Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD1139 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT PAPER ON A PROPOSED ADDITIONAL GRANT AND RESTRUCTURING IN THE AMOUNT OF US$15 MILLION TO THE PALESTINE LIBERATION ORGANIZATION (FOR THE BENEFIT OF THE PALESTINIAN AUTHORITY) FOR A GAZA WATER SUPPLY AND SEWAGE SYSTEMS IMPROVEMENT PROJECT October 17, 2014 Water Global Practice Middle East and North Africa Region This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank’s policy on Access to Information.. CURRENCY EQUIVALENTS September 30, 2014 Currency Unit = US$ 3.69 = US$1 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AF Additional financing AFD Agence Française de Développement AFR Additional Financing and Restructuring CMWU Coastal Municipalities Water Utility EC European Commission ESMP Environmental and Social Management Plan ESIA Environmental and Social Impact Assessment FM Financial Management IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding IDA International Development Association IsDB Islamic Development Bank MENA Middle East and North Africa MOF Ministry of Finance NCB National Competitive Bidding NRW Non- Revenue Water PA Palestinian Authority PID-MDTF Partnership for Infrastructure Development of the Multi- Donor Trust Fund PLO Palestine Liberation Organization PMU Project Management Unit PRDP Palestinian Recovery and Development Plan PWA Palestinian Water Authority QCBS Quality and Cost Based Selection SIDA Swedish International Development Agency TFGWB Trust Fund for Gaza and the West Bank UXO Unexploded Ordnance WB&G West Bank and Gaza WSSSIP Water Supply and Sewage Improvement Project WWTP Waste water treatment plant Vice President: Inger Andersen Country Director: Steen Lau Jorgenson Senior Global Practice Director: Junaid Kamal Ahmad Practice Manager Steven Schonberger Task Team Leader: Iyad Rammal Co-Task Team Leader Pieter David Meerbach WEST BANK AND GAZA ADDITIONAL FINANCING AND RESTRUCTURING TO THE GAZA WATER SUPPLY AND SEWAGE SYSTEMS IMPROVEMENT PROJECT CONTENTS Project Paper Data Sheet i Project Paper 1 I. Introduction 1 II. Background and Rationale for Additional Financing 2 III. Proposed Changes 5 IV. Appraisal Summary 11 Annexes Annex 1 - Revised Results Framework and Monitoring Indicators 14 Annex 2 - Operational Risk Assessment Framework 21 Annex 3 - Detailed Description of Modified or New Project Activities 28 Annex 4 - Revised Estimate of Project Costs 32 Annex 5 - Revised Implementation Arrangements and Support (this 33 includes any changes to the procurement, Financial Management, Safeguards, etc.) ADDITIONAL FINANCINGDATA SHEET West Bank and Gaza Additional Financing and Restructuring for Water Supply & Sewage Systems Improvement ( P151032 ) MIDDLE EAST AND NORTH AFRICA GWADR Basic Information – Parent Parent Project ID: P101289 Original EA Category: B - Partial Assessment Current Closing Date: 30-Jun-2016 Basic Information – Additional Financing (AF) Additional Financing Project ID: P151032 Scale Up Type (from AUS): Regional Vice Inger Andersen Proposed EA Category: B - Partial Assessment President: Expected Effectiveness Country Director: Steen Lau Jorgensen 10-Nov-2014 Date: Senior Global Practice Junaid Kamal Ahmad Expected Closing Date: 31-Dec-2017 Director: Practice Steven N. Schonberger Report No: PAD1139 Manager/Manager: Team Leader: Iyad Rammal Borrower Organization Name Contact Title Telephone Email Minister of Finance Palestine Liberation Shukry Bishara at the +972 2 2978830 minister@pmof.ps Organization (PLO) Palestinian Authority Project Financing Data–Parent ( GZ-Gaza Water Supply & Sewage System Improvement- P101289 ) Key Dates Approval Signing Effectiveness Original Revised Project Ln/Cr/TF Status Date Date Date Closing Date Closing Date P101289 TF-13564 Effective 19-Dec-2012 19-Dec-2012 26-Dec-2012 30-Jun-2016 31-Dec-2017 Disbursements % Project Ln/Cr/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P101289 TF-13564 Effective USD 6.40 6.40 0.00 3.86 2.54 60.29 i –Additional Financing and Restructuring for Water Supply & Sewage Systems Improvement ( P151032 ) [ ] Loan [X] Grant [ ] IDA Grant [ ] Credit [ ] Guarantee [ ] Other Total Project Cost: 15.00 Total Bank Financing: 15.00 Financing Gap: 0.00 Financing Source – Additional Financing (AF) Amount Borrower 0.00 Partnership for Water and Urban Development in the West Bank 12.00 Special Financing 3.00 Total 15.00 Policy Waivers Does the project depart from the CAS in content or in other significant No respects? Explanation Does the project require any policy waiver(s)? No Explanation Bank Staff Name Title Specialization Unit Maya Abi Karam Senior Counsel Legal Counsel LEGAM Fifi Z. Antar Program Assistant Program Assistance MNCGZ John R. Butler Lead Social Lead Social OPSOR Development Specialist Development Specialist Lina Fathallah Rajoub Senior Procurement Procurement GGODR Specialist Tracy Hart Senior Environmental Environmental GENDR Specialist Safeguards Basheer Ahmad Procurement Analyst Procurement GGODR Fahem Jaber Nadi Yosef Mashni Financial Management Financial Management GGODR Specialist Pieter David Sr Water Resources Co-Team Lead GWADR Meerbach Spec. Iyad Rammal Senior Infrastructure Team Lead GWADR Specialist ii Hana Salah Consultant Safeguards GURDR Nikolai Soubbotin Lead Counsel Legal Counsel LEGAM Caroline van den Lead Water and Economic Analysis GWADR Berg Sanitation Specialist Eric Ranjeva Financial Officer Disbursement Specialist CTRLD Non Bank Staff Name Title City Locations Country First Administrative Location Planned Actual Comments Division West Bank West Bank and X Gaza and Gaza Gaza Institutional Data Parent ( GZ-Gaza Water Supply & Sewage System Improvement-P101289 ) Practice Area / Cross Cutting Solution Area Water Cross Cutting Areas [ ] Climate Change [ ] Fragile, Conflict & Violence [ ] Gender [ ] Jobs [ ] Public Private Partnership Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Co- Mitigation Co- benefits % benefits % Water, sanitation and flood Water supply 50 protection Water, sanitation and flood Wastewater 27 protection Treatment and Disposal Public Administration, Law, and Public 23 Justice administration- Water, sanitation and flood protection iii Total 100 Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Urban development Urban services and housing for the 76 poor Financial and private sector Infrastructure services for private 24 development sector development Total 100 Additional Financing and Restructuring for Water Supply & Sewage Systems Improvement ( P151032 ) Practice Area / Cross Cutting Solution Area Water Cross Cutting Areas [ ] Climate Change [X] Fragile, Conflict & Violence [ ] Gender [ ] Jobs [ ] Public Private Partnership Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Co- Mitigation Co- benefits % benefits % Water, sanitation and flood Water supply 50 protection Water, sanitation and flood Sanitation 25 protection Public Administration, Law, and Public 25 Justice administration- Water, sanitation and flood protection Total 100 I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. Themes iv Theme (Maximum 5 and total % must equal 100) Major theme Theme % Urban development Urban services and housing for the 100 poor Total 100 v I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide additional financing grant (AF) in the amount of US$ 3 million from the Trust Fund for Gaza and West Bank (TFGWB)to the Palestinian Liberation Organization for the Gaza Water Supply and Sewage Systems Improvement Project (WSSSIP) (P101289, Grant No. TF013564). In addition, the project will be co-financed by a grant in the amount of US$12 million from the Partnership for Infrastructure Development Multi-Donor Trust Fund (PID MDTF). The proposed AF was prepared according to OP10.00 paragraph 12 “Projects in Situations of Urgent Need of Assistance or Capacity Constraints.” 2. The proposed AF would help finance the costs associated with the scaling-up of project activities in response to circumstances arising during implementation, and specifically it would finance rehabilitating water and wastewater infrastructure damaged in Gaza as a result of the conflict that took place from July 5 to August 26, 2014. The AF is requested by the Palestinian Water Authority (PWA) in consultation with the Gaza Coastal Municipal Water Utility (CMWU) to finance civil works, goods, consulting services, non-consulting services, training, operating costs and recurrent costs to: (i) conduct the most urgent repairs to damage water and wastewater systems in order to restore basic water and wastewater services; and (ii) restore and enhance the capacity of the CMWU to deliver these services. Overall damage to water and wastewater systems are assessed in the order of US$ 34 million, with the proposed AF covering approximately 40 percent of the required repairs. It is expected that additional funds from other donors for the reconstruction of the water sector will become available over the course of 2015 and early 2016 to cover the remaining 60 percent. 3. The proposed changes for the purposes of the AF are: (i) change in the PDO to reflect the reconstruction activities; (ii) restructuring of Component 1 (Improving Water Supply and Wastewater Facilities) to include additional activities for restoring damaged water supply and wastewater systems; (iii) corresponding changes to Component 2 (CMWU Capacity Building and Operational Support and CMWU recurrent cost) to include operating costs; (iv) restructuring of Component 3 (Project Management, Monitoring and Evaluation ) and changes to the financial management and disbursement procedures; (iv) revision of procurement arrangements in line with OP10.00 paragraph 12 to allow for simplified procurement procedures; and (iv) an extension of the closing date by 18 months from June 30, 2016 to December 31, 2017. 4. The direct beneficiaries from the proposed AF would be: (i) a population of around 1.8 million people that are currently reliant on CMWU services delivery through damaged or destroyed water and wastewater systems; (ii) the CMWU which had its technical and financial capacity for service delivery severely affected; and (iii) a population of around 1.2 million affected by the uncontrolled disposal of sewage as a result of non-functioning wastewater infrastructure. The expected outcome of the AF would be that around 1.8 million people of which 50 percent women would have basic water supply and wastewater services restored. 