FOR OFFICIAL USE ONLY Report No: PAD00237 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT APPRAISAL DOCUMENT ON A PROPOSED GRANT IN THE AMOUNT OF US$20 MILLION FROM THE TRUST FUND FOR GAZA AND THE WEST BANK (TFGWB) WITH CO-FINANCING FROM THE PARTNERSHIP FOR INFRASTRUCTURE DEVELOPMENT MULTI-DONOR TRUST FUND (PID MDTF) IN THE AMOUNT OF US$5 MILLION TO THE PALESTINE LIBERATION ORGANIZATION (FOR THE BENEFIT OF THE PALESTINIAN AUTHORITY) FOR A INTEGRATED SOLID WASTE MANAGEMENT PROJECT-PHASE I JANUARY 06, 2025 Urban, Resilience and Land Middle East And North Africa CURRENCY EQUIVALENTS (Exchange Rate Effective Dec 11, 2024) Currency Unit = NIS US$1= NIS 3.58 FISCAL YEAR January 1 - December 31 Regional Vice President: Ousmane Dione Regional Director: Paul Noumba Um Country Director: Stefan W. Emblad Practice Manager: Catherine Signe Tovey Task Team Leader(s): Haji Huseynov, Dana Almubaied ABBREVIATIONS AND ACRONYMS AFD Agence Française de Développement (French Development Agency) APLA Association of Palestinian Local Authorities ASA Advisory Services and Analytics CD Capacity Development CERC Contingency Emergency Response Component DA Designated Account DP Development Partner EA Environmental Assessment ESF Environmental and Social Framework ESMP Environmental and Social Management Plan ESMF Environmental and Social Management Framework EU European Union FM Financial Management GDP Gross Domestic Product GEMS Geo-Enabling initiative for Monitoring and Supervision Gesellschaft für Internationale Zusammenarbeit (German Federal GIZ Enterprise for International Cooperation) GNI Gross National Income GoI Government of Israel GRM Grievance Redress Mechanism GSWMP Gaza Solid Waste Management Project HWMP Hazardous Waste Management Plan IA Internal Audit IBRD International Bank for Reconstruction and Development ICR Implementation Completion and Results Report IDA International Development Agency IEG Independent Evaluation Group IFRs Interim Financial Reports IPF Investment Project Financing IT Information Technology JICA Japanese International Cooperation Agency KfW German Development Bank LGUs Local Governance Units MDLF Municipal Development Lending Fund MDP Municipal Development Project M&E Monitoring and Evaluation MENA Middle East and North Africa MOF Ministry of Finance MOLG Ministry of Local Government MoWA Ministry of Women’s Affairs MTR Mid-Term Review NDC Nationally Determined Contribution NDP National Development Plan NGO Non-governmental organization NIS New Israeli Shekel NSWMS National Solid Waste Management Strategy OM Operations Manual O&M Operations and Maintenance PA Palestinian Authority PAD Project Appraisal Document PBF Performance Based Financing PDO Project Development Objective PID-MDTF Partnership for Infrastructure Development – Multi-Donor Trust Fund PLO Palestinian Liberation Organization PP Procurement Plan PPSD Project Procurement Strategy for Development PWA Palestinian Water Authority RAP Resettlement Action Plan RMSP Resilient Municipal Services Project SLF Sanitary Landfill SWM Solid Waste Management TFGWB Trust Fund for Gaza and the West Bank TOR Terms of Reference TS Transfer Station TTL Task Team Leader UN United Nations US$ United States Dollar VC Village Council WA Withdrawal Application WBG World Bank Group WB&G West Bank and Gaza WtE Waste to Energy ZAF Zahrat Al Finjan The World Bank West Bank and Gaza Integrated Solid Waste Management Project-Phase I (P500392) TABLE OF CONTENTS DATASHEET ............................................................................................................................ i I. STRATEGIC CONTEXT ...................................................................................................... 1 A. Project Strategic Context .................................................................................................................. 1 B. Sectoral and Institutional Context .................................................................................................... 1 II. PROJECT DESCRIPTION ................................................................................................... 4 A. Project Development Objective ........................................................................................................ 7 B. Theory of Change and PDO Indicators .............................................................................................. 8 C. Project Beneficiaries ....................................................................................................................... 10 D. Project Components ....................................................................................................................... 10 E. Role of Partners ............................................................................................................................... 12 F. Lessons Learned and Reflected in the Project Design..................................................................... 13 III. PROJECT IMPLEMENTATION ......................................................................................... 13 A. Institutional and Implementation Arrangements ........................................................................... 13 B. Results Monitoring, Evaluation, and Verification Arrangements ................................................... 14 IV. PROJECT APPRAISAL SUMMARY ................................................................................... 14 A. Technical, Economic and Financial Analysis (if applicable)............................................................. 14 B. Fiduciary .......................................................................................................................................... 17 C. Environmental, Social and Legal Operational Policies .................................................................... 19 Grievance Redress Services................................................................................................................. 21 V. KEY RISKS ..................................................................................................................... 21 ANNEX 1. RESULTS FRAMEWORK ......................................................................................... 24 ANNEX 2. FIDUCIARY ARRANGEMENTS ………………………………………………………………………………..33 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) @#&OPS~Doctype~OPS^dynamics@padbasicinformation#doctemplate DATASHEET BASIC INFORMATION Project Operation Name Beneficiary(ies) West Bank and Gaza Integrated Solid Waste Management Project-Phase I Environmental and Social Risk Operation ID Financing Instrument Classification Investment Project P500392 Substantial Financing (IPF) @#&OPS~Doctype~OPS^dynamics@padprocessing#doctemplate Financing & Implementation Modalities [ ] Multiphase Programmatic Approach (MPA) [✓] Contingent Emergency Response Component (CERC) [✓] Series of Projects (SOP) [✓] Fragile State(s) [ ] Performance-Based Conditions (PBCs) [ ] Small State(s) [ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country [ ] Project-Based Guarantee [✓] Conflict [ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster [ ] Alternative Procurement Arrangements (APA) [ ] Hands-on Expanded Implementation Support (HEIS) Expected Approval Date Expected Closing Date 30-Jan-2025 31-Dec-2031 Bank/IFC Collaboration No Proposed Development Objective(s) To upgrade, sustain and support integrated solid waste management system in the West Bank. Components Component Name Cost (US$) i The World Bank Integrated Solid Waste Management Project-Phase I (P500392) Priority Infrastructure 16,750,000.00 Strengthening Sector Policy and Institutional Capacity 4,500,000.00 Contingency Emergency Response Component 0.00 Project Management 3,750,000.00 @#&OPS~Doctype~OPS^dynamics@padborrower#doctemplate Organizations Borrower: Palestinian Authority on behalf of the Palestine Liberation Organization Contact Title Telephone No. Email Laila Sbaih Director General 00000000 slaila@pmof.ps Implementing Agency: Municipal Development and Lending Fund , Ministry of Local Government Contact Title Telephone No. Email Mohammad Ramahi Director 02-2966610 mramahi@mdlf.org.ps Yosrea Ramadan Head of Solid Waste +972-594-22 78 18 yosrear@molg.pna.ps Unit,Ministry of Local Government @#&OPS~Doctype~OPS^dynamics@padfinancingsummary#doctemplate PROJECT FINANCING DATA (US$, Millions) Maximizing Finance for Development Is this an MFD-Enabling Project (MFD-EP)? No Is this project Private Capital Enabling (PCE)? No SUMMARY Total Operation Cost 36.00 Total Financing 36.00 Financing Gap 0.00 DETAILS Non-World Bank Group Financing Other Sources 11.00 ii The World Bank Integrated Solid Waste Management Project-Phase I (P500392) FRANCE: Govt. of [MOFA and AFD (C2D)] 11.00 Trust Funds 25.00 Partnership for Intrastructure Development MDTF 5.00 Special Financing 20.00 @#&OPS~Doctype~OPS^dynamics@paddisbursementprojection#doctemplate Expected Disbursements (US$, Millions) WB Fiscal Year 2025 2026 2027 2028 2029 2030 2031 Annual 0.50 3.00 5.00 5.00 5.00 3.00 3.50 Cumulative 0.50 3.50 8.50 13.50 18.50 21.50 25.00 @#&OPS~Doctype~OPS^dynamics@padclimatechange#doctemplate PRACTICE AREA(S) Practice Area (Lead) Contributing Practice Areas Urban, Resilience and Land @#&OPS~Doctype~OPS^dynamics@padrisk#doctemplate SYSTEMATIC OPERATIONS RISK- RATING TOOL (SORT) Risk Category Rating 1. Political and Governance  High 2. Macroeconomic  High 3. Sector Strategies and Policies  Substantial 4. Technical Design of Project or Program  Substantial 5. Institutional Capacity for Implementation and Sustainability  Substantial 6. Fiduciary  Substantial 7. Environment and Social  Substantial 8. Stakeholders  Substantial 9. Other  Substantial 10. Overall  Substantial iii The World Bank Integrated Solid Waste Management Project-Phase I (P500392) @#&OPS~Doctype~OPS^dynamics@padcompliance#doctemplate POLICY COMPLIANCE Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [✓] No Does the project require any waivers of Bank policies? [ ] Yes [✓] No ENVIRONMENTAL AND SOCIAL Environmental and Social Standards Relevance Given its Context at the Time of Appraisal E & S Standards Relevance ESS 1: Assessment and Management of Environmental and Social Risks and Relevant Impacts ESS 10: Stakeholder Engagement and Information Disclosure Relevant ESS 2: Labor and Working Conditions Relevant ESS 3: Resource Efficiency and Pollution Prevention and Management Relevant ESS 4: Community Health and Safety Relevant ESS 5: Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Relevant ESS 6: Biodiversity Conservation and Sustainable Management of Living Natural Relevant Resources ESS 7: Indigenous Peoples/Sub-Saharan African Historically Underserved Not Currently Relevant Traditional Local Communities ESS 8: Cultural Heritage Relevant ESS 9: Financial Intermediaries Not Currently Relevant NOTE: For further information regarding the World Bank’s due diligence assessment of the Project’s potential environmental and social risks and impacts, please refer to the Project’s Appraisal Environmental and Social Review Summary (ESRS). @#&OPS~Doctype~OPS^dynamics@padlegalcovenants#doctemplate LEGAL Legal Covenants Sections and Description iv The World Bank Integrated Solid Waste Management Project-Phase I (P500392) The Recipient shall cause MDLF through the project agreement, not later than 180 days after the Effective Date, or any other date agreed with the Bank, to hire an independent third-party verification agency (“IVA”) acceptable to the Bank, for the purposes of assessing the performance of JSCs to become eligible to receive PBS Subgrants, all under terms and conditions, and against the set of agreed indicators included in the POM. @#&OPS~Doctype~OPS^dynamics@padconditions#doctemplate Conditions Type Citation Description Financing Source The MDLF will prepare and adopt the project Adoption of an operational operational manual that Effectiveness IBRD/IDA, Trust Funds manual will be cleared with the Bank prior to project effectivenees v The World Bank Integrated Solid Waste Management Project-Phase I (P500392) I. STRATEGIC CONTEXT A. Project Strategic Context 1. The ongoing conflict in the Middle East continues to have a catastrophic impact on the Palestinian economy, pushing the territories into a crisis of unprecedented magnitude. The conflict has resulted in a staggering number of casualties, widespread displacement, and massive destruction of infrastructure in Gaza. The continuation of the hostilities has led to a sharp reduction in economic output and a collapse of basic services in both the West Bank and Gaza, amid deepening poverty and inequality across the territories. 