Document of The World Bank Report No: 18102-GZ PROJECT APPRAISAL DOCUMENT FORA PROPOSED TRUST FUND CREDIT IN AN AMOUNT OF US$25.0 MILLION EQUIVALENT TO THE WEST BANK AND GAZA FOR THE BETHLEHEM 2000 PROJECT August 28, 1998 Infrastructure Development Group Middle East and North Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective July 31, 1998) NIS I = US$ 0.27 - US$ I = NIS 3.65 FISCAL YEAR January I - December 31 ABBREVIATIONS AND ACRONYMS APIB Arab Palestine Investment Bank BAM Bethlehem Area Municipalities BMM Bethlehem Municipalities Management CAS Countiy Assistance Strategy CBU Capacity Building Unit CDP Community Development Project CG Consultative Group CH Cultural Heritage CI-IA Cultural Heritage Authority CHDM Cultural Heritage Development Management CQ Consulants' Qualifications DOA Department of Antiquities ECU European Currency Unit EIB European Investment Bank ERR Economic Rate of Return EMP Environmental Management Plan EU European Union FA Force Account GDP Gross Domestic Product GPN General Procurement Notice ICB Intemational Competitive Bidding IDA Intemational Development Association IFC Intemational Finance Corporation IS Intemational Shopping JSC Joint Services Council LCS Least-Cost Selection LG Local Government LIR Legal and Institutional Reform MCHPB Municipal Cultural Heritage Program Boards MIDP Municipal Infrastructure Development Project MLG Ministry of Local Government MOF Ministry of Finance MOTA Ministry of Tourism and Antiquities MOC Ministry of Culture NCB National Competitive Bidding NGO Non Governmental Organization NS National Shopping O&M Operation and Maintenance PA Palestinian Authority PECDAR Palestinian Economic Council for Development and Reconstruction PCBS Palestinian Central Bureau of Statistics PCD Project Concept Document PDP Palestinian Development Plan PEnA Palestinian Environmental Authority PLO Palestine Liberation Organization QBS Quality-Based Selection QCBS Quality-Cost Based Selection SA Special Account SOE Statement of Expenditures/Expenses SPN Specific Procurement Notice SS Sole-Source Selection TA Technical Assistance TFGWB Trust Fund for Gaza and West Bank TOR Terms of Reference UNDB United Nations Development Business UNDP United Nations Developnient Program UNESCO United Nations Educational, Scientific and Cultural Organization USAID United States Agency for Intemational Development WBG West Bank and Gaza Vice President Kemal Dervi§ Country Director Joseph Saba Sector Director Jean-Claude Villiard Task Manager Kingsley Robotham West Bank and Gaza BETHLEHEM 2000 PROJECT TABLE OF CONTENTS Page Block 1: Project Description --------------- ----- ---------------- 2 1. Project Development Objectives----------------------------------------------------------------------------------------2 2. Project Components -----------------------------------------------------------------------------------------------------3 3. Benefits and Target Population ------- ----------------------------------------------------------------------4 4. Institutional and Implementation Arrangements----------------------------------------------------------------------4 Block 2: Project Rationale----------------------------------------------------------------------------------------------------------5 5. CAS Objectives Supported by the Project-----------------------------------------------------------------------------5 6. Main Sector Issues and Government Strategy ------------------------------------------------------------------------6 7. Sector Issues to be Addressed by the Project and Strategic Choices-----------------------------------------------7 8. Project Alternatives Considered and Reasons for Rejection -------------------------------------------------------7 9. Major Related Projects Financed by the Bank and/or other Development Agencies ------- 8 10. Lessons Learned and Reflected in the Project Design ---------------------------------------------------------------8 11. Indications of Borrower Recipient Commitment and Ownership --------------------------------------------------9 12. Value Added of Bank Support------------------------------------------------------------------------------------------9 Block 3: Summary Project Assessments ----------------------------------------------------------------------------------------9 13. Economic Assessment---------------------------------------------------------------------------------------------------9 14. Financial Assessment--------------------------------------------------------------------------------------------------- I1 15. Technical Assessment--------------------------------1--------------------------------------- I11 16. Institutional Assessment ----------------------------------------------------------------------------------------------- 11 17. Social Assessment ------------------------------------------------------------------------------------------------------ 12 18. Environmental Assessment------------------------------------------------------------------------------------------- 12 19. Participatory Approach------------------------------------------------------------------------------------------------ 13 20. Sustainability ----------------------------------------------------------------------------------------------------------- 13 21. Critical Risks ------------------------------------------------------------------------------------------------------------ 13 22. Possible Controversial Aspects --------------------------------------------------------------------------------------- 14 Block 4: Main Loan Conditions ------------------------------------------------------------------------------------------------ 14 23. Effectiveness Conditions-- - -------- - - - - 14 24. Other ------------------- - 15 Block 5: Compliance with Bank Policies-------------------------------------------------------------------------------------- 15 Annexes Annex I Project Design Summary ---------------------------------------------------------------------------------------- 16 Annex 2 Detailed Project Description ----------------------------------------------------------------------------------- 18 Annex 3 Estimated Project Costs----------------------------------------------------------------------------------------- 31 Annex 4 Cost-Benefit Analysis Summary ------------------------------------------------------------------------------- 33 Annex 5 Letter of Sector Policy ------------------------------------------------ -- --- ------------ 35 Annex 6 Environmental Data Sheet-------------------------------------------------------------------------------------- 42 Annex 7 Financial Summary B2000 Project Authority ------------------------------------------------------- 44 Annex 8 Procurement and Disbursement Arrangements------------------------------------------------------ 51 Annex 9 Project Processing Budget and Schedule------------------------------------------------------------ 57 Annex 10 Documents on Project File- - - - - - - - ---------------------------------------------------------------------------- 58 Annex II a. Statement of Bank Loans and IDA Credits ----------------------------------------------------- 59 b. Statement of IFC Investments--------------------------------------------------------------------- 60 Annex 12 Country at A Glance-------------------------------------------------------------------------------------------61 Map Nos. IBRD 29778 and 29794 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Middle East and North Africa Regional Office West Bank and Gaza Program Project Appraisal Document Bethlehem 2000 Project (B2000) Date: August28, 1998 [ ] Draft [x] Final Task Manager: Kingsley Robotham Sector Director: Jean-Claude Villiard Country Director: Joseph Saba Project ID: GZ-SF-53985 Focal Area: Urban POC: NA Lending Instrument: Specific Investment Loan PTI: [x Yes [ ] No Project Financing Data [ Loan [] Credit [] Guarantee [] Grant [ ] Other' For Loans/Credits/Others: Amount (US$m/SDRm): US$ 25m Proposed Terms: [] Multicurrency [x] Single currency Grace period (years): 10 [] Standard [] Fixed [] LIBOR- Variable based Years to maturity: 40 Commitment fee: NA% Service charge: 0.75% Financing plan (US$m): Source Local Foreign Total Government IDA 13.5 11.5 25.0 TOTAL 13.5 11.5 25.0 Borrower: PLO for the benefit of the Palestinian Authority (PA), represented by the Ministry of Finance. Guarantor: NA Responsible agencies: The Bethlehem 2000 Project Authority, Ministry of Local Government (MLG), the Ministry of Tourism and Antiquities (MOTA) and the Ministry of Culture (MOC) Project imnplementation period: 3 years Estimated disbursements (IDA FY/US$M): 1999 2000 2001 2002 Annual 10.30 12.60 1.80 0.30 Cumulative 10.30 22.90 24.70 25.00 Expected effectiveness date: November 2, 1998 Closing date: June 30, 2002 Trust Fund Credit out of the Trust Fund for Gaza and West Bank. PrjecAppraisal Document Page 2 West Bank and Gaza Bethlehem 2000 Project (B2000) Block 1: Project Description 1. Project Development Objectives (see Annex 1 for key performance indicators): Background: The Bethlehem 2000 project (B2000) builds on the initiatives of the existing Municipal Infrastructure Development Project (MIDP, FY96), extending these initiatives to the four new municipalities (Bethlehem, Beit Sahor, Beit Jala & Doha). Together these municipalities comprise the Bethlehem area (the Area Municipalities) and have a population of about 100,000. MIDP focuses on high priority infrastructure rehabilitation as well as municipal capacity building. The latter has a national as well as a local dimension. The national dimension focuses on legal, institutional and financial reform involving, for example, such issues as: decentralization (central/local relationships); revenue mobilization and sharing; regional investment programming; and the role, structure and capacity of the Ministry of Local Government (MLG). This initiative represents the first attempt in recent years at significant local govermnent sector reform. The local (municipal) dimension focuses on: improving financial planning and management; modernizing accounting systems; improving revenue mobilization and cost recovery; strengthening service delivery; and rationalizing, commercializing and privatizing service provision.2 A Unique Opportunity: B2000, while also focusing on high priority infrastructure rehabilitation and municipal capacity building, is unique. Bethlehem has an economic and cultural base anchored in history, religion and tourism. The year 2000, signifying as it does the end of the millennium and the 2000' anniversary of the birth of Christ in Bethlehem, is a quite special year. These two sets of factors give rise to a unique opportunity. B2000 seeks to capitalize on this opportunity to accelerate progress towards the achievement of a number of important sectoral and national developmental objectives (see below). Recognizing the significance of the anniversary and the opportunity, the Palestinian Authority (PA) plans to stage celebrations over the sixteen (16) month period beginning December 1999 and to invite the world to participate. To plan and manage the celebrations, it has established the Bethlehem 2000 Project Authority3 under the direct supervision of President Yasser Arafat. Objectives: The primary objectives of B2000 are to: 1) strengthen the economic and cultural base of the Bethlehem Area Municipalities and foster their sustainable development through tourism promotion and product development; 2) strengthen the infrastructural, fnancial and managerial base of these municipalities through a program of investment, reform and capacity building; and 3) begin to foster the preservation of cultural assets in the West Bank and Gaza (assets of worldwide importance and value) by initiating a national process of policy and institutional reform and capacity building. Key Performance Indicators: The key performance indicators are: Strengthening the Economic and Cultural Base: (1) the production of world class media events on or about Christmas days 1999 and 2000, with live international television broadcasts from Bethlehem; and (2) a significant increase in the numbers of tourists visiting and the percent of tourism expenditure captured by the local economy during the celebrations and in the post celebrations decade (2001-2010); Strengthening Infrastructural, Financial and Managerial Capacity: (I) Increase in number of households provided with reliable water and sanitation services; (2) reduction of travel time on key sections of the road network; and (3) significant increase in revenue mobilization and cost recovery by area LGs in the post celebrations period; Preserving of Cultural Assets: (I) initiation of a dialogue on national conservation policy and institutional arrangements; and (2) increase in the number of historic buildings rehabilitated and/or sustainably reused in the Bethlehem Area. 2 MIDP capacity building encompases five pilot (or selected) municipalities: Nablus, Jenin, Hebron, Gaza and Rafah. Authority established by Presidential Decree dated March 20, 1998. Project Appraisal Document Page 3 West Bank and Gaza Bethlehem 2000 Project (B2000) 2. Project Coimponents (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): Cost4 % of Component Category (US$M) Total 1. Celebrations Support: TA, 6.00 24% To The Bethlehem 2000 Project Authority for: a) technical Capacity assistance (TA) and consultants' services for: strategic planning; Building finance; fund raising; event development, marketing and sponsorship; overall program management and coordination; and construction management, including environmental management; and b) capital and operating expenses. 2. Infrastructure and Cultural Heritage Rehabilitation Works: Physical 15.00 60% Support to the Bethlehem 2000 Project Authority and Bethlehem works municipalities jbr: a) rehabilitation of essential Infrastructure and Services (roads, drains, water, sewerage, buildings, and parking structures); b) rehabilitation and adaptive reuse of historic municipal cores of Beit Jala and Beit Sahor and buildings; and c) archeological chance find protection. 3. Capacity Building Support: TA, 3.50 14% a) To Area Municipalities for: B2000 emergency services Capacity programming; financial and managerial and accounting systems Building reform; joint services, development; and infrastructure O&M programming; studies to enhance competitiveness in regional, national and international markets; and b) To MOTA (DOA) and MOC for: Cultural Heritage Preservation policy and legal reform and institutional development; seminars and training; action plan for Hebron/Jericho and plan for promotion of Palestinian culture. (Latter ("b") undertaken jointly with UNESCO.) 4. Overall Project Monitoring and Reporting Support: TA, 0.50 2% a) To MLG for: technical, financial and progress monitoring and Capacity reporting; project accounting systems establishment and Building management; and development indicator monitoring; and b) To B2000 Project Authority for: environmental training and monitoring. Total 25.00 100% 4 Includes contingencies. Project Appraisal Document Page 4 West Bank and Gaza Bethlehem 2000 Project (82000) 3. Benefits and Target Population: While widespread benefits would accrue to the Bethlehem area population, significant benefits would also accrue to the national population from the major lift provided to the tourist industry and the general improvement in urban efficiency. The benefits to the area include: increased tourism earnings by both private and public sectors; improvements in infrastructural services including reductions in vehicle operating costs and travel times, increase in the number of households provided with reliable water and sanitation services; improvements in public health and environmental conditions; employment generation (about 600 person years, direct); preservation of local infrastructure and cultural assets; improvement in the conditions for private sector investment and development; improvement in the fiscal efficiency of the Area Municipalities and increase in the long term potential of Bethlehem as a tourist destination. The wider benefits include: increased foreign exchange earnings from tourism; reduction in the demands made on the PA's Budget by the area LGs'; increased preservation of national cultural assets; increased international awareness of Palestine as a Tourist destination and Palestinian and Arab culture and increased international recognition and understanding of the problems and opportunities of Palestine. Economic Benefits: a) Quantified for Economic Analysis: These include the incremental tourism expenditures accruing to Palestine during the celebrations and subsequent years (to 2010) as a result of the combined effect of increased visitation and per capita spending--in turn, a result of marketing, events and improved tourism product; time and vehicle operating costs as a result of road investments; and increase in water supply availability. b) Non-Quantifiable Economic Beneffs: These include preservation of cultural heritage assets for future Palestinian generations; deepened and broadened tourism product; demonstration effect that is likely to pull more private resources into tourism product development; cultural heritage preservation; and increased private sector investment as result of improvement in the enabling environment (better infrastructural services). Target Population: The project is targeted at the worldwide tourism market, particularly the religious and cultural heritage segments of this market. This market numbers several hundreds of millions, but the immediate target is the potential visitor to the Holy Land for the Millennium celebration. This is estimated to be a maximum of four million in the year 2000'. Closer to home, the project is targeted at the approximately 100,000 persons in the Bethlehem area who would benefit directly from the investments. Closer still are those private companies and individuals directly involved in providing goods and services to visitors. They would benefit by increased incomes and investment opportunities. 4. Institutional and Implementation Arrangements: Implementation Period: The project would be implemented over the three (3) year period beginning in November 1998 and ending December 31, 2001. The closing date would be June 30, 2002. Time is of the essence; thus the project would be implemented in a carefully sequenced manner. The focus during the first year would be on those components (events, marketing, infrastructure, etc.) which are essential for the effective staging of the celebrations. When this is well in hand, say by end- 1999, the focus would begin to shift to the municipal and cultural heritage capacity building issues. Executing Agencies: The Bethlehem 2000 Project Authority6 would be responsible for all activities directly related to the celebrations and physical works. The Area Municipalities and MLG would be responsible for the Municipal Capacity Building component and each of the Area Municipalities and MLG would enter into an Implementation Agreement in this respect. The execution of these Agreements on terms and conditions satisfactory to IDA is a condition of Effectiveness. The Department of Antiquities of the Ministry of Tourism and Antiquities would be responsible for the Cultural Heritage Capacity Building component in consultation with the Ministry of Culture. f Deloint & Touche Draft Tourism Report April 1998, p5. See section No. 6 for a summary description of the Authority. Project Appraisal Documeent Page S West Bank and Gaza Bethlehem 2000 Project (B2000) Project Coordination: The main components of the project would be implemented by the Project Authority in consultation with Area Municipalities and the DOA. These components ("1", "2" & "4(b)") include high- priority infrastructure rehabilitation; event development, marketing, sponsorship, financing, strategic planning and overall construction and project management7. In preparing and managing the infrastructure components, the Authority would be assisted by leading international and local consultants supported under B2000, (Recruitment would be in accordance with Bank Guidelines for Consultants, 1997.). It would also be assisted, where necessary, by PECDAR, whose capabilities were established under earlier Bank projects. The municipal capacity building component ("3(a)") would be implemented by the Area Municipalities with the assistance of MLG and local and international consultants supported under the project. The cultural preservation capacity building component ("3(b)") would be implemented by the MOTA (DOA) and MOC, with the assistance of local and international consultants supported under the project and UNESCO. Component "4(a)" would be implemented by MLG. A detailed computerized critical path program developed by the Bethlehem 2000 Authority would provide the operational framework and the mechanism for planning, monitoring and control. (Draft of Project File.) This would be supplemented by close, on-ground Bank support, geared to the complexity and intensity of activities. Project Oversight and Policy Guidance: Guidance for the major components would be provided by the Bethlehem 2000 Ministerial Committee (see section No. 6 below). MLG would provide oversight and guidance for the municipal capacity building component, and MOTA (DOA) and MOC for the cultural heritage capacity building component. UNESCO will also assist with the latter. Accounting, Financial Reporting and Auditing Arrangements: While the B2000 Project Authority would keep its own accounts which would be audited annually, for reasons explained below (next para), MLG would be responsible for the overall consolidation of the project accounts. This responsibility would reside with the Capacity Building Unit (CBU) of MLG (established under MIDP) assisted by consultants supported under the project. The CBU would ensure that: professionally acceptable computerized accounting systems are established and maintained; that monthly, quarterly and annual financial statements are prepared reflecting all project activities and transactions; and that these accounts be audited annually in accordance with Bank Guidelines by a competent firm acceptable to the Bank. The quarterly reports would be forwarded to the Bank within one month of the end of each quarter. Audited financial statements would be submitted to the Bank within six (6) months of the close of each financial year. Monitoring and Evaluation Arrangements: Since the duration of the project may be greater than the life of the Project Authority, MLG would also be responsible for overall project monitoring and reporting. However, in this capacity it would rely heavily on inputs from the Project Authority. Thus CBU would undertake overall project monitoring, including progress, technical and financial, and performance indicator monitoring. It would also be responsible for overall project evaluation, with the assistance of the Project Authority, the Bethlehem Municipalities, MOTA (DOA) and MOC. Environmental monitoring and evaluation would be the responsibility of the Project Authority, assisted by the Palestinian Environmental Authority (PEnA). All of these activities would be supported under the project. Block 2: Project Rationale 5. CAS Objective(s) Supported by the Project Country Strategy: The World Bank Strategy is set out in the Board paper "A World Bank Group Strategy for the West Bank and Gaza and Request for a Replenishment of the Trust Fundfor Gaza and the West Bank" (R98 - 96) dated April 28, 1998. The strategy sets out the key themes around which the future work program will be focused. Three of these themes are particularly relevant here: * improving the environment for private sector development and supporting public/private partnerships; * improving public sector management and governance; and * institution building. The Authority is already being supported with USS I .OOm in funding provided from MIDP, and would be further supported under B2000. Project Appraisal Document Page 6 West Bank and Gaza Bethlehem 2000 Project (B2000) The Bethlehem 2000 project specifically addresses both of these themes by providing public infrastructure as a platform for private sector tourism development in Bethlehem; helping realize the considerable tourism potential of Palestine's religious, historic and cultural assets; and setting the stage for the emergence of self- governing institutions on the local and national levels in order to support sustainable economic development. 