5. The AF will be funded with US$ 3 million Special Financing from the TFGWB, supplemented by US$ 12 million co-financing from the World Bank-administered PID MDTF. Co-financing for the proposed AF has been committed through Administration Agreements specifying the donor contributions to the PID MDTF. A supplemental contribution to the PID MDTF will be made by the Representative Office of the Kingdom of the Netherlands who signed 1 the Administrative Agreement for US$4.0 million and the Agence Française de Développement (AFD) who expressed a willingness to participate with US$4.5 million equivalent. Project financing under this AF reflects the full amount required for this project as well as all financial allocations. As such, the Grant Agreement (GA) for the MDTF co-financing will be issued only up to the amount of cash currently available from the Trust Fund. The GA will be amended as supplemental tranches from donors are received, but would not exceed the total financing envelope of US$15 million for this proposed emergency AF as detailed in the document. Such supplemental amendments to the GA would not be considered “Additional Financing” per OP/BP 10.00 and would not require Board approval.1 The additional financing from the World Bank’s TFGWB is secured and will be reflected in an amendment to the original GA. II. Background and Rationale for Additional Financing in the amount of US$15 million 6. Alignment with Interim Strategy. The proposed AF fits well with the World Bank Group’s Assistance Strategy for the West Bank and Gaza for the Period FY15 – FY16. It is critical to restoring basic water and wastewater services in Gaza, and as such would directly support the efforts of the Palestinian Authority (PA) to strengthen public institutions to ensure service delivery to citizens, the first pillar of the Assistance Strategy. Within that context the proposed AF would restore a part of the water and wastewater services in Gaza to the same or better level as before the July-August 2014 hostilities. It would also improve water infrastructure and environmental protection by reducing uncontrolled disposal of untreated or partially treated sewage. The AF would support private sector development and employment generation through civil works and goods contracts to local contractors and suppliers, in that way supporting private sector led growth that increases employment opportunities, which is the second pillar of the Strategy. The proposed AF would support the efforts to achieve the Bank’s global twin goals to end extreme poverty and promote shared prosperity, since restoring basic water and wastewater services will meet urgent humanitarian needs as well as meet the water and sanitation requirements of commercial and industrial enterprises and public services, thereby enabling private-sector led growth. 7. Original Grant. The development objective of WSSSIP is to improve the quality and efficiency of water supply and wastewater service provision in Gaza by (i) rehabilitating and expanding existing water and wastewater systems, and (ii) enhancing the capacity of the Coastal Municipalities Water Utility to sustain water and wastewater services. WSSSIP is the third in a series of World Bank-supported projects aimed at improving water and wastewater infrastructure and the institutional capacity to manage these facilities in Gaza. The project has a total budget envelope of US$17.54 million, and is funded through a grant from the TFGWB of US$ 6.40 million and a grant of US$ 11.14 million in parallel co-financing from the Islamic Development Bank (IsDB). There have been slight changes to the objectives and components, but not to the scope of the project. The original project became effective December 26, 2012 and was originally scheduled to close on June 30, 2016 and is now being extended to December 31, 2017. 8. Performance of WSSSIP. WSSSIP is currently rated Satisfactory for achievement of the PDO as well as for Implementation Progress, in spite of delays related to Israeli restrictions on 1 Any project restructuring per OP/BP 10.00 would be submitted to the Board for approval. Amendments to the GA would be subject to standard clearance procedures prior to signature. 2 the entry of materials into Gaza. Project implementation complies with all key grant covenants, procurement and financial management capacity are rated satisfactory, and there are no unresolved fiduciary issues. Prior to the hostilities of July-August 2014, the project had achieved some impressive results, including: (i) PWA and the CMWU maintain disinfection efficiency of the water supply in Gaza at the acceptable standard level of 99 percent as a result of chlorine supplies secured under the project; (ii) the percentage of non-revenue water(NRW) decreased from 39 percent to 34 percent as a result of repairs and installation of pipes and water meters; (iii) improved wastewater facilities benefitted around 44,000 people; and (iv) significant reduction (43 percent) in the power consumption at water wells as a result of rehabilitation and upgrading of electro-mechanical works. However, as a result of the hostilities some of these results were annulled, as NRW increased due to massive leakages from damaged pipe networks, and water and wastewater facilities that were built under the project sustained damages. Most notably, the financial capacity of the CMWU has been severely affected, and with the lack of services it is expected for the coming year that bill collection will not be higher than 65 percent of the collection rate before the hostilities. 9. Rationale for requesting Additional Financing. The request for the proposed two AF (US$3 million from the TFGWB and US$12 million from the PID MDTF) stems from the extensive damages to water and wastewater facilities caused by the the conflict in Gaza in July- August, 2014. In parallel to the AF to the WSSSIP, AFs are also proposed for the ongoing Gaza Electricity Network Rehabilitation Project and the Second Municipal Development Project which address urgent rehabilitation needs in the power and electricity sector as well as the municipal sector. Although total available funding will not suffice to address the full scope of damages from the July-August 2014 conflict, the proposed three AF operations are critical given the urgent need to ensure delivery of critical basic services in the three sectors (water, energy and municipal) and to enable the PA to respond to the emergency needs. Funds across the three sectors were allocated in close coordination with the PA sector authorities, based on the rapid damage assessments prepared with support from the Bank, and considering availability of sector funding from other donors, including for parallel financing. Allocation within sectors follows the priorities identified by the PA sector authorities. However, significant additional funding for recovery and reconstruction will be required and would need to be mobilized by the PA. 10. The recent conflict in Gaza from July 8 through August 26, 2014 had devastating impacts. According to UNOCHA estimates, 2,131 people died, close to 11,000 people have been wounded, and 28 percent of Gazans were displaced during the conflict. Prior to the conflict, a consensus Palestinian Government under the leadership of President Abbas was established in May 2014, with a cabinet of technocrats, who are not affiliated to any political party, but with broad support from all Palestinian parties. Growth, which started falling since 2012 as a result of a decline in foreign aid, fell further to less than 2 percent in 2013. The closures of the illicit tunnels with Egypt, which represented the main trade channel for imports and exports, particularly affected Gaza, and the economies of both the West Bank and Gaza went into recession in 2014. Preliminary estimates by the Palestine Central Bureau of Statistics (PCBS) indicate that growth in the first quarter of 2014 amounted to -1 percent (0.5 percent in the West Bank and -4 percent in Gaza). Israeli restrictions2 on economic activity, in particular those on 2 According to the Government of Israel, these restrictions are for the purpose of enhancing the security of Israel and Israeli citizens. 3 trade, movement and access substantially increased the cost of trade and make it impossible to import many production inputs into the Palestinian territoriesi. 11. The restrictions on import and export and on movement of people in Gaza are particularly severe. All movement of people and goods in and out of Gaza has been restricted since June 2007. Israeli restrictions have been eased since 2010 for some construction materials, but exports are still virtually blocked from Gaza and must be destined to a third country (neither Israel nor the West Bank, which traditionally absorbed 85 percent of Gaza’s exports.) The economic decline is resulting in unemployment growth. Unemployment reached 26 percent by the middle of 2014: 16 percent in the West Bank and a staggering 45 percent in Gaza. At 40 percent each, women and youth have particularly high levels of unemployment. Almost 23 percent of the workforce is employed by the public sector, an uncommonly high proportion that reflects the lack of dynamism in the private sector. A quarter of all Palestinians live in poverty according to a national poverty line based on a basic needs package of goods, with poverty rates in Gaza being twice that of the West Bank. 12. The economic impact of the conflict has not been fully quantified yet, but is doubtless severe. The loss in national GDP compared to the pre-conflict forecast is estimated at more than US$ 0.65 billion. Economic activity in Gaza has all but stopped for almost two months. The World Bank and IMF are forecasting that the Palestinian economy will shrink by almost 4 percent in real terms, with growth projected at -15 percent for Gaza and 0.5 percent for the West Bank for 2014. 13. The conflict resulted in massive destruction of infrastructure. Needs for immediate relief and early recovery assistance are significant and urgent. The PA has been preparing a comprehensive strategy and plan to deal with the aftermath of the Gaza conflict. As the first phase is in the planning process, the PA has launched damage assessments for specific sectors. An early draft of the plan called “The National Early Recovery and Reconstruct ion Plan for Gaza” (NERRPG) has been shared with the Bank and other donor partners. It comprises a vision for Gaza’s reconstruction and socioeconomic recovery; early damage estimates; and principles for the implementation of the plan. Given that full damage and needs assessments for all relevant sectors are yet to be completed, the plan will be a living document for the next few months. 14. The total damage and needs are not fully known yet but are likely to be in the billions of dollars. The Bank has been active from early stages of the joint effort to design a recovery and reconstruction plan for Gaza. The PA has asked the Bank, the United Nations Development Program (UNDP), and the European Union (EU) to take the lead on the post-humanitarian phase needs assessments, which will be a critical input to enable the PA to revise and finalize the NERRPG. At the request of the PA, the Bank also contributes to the damage assessments in the sectors where the Bank is one of the PA partners in project implementation. These include water and sanitation, energy, and municipal development. 15. Rapid assessments estimate damages to the water and sanitation infrastructure at around US$ 34 million; and at around US$ 42.5 million in the electricity sector. Damages to municipal infrastructure and public facilities are estimated at more than US$ 58 million, excluding the infrastructure and networks owned and operated by utilities. 