdoors. additional landfill capacity. A system of performance standards The volume of waste is expected to grow, exacerbating the problem and penalties ensures sanitary operation of the landfill, adherence and posing growing health and environmental risks that worsen to environmental standards on leachate and landfill gas, and quality of life. In addition, decades of conflict and political performance of other critical operational requirements. instability, has meant that municipalities in the West Bank The GPOBA disbursements were designed on specific service and Gaza have been unable to invest sufficiently in solid waste improvements and financial sustainability targets, providing management (SWM) infrastructure or services. To address this additional comfort to the operator that the system can support problem, the Joint Services Council for Hebron and Bethlehem operating payments. (JSC-H&B) was established to focus on providing sanitary final BIDDING disposal services and raise public awareness. Seven international and regional private sector operators THE WORLD BANK GROUP’S ROLE expressed interest in the project. Of these, three were pre-qualified The World Bank Group provided an integrated solution to the and submitted bids: Hera Holding (Spain); W.A.T.T. S.A.- client JSC-H&B. MESOGEOS S.A. & EPEM S.A. (Greece); and Entag-Ecaru- Realizing the need for sanitary waste disposal facilities, the JSC- Comeback (Egypt-Palestine). The two-stage evaluation process H&B sought support from the World Bank and international consisted of a technical evaluation followed by financial bid. To donors to fund a modern, sanitary landfill, transfer stations, ensure completeness and compliance with bidding requirements, and access roads at Al Minya that would enable the closure of technical bids were evaluated by a committee that included existing, unsanitary dumpsites. However, operating the new the Hebron Joint Service Council, the Bethlehem Joint Service facility required expertise unavailable locally so IFC was brought Council, and the Ministry of Local Government with support in to help find a qualified private partner to manage the facility. from IFC as well as technical and legal experts. IFC worked with the client to design a PPP for the operation and The PPP agreement was signed at Al-Minya on September 2, management of the Al-Minya landfill and associated facilities. 2013. IFC will also provide post transaction support to JSC-H&B IFC and the World Bank also supported JSC-H&B to improve through the initial period of operations. sustainability of the SWM sector by structuring an $8 million output-based grant from the Global Partnership on Output Based Aid (GPOBA*). EXPECTED POST-TENDER RESULTS PPP TRANSACTION STRUCTURE • First PPP in the West Bank. IFC worked closely with technical consultants and legal counsel to design a PPP structure built on a sound technical, legal, and • Will benefit 840,000 people in towns and villages regulatory foundation. Anticipating private sector concerns in Bethlehem and Hebron, who will enjoy signifi- around the fragile and conflict-affected status of West Bank cantly improved solid waste management services. and Gaza, IFC held numerous conversations with regional and • Estimated reduction of GHG emissions by 13,400 international solid waste operators to develop a robust transaction tons over seven years. structure that addressed the country’s unique situation. The operation and management of the facilities in a sanitary and efficient way was a key goal for JSC-H&B. Under the project structure, the private partner is responsible for the operation * GPOBA was established in 2003 by the United Kingdom’s Department for and management of Al-Minya landfill and two transfer stations International Development (DFID) as a multi-donor trust fund administered by at Tarqoumiya and Hebron, including the long-haul transfer of the World Bank. Four additional donors have joined the partnership: IFC, the waste to from the transfer stations to the landfill. The JSC-H&B Dutch Ministry of Foreign Affairs, the Australian Department of Foreign Affairs will provide a minimum waste guarantee of 500 tons per day to and Trade, and the Swedish International Development Agency. 11/2013 the operator and pay fees per ton of waste managed at the landfill and transfer stations. Primary waste collection is not a part of the private sector’s responsibilities and will remain in the hands of various municipal entities. In order to better align incentives between the grantor and the operator, a flexible concession term was adopted whereby the private partner operates and maintains the facilities for a