2. The economic downturn triggered by the conflict surpasses the impact of any previous shocks over the last three decades. Real GDP has plummeted, with the West Bank experiencing a 23 percent contraction in the first half of 2024, and Gaza suffering an 86 percent decline, year-on-year. For 2024, the World Bank estimates a real GDP decline of 17 percent year on year, for the Palestinian territories. All sectors have been severely affected, with construction, manufacturing, and trade experiencing the most significant declines. 3. Poverty has reached unprecedented levels and unemployment has surged. Current estimates show that nearly every Gazan lives in poverty. West Bank's households also suffer from the hostilities. In the face of this economic deterioration, unemployment has reached record highs in both the West Bank and Gaza, with rates of 35 percent and 80 percent, respectively. 4. The PA’s financing gap is projected to increase significantly, and the financial sector is under strain. The financing gap is expected to reach US$2 billion in 2024, according to World Bank estimates, or 12 percent of GDP up from 4 percent in 2023, which may pose elevated risks for a systemic failure, primarily affecting public service delivery. Worryingly, the gap is primarily financed by borrowing from domestic banks and increasing arrears to the private sector, public employees, and the pension fund. There is an urgent need for measures to safeguard the sector's integrity, increase predictability and support its recovery. 5. The impact of the current conflict is particularly acute on the Solid Waste (SW) sector whereby customers have long suffered from inadequate waste disposal infrastructure and dilapidated equipment, poor service quality and operational standard exacerbated by highly constrained financial management capacity of SW service operators. B. Sectoral and Institutional Context 6. Solid waste management (SWM) in the West Bank is characterized by high inadequacy, with major gaps in infrastructure and operational capacity for collection, transfer, treatment and disposal services. Although primary waste collection was high (over 90%) prior to the conflict, the overall service particularly for secondary collection and disposal is inadequate. For disposal, there are only two 1 sanitary landfills (SLF) operating in the 1 In addition to these two sanitary landfills, the Jericho and Beit Anan semi-controlled landfills/dumpsites are being used but both sites are oversaturated and have reached their maximum capacity and are now considered environmental hotspots. Page 1 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) West Bank, Zahrat Al Finjan and Al Minya, in the North and South of the West Bank, respectively.2 Currently, there is no landfill serving the central part of the West Bank due to the long-lasting delays incurred to construct the Rammoun landfill. 3 As a result, several local government units (LGUs) in the middle area of the West Bank are burdened by hefty transportation cost for transferring and disposing waste at the referred two SLF. As such, both landfills are forced to function over their designed capacity and are reaching full capacity way ahead of their planned life span due to overload of waste disposal from several governates across the West Bank. 7. The ongoing conflict has intensified these existing challenges in SWM and has introduced new ones. Lack of adequate disposal facilities, the expensive transportation costs and newly introduced movement restrictions are leading to the proliferation of dumpsites across the West Bank. Many LGUs are unable to afford the costly transportation and disposal costs, and illegal dumping becomes the cheaper option. As a result, the landfills and dumpsites footprints are creating negative environment and public health externalities, including contamination of ground water. If the current trend of reliance on landfilling for disposal continues without any policy changes that incentivize waste minimization and treatment, more landfills will be needed for waste disposal. However, construction of new sanitary landfills in the West Bank is difficult, given most suitable sites fall within area “C” boundaries which is under Israeli control. Without urgent infrastructure interventions such as extension of two existing SLFs and construction of strategically located transfer stations to reduce transportation costs, the operation of the current two waste sheds and the proposed third waste shed will be financially and environmentally unsustainable. 8. Constrained financial resources further impede capital investments in new disposal infrastructure and maintenance of existing solid waste facilities, significantly impacting the quality and reliability of service delivery. Cost recovery of SWM services has remained a challenge for LGUs consisting of Joint Service Councils (JSCs), municipalities and village councils which have been providing the SWM services. The current fiscal crisis of the PA has worsened the financial situation of LGUs which mostly rely on central government funding to cover their operational budget. The average cost recovery rate in West Bank pre-2023 was only about 40 percent, and this has further declined since the conflict began and is currently assumed to be less than 20 percent. The wide disparity in the full cost of service delivery and actual cost recovery results in poor service quality and deferral of much needed capital and O&M improvements. Significant resources are required to bring the current SWM facilities to an acceptable standard (infrastructure, equipment, and maintenance support) and to build new disposal facilities to accommodate the ever-increasing waste generation. 9. Given the scarcity of land and over-capacity functioning of the existing two sanitary landfills in West Bank, the government has recently decided to contract a Waste-to-Energy (WtE) facility (mass burn incineration) for the Zahrat Al Finjan landfill with an annual capacity of 430 000 tons/year. The Design-Build- Own-Operate (DBOO) contract has been signed with an international and locally registered national partners consortium and the WtE’s detailed design is underway. The Government fully acknowledges the challenges that 2 The Jericho semi-controlled landfill, located east of Central West Bank and Consists of 3 cells, has almost reached its capacity. Cell 1 was closed 4 years ago, and cell 2 is still in operation while it has reached its maximum capacity, while cell 3 is mostly located in Area “C”. The Israeli authorities are banning the expansion and operation of cell 3. Due to delays in the construction of the Rammoun landfill, the Jericho landfill, though it has reached maximum capacity, is still in use. Additionally, the Beit Anan controlled dumpsite (currently operating) was established to receive waste from the N&NW JSC area as a transitional phase until the completion of the Rammoun landfill. 3 The Rammoun landfill has been planned to be constructed in area C to serve the Central West Bank area through the support of KfW and AFD since 2009. Israeli permission is needed to construct the landfill in area C. If granted the landfill could be constructed and operational after 4-5 years. Page 2 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) the decision to switch from landfilling to incineration might bring to the current mixed waste system. The new SWM Roadmap for West Bank and Gaza completed by the World Bank in October 2024 took into account the PA’s decision to gradually shift from landfills to waste recovery and WtE. The roadmap identified adjustments to be introduced to the waste collection sheds including providing additional interim sanitary disposal capacity, optimizing primary and secondary collection systems to improve existing waste sorting practices as well as advise on necessary adjustments to the institutional, financial and legal frameworks to improve the sector overall performance and adapt to the PA’s new vision towards waste management in West Bank. While WtE remains as one possible option for waste treatment, technical implementation challenges associated with this disposal option, such as minimal waste calorific value required for incineration/energy generation, increasing waste generation, mobility restrictions affecting SWM waste transfer operators, and the prohibitive O&M cost of WtE facilities, make landfilling the most feasible disposal option for the foreseeable future. 10. Inadequacy and gaps in the existing SWM policies and weak enforcement mechanisms further constrain the effectiveness of SWM institutions. The sector suffers from policy gaps, and in cases where the policies exist, from lack of enforcement mechanisms to properly monitor and/or enforce solid waste directives. The existing policies are generally lacking in critical areas such as policies targeting waste minimization (laws and bylaws for 4Rs (Reduce-Reuse-Recycle-Recover)), promotion of circularity in waste management and creating enabling environment and incentives for private sector participation. To address these policy gaps, Japan International Cooperation Agency (JICA) has been providing support for the formulation of 4Rs guidelines, laws, and bylaws (including policy formulation for Extended Producer Responsibility and single-use plastic ban) which are all in the process of being rolled out by LGUs. Further, the existing laws, regulations, and enforcement mechanisms for environmentally sound management of waste and prohibition of large-scale dumping are acutely insufficient. Sector-wide financial policy reforms are also urgently needed to revisit the current flat tariff setting structure, strengthen the enforcement mechanisms and improve the overall revenue management and administration system for SWM in WB&G. 11. While the Palestinian Authority (PA), through its National Solid Waste Management Strategy (NSWMS), formulates the national targets and plans in the right direction, translating these into actions on the ground has been a key challenge due to lack of capacity, resources, leverage, and gaps in institutional arrangements. The key institution responsible for managing the SWM sector is the Ministry of Local Government (MOLG). The MOLG, as part of its overall responsibility for LGUs, has the mandate to regulate the sector and to update the NSWM in partnership with, among others, Environment Quality Agency (EQA), Ministry of Health (MoH) and Ministry of Finance (MoF). The SWM services on the ground are assigned to fragmented LGUs (municipalities, JSCs and village councils) which often lack sufficient capacity and funding to provide quality and reliable services and/or properly enforce the existing regulations and bylaws set by the MOLG and EQA. (Supplemental Annex 4 3. Institutional framework in the sector). 