16. For the water sector, PWA has prepared a damage assessment based on an inventory by the CMWU of the most visible damages and impacts. This assessment (see Table 1), shows that around US$ 34 million in damages have been identified thus far. The impact of these damages is 4 significant and potentially disastrous. Water supply shortages occur due to damaged wells and around 120,000 CM per day of sewage (equivalent to the sewage of around 1,800,000 people) is currently discharged and uncontrolled, affecting groundwater infiltration areas, residential areas and eventually the sea. The poor sanitary situation is of great concern, as it could trigger the rapid spread of water-borne diseases. At the peak of the hostilities reportedly almost 40 percent of the water sources for Gaza in the eastern area of Gaza was left out of order either due to direct damages or damages to the electricity supply, as well as a lack of fuel to run back-up generators, leaving only 20 percent of the population receiving water through the network. Reportedly eight staff of the CMWU were killed while trying to perform emergency repairs on critical infrastructure. An overview of damages is given in Table 1 below. Table 1: Type of damages in the water and wastewater sector and estimated cost3 Damaged Infrastructure/Asset Extend of damage Quantity Estimated costs Water Wells Partially 15 $ 419,000 Water Wells Completely 11 $ 1,650,000 Water Network Partially 17,500m $ 3,310,000 Water Network Completely 29,300 m $ 4,325,000 Water Storage/Reservoir Partially 11 $ 1,300,000 Water Storage/Reservoir Completely 5 $ 4,400,000 Desalination Unit Partially 4 $ 205,000 Desalination Unit Completely 2 $ 130,000 Wastewater Network Partially 10310 m $ 2,427,100 Wastewater Network Completely 7238 m $ 2,492,000 Wastewater Pump Station Partially 12 $ 1,447,000 Wastewater Pump Station Completely 0 $- Wastewater Treatment Plant Partially 4 $ 1,224,000 Wastewater Treatment Plant Completely 0 $- Water & Sanitation Vehicles &Equipment 50 $ 8,850,000 Offices, computer and office equipment 1 $ 255,000 Hidden and unseen 1 $ 2,000,000 Total USD $ 34,434,100 17. Alternatives considered. The World Bank considered providing financing to the water sector needs in Gaza through a stand-alone emergency project. This alternative was not favoured as it required longer processing time whereas the needs in Gaza are immediate and critical. Since all the activities envisaged under this proposed AF are in line with the original WSSSIP PDO, with the original project components and implementation mechanisms already in place, the same fiduciary, environmental and social safeguard mechanisms can apply, thus facilitating implementation in the early stages. III. Proposed Changes Summary of Proposed Changes 3 Water Sector Damage assessment Report, (Gaza August, 2014). Palestinian Water Authority, based on data from the Coastal Municipalities Water Utility (CMWU). 5 The proposed Additional Financing will restructure and scale-up the project activities to provide financing for emergency rehabilitation of water infrastructure which was damaged during the violent conflict in Gaza in July-August, 2014. The project development objective is revised and the project scope is expanded to scale-up on-going activities for: (i) the emergency rehabilitation of damaged water infrastructure in order to restore basic water supply and wastewater services; (ii) operational support to the implementing agency; and (iii) project management. The results framework is updated to reflect the deterioration in the original target values as a result of the damages, and to include indicators for the emergency rehabilitation. The project closing date will be extended to December 31, 2017. The proposed AF is in line with OP10.00 paragraph 12 "Projects in Situations of Urgent Need of Assistance or Capacity Constraints". The financing envelope for the AF will be revised as other financiers are likely to commit financial contributions to this AF over the course of preparation and appraisal. Change in Implementing Agency Yes [] No [ X ] Change in Project's Development Objectives Yes [ X ] No [ ] Change in Results Framework Yes [ X ] No [ ] Change in Safeguard Policies Triggered Yes [ ] No [ X ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ ] No [ X ] Change in Legal Covenants Yes [ ] No [ X ] Change in Loan Closing Date(s) Yes [ X ] No [ ] Cancellations Proposed Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ ] No [ X ] Change in Disbursement Estimates Yes [ X ] No [ ] Change to Components and Cost Yes [ X ] No [ ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ ] No [ X ] Change in Procurement Yes [ X ] No [ ] Change in Implementation Schedule Yes [ X ] No [ ] Other Change(s) Yes [ ] No [ X ] Development Objective/Results PHHHDO Project’s Development Objectives Original PDO The project development objective is to improve the quality and efficiency of water supply and wastewater 6 service provision in Gaza. This will be achieved through (i) rehabilitation and expansion of existing water and wastewater systems, and (ii) enhancing the capacity of the Coastal Municipalities Water Utility (CMWU) to sustain water and wastewater services. Change in Project's Development Objectives PHHCPDO Explanation: The PDO is revised to reflect the focus on emergency rehabilitation. Proposed New PDO - Additional Financing and Restructuring (AFR) To improve the quality and efficiency of water supply and wastewater service provision in Gaza and assist in restoration of basic water supply and wastewater services through: (i) rehabilitation and reconstruction of existing and damaged water and wastewater systems, and (ii) enhancing the capacity of the Coastal Municipalities Water Utility (CMWU) to sustain water and wastewater services. Change in Results Framework PHHCRF Explanation: The Results Framework is revised to reflect: (i) the reduction in target values for the original indicators; and (ii) the focus under the AF on restoring basic water and wastewater services. Compliance PHHHCompl Covenants - Additional Financing ( Additional Financing and Restructuring for Water Supply & Sewage Systems Improvement - P151032 ) Source of Finance Description of Funds Agreement Date Due Recurrent Frequency Action Covenants Reference - US$4.7 million are available and TBD the rest of the funds PWUD are contingent on receiving funds from donors in the MDTF account. Quarterly New - Signing of the Subsidiary Agreements between the PLO and PA are needed to be signed for the two additional TFGWB financing 7 Conditions PHCondTbl Source Of Fund Name Type Special Financing Amendment Letter, paragraph Effectiveness 15 Description of Condition The Subsidiary Agreement has been revised according to the provisions of the Amendment Letter. Finance PHHHFin Loan Closing Date - Additional Financing ( Additional Financing and restructuring for Water Supply & Sewage Systems Improvement - P151032 ) Proposed Additional Financing and restructuring Loan Source of Funds Closing Date MNA VPU Free-standing Trust Funds 31-Dec-2017 Special Financing 31-Dec-2017 Loan Closing Date(s) - Parent ( GZ-Gaza Water Supply & Sewage System HCLCD Improvement - P101289 ) Explanation: As a result of the damages to the water sector in Gaza, project implementation was delayed and results already achieved were negatively affected. Activities are scaled-up under the proposed AF to recover and expand achievement of the project objectives, requiring an extension of the closing date of 18 months. Ln/Cr/T Status Original Current Closing Proposed Closing Previous Closing F Closing Date Date Date Date(s) TF-13564 Effective 30-Jun-2016 30-Jun-2016 31-Dec-2017 Change in Disbursement PHHCDA Arrangements Explanation: Under the original project there are three disbursement categories; (i) Goods, Works, Non-consulting Services, Consultants' Services and Training under Component 1 and 3; (ii) Goods, Works, Non-consulting Services, Consultants' Services and Training under Component 2; and (iii) Operating Costs of the Project Management Unit. In order to provide the implementing agency with the required flexibility to allocate funds as needed, under the original grant and the AF there will be one disbursement category for "Goods, Works, Non-consulting Services, Consultants' Services, Training, Operating Costs, and Recurrent Costs". Allocation of funds will be done in line with the project budget satisfactory to the World Bank. Change in Disbursement (including all sources of Financing)PHHCDE 8 Estimates Explanation: Expected disbursements are updated to reflect the two AF and as shown in the legal agreement. Expected Disbursements (in USD Million) (including all Sources of Financing) Fiscal Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Annual 0.00 2.00 6.80 4.00 2.2 0.00 0.00 0.00 0.00 0.00 Cumulative 0.00 2.00 8.80 12.8 15.00 0.00 0.00 0.00 0.00 0.00 Allocations - Additional Financing ( Additional Financing and restructuring for Water Supply & Sewage Systems Improvement - P151032 ) TFGWB US$3Million: Amount of the Additional Grant Percentage of Allocated (expressed in USD) Expenditures to Category be Financed (1) Goods, works, non-consulting services, consultants’ 1,650,000 100% services and Training under Parts A and C of the Project (2) Goods, works, non-consulting services, consultants’ 800,000 100% services and Training under Part B of the Project (3) PMU Operating Costs 550,000 100% TOTAL AMOUNT 3,000,000 PID MDTF (PWUD) US$12Million: Source of Allocation Disbursement %(Type Total) Currency Category of Expenditure Fund Proposed Proposed Goods, civil work, consultancy services, non- consultancy PWUD 100 services, training, operation cost 12,000,000.00 and recurrent cost Total: 12,000,000.00 Reallocation between Disbursement Categories PHHRBDC Explanation: No Change in the Parent project. Components PHHHCompo Change to Components PHHCCC and Cost Explanation: 9 Component 1 is revised to scale-up activities for the emergency rehabilitation of damaged water infrastructure. Component 2 and Component 3 are revised to scale-up financing for Operational Support (Component 2) and Project Management (Component 3). Proposed Current Proposed Component Current Cost AF Cost Action Component Name Name (US$M) (US$M) Improving Water Restoring and Improving Supply and Water Supply and 11.29 11.05 22.34 Revised Wastewater Wastewater Facilities Facilities Utility Capacity Utility Capacity Building Building and and Operational Support 3.15 2.40 5.55 Revised Operational and CMWU Recurrent Support Cost Project Management, Project Management, 3.10 1.55 4.65 Revised Monitoring and Monitoring, Evaluation Evaluation Total: 17.54 15.00 32.54 Other Change(s) PHHHOthC Change in Implementing PHHCIAg Agency Explanation: Implementing agency remains PWA, but the name in the system is changed to reflect a recent change of the Head of the PWA. PHImplemeDel Implementing Agency Name Type Action Palestinian Water Authority Implementing Agency Change in PHHCProc Procurement Explanation: Since the AF is processed under OP 10.00 paragraph 12 "Projects in Situations of Urgent Need of Assistance or Capacity Constraints", simplified procurement procedures will be used in accordance with OP 10 11.0 (Procurement) paragraph 20. Change in Implementation PHHCISch Schedule Explanation: The implementation schedule is revised to reflect the scaled-up activities and the extended closing date. IV. Appraisal Summary PHHHAppS Economic and Financial Analysis PHHASEFA Explanation: There are no changes to the economic and financial rates of return for the original WSSSIP. No economic and financial analysis is done for the purposes of this AF, since the AF will restore basic water and wastewater services to the beneficiary population, and as such has not only humanitarian urgency but also significant economic and financial benefits, as people can return to their houses and the CMWU can re-start their normal