6. Main Sector Issues and PA Strategy: Context: The recent history of WBG has been one of occupation; under-investment; hopes of peace and political settlements; repeated political crises and attendant violence; increasing unemployment as a result of repeated border closures; severe restrictions on the movement of people and goods; lack of authority over resource allocation; increasing disillusionment regarding political possibilities; and economic decline brought about by political uncertainty. This is a context of very high uncertainty and risk These factors require the Bank to provide very close on-ground support, and to be flexible and responsive to changing circumstances. Issues: The main sector issues are: * Tourism Promotion and Development: Increasing net revenues by developing and effectively marketing the tourism product; establishing a sound policy framework; and establishing the political, economic, institutional and infrastructural conditions for sustained private investment; * Infrastructure Rehabilitation: Reducing the backlog; establishing a sound strategic framework for development; and developing a sustainable system of financing improvements and maintaining existing assets; * Urban and Local Governance: Rationalizing roles and responsibilities; developing an efficient legal and institutional framework; strengthening fnance, accounting and management capacity; * Cultural Preservation: Establishing a sound policy and institutional framework; and developing appropriate and efficient practices and sustainable fnancing mechanisms. PA Strategy: While the PA has yet to develop a fully coherent strategy in any of the above areas, the recently completed Palestinian Development Plan, 1998-2000 (PDP) presented to the December 1997 Consultative Group (CG) meeting in Paris is an important step in this direction. Rehabilitation and improvement of infrastructure are critical objectives of the PDP, together with increasing reliance on the private sector and improving governance. Furthermore, under MIDP, MLG is working to develop a strategy and a framework for the local government sector. Finally, under the Technical Assistance Trust Fund for WBG studies are planned which will assist the PA to develop policies and strategies to promote tourism, private sector investment and cultural heritage preservation' These studies have been long delayed but are expected to begin shortly. Outputs from these studies would be taken into consideration during project implementation and adjustments made to project design where necessary. a) The B2000 Project Authority: As noted above (Section "1"), the PA has established the Bethlehem 2000 Project Authority as a special purpose organization with a limited life to plan and manage the celebrations. The Authority is comprised of a Ministerial Committee headed by President Arafat and four Interministerial Sub- Committees, one each for finance and fund raisings, events and marketing, infrastructure and cultural heritage, and private sector and tourism. The activities of the Interministerial Sub-Committees and the day to day activities of the Authority are overseen by a Minister of State who also is the general project coordinator. The Project Authority itself is comprised of about twenty professionals in three main clusters: 1) finance, private sector and tourism; 2) events, marketing, public relations and religious affairs; 3) infrastructure, systems and services. The entire structure together with its technical consultants would be supported under the project8. b) The B2000 Fund: Supplementing and supporting the Project Authority and an important constituent part of the overall structure, is the B2000 Fund. The Fund would act as a vehicle for resource mobilization and allocation. It would have a highly respected Board of Trustees who would provide oversight and guidance on the use and investment of resources, and would be managed professionally by a competent and highly respected international firm. Additional consulting support is being septely provided to the Project Authority by Arithur Andersen consultants. Project Appraisal Documnent Page 7 West Bank and Gaza Bethlehem 2000 Project (B2000) c) The B2000 Business Plan: The Plan and its supporting documentation are the basic guiding documents for the Authority and the celebrations. (See Annex 2(a) for the Executive Summary of the Business Plan.) This plan was originally prepared for a joint B2000/EU/UNDP/UNESCO/World Bank Fund Raising Conference held in Brussels on May 11-12, 1998. It lays out the basic aims and objectives of the celebrations. While the budget has been significantly modified and elements of the organization framework slightly altered the Plan as a whole remains valid. 7. Sector Issues to be Addressed by the Project and Strategic Choices: As noted earlier, the proposed project seeks to capitalize on the unique opportunity and significance of Bethlehem 2000 to accelerate progress towards the achievement of a number of important objectives. These include tourism promotion, municipal reform and capacity building, and cultural heritage preservation (see Section 1). B2000 does not attempt to create an extensive framework for tourism development, nor does it attempt to resolve the more entrenched issues of private sector development. These are strategic choices. The political, legal, institutional, financial and technical issues involved in formulating comprehensive tourism and private sector development strategies and unblocking current systemic rigidities are too complex to be tackled within the current project framework. The project does however provide a considerable push in these two vital areas, and will help establish the basis for their sustainable development. Private Sector Components and the IFC: B2000 does not aim to provide direct financial or technical support to the private sector. This task would be undertaken by IFC in close consultation with the Bank, the Bethlehem 2000 Project Authority and Area Municipalities. Two hotels are currently being considered for financing in Bethlehem by the IFC, and other investments are under consideration. These include a car/coach park, which would be ajoint public-private partnership, and a cultural/entertainment center. 8. Project Alternatives Considered and Reasons for Rejection: In mid-1997 the Bank recognized that the celebrations, while having a religious focus, were of unique worldwide historical and cultural significance and also had the potential to advance the long-termn sustainable development of the tourism sector. It was further recognized that significant cultural preservation issues were at stake. However, the political, economic and technical risks were significant and Bank resources were limited. In developing a strategy, five alternatives were considered. These ranged from a narrow focus on infrastructure rehabilitation (the minimalist case), to total program support (long term tourism/private sector development, the maximalist case). The former was clearly insufficient given the significance of the occasion and the problems then being encountered by the Bethlehem 2000 Steering Committee (the Committee initially established by the PA to prepare and coordinate the celebrations)9. The maximalist option was clearly beyond our capacity to prepare and manage effectively given time, budget and other constraints, and would in any case have overburdened the project. The on-going MIDP provided the obvious point of departure, but it was quickly realized that the PA by itself was unable to adequately prepare the celebrations and realize the potential thereof. Some donors showed great interest in supporting individual infrastructure and cultural components, but none showed much interest in helping to support the organizational, technical and financial prerequisites for successfully preparing the celebrations. Also, few showed any interest in supporting the municipalities or helping to realize the long-term potential of the celebrations. With the real possibility that the entire effort could be stillborn or reduced to very limited infrastructure improvements, Dr. Ashrawi, then the Minister of Higher Education and Chairman of the Bethlehem 2000 Steering Committee, requested The World Bank to assist When the options were reviewed it was decided that the Bank should go beyond simply extending MIDP and help the PA to establish the organizational, financial and programmatic framework for the celebrations. This included helping to provide critical world-class expertise through technical assistance The longer-term and highly complex tourism and private sector development issues were left for the future and to others. The cultural preservation issues were considered integral to Bethlehem, however; hence an important but modest start was proposed in this area. 9 lhe Steering Conmnittee is now defuncL It has been succeeded by The Bethlehem 2000 Project Authority. Project Appraisal Document Page 8 West Bank and Gaza Bethlehem 2000 Project (B2000) 9. Major Related Projects Financed by the Bank and/or Other Development Agencies (completed, ongoing and planned): Sector Issue Project Latest Supervision (Form 590) Ratings Implementation Development Progress Objective Bank-financed * Reducing basic infrastructure and Municipal Infrastructure S S services backlog; generating Development Project (MIDP), employment in response to border June 1996 (US$40 m) closures; Local Government sector Reform and Capacity Building * Water and Sanitation: System Reform Water and Sanitation Services S S and Capacity Building (Gaza). Project, June 1996 (US$25m) * Reducing basic rural and community Community Development Project S S infrastructure and services backlog; (CDP), February 1997 (US$1Om) generating employment in response to border closures. * Supporting the banking system in WBG Microenterprise Project S S lending to small businesses (US$23m) * Water and Sanitation: System Reform Proposed Southern Area Water and Capacity Building. and Sanitation Improvement Project (SAWSIP) (US$52m) * Electricity Sector Reform and Proposed Electricity Distribution Capacity Building. and Management Project (EDMP) (US$76m) MIGA e Insuring against political risk Multilateral Investment Guarantee S S Fund (US$1 Om) IFC * Provision of hotels; parking and Proposed five star hotel entertainment (US$43m), three star hotel (USS7m), and coach/car park (US$1 Im) Other Development Agencies * EU Municipal Support Program, January 1996 (ECU25m) Local Rural Development Fund, * UNDP January 1997 (US$27m) S = Satisfactory 10. Lessons Learned and Reflected in the Project Design: During the course of implementing projects in WBG, including the first five in the Assistance Program, the following key lessons have been learned: Project Appraisal Document Page 9 West Bank and Gaza Bethlehem 2000 Project (B2000) * there must be strong ownership by and good dialogue with the PA and its constituent organizations, if necessary implementation decisions are to be taken on a timely basis; * adequate "slack" time must be provided if the vicissitudes of border closures (political risks) are to be weathered; * the provision of operating support to implementing units is critical to establishing managerial and technical capacity. * close on-the-ground supervision and willingness to be flexible in adapting the project to local realities is essential; These lessons have all been built into the project design. In particular, good working relationships have been developed with the Bethlehem 2000 Project Authority and the Area Municipalities. B2000 faces two unique risks: (i) time is of the essence; and (ii) visitor access to Bethlehem can be shut off entirely at a moment's notice by unilateral border closures. The first factor would be addressed by accelerated preparation and the employment of construction management consultants. The second factor would be addressed primarily by focusing strongly on the "media" dimension of the celebrations. Thus even in the event ofprolonged closure the international media show would go on. The risks would also be addressed through dialogue with critical Israeli stakeholders namely, the hotel and tour operators who stand to benefit. 11. Indications of Borrower and Recipient Commitment and Ownership: The key indicator is that President Arafat, himself, heads the Bethlehem 2000 Project Authority. Also the PA has announced publicly that the celebrations are a high priority national effort. Finally, key steps have been taken by the PA in establishing the institutional and operating framework for the celebrations (see Section No. 6 above and Annex 2(a)) and providing budget support. 12. Value Added of Bank Support: Without Bank support the celebrations would be unlikely to realize their potential. By working in very close consultation with Palestinian counterparts the original conceptual, institutional, managerial, financial and operational framework of B2000 celebrations has been transformed. Bank involvement has helped also to strengthen Palestinian managerial capacity. Finally, it has helped to generate confidence among donors and the private sector whose support is essential to the success of the celebrations. It should be noted here that UNESCO and the Italian government have also contributed significantly in undertaking preliminary work on the Bethlehem 2000 project. Their Emergency Action Plan provides the basis for infrastructure programming. UNDP and a number of other donors have also provided important operating support to B2000. Nevertheless, Bank support has been pivotal. Block 3: Summary Project Assessments (Detailed assessments are in the Project File. See Annex 8) 13. Economic Assessment [x] Cost-Benefit Analysis: [] Cost Effectiveness [] Other (see Annex 4): NPV=US$ million; Analysis: ERR= >14% The main objectives of the B2000 project are: (i) to promote tourism development which will generate employment and foreign exchange eamings; (ii) to strengthen the infrastructural, financial and managerial base of the included municipalities; and (iii) to preserve cultural heritage sites. There is a strong rationale for proceeding with the B2000 project as a public intervention; the project counterfactual of a private sector project to promote the B2000 project on commercial terms is not viable given the need for infrastructure and cultural heritage investments and institutional strengthening to sustain the benefits from the project. The B2000 project is also an appropriate form of intervention given that alternative interventions such as subsidies to tourism development, private sector investment in infrastructure and regulatory based preservation of cultural heritage are not seen as viable under the present economic and financial circumstances. The main economic benefits from the B2000 project come from the development of the tourism sector in Bethlehem that will generate employment and enhance foreign exchange earnings. The components of the project, which will substantially influence the number of visitors and their spending pattern, are the events and their marketing. However, infrastructure rehabilitation and cultural heritage preservation are essential pre- requisites for visitors to come. Three scenarios have been outlined regarding visitor numbers and spending up to Project Appraisal Document Page 10 West Bank and Gaza Bethlehem 2000 Project (92000) the year 2010. Scenario "I' is the optimistic case assuming a successfully implemented events program and new attractions with long term sustainability. Scenario "2" assumes a more restricted marketing effort. Scenario 113N is the situation without the B2000 project and with continued political deadlock. This is the base case against which the two first scenarios are compared. For the economic analysis the four major components of the B2000 project have been analyzed separately: (i) the celebrations support to the B2000 Project Authority; (ii) cultural heritage; (iii) road projects; and (iv) water projects. B2000 Project Authority Support: This component provides support for the Bethlehem 2000 Project Authority for developing and staging the events program. Without a successful events program the increase in visitors and spending is unlikely to materialize. The economic rate of return, though largely indicative because of date limitations, clearly illustrates the size of potential benefits. Even assuming a quite moderate visitor response the economic rate of return is above 14 percent, our threshold rate. (It should be noted that this rate is above the opportunity cost of capital (10-1 1%) but is thought appropriate given the risks and data uncertainties.) If the more optimistic scenario regarding visitor numbers can be realized the economic rate of return doubles. Sensitivity analysis shows that the component is very sensitive to assumptions regarding visitor spending (and number of visitors) whereas it is less so to cost overruns. Cultural Heritage: This component focuses on cultural heritage rehabilitation in the old cores of Beit Jala and Beit Sahor. This will make these old city cores more attractive for visitors. The quantifiable economic benefits primarily come from an increase in the number of visitors (and related spending) to Beit Jala and Beit Sahor. The non-quantifiable benefits are also large. The most important of these are: (i) preservation of Palestinian heritage to the benefit of present and future Palestinian generations; (ii) a deepened and broadened tourist product; and (iii) a demonstration effect that is likely to pull in more resources for cultural heritage preservation. Because the non-quantifiable benefits are likely to outweigh the quantifiable benefits no attempt has been made to estimate the impact in terms of cost-benefit analysis. Roads: A total of fifteen (15) proposed road projects has been analyzed by a combination of cost benefit and cost effectiveness analysis. Out of these, four (4) projects have been selected for inclusion in the B2000 project. The road rehabilitation projects all show high economic benefits with economic rates of return in the range of 25-33%. The projects are quite resilient to changes in cost and traffic assumptions. Water: A total of eleven (11) proposed water projects has been analyzed again by cost benefit and cost effectiveness analysis. Of these, four (4) projects have been selected for the B2000 project. Generally, the larger projects have the lowest economic rates of return. Still, all four projects have rates of return above the threshold rate of 14%. The water projects are quite sensitive to cost assumptions. Summary: The overall average economic rate of return is summarized in "Annex 4." As indicated there, the rate of return in the base case is quite high at 22.8%. Even when adjusted to a worst case outcome for all projects the average economic rate of return, at 17.1%, is above the threshold rate of return of 14%. Level of risk:. All Bank operations in the West Bank and Gaza are exposed to a high level of risk (see Section No. 6). In addition, there are a number of project specific risks. The main risk is that a further deterioration of the peace process will adversely impact the flow of visitors to Bethlehem as well as be a deterrent to attempts to increase the number of overnight stays. Secondly, an insufficient product development and marketing effort by the Bethlehem 2000 Project Authority, the MOTA and the private sector could lead to a lower number of visitors and a reduced revenue stream for the Project Authority. Thirdly, to increase the economic benefits for the Palestinian economy, it is essential that the private tourism industry develop further. This requires a positive private sector response in the form of new investments in hotels (accommodation), restaurants, shops, tour operators and other tourism facilities. A better commercial tourist product, in addition to a well preserved cultural heritage, is required to attract tourists to stay longer in Bethlehem and thereby increase the value added generated by the tourism industry for the benefit of the Palestinian economy. However, a continued relatively low level of productive private sector investments could be an impediment to realizing this goal. Fiscal impact (for alprojects): The net fiscal impact of the project cannot be precisely calculated at this time. It will depend partly on the number of visitors, their spending, and the extent to which local economy and governmental institutions are able to capture a share of the anticipated incremental revenue. On the whole the Project Appraisal Document Page 11 West Bank and Gaza Bethlehem 2000 Project (B2000) impact can be expected to be quite positive, particularly if the private sector responds to the investment opportunities provided and the municipal financial reform and capacity building components are effectively implemented. The latter would ensure that the Area Municipalities pay greater attention to revenue mobilization, cost recovery, and asset utilization and maintenance. 14. Financial Assessment (see Annex 5) NPV= N.A.; FRR= N.A. The total estimated cost of the entire Bethlehem 2000 Celebrations Program is about US$212m net of financing charges. The proposed credit of US$25.Om would cover 11% of total program costs. The balance would be covered from: other donor contributions'°; the PA (including a small contribution by the Area Municipalities); licenses, royalties and rights; ticket sales and sponsorships; and fund raising. The project cost (US$25.0m) is net of VAT and other taxes. The foreign exchange component is estimated at about 46% of the total project cost. Physical contingencies have been allowed for at 10% of base costs and price contingencies at 3% per annum in accordance with World Bank/IDA guidelines over the three-year implementation period beginning November 1998. Approximately 60% (US$15.0m) of the proposed IDA credit would be used to finance the rehabilitation and improvement of high-priority infrastructure and cultural heritage assets; 24% (US$6.0m) would be used to support the preparations (technical assistance and consultancies, planning, management, operating costs, etc.) for the celebrations; 14% (US$3.5m) would be used to support municipal and cultural heritage preservation capacity building; and 2% (US$0.5m) would be used of overall project monitoring and reporting. Given the urgency of the project and the need for accelerated preparation and implementation, retroactive cost financing has been agreed of up to 20% (US$5.0m) of total project costs, for works and studies undertaken prior to project effectiveness. The detailed project cost table is presented in Annex 3. Preliminary estimates on the overall B2000 Celebrations Program cost and financing are presented in Annex 5. These estimates were discussed at Negotiations and will continue to befiurther refined as the project develops. 