12. The World Bank has been supporting the PA in the solid waste sector, through sequences of Investment Financing and TA engagements since the early 2000s. Over the past two decades, the Bank has sponsored several flagship solid waste projects, both in the West Bank and Gaza that have achieved successful outcomes and rated 4 All supplemental annexes referred in the PAD are filed under the project folder in Operations Workspace (OW). Page 3 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) as highly satisfactory 5 by the Independent Evaluation Group (IEG). The interventions have been transformational in the provision of SWM services, both in the West Bank and Gaza Strip while operating in a very fragile and capacity-constrained environment. Key contributions supported through WB support included establishment of a modern sanitary landfill and ancillary facilities; upgrade of transfer stations; rehabilitation of dumpsites and elimination of open waste dumping; support to improved cost recovery; establishment of O&M standards for solid waste facilities and improved service delivery. Through these operational engagements, the World Bank was able to bring together global, regional, and national experience in SWM programs and amassed key lessons in the sector, which are critical and applicable for pipeline SWM operations. 13. While the support of the World Bank and other donor partners have been instrumental, particularly in establishing critical infrastructures, there is an ever-increasing need for an integrated and more programmatic waste management approach, focused on resilient infrastructure, waste minimization, and operational efficiency across the whole solid waste service chain. The programmatic approach will identify and prioritize construction of urgently needed infrastructure while at the same time introduce an incremental and gradual shift from the traditional ‘take-make-use-discard’ to that of circularity 6 , particularly given the context of increasing waste, proliferating dumpsites, scarcity of land and financial constraints faced in the WB. To that end, the World Bank launched the Resilient Urban Development in West Bank and Gaza (P180345) programmatic ASA in February 2023, which included the preparation of comprehensive SWM Roadmap for the WB&G as one of the key pillars supported under the ASA. The roadmap aims to inform the sector priorities, policy development and future investments. The roadmap applies a holistic, sector-wide approach while carrying an in-depth analysis focused on the environmental, financial, institutional, and social sustainability pillars of SWM. The proposed project’s preparation is informed by and aligned with the priority interventions identified in the roadmap that has been completed in June 2024. The roadmap also informs the government’s new National Solid Waste Management Strategy (NSWMS) (2024-2029), which is currently under preparation by the MOLG. II. PROJECT DESCRIPTION 14. The proposed Integrated Solid Waste Management Project (ISWMP-1) will be part of a Series of Projects (SOP) to address WB&G’s complex SWM sector issues, major infrastructure deficits, and incremental policy reform needed to support the improved SW management. The SOP framework will allow ISWMP-1 to address urgent infrastructure and equipment gaps in existing three waste sheds in the West Bank, such as addressing operational gaps and adding disposal capacity at the existing two sanitary landfills in Northern and Southern waste sheds and construction and rehabilitation of selected transfer station(s). The first phase will also lay the groundwork for much needed policy reforms and strengthening enforcement capacities of key SWM institutions in the sector that will enable the long-term operational, financial and institutional sustainability of the sector. ISWMP-2 on the other hand will focus on tackling long-term measures and activities that require in depth- assessments, longer implementation timeframe and stability, and significant level of financing such as collection optimization of the primary and secondary collection, upgrade of semi-controlled landfills and dumpsites to 5 Southern West Bank Solid Waste Project (P105404, 2014); West Bank and Gaza - Solid Waste Management OBA Pilot in West Bank Project (P132268, 2018); Gaza Solid Waste Management Project (P121648, 2022) 6Circularity in solid waste management refers to the application of circular economy principles to the management of waste. Unlike the traditional linear economy model, which follows a "take-make-dispose" approach, a circular economy aims to minimize waste and make the most of resources by reusing, repairing, refurbishing, and recycling existing materials and products. Page 4 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) sanitary landfills and/or their closure, closure of major illegal dumpsites, construction of waste sorting facilities as well as providing implementation support for the legal and institutional reforms incubated under the ISWMP-1. 15. The SOP aims to provide a long-term framework for the World Bank to continue addressing SWM challenges, while complementing other investments and initiatives by other development partners. ISWMP-1 builds on the lessons and gains of WB solid waste investment over the past two decades. It will adopt a strategic approach to address the urgent disposal infrastructure needs in the West Bank, while working on strengthening the policies, regulations, and enforcement capacities of SWM institutions to promote waste reduction and diversion from landfill disposal. 16. The Bank has been successful in convening development partners and leveraging financing to address main issues in the solid waste sector and continues to do so for this project. Building on the success of the Gaza Solid Waste Management Project (closed on 2022) which was designed and implemented jointly with Agence Française de Développement (AFD) 7, this project once again aims to bring together World Bank and AFD financing and technical expertise to replicate the successful results previously achieved in the solid waste sector. 17. The project will integrate key interlinked priorities of infrastructure investments in the water, energy and transport sectors into its design and implementation arrangements. Through joint planning and close coordination with relevant sectors, the project will support the proper disposal of sludge generated by the Wastewater Treatment Plants (WWTPs) 8 in West Bank (Supplemental Annex 9. Sludge Management and collaboration with WWTPs in the West Bank). Additionally, the project design involves close collaboration with the energy sector to ensure that grid connections are available to transfer the electricity generated at landfills to the national grid. Furthermore, the strategic selection of locations for the proposed transfer stations under this project will be conducted in close consultation and collaboration with the transport sector. 18. ISWMP-1 is proposed as the first in a Series of Projects (SOP) focused only on the West Bank solid waste sector. This programmatic approach will help address the complex issues requiring incremental and sustained interventions while responding to immediate infrastructure and service provision and capacity building demands. While the first phase recognizes the urgent infrastructure gaps for basic disposal, waste transfer and landfill remediation (Component 1) in the West Bank and proposes a rather modest/curbed capacity building and policy reform measures (Component 2) suited to the highly constrained current operational context of the West Bank, it is acknowledged that more ambitious/advanced sector policy reforms and capacity strengthening measures are needed to effect improved service performance at scale, regulate the sector and sustain investments prepared and implemented under ISWMP-1. To that end, ISWMP-1 plays the critical role of sustaining the existing system and deterring it from further collapse while ISWMP-2 is expected to pursue a more ambitious reform agenda and transformative policy measures needed in the sector for the long run. Figure 1, details the planned interventions under ISWMP-1 and ISWMP-2, including the foreseen timeframe for implementation. (Supplemental Annex 4: Activities and the proposed total project cost under Phase-I & Phase-II). 7 AFD has agreed to commit 10.0 million Euro in parallel financing. 8 Construction of a sludge management unit as part of the new cell design at Zahrat Al Finjan landfill (Jenin) and Al Minya Landfill (Hebron) for disposal of sludge. Page 5 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) Figure 1. ISWMP Programmatic Approach: Phase-1 and Phase-2 19. ISWMP-1 is consistent with the development priorities of the Bank’s Assistance Strategy 9 (AS) for WB&G (FY2022-2025), which acknowledged the significant investment and policy reform needed in the SWM sector. To that end, the project aims to provide critical infrastructure and capacity development support that will enhance the effectiveness of the sector in alignment with the PA’s priority areas as stated in the National Development Plan (NDP, 2021-2023), Pillar 3: National Policy 31: Ensuring a Sustainable Environment. The proposed operation also supports several key objectives of the World Bank Middle East and North Africa (MENA) Regional Strategy by responding to two key pillars: (i) renewing the social contract, and (ii) strengthening resilience to disasters and climate change. 20. The project is consistent with WB&G Nationally Determined Contributions (NDC)- to the Paris Climate Agreement. Tackling climate change is a national priority and the NDC identifies the waste sector as the second highest source of emitter of the total national greenhouse gas (GHG) emissions, accounting for 23% of the total national emissions. Solid waste is also identified as one of six of the most vulnerable sectors in the 2016 National Adaptation Plan. Accordingly, mitigation interventions focused on the solid waste sector have been included as part of the roadmap to achieve the NDC targets, which outlines two implementation action plans for the waste sector primarily from a mitigation perspective: (i) improving waste management and (ii) reducing emissions in the waste management sector. 21. The project interventions will also respond to the cross-cutting thematic areas of Maximizing Climate Resilience through waste minimization and providing better SWM services. Planned project 9 Report No.156451-GZ discussed by the Board of Executive Directors on April 29, 2021 Page 6 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) interventions/activities have benefited from climate risk information as part of urban climate hazard vulnerability assessments. Interventions which will likely improve the landfill management are also expected to improve the water resource management, by reducing pollution of ground water resources. Interventions will also support the reduction of waste accumulation in drainage infrastructure, which is one of the contributors of flooding. Furthermore, these investments will be accompanied by policy reforms that promote waste minimization and overall efficiency of SWM services. 