operating procedures, including service provisions and bill collection. Technical Analysis PHHASTA Explanation: The proposed AF is technically feasible, as it includes mostly civil works and goods to repair damages sustained in the water sector as a result of the bombardments and incursions of the Israeli Defense Forces (IDF) in Gaza. The Coastal Municipal Water Utility (CMWU) is very well experienced in implementing, procuring and supervising civil works and goods contracts. There is sufficient qualified staff, and staffing levels required for construction supervision will be monitored during implementation and adjusted if necessary. Activities to be financed have been identified by the CMWU and the Palestinian Water Authority in a detailed assessment of damages which occurred until August 14, 2014. This assessment was done by teams of CMWU and PWA staff and includes detailed lists of repairs needed at specified locations, as well as the preliminary bill of quantities, technical specifications and scope of works needed for the rehabilitation. The assessment does not yet include: (i) damages occurred during continued bombardments from August 14-16, 2014; (ii) hidden damages which cannot be observed as a result of scattered debris; (iii) damages to buried pipelines as a result of shock waves from the bombardments; and (iv) environmental damages such as pollution of wells and groundwater bodies. The assessment identifies around US$ 34 million of damages, mostly to water reservoirs, water and wastewater networks as well damages to CMWU buildings, vehicles, spare parts, equipment and machinery. Immediate financing of US$ 17 million is required to alleviate the most urgent needs, with intermediate and long-term financing of US$ 17 million to render the system fully operation. As funding is limited, packages to be financed under the proposed AF have been prioritized based on humanitarian needs, so the number of beneficiaries is maximized. The project will also work with other donors to explore the possibility of parallel funding for certain activities. Social Analysis PHHASSA Explanation: The social development impacts of this project are expected to be generally positive, including restoring 11 water and sewerage services, reducing physical dangers caused by damaged systems; providing employment for local contractors and workers, and restoring water and sanitation services to hospitals, schools and homes. Potential negative impact of the project are in general limited to the project construction phase and may include noise, dust, obstruction of access to businesses and houses, etc. These negatives impacts are manageable and their mitigation is addressed in the project Environmental and Social Management Plan (ESMP) whose scope and area remain the same. The project will not require any land acquisition as it will be carried out on existing facility sites located on public land (including waqf lands) and on municipality property and thus will not entail any resettlement or land acquisition and will not trigger the Involuntary Resettlement OP 4.12 safeguards policy. The project will avoid all areas where internally displaced people (IDPs) are temporarily housed. The CMWU and Bank confirmed that there are no IDPs on the site of the works. Formal consultations were carried out in the original project and the World Bank was informed that the populations affected have not changed. Information about the project and construction schedules will be communicated to the beneficiary population in a consultative manner. Environmental and social documentation have been updated and revised as necessary and were disclosed locally in local language (Arabic) and in the Infoshop on September 25, 2014. Grievance resolution: Complaints will be resolved by providing written complaints to the borrower/client. If the issue cannot be resolved, an alternative method of completing the project will be identified. All complaints must be documented, including meetings and discussions of how the issues are resolved. The CMWU has been using a grievance process and has agreed to formalize this with improved documentation going forward and this will be reviewed regularly as part of the Bank’s supervision activities. Environmental Analysis PHHASEnvA Explanation: As the proposed AF is primarily restoration of similar physical works funded by the parent project, WSSSIP, there is no change to the safeguard category, nor the triggered safeguards policies. Hence the only relevant environmental safeguards policy is OP 4.01 on Environmental Assessment, and the proposed AF remains as an environmental safeguards category B. The safeguards instruments of the parent project (ESIA/ESMP) can be applied to the proposed AF, with minor updating to the ESMP to reflect the proposed AF sites. The content of the ESIA as well as the environmental consultations for the initial WSSSIP is still applicable. Construction debris removal is now in process, largely guided by UN agencies. Limited refurbished materials (e.g. gravel for backfilling) may be used for the civil works in this project, provided it fully complies with technical specifications. The UN Mine Action Service (UNMAS), as well as other humanitarian agencies, are responsible for the safe removal of unexploded ordnances (UXO) and other explosive materials. Written documentation demonstrating completion of UXO clearance will be required as part of sub-project screening processes prior to commencement of civil works, as will be amended in relevant sections of the Operations Manual. The CMWU will use the ESMP to address any and all expected environmental impacts, as well as mitigation and monitoring measures. Client supervision of environmental safeguards aspects during implementation of 12 WSSSIP small civil works has been consistently rated Satisfactory, with timely and clear written monitoring and reporting records. The client has also complied with measuring and reporting relevant water quality indicators. Risk High Explanation: The risk rating remains high, due to the exceptional situation in Gaza. Under the cease-fire agreements reached on August 26, 2014, Israel has committed to ease restrictions to the imports of goods into Gaza. Nevertheless, the restrictions in place will likely pose a burden to implementation progress. Coordination with the Government of Israel on imports required for project implementation will be key to mitigate this risk. 13 Annex 1 - Results framework – Additional Financing and Restructuring for Water Supply & Sewage Systems Improvement Project Additional Financing and restructuring for Water Supply & Project Additional Financing Status: DRAFT Name: Sewage Systems Improvement (P151032) Stage: Team Requesting Iyad Rammal MNC04 Created by: Pieter David Meerbach on 27-Aug-2014 Leader: Unit: Product Responsible Special Financing GWADR Modified by: Pieter David Meerbach on 12-Sep-2014 Line: Unit: Country: West Bank and G Approval FY: 2015 MIDDLE EAST AND NORTH Lending Region: Investment Project Financing AFRICA Instrument: Parent Project Parent Project P101289 GZ-Gaza Water Supply & Sewage System Improvement (P101289) ID: Name: Project Development Objectives Original Project Development Objective - Parent: The project development objective is to improve the quality and efficiency of water supply and wastewater service provision in Gaza. This will be achieved through (i) rehabilitation and expansion of existing water and wastewater systems, and (ii) enhancing the capacity of the Coastal Municipalities Water Utility (CMWU) to sustain water and wastewater services. Proposed Project Development Objective - Additional Financing and restructuring (AFR): To improve the quality and efficiency of water supply and wastewater service provision in Gaza and restore basic water supply and wastewater services. This will be achieved through: (i) rehabilitation and reconstruction of existing and damaged water and wastewater systems, and (ii) enhancing the capacity of the Coastal Municipalities Water Utility (CMWU) to sustain water and wastewater services. Results Core sector indicators are considered: Yes Results reporting level: Project Level 14 Project Development Objective Indicators Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target Revised Disinfection efficiency of water Yes/No Value Yes No Yes supply in Gaza is sustained at Date 30-Sep-2012 12-Sep-2014 31-Dec-2017 the baseline level of 99.0% throughout the project. Comment The project helped PWA and the utility to secure chlorine solution which helped sustaining the disinfection efficiency of the water supply in Gaza at acceptable standard level of 99.0%, even during the hostilities. Revised Decrease in the percentage of Percentage Value 39.00 42.00 34.00 non-revenue water in Rafah, Date 30-Sep-2012 12-Sep-2014 31-Dec-2017 Khan Younis, and Deir El- Balah as a result of the project. Comment Prior to hostilities, non- revenue water decreased to the target value of 34%, but it is currently estimated that as 15 a result of the damages, there are more losses and it is higher than the original baseline value. Revised Nominal increase in collection Percentage Value 49.00 25.00 55.00 rate of CMWU in Rafah, Khan Date 30-Sep-2012 12-Sep-2014 31-Dec-2017 Younis, and Deir El-Balah Governorates as a result of the Comment Prior to hostilities project. collection rate was at 49%, but it is now at 25% only, as many household connections have been destroyed. Revised People (49% females) in the Number Value 0.00 0.00 100000.00 project area would benefit from Date 30-Sep-2012 12-Sep-2014 31-Dec-2017 improved wastewater facilities. Comment Before the hostilities, 44,000 people had improved wastewater facilities, but because of destruction this is now back to the baseline value of 0. 