15. Technical Assessment: The project is technically sound. Preliminary technical assessments were made of some seventy (70) Infrastructure sub-projects. These were screened for: priority for the celebration and for the community; contribution to reducing the backlog on the major infrastructure networks; contribution to resolving major Infrastructure network bottlenecks; and readiness for implementation. A similarly intensive review was undertaken of the cultural heritage works sub-component, in consultation with B2000, DOA and UNESCO. Based on this screening about thirty (30) of the highest priority sub-projects were subjected to detailed technical and economic analysis. From this set the fnal sub-project list was selected, representing the highest priority and most feasible sub-projects, given the choices of other donors. Final sub-project selection was closely coordinated with the Project Authority, the Area Municipalities and the DOA. Technical reviews were undertaken with the assistance of competent local and international consultants. The capacity building components have also been thoroughly reviewed by competent local and foreign consultants. UNESCO, in particular, has assisted in defining and reviewing the cultural heritage preservation component. The municipal support component is an extension of work already in progress under MIDP and was closely coordinated with MLG. In the case of the B2000 Project Authority support component, assistance has been obtained from competent international consultants, including one of the main consultants to the London Millennium celebrations project. Finally the project draws on the successful experience of implementing five projects on the ground in WBG. 16. Institutional Assessment: a) Executing Agencies: The key institutions involved in the project are: The Bethlehem 2000 Project Authority; The Ministry of Local Government and the Area Municipalities; and the Department of Antiquities of the Ministry of Tourism. The B2000 Project Authority: This organization has already been described in Section 6 (see also Annex 2"a"). It is new and relatively untested, but it is very ably led and strongly supported by the PA. It would be further supported under the project through the recruitment (according to Bank Guidelines) of competent local and international consultants in the areas of finance, marketing, tourism, sponsorship, events and construction management. Also it would be able to draw on systems already established in other local institutions under existing Bank projects. Finally it will be assisted through very close on-ground support from the staff of the resident mission. The Authority is in the process of establishing systems and staffing up. It is expected that by '° A number of Donors including Italy, Norway and EIB have shown interest in cofinancing jointly or in parallel. So far no agreements have been reached. Proim AppraMaI Document Page 12 WPadt Bank and Gm Betehem 2000 Project (M2M00) October 1998 all the key positions will be filled with competent professionals. These positions include the directors in charge of fnance and marketing. The recruitment of these professionals and the establishment of project control, accounting and reporting systems satisfactory to IDA was agreed at Negotiations and are Conditions of Effectiveness. MLG and the Area Municipalities: These institutions are relatively weak. However, MLG is currently receiving major capacity building support under MIDP and the projects of a number of donors including USAID, UNDP and the Netherlands. This assistance should enable MLG to effectively exercise its responsibilities. The CBU in MLG has been singled out for special support under the project since they will play an important role in assisting the Area Municipalities and in overall project monitoring and reporting. In particular, CBU's accounting staff would be strengthened as well as its accounting and computer systems. The employment of a qualified project accountant and the establishment of computerized accounting, project, planning, control and monitoring systems acceptable to IDA was agreed by Negotiations, and are Conditions of Effectiveness. With respect to the Area Municipalities, an extensive program of support is planned (see detailed description in Annex 2(c)). This support would be delivered with the assistance of MLG, and under the implementation agreements (see para "4" above). MOTA (DOA): This institution, acting in consultation with MOC, would be responsible for initiating implementation of the cultural heritage preservation component. It is weak, but it would be the beneficiary of major capacity building support efforts under the project. Assisting in this important task would be UNESCO and consultants supported under the project. A fundamental medium term objective is to transform DOA into an effective institution for safeguarding Palestine's cultural assets and harnessing these assets for national development as well as for the enjoyment and education of both Palestinians and visitors. A letter of PA Cultural Heritage Preservation Policy was presented to the Bank at Negotiations (see Annex 5). b) Project Management: As noted repeatedly above (Sections 1, 4 and 6), the major responsibility for project management would lie with the B2000 Project Authority. They would be responsible for implementing components which together account for 84% of total project costs. Infrastructure and cultural heritage preservation and rehabilitation works account for about 70% (by value) of this responsibility. To enable the Project Authority to effectively undertake its tasks it would be assisted by construction management and a number of other internationally recruited consultants supported under the project. (See also discussion above and in Sections 4 & 6.) In sum, the local institutions are weak but would be intensively assisted by local and international consultants hired under the project, through support from UNESCO, and through very intensive resident mission support. The mission support task will not be easy, but given our experience in WBG over the last four years it should be doable. Finally, the PA is very highly committed to the success of the project and is providing very able leadership. This will make a considerable difference by ensuring that problems, when they arise, are addressed quickly and effectively. 17. Social Assessment: A full, formal social assessment is not required at this time as the project investment components are limited to public infrastructure, facilities and spaces, and unoccupied buildings. Nevertheless consultation with, and participation by several community groups has been a feature of the development of this project. In addition, studies on Palestinian community attitudes towards cultural heritage influenced the design of the policy and institutional development components. These have deliberately built in significant community influence on future activities, especially with regard to cultural heritage. This is in recognition that the sustainability of the cultural heritage program, and hence the tourism strategy, is dependent on that program being responsive to community interests. 18 Environmental Assessment: Environmental Category 1] A [x] B [I C The proposed Project would support enviromnental improvements in the Bethlehem region through: (a) rehabilitation of roads, reducing current serious congestion problems and associated air pollution and noise impacts; (b) provision of a good quality, reliable domestic water supply for commercial and household use; and (c) preservation of cultural heritage through rehabilitation and conservation measures. Since most of the investment activities to be supported by the proposed Project deal with rehabilitation of existing infrastructure, it has been placed in environmental screening "category B" in accordance with World Bank Operational Policy 4.01 (January 1998). As per Bank requirements, a detailed Environmental Management Plan (EMP) has been Project Appraisal Document Page 13 West Bank and Gaza Bethlehem 2000 Project (B2000) prepared and is included in the Project File. The Environmental Data Sheet is presented in Annex 6. The EMP would support: (a) site-specific environmental screening for sub-projects and Project supported activities for rehabilitation of roads, rehabilitation of water supply and preservation of cultural heritage sites; (b) establishment of an Environmental Unit within the construction management section of the B2000 Project Authority; (c) training of staff of B2000 and other sector ministries involved in Project implementation; and (d) monitoring and evaluation of mitigation measures identified in the site-specific reviews. All activities related to the EMP would be closely coordinated with the Palestinian Environmental Authority (PEnA) and other relevant sector ministries. Funding for the plan has been incorporated in the overall project budget and a tentative implementation schedule has also been included. The Project design process included extensive discussions with mayors and other representatives of the Area Municipalities. Consultations were also held with the main religious organizations such as: Middle East Council of Churches (MEC); the major community groups; Bethlehem University and local and international nongovernmental organizations working in the area. All works have been carefully selected; hence there will be no displacement of households. 19. Participatory Approach: Party Identification/ Implementation Operation Preparation * Municipalities Collaboration Execute/Participate Execute * Local Government n I it * DOA * MOC t i Collaboration * Other Beneficiaries/Community groups Consultation Notify/Collab. Notify/Collab. * Intermediary NGOs o Consult/Collab. Collaboration * Academic Institutions Collaboration Collaboration * UNESCO i * Government of Israel ot 20. Sustainability: The Palestinian Authority has indicated that B2000 is one of their highest priority projects, and MLG and the Bethlehem Municipalities recognize the potential benefits involved. The MOTA (DOA) and MOC also recognize that this is an excellent opportunity to effect major and long awaited institutional and policy change. Further, the Israeli travel trade recognizes the opportunity for increased earnings since the largest share by far of the tourist "spend" accrues to them. Thus all stakeholders have strong incentives to implement the project successfully and to insure the sustainability of project benefits. As important, the municipal, cultural development and related tourism components are part of on-going strategies and programs in these sectors. The project by its design is intended to reinforce these efforts by raising the profile of Palestine, expanding its market and creating the preconditions for accelerated and sustained private investment. 21. Critical Risks (see fourth column of Annex 1): Risk Risk Risk Minimization Measure Rating Project outputs to development objectives 1. Delays in fully operationalizing S Provide TA, consulting and operational support. B2000 Project Authority 2. Lack of sound management and M Provide TA and operational support, and conditionalities internal cohesion in the B2000 associated with the hiring of key staff and establishment of Project Authority critical systems. 3. Significant delay in resolving H Encourage dialogue with Israeli counterparts and stakeholders. security and logistical issues 4. Delays due to border closures H Allow sufficient "slack" in construction program and stockpile could significantly affect timely key construction materials. completion of sub-projects Project Appraisal Document Page 14 West Bank and Gaza Bethlehem 2000 Project (B2000) Project components to outputs 5. Weak private sector confidence S Implementation of marketing programs as well as financial leading to slow investment support by IFC. response 6. Failure by Municipalities and M Provide TA, close supervision and include dated covenants. MLG to devote sufficient time and resources to reform measures 7. Insufficient LG financial and S Provide TA, a framework for reform, training and operational managerial capacity support. 8. Failure by MOTA (DOA) and S Promote inter-agency dialogue; provide TA, and develop MOC to agree on adequate appropriate inter-agency coordination mechanism. policy and institutional framework for cultural preservation Overall project risk rating Overall Risk Rating S Although overall risk rating is "S," close Bank supervision and collaboration with key stakeholders should mitigate the risks. WBG is a high-risk country. Despite this, the Bank's program is currently being satisfactorily implemented. The high potential payoff makes this project a very worthwhile one. M = Moderate, S = Significant, H = High 22. Possible Controversial Aspects: There are no issues of significance. Block 4: Main Loan Conditions At Negotiations agreements were reached with the B2000 Project Authority on the overall program fnancing strategy, action plan, the appointment of the directors of finance and of marketing; and the establishment of accounting, planning and project control systems. Agreements were reached with MLG on the appointment of a qualified project accountant and the establishment of accounting, planning and project control systems. Understanding has also been reached with MOTA and MOC on a letter of Cultural Heritage Preservation policy (included as Annex 5). There are no conditions of Board. 23. Effectiveness Conditions The Conditions of Effectiveness are as follows: 1) The B2000,Project Authority: a) Appointment of the directors of finance and of marketing; b) Installation of computerized accounting systems; c) Installation of computerized project planning, control and monitoring systems; 2) MLG: a) Appointment of a qualified project accountant; b) Installation of computerized accounting systems; c) Installation of computerized project planning, control and monitoring systems; d) Execution of Implementation Agreements with each of the Area Municipalities. These would all need to be satisfactory to the Bank. Ptoie Apptaa Docwnwt Page 15 West Bank and Gaza Def1ehem 2000 Pjoect (82000) 24. Other [classify according to convenient types used in the Legal Agreements database.I Block 5: Compliance with Bank Policies [xj This project complies with all applicable Bank policies. [ ] The following exceptions to Bank policies are recommended for approval: The project complies with all other applicable Bank policies. ITaskMuma Secror Director Jean-Claude VMliard Joseh Saba Project Appraisal Document Page 16 West Bank and Gaza Bethlehem 2000 Project (B2000) Annex 1 Project Design Summary Narrative Summary Key Performance Indicators" Monitoring and Cridcal Assumptons and Supervision Risks Sector-related CAS Goal: * Realizing the tourism potential * Increasing visitors with * Palestinian Central * Bank's program of support to of Palestine's religious, historic increasing per capita expenditure Bureau of Statistics (PCBS) the Peace Process. Also, and cultural assets. in WBG. surveys and reports. On- favorable political and econ. ground Bank supervision environment. and quarterly reports. * Setting the stage for the . Governmental decentralization, emergence of self-governing and capacity building at local institutions on a sustainable basis. level. * Developing an environment * Increasing private sector n conducive to private sector investment in the provision of activity. tourism, goods and services. Project Development (Objective to Goal) Objectives * Accelerate the development of * Increased visitor arrival and * PCBS Statistics. On- * Recurrent political crises the tourism industry in lengthening of stay. ground Bank supervision violence, and institutional Bethlehem. * Number of visits to other and quarterly reports. weakness do not continue to important sites besides Manger undermine efforts; critical Square and Shepherds' Fields. security and logistics problems solved. * Strengthen the economic and * Increased economic activity as , Area LGs take their infrastructural base of the measured by increased total and managerial, financial and Bethlehem area LGs and improve per capita expenditure. O&M responsibilities more their financial and managerial * Improved infrastructure services seriously. capacity. coverage and quality. * Increased LG revenue mobilization and cost recovery. * Provide opportunities for * Increased private sector .. * Climate of confidence private sector initiatives and investment in hotel created and sustained. investment. accommodation, tour operations and tourism facilities. Project Outputs: * Promotion of major world * TV programs carried live and * On-ground Bank * B2000 Project Authority is class global religious/ cultural TV prerecorded from Bethlehem by supervision, quarterly able to quickly and effectively events by Bethlehem on key major international networks on/or reports. establish itself and mobilize celebratory days during the about Christmas Days 1999 and world class Events, Media period December 1999-Easter 2000. Marketing, and Sponsorship 2001. consultants. * Beginning of dialogue towards * Publication of policy and * On-ground Bank * Policy and institutional the establishment of national consolidation of institutional supervision, quarterly framework is put in place by cultural conservation policy and framework by end of yr. 2. reports and surveys. PA, and funding mechanism institutional framework. idendfied and activated. . Rehabilitation, renovation and * Number of historic buildings adaptive reuse of historical identified, protected, rehabilitated building and sites. and reused annually. " Baseline and targeted values should be shown, with the lanter divided into values expected at mid-term, end of project and full impact. Project Appraisal Document Page 17 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Narrative Summary Key Performance Indicators Monitoring and Supervision Critical Assumptions and _________ ________ ________R isks * Improved basic * Number of kilometers of road, * Special annual traffic * Continued Bank and donor infrastructure and services. water and sewerage networks surveys. On-ground Bank support in financing constructed annually. supervision, quarterly reports. infrastructure improvements. * Number of additional households .. Successful efforts to mobilize benefiting annually from improved investment funding for water and sanitation services. Bethlehem. Complementary proposed Bank projects in the * Reduction in congestion on access . Electricity and Water sectors roads to main tourist destinations are implemented. (Manger Sq., Shepherd's Field, and others) measured by travel times from Jerusalem checkpoint. * Strengthened area LG * Annual absolute real absolute and * On-ground Bank * Capacity building program finance and management percent increase in municipal supervision, quarterly reports. put in place and area LGs capacity and increased revenue revenues, 1999-2001. take advantage of mobilization. * Strengthened technical and opportunities by committing managerial capacity to implement staff resources and time and above (number of key officials work with MLG to trained) by end 2000. implement. MLG provide adequate support. * Supportive Infrastructure for . Number of additional hotel rooms * Surveys by PCBS. On- * Private sector perceives private investment. built by private investors 2000-2010. ground Bank supervision, that visitor interest (demand) quarterly reports and surveys. is increasing on a sustainable basis; political and economic stability. Project Components: (see (Components to Outputs) annex 2 for detailed description) * Support to B2000 Project * Delivery of technical assistance * On-ground Bank * B2000 Authority quickly Authority planning and and consulting services for supervision, quarterly reports recruits key finance and managing celebrations. establishing institutional from B2000 Authority. marketing personnel. PA programmatic, managerial and provides additional support financial framework for celebrations to development and operating by December 1999. expenses. * Rehabilitation/Improvement Execution of works Disbursements: * On-ground Bank * Eng. Dept. of B2000 of high priority: 1999 - $7.00m; 2000 - $6.60m; supervision, quarterly reports Project Authority adequately Infrastructure; and Cultural 2001 - $1.40m. from B2000 Authority. staffed and Construction Assets (buildings). Physical. Water, # of additional Management performs persons served end 1999, 2000. effectively. Roads: Km built end 1999,2000. * Capacity Building support to: * Bethlehem, Area * Installation of accrual based * On-ground Bank * MLG reform initiatives Municipalities. computerized accounting systems by supervision, quarterly reports continue; Municipalities end 2000. from MLG. devote adequate staff, time * Preparation of 3 yr. Municipal and other resources. development plans by end 2000. * Development and implementation of infrastructure O&M performance standards and programs by end 2000. * Min. of Tourism and * Cultural Heritage policy and PA willing to resolve Antiquities and Dept. institutional framework developed - institutional conflicts and of Antiquities (MOTA/ end 2000. promote Cultural Heritage as DOA) and Ministry of * New Cultural Heritage part of national development Culture (MOC). institutional framework established - strategy. I end 2001. Project Appraisal Document Page 18 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) ANNEX 2 Detailed Project Description Components Project Component 1: Celebrations Support (US$6.0m, 24% of totalproject cost): This component provides broad support to the Bethlehem 2000 Project Authority to prepare for and manage the celebrations. The following items would be supported: A. Development and Promotion Expenses (US$3.0m): 1) technical assistance and consultants' services to help develop and stage international and local events (including cultural, social, religious and major media events) for the celebrations; 2) technical assistance and consultants' services to develop and implement effective marketing and public relations programs in support of the celebrations and the tourism promotion; 3) technical assistance and consultants' services to protect and maximize the benefits from property and intellectual rights arising out of the celebrations (including feasibility studies and the preparation, negotiation and execution of contracts); 4) ancillary expenses associated with the above including publications, travel, subsistence, equipment, materials and supplies. B. Construction Management Expenses (US$1.6m): 1) technical assistance and consultants' services to help plan coordinate, monitor and manage the construction activities of the various agencies and contractors engaged in preparing and implementing the infrastructure and other works required for or associated with the celebrations, including ensuring compliance with environmental standards and regulations; and 2) ancillary expenses associated with the above including publications, travel, subsistence, equipment, materials and supplies. C. Capital and Operating Expenses (USS1.4m): 1) purchase or rental of essential office, furniture, equipment, computer networks and vehicles for the Project Authority to enable it to adequately prepare for and manage the celebrations; 2) salaries and benefits for staff of the B2000 Project Authority engaged in preparing and managing the celebrations; 3) essential supplies, services and utilities (including stationery, consumables, printing, publications, translation, international travel, communications, hospitality, transportation, accounting, and rent) to enable the Project Authority to adequately prepare for and manage the celebrations. (See Annex 2(a) for Summary of the Bethlehem 2000 Project Authority, Business Plan. Though the cost and revenue estimates have been revised downwards and the organigram slightly modified, on the whole this document is still valid andprovides the basicframeworkfor the celebrations and the B2000 Project Authority.) Project Component 2: Infrastructure and Cultural Heritage Rehabilitation Works (US$15.Om, 60% of total project cost): This component supports physical rehabilitation works and includes two sub-components. These are described below. A. Infrastructure Rehabilitation Works ($12.52m): This sub-component provides support to the Bethlehem 2000 Project Authority and Area Municipalities for the rehabilitation and improvement of high-priority infrastructure and services. It includes two sub-components: 1) Roads: This sub-component includes the following: The Jerusalem/Hebron and Beit Sahor main roads; Bethlehem roads improvement (maintenance, traffic management and signage) works arising out of on-going traffic studies, Bus parking lot in Beit Sahor. 