22. Country Climate and Development Report (CCDR). The CCDR for WB&G, through the Climate Responsive Urban Development agenda, identifies the solid waste sector as one of the main pathways and priority area that will contribute to reduction of GHG emissions and climate vulnerabilities through: (i) minimizing waste disposal at landfills through recycling; (ii) improved landfill Management for CC consideration; and (iii) financial and institutional sustainability. The proposed project components are aligned with the CCDR goals by focusing on policies and investments that contribute towards climate resiliency, adaptation, and mitigation co-benefits, while addressing the broader intrinsic development challenges of WB&G. 23. Gender. The ongoing challenges in solid waste management (SWM) in the West Bank and Gaza have profound implications for women, affecting their health, environment, and economic opportunities. Women face heightened exposure to health risks due to their roles in informal waste picking and household waste management, especially where SWM systems are inadequate or have collapsed (UNEP-IETC and GRID-Arendal, 2019). These environmental and health risks are compounded by their exclusion from formal decision-making roles in the sector, limiting their ability to influence change in SWM practices and access to safer, higher-paying opportunities. Female labor force participation in the West Bank and Gaza, already among the lowest globally at 17 percent, is expected to decline further due to conflict, exacerbating economic challenges. Women remain underrepresented in leadership and male-dominated sectors like construction, essential for SWM, with part-time work rising sharply to 40.3 percent (ILO, 2024). Although the government has established frameworks such as the National Gender Strategy for the Environment Sector (2013–2017) to integrate gender considerations into water and solid waste management, these policies have not been updated to address the evolving challenges posed by the ongoing conflict and systemic issues in the sector. The project takes a multifaceted approach to addressing these challenges by encouraging construction contracts to include at least 30% women in SWM infrastructure roles while ensuring workplace safety through measures such as separate facilities and improved lighting. It leverages performance-based financing to incentivize JSCs and local SWM service providers to employ women in leadership and technical roles, supported by capacity-building workshops in partnership with Ministry of Women’s Affairs (MoWA) and other women-based organizations. Furthermore, it advocates for updating the National Strategy for the Environment Sector (2013-2017) to align with current SWM challenges and promote women’s participation in governance and Waste-to-Energy initiatives (Supplemental Annex 5: Gender Gap Analysis). A. Project Development Objective The PDO is to upgrade, sustain and support integrated solid waste management system in the West Bank. 24. The PDO indicators include the following: • PDO Indicator 1. Increase in the overall waste disposal capacity at ZAF and AM sanitary landfills Page 7 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) • PDO Indicator 2. Financial management model prepared and utilized by at least 60% of targeted JSCs and local SWM service providers • PDO Indicator 3. People benefiting from climate resilient infrastructure • PDO Indicator 4. Landfills and TS(s) supported under the project operate and managed per defined operational standards in the POM B. Theory of Change and PDO Indicators 25. The rationale for the Project is to improve solid waste disposal and management services in the Project area, as it is critical to improving environmental outcomes and basic living conditions in the West Bank. Hence, the logic underpinning the operation is to ensure environmentally sound and socially responsive priority infrastructure investments in selected areas to contribute to the outcome of improved solid waste disposal services. The Project design also reflects the critical significance of institutional and policy strengthening by putting them at the core of the operation. The ISWMPs Theory of Change (TOC) lays out the underlying logic, causal chain between outputs, outcomes and PDO, and the guiding assumptions. Page 8 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) Figure 2. Theory of Change (Results Chain) Challenges Result Areas Activities Outputs Short-Term PDO Medium-Term Long Term Outcomes Outcomes SOP (Phase 1) (Phase-2) Outcomes • Lack of disposal Result Area 1. • Construct new cells and • Additional landfill capacity Environmental PDO Indicator 1. Environmental capacity Upgrading the rehabilitate sanitary created through cells improvements due to: Increase in the improvements due • Lack of transfer MSW infrastructures/landfills. expansions • Upgraded overall waste disposal to: station infrastructures • Construct/rehabilitate • Landfills equipped with capacity for capacity at ZAF and Resilient SWM • Inadequate and enhance the transfer stations infrastructure for gas sanitary disposal AM sanitary landfills. infrastructure with landfill and TS environmental • Provide equipment, capture and other env. of waste with sanitary disposal of equipment and performance of machineries, containers/bins measures (leachate proper leachate PDO Indicator 4. waste at landfills. bins disposal facilities • Strengthen resiliency of collection/treatment, storm management Landfills and TS (s) Proper leachate • Poor landfilling SWM infrastructure water collection and and other env. supported under the collection and practices treatment drainage, etc.) Measures. project operate and management • Additional transfer stations managed per defined Landfill gas collection constructed /rehabilitated. • Proper operational standards (GHG reduction); • Landfill and TS operational operational in the POM. Reduction of illegal equipment/machineries and management of dumping, due to containers provided for landfills and TS PDO Indicator 3. availability and secondary collection (compaction, People benefiting proximity of TS. cover). from climate resilient • Containers/bins infrastructure utilized for Integrated increased MSW collection. Management • Missing Result Area 2 • Prepare/update • Policy and Legal framework • WMIS System • Reduction in with regulators and (1) Strengthening comprehensive/standardized for Waste Minimization, customized and waste enhanced policy institutional legal and policy framework illegal dumping, and HWM scaled-up. disposed at environmental instruments capacity for (i) Waste Minimization, put in place. • Framework landfills. and that promote development (ii) illegal dumping and (iii) • Enforcement procedures, prepared for • Reduction in institutional circular support to Hazardous Waste with clear assigned enforcement illegal sustainability economy/waste promote Management (HWM) responsibility prepared for mechanism dumping. and minimization integrated solid • Strengthen the Institutional MoLG, EQA. Etc. /platform for • Improved Greater and waste capacity of MoLG and EQA • WMIS customized and waste management circular enforcement management for (i) improved SWM service adopted that allows for minimization of HW economy capacity performance monitoring of better monitoring LGUs policies. • Increase LGUs, (ii) ensuring performance. • Contingency participation enforcement/compliance of Plans Developed of private SWM mandates for SWM Infra sector in and operation SWM • National level performance standards and reporting system/platform prepared • Lack of PDO Indicator 2. standardized (2) Improving • Develop performance-based • Standardized SWM service • Compliance of Financial Improved the overall financial financial grants system performance monitoring JSCs with KPIs. management model SWM planning and management management of • Update SWM tariff policies indicators were developed. • JSCs/SW prepared and utilized budgeting. model/toolkits MSW sector and regulations • Standardized financial operators by at least 60% of Enhanced SWM for solid waste • Upgrade billing/revenues management system utilized targeted JSCs and cost-recovery and operators collection systems prepared. standardized local SWM service financial • Performance based grants financial providers management. • Prepare standardized Financial Management and piloted for selected JSCs. management Reporting system for • Upgraded billing and and reporting JSCs/SW operators revenue collection systems. system based on • the upgraded billing and revenue collection modules. Assumptions: • Fiscal and institutional capacities of existing SWM institution continues at least at the current level and no further aggravation incurred due to changes in operational context • No prohibitive or detrimental policies implemented by govt to affect waste minimization • Effective and continued collaboration within and between concerned national solid waste national ministries, local government units and other governance bodies • Capacity building at the national, local government level and PIU (MDLF) is effective • Effective incentive schemes to ensure commitment at JSC level Page 9 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) C. Project Beneficiaries 26. The project is expected to benefit the population of the West Bank by providing priority SWM infrastructure and strengthening integrated SWM to sector agencies and service providers. The project will increase access to improved solid waste infrastructure and services to residents in the West Bank, which will have improved environmental and health impact on project targeted area. 27. Citizen Engagement. The project will build on the advances of the RMSP and its predecessor projects by embedding citizen engagement and social accountability in the functioning and performance incentives of JSCs and local SWM service providers. The citizens and recipients of waste disposal services in the project target areas will be able to communicate their views about the quality of the service, grievances and areas for improvement to their respective service providers. This will be done through community consultations, periodical surveys and IVA monitoring tools that will be supported under the project. These tools will also include active usage of the Waste Management Information System (WMIS) customized under the project as the reporting mechanisms, in addition to the use of ICT tools such as text messaging and social media platforms. A participatory public consultation process will be followed in the preparation of feasibility and design studies, particularly under component 1. These procedures will be outlined as part of the project operation manual (POM). Community committees (with representation from women, people with disabilities, and youth) will be convened for each benefiting JSC/LGU as part of consultation on design of site-specific SWM infrastructure. MDLF will also carry out satisfaction assessments of direct beneficiaries, clients, and citizens in project targeted areas during the course of the project, at the beginning (baseline) and before project closing. D. Project Components 28. The project will finance the following four components: Component 1: Priority Infrastructure (US$16.75 million) 29. This Component will finance the construction and rehabilitation of critical solid waste infrastructure in the West Bank. Proposed activities cover: (a) Zahrat-Al-Finjan (ZAF) landfill that serves the northern and middle waste sheds in West Bank. Investments include construction of new cells, remedial rehabilitation of existing cells, including improved leachate collection and treatment system, necessary infrastructure for gas collection 10, sludge management 11, and provision of essential landfill O&M equipment, (b) Al Minya landfill that serves the southern waste shed in West Bank. Investment includes construction of new cell, remedial rehabilitation of existing cells, including improved leachate collection and treatment system, necessary infrastructure for gas collection and energy generation, and provision of essential O&M equipment for Al Minya landfill and supply of medical waste treatment equipment, (c) construction of transfer station (s). Quantity, location and capacity of transfer stations 10 ISWMP-2 will cover gas treatment and energy production equipment. Potentially, there might be a PPP arrangement between the JSCs and with private investors to cover these assets. 11 During early project implementation, MDLF will conduct the feasibility studies and detailed designs for the rehabilitation and extension of ZAF and AM landfills which will consider feasible options to accept treated sludge from neighboring functional WWTPs (detailed reference included under supplemental annex 9). Page 10 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) will be determined based on the waste shed feasibility study that will be conducted post project approval); and (d) supply of waste bins. Component 2: Strengthening Sector Policy and Institutional Capacity (US$4.50 million) 30. As described in para 18 above, the ISWMP-1 plays the critical role of sustaining the existing system and deterring it from further collapse while ISWMP-2 is expected to pursue a more ambitious reform agenda and transformative policy measures needed in the sector for the long run. Therefore, proposed activities under Component 2 are mostly focused on basic/simple TA activities and lays out a basis for more ambitious policy reforms to be undertaken under the Phase-II, where major improvements and performance will be sought from the sector. 