16 Revised Improvement in wastewater Percentage Value 75.00 70.00 80.00 effluent quality in Gaza. Date 30-Sep-2012 12-Sep-2014 31-Dec-2017 Comment As a result of damages to wastewater treatment plants, effluent quality deteriorated. New Number of people in urban Number Value 1600000.00 1600000.00 1850000.00 areas provided with access to Date 12-Sep-2014 12-Sep-2014 31-Dec-2017 Improved Water Sources under the project Comment New Number of people benefitting Number Value 0.00 0.00 1800000.00 from restored water supply and Date 12-Sep-2014 12-Sep-2014 31-Dec-2017 wastewater services Comment Intermediate Results Indicators Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target Revised Water tanks (3,000 – 4,000 Number Value 0.00 3.00 5.00 CMs capacity) installed or Date 30-Sep-2012 12-Sep-2014 31-Dec-2017 rehabilitated and connected to the existing water network Comment Three water tanks according to the CMWU were constructed Master Plan. prior to hostilities Revised Kilometers of water Number Value 0.00 12.00 36.00 distribution networks Date 30-Sep-2012 27-May-2014 31-Dec-2017 rehabilitated. Comment 17 Revised Water meters Number Value 0.00 8750.00 14000.00 installed/replaced. Date 30-Sep-2012 27-May-2014 31-Dec-2017 Comment 8750 new customers meters have been procured and installed with all associated piping requirements based on the field assessment carried out with customers services department. The main target was to replace blocked and damaged water meters Revised Volume(mass) of BOD Tones/year Value 7000.00 6000.00 8500.00 pollution load removed by Date 30-Sep-2012 12-Sep-2014 31-Dec-2017 treatment plant under the project Comment Volume of BOD load removed as a result of damages to WWTPs Revised Volume of wastewater Number Value 110000.00 100000.00 130000.00 pumping capacity (m3/ day) Date 30-Sep-2012 12-Sep-2014 31-Dec-2017 restored and maintained, under the project. Comment Pumping capacity 18 decreased as a result of damages Revised Tariff proposal and adjustment Yes/No Value No No Yes system at CMWU upgraded. Date 30-Sep-2012 27-May-2014 31-Dec-2017 Comment PWA/CMWU in cooperation with the Ministry of Local Government was introducing the new tariff system but this has been paused as a result of the hostilities. Revised Operational cost recovery Text Value CMWU is CMWU is CMWU sign instruments for CMWU recovering recovering MOUs for developed. operational operational cost membership cost only in only in Rafah with Khan Rafah Younis and Deir El-Balah Municipalities Date 01-Jan-2013 27-May-2014 31-Dec-2017 Comment Due to the political situation with Egypt the economic situation is preventing the achievement of 19 cost recovery in other areas. Revised Reduction in energy Text Value 0.55 0.55 0.4 consumption for operation of Date 01-Jan-2013 27-May-2014 31-Dec-2017 targeted water wells supported by the project in Rafah, Khan Comment Initial Younis, and DeirEl-Balah achievements Governorates (Kw/h/m3). have been annulled by damages sustained to the pumps supported under the project. New Kilometers of damaged or Kilometers Value 0.00 0.00 46.00 destroyed water networks Date 12-Sep-2014 12-Sep-2014 31-Dec-2017 restored. Comment 20 Annex 2 Operational Risk Assessment Framework (ORAF) West Bank and G: Additional Financing and Restructuring for Water Supply & Sewage Systems Improvement (P151032) Stage: Additional Financing and Restructuring Risks 1. Project Stakeholder Risks 1.1 Stakeholder Risk Rating Moderate Risk Description: Risk Management: The PA, PWA change priorities, donors not Water supply and infrastructure rehabilitation in Gaza is a pillar of the PNDP for 2011-2014. interested in further funding the program Investments are aligned with the PA and PWA strategy for improving the water supply in Gaza and developed and has been also recognized as a priority area for rehabilitation and reconstruction after the last conflict in Gaza. Many donors are showing interest in supporting the water sector in Gaza and the IsDB has signed a financing agreement of US$ 11.14 million for this project. Resp: Client Stage: Imple Recurrent: Due Dec 31, 2015 Frequency Status: Ongoin menta Date: : g tion 2. Implementing Agency (IA) Risks (including Fiduciary Risks) 2.1 Capacity Rating Moderate Risk Description: Risk Management: 21 By establishing a PMU, PWA agreed with the CMWU to hire PMU staff who have acquired substantial experience in implementing the Bank-supported GEWP and other donors’ project. The same PMU will PWA is unable to meet project continue managing the Additional Financing and Restructuring. implementation requirements Resp: Client Stage: Imple Recurrent: Due Dec 31, 2017 Frequency Status: Ongoin menta Date: : g tion Risk Management: Project Implementation Manual (including FM & Procurement procedures) has been updated to comply with the additional financing and measures were taken also to enhance the FM, procurement, and safeguards functions within PWA, including the retaining of the FM & Procurement specialists. Resp: Client Stage: Prepa Recurrent: Due Sep 28, 2014 Frequency Status: Compl ration Date: : eted 3.2 Governance Rating Moderate Risk Description: Risk Management: The utility governance affected by political The PWA will be the implementing agency and will be responsible for the fiduciary aspects. The split between the West Bank and Gaza utility has been successfully surviving the split and keeping coherent governance by focusing on the provision of services. Investments are spread and will benefit the entire population in Gaza and for all municipalities. Resp: Client Stage: Imple Recurrent: Due March 2015 Frequency Status: Ongoin menta Date: : g tion 3. Project Risks 22 3.1 Design Rating Low Risk Description: Risk Management: Project design is not flexible enough to suit Implementation arrangements were kept simple, utilizing the accumulated experience of PWA and the volatile conditions in Gaza and the CMWU in implementing previous Bank projects and the coordination mechanisms with the Israeli parallel financing arrangements. Strong authorities on materials entry. linkages between several activities financed by the World Bank and the IsDB might Resp: Client Stage: Imple Recurrent: Due Dec 2017 Frequency Status: Ongoin negatively affect the Bank’s financing in menta Date: : g case the IsDB investments are not tion implemented correctly. For the purposes of the AF, the overall Risk Management: scope and design of the project have depended on the availability of funds. This Co-financed activities between the Bank and IsDB have been implemented efficiently and the envelop depended on: (i) the allocation of coordination efforts will continue until they are finalized. The Bank activities that are linked to IsDB's available funds over the water, power and are sequenced in a proper manner in the PP to ensure effectiveness of the Bank’s investments. Close municipal sector; and (ii) the committed coordination between the involved parties (WB, IsDB, and Client) is already established and joint contributions of donors. supervision missions will be conducted during implementation. Resp: Client Stage: Imple Recurrent: Due Dec 2015 Frequency Status: Ongoin menta Date: : g tion Risk Management: There are several donors who joined the PID MDTF, four of them (Denmark, Sweden, Finland and Netherlands) have signed administrative agreement with the World Bank. AFD is anticipated to do so in December 2014. Therefore, the majority of the funding needs are already available. Resp: Client Stage: Imple Recurrent: Due October 2014 Frequency Status: Ongoin 23 menta Date: : g tion Risk Management: Jointly with the relevant PA institutions in Gaza and the other donors, a consensus will be reached on allocation of limited funds to the sectors with the highest need and the greatest impact on alleviating humanitarian needs. Resp: Both Stage: Imple Recurrent: Due Dec 2014 Frequency Status: Not menta Date: : Yet tion Due 3.2 Social and Environmental Rating Moderate Risk Description: Risk Management: The PMU staff is trained to implement and monitor the implementation of the EMP. CMWU will assist in monitoring the implementation of the ESMP; qualified staff at the quality assurance department are Construction and rehabilitation activities impacting communities. The PWA already in place. oversees monitoring the implementation of the ESMP. Customers may not be satisfied Resp: Client Stage: Imple Recurrent: Due Dec 2014 Frequency Status: Not yet with the CMWU performance. menta Date: : started tion Risk Management: A tariff by law has been approved by the Ministerial cabinet and study will be conducted focused on protecting poor households. 24 Resp: Client Stage: Imple Recurrent: Due 31-Dec-2016 Frequency Status: In menta Date: : Progres tion s Risk Management: PWA in consultation with the CMWU will conduct broad-based consultations; communicate progress achieved by the project to enhance customer confidence and trust. CMWU is already using part of this through their website and its Facebook page. Resp: Client Stage: Imple Recurrent: Due Sep 2015 Frequency Status: Ongoin menta Date: : g tion 3.3 Program and Donor Rating Moderate Risk Description: Risk Management: Parallel financing by IsDB may be CMWU and IsDB have signed agreements on financing the agreed activities. IsDB expressed interest affected. to the Bank team to support the CMWU and the water sector in Gaza. New coordination effort between Donors’ coordination may not be effective, CMWU and IsDB following the last Israeli-Palestinian conflict in Gaza is going on. which may jeopardize project implementation. Resp: Client Stage: Imple Recurrent: Due Dec 2014 Frequency Status: Ongoin menta Date: : g For the proposed Additional Financing and tion Restructuring, some donors are still considering contributing to the AF through Risk Management: the Multi-Donor Trust Fund "Partnership for Infrastructure Development". Involved donors have started coordination at an early stage of project preparation and agreed to enhance coordination during implementation. Joint supervision missions will be conducted, along with regular communication among the involved parties. Four donors have already signed Administrative 25 Agreements to provide support through the PID MDTF. Resp: Bank Stage: Imple Recurrent: Due Dec 2017 Frequency Status: Ongoin menta Date: : g tion Risk Management: The PWA, the Bank and the CMWU will have close coordination with the various donors involved, in order to expedite the decision making process and finalize the financing envelop for the proposed AF. Resp: Both Stage: Imple Recurrent: Due Dec2014 Frequency Status: Ongoin menta Date: : g tion 3.4 Delivery Monitoring and Rating Substantial Sustainability Risk Description: Risk Management: CMWU is unable to improve its financial Measures were employed in project design to support the CMWU operation and CMWU will take standing and operational sustainability to some measures to reduce (i) the operational costs of the utility and (ii) improve revenues. operate and maintain the infrastructure investments. Resp: Client Stage: Imple Recurrent: Due 31-Dec-2015 Frequency Status: In menta Date: : Progres tion s Risk Management: External independent M&E specialist will be hired by the PWA to monitor project progress and 26 evaluate CMWU operations and management functions. Resp: Client Stage: Imple Recurrent: Due 31-Dec-2015 Frequency Status: In menta Date: : Progres tion s Risk Management: CMWU will take measures and will sign MOUs with municipalities to ensure improved cost recovery. Milestones have been set and agreed. Resp: Client Stage: Imple Recurrent: Due 31-Dec-2015 Frequency Status: In menta Date: : Progres tion s 4. Overall Risk Overall Implementation Risk: High The overall fragility of the operating environment. PWA and CMWU unable to meet the Risk Description: implementation requirements, and donors (together) and Client coordination are not efficient during implementation 27 Annex 3 – Detailed Description of Activities financed under the Additional Financing and Restructuring 1. Based on the detailed damage assessment, a priority list of scaled-up activities was established which can be financed with the available envelope. The additional financing will be used for the activities listed in Table 2, which are similar to the activities under the original components of the WSSSIP. All damaged works will be rehabilitated and if necessary upgraded in line with the PWA & CWMU Master Plan. Since it is expected that more damages will become apparent as the debris is being cleared, and since prices of materials and equipment are a function of the import restrictions imposed by the Israeli authorities, a high contingency rate of 20 percent is used for both price and physical contingencies. Table 2: Very urgent priority activities financed under the AF and related WSSSIP components. # Very urgent Activity details WSSSIP No. of Estimated priority activities Compo- benefi- Cost (US$ nent ciaries million) (`000) 1 Rehabilitate and Drilling and reconstruction of two wells to replace the 1.2 500 0.5 reconstruction of completely damaged Abu Hamam and Abu Naser water wells and wells, each of 60 m3/hr production capacity in Deir Al desalination plants Balah area. Also, 8 partially damaged wells shall be repaired and rehabilitated including civil and electromechanical works. The works shall cover electromechanical rehabilitation of Al Salam Brackish water desalination plant of 50 m3/hour production capacity in Rafah which was partially damaged. 