2) Water and Sanitation: This sub-component includes the following: Bethlehem reservoir; and pipelines to the Bethlehem reservoir, from Duhaisheh to Ayda junction, and from junction to Ayda Camp. While the above works have been programmed and are under advanced preparation, in order to be of maximum assistance to the Bethlehem 2000 Project Authority it may become necessary to substitute some of the above specified investments with others of equal merit. This possibility arises particularly with respect to need to adjust to the priorities of cofmanciers. Another possibility is that Israeli Authorities may decide to rehabilitate the Northern (Jerusalem) section of the Jerusalem/Hebron main road themselves, freeing IDA resources for other infrastructure items. Thus some flexibility in the final choice of sub-projects is allowed, subject to IDA's prior approval, but in any case IDA resources would not be used on any kinds inside Jerusalem boundaries. Project Appraisal Document Page 19 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) B. Supportfor Cultural Heritage Rehabilitation Works ($2.48m): This sub-component provides support to the Bethlehem 2000 Project Authority, Area Municipalities & DOA for the rehabilitation of the historic cores of Beit Sahor and Beit Jala, as well as the rehabilitation and adaptive reuse on a pilot basis of one historic building in Beit Sahor (Dar Qumsieh). The sub-component also makes a provision for safeguarding "chance finds" during construction. The rehabilitation of the historic cores will include: improvement of services (water, sanitation, lighting and electricity); the repaving of roads, paths sidewalks using traditional materials (stone) and the rehabilitation/ repair of adjacent facades (walls, shutters, doors, windows, awnings, etc.). Efforts will be made to encourage property owners benefiting directly from the improvements to improve their own property or contribute to the cost of doing so (15% - 20% of the total cost of the sub-component). The Dar Qumsieh Pilot: In the case of Dar Qumsieh, the project would support the cost of essential internal repairs. It is planned that this building, which is currently dilapidated and unoccupied, be leased from the existing private owner by the Department of Antiquities and the Ministry of Culture. It would then be rehabilitated and sublet to private investors who would establish and operate an arts/crafts center cum museum/coffee shop/restaurant, etc., on a commercial basis. The main lease would be for a term of 10-15 years (renewable) after which the property would revert to the owner. The details of the lease are still being developed and will be subject to IDA's prior approval. The project would (separately) provide technical assistance to the Bethlehem 2000 Project Authority for feasibility studies and for preparing and executing the above transactions (see component "I" above). The basic strategy here is to mobilize community participation and private investment in revitalizing the old historic cores and realizing their touristic potential. IDA resources would be directed to this end and to developing a sustainable and replicable model. Archeological "chance find" protection (US$0.10m): This sub-component, included in "B" above, supports the protection of finds arising out of works under "A" and "B" above. (See Annex 2(b)forfurther details on this components "A " and "B" andfor cofinancing potentials andpriorities). Project Component 3: Capacity Building Support (US$3.50m, 14% of totalproject cost): This component provides capacity building support to Area Municipalities and Cultural Heritage Authorities. The sub-components are described below. A. Support to Bethlehem Area Municipalities ($2.3m): This sub-component provides support to the four Bethlehem Area Municipalities for strengthening their capacity to plan, finance, manage and maintain municipal infrastructure and services. It includes technical assistance, consultants' services, equipment materials and supplies to: 1) prepare the emergency services (health, police, ambulance, traffic management, etc.) for the celebrations; 2) reform accounting systeims (including necessary software, hardware and training support); 3) develop and begin implementing effective operations and maintenance program for key infrastructural services (roads, water, sewage and drainage); 4) prepare an appropriate and financeable three-year Development Program, having regard to municipal needs, resources and potentials, and bearing in mind the need to rationalize services delivery and improve municipal resource allocation; 5) develop and begin implementing a plan for regional sharing of key municipal services (for example, solid waste collection, water, sanitation and road maintenance) on an efficient and cost-effective basis; 6) assess the potential for and feasibility of increasing the revenue yield to the municipalities from the tourism industry; and 7) assess the business development potential of, and prepare a business development strategy for enhancing the competitiveness of the area in the national, regional and global market place. (See Annex 2(c) for outline TORs). B. Support Cultural Heritage Preservation (USS1.20m): This sub-component provides support to the Department of Antiquities in the Ministry of Tourism and to the Ministry of Culture for policy and institution reform and development. It includes technical assistance, consultants' services, training support, equipment, materials and supplies to: 1) review the legal and institutional framework for cultural heritage preservation and management and develop an appropriate package of reforms; 2) prepare and hold regional seminars on cultural heritage preservation policy and practice aimed at sharing experience and building a consensus on an appropriate framework for Palestine; 3) begin implementing the agreed reforms arising of " 1 " above (including operational, software, hardware and training support); 4) prepare an emergency action plan for Hebron and Jericho (with the assistance of UNESCO) along the lines of that prepared by UNESCO for Bethlehem 2000; 5) prepare a plan for the promotion of Palestinian culture Project Appraisal Document Page 20 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) (with the assistance of UNESCO); 6) undertake a study to determine the feasible and sustainable commercial options for adaptive reuse of cultural heritage assets in the Bethlehem area. (See Annex 2(d)for outline TORs). Project Component 4: Overall Project Monitoring and Reporting Support (US$0.5m, 2% of totalproject cost): This component provides support for overall project monitoring and reporting. It includes two sub-components which are described below. A. MLG Project Monitoring, Accounting and Reporting (US$0.4m): This sub-component includes support to MLG for technical assistance, consultants' services, equipment, materials and supplies to: 1) establish and operate appropriate systems to monitor overall project progress (including undertaking/commissioning any necessary studies to verify project assumptions and performance indicators); 2) establish and maintain computerized accounts for the entire project; 3) establish and manage special accounts for the capacity building and project monitoring and reporting components ("3"&"4(a)"); 4) commission annual and period audits of the entire project by competent professional accounting frms; 5) prepare monthly, quarterly and annual reports for the borrower and IDA documenting progress and expenditures, highlighting issues and problems, and proposing remedial actions to attain project objectives. B. Environmental Programming and Monitoring (US$O.lOm): This sub-component provides support to the B2000 Project Authority for undertaking the environmental advisory, training and monitoring functions associated by the implementation of the Infrastructure and Cultural Heritage Rehabilitation (works) component ("2" above). It includes: 1) advice to technical consultants and contractors on preventative measures to project the environment and to comply with PA and IDA rules and regulations; 2) training sessions where relevant to accomplish "1" above; and 3) monitoring performance during implementation and suggesting remedial measures, where appropriate. Sumnary of Responsibilities: The following is a summary of main responsibilities: Component Description Main ResponsibiHity * 1,2 & 4 (b): Celebrations support; infrastructure and cultural B2000 Project Authority heritage rehabilitation works; and environmental programming and monitoring. * 3(a): Capacity building support to Area Municipalities Area Municipalities/MLG, under Implementation Agreement between MLG & each Municipality * 3(b): Capacity building support for cultural heritage DOA/MOC with support of UNESCO preservation. * 4(a): Overall project monitoring, accounting and MLG reporting. Project Appraisal Document Page 21 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) ANNEX 2 (a) B2000 Business Plan, Executive Summary'2 * The Bethlehem 2000 Vision and Program Occasion: As guardians of the birthplace of Christ, the Palestinian people wish to share their celebration of the 2000th anniversary of his birth. Also, as the end of the millennium approaches, they commit themselves to renewing his vision and universal message. Invitation: Palestine is issuing an invitation to the world for all to visit Bethlehem. The celebrations will be held during the sixteen (16) month period beginning Christmas 1999, but all are invited thereafter to make Bethlehem their annual place of pilgrimage. Objectives: The immediate objectives are to attract widespread participation (targeting 3 million visitors) and successfully stage the celebrations. The longer-term objective is to leave a legacy which will promote the sustainable development of the tourism industry in Bethlehem and Palestine as a whole. Themes: The key themes will be: peace, hope andjustice. Program: The overall program includes the following main components: a dignified, varied and high quality program of live and media events--some to be broadcast to a worldwide television audience; development and implementation of marketing, public relations, sponsorship and tourism promotion strategies; rehabilitation and improvement of critical infrastructure and services; culture heritage preservation; private sector mobilization; program financing; and the establishment of managerial capacity. Program Cost: This program is expected to cost some US$200 million and be implemented over the three years beginning January 1998. * Events, Marketing, Public Relations and Sponsorship Events: A broad, varied, entertaining and informative program of events is proposed over the sixteen (16) month period, stressing enduring religious as well as broad, universal human values. Some of the highlights will be: * Catch the Star, a 24-hour multi-media event broadcast live to the world from Bethlehem on Christmas Eve 1999. * New Year's World Party, a world-class international music festival on the eve of the year 2000 with ten thousand torches and a minute's silence sending a message around the world. * The Passion, a closing celebration on Easter 2001 performed by the Royal National Theater of Great Britain. Venues: There will be multiple centers of attraction, including Manager Square and the Church of the Nativity, a Hope Center in the Solomon's Pool area (a few kilometers to the south of Manger Square), Shepherd's Fields, and the old city coimmercial center. Marketing and Public Relations: Bethlehem is the true source of the millennium. No other celebration can make this claim. The watchword, therefore, will be authenticity, and Bethlehem will capitalize on this unique quality in appealing to a broad international audience. The catch phrase will be Bethlehem, the Star of the Millennium. A well thought out and carefully sequenced multi-year marketing and public relations program has been developed to support the celebrations. The core target audience will be the large worldwide constituency of Christians (numbering over one billion), but the entire program will be designed to appeal to visitors of other religious persuasions and varied interests. Sponsorship: Supporting the program of events will be carefully crafted sponsorship strategy aimed at attracting maximum support from well-known and prestigious international corporations. * Infrastructure, Cultural Heritage and Support Services Existing: Bethlehem possesses a tremendous cultural heritage, the most famous part of which is the Church of Nativity. However, this heritage has not been well maintained and many valuable assets are in a state of near 12 As of July 1998. Project Appraisal Document Page 22 Country: West Bank and Gaza Bethlehem 2000 Projed (82000) collapse. In addition to this, years of neglect have left Bethlehem with hopelessly inadequate infrastructure and services. Proposed: It is the aim of the program to preserve, rehabilitate and, where possible, appropriately reuse all important buildings and monuments. Basic infrastructure and services (roads, water, sewerage electricity, telephones, garbage collection, security, health, etc.) will also be improved, beginning with those which are most critical to the success of the celebrations and longer term development of the economy. * The Tourism and Private Sector Development Holy Land Total: Credible sources estimate the likely visitation to the Holy Land during the celebrations will be in the order of four (4)million, assuming the political and security situation does not deteriorate. Bethlehem: This estimate implies that approximately two (2) million visitors to Bethlehem during the period. Through a variety of marketing and other initiatives, the program aims to maximize the number of visitors to three (3) million visitors. Expenditure Share: The program also aims over time to increase the currently low share (less than 6% of total) of visitor expenditure accruing to Palestine by building up tourism stock (hotels, restaurants, etc.), improving the tourism product and improving infrastructure and services. Private Sector: The private sector has a vital role to play in the development of tourism. The program aims to provide them with the necessary investment and infrastructural support. - Organization, Management and Finance Project Authority: The Palestinian national Authority has established the Bethlehem 2000 Project Authority to plan and manage the implementation of the key activities and events associated with the millennium celebrations. This authority is headed by HE President Yasser Arafat. Trust Fund: A special Bethlehem 2000 Trust Fund has also been established to act as a vehicle for international fund raising. Finance: As noted above, the entire program is estimated to cost approximately US$ 212 million as follows: Program Element Est. Cost - July 1998 US$ million Projects, Events and Contingencies 207 Overheads and Operating Expenses 5 Total 212 Financing is programmed as follows: Financing Source Est. Yield - July 1998 US$ million Sales, Sponsorship and Fund Raising 85 Palestinian National Authority 5 Donors & Other 122 Total 212 * Closing Remarks The Star: Bethlehem will be the Star of the Millennium. Peoples of all faiths are invited to participate and share the celebrations with the Palestinian people, and to make Bethlehem their place of annual pilgrimage thereafter. The Hope: These celebrations offer a chance to renew hope, promote sustainable development and help build the Palestinian economy. Most of all, it offers a chance to help promote peace and stability in a troubled world. Bethlehem 2000 Project Authority Organization Chart'3 \ | ~~~~~~~~~~~President Yasser Arafat | Ministerial Committee .. .......................... ........................ ........ ;.----..------------.T................-*5-{ [ B-2000 Tl ust Fund | ~ ~~~~~~~~~~~ ............................................... _*., | Board of Directors | ..... MSC 4 |Coordinator General |Private Sector - Events & InrStrCtr I Fund Raising &Tourism Marketing Cultural Heritage Independn. .; Auditoss i ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~C E O ........................................... ........................ ........................... r und Manager -------------------....... . . I~~~~nt' Business Advisors & . .................................................................................................. ........................................................... ................................................................ LglA vsr F De ty DIrco ...... ........ . | | ~~~~~~~~~~~~~~~~~~Finance& Admin _.| DputyDrco - Deputy Dsco . r --- . Religi~~~~~~~~~~~~~~~~~~~~~gous _ Public . Tourism Privte Sevie Infrastructure ...... Affairs Relations. E k E<4 * |~~~~~~~~~~~~~~~~Sstm PrograTnming||. - - r . '''T.'''''---'-'''-'''''''''''''-'''''---'---''-'-' ~~~~~~........................................ .......................... I Independent onstr.\ |Auditors |< PCA> /Int' Eent Mm t ...... ......... /In'Maktg\ 13As at end May 1998. Slightly levised sinc. Project Appraisal Document Page 24 West Bank and Gaza Bethlehem 2000 Project (B2000) Annex 2(b) Infrastructure and Cultural Heritage Component (Works) The following is a brief description of the IDA components, and a listing of those projects reviewed in detail by IDA as high priority candidates for cofinancing. Further details are on the Project Files. Description of Sub-projects Roads 1. Jerusalem- Hebron Rd. (Highway No. 60): The project involves upgrading Highway No. 60, which passes through Bethlehem and Beit Jala area. Work also includes construction of the necessary water, sewerage, storm- water system, and street lighting systems. This project is composed of two main segments, the first of 1.0 Km with traffic count of 8430 vehicle per day and an economic rate of return of 25% as base case and 20% as the worst case. The second segment is of 4.2 Km with traffic count of 9242 vehicle per day and an economic rate of return (ERR) of 27% as base case and 22% as the worst case. 2. Beit Sahor Rd: The project involves upgrading the main road crosses Beit Sahor from east to west. Storm- water, water, sewerage, street lighting, and retaining structures are to be included in the project, in addition to the necessary islands and traffic control devices. The project length is 4.35 km with traffic count of 12424 vehicle per day and an economic rate of return (ERR) of 33% as base case and 28% as the worst case. 3. Inner roads of Bethlehem: The project involves upgrading of the inner roads in different lengths within the city. Work includes services, pavement, road's geometry and in some areas to increase the width of the road. No traffic counts have been undertaken for this project because it is not yet very precisely defined. Thus no ERRs have been calculated, but based on experience in Palestine and elsewhere ERRs are expected to exceed 30%. 4. Bus parking lot in Beit Sahor: This project involves upgrading existing parking lot in Beit Sahor in addition to landscaping works to accommodate tourist buses visiting the municipal core. Water and Sanitation 1. Bethlehem Reservoir: The project involves of demolition of an existing, leaking reservoir and the construction of a new 2500 m3 concrete reservoir to provide enough storage capacity for the town. Based on its 40,000 beneficiaries, the project economic rate of return (ERR) is estimated to be 14% as base case and 10% as worse case. 2. Water Pipeline: The project involves of construction of a 16" diameter, 1300 m. steel water pipeline from 30" diameter main pipeline to Bethlehem reservoir. Based on its 90,000 beneficiaries, the project economic rate of return (ERR) is estimated to be 58% as base case and 42% as worse case. 3. Water Pipeline: The project consists of the construction of a 30" diameter, 2300m steel water pipeline from Duhaisheh 10,000 m3 new reservoir. Based on its 100,000 beneficiaries, the project economic rate of return (ERR) is estimated to be 15% as base case and 10% as worse case. 4. Water Pipeline: The project consists of the construction of a 16" diameter, 2000m steel water pipeline from Ayda camp junction. Based on its 70,000 beneficiaries, the project economic rate of return (ERR) is estimated to be 33% as base case and 25% as worse case. Cultural Heritage 1. The Historic Core of Beit Sahor: The projects proposes pedestrianisation of the main routes; upgrading the services and infrastructure, pavements and walkways; restoring and repairing stone facades, timber and metal elements; and providing street lighting and furniture. The work proposed is distributed into four sub-projects: Wasat El-balad, Hosh Banora, Dakhlet el-Furon and Dar Qumsieh. The latter, includes rehabilitation and adaptive reuse on a pilot basis of a historic building from the 18dh century. 2. The Historic Core of Beit Jala: the projects proposes pedestrianisation of the main routes; upgrading the services and infrastructure, pavements and walkways; restoring and repairing stone facades, timber and metal Project Appraisal Document Page 25 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) elements; and providing street lighting and furniture. The work proposed is distributed into three sub-projects: Shari' Assouk, Haret Addir and Mary's church. The latter, includes rehabilitation and adaptive reuse of the gardens for open-air cultural activities and upgrading of the existing space for public concerts. The economic rate of return (ERR) on these components were only partially estimated. The non-quantifiable benefits are believed to be high and dominate the quantifiable. Table 1: Proposed Infrastructure and Cultural Heritage Projects, Including Priority Projects for Cofinancing Component Unit Quantity Total (USS million) 1. IDA Projects A. Infrastructure 12.52 I) Roads 10.02 a) Jerusalem- Hebron Rd km 5.7 5.50 b) Beit Sabor Rd. km 4.4 2.50 c) Inner Roads of Bethlehem km 8.0 1.92 d) Bus Parking Lot in Beit Sahor m2 2600 0.10 2) Water 2.50 a) Bethlehem reservoir in3 2500 0.40 b) 16" pipe line to Beth Reservoir km 1.30 0.35 c) 30" pipeline from Duhaisheh to Ayda Junction km 2.30 1.30 d) 16" from Junction to Ayda Camp km 2.00 0.45 B. Support for Rehabilitation of Cultural Heritage (Works) 2.48 1) Rehabilitation of Old Core of Beit Sahor 1.23 a) Wasat El- Balad m 400 0.70 b) Hosh Banoura m 60 0.12 c) Dakhlet el- Furon m 120 0.24 d) Dar Qumsieh (Interior) N.A 0.17 2) Rehabilitation of Old Core ofBeit Jala 1.15 a) Shari' Assouk m 220 0.44 b) Haret Addir m 280 0.56 c) Rehabilitation of Mary's Church N.A 0.15 3) Archeological "Chance Find" Protection N.A 0.10 Total IDA 15.00 2. High Priority Projects for Cofinancing and Potential Donors A. Italy 1) Artas - Bethlehem Road km 4.5 2.00 2) Cultural Heritage Rehabilitation Unit N.A 0.25 3) Nativity Museum N.A 0.25 Total Italy 2.50 B. EIB I)Beit Jala water pipeline km 1.20 1.30 2) Beit Jala Reservoir m3 500 0.20 Total EIB 1.50 C. Norway 1) Shepherd's Field Rd km 2.6 2.00 Total 2.00 Norway D. Greece 1) Milk Grotto rd. 0.70 Total 0.70 Greece E Donor not yet identified 1) Beit Jala Entrance Rd km 6.5 2.00 2) Southern Inner Ring Rd. km 2.0 2.00 3) Deir Crimisan Access Rd. km 2.5 0.80 4) Beth, B. Jala, BS sewage, second phase collection, Stage 11 (Year 2000). 