31. Component 2 will support integrated SWM for national agencies and local SWM service providers 12. At the national level it will provide support to the MOLG and EQA which oversee the policy formulation, implementation, and enforcement within the sector. At the local (LGU) level, it will provide technical assistance, capacity building to local SWM service providers and performance-based support to selected JSCs to improve the overall SWM and service delivery. This component will also provide capacity building measures and training for MDLF staff. 32. Sub-Component 2.1. National-Level support. This subcomponent will support central ministries/national agencies through technical assistance to prepare sector policy reforms, regulations and initiatives focused on three key areas: (i) policy initiatives promoting waste reduction through ‘Reduce-Reuse-Recycle-Recover”, circularity in waste management, and enabling framework for private sector involvement; (ii) policies and regulations minimizing uncontrolled dumping and unsanitary disposal, and (iii) improve the financial sustainability of the sector through preparation of financial management toolkits/model. The national policy reforms supported under this sub-component will be reinforced through incentives and performance-based support provided to selected JSCs under sub-component 2.2. This sub-component will also provide institutional strengthening and capacity development support to MOLG and EQA to strengthen the policy compliance oversight and enforcement capacity at central level, improving the coordination mechanisms among agencies, establishing data and performance monitoring platforms and providing technical assistance for strengthening solid waste investment planning, procurement, and contract management. 33. Sub-component 2.2. Local SWM service providers. This subcomponent will finance capacity development and technical assistance support to local SWM service providers and piloted performance-based grants to selected JSCs focused on (i) service improvement (efficiency in collection, transfer and disposal), (ii) financial improvement (improvement in fee collection, cost recovery, financial monitoring system, billing system and the implementation of waste information management systems), and (iii) adoption of waste minimization initiatives. Supplemental Annex 6 includes the proposed sample Key Performance indicators (KPIs). The Project Operations Manual (POM) shall detail, inter alia, the initial list of KPIs, the criteria for eligibility of performance-based grant, and the monitoring and verification mechanism, which will be further refined during the course of the project implementation. 34. Sub-component 2.3. Waste shed optimization studies and waste management plans. This sub- component will finance, inter alia: (i) waste shed feasibilities to optimize primary and secondary collection 12 SWM service providers include JSCs, Municipalities and Village Councils Page 11 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) services, treatment and disposal activities and reduce the operating costs of local SWM service providers in the West Bank; (ii) feasibility studies and detailed designs to upgrade and extend existing landfills in the West Bank; and (iii) prepare National Hazardous Waste Management Plan (HWMP). Component 3: Contingency Emergency Response Component (CERC) (US$0) 35. This is currently a zero-sum component to make funds available to the government by reallocation in the event of a natural, man-made or health crisis. Component 4. Project Management (US$3.75 million) 36. This component will finance the direct costs of management and operation of the project to ensure smooth delivery and compliance with World Bank policy and guidelines. This will include support for the Project Implementing Agency (PIA) for managing both the national level reforms and overseeing the project implementation at local level. Key activities will include construction supervision and contract management, technical studies, financial and technical audit, oversight on the inclusion of environmental and social safeguards aspects (including citizen engagement and grievance redress mechanism) and monitoring of environmental and social safeguards requirements, M&E activities (including independent evaluation (IVA) of JSC’s operational performance), and other consultancies that are identified critical for the project implementation. 37. Total project costs. The total operation cost is US$36 million, including US$25.0 million from the World Bank (TFGWB and PID-MDTF) and ~US$11.0 million from Agence Française de Développement (AFD) under parallel financing to ISWMP-1. Trust Fund Source Trust Fund US$ Closing Date Number (million) TFGWB TF0C6877 20.00 31-December-2031 PID-MDTF TF0C6876 5.00 30-June-2027 E. Role of Partners 38. The project builds on a two-decade engagement of the Bank in the WB&G solid waste sector. The Bank’s main value added for this project derives from its extensive engagement in the WB&G solid waste sector as well as the Bank’s regional and global expertise and knowledge on SWM. An important feature of the Bank’s approach to solid waste projects is to take an integrated and programmatic approach in the sector, particularly in the WB&G, whereby strategic sector assessment is followed by phased infrastructure interventions complemented by programmatic sector policies, targeted institutional capacity building, and financial sustainability of the sector in a way that responds to the unique constraints and challenges faced by the sector. The proposed project also complements other solid waste operations supported by development partners in the West Bank, such as long- planned KfW/AFD’s supported project for constructing a very needed sanitary landfill (Rammoun) in area C to serve the middle waste shed in West Bank. The referred landfill is expected to materialize in 4-5 years (if Israeli Page 12 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) permission is granted). Proposed intervention under ISWMP-1 and 2 will potentially include the financing of transfer station(s) in middle waste shed to improve the efficiency of SWM operation around most dense areas in WB, reduce the illegal dumping and provide an interim and no-regret infrastructure solution until the sanitary landfill is constructed to serve the middle waste shed. Name of Partner Nature of Involvement /Description Agence Française de Parallel Financing in the amount of 10.0 million (Euro) Développement (AFD) F. Lessons Learned and Reflected in the Project Design 39. Investing in SWM. The project builds on lessons learned from two decades of engagement in the West Bank and Gaza SWM sector by the World Bank and donors. Some of the key lessons considered during project design is the need for an integrated and programmatic approach that includes strategically phased policy, regulation and institutional interventions accompanying infrastructure investments in collection, transportation, and disposal along with focus on circularity and job creation. Improved resilience to hard and longstanding FCV context and strengthened financial sustainability of operators are among the key priorities of the Bank’s engagement in the sector along with active support to establishment of enabling framework for private sector participation both in O&M of SWM infrastructure and as part of expanded waste recovery and recycling agenda. 40. Programmatic approach. One of the key lessons that emerged from the ICR for the recently completed GSWMP is that investment in sanitary landfills and stand-alone project level interventions will not be sufficient to address sector wide challenges. The proposed project adopts a more inclusive and programmatic approach through the SoP to address the urgent infrastructure needs in a phased manner, while contributing to gradual policy and institutional strengthening needed to achieve long-term sustainable outcomes. For ISWMP-1, the priority infrastructure investments (Component 1) and the policy and institutional TA (Component 2) will be thematically linked and sequentially followed under Phase-2 to ensure their continuity and sustainability. III. PROJECT IMPLEMENTATION A. Institutional and Implementation Arrangements 41. The project will be implemented by the MOLG through the Municipal Development Lending Fund (MDLF). The MDLF had recently successfully implemented GSWMP (P121648) (2014-2022) and MDP3 (P159258) (2019- 2023) and possesses substantial implementation knowledge of the World Bank’s project preparation and implementation cycles, including safeguards and fiduciary policies as well as SWM related interventions. As such, the proposed project will heavily capitalize on MDLF’s implementation capacity, experience and qualified staffing. The Environmental Quality Authority (EQA) will also be involved throughout project implementation particularly related to project activities supported under Component 2. 42. The MDLF will follow the implementation arrangements that have been used for the MDP3 Project (P159258). MOLG/JSCs will be involved in three major phases: a) providing inputs to technical documents; b) depending on the type of contracts, MOLG/JSC may be invited to participate in the evaluation of bidders/consultants and decide on a final award recommendation; and c) contribution to designs, supervising the Page 13 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) works and taking over all completed works, supplied goods and consultant deliverables. The specific framework conditions through which these JSCs will be beneficiaries of project funds will be described in the Project Operations Manual (POM), which will be prepared and adopted by the MDLF once cleared with the Bank, prior to project effectiveness. The specific targets for the release of performance-based grants will be included in these agreements and will be agreed with the WB prior to their signature. B. Results Monitoring, Evaluation, and Verification Arrangements 43. M&E of project results will follow standard World Bank practice. The World Bank and the MDLF will agree on a results framework with indicators and the methodology for data collection, which will be used to track progress towards achieving the targets and the PDO, and to provide a sound evidence-base to support course correction in response to emerging issues. MDLF will assume the overall responsibility for M&E and preparation of semi-annual reports to be discussed with the Bank. Dedicated resources will be allocated for M&E under Component 4, including budgets for training, outsourced consultancy for technical audit, KPIs verification, and the other needed surveys. The POM shall detail the roles and responsibilities of all parties involved. C. Disbursement Arrangements 44. The ISWMP-1 will utilize the disbursement arrangements and guidelines as stipulated in the Project Disbursement and Financial Information Letter (DFIL), in accordance with the World Bank’s disbursements guidelines. The ISWMP-1 will use “Reporting-Based Disbursement” with IFRs that include cash forecasts covering one or two quarters, as deemed necessary. The ISWMP-1 will require the opening of two DAs at The National Bank (TNB), one DA for each of the two trust funds that will finance the project. Other Financial Management and Disbursement arrangements will be similar to RMSP including using proper Withdrawal Applications and E- disbursement IV. PROJECT APPRAISAL SUMMARY A. Technical, Economic and Financial Analysis (if applicable) Technical Analysis 45. The ISWMP-1 adopts a holistic, sector-wide approach that includes comprehensive and phased policy and strategic interventions. This approach focuses on environmental, financial, institutional, and social sustainability of proposed sector interventions. The project design helps to address complex SWM sector issues, major infrastructure deficits, and incremental policy reforms needed to support improved SWM in West Bank and Gaza. 46. The ISMWP-1 will finance the rehabilitation, extension and upgrade of critical SWM infrastructure such as sanitary landfills, transfer stations, and waste collections systems. The project will help to enhance the operational efficiency and financial sustainability of local SWM service providers. This includes training and technical assistance to improve service delivery and management practices. 