2 Rehabilitate and Reconstruction of two groundwater reservoirs of 1,500 1.1 175 2.2 reconstruction of m3 capacity each, complete with water booster stations water reservoirs and to serve both Khoza'a and Abassan Al Kabira areas in booster stations , Khan Younis governorate in order to replace the reconstruct damaged reservoirs. Structural rehabilitation and (Khouzaaa Water repairs of partially damaged ground water reservoirs in Rehabilitate Al Musader (350 m3), Wadi Al Salqa (350 m3), and Al reservoir and Moghrakah (3000 m3) located in the middle area Abasan Water governorate. Electromechanical rehabilitation and reservoir) repair of partially damaged Al Rahma water booster station located at the existing Rahma 5000 m3 ground water reservoir in Khan Younis. 3 Rehabilitate and Replacement of all damaged carrier water lines 1.1&1.3 500 2.2 reconstruction of including connections, valves and plumbing fixtures water mains, and upgrading of water networks with all associated distribution household connections .This will cover UPVC piping network, and house and ductile pipes wherever applicable, including 4 km connections, assess of 14" diameter pipes,5 km of 12" diameter pipes, 8 km damages through a of 10" diameter ,16 km of 8" ,6",4",2" diameters. Also, leak detection the works and supplies shall include two leakage program detection vehicles to detect leakage in order to reduce it. 4 Rehabilitate and Carry out comprehensive cleaning and desludging of 6 1.4 750 0.5 reconstruction of anaerobic wastewater lagoons located at 3 treatment wastewater plants in North,Rafah and Khan Younis plants. This 28 treatment plants in will improve the performance of the plants by Rafah, Khan increasing the detention time for anaerobic lagoons. Younis, and North Also, the works shall include electromechanical area rehabilitation of mechanical surface aerators located in Khan Younis and North WWTP and a rotary arm for bio tower in Rafah WWTP, as well as effluent water pumping stations with all associated electrical and mechanical installations requirements. 5 Rehabilitated and Replacement and upgrading of various wastewater 1.4 200 1.65 reconstruction of gravity pipelines of different sizes with all associated wastewater manholes requirements which are damaged during the networks and war periods. Electromechanical rehabilitation and wastewater repairs of 10 wastewater pumping stations including pumping stations the replacement of damaged electrical switchboards, generators, pressure manifolds and pumps. 6 Purchase vehicles Procurement of two loaders, two backhoes, one 1.3 & 1.4 350 1.5 and heavy excavator, two trucks and five equipped maintenance machinery, vehicles. Comprehensive repair of 10 partially including loaders, damaged service water and wastewater vehicles with excavators, and all associated spare parts. maintenance vehicles 7 Environmental This will enhance the CMWU environmental 2.3 1,800 0.3 mitigation measures monitoring programs established by CMWU for both and monitoring water and wastewater services, and additional laboratory equipment and kits will be procured to enhance the CMWU laboratory capacity. Several additional activities and mitigation measures should be carried out to maintain both safe dumping of sludge generated from wastewater treatment plants and safe effluent wastewater to the sea outfalls which were partially damaged during hostilities. Also, a water quality monitoring program shall be established at customers household points where actual blending is taking place along with the water distribution networks. 8 Rehabilitate the Structural and civil works repairs for CMWU 2.1 1,800 0.4 administration and Headquarter, regional and operational offices operational buildings of the CMWU 9 Repair and replace Procurement of computers, printers, photocopiers and 2.2 700 0.3 damaged scanners to replace IT equipment which were partially Information damaged at different CMWU regional offices. Technology equipment (computers, printers, servers) 10 Purchase chlorine ( Additional requirements of chlorine disinfection 2.3 1,800 1.0 extra demand to solution required to chlorinate the targeted reservoirs, disinfect the entire water supply tanks, water networks and return them to water networks) safe operation. Also, additional chemicals for and chemicals , and desalination plants are required to secure the operation 29 fuel of 9 brackish water desalination plants each of 50 m3/hr production capacity and one sea water desalination plant of 115 m3/hour .Diesel fuel quantities of at least 250,000 liters has to be made available to cover the deficits required for standby generators operated for more than 12 hours a day after the complete damage of Gaza electricity generation plant 11 Additional This will support PMU's project management by 3 1.95 contributions to financing external M&E, external audit, CMWU PMU and CMWU recurrent cost (utility charges, insurance, office rent) recurrent cost and and the like. monitoring and evaluation from October 2014 until December 2017. Sub-Total 12.5 Contingency at 20% 2.5 TOTAL 15 2. The proposed activities include significant financing for environmental mitigation and for contributions to the recurrent costs of the PMU and the CMWU. Additional environmental mitigation and monitoring is necessary as groundwater recharge areas and wells have been affected by uncontrolled sewage and possibly by hazardous substances used in the shells, bombs and ammunition used by the IDF. Environmental monitoring as such might call for more rigorous rehabilitation than estimated in the damage assessment. Additional financing to the CMWU is necessary as a result of the significant loss of revenues from bill collection. Therefore the AF will bridge the gap in CMWU operating costs until bill collection is back to previous or better levels, which could be achieved by project closing on December 31, 2017. 3. If contingency funds or additional financing from other donors will become available, they can be allocated to the activities of second priority as noted in Table 3. Table 3: Urgent priority activities to be financed if more financing becomes available. # Urgent priority activities as noted in the damage assessment WSSSIP No. of Estimated report Compo- benefi- Cost (US$ nent ciaries million) (`000) 1 Rehabilitated wastewater networks and wastewater pumping 1.4 100 1.0 stations 2 Rehabilitate and upgrade water mains, distribution network, and 1.1&1.3 200 2.0 house connections, 30 3 Rehabilitate wastewater treatment plants in Rafah, Khan Younis, 1.4 750 0.5 and North area 44. Purchase chlorine ( extra demand to disinfect the entire water 2.3 1,800 1.0 networks) and chemicals , and fuel 5 Purchase vehicles and heavy machinery, including loaders, 1.3&1.4 300 1.0 excavators, and maintenance vehicles Sub-Total 5.5 Contingency at 20% 1.1 TOTAL 6.6 31 Annex 4 – Revised cost estimates 1. Table 1 below shows the current financing for the WSSIP per Component, both for the current original project (including IsDB parallel financing) as well as for the proposed AF. Table 1. Financing for the WSSSIP per Component, current project and AF (in US$ million) Component Current AF Total Restoring and Improving Water Supply and Wastewater 11.29 11.05 22.34 Facilities Utility Capacity Building and Operational Support and 3.15 2.40 5.55 CMWU Recurrent Cost Project Management, Monitoring and Evaluation 3.10 1.55 4.65 Total 17.54 15.00 32.54 32 Annex 5 - Revised Implementation Arrangements and Support 1. General. There are no changes to the implementation arrangements. The grant recipient is the Palestinian Liberation Organization (PLO) for the benefit of the Palestinian Authority (PA). The PA will implement the project through the Palestinian Water Authority for the benefit of the people of Gaza in accordance with legal agreements between the Bank and the recipient. A PMU will carry out day-to-day project implementation in consultation with the Coastal Municipalities Water Utility through inter-agency arrangements. The PWA and the CMWU have signed a memorandum of understanding describing the relationships, roles, and responsibilities between the two entities to be applied during project implementation. The PWA will be responsible for the fiduciary and safeguard aspects of project implementation through a PMU that has been established. The PMU makes available to the CMWU consultants’ services, goods, and works benefitting the CMWU and financed out of the proceeds of the trust funds administered by the World Bank. The parties agreed that following completion of the construction, rehabilitation, and reconstruction of the facilities, the CMWU will continue to operate and maintain the facilities. 2. Financial Management (FM): The existing FM and disbursement arrangements for WSSSIP are used for this AF. FM performance rating has been "Satisfactory" since its effectiveness. The FM and disbursement arrangements of the ongoing WSSSIP will continue to be implemented under the proposed AF, and the PWA through the PMU will continue to manage the FM and disbursement for the Project. The PMU is adequately staffed and the accounting system is well functioning and captures all project-related transactions by component and by each financier. The PWA has a proven track record of effectively operating in the complex environment of Gaza. 3. The PWA’s accounting system will be used to record, report, and monitor the project’s accounts. Previous IFRs have been submitted in a timely and acceptable manner. The overall FM risk rating for the proposed AF is assessed as substantial with similar mitigating measures as WSSSIP. The audit report and management letter for the year ending December 2013 has been received. The delay in submitting the audit report is attributed to delays in contracting the external auditor and is also attributed to the current situation in Gaza. The audit field work was finalized by the external auditor and the auditor is expected to submit the final audit report to the Bank by September 15, 2014. 4. An external auditor, acceptable to the Bank, will be appointed by the Ministry of Finance (MOF) to audit the project’s financial statements based on terms of reference (TOR) acceptable to the Bank. Additionally, an external auditor, using relevant technical specialists as needed, will conduct an annual technical audit. 5. Financial risks and mitigating measures. The overall financial management risk for the project is assessed as “substantial,” mainly due to the following factors: a) The overall fragile situation and the Israeli-imposed access restrictions to Gaza may affect the physical and financial progress of the operation and the verification of actual physical progress on the ground. b) The nature of the project, which involves large work contracts for the rehabilitation and reconstruction of water reservoirs and water wells, may encourage collusive behavior. 