2.50 5) Haret el- Iraq m 150 0.30 6) Establishment of Rehabilitation unit 0.70 Total 8.3 Donor Total Proposed for Cofinancing 15.00 Grand Total 30.00 Project Appraisal Document Page 26 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Annex 2(c) Capacity Building: Support to Bethlehem Area Municipalities (Please see paper "The Bethlehem Municipalities" in Project Files). This component consists of a number of measures to strengthen municipalities and improve the planning and management of service delivery in the Bethlehem region within the jurisdiction of its four main municipalities (Bethlehem, Beit Jala, Beit Sahor, Al Doha - the BAM). Despite being small and contiguous, each municipality duplicates efforts to manage the provision of a number of services which could be more efficiently and effectively managed jointly - a point of view shared by the municipalities. In addition, there is substantial mismatch between revenues and expenditures among all the municipalities and their revenue structure does not allow for cost recovery of tourism related expenditures for services. The Bank supported program will be in two parts. Part I will focus on efforts which provide common benefits to the four municipalities as a group while Part 2 will deal with the individual requirements of the separate municipalities. The elements of Part I constitute a sequence of studies which lead to a new, common tax; the design and implement a joint service program for the BAM through a Joint Services Council (JSC) and support the implementation of the joint service plan; and a unified development strategy to increase their competitiveness. These studies are grouped into three packages: * A Tourism tax study and implementation plan: This study will identify tourism taxes and charges that are appropriate to be applied in the BAM, including the desirable rates, the collection and distribution mechanisms, and the public education and capacity building programs needed for effective implementation. Required draft legislation is also would be prepared. * JSC program support and studies. These include: A regional plan to locate sharedfacilities and services: a study needs to be done that updates the various plans underway (for example, for road improvements and traffic management and water supply and sanitation, currently being done with French Government assistance, for the B2000 program); and identifies suitable locations for the facilities and services desired by the BAM. Pre-feasibility studies to size and prioritize joint services: studies will provide the JSC with the information necessary to enable them to prioritize their implementation program. These studies also would determine the desirable dimensions of priority facilities so that the investment requirements may be estimated and the cost recovery implications clarified. Individual studies to design the institutional arrangements for service delivery of priority joint services: Services selected as priorities will be studied to determine the most efficient modality for implementation. Where possible, in order to improve the quality of services, competition in the provision of these services or for the right to deliver a service, would be part of these arrangements. Investment plans for priority services: where a service is to be delivered by the public sector, the investment plans would be prepared using this facility. Strengthen emergency services and trqffic management: this would build on the Bethlehem municipality emergency services and extend it to the other three municipalities, as well as implement measures recommended in the French-assisted traffic management study. TA to strengthen Joint Services Council to plan and manage program: Technical Assistance will be provided for systems development, training and other measures required for capacity building. * Competitiveness strategy: The BAM would like to take maximum advantage of the opportunities that are to become available as a consequence of the B2000 program. They wish to develop a strategy with the private sector to facilitate growth that is specifically suited to their context. The project would facilitate this by extending the approach being developed in Nablus to these municipalities. Part 2 of the program will assist the individual municipalities in the following areas: * New accounting system: A new municipal accounting system is being developed for WBG municipalities under MIDP. It is currently scheduled to be piloted in Gaza and Nablus. The BAM would be included in the second round of rollouts of the system. Project Appraisal Document Page 27 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) * O&M program: An operations and maintenance program for existing and expanded facilities will be a vital necessity for the BAM. Technical assistance will assist in its accelerated design and inplementation. * Three year investment program preparation: To facilitate a coherent and concerted exarnination of revenue and expenditure structure and programs, the five municipalities participating in MIDP are being assisted in developing three year investment programns. These include internal capacity building. This support would be extended to the BAM. MLG would assist the BAM to execute this component, and would enter into an Implementation Agreement with each of the Municipalities to this effect. The Implementation Agreements will lay out the duties, responsibilities and rights of each party. Timetable and Costs Item/Package Starting Completion Responsibility Packages and Items Costs Date Date (S m) Part I * Tourism Tax Study 0.100 Nov. 98 April 99 MOF/MLG/ Consultants * JSC Program 0.450 Oct. 98 Dec. 01 JSC/Consultant Regional plan 0.025 Oct. 98 Apr. 99 JSC/Consultant Pre-feasibility studies 0.025 Nov. 98 June 99 JSC/Consultant Individual studies 0.050 Mar. 99 Oct. 99 JSC/Consultant Investment plans 0.050 June. 99 Dec. 01 JSC/Consultant Emergency services and traffic manage. 0.200 Oct. 98 Oct. 99 JSC/Consultant Strengthen JSC 0.100 Nov. 99 Dec. 01 JSC/Consultant * Competitiveness Strategy 0.100 Jan. 99 Dec. 99 JSC/Private sector/Consultant Part 1 Sub-total 0.650 Part 2 * Accounting Systems 1.250 June 99 Sept. 00 MLG/Mun.l Consultant Software 0.800 Sept. 99 Dec. 99 MLGlMun./ Consultant Hardware 0.250 Sept. 99 Dec. 99 MLG/Mun./ Consultant Training 0.200 June 99 Sept. 00 MLG/Mun./ Consultant * 0 & M Program 0.150 Jan. 99 July 99 MunJConsultant * 3 Year Investment Program 0.250 Jan. 99 June 00 MunJConsultant Part 2 Sub-total 1.650 Component Total 2.300 Project Appraisal Document Page 28 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Annex 2(d) Capacity Building Component: Support to Cultural Heritage Preservation (Please see Paper "Cultural Heritage and Development in West Bank Gaza" in Project Files) In the context of cultural heritage, the West Bank and Gaza is remarkable. Over 1600 major archeological site are located there. It is known world wide as the birthplace of the three great monotheistic religions and home to some of the most powerful and evocative artifacts of their collective history, including the tomb of Abraham, the father of the three religious families, in Hebron and the birthplace of Jesus Christ in Bethlehem. Both before and since the pivotal historical event of the birth of Jesus Christ, important civilizations have shared and/or disputed these lands that continue to be pivotal in human history. The PA wishes to manage this cultural heritage as an intrinsic part of its development strategy; it is, however, a complex undertaking. The range of requirements include: the technical tasks of archeological preservation, scholarship and presentation; the economic policies, strategies and incentives necessary to ensure that appropriate levels of benefits of this cultural wealth is realized to the people of WBG; the critical engagement of local communities in understanding and decision making with regard to proper preservation and exploitation of their cultural heritage; the political management necessary to satisfy potentially competing interests; the policy and institutional framework within which this development agenda would be elaborated and function effectively; and, capacity building programs to support all aspects of these requirements. This component will support the establishment and development of a policy, institutional and financing framework for the management of cultural heritage in the development agenda of WBG. Because of the importance of the cultural heritage preservation task to national development, existing managerial structures will have to be considerably enhanced and new structures may have to be developed. It is not possible to definitively specify these actions or structures at this time. However, we expect DOA to be the core around which additional capacity would be built. Furthermore, we expect that all central government departments currently undertaking cultural heritage preservation functions will be brought under one umbrella. This enhanced structure would be managed by a highly qualified Executive Director. In order to assist MOTA and MOC to thoroughly examine the organizational and managerial options and to reach a consensus on the appropriate framework, MOTA and MOC would establish a cultural heritage preservation "Advisory Committee" whose terms of reference would be to propose an appropriate institutional structure. This Committee would be chaired by a highly respected Palestinian with considerable knowledge of the cultural preservation field, and would have representatives from key ministries (including the ministries of finance and local government), agencies and the private sector. The findings and recommendations of the Committee would form the basis for defining the future organizational structure of the sector. It is envisaged that this Committee would be established by November 1, 1998, and would make its findings and recommendations on a new cultural heritage preservation organization (NCHPO) to MOTA and MOC before July 1, 1999. These finding and recommendations would thereafter be transmitted to the PNA for consideration. Until such time as new or enhanced structures are decided upon, MOTA and MOC would closely coordinate their activities in this field. A critical aspect of the strategy for cultural heritage management is the involvement of local communities. The CHA will establish with municipalities and community groups, Municipal Cultural Heritage Program Boards (MCHPB) which will participate in the decision making on, and oversee local programs. A system of incentives and a financing program geared to eventual self-sustainability will be developed to support the Cultural Heritage Development Management strategy. A legal framework to enable all aspects of the CHDM also will be developed with the assistance of UNESCO. At negotiations the PA presented to the Bank a policy letter confirming this strategy (see Annex 5). Bank support will be provided in three packages - a legal and institutional reform (LIR) package; a capacity building (CB) package; and, a program development (PD) package. Project Appraisal Document Page 29 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) * The LIR Package includes assistance in drafting and reviewing legislation and regulations, an organizational development and management study for the NCHPO, fiscal and financial studies to support the operations of the entire cultural heritage management system, studies leading to the development of appropriate incentive programs for individuals and communities to collaborate and participate in the program within the policy framework established and technical assistance in the establishment and management of MCHPBs, beginning with the Bethlehem municipalities; * The CB package comprises the development and implementation of capacity building programs for the NCHPO and its program management entities, as they are introduced, computer hardware and software and training of staff; * The PD package encompasses technical assistance for program development under the cultural heritage development strategy, including action plans for Hebron and Jericho, a plan for the promotion of cultural heritage among the Palestinian community, market feasibility studies of adaptive reuse proposals, and a regional cultural heritage policy seminar for policy makers dealing with cultural heritage and development to exchange information and experiences, discuss the issues involved and potential collaboration between them. Project Appraisal Docurnent Page 30 Cowntry: West Bank and Gaza B.tlhehm 2000 Project (82000) Timetable and budget Item/Package Starting Completion Responsibility Packages and Items Costs Date Date (S m) * LegaI and Institutional Reforma 0.300 Sept. 98 Dec. 99 Draft, Review Laws, Regulations 0.050 Sept.98 June 99 MOTA(DOA)/MOC/UNESCO/WB OD & Mstudyb 0.100 Oct.98 Sept.99 MOTA(DOA)/MOC/Consultants F&F studiesC 0.075 Jan. 99 Dec. 99 MOTA(DOA)/MOC/Consultants Incentives studies 0.075 Nov. 98 May 99 MOTA(DOA)IMOC/Consultants * Capacity Building 0.400 Jan.99 Dec.01 Develop and Implement Programs 0.200 Mar. 99 Dec. 99 NCHPO/MOC/Consultants Hardware and Software 0.100 Mar. 99 Dec. 99 NCHPOlMOC/Consultants Training 0.100 Jan. 99 Dec. 01 NCHPO/MOC/Consultants * Program Development 0.500 Sept.98 Dec.00 Action Plans for Hebron, Jericho 0.250 Jan.99 Jun.00 NCHPO/MOC/UNESCO Plan for Promotion of Cultural Heritage 0.050 Oct. 98 Mar. 99 DOA/MOCfUNESCO Adaptive Reuse Feasibility Studies 0.100 Oct. 98 Jun.99 DOA/MOC/Consultant Regional Policy Seminar 0.100 Sept.98 Jan.99 DOA/MOC/UNESCO/WB Component Total 1.200 a Includes deliberations of the Advisory Committee b OD & M = Organizational Developnent and Managenent. c F&F = Fiscal and Financial. Project Appraisal Document Page 31 West Bank and Gaza Bethlehem 2000 Project (B2000) Annex 3 Estimated Project Costs (Including Contingencies)'4 Project Comlponent Local Foreign Total --US $ million 1. Celebrations Support (B2000 Project Authority) 2.02 3.98 6.00 A. Development and Promotion Expenses 0.60 2.40 3.00 B. Construction Management Expenses 0.16 1.44 1.60 C. Capital and Operating Expenses 1.26 0.14 1.40 2. Infrastructure and Cultural Heritage Rehabilitation Works 9.72 5.28 15.00 (B2000 Project Authority) A. Infrastructure Rehabilitation Works 7.96 4.56 12.52 1) Roads 6.58 3.44 10.02 a) Jerusalem- Hebron Rd 3.58 1.92 5.50 b) Beit Sahor Rd. 1.62 0.88 2.50 c) Inner Roads of Bethlehem 1.31 0.61 1.92 d) Bus Parking Lot in Beit Sahor 0.07 0.03 0.10 2) Water 1.38 1.12 2.50 a) Bethlehem reservoir 0.22 0.18 0.40 b) 16" pipe line to Beth Reservoir 0.19 0.16 0.35 c) 30" pipeline from Duhaisheh to Ayda Junction 0.72 0.58 1.30 d) 16" from Junction to Ayda Camp 0.25 0.20 0.45 B. Cultural Heritage Rehabilitation Works 1.76 0.72 2.48 1) Rehabilitation of Old Core of Beit Sahor 0.86 0.37 1.23 a) Wasat El- Balad 0.49 0.21 0.70 b) Hosh Banoura 0.08 0.04 0.12 c) Dakhlet el- Furon 0.17 0.07 0.24 d) Dar Qumsieh (Interior) 0.12 0.05 0.17 2) Rehabilitation of Old Core of Beit Jala 0.80 0.35 1.15 a) Shari Assouk 0.31 0.13 0.44 b) Haret Addir 0.39 0.17 0.56 c) Rehabilitation of Mary's Church 0.10 0.05 0.15 3) Archeological "Chance Find" Protection 0.10 0.00 0.10 ...Continued " Physical contingencies estimated a 10% base costs. Price contingencies estimated a 3% per Annum in accordance with Bank/IDA guidelines. Project Appraisal Document Page 32 Country: West Bank and Gaza Bethlehem 2000 Project (82000) Estimated Project Costs (Including Contingencies)'5 Continued Project Component Local Foreign Total -US $ million 3. Capacity Building Support 1.36 2.14 3.50 A. Support to Bethlehem Area Municipalities 0.70 1.60 2.30 1) B2000 Emergency Municipal Services and traffic 0.15 0.05 0.20 Management 2) Tourism Tax Study and Implementation Plan. 0.05 0.05 0.10 3) Regional Shared Facilities and Services Programming 0.15 0.10 0.25 4) Competitiveness Study 0.05 0.05 0.10 5) Accounting System Reform a) Software, Systems and Training Support 0.00 0.80 0.80 b) Hardware 0.00 0.25 0.25 c) Training Support 0.10 0.10 0.20 6) O&M Program Development 0.10 0.05 0.15 7) Three (3) Year Investment Program preparation 0.10 0.15 0.25 B. Support Cultural Heritage Preservation 0.66 0.54 1.20 1) Legal and Institutional Framework Reform Study 0.15 0.15 0.30 2) CH Institution Building a). Operating support 0.20 0.00 0.20 b) Hardware 0.00 0.10 0.10 c) Training Support 0.05 0.05 0.10 3) Regional CH Policy Seminar 0.03 0.07 0.10 4) Preparation of Emergency Action Plan for Hebron/Jericho 0.15 0.10 0.25 5) Plan for Promotion for Palestinian Culture 0.05 0.00 0.05 6) Adaptive Reuse Market Feasibility Study 0.03 0.07 0.10 4. Overall Project Monitoring and Reporting Support 0.50 0.00 0.50 A. MLG Program Monitoring, Accounting and reporting 0.40 0.00 0.40 B. Environmental Programming and Monitoring 0.10 0.00 0.10 Total Project Cost 13.48 11.51 25.00 I' Physical contingencies estimated a 10% base costs. Price contingencies estimated a 3% per Annum in accordance with Bank/IDA guidelines. Project Appraisal Document Page 33 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Annex 4 Cost Benefit Analysis Summary Table 1. Average Economic Rate of Return Project Cost % of Project Cost EIRR Base Case EIRR Worst (Sm) Case Overall B2000 Project 25.0 100 B2000 Project (Quantifiable) 16.5 66 22.8% 17.1% B2000 Project Authority 6.0 24 14.5% 8.3% Roads 8.0 32 28.6% 23.6% Beit Sahor Main St. 33.0% 28.0% Highway 60 North 25.0% 20.0% Highway 60 South 27.0% 22.0% Water 2.5 10 24.1% 17.2% Bethlehem Water Reservoir 14.0% 10.0% 16" water pipeline (Beth. reservoir) 58.0% 42.0% 30" water pipeline 15.0% 10.0% 16" water pipeline (Ayda Camp) 33.0% 25.0% Table I above reports the average rate of return for the B2000 project. The rate of return in the base case is quite high at 22.8 percent. This reflects the large benefits from the project, however, it also suggests that a couple of outliers might distort the results slightly. Particularly, the high rates of return for the Beit Sahor Main St. and the 16" water pipelines have a large impact on the average rate of return. Since it is possible that the benefits for these three projects have been slightly overestimated (given the quality of the data) the overall rate of return might also have been overestimated. It is therefore useful to look at the worst case scenario. Even here, where we assume the worst case outcome for all projects, the average economic rate of retum at 17.1 percent is above the threshold rate of return of 14%. It should be noted that this rate is above the opportunity cost of capital (10-11%) but is thought appropriate given the risks and the data uncertainties. Main Assumptions: The following are the main assumptions underlying the economic model used to estimate the value added from increased visitor spending. Table 2. Expected Spending per Visitor, 1998-2010 (Constant 1998 prices) US$ Average spendfor day visitors Average spendfor overnight visitors (3 nights) Scenario I Scenario 2 Scenario 3 Scenario I Scenario 2 Scenario 3 1998 10 10 10 180 180 180 1999 15 12 10 195 195 180 2000 25 22 10 240 240 180 +2001 20 20 10 210 210 180 The unit spending per visitor has been conservatively estimated as shown in Table 2 with the data in constant 1998 prices. The increase in unit spending primarily reflects a better and more interesting tourist product. Project Appraisal Document - Page 34 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Table 3. Composition of Spending and Added Value Accommodation Food & bev. Purchases Transport Donations Total Day visits 0% 40% 60% 0% 0% 100% (added value) N/A. (3 5%/) (60%) N/A. N/A. Overnight to 2000 and 23% 25% 15% 30% 7% 100% Scenario 3 (added value) (60%) (3 5%) (60%) (20%) (70%) Overnight in 2000 27% 19% 25% 24% 5% 100% Scenario 2 and 3 (added (60%) (3 5%) (60%) (0%) (70%) value) Overnight 2001+ 25% 23% 20% 27% 5% 100% Scenario 2 and 3 (added (60%) (35%) (60%) (20%) (70%) value) To derive at an estimate of the value added for the Palestinian economy from visitor spending the assumptions shown in Table 3 have been applied. This assumes, for example, that 35 percent of spending on food and accommodation will benefit the Palestinian economy. The relatively low estimates for value added reflect the large "leakage" of benefits from tourism going to the Israeli economy. Again quite conservative estimates have been applied in the analysis given the quality of the data available. (The detailed economic analysis is on the Project File.) Project Appraisal Document Page 35 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Annex 5 Letter of Sector Policy Bethlehem 2000 Project August 1, 1998 Mr. Joseph Saba Country Director, West Bank and Gaza World Bank Subject: Letter of Sector Policy, Cultural Heritage Preservation and Development in West Bank Gaza' Introduction The Ministry of Tourism and Antiquities (MOTA) and the Ministry of Culture (MOC) of the Palestine National Authority (PNA) would like to inform you of the policy and institutional arrangements through which it intends to guide and strengthen the preservation and management of cultural heritage in the development plans of Palestine. In order that you may fully appreciate the policy and institutional framework we envisage, we would like to begin by setting out the background, philosophy, structures and programs that have informed our decisions. Background In the context of cultural heritage, the West Bank and Gaza is a treasure trove. Over 1600 major archeological site are located here. It is the birthplace of the three great monotheistic religions and home to some of the most powerful and evocative artifacts of their collective history, including the tomb of Abrahamn, the father of the three religious families, in Hebron and the birthplace of Jesus Christ in Bethlehem. Both before and since the pivotal historical event of the birth of Jesus Christ, important civilizations have shared and/or disputed these lands that continue to be pivotal in human history. An important consequence for the development of WBG is that this rich history, its archeological evidence and current manifestations continue to have meaning to millions of diverse people around the world. By preserving this evidence and appropriately managing its use and access to it, we Palestinians can simultaneously make substantial contributions to our economy, identity and to the larger world. Nevertheless, managing our cultural heritage as an intrinsic part of our development strategy is a complex undertaking. The range of requirements include: the technical tasks of archeological preservation, scholarship and presentation; the economic policies, strategies and incentives necessary to ensure that appropriate levels of benefits of this cultural wealth is realized to the people of WBG; the critical engagement of local communities in understanding and decision making with regard to proper preservation and exploitation of their cultural heritage; the political management necessary to satisfy potentially competing interests; the policy and institutional framework within which this development agenda would be elaborated and function effectively; and, capacity building programs to support all aspects of these requirements. There is urgency to develop the necessary institutional and policy framework and build crucial capacities. Important aspects of this heritage are threatened by urban expansion, by re-development of old areas of ancient cities and by the decay and deterioration of long neglected structures. However, the greatest urgency lies in the opportunity costs of delay. The WBG economy has been buffeted by the political conflicts and violence that has been associated with the slowdown of the peace process, and despair and frustration has been replacing the hope that accompanied the Oslo agreements. Effective management of cultural heritage in the development agenda of WBG offers real possibilities for interdependence in the sector and even a shared tourism strategy between the neighboring countries. The aspect of cultural heritage referred to in this letter relates to the physical dimension only, specifically: Archeological Sites and Artifacts, Historic Buildings; Ethnographic Architecture, and Cultural Landscapes Project Appraisal Document Page 36 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) We recognize these complex requirements and have therefore sought the assistance of the wider world community in these tasks. As we will elaborate