47. The ISWMP-1 also focuses on reducing greenhouse gas emissions by promoting recycling and waste minimization practices. The project emphasizes the transition from a traditional linear economy model ("take- Page 14 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) make-dispose") to a circular economy model. This involves strengthening the framework for reusing, repairing, refurbishing, and recycling existing materials and products to minimize waste disposal. 48. The project encourages gender inclusion by promoting the employment of women in SWM infrastructure roles and leadership positions. This is supported by capacity-building workshops and performance-based financing incentives. Social considerations include ensuring workplace safety, promoting women's participation in governance, and addressing the needs of vulnerable communities. 49. The ISMWP-1 will assess and mitigate environmental and social risks associated with SWM activities. This includes ensuring the health and safety of workers and surrounding communities and implementing robust environmental and community safety measures. Effective coordination among key institutional stakeholders, including local governments, SWM service providers, and development partners, is crucial for the successful implementation of ISWMP-1. The project will engage with consumers of SWM services and neighboring populations to ensure their needs and concerns are addressed. 50. The project will develop a robust performance-based financing mechanism for monitoring, evaluating and rewarding the performance of local SWM service providers. This involves setting key performance indicators (KPIs), conducting independent evaluation, and ensuring compliance with World Bank policies and guidelines. 51. The ISWMP-1 will finance the following major SWM assets: 52. Zahrat Al Finjan (ZAF) landfill, situated in the northern West Bank, serves multiple local government units (LGUs) and handles 1200-1400 tons of waste daily. It was initially designed for a lower capacity, which has been exceeded due to the growing demand. The landfill has expanded significantly since its inception in 2007, now incorporating five cells with a total capacity of 5.5 million tons. However, this rapid expansion has led to operational challenges, including issues with leachate management and structural stability. The proposed interventions under this project will focus on expanding additional cells, equipped with proper leachate lining, provision of infrastructure for gas flaring/collection system, management of sludge from WWTPs and introduction of improved landfill management standards that will be monitored through defined KPIs, in addition to providing critical equipment and machinery to manage the day-to-day landfill operation. 53. Al Minya landfill, situated in the southern West Bank, serves multiple local government units (LGUs) and handles 1300 tons of waste daily. It was initially designed for a lower capacity of 630 tons daily, which has been exceeded due to the growing demand. The landfill has expanded significantly since its construction in 2011, now incorporating four cells with a total capacity of 4 million tons. However, this rapid expansion has led to multitude of operational challenges, including issues with leachate management and waste piling. The proposed interventions under this project will focus on expanding additional cells, equipped with proper leachate lining, provision of infrastructure for gas flaring/collection system, management of sludge from WWTPs, supply of medical waste treatment equipment and introduction of improved landfill management standards that will be monitored through defined KPIs, in addition to providing equipment and machinery to support the day-to-day landfill operation. 54. Transfer stations: the three-waste sheds in the West Bank (north, middle and south) all suffer from lack of sufficient transfer stations, often resulting in high transportation cost for waste transfer to main sanitary landfills. This resulted in proliferation of illegal dumpsites, particularly in central and southern governorates where longer distance to landfills and excessive transportation costs are forcing municipalities to rely on illegal dumping, Page 15 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) creating multitude of environmental and social issues in the area. The project will finance the construction of strategically selected transfer station (s) in problem areas, in addition to providing additional containers/bins and equipment for transfer stations. 55. The proposed operation is aligned with the goals of the Paris Agreement on both mitigation and adaptation (Supplemental Annex 7. Project Alignment with the Paris Climate Agreement). 56. Assessment and reduction of mitigation risks. Activities financed under sub-component 2.1 (National- level support), provides technical assistance support focused on three key areas: (i) policies promoting waste minimization through ‘Reduce-Reuse-Recycle-Recover”, circularity in waste management, and enabling framework for private sector involvement; (ii) policies and regulations preventing uncontrolled dumping and unsanitary disposal, and (iii) strengthening financial sustainability of the sector. The national policy reforms supported under this sub-component will be reinforced through incentives and performance-based support provided to SWM service providers under sub-component 2.2. These activities are not only aimed at reducing waste but also at promoting recycling, all aimed to improve overall SWM service delivery. Activities related to technical assistance on institutional capacity building are universally aligned. Activities related to collection and transport of mixed waste are part of the ISWMP system and are considered low risk given there are no other technically feasible alternatives that can deliver the same development objectives with lower GHG emissions. The carbon lock-in and transition risks of these activities are also low as they contribute towards reducing methane emissions from decomposing waste and have relatively short lifetime. Activities related to procurement of waste storage, equipment, and upgrading of local SWM infrastructure and facilities pose moderate risk as these investments support implementations of SWM plans that include the policy and regulatory framework. These activities present low risk to carbon lock-in and transition risk, given their relatively short lifetime and limited lower-carbon alternatives. They also support the operationalization of professional SWM entities to streamline the management of disposal and transfer station operations. The construction of new cells presents a moderate risk of increasing methane emissions. This risk will fully be mitigated through the installation of landfill gas collection system. 57. Assessment and reduction of adaptation risks. The project area is exposed to climate, particularly extreme temperatures and flooding. Despite this, the impact on the project’s physical infrastructure and assets is considered moderate, partly due to strategic infrastructure investments focusing on the climate resilient infrastructure (e.g. rehabilitation and extension of existing storm water management system at two landfills, improved slope management/control and increased vegetation, leachate collection and treatment, etc). Furthermore, the project supports policy development, strategic planning, capacity building, maintenance, operations, provision of SWM data platform, and information management all designed to reduce the risk of climate hazards and to build resilience capacity. Specifically, the project’s approach to enhancing the SWM system includes updating plans to incorporate climate risk considerations, thereby increasing infrastructure resilience, facilitating facility upgrades, and ensuring operational support for existing facilities. This is complemented by comprehensive climate risk screening for all project financed SWM activities, assessing local governments’ vulnerability and implementing effective risk management strategies. This includes integrating climate resilience guidelines into the Project Operations Manual. The project also provides technical assistance and capacity building in environmental and social risk management to address potential climate impacts. These strategic measures adequately reduce risks from climate hazards to an acceptable level, thereby contributing to the achievement of adaptation goals and enhancing climate resilience within the SWM system. Page 16 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) 58. Sustainability. The activities planned under the Phase -1 operation will ensure that priority infrastructure and essential policy, institutional and financial reforms are in place and will create a favorable/enabling environment for activities planned under the Phase-2 operation. As such, the activities planned under the Phase- 2 operation would be much more focused on implementing the circularity, cleaning illegal dumpsites, continuing to improve the waste sheds efficiency, strengthening the financial sustainability and conflict resilience of SWM operators, expanding efficient, transparent and accountable private sector participation in SWM O&M and waste recovery and recycling. The Phase-1 will support the preparation of required regulation mechanisms, such as performance-based financing framework, that would help to translate the policies and national sectoral targets into operational achievements on the ground. 59. Operational efficiency. The project will prioritize the financing of activities that would have an immediate impact on operational efficiency, service reliability and cost reduction. Among those are: waste shed feasibility studies, collection optimization studies, waste management information systems, financial management tools, O&M trainings and performance-based financing. Economic and Financial Analysis 60. The analysis estimates economic benefits in three categories: the prevented health costs resulting from better waste management, the benefit arising from reduced greenhouse gas (GHG) emissions, and the additional labor income created. This is not an exhaustive list of potential benefits arising from this project. For example, the positive impacts of recycling, cleaner streets, and spillover effects on infrastructure in rural areas have not been included in the analysis given that the monetary evaluation of this and other potential benefits is challenging. Thus, the total benefits of the program are likely to be greater than those quantified here. Studies have shown that the occurrence of waste disposal related diseases increases with the vicinity to a disposal site with improper solid waste disposal. In the West Bank, 41.6 percent of the sample population report that they have negative impacts from living close to a waste dump. The calculations account for efficiency decreases in methane generation of 5 percent per year. To calculate the benefit from greenhouse gas emission reduction, the reduction estimate from the SOFA landfill (Gaza Solid Waste Management Project) is applied to the larger quantities of ZAF and Al Minya and subsequently multiplied by a carbon price of US$ 60 per ton. Lastly, the expansion of the two landfills ensures that workers and drivers working at the two landfills remain employed. Using a rough estimate of the required number of workers and drivers and multiplying by their annual wages yields the benefit from additional income created by the expansion (Supplemental Annex 8. Economic and Financial Analysis). B. Fiduciary Financial Management 61. A financial management (FM) assessment of MDLF has been conducted. The assessment concluded that with the implementation of agreed-upon actions, the proposed FM and disbursement arrangements will satisfy the minimum requirements of the Bank Policy on IPF. 62. Based on the FM design and assessment, the overall FM risk is Substantial. With mitigation measures in place, the project will have acceptable project FM and disbursement arrangements. The Project Implementer (MDLF) has adequate capacity and experience, the finance team at MDLF is composed of five employees with extensive knowledge and experience. This finance team working on World Bank Projects at MDLF will be the main counterparts responsible for FM and disbursement arrangements. The counterpart team has gained experience Page 17 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) with World Bank policies and procedures and is knowledgeable about FM and disbursement processes for World Bank projects. There will be close supervision by the Bank team as well as regular audits and supervisions. The current FM performance rating for the World Bank active projects managed by MDLF is Satisfactory. 