33 c) Potential “double dipping” from donors’ funds. 6. The following is a summary of the agreed actions/mitigation measures: a) Contract management will be centralized at the PWA. b) The PWA will have the sole responsibility to disburse to suppliers, contractors, and consultants on behalf of the project. c) The technical team responsible for monitoring goods and works contracts will review and approve project payment requests before further processing to provide assurance that payment related activities correlate to goods actually supplied and installed and to physical progress on the operations. d) An independent external auditor, acceptable to the Bank, will be hired on a competitive basis to perform an external audit of the project’s annual financial statements, in accordance with ToR acceptable to the Bank. In addition, the ToR will be expanded to include a provision for annual technical audits of the project. e) A separate Designated Account for each financier will be opened by the MoF under the Central Treasury Account, and will be used solely for this particular project. f) The PWA will maintain separate financial transactions in its accounting software by opening separate cost centers for each financer. g) The PWA will maintain complete and orderly supporting documentation for each contract, including signed contracts and invoices, and other related supporting materials, readily available for audit. h) Quarterly financial management supervision missions will be undertaken by the Bank. 7. Parallel Financing by Financing Partners: Each donor’s contribution to the additional financing (including the Bank’s) will be through the MDTF, as co-financing towards the project’s activities. The Bank will disburse its funds through a separate Designated Account (DA) (under the Central Treasury Account) and managed by the PWA. World Bank and MDTF funds will be spent on specific project activities under the AF. Under the original WSSSIP, IsDB provides parallel financing, and World Bank and IsDB finance discrete project activities. 8. Staffing at the PWA: The PMU staff consists of a full-time financial and administrative manager, as well as a financial officer. The financial and administrative manager holds a degree in accounting and is capable of monitoring the grant’s FM and disbursement functions. The FM team is familiar with the World Bank’s FM and disbursements guidelines. 9. Budgeting and Funds Flow: The PMU will maintain a project budget and detailed disbursement plans. The budget will be developed based on an initial procurement plan and revised as needed. The budget will be analyzed yearly and quarterly as part of the Interim Financial Reports (IFRs). 10. The PMU is vested with the sole responsibility to disburse on behalf of the project to suppliers, contractors, and consultants. Each disbursement check has to be signed by one signatory from Category (A) plus one signatory from Category (B), according to the following matrix: Category A: (1) PMU head based in Ramallah, and (2) PMU-Gz deputy head based in Gaza. Category B: (1) PMU manager, and (2) PMU financial and administrative manager. 34 Flow of Funds World Bank PWA submits WA for MOF’s co- Central Treasury Suppliers, signature Account at the Contractors & MOF (Designated consultants Account Managed by PWA) PWA PMU submits Payment requests to PWA Legend Full Arrows Movement of funds Dotted Arrows Request for fund transfer 11. Accounting & Reporting: The PWA has a fully automated accounting system in place, “Al Aseel Accounting System.” This system is capable of capturing all project-related transactions. Separate cost centers to track and report the use of project funds for each financier will be created after the Grant Agreements are signed. The accounting system, however, cannot generate the Interim Financial Reports (IFRs). Therefore, IFRs will be compiled manually using Excel spreadsheets. Transaction statements from the accounting system will be retained with the IFRs to provide an audit trail to the underlying documentation. 12. The PMU will be required to issue quarterly IFRs composed of (i) Statement of Sources and Uses of Funds for the period and cumulatively by donor and by component and subcomponent; ii) Comparison between budget versus actual along with explanations of significant variances between budgeted and actual amounts; (iii) Statement of Designated Account reconciling the period’s opening and end balances; (iii) Contract listing; (iv) Fixed assets schedule; and (v) Physical Progress Reports, which include narrative information linking financial information with physical progress, and highlighting issues that require attention. The IFRs will be comprehensive and will cover all aspects of the project including all financing sources. IFRs content and format has been communicated and discussed with the project team. 13. Internal Control and Internal Audit: Project control procedures will follow the PWA’s internal control procedures, supplemented by the FM manual, to ensure that project funds are used only for intended purposes and for financing eligible expenditures. The PWA’s internal control procedures are summarized as follows: (i) PMU technical team review and approval; (ii) Procurement officer review and approval, and financial and administrative manager review and approval; (iii) MoF financial controller review; and (iv) Each payment will be signed by two authorized signatories as mentioned above. All parties must approve payment requests before the authorized signatories sign the requested check. 35 14. External Audit: The project financial statements will be audited annually by a qualified independent external auditor acceptable to the Bank and in accordance with internationally accepted auditing standards and ToR acceptable to the Bank. The audit will be comprehensive covering all financiers and will be conducted in accordance with International Standards on Auditing. The scope of the audit will be expanded to assess and report on the effectiveness of internal controls and compliance with the Grant Agreement, FM manual, and applicable laws and regulations. Deficiencies will be reported through a management letter. The audited financial statements and management letter will be sent to the World Bank not later than six months following the end of the project’s fiscal year. 15. The PWA in coordination with the MoF will be responsible for preparing the ToRs for the external auditors. The ToRs is to be submitted to the Bank for clearance three months after project effectiveness. The cost of the external auditor will be financed from the grant. The PMU has one outstanding audit for WSSSIP. The delay in submitting the audit report is attributed to delays in contracting the external auditor and is also attributed to the current situation in Gaza. The audit field work was finalized by the external auditor and the auditor submited the final audit report to the Bank on September 15, 2014. 16. In addition to the financial audit, the auditor is expected to perform a technical audit on an annual basis. In this context, auditors should use relevant technical specialists as needed to perform the technical audit in accordance to the Bank-accepted ToRs. 17. According to the World Bank’s access to information policy issued on Jul y 1, 2010, the project’s audit report with audited financial statements will be made available to the public. 18. Fixed Assets and Contracts Registers: The Fixed Assets Register will be maintained by the PWA and regularly updated and checked. The register will include all necessary information including fixed asset description, location, type, identification numbers, purchase date, invoice number, etc. Contracts registers will be maintained for all contracts. 19. Supervision: The project’s FM arrangements and activities will be supervised every quarter. The financial supervision activities will include, inter alia, review of IFRs, review of annual audited financial statements and management letters, technical audit reports, as well as timely follow up on issues raised by the auditor and a review of SOEs if needed. 20. Record Management: The PMU and CMWU will keep the project files for three years from the last audit of the project. 21. Governance and Anti-Corruption: Although it is impossible to eliminate the risk of fraud and corruption, prevention policies and internal control can reduce opportunities for it to occur. Fraud and corruption may affect project resources, thereby negatively affecting project outcomes. The above-proposed fiduciary arrangements are expected to reduce the risks of fraud and corruption that are likely to have a material impact on the project outcomes. 22. Disbursement: The proceeds of the grant will be disbursed in accordance with the Disbursement Letter and the Bank’s disbursement guidelines for projects. Transaction-based disbursement will be used in this project. The same authorized signatories, names, and corresponding specimens of their signatures will be used by the Bank as in WSSSIP. For direct payments above the “minimum application size,” as specified in the Disbursement Letter, withdrawal applications will be submitted to the World Bank for payments to suppliers and consultants directly. There will be two new segregated DAs for the new AFs. There are no 36 subaccounts under this DA, and reimbursements to the PA for payments made from its own resources will be made to accounts opened under the CTA with adequate safeguards to monitor accounts to which reimbursements would be made. Withdrawal applications submitted to the Bank will be prepared by the PMU and signed by the authorized signatories at the MoF, prior to submission to the Bank for processing. 23. Supporting documentation. In requesting disbursements into the DA or reimbursements for expenditures pre-financed by the recipient, the PMU will make use of a Statement of Expenditures (SOE) or records. The SOE could be used for (i) goods contracts costing less than US$100,000 equivalent; (ii) works contracts costing less than US$250,000; (iii) service contracts for individual consultants costing less than US$ 50,000 equivalent each, and for consulting firm services costing less than US$200,000; and for (iv) incremental operating costs. 