later, we already have programs supported by a number of donors, including the World Bank. Under the Bethlehem 2000 project, we intend to utilize further UNESCO and World Bank assistance in designing a strategy and institutional framework for the management of this important development agenda. Existing Programs in Cultural Heritage in WBG Despite the difficult circumstances of the last three decades, considerable work has been done in the past two years by the PNA and in particular by MOTA & MOC to set the stage for effective management of cultural heritage. Draft legislation has been prepared and planning for the technical and to some extent, community aspects of the management requirements has begun in conjunction with the MOC. UNESCO, which has been involved in a multi- year Program of Assistance to the Palestinian People, has been requested to comment on the draft legislation. The World Bank has been supporting work on the managerial and technical requirements. In addition to the work on the institutional issues, the Department of Antiquities (DOA) within MOTA has undertaken a number of excavation and restoration projects with the assistance of various donors including, Italy, the Netherlands, Japan and UNESCO. Restoration of sites within Bethlehem is among the projects underway. Moreover the Directorate of Cultural Heritage (DCH) at MOC have developed an active program of cooperation with international institutions working in cultural heritage including (UNESCO, ICOM, ICOMOS, ICCROM). Parallel cooperation has been developed with governmental bodies in the Mediterranean region through a number of projects under the Euro- Mediterranean cooperation program on cultural heritage supported by the EU. As a result, there is a proven base of institutional as well as operational work on which to build. Tbe Issues We Face Despite this, there are many issues to be addressed in the context of the complex requirements outlined earlier. With regard to the technical tasks of archeological preservation, scholarship and presentation, there are substantial organizational deficits, which need to be remedied. Thus capacity building is an urgent requirement. However, the level of effort needed will be extensive and will need to be prioritized in order to be manageable. Restoration and rehabilitation projects need to be executed, documentation and scholarship with regard to the sites and artifacts within WBG is to be carried out, museums and other media for presentation and education must be developed, and a variety of staff must be trained. We propose to utilize approaches that, to the extent possible, accomplish multiple objectives. Economic policies, strategies and incentives necessary to ensure that appropriate levels of benefits of this cultural wealth is realized to the Palestinian people must encompass several aspects of tourism and its linkages to the people in their local communities. Incentives which provide linkages to direct benefits such as loans and grants to encourage rehabilitation and reuse of historical buildings, for example, as bed and breakfast accommodations, must be coupled with incentives at a community level that promote the collective benefits of items as diverse as preservation of public spaces to discouraging the theft or sale of archeological artifacts. In addition, the management of cultural heritage must yield adequate income to support the technical and professional work around which the program is organized. We are pleased that the Bethlehem 2000 project will include specific elements to address these issues. The engagement of local communities in understanding and decision making with regard to proper preservation and exploitation of their cultural heritage is at the heart of the PNA strategy for the management of cultural heritage. This emphasis is critical to overcoming the past alienation of the elements and manifestation of cultural heritage from the Palestinian people. Archeology, for example, have been experienced by some Palestinians as a political weapon used against them, while for others, the preservation of historical buildings has been an instrument of expropriation. However, not only must the negative be overcome, the positive also needs to be recognized. A vibrant tourism industry based on cultural heritage will promote the development of quality public services necessary to that market - water and sanitation, health care, security and public safety, roads and traffic management, parks and recreation - as well as provide incomes for other services such as schools and libraries. In addition, we intend to promote the recognition that the Palestinian people share an extraordinarily rich heritage as a source of pride and nation building. Finally, increasing direct contact between the Palestinian people and the rest of the world will help to clarify the status of WBG and increase public support worldwide. It is also for these reasons that we have ensured that the Bethlehem 2000 project also supports mechanisms which will address this crucial set of issues. Project Appraisal Document Page 37 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) necessary to tailor growth in tourism to absorptive capacity, if frustration and disappointment of both tourists and residents are to be avoided. Exploitation must keep pace with, not outrun, preservation. Public education and support and participation must be maintained at all times. Investments in public services must keep pace with demand. We intend to continue to involve the international community in assisting us, for the transfer of knowledge and experience they are able to provide in addition to as well as other resources. In particular, we expect to draw on the rich and relevant experience of neighboring countries. The Task Ahead The policy and institutional framework within which the Palestinian development agenda with regard to cultural heritage is to be elaborated and implemented must take into account all of the preceding considerations. As it is clear that much of the program remains to be defined and will emerge over time, the framework must allow for this dynamic and for learning and adjustment. The architecture of this framework must therefore be somewhat open even while the fundamental principles outlined above are fixed. The proposed framework is outlined in detail below. Every aspect of this program requires capacity building programs to support its requirements. In the same manner that other aspects of the program will need to be prioritized and phased, so too must the capacity building program. MOTA & MOC are pleased that some critical elements of this capacity building program have been identified and been agreed with the World Bank to be supported under this project. The Policy and Institutional Framework The institutional framework consists the guiding development philosophy; the policy context; the legal and regulatory framework - to be further developed with the support of UNESCO and the World Bank; and the organizational roles, responsibilities and relationships. Development Philosophy The PNA recognizes both the extraordinary value of the cultural heritage of Palestine and the critical necessity to involve the Palestinian community especially at the local level, in the preservation, rehabilitation, management and exploitation of that rich resource. Several elements will be needed to achieve this latter objective of community involvement. These include building the recognition among the community that this heritage is their resource and that its appropriate use will provide a broad array of benefits to themselves as individuals and as a community. This, in turn, requires a unique and critical role for our technical managers in the institutional framework; in addition to a thorough understanding of the technical requirements for cultural archeological preservation, documentation and presentation, they must anticipate the reservations and issues of the community with regard to the proper management of cultural resources and develop proposals which respond to legitimate community concerns. They also must educate the community with regard to appropriate rehabilitation and use of cultural resources including historical buildings and public spaces, the programs to support such rehabilitation and use, and the role that the community may play effectively in the management of cultural heritage. Finally, they must be effective in listening, and responding to the communities so that these communities assume ownership of their local resources. Policy Context The PNA has outlined a number of policy objectives which follow from its development philosophy. These include: * protect, enhance and manage the cultural heritage of WBG to the benefit of the Palestinian people and to the world at large; * provide appropriate mechanisms for implementing the policy including a regulatory framework, incentives and technical guidelines and advice; * ensure coordination and effective management of policies, programs and activities across related sectors and between levels of government; * develop Palestinian technical skills and capacity through research and study, training programs and coordination of technical development in various institutions; Project Appraisal Document Page 38 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) * ensure the provision of adequate resources to the overall program; * attract private investment in support of and/or complementary to cultural heritage programs; * ensure a partnership approach involving public and private sectors as well as community based organizations in the protection, enhancement and management of cultural heritage; and * ensure community commitment to the program through public education and meaningful participation The Legal and Regulatory Framework A number of laws and regulations will be needed to guide and support programs for the appropriate management of cultural heritage. These need to cover, inter alia, all aspects of preservation, restoration, documentation and display of cultural artifacts; the planning and management of live heritage including urban historical areas; incentive packages; financing and fiscal instruments; and, organizational roles and responsibilities. As noted earlier, considerable work has been done on a draft law on Palestinian Antiquities that is now being reviewed with the help of UNESCO. Priority will be given to a complementary package of legislation including local planning and controls that provide incentives to ensure that the planning and management of live heritage including urban historical areas operates in support of the cultural heritage development agenda. These incentives will apply to individuals and groups who own or wish to invest in historical buildings and will encourage their appropriate rehabilitation and reuse. Incentive will be designed as well as to encourage the support of communities who would indirectly benefit from rehabilitation and appropriate use of public or common spaces. We intend to use financing and fiscal instruments to support organizational roles and responsibilities and plan that the legal and regulatory framework will ensure this support. We propose to carry out the necessary studies in order to dimension financial and fiscal requirements; these will be done while the strategy for the elaboration and implementation of the various organizational structures is being developed. Nevertheless, it is clear that a share of tourism revenues need to be available to local governments in order to recover the costs of local public services provided to their benefit. In addition, several public organizational entities (discussed below) will provide the ingredients for this program. Some of those that interact directly with tourists will be able to charge fees for services, goods or access. A financing system will be devised which will eventually be able to support the entire network of institutions. We are aware that such mechanisms are used by our neighbors in the region (e. g. Tunisia) however, we must establish an enabling framework for the appropriate solutions. For this reason we are pleased that the World Bank will support studies to establish a fiscal and financial system to sustain this program over the long run. Organizational Roles, Responsibilities and Relationships A substantial amount of work has been done on various aspects of organizational requirements for managing cultural heritage in Palestine. However, much of that work has focused on detailing the structure of particular individual organizations within the existing framework. As our understanding of the issues and opportunities have grown we have found it necessary to revise the old framework. We therefore will focus first on defining and assigning overall roles, responsibilities and relationships in the new framework and tackle the elaboration of individual structure over the next several months as the cultural heritage program develops. The critical roles we have defned and assigned are: overall policy guidance; overall management of the cultural heritage program; management of specific, critical aspects of the programs; community level program management; project management; and, entities management. (In this regard, the DOA is currently the main vehicle.) Policy Guidance: Considerable efforts are required to build the capacity to effectively manage and develop Palestine's cultural heritage, and to harness this considerable heritage for the task of national development. MOTA and MOC are working together to defne the most appropriate distribution of roles and responsibilities and the structure best suited to fulfill this important mandate. Nevertheless, we envisage that an appropriate institutional structure concerning cultural heritage preservation would be established to help provide policy guidance for the sector; and that key sector ministries, agencies, organizations and the private sector would be represented in that structure. Program Management: Because of the importance of the cultural heritage preservation task to national development, we envisage that existing managerial structures will have to be considerably enhanced and new structures may have to be developed. It is not possible to definitively specify these actions or structures at this time. In any event, however, we expect DOA to be the core around which additional capacity would be built. Furthermore, we expect that all Project Appraisal Document Page 39 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) central government departments currently undertaking cultural heritage preservation functions will be brought under one umbrella. This enhanced structure would be managed by a highly qualified Executive Director. In order to assist MOTA and MOC to thoroughly examine the organizational and managerial options and to reach a consensus on the appropriate framework, MOTA and MOC would establish a cultural heritage preservation "Advisory Committee" whose terms of reference would be to propose the envisaged institutional structure concerning cultural heritage preservation. This Committee would be chaired by a highly respected Palestinian with considerable knowledge of the cultural preservation field, and would have representatives from key ministries (including the ministries of finance and local government), agencies and the private sector. The findings and recommendations of the Committee would form the basis for defining the future organizational structure of the sector. It is envisaged that this Committee would be established by November 1, 1998, and would make its findings and recommendations to MOTA and MOC before July 1, 1999. These finding and recommendations would thereafter be transmitted to the PNA for consideration. It is also envisaged that the Bank would be periodically informed on the progress of the Committee's deliberations, that its findings and recommendations would be shared with the Bank. Until such time as new or enhanced structures are decided upon, MOTA and MOC would closely coordinate their activities in this field. We appreciate the technical assistance that the Bank is providing under this project to support the work of this Committee. It is currently envisaged that any new or enhanced cultural heritage organization (NCHPO) would be responsible for: 1. developing and recommending policy for the preservation and restoration of historic monuments (including all enviromnental aspects) 2. developing and recommending policy for urban conservation and rehabilitation of historic centers 3. implementing policy on protection of all antiquities and control over all excavations/exploration activities in archeological sites by establishing an effective system for the protection and preservation of cultural heritage 4. developing and recommending a national museum policy for the creation, protection and management of national and local museums; 5. establish a national archives for cultural heritage resources 6. prepare a management and maintenance plan for Palestinian cultural resources 7. design, recommend and ultimately implement a financial mechanism to support agencies and individuals involved in the protection of cultural heritage including incentives for users and residents of historic buildings 8. coordination and consultation with relevant authorities at the international, national and local levels 9. organizing programs and projects to: * restore and rehabilitate historic monuments, buildings and sites and improve their presentation and the surrounding environment according to international standards and conventions; * enhance and improve the physical condition of historic towns; * establish local/satellite conservation/rehabilitation units to all historic centers to ensure the implementation of these programs through WBG; * monitor and update where required implementation of the preservation policy in all historic sites according to characteristics of each locality and the changing conditions; * improve the accessibility of cultural heritage sites and property for both the Palestinian public and their visitors; * use these cultural assets for education and awareness of the Palestinian public of their heritage and history and to educate visitors and tourist about the rich history of Palestine; * make available in a manner consistent with preservation policy, Palestinian cultural assets to attract local and international tourism and encourage investment; * initiate programs and processes for strengthening the capacity of national and local authorities and institutions for planning and implementing conservation and rehabilitation policies. Organizational Options: We envisage several options with regard to how the organization could be structured below the level of the Executive Director for the management of specific, critical aspects of the programs. Among these are suggestions that semi-autonomous Institutes be established for each major program area. These suggestions have merit in that they have been modeled on other successful approaches such as the Smithsonian in Washington, D. C. However, a detailed strategy based on priorities, work program and financing would need to be developed before implementation. We are pleased that the development of such a strategy is to be supported under the project. Project Appraisal Document Page 40 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Community Involvement: As we have emphasize throughout this letter, we consider the community level program management as a crucial element of a successful strategy for managing cultural heritage in the development agenda of WBG. It is vital that the organization at that level should represent a partnership between the proposed enhanced on new structure2 , concerned municipality and the affected community. That partnership also will be represented by a Board for each municipality (the Municipality Cultural Heritage Program Board - MCHPB). The role of the NCHPO on the MCHPB is to provide it with technical guidance and bring to it technical expertise as indicated in the development philosophy outlined earlier and incentives including financing. Community members will constitute the majority of Board members. The MCHPB in consultation with NCHPO would be responsible for reviewing and approving the programs and projects of cultural heritage management within their communities especially with regard to the priorities and modalities of implementation. In addition the MCHPB in consultation with NCHPO would oversee the implementation of these programs and projects. Because of the technical nature of the work involved, project management will be the responsibility of a professional body approved by the MCHPB. In cases where specific projects will be financed by donors, especially in the early years of the program, the procurement rules would need to reflect their requirements. Finally, we hope that individual museums, sites, bookstores, authorized replica stores, etc. may be efficiently managed by local entities management, as this would strengthen community benefits and commitment to the cultural heritage program. Any such arrangement would have to be approved by the MCHPB in consultation with NCHPO, however, because of the responsibilities involved and to ensure adequate capacity and performance, the NCHPO will have veto powers over the appointment of any such group, and may require their removal at any time on the basis of unsatisfactory performance. The Priority Program The PNA will continue implementing the archeological and rehabilitation projects already agreed with donors as well as undertaking those planned under the Bethlehem 2000 project. However, priority will now be given to elaborating and implementing the policy and institutional framework set out in this letter. The elements required to do so include: 1. an organizational development and management plan and program for the NCHPO 2. the development and implementation of capacity building programs for the NCHPO and its program management entities, as they are introduced 3. critical training for individuals and groups within and outside of the NCHPO framework 4. development of appropriate incentive programs for individuals and communities to collaborate and participate in the cultural heritage program within the policy framework established 5. establishment and management of MCHPBs beginning with the Bethlehem municipalities 6. fiscal and financial mechanisms to support the operations of the entire cultural heritage management system. We believe that it is crucial to leanm from and collaborate with neighboring countries in preserving and managing cultural heritage. As a result we propose that the World Bank and UNESCO convene a policy seminar for regional policy makers dealing with cultural heritage and development to exchange information and experiences, discuss the issues involved and explore potential collaboration among us. 2 Refereed to hereafter as the New Culture Heritage Preservation Organization (NCHPO) Project Appraisal Document Page 41 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) We will continue to develop the cultural heritage program development under the strategy we have outlined in this letter. Our immediate priority will be to initiate the programs of rehabilitation and development of cultural heritage sites in Hebron and Jericho and to prepare a program for the promotion of cultural heritage in Palestine for which we have agreed World Bank and UNESCO assistance. As we pursue these and other items in our strategy and program we hope we will be able to count on the continuing support of the World Bank. Signed Signed Yassir Abed Rabbo HIaHj Ministry of Culture and Arts Deputy Minister of Tourism & Antiquities Project Appraisal Document Page 42 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Annex 6 ENVIRONMENTAL DATA SHEET FOR PROJECTS IN THE IBRD/IDA LENDING PROGRAM Country: West Bank and Gaza Project ID No.: GZ-SF-53985 Project Name: Bethlehem 2000 IBRD Amount: $25M Appraisal Date: 7/15/98 Sector: Urban Board Date: 9/22/98 Status: Lending Managing Division: MNSID Lending Instrument: SIL Date for receipt of EA by Bank (Cat. A Projects): EA Category: B Date Assigned: 3/24/98 Date prepared/updated: 08/24/98 Major Project Components: The Project would assist Palestinian authorities in the planning, organization and staging of the Bethlehem 2000 celebrations which will attract worldwide attention and participation. The main objectives of the Project are to: (a) strengthen the local economic base and foster sustainable development of the Bethlehem region through well planned tourism development; (b) strengthen the planning, financial and managerial base of Bethlehem and adjoining municipalities through a program of investment, reform and capacity building; and (c) foster the conservation of cultural heritage through a process of policy, institutional reform and capacity building. The main physical investment components of the Project include: (a) rehabilitation of water services; (b) rehabilitation of roads; and (c) preservation of cultural heritage by physical rehabilitation and adaptive reuse of structures. All activities would be undertaken in the Bethlehem region of the West Bank which includes Bethlehem, Beit Sahour, Beit Jala and Doha. Major Environmental Issues (identified or suspected in project): The Project has been placed in environmental screening category "B" consistent with the provisions of World Bank Operational Directive 4.01, "Environmental Assessment" due to emphasis on rehabilitation of existing infrastructure and the restricted scope of potential environmental impacts. The primary potential impacts associated with the Project are construction and operational phase issues related to rehabilitation and upgrading of small scale water and road infrastructure and localized disturbance associated with the restoration of selected cultural heritage sites. Implementation of the Project would result in significant improvement in the management of water and wastewater services in the Bethlehem region. Rehabilitation of the road network would improve surface drainage, thus reducing flooding in municipalities and soil erosion. In addition, resulting efficiencies in travel patterns would decrease the incidence of serious congestion; reduce local traffic related air and noise pollution; and improve road safety for motorists and pedestrians. Project activities for the preservation of cultural heritage would reduce risks to sites of international significance. Project funded activities would be undertaken with the advice of UNESCO and would be conducted in close cooperation with stakeholders to ensure satisfactory outcomes at the local level. A review conducted by cooperating Palestinian organizations and the World Bank has not identified any currently proposed subprojects that would require involuntary resettlement on a permanent and/or temporary basis. However, this issue will be reviewed on a case-by-case basis through the subproject screening process. Other Environmental Issues (of lesser scope associated with project): Some activities under the Project will cause local disruption from dust and noise during the construction phase associated with trenching operations for upgrading of water supply, excavations required for road rehabilitation, and activities associated with conservation of cultural heritage sites. Project supported subprojects will increase local demand for building materials and their transport to construction sites. Excavation activities for subprojects may result in the chance find of buried materials of archaeological significance. Project Appraisal Document Page 43 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Proposed Actions (to mitigate environmental issues described above): In order to address potential impacts and support capacity building, an Environmental Management Plan (EMP) has been prepared in cooperation with the Palestinian Environmental Authority, Department of Archaeology of the Ministry of Tourism and Antiquities, and Ministry of Culture. The EMP includes: (a) conduct of site-specific environmental screening for Project supported subprojects and activities for rehabilitation of water supply, rehabilitation of roads and preservation of cultural heritage sites; (b) establishment of an Environmental Unit within the implementing agency; (c) environmental training of staff of the Bethlehem 2000 Authority and other Palestinian organizations involved in Project implementation; and (d) monitoring and evaluation of the implementation of mitigation measures identified in the site-specific reviews. The EMP includes provisions for the use of archaeological "chance find" procedures in case unknown archaeological sites are encountered during excavations and construction activities supported by the Project. In addition, the environmental screening documents will be submitted for review and clearance by the Palestinian Environmental Authority, Department of Antiquities of the Ministry of Tourism and Antiquities, Ministry of Culture, and World Bank. This procedure for environmental review of subprojects adopted under the EMP would be extended by the Bethlehem 2000 Project Authority to activities supported by other international and bilateral organizations. Justification/Rationale for Environmental Category (presents reasons for environmental category selected and explanation of any changes from initial classification, including whether any changes relate to alternatives): The activities to be supported under the Project comprise: (a) small and medium subprojects for the rehabilitation, upgrading, extension and maintenance of water services and roads; and (b) site specific measures for preservation of selected cultural heritage sites. In both cases, potential environmental impacts can be anticipated and effective measures taken to address these concerns in subproject design; supervision can be adopted on a subproject basis. Reporting Schedule: An Environmental Management Plan has been prepared, reviewed and approved by Palestinian authorities. The EMP is available at several locations in the Bethlehem region and is provided in the Project File. Remarks (give status of any other environmental studies, lists local groups and local NGOs consulted and where Category A environmental assessments were made public locally, tells whether Borrower has given permission to release EA, etc.): Implementation of the Project would be done in cooperation with the Palestinian Environmental Authority, Department of Archaeology of the Ministry of Tourism and Antiquities and the Ministry of Culture. In addition, advisory support for the cultural heritage activities will be provided by UNESCO. The project preparation process has included extensive work with mayors and other representatives of the municipalities of Bethlehem, Beit Sahour, Beit Jala and Doha. Consultations were also held with the main religious organizations concerned with the celebrations including the Middle East Council (MEC) and Jerusalem Interchurch Committee for the Jubilee. Consultations were also held with many community groups including Bethlehem University, Arab Orthodox Club, Alternative Tourism Group and Catholic Relief Services. The Borrower has given permission to release the EMP and has made it available to the public in the West Bank. Project Appraisal Document Page 44 Country: West Bank and Gaza Bethlehem 2000 Project (52000) Annex 7 Bethlehem 2000 Project Authority Program Note on Preliminary Cashflow Budget The estimated B2000 Program Budget is summarized in the attached tables. Two revenue scenarios have so far been examined. The total revenue is the same in both scenarios but the timing of the inflows differ. The Optimistic Scenario assumes relatively early inflows of ticket sales and sponsorship; licenses royalties and rights; and non- infrastructure related fund raising monies. The Pessinistic Scenario assumes that these inflows will mostly come in 2000 - 2001. But for this difference, the revenue scenarios are the same. There is only one expenditure scenario. The program as a whole, aims to at least break-even. Other important assumptions are: 1. Infrastructure and Cultural Heritage works expenditures will be fully offset by Donor contributions; 2. Events costs will be fully offset by ticket sales and sponsorship revenues; 3. Other shortfalls will be offset by fundraising efforts; 4. Interest rate on Bank borrowing is 10%; 5. Interest charge in 1998 is based on 4 months only; 6. A minimum desired cash balance of US$1.0m. In general, non-infrastructure related fund raising is assumed to be the balancing item. Given the above assumptions, a number of conclusions can be drawn (see Table l(d)): 1. Even in the Optimistic Scenario there would be a net program deficit of about $lm. In the case of the Pessimistic Scenario the net program deficit would be of the order of $5.5m. These deficits arise because of the need for short-term Bank borrowing, even in 1998, and the consequent interest charges. 2. The estimated borrowing requirements and net surplus (deficit) would be as follows: 1998 1999 2000 2001 Net Surplus (Deficit) Optimistic Scenario US$11.2m US$25.2m US$1 1.5m - (US$1.1m) Pessimistic Scenario US$11.2m US$43.9m US$42.0m - (US$5.5m) 3. To break-even on the program as a whole, the non-works fund raising effort would have to be increased from the current estimate of US$15m to US$18-25m. Alternatively, inflows would have to be accelerated or expenditure on consultancies, supporting activities, projects and services reduced. Background Note Several Donors are assisting Bethlehem prepare for the Millennium Celebrations including, inter alia, Austria, Belgium, Sweden, Greece, Germany, Italy, Norway, Spain, Finland, Japan, France, The Vatican, Knights of Malta, UNDP, EIB, USAID, UNESCO and the Bank. Infrastructure: Some US$14m has already been committed to on-going infrastructure projects and US$44m has been pledged, excluding proposed Bank funding under B2000 (US$15m). Another US$40m is being sought by the B2000 Project Authority for essential infrastructure rehabilitation. It is not clear whether this additional funding can be secured from donors, but it is expected that the most critical components will be covered. In this event, the issue will be implementation capacity and not fnance. Offlce Operating Costs: This will be partly covered by Bank support under MIDP (US$0.38m) and B2000 (US$1.4m). Other donors have so far provided about US$ 0.3m. It is expected that the PA will fund the balance of about US$2.6m. Project Appraisal Document Page 45 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Consultancies: These cover marketing, PR, events, legal, accounting, etc. Here about US$12m is required and only about US$5.8m is pledged, mostly by the Bank (US$4.8m). Thus about US$6m needs be to raised by the Project Authority. Supporting Services: These include police and emergency services. Here about US$6.6m is required and only about US$1.8m has been pledged by donors. The PA is expected to provide about US$2.4m, leaving about another US$2.4m to be raised by the B2000 Project Authority. Events: This is budgeted at US$53.5m and expected to be self-financing. However, there will be significant up-front costs which will have to be covered by borrowing from commercial sources. PA Contribution: This is planned at US$5.0m, including US$ I.Om from the Area Municipalities. Summary: There is a significant financing gap of the order of US$27m, excluding financing charges (probably another US$2-5m). This includes about US$1 8.6m in contingencies (provided for at 10% of base costs). This points to the need, on the one hand, for urgent fund raising efforts by the B2000 Project Authority and, on the other, for careful financial planning and management. The above issues were discussed with the B2000 Project Authority at Negotiations and the overall program financing strategy agreed. Project Appraisal Document Page 46 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Bethlehem 2000 Project Authority Program Table 1(a): Draft Budget 1998 - 2001, Revenue - Optimistic Scenario (Preliminary) (In US$ Millions) 1998 1999 2000 2001 Total Revenue 1.0 Donor Commitments (Exist. And firm 18.32 45.83 19.00 0.13 83.28 Pledges) 1.1 Donors (Suprt. for Infra. And Cult. Heritage 16.19 41.69 16.55 0.13 74.56 Investment) a) World Bank (B2000) 2.62 9.00 3.25 0.13 15.00 b) Other Donors (ongoing) 9.14 6.10 0.00 0.00 15.24 c) Other Donors (pledged) 4.43 26.59 13.30 0.00 44.32 1.2 Donors (Support for Other Components) 2.13 4.14 2.45 0.00 8.72 a) World Bank (MIDP & B2000) 1.51 3.14 2.45 0.00 7.10 b) Other Donors 0.62 1.00 0.00 0.00 1.62 2.0 Government 1.00 2.50 1.50 0.00 5.00 2.1 PA 1.00 2.00 1.00 0.00 4.00 2.2 Municipalities 0.00 0.50 0.50 0.00 1.00 3.0 Other Sources 0.40 24.30 34.30 10.5 69.50 3.1 Finance and Fund Raising Contrib. 0.40 0.30 0.30 0.00 1.00 3.2 Licenses, Royalties and Rights 0.00 4.00 9.00 2.00 15.00 3.3 Ticket and Sponsorships for Events 0.00 20.00 25.00 8.50 53.50 4.0 Fund Raising 0.00 25.00 31.44 0.00 56.44 4.1 From Donors for Infra. And Cult. Heritage 0.00 20.00 21.44 0.00 41.44 Investments 4.2 From Others 0.00 5.00 10.0 0.0 15.00 Total Revenues 19.72 97.63 86.24 10.63 214.22 Assumptions: 1. Pessimistic Scenario: Late inflows of sales, sponsorship and licensing, etc. revenues; 2. Optimistic Scenario: Early inflows of sales, sponsorship and licensing, etc. revenues; 3. Infrastructure and Cultural Heritage works expenditures will be fully offset by Donor contributions; 4. Events costs will be fully offset by ticket sales and sponsorship revenues; 5. Other shortfalls will be offset by fundraising efforts; 6. The program as a whole aims to, at least, break-even. Project Appraisal Document Page 47 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Bethlehem 2000 Project Authority Program Table l(b): Draft Budget 1998 - 2001, Revenue - Pessimistic Scenario (Preliminary) (In US$ Millions) 1998 1999 2000 2001 Total Revenue 1.0 Donor Commitments (Exist. And firm 18.32 45.83 19.00 0.13 83.28 Pledges) 1.1 Donors (Suprt. for Infra. And Cult. Heritage 16.19 41.69 16.55 0.13 74.56 Investment) a) World Bank (B2000) 2.62 9.00 3.25 0.13 15.00 b) Other Donors (ongoing) 9.14 6.10 0.00 0.00 15.24 c) Other Donors (pledged) 4.43 26.59 13.30 0.00 44.32 1.2 Donors (Support for Other Components) 2.13 4.14 2.45 0.00 8.72 a) World Bank (MIDP & B2000) 1.51 3.14 2.45 0.00 7.10 b) Other Donors 0.62 1.00 0.00 0.00 1.62 2.0 Government 1.00 2.50 1.50 0.00 5.00 2.1 PA 1.00 2.00 1.00 0.00 4.00 2.2 Municipalities 0.00 0.50 0.50 0.00 1.00 3.0 Other Sources 0.40 7.30 25.30 36.50 69.50 3.1 Finance and Fund Raising Contrib. 0.40 0.30 0.30 0.00 1.00 3.2 Licenses, Royalties and Rights 0.00 2.00 5.0 8.00 15.00 3.3 Tickel: and Sponsorships for Events 0.00 5.00 20.00 28.50 53.50 4.0 Fund Raising 0.00 25.00 31.44 0.00 56.44 4.1 From Donors for Infra. And Cult. Heritage 0.00 20.00 21.44 0.00 41.44 Investments 4.2 From Others 0.00 5.00 10.0 0.0 15.00 Total Revenues 19.72 80.63 77.24 36.63 214.22 Assumptions: I. Pessimistic Scenario: Late inflows of sales, sponsorship and licensing, etc. revenues; 2. Optimistic Scenario: Early inflows of sales, sponsorship and licensing, etc. revenues; 3. Infrastructure and Cultural Heritage works expenditures will be fully offset by Donor contributions; 4. Events costs will be fully offset by ticket sales and sponsorship revenues; 5. Other shortfalls will be offset by fundraising efforts; 6. The program as a whole aims to, at least, break-even. Project Appraisal Document Page 48 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Bethlehem 2000 Project Authority Program Table l(c): Draft Budget 1998 - 2001, Expenditure Scenario (Preliminary) (In US$ Millions) Continued 1998 1999 2000 2001 Total Expenditure 1.0 Office and Operating costs 1.33 1.39 1.27 0.69 4.68 1.1 Salaries and Benefits 0.47 0.59 0.61 0.35 2.02 1.2 Office Operating Expenses 0.58 0.75 0.66 0.34 2.33 1.3 Office Capital Expenditures 0.28 0.05 0.00 0.00 0.33 2.0 Infra. & Cult. Heritage Rehab. & Improve. 16.19 61.69 37.99 0.13 116.00 Works 2.1 World Bank (B2000) 2.62 9.00 3.25 0.13 15.00 2.2 Other Donors (ongoing) 9.14 6.10 0.00 0.00 15.24 2.3 Other Donors (pledged) 4.43 26.59 13.30 0.00 44.32 2.4 Other (unfunded) 0.00 20.00 21.44 0.00 41.44 3.0 Consultancies 3.14 6.63 2.36 0.04 12.17 3.1 Construction Management 0.32 1.29 0.54 0.00 2.15 3.2 Marketing 1.20 3.52 0.90 0.00 5.62 3.3 Public Relations 0.34 0.49 0.29 0.00 1.12 3.4 Events 0.60 0.78 0.30 0.02 1.70 3.5 Legal, Accounting and Auditing 0.28 0.25 0.03 0.02 0.58 3.6 Finance and Fund Raising 0.40 0.30 0.30 0.00 1.00 4.0 Supporting Projects / Activities 1.30 3.65 1.68 0.00 6.63 4.1 Tourism Infra. Development 0.60 1.53 0.00 0.00 2.13 4.2 Emergency and Social Services 0.50 2.00 1.50 0.00 4.00 4.3 Conferences 0.20 0.12 0.18 0.00 0.50 5.0 Events 5.00 26.40 21.90 0.20 53.50 5.1 Local 0.00 1.40 1.90 0.20 3.50 5.2 International (Media and Live) 5.00 25.00 20.00 0.00 50.00 6.0 Contingencies (10% of Base Cost) 2.56 9.61 6.35 0.11 18.63 Total Expenditure 29.51 109.37 71.55 1.17 211.61 Assumptions: 1. Pessimistic Scenario: Late inflows of sales, sponsorship and licensing, etc. revenues; 2. Optimistic Scenario: Early inflows of sales, sponsorship and licensing, etc. revenues; 3. Infrastructure and Cultural Heritage works expenditu will be fully offset by Donor contributions; 4. Events costs will be fully offset by ticket sales and sponsorship revenues; 5. Other shortfalls will be offset by fundraising efforts; 6. The program as a whole aims to, at least, break-even. Project Appraisal Document Page 49 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Bethlehem 2000 Project Authority Program Table 1(d): Draft Cashflow Budget Summary, 1998 - 2001 (Preliminary) (In US$ Millions) 1998 1999 2000 2001 Total Optimistic Scenario Total Revenues 19.72 97.63 86.24 10.63 214.22 Total Expenditure 29.51 109.37 71.54 1.16 211.58 Surplus (Deficit) before Financing Charges (9.79) (11.74) 14.70 9.47 2.64 Beginning Cash 0.00 1.00 1.00 1.00 Adjusted Balance (9.79) (10.74) 15.70 10.47 Borrow (Repay) 10.79 11.74 (14.70) (11.53) Ending Cash Balance ($lm assumed min.) 1.00 1.00 1.00 (1.06) (1.06) Cumulative short-term Borrowing 10.79 22.89 10.48 0.00 Interest Charge (10%) 0.36 2.29 1.05 Cumulative Short-Term Borrowing and Interest 11.15 25.18 11.53 Charge Pessimistic Scenario Total Revenues 19.72 80.63 77.24 36.63 214.22 Total Expenditure 29.51 109.37 71.54 1.16 211.58 Surplus (Deficit) before Financing Charges (9.79) (28.74) 5.70 35.47 2.64 Beginning Cash 0.00 1.00 1.00 1.00 Adjusted Balance (9.79) (27.74) 6.70 36.47 Borrow (Repay) 10.79 28.74 (5.70) (42.00) Ending Cash Balance ($1m assumed min.) 1.00 1.00 1.00 (5.53) (5.53) Cumulative Short-Term Borrowing 10.79 39.89 38.18 0.00 Interest Charge (10%) 0.36 3.99 3.82 Cumulative Short-Term Borrowing and Interest 11.15 43.88 42.00 Charge Assumptions: 1. Pessimistic Scenario: Late inflows of sales, sponsorship and licensing, etc. revenues; 2. Optimistic Scenario: Early inflows of sales, sponsorship and licensing, etc. revenues; 3. Infrastructure and Cultural Heritage works expenditures will be fully offset by Donor contributions; 4. Events costs will be fully offset by ticket sales and sponsorship revenues; 5. Other shortfalls will be offset by fundraising efforts; 6. The program as a whole aims to, at least, breakeven; 7. Interest rate on short-term commercial bank borrowing is 10%; 8. Interest charge in 1998 is based on 4 months only; 9. Minimum desired cash balance of USSI.Om. Project Appraisal Document Page 50 Country: West Bank and Gaza Eethlehem 2000 Project (B2000) Preliminary Bethlehem 2000 Project Authority Program Table l(e): Draft Budget Summary Expenditure by Year and by Revenue Source, 1998 - 2001 (Preliminary) (In US$ Millions) a) By Year 1998 1999 2000 2001 Total 1.0 Office and Operating Costs 1.32 1.39 1.27 0.69 4.67 2.0 Infrastructure and Cultural Heritage 16.19 61.69 37.99 0.13 116.00 Rehabilitation and Improvement 3.0 Consultancies 3.14 6.62 2.36 0.04 12.15 4.0 Supporting 1.30 3.65 1.68 6.63 Projects/Activities/Services 5.0 Events 5.00 26.40 21.90 0.20 53.50 6.0 Contingencies (10% of Base Cost) 2.56 9.61 6.35 0.11 18.63 Total Expenditure 29.51 109.37 71.54 1.16 211.58 b) By Sources IDA Donors PA Tickets & Other Total Spons. 1.0 Office and Operating Costs 1.78 0.30 2.59 4.67 2.0 Infiastructure and Cultural Heritage 15.00 101.00 116.00 Rehabilitation and Improvement 3.0 Consultancies 4.82 7.33 12.15 4.0 Supporting 0.50 1.32 2.41 2.40 6.63 Projects/Activities/Services 5.0 Events 53.50 53.50 6.0 Contingencies (10% of Base Cost) 18.63 18.63 Total Revenue 22.10 102.62 5.00 53.50 28.36 211.58 Notes: 1. Estimates are prior to financing charges. These charges would have to be offset by increased non-works fund raising efforts; 2. IDA total excludes capacity building components with DOA, Area Municipalities and MLG; 3. Donor estimates include on-going, pledged and additional funding to be sought by B2000 Project Authority; 4. PA includes about US$1.0m from Area Municipalities, largely for services; 5. Other includes licenses, rights, etc. and fund raising for non-works items. Project Appraisal Document Page 51 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Annex 8 Procurement and Disbursement Arrangements Procurement The Credit would finance selected activities requiring the procurement of: (a) works, i.e. the construction or rehabilitation of road, water and cultural heritage sites; (b) goods, including computers, telecommunications, office equipment, vehicles and maintenance equipment for subprojects; (c) consultancy services for studies, training, institutional reforms and cultural heritage subprojects; and (d) incremental operating expenses for the B2000 Project Authority, MLG Capacity Building Unit, and MOTA and MOC. Procurement under the Credit would be carried out in accordance with IDA's Guidelines for "Procurement under IBRD Loans and Credits". January 1995, revised January and August 1996 and September 1997 and for "Selection and Employment of Consultants by World Bank Borrowers". January 1997 and revised September 1997. IDA's Standard Bidding Documents (SBD) would be used for all procurement under International Competitive Bidding (ICB) and, with modifications acceptable to IDA, in Arabic language, also for National Competitive Bidding (NCB). Simplified documents would be prepared for use under the Credit and apply to National and International Shopping (NS/IS), relatively low-value works contracts and low-value consulting contracts. Credit components not financed by IDA would be procured in accordance with PA regulations or the guidelines of cofinancing institutions. A General Procurement Notice (GPN) would be advertised in "United Nations Development Business" (UNDB) not less than eight weeks prior to the publication of the first Specific Procurement Notice (SPN) and bidders who have expressed an interest would be notified directly by Bethlehem 2000 Project Authority and/or MLG. Works: Taking into account the nature of construction, state of subproject preparation and the goal of fostering the development of the emerging local construction industry, several bid packages would be prepared according to the list of subprojects shown in Annex 3. Bid packages with an estimated contract value above US$3 million equivalent would be procured using ICB procedures and documents and advertisements in UNDB and in local newspapers. (With the exception of those works requiring special construction expertise, contracts of less than US$3.Om are not expected to attract International Bidders). Bidders would be subject to post-qualification in accordance with IDA's SBD Procurement of Works, Smaller Contracts - January 1995. Bid evaluations would be submitted on IDA's Standard Bid Eva[luation Form: "Procurement of Goods and Works" - April 1996. Bid packages with an estimated contract value above US$100,000 equivalent, up to an aggregate