63. The main FM risks identified under the proposed project relate to: (a) the complexity of the project activities under component 1 which results in a heightened risk of ineligible or inaccurate expenditures, (b) commingling of project’s funds with other projects and DP accounts, (c) subsidy payments under sub- component 2.2 might not be subject to adequate controls, (d) poor coordination between project implementors and stakeholders, (e) inadequate internal controls over sub-project activities implemented by municipalities and JSC, (f) the political situation and the imposed access restrictions to the West Bank and especially to Gaza. Risks will be mitigated through several actions as follows: • The project will be ring-fenced through the institutional set up. After declaration of effectiveness, separate USD DA accounts will be opened for the project and there will be no co-mingling of funds. MDLF will open a separate cost center in Oracle and excel spread sheets to separately account for the project funds and expenditures project/subproject, municipality, and donor levels • On regular basis, MDLF will diligently oversee and supervise the technical progress, including amount and size of work, and related supporting documentation for activities and expenditures under component 1 and sub-component 2.2 to ensure eligibility and accuracy. This will also be an area of focus of the Bank team and will be reviewed regularly • An independent external auditor, acceptable to the Bank, will be hired to audit the financial statements of the Project • A Financial Manual will be developed to meet the project’s FM requirements as part of the POM.  64. The ISWMP-1 will be implemented by MDLF in close partnership with MOLG, EQA, and local SWM service providers. MDLF will be responsible for the implementation of all project components. IFRs should be submitted to the Bank within 45 days after the end of each semi-annual period. Submitted IFRs will include financial information and physical progress updates for project and subprojects, with information reviewed by MDLF. The Grant Agreements will require the submission of annual audited project financial statements within six months after year-end. The project’s financial statements will be prepared using an acceptable accounting standard in Palestine and will be audited by a qualified private sector audit firm that is a member of the Palestinian Association of Certified Public Accountants (PACPA) and recruited on a competitive basis based on Terms of Reference (TORs) acceptable to the Bank. The cost of the audit will be financed from the Grant proceeds. The audited annual project financial statements will be publicly disclosed according to the Bank Access to Information policy. 65. The proceeds of the Grants will be disbursed in accordance with the World Bank's disbursement guidelines, as outlined in the Disbursement and Financial Information Letter (DFIL). The project will follow “Reporting-Based Disbursements” with IFRs that include cash forecasts covering six months, other disbursement procedures such as direct payments, reimbursements, and special commitments will also be applicable if necessary. Withdrawal Applications (WAs) will be submitted to the Bank for payments to suppliers and consultants directly (if needed). The documentation supporting expenditures will be retained at MDLF and readily accessible for review by the external auditors and Bank implementation support missions. All disbursements will be subject to the conditions of the Grant Agreements and disbursement procedures as defined in the DFIL. 66. Annex 2 provides the details of the FM assessment, risks and associated mitigation measures, and proposed FM and disbursement arrangements. Page 18 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) Procurement 67. Procurement will be carried out in accordance with the World Bank Procurement Regulations for Borrowers under IPF dated September 2023. Furthermore, the “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by International Bank for Reconstruction and Development Loans and International Development Association Credits and Grants”, dated October 15, 2006, and revised in January 2011 and as of July 1, 2016, shall apply to the ISWMP-1. Further, the PA Public Procurement Law (PPL) No. 8 of 2014 became effective on July 1, 2016. When approaching the national market for specific procurements to be identified in the Procurement Plan, specific components of the national procurement procedures may be used subject to requirements specified in Section-V of Procurement Regulations. Procurement for components under parallel financing will be carried out under the procedures outlined in the MDLF Procurement Manual and the modalities in place for ongoing project implemented by MDLF. The Bank’s Standard Procurement Documents shall be used for all procurements to be carried out under open international procurement procedures. 68. The overall responsibility for project procurement will rest with the MDLF who will implement procurement for all components. MDLF will manage the procurement process, ensuring involvement of relevant stakeholders throughout the procurement process (i.e., MOLG and JSCs). MDLF, in close consultation with MOLG/JSCs, will also be responsible for contract management, including the supervision of works by contractors, the review and approval of consultants’ deliverables and the receipt/inspection and acceptance of goods, and the release of payments to the consultant/contractor/supplier in accordance with the signed contracts. An updated procurement risk and capacity assessment of the MDLF was carried out to identify risks and agree on mitigation measures. The overall procurement risk is Substantial due mainly to the inherent fiduciary risk in the country and the prevailing security situation in West Bank. 69. The project will finance procurement of works, goods and non-consulting services, as well as consultants’ services. MDLF, with support from the World Bank, has prepared a draft PPSD to determine the most appropriate procurement arrangements for the project. Most of the works’ packages under the Priority Infrastructure Component (i.e. ZAF and Al Minya Landfills) will be procured following open international competitive procedures using the World’s Bank Standard Procurement Documents. The project will also finance goods and consultants’ services under the capacity development and project management components. The procurement arrangements for the CERC component will be identified once this component is activated during implementation. MDLF has also prepared a Procurement Plan for the first 18 months of the project. The Procurement Plan will be updated in agreement with the World Bank team annually or as required to reflect the annual project implementation needs. Detailed Procurement Arrangements are included in Annex 2. C. Environmental, Social and Legal Operational Policies 70. The environmental and social risks envisaged through the project will be mainly associated with Component 1: the construction and rehabilitation of critical solid waste infrastructure in two landfills, transfer station (s)and provision of waste bins. In addition, feasibility studies and detailed designs to upgrade and extend existing landfills in the West Bank under sub-component 2.3 will entail potential E&S impacts when the downstream investments identified through the studies materializ. The risks resulting from the construction/rehabilitation activities are occupational health and safety (OHS), generation of dust, noise, stormwater runoff, waste generation, increased traffic during excavations and the significant earth works. Construction and rehabilitation of the solid waste disposal infrastructure are planned to be implemented in the footprint of the existing landfills using public land. However, potential need for land taking will still need to be Page 19 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) further assessed in more details during ESMP preparation process. The operations of the facilities may cause the risks related to pest management, generation of odor, dust and noise, scatter of waste, and OHS as well as community health and safety issues if the expanded landfills are operated without adequate management of waste, leachate, landfill gas, sludge and pest. 71. An Environmental and Social Audit was carried out for Al Minya and ZAF landfills to review the existing environmental and social management performance and compliance status, and to identify the areas of environmental and social concern related to ongoing operation of two landfills. The key areas for improvement include but are not limited to E&S monitoring, insufficient labor and working conditions including OHS, lack of collection and treatment of leachate and landfill gas, potential contamination of surrounding lands and associated livelihood and asset devaluation impacts around the landfills, birds entering to the site, weak GRM and absence of clear mechanisms for stakeholder engagement. E&S audit proposed corrective measures to address the findings with estimated budget. These corrective measures are classified into three categories: i) the measures requiring regulatory and administrative reform, ii) landfill site level remedial actions (both hard and soft interventions), and iii) mitigation measures which can be introduced/strengthened through preparation and implementation of ESMPs for Al Minya and ZAF landfills through the project. For i), MDLF will work with MOLG, JSCs and other stakeholders toward regulatory and administrative strengthening. The project will support the high priority and short-term corrective actions under ii) through infrastructure development, O&M improvement and other capacity building support. For corrective measures related to iii), they are expected to create positive E&S impacts as they will help in addressing several of the challenges currently encountered by the local communities as shown in the E&S audits. The ESCP stipulated the ESF instruments that should be prepared during the project implementation. The ESMPs to be prepared for the construction and rehabilitation of critical solid waste infrastructure in two landfills and transfer station(s) will look in more detail at the risks and impacts of the construction and operation of those facilities. 