24. Allocation of grant proceeds. Under the original project there are three disbursement categories; (i) Goods, Works, Non-consulting Services, Consultants' Services and Training under Component 1 and 3; (ii) Goods, Works, Non-consulting Services, Consultants' Services and Training under Component 2; and (iii) Operating Costs of the Project Management Unit. In order to provide the implementing agency with the required flexibility to allocate funds as needed, under the AF there will be one disbursement category for "Goods, Works, Non- consulting Services, Consultants' Services, Training, Operating Costs, and Recurrent Costs". Allocation of funds will be done in line with the project budget satisfactory to the World Bank. The proposed allocation of grant proceeds is shown in the table below. Amount of the Grant Percentage of Expenditures Category Allocated (expressed to be Financed in USD) (inclusive of taxes) Goods, Works, Non-consulting Services, Consultants' Services, Training, Operating Costs, and Recurrent 12,000,000 100% Costs Amount of the Original Amount of the Percentage of Category Grant Allocated Additional Grant Expenditures to be (expressed in USD) Allocated (expressed in Financed USD) (1) Goods, works, non-consulting 2,840,000 1,650,000 100% services, consultants’ services and Training under Parts A and C of the Project (2) Goods, works, non-consulting 490,000 800,000 100% services, consultants’ services and Training under Part B of the Project (3) PMU Operating Costs 3,070,000 550,000 100% TOTAL AMOUNT 6,400,000 3,000,000 TOTAL GRANT AMOUNT 9,400,000 37 25. Disbursement Plan: The projected disbursement for the proposed AF (in million US$, rounded numbers) for each financial year (July-June, with FY15 from July 2014 until June 2015) is noted in the table below. Disbursements peak at the start of the AF as contracts are signed, and in the last two quarters of the project, as works are approved and commissioned and final bills are paid. Component FY 2015 FY 2016 FY 2017 FY 2018 Su Sub- Q2 Q3 Q4 Sub Q1 Q2 Q3 Q4 Sub Q1 Q2 Q3 Q4 Sub Q1 Q2 b Tot Restoring and Improving Water Supply 0.75 0.30 0.31 1.360 1.40 1.30 1.20 1.30 5.20 0.50 0.50 0.56 0.56 2.12 1.0 1.33 2.33 11.01 and Wastewater Facilities Utility Capacity Building and Operational 0.10 0.10 0.35 0.55 0.35 0.35 0.26 0.24 1.20 0.27 0.27 0.1 0.05 0.69 0.0 0.0 0.0 2.44 Support and CMWU Recurrent Cost Project Management, Monitoring 0.0 0.0 0.0 0.0 0.0 0.175 0.17 0.17 0.515 0.17 0.265 0.175 0.175 0.785 0.175 0.75 0.25 1.55 and Evaluation, Sub-Total 0.85 0.40 0.66 0.175 1.825 1.630 1.710 0.94 1.035 0.835 0785 1.175 1.405 Total 0.85 1.25 1.91 1.91 3.66 5.485 7.115 8.825 8.825 9.765 10.80 11.63 12.42 12.42 13.59 15.0 15.0 15.0 (Cumulative) 26. Disbursement Methods: Methods will include advances, reimbursements, direct payments, and special commitments. The project’s Designated Account (DA) is established under the Central Treasury Account. The PWA is responsible for managing the DA and making all payments directly to contractors, consultants, and suppliers, including the incremental and operating costs of the PMU. 27. Procurement: Procurement for the AF will follow the same arrangements in place for the original project. In particular, procurement of goods, works, and non-consulting services will be carried out in accordance with the Guidelines: Procurement of Goods, Works and Non- Consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers, (World Bank, January 2011). For the selection of consultants, Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers will be used (World Bank, January 2011). Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants ,” shall apply to the AF (World Bank, October 15, 2006, revised January 2011). 28. The overall responsibility for procurement shall rest with PWA, through the existing PMU which has been handling the day-to-day implementation of the project, including 38 procurement. The PMU has experienced staff in implementing projects under Bank Procurement Guidelines. Current procurement performance is rated “Satisfactory”. However, continued restrictions imposed on access and movement of people and goods into Gaza is expected to delay or hinder the supply of equipment, spare parts, and other construction materials necessary for the execution of the rehabilitation works and may therefore cause substantial implementation delays and cost overruns. 29. Given the emergency nature of this AF, the following simplified procurement procedures for works and goods and selection procedures for consultants’ services shall apply: A. Works and Goods Direct Contracting. Direct contracting for the procurement of works and goods (as per paragraph 3.6 (a) and (e) of the Procurement Guidelines) may be used to extend an existing contract or award new contracts. For such contracting to be justified, the Bank should be satisfied that the price is reasonable and that no advantage could be obtained by further competition. Shopping. Shopping in accordance with paragraph 3.5 of the Procurement Guidelines may be used for procuring readily available off-the-shelf goods of values less than US$500,000, or simple works of values less than US$1,000,000. The PMU shall solicit at least three price quotations4 for the purchase of goods, materials, small works, or services (other than consulting services), to formulate a cost comparison report. B. Consultants’ Services Single-Source Selection. Single-source selection of consulting firms and individuals (paragraphs 3.10 (b) and 5.4, respectively, of the Consultant Guidelines) may be used only if it presents a clear advantage over competition for the required consulting services. Advertising/Shortlists For assignments that are estimated to cost less than US$100,000, advertisement is not mandatory as long as a shortlist of at least three qualified firms is established. 30. Procurement Plan. Under works, the AF will finance the procurement of rehabilitation and repair works of water wells, desalination plants, tanks, booster stations, networks and house connections, rehabilitation and repair of wastewater networks and pumping stations, and rehabilitation works of CMWU administrative and operation buildings. Under goods, supply of Chlorine, chemicals and fuel, supply of vehicles, heavy machinery loaders, excavators and maintenance vehicles, and supply of IT and office equipment are envisaged, in addition to environmental monitoring and technical and financial audits under consultants services. 31. The PMU prepared a procurement plan for the AF, in consultation with CMWU. The procurement plan was agreed with the Bank and is summarized below. It specifies the procurement packages/consultancy assignments, estimated cost, methods and schedule, taking into consideration the project implementation schedule. It does not include PMU and CWMU 4 The PMU shall use the sample request for quotations for goods and simple works, which are currently being used under the original project. 39 management and recurrent costs. The PP will be updated at least annually or as needed to reflect actual project implementation needs. Summarized Procurement Plan I. General 1. Project Name: Additional Financing and Restructuring for Gaza Water Supply and Sewage Systems Improvement Project 2. Period covered by this procurement plan: first 18 months II. Works and Goods 1. Procurement Methods and Prior Review Thresholds: Procurement Decisions subject to Prior Review by the Bank as stated in Appendix 1 to the Guidelines for Procurement: Category Method of Procurement Threshold (US$ Prior Review Threshold (US$ Equivalent) Equivalent) NCB <5,000,000 None Shopping <1,000,000 None Works Direct Contracting No threshold All contracts Goods ICB No threshold First contract NCB <500,000 None Shopping <500,000 None Direct Contracting No threshold All contracts 2. Summary of the Procurement Packages planned during the first 18 months after project effectiveness: Works: 1 2 3 4 5 6 7 8 Ref. Description Estimated Procurement No. of Domestic Review by Estimated No. Cost Method lots Preference Bank BDs issue US$ (‘000) (yes/no) (Prior / date Post) 1. Construction and Equipping of Khoza'a Ground 800 NCB 1 No Post 1-Dec-14 Water Reservoirs of 1800 m3 capacity in 40 Khan Younis Governorate. 2. Construction and Equipping of Abassan Al Kabira Ground Water 800 NCB 1 No Post 15-Dec-14 Reservoirs of 1800 m3 capacity in Khan Younis Governorate. 3. Repair & Rehabilitation of Water Tanks and Booster Stations in 600 NCB 1 No Post 10-Dec-14 Middle and Southern Area. (Multiple Packages) 4. Rehabilitation of Water Mains, 15-Dec-14 Networks and House 650 NCB 1 No Post Connections. (Multiple Packages) 5. Drilling, Construction and Equipping of Two new wells replace completely damaged 300 NCB 1 No Post 15-Jan-15 Abu Hamam and Abu Naseer wells in Deir Al Balah Area (Multiple Packages) 6. Electromechanical Repair and Rehabilitation of Al Salam Brackish Water Desalination Plant of 50m3/hour 200 NCB 1 No Post 10-Jan-15 production capacity in Rafah Area and rehabilitation of partially damaged well 7. Cleaning &Rehab of 6 anaerobic wastewater lagoons located at 3 260 NCB 1 No Post 10-Dec-14 treatment plants in North, Rafah and Khan Younis 41 Area(Multiple Packages) 8. Electromechanical rehabilitation of mechanical surface aerators located in 200 NCB 1 No Post 10-Jan-16 both Khan Younis and North WWTP. (Multiple Packages) 9. Replacement and upgrading of various wastewater gravity pipelines of different 300 NCB 1 No Post 10-Jan-15 sizes with all associated manholes requirements (Multiple Packages) 10. Electromechanical rehabilitation and repairs of 10 wastewater pumping stations including the replacement of 1500 NCB 1 No Post 10-Dec-14 damaged electrical switch boards, generators, pressure manifolds and its associates, pumps (Multiple Packages) 11. Repair and maintenance of partially damaged 150 NCB 2 No Post 10-Nov-14 water and wastewater vehicles (2 Lots) 12. Rehabilitate the Administration and Operation Buildings of the CMWU 400 NCB 1 No Post 05-Jan-15 beside CMWU warehouse (Multiple Packages) 13 Rehabilitation, reconstruction of water and 2,000 NCB 1 No Post 01-Sep-15 wastewater networks and house connections 42 (Multiple Packages) Total 8,160 Goods: 1 2 3 4 5 6 7 8 Ref. Description Estimated Procurement No. of Domestic Review by Estimated No. Cost Method lots Preference Bank BDs issue US$ (yes/no) (Prior / date (,000) Post) 1. Two leakage detection 200 NCB 1 No Post 15-Jan-15 vehicles 2. Supply vehicles and heavy machinery loaders and 1,350 NCB 1 No Post 10-Apr-15 excavators. (Multiple Packages) 3. Laboratory 140 NCB 1 No Post 10-Apr-15 Equipment and Kits 4. Supply of maintenance vehicles 200 NCB 1 No Post 15-Nov-14 with all associated spare parts 5. Procurement of 30 PC units, 10 printers, 5 photocopiers, 15 300 NCB 1 No Post 01-Nov-14 scanners, and other IT equipment 6. Supply Fuel for Water and Wastewater 200 NCB 1 No Post 15-Dec-14 Facilities 7. Supply Chlorine and Chemicals (Multiple 800 NCB 1 No Post 01-Mar-15 Packages) 8. Procurement of Pipes for water networks 1,000 NCB 1 No Post 02-Oct-14 (Multiple Packages) 9 Procurement of water NCB 1 No Post 01-Nov-15 meters in destroyed areas after debris 500 removal (Multiple Packages) Total 4,690 43 III. Selection of Consultants 1. Selection Methods and Prior Review Thresholds: Selection decisions subject to Prior Review by Bank as stated in Appendix 1 to the Guidelines Selection and Employment of Consultants: Category Selection Method Threshold Prior Review Threshold (US$ Equivalent) (US$ Equivalent) Consulting QCBS/QBS No threshold Contracts above $1,000,000 Services Firms FBS/CQS/LCS <300,000 None Sole Source No threshold All contracts Individuals IC No threshold Contracts above $300,000 Sole Source No threshold All contracts 2. Short list comprising entirely of national consultants: Short list of consultants for services, estimated to cost less than US$300,000 equivalent per contract, may comprise entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 3. Consultancy Assignments with Selection Methods and Time Schedule: 1 2 3 4 5 6 Ref. Description of Assignment Estimated Selection Review by Estimated No. Cost Method Bank RFP issue US$ (,000) (Prior / Post) date 1. Consultancy Service for Environmental Mitigation 160 QCBS Post 25 –Dec- 14 Measures and Monitoring 2. Auditing Services 40 LCS Post 10 Jan 15 Total 200 The procurement plan does not include staffing and recurrent costs. i The Government of Israel claims that these restrictions are for the security of the Israel and its citizens 44