amount of approximately US$8.5 million equivalent, would be procured using NCB procedures and documents and advertisements in at least two local newspapers. Contracts below an estimated value of US$50,000 equivalent, up to an aggregate amount of US$1 million equivalent, would be procured using (i) advertisements in a local newspaper and announcements posted in a public place, (ii) simplified bidding documents and evaluation procedures agreed with IDA, (iii) public bid openings, (iv) and contract awards to the lowest evaluated bidder. Prequalification would be necessary for all contracts procured under ICB and all contracts above US$ 1.0 million equivalent procured under NCB procedures. For contracts below US$ 1.0 million equivalent it would be discretionary. An open prequalification process and explicit qualification criteria would be used. Subject to prior agreement with IDA in each case and practical considerations, works below an estimated value of US$50,000 may occasionally be implemented, instead, by using direct contracting with the nearest available source or force account construction through PA personnel and equipment. Goods: To the maximum possible extent, the procurement of goods would be carried out through bid packages comprising several lots of similar items. Bid packages with an estimated contract value above US$500,000 equivalent would be procured using ICB procedures and documents, and advertisements in UNDB and in local newspapers. Bidders would be subject to post-qualification in accordance with IDA's SBD for "Procurement of Goods" January 1995. Bid evaluations would be submitted on IDA's Standard Bid Evaluation Form "Procurement of Goods and Works" - April 1996. Bid packages with an estimated contract value above US$50,000 equivalent, up to an aggregate of approximately US$300,000 equivalent, would be procured using NCB procedures and documents and advertisements in at least two local newspapers. The procurement of goods and supplies below an estimated value of US$50,000 per contract or purchase order, up to an aggregate amount of approximately of $200,000 equivalent, would follow NS/IS procedures, using requests for quotations which would indicate the description, quantity and required delivery time of the procured goods. At least three quotations would be solicited from local suppliers, when these goods are readily available locally at competitive prices; otherwise, quotations would be solicited from at least three international suppliers in two different countries. The evaluation of quotations would follow procedures agreed with IDA. Incidental goods and supplies below a cost of US$5,000 per purchase, up to an aggregate amount of Project Appraisal Document Page 52 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) approximately US$100,000 equivalent would be purchased directly from the nearest available source or, if available, through the PA Government Supply Catalogue maintained by MOF. Under ICB procedures, bids offering goods manufactured in West Bank/Gaza would be granted a margin of preference of 15% when compared to goods manufactured elsewhere. In the comparison of bids to establish eligibility for Domestic Preference, the provisions of Appendix 2 of IDA's Procurement Guidelines would be followed. Services: For consultancies above an estimated contract value of US$100,000 equivalent, the selection method would be Quality and Cost-Based (QCBS). For consultancies above an estimated contract value of US$50,000 equivalent, the selection method would be Quality-Based (QBS) or Least-Cost Selection (LCS). Consultants' Qualification-Based (CQ) and Single-Source Selection (SS) methods would be used for all specialized, short-term or low-cost contracts with consultants. Furthermore, all consultancies with an estimated contract value above US$200,000 would be advertised in UNDB and in local newspapers. Incremental Operating Expenses: These project related expenses would include salaries, office rent, utilities, vehicle operating costs, stationery, consumables, printing, translation services, publications, communication services and travel expenses. Repair and replacement costs for office equipment and vehicles would also be covered. Prior Review: The first two contracts in each category (works, goods and services), irrespective of the estimated contract value, would be subject to IDA's prior review, in accordance with the applicable guidelines. Thereafter, all procurement of works and goods, which is subject to ICB procedures, would be subject to IDA's prior review. Also, any contract for works with an estimated contract value above US$100,000 equivalent and any contract for goods with an estimated contract value above US$100,000 equivalent would be subject to IDA's prior review. Contracts with individual consultants in excess of US$50,000 equivalent and with consulting frms in excess of US$100,000 equivalent, as well as all single-source contracts, would be subject to prior review. The prior review process would cover about 60% of total works goods and services contracts, which would be reasonably achievable under the circumstances. All other contracts would be subject to post-review on a random basis during supervision missions and procurement audits. Procurement Responsibilities: The B2000 Project Authority would be responsible for all procurement activities related to Components "I" (Celebration Support), "2" (Infrastructure and Cultural rehabilitation Works) and "4 (b)" (Environmental Training and Monitoring) of the Project. MLG's Capacity Building Unit (CBU) would be responsible for all procurement activities related to Components "3 (a)" (Capacity Building Support) and "4 (a)" (Programming, Accounting Services, Emergency Services, etc.) of the Project. MOTA and MOC would be responsible for component "3 (b)." The initial Procurement Plan is shown in Table D. It would be updated periodically and jointly by B2000 Project Authority, CBU and MOTA/MOC, which would also jointly prepare the standard bidding documents to be used for all subprojects. Each unit would retain responsibilities for advertising bids, issuing bidding documents, opening and evaluating bids and awarding contracts with regard to its assigned components. The procurement skills of B2000 Project Authority, CBU and MOTA staff would be upgraded through a training program. Disbursement Allocation of loan proceeds (Table C) The project funds are expected to be disbursed over a period of three years beginning November 1998 and end December 31, 2001. The closing date for the credit would be June 30, 2002. It is estimated that Bethlehem 2000 Project Authority would be able to disburse at average of US$1.0 million per month during the first year of the project. All IDA funded disbursements towards civil works are expected to be completed within two years from day of project effectiveness. To facilitate disbursement against eligible expenditures, Bethlehem 2000 Project Authority, MLG and MOTA/MOC would each establish a Special Account under terms and conditions satisfactory to IDA. An initial deposit of the US$3.00m will be made into B2000 Project Authority Special Account and $0.2m into the MLG Special Account, and US$0.lm into the MOTA/MOC Special Account all from the IDA credit Bethlehem 2000 Project Authority, MLG and MOTA/MOC would submit replenishment applications for their respective Special Accounts on a monthly basis. Use of Statements of Expenses: All contracts for works below US$100,000 All contracts for goods below US$100,000 Consultancy contracts for individuals below US$50,000, except single-source contracts Consultancy contracts for frms below US$100,000 Local training, Seminars and workshops Project Appraisal Document Page 53 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Table A: Project Costs by Procurement Arrangements' (in US$million equivalent) Total Cost Expenditure Category Procurement Method (including contingencies) ICB NCB NS Other 1. Works 5.50 9.00 0.50 15.00 2. Goods a) For B2000 Project Authority 0.16 0.16 b) For Municipalities and MLG 0.70 0.30 0.05 1.05 c) For Cultural Heritage, MLG and MOTA/MOC 0.10 0.10 3. Services Consultancy Services, Studies and Training a) For B2000 Project Authority 4.82 4.82 b) For Municipalities and MLG 1.25 1.25 c) For Cultural Heritage, MLG, and MOTA/MOC 0.90 0.90 4. Miscellaneous Incremental Operating Expenses a) For B2000 Project Authority 1.12 1.12 b) For Municipalities and MLG 0.40 0.4 c) For Cultural Heritage, and MOTA/MOC 0.20 0.20 Total 6.20 9.30 0.31 9.19 25.00 a Values are net of taxes (including VAT). Project Appraisal Document Page 54 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Table B: Thresholds for Procurement Methods and Prior Review (in US$ equivalent) Expenditure Contract Value Procurement Contracts Category (Threshold) Method Subject to Prior Review 1. Works >3.0 Million ICB YES >100,000 NCB No a >50,000 NCB/simplified No 2. Goods >500,000 ICB Yes >50,000 NCB No <50,000 NS/IS No <5,000 Direct Purchase No 3. Services >100,000 QCBS Yes/ If Firm >50,000 QBS, LCS Yes/ If Individual <50,000 CQ, SS No a In addition the first two contracts for works, goods and services, irrespective of contract value, would be subject to prior review. Project Appraisal Document Page 55 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Table C: Allocation of Credit Proceeds (in US$million equivalent) Expenditure Category Amount in US$million Financing Percentage 1. Civil Works 13.70 100% of foreign & 85% of local 2. Goods 100%/o of foreign & 85% of local a) for B2000 Project Authority components 0.10 b) for LG capacity building 0.90 c) Cultural heritage capacity building components 0.10 3. Consultancy Services, Studies and Training 100% a) for B2000 Project Authority components 4.40 b) for LG capacity building 1.1 c) Cultural heritage capacity building components 0.8 4. Incremental Operating Expenses 100%/e of foreign & 85% of local a) for B2000 Project Authority components 1.00 b) for LG capacity building components 0.30 c) Cultural heritage capacity building components 0.10 2.50 5. Unallocated Total 25.00 Project Appraisal Document Page 56 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Table D: Procurement Plan Estimated Schedule (Month/Year) # of Cost Procurement Review Pre- Invitation Bid Contract Contract slices/ Estimate Method (Advance qualification to Bid Opening Award Completion Description sub- (USSm) I Prior projects /Post) 1. Works a) Roads 5 10.02 ICB/NCB Prior Sept.98 Oct.98 Nov. 98 Dec. 98 Aug. 00 b) Water 4 2.50 NCB Prior Sept98 Oct.9S Nov.98 Dec. 98 Aug.99 c) Cultural Heritage 3 2.48 NCB Prior Sept.98 Oct. 98 Nov. 98 Dec. 98 Aug.99 2. Goods Vehicles, Equipment and Supplies a) For Bethlehem 2000 0.16 NCB Prior N/A Apr. 99 May99 June 99 Dec. 99 Project Authority b) For Others 1.25 ICB/NCB Prior N/A Apr. 99 May 99 June99 Dec. 99 3. Services Consultancy Services, Studies and Training a) For Bethlehem 2000 4.82 QCBS/QBS/ Prior/Post Feb. 99 Mar. 99 Apr. 99 May99 June00 Project Authority LCS/SS/CQ b) For Otherse 2.35 QCBSIQBS/ Prior/Post Nov.98 Jan.99 Mar.99 Apr.99 June00 LCS/SS/CQ 4. Miscellaneous Incremental Operating expenses a) For Bethlehem 2000 1.12 Project Authority b) For Others 0.30 TOTAL 25.00 a Include Bethlehem Area Municipalities (Bethlehem, Beit Jala, Beit Sahor and Doha), MLG, Cultural Heritage Unit, MOC and MOTA/DOA. Project Appraisal Document Page 57 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Annex 9 Project Processing Budget and Schedule A. Project Budget (US$000) Planned Actual (At final PCD stage) 397,000 278,200 (7/5/98) B. Project Schedule Planned Actual (At final PCD stage) Time taken to prepare the project (months) 9 First Bank mission (identification)'6 1/10/1998 1/10/1998 Appraisal mission departure 6/29/1998 7/20/1998 Negotiations 7/15/1998 7/29/1998 Board 9/22/1998 Planned Date of Effectiveness 11/2/1998 Prepared in Consultation with: B2000 Authority, Area Municipalities, MLG, DOA and MOC Preparation Assistance: Japanese Trust Fund Bank Staff who worked on the project included: Kingsley Robotham (Task Manager, Principal Urban Planner, Resident Mission), George Awwad (Civil Engineer, Project Officer Resident Mission), Hiba Tahboub (Water and Sanitation Engineer, Project Officer Resident Mission), Hans Jurgen Gruss (Legal Counsel), Josephine Bassinette (Country Officer), Nigel Roberts (Manager), Joshua Putterman (Operations Analyst- LTC), Khalida Qutob (Staff Assistant, Resident Mission), Fitz Ford (Senior Urban Economist, TWURD), Kanthan Shanlcar (Environmental Engineer, Resident Mission), Thomas Baunsgaard (Economist, Resident Mission), Claude Archambault (Section Transport Engineer, MNSID), Oliver Bennett (Tourism Economist, Consultant), Michael Couillaud (Cultural Heritage Economist, Consultant) and June Taboroff (Cultural Heritage Preservation, Consultant), Tim Campbell (Peer Reviewer, TWUTD). Palestinian Team who worked on the project: H.E. Dr. Nabil Kassis (Minister), Imad Nassar (Head of Infrastructure Unit), Nada El-Hasan (Head of Cultural Heritage Unit), Bruno Marmiroli (Architect), Julia Bouchain (Head of P.R Unit), Christiane Schmit (Head of Toursim Unit), Hind Khoury (Head of Events Unit), Chritian Naser (Head of Religious Affairs), Majdi Shomali (Head of Public Awareness) (Bethlehem 2000 Project Authority). Dr. Hamdan Taha (Director DOA), Mr. Walid Sharif (Acting Director General Cultural Heritage), Dr. Shadia Touqan (Consultant, Director, Jerusalem Project). Mr. Tayseer Edeas (Coordinator CBU/MLG). UNESCO Team who worked on the project included: Omar Masalha (Director, Palestine Program Office), Azedine Beschaouch (Special Projects, Cultural Heritage), Veronique Dauge (Acting Head of Office, WBG). Project Appraisal Document Page 58 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Annex 10 Documents in the Project File 1) Project Implementation Action Plan 2) Procurement Plan - George Awwad. 3) Economic Analysis - Thomas Baunsgaard. 4) Bethlehem 2000 - Road and Traffic Management, Report on Appraisal of Roads and Parking Projects - Claude Archambault, May 1998 5) Draft Letter of Sector Policy, Cultural Heritage and Development in West Bank and Gaza - Fitz Ford. 6) Appraisal of Cultural Heritage component - Michael Couillaud. 7) Environmental Management Plan - Stephen Lintner, Kanthan Shankar, Hiba Tahboub. 8) Planning the Strengthening of the Operating and Financial Status of the Bethlehem Municipalities - Fitz Ford. 9) Technical Assistance Trust Fund, Cultural Resources Management Project, TOR - Stephen Lintner. 10) Palestinian Tourism Sector, Planning and Development Project, TOR - Stephen Lintner. 11) Tourism Background Paper, Bethlehem Visitor Target, Bethlehem 2000: Cultural Rehabilitation. 12) Estimate for the Bethlehem 2000 Project, Heritage Center Concept Note - Oliver Bennett, June 98. 13) UNESCO - Palestinian Authority: B2000 Emergency Action Plan for Bethlehem Area - June 1997: Urban Renewal and Conservation of Religious and Cultural Heritage; Water, wastewater and Drainage Services; Assessment and Development of the Electricity System; Solid Waste Management; Tourism Development; Regional and Urban Planning Development; Roads, Traffic and Transportation; Interim Report; Executive Summary; Projects profile; and Synthesis Report, 1998. 14) Traffic System Management Study for the cities of Bethlehem, Beit Jala and Beit Sahor (2 volumes) - Wilber Smith Associates/ Universal Group, Oct. 1996. 15) Traffic Management Study - Inception Report (Preliminary Version) - Sogelerg Ingenierie, May 1998. 16) Traffic Study and Analysis for Roads in Bethlehem District, Final Report - Universal Group for Engineering and Consulting, April 1998. 17) The Bethlehem Bus Terminal & Tourist Complex, an Investment Proposal - Ashford Investment Inc., Feb. 1998. 18) Feasibility Study for the Bethlehem Bus Terminal Station (2 volumes) - Noviconsult, Italy, for the European Union, April 1998. 19) Palestinian National Authority - Bethlehem 2000 Project. Business Plan - May 1998. Special Participants Conference Reports for Brussels Conference: a) Infrastructure; b) Cultural Heritage; c) Event Management; d) Tourism Development; e) Private Sector Development. 20) Draft Tourism Report - Deloitte & Touche, April 1998. 21) Proposal for Project for the Preservation of Palestinian Cultural Heritage - Shadia Touqan, May 1998. 22) The Structural Project for General Directorate of Antiquities, Palestinian Ministry of Tourism and Antiquities. 23) Palestinian Antiquities Draft Law - Ministry of Tourism and Antiquities, 1995. 24) Israel 2000, Summary of Conclusive Report - Ministry of Tourism and Ministry of Finance, November 1997. 25) Bethlehem 2000, Initial Planning and Programming (2 volumes) - WCT/M&CSAATCHI, March 1998. 26) Bethlehem 2000, final Report, (2 Volumes), WCT/M&CSAATCHI, April 1998. Project Appraisal Document Page 59 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) Annex 1 1 Statement of Loans and Credits A. Statement of Bank Loans and IDA Credits (As of June 21, 1998) Loan or Fiscal Borrower Purpose (Amount in US$ million Closing Credit No. Year - rounded upwards) Date TFGWB Disbursed 15 TF Credits 94 PECDAR Emergency Rehabilitation 30.0 29.44 12/31/97 TF026066 TF026065 95 PECDAR Education and Health 20.0 18.26 06/30/99 Rehabilitation TF026058 96 PECDAR Emergency Rehabilitation II 20.0 19.26 12/31/97 TF026057 96 PLO Municipal Infrastructure 40.0 23.16 12/31/00 Development TF026056 97 PLO Gaza Water and Sanitation 25.0 10.82 12/31/00 Improvement Project TF024100 97 PLO Microenterprise Project 5.0 0.0 07/31/02 TF024112 97 PECDAR Community Development 10.0 6.91 06/15/99 Project TF026052 97 PLO Housing Project 25.0 0.0 12/31/01 TF026050 97 PLO Investment Guarantee Fund 10.0 10.0 3/31/98 Project TF027041 97 PLO Palestinian Expatriate 3.0 0.15 12/31/00 Professional Program TF026048 98 PLO Gaza Industrial Estate 10 0 06/30/04 TF026063 97 PLO Legal Development Project 5.5 0.35 12/31/01 TF026047 98 N/A* Palestinian NGO Project 10.0 1.4 12/31/03 *Grant recipient: The Welfare Association Project Appraisal Document Page 60 Country: West Bank and Gaza Bethlehem 2000 Project (52000) West Bank and Gaza Strip (IFC) B. Statement of IFC's Committed and Disbursed Portfolio (As of October 31, 1997) In Millions US Dollars Committed Disbursed -IFC-- _FIFC FY Company Loan Equity Quasi Participants Loan Equity Quasi 1 Participants Approval _ 1994 Arab Palestine 0.00 3.80 0.00 0.00 0.00 3.73 0.00 0.00 Investmnent Bank _ _ _ _ (A PIB )__ _ _ _ _ _ __ _ _ _ _ _ _ _ __ _ _ _ _ _ __ _ _ _ _ _ _ _ _ 1997 Palestine Industrial 8.00 1.00 0.00 0.00 0.00 0.50 0.00 0.00 Estate Management and Development Co. _ _ _ _ (PIECO)__ _ _ __ _ _ _ 1997 SEF Nabahin 0.50 0.00 0.00 0.00 0.50 0.00 0.00 0.00 1997 Jordan National 0.00 0.00 3.00 0.00 0.00 0.00 0.00 0.00 1997 Arab Bank 0.00 0.00 3.00 0.00 0.00 0.00 0.00 0.00 1997 Coi Bank Palestine 0.00 0.00 1.50 0.00 0.00 0.00 0.00 0.00 1997 SEF Arab Concrete 0.80 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1998 SEF Pharmacare 0.45 0.00 0.00 0.00 0.45 0.00 0.00 0.00 1998 PTF-Mgrnt Co. 0.00 0.20 0.00 0.00 0.00 0.00 0.00 0.00 =_______ Portfolio Totals: 9.75 5.00 7.50 0.00 0.95 4.23 0.00 0.00 pPending Commitments FY Company Loan Equity Quasi Participants Approval I__ _ _ _ _ _ __ _ _ _ _ _ _ _ 1 -lA-998Sr°Vl Peace Tech. Fund 0.00 20.00 0.00 0.00 1998 SEF Al-Ayyam 1.80 0.00 0.00 0.00 Total Pending Commitment: 1.80 20.00 X0.00 0.00 Project Appraisal Document Page 61 Country: West Bank and Gaza Bethlehem 2000 Project (B2000) West Barnk and Gaza at a glance Marchl998 West M. East Lower. POVERTY and SOCIAL Bank & & North middle- Qaza Africa inco me Development diamond' Population mid-S96 (millions) 2.7 272 1153 GNP per capita 1996 (US$) 1700 1.780 1.670 Life expectancy GNP 996 (millions US$) 4.51D 484 1930 GDP per capita S96 (USS) 1470 GDP 1996 (millions US$) 3,900 T Average annual growth, 1990-96 Gross Population (94 6 3 1 GNP primary Laborforce(%) 6 3 2 per t capita M ost recent estimate Poverty: headcount index(%ofpopulation) 24 Urban population (%oftotalpopulation) 70 57 56 1 Life expectancy at birth (years) 70 66 67 Infant mortality (per t000 live births) 28 54 41 Access to safe water Child malnutrition (%of children under5) Access to safe water (%of population) 90 85 IllRteracy (%of population age S1i l 43 Gross primaryenrollment (%of schoolagepopulation) 91 97 G4 Male 91 83 86 Female 92 91 t1 --Lower-middle-income group KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1985 1994 1995 1996 Economic ratios' GDP (millions US$)- 1000 3,340 3.700 3,900 Gross domestic investment/GDP 29 32 34 30 Exports of goods and non-factor services/GDP 31 22 22 22 Openness of economy Gross domestic savings/GDP -31 -13 -11 -29 Gross national savings/GDP 3 9 15 -2 Current account balance/GDP (excl. off.transfers) -15 -25 -27 -33 Current account balance/GDP (inl. off. transfers) -t5 -14 -S -23 Interest payments/GDP 0 0 0 Ivte Total debt/GDP 0 1 1 Savings Investment Totaldebtservice/exports 0 0 0 Present value of debt/GDP . Present value of debt/exports . 1985-93 1994 1995 1996 Indebtedness (average annual real growth) GDP 8% 10% -6% 0% GNP 6% 8% -5% -1% UfG GDP per capita 3% 3% -12% -6% L m - e GNP per capita 2% 'P -8% -7% Lower-middle-ncomegroup STRUCTURE of the ECONOMY 1985 1994 1995 1996 (%ofGDPfc) 9 Growth rates of output and Investmen Agricufture 20 14 13 14 | Industry 8 14 t8 t6 40s * Construction 17 9 9 9 Private Services 38 44 41 39 3 Public Services 17 S S 5 23 20 A /\ (%of GDP) 10 Private consumption 1t 95 98 89 a I - I General govemment consumption 13 17 13 20 -10 0 192 9S 94 Importsofgoodsandnon-factorservlces 75 67 67 72 GNP --Q-GDP + GDI 1985-93 1994 1996 1996 (average annualrealgrowth) Agriculture t5 6 -8 t2 Growth rates of exports and Imports M anufacturinrg 9 t9 34 -13 so Construction t6 -56 -2 -4 so Private Services 6 46 -7 -S 40 Public Services 5 -2 5 is 20 Privateconsumptlon 4 3 4 11 r 9 91 92 General govemment consumption 7 48 -24 53 Imports of goods and non-factor services 8 -Exports -- Irmports Exports of goods and non-factorservbces 3 -The diamonds showfour key indicator In the country(in bold) compared wth its income-group average. If data are missing,the diamond will be incomplete. "Not calculated using the atlas method. The level of nominal GDP and GNP is likelyto be underestimated for S94 and S95. -r ; , ;fx f \, /v ''-''-t -*Yt brBETH LEH EM 2000 0,535 flGS. T,,35 ,ss. '' Th . .den ,,i' B, n - AIRPORTS / AIRFIELDS AC JT\f / \ j A- AX _ (<(Tul~~krar nr Tuo 3 BUILT-UP AREAS ,-, k <, > Tommun UNRWA REFUGEE CAMPS ,0,'T Bt BETH= , ' _ <. __ Noblus i X sf ' . 13t - ISRAELI SETTLEMENTS y ~~~ Z yX s 4 < & u 6 ] > ~~~~~~ ARMISTICE DEMARCATION LINES, 1949 I Ci- J' Wf2 4_ - l- /( 2'NO-MAN'S LAND AREAS, * N I H~~~~~~~~~~ARMISURFCE DEMRCTOADS N,94 $ ' O \ 4y ^, . ' , . - ev ,, f ~~~~~~~~~~~~~~~~JERUSALEM CITY LIMIT, UNILATERZALLY t- RAILRO. t .--- ; - - \ t -9 , - EXPANDED BY ISRAEL JUNE 1967; , ia. tMF' >|;|_ t \ -- (j \ l ~~~~~~~THEN ANNEXED JULY 30 1980 F K - - 4 IS R AEL Tu C;arm @- BUILT-UP A SB A,N K r ~ ~~~ ~~ ~ ~~~~~~~~~~~~~~~ Y / / A ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~JRA /3l'4' , 'blus , ISRAELI s /SET ,_ F / / ~~~~~~~~~~~MEDITERRANEAN .i e ~ ~~~~~ ~ ARITC DEARATO LIES 1949Er 0 l + A Tlas 3'fft _ @ bilic0 5 lo l G A Z A ',Di /Au- --A-- SEA S EA ~ ~ ~ ~ N-MNSLNDAES ~~~31~~~- D' ...... JEUSLE CTY aD.< rE mIMITj, UNLTEAL ff .AoHebr :- THEN A JL m -' -IN.-Te daslldnmntasnoremo do 1f'rTER NATIO: NALGbboUNDARIES ort~~~~~~Y B ~~O~~ISI~~.A~~j - ~~'. BA'I'JK ~~~~~o SRAE 3:~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~RasD oepismoI sIchziunde l res y f ne f, or anV endomement r >] \ 1£5 0 .. JOR DA N DDfS f0ehf1 11/ t?-0'--- $L Al Bia t --=3' ZWO IBRD 29794 3409 0Ncrt? 3 WEST BANK AND GAZA -- 49A i,bid BETHLEHEM 2000 PROJECT JZ jHde' \ Tciercscleor ~~Deir Cremsisan e~~J&3 "WLe DDUNEARIES I JORDAN <, _ ,>>>>tv / g { WrEn Mediterranean Oeq3o NW s JORDAN e\ TEL AVIV YAFO W Sah Jabel Abu Ghneim Sea B300 A N K 0 32005' Rome lob AMMAN