72. MLDF prepared and disclosed E&S audit reports for two landfills, the Stakeholder Engagement Plan (SEP) and the Environmental and Social Commitment Plan (ESCP). As per the ESCP, the ESMPs for priority infrastructure development at the two existing landfills and transfer station(s) that will be established/upgraded will be prepared during project implementation before the start of bidding process once the scope of the intervention is finalized. The ESMPs for two landfills will be prepared building upon the findings from E&S audit reports. For the feasibility studies and detailed designs to upgrade and extend existing landfills in the West Bank, it will be ensured that the ToRs of those studies will include sufficient scope on environmental and social aspects. SEP was also prepared by MDLF. The SEP preparation entailed rounds of consultation with various stakeholders including local communities in the areas surrounding the targeted facilities, MOLG team, SWM workers and JSCs. The consultation and engagement activities clearly revealed strong support to the project as it is anticipated to help in resolving one of the critical challenges that the local communities adjacent to the existing landfills are encountering. In the meantime, local communities expressed dissatisfaction about how their complaints are addressed indicating clear challenges in the grievance redress mechanisms. In the meantime, and for the planning of future activities for the project, the consulted stakeholders underlined the need for continuing the engagement with the local communities and ensuring that their views are considered in the design and operation of the facilities. The approach for the future engagement with the various groups of stakeholders is presented in the SEP and will be used throughout the project cycle to guide the process of stakeholders engagement. 73. MDLF has an Environmental Specialist and a Social Specialist who has E&S management experience through the previous Bank financed projects and their ongoing operation. In addition, an E&S consultant has been engaged to carry out E&S audit. Environmental and social specialist in MDLF and an E&S consultant will continue Page 20 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) to be engaged for the E&S management of the project including E&S instruments preparation and implementation, construction supervision and capacity building of MOLG and JSCs. As per the ESCP, a Stakeholder Engagement Specialist will be assigned for more inclusive project design and implementation including addressing the issues in E&S audit. Capacity building measures and E&S management requirements of the project have been recorded in the ESCP. @#&OPS~Doctype~OPS^dynamics@padlegalpolicy#doctemplate Legal Operational Policies Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Area OP 7.60 No Grievance Redress Services 74. Grievance Redress. Communities and individuals who believe that they are adversely affected by a project supported by the World Bank may submit complaints to existing project-level grievance mechanisms or the Bank’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the Bank’s independent Accountability Mechanism (AM). The AM houses the Inspection Panel, which determines whether harm occurred, or could occur, as a result of Bank non-compliance with its policies and procedures, and the Dispute Resolution Service, which provides communities and borrowers with the opportunity to address complaints through dispute resolution. Complaints may be submitted to the AM at any time after concerns have been brought directly to the attention of Bank Management and after Management has been given an opportunity to respond. For information on how to submit complaints to the Bank’s Grievance Redress Service (GRS), visit http://www.worldbank.org/GRS. For information on how to submit complaints to the Bank’s Accountability Mechanism, visit https://accountability.worldbank.org. V. KEY RISKS 75. Overall risk. Given the ongoing conflict, the overall risk to the achievement of the project’s development objective is Substantial due to High-risk rating for Political and Governance, and Macroeconomic, and Substantial risk rating for the remaining risk categories. 76. Political and governance risks are High. The political uncertainty posed by the ongoing conflict poses significant risks to project implementation. The project is being adapted to be carried out in the West Bank only, where the governance associated risks are relatively manageable. The High rating for this risk acknowledges the inherent complexity and the unknown trajectory of the ongoing conflict. It also factors in the indirect risks associated with systems collapsing and which may limit the functioning of the proposed implementation arrangements in a manner that is not accounted for under the established risk categories. The Bank continues to monitor the political situation closely in coordination with local and international partners to minimize the impact on the country portfolio and identify opportunities to support the Palestinian economy. Page 21 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) 77. Macroeconomic risk is High. The macroeconomic outlook is challenging, given the reliance on international aid due to the large fiscal deficit that is mostly financed through donor grants. The ongoing conflict exacerbates the already strained economy and is likely to further worsen local revenue sources and the provision of solid waste service delivery by LGUs. The macroeconomic situation may also render the PA unable to fulfill its intergovernmental fiscal transfer to LGUs. Nevertheless, the World Bank will remain engaged and will continue to leverage donor resources to support service provision. 78. Sector Strategies and Policies risk is Substantial. In the solid waste sector, resources for capital investments as well as operation and maintenance for improved service delivery remain scarce. Despite the strong ownership by the PA for improving solid waste services to improve financial sustainability and basic service delivery, the PA’s fiscal distress may continue putting pressure to use centrally collected local resources for other national level priorities. This would deprive the solid sector of much needed public financial resources and further limit fiscal space for capital investments. 79. Technical Design risk is Substantial. The current and prolonged conflict put multiple constraints (such as movement restrictions, limited access to equipment, construction materials and spare parts, complicated and time-consuming approval procedures on having most optimal technical and financially feasible solution. To mitigate these risks, the MDLF will work closely with the PA to ensure smooth implementation. 80. Institutional capacity for implementation and sustainability risk is Substantial. MDLF remains the most capable partner available to deliver critical support. Since the start of the conflict, MDLF has managed to supervise and deliver the project activities in the West Bank. Nevertheless, MDLF's capability to implement the project is vulnerable due to factors beyond its capacity such as the political fragility, access, and mobility restriction within the West Bank. To the extent possible, MDLF will mitigate these exogenous risks through preemptive planning and flexible approach to project execution, including using Geo-Enabling initiative for monitoring and supervision (GEMS) tools and relying on valuable lessons learned from other predecessor operations. The ESCP will include a training on GEMS for JSCs. 81. Fiduciary risk is Substantial. MDLF has extensive experience working with World Bank projects and has successfully implemented solid waste projects in the past. The FM risk is assessed substantial considering the overall control and inherent risk of the Project, which is based on the nature of the project components and subcomponents and experience with similar projects. The Municipal Development and Lending Fund (MDLF) has excellent procurement experience working with the World Bank through different projects. The procurement risk is assessed as substantial considering the country context and the prevailing circumstances which limit competition and impose restrictions on the movement of people and on the entry of equipment and construction material. 82. Environment and Social risk are Substantial. The proposed project would finance the construction of new cells at the two main sanitary landfills and transfer station (s), and the provision of operational equipment for the new sanitary landfill and transfer stations. The risks related to operating the different solid waste management facilities including, but not limited to, the health and safety of the workers and the surrounding communities have been assessed as substantial. Due to the scope of work, mainly related to the landfill and transfer station (s), the E&S risk is assessed as Substantial at this stage. These risks are expected to be mitigated since MDLF has extensive experience and a track record in managing environmental and social risks, and additional measures will be proposed and implemented based on E&S audit and through ESMPs. Page 22 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) 83. Stakeholder risk is rated Substantial. MoLG, EQA, the JSCs and its constituent municipalities, the medical waste producers and the MDLF are the key institutional stakeholders in the project. These groups have demonstrated good coordination in service delivery and payment arrangements, which will be reinforced by project sub-agreements. Other stakeholders include the consumers of the SWM services and the neighboring populations of the facilities, both of which will benefit from the project. Given past experience in the West Bank with neighboring communities of landfills, the risk related to these stakeholders is substantial and the project will incorporate explicit outcomes in terms of service quality and engagement through a complaints system and communication program to mitigate this risk. 84. Other risks. Additional risk that could negatively impact project implementation pertains to the FCV operational context of the West Bank, where access to goods, mobility restrictions and required permits and lengthy approval processes from Isreal could potentially delay or impede project implementation. The interventions supported under this project significantly contribute to the protection of environment and natural resources (especially the ground water aquifers) and help deter potential negative impacts on the shared environment and the easily transmitted cross-borders pollution from poor waste management practices. As such, materialization of such risk is expected to be low due to the shared benefits the project activities yield to all parties involved in the region. Page 23 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) ANNEX 1. RESULTS FRAMEWORK @#&OPS~Doctype~OPS^dynamics@padannexresultframework#doctemplate PDO Indicators by PDO Outcomes Baseline Closing Period Increased waste disposal capacity created at ZAF and AM landfills Increase in the overall waste disposal capacity at ZAF and AM sanitary landfills (Percentage) Nov/2024 Dec/2031 0 15 Improved financial management for local SWM service providers Financial management model prepared and utilized by at least 60% of targeted JSCs and local SWM service providers (Yes/No) Nov/2024 Dec/2031 No Yes People with enhanced resilience to climate risks People benefiting from climate resilient infrastructure (Number of people) CRI Nov/2024 Dec/2031 0 1,000,000 People benefiting from climate resilient infrastructure - Female (Number of people) CRI Nov/2024 Dec/2031 0 500,000 People benefiting from climate resilient infrastructure - Youth (Number of people) CRI Nov/2024 Dec/2031 0 300,000 Proper operation and management of ZAF and AM landfills and transfer station (s) Landfills and TS(s) supported under the project operate and managed per defined operational standards in the POM (Yes/No) Nov/2024 Dec/2031 No Yes Intermediate Indicators by Components Baseline Closing Period Page 24 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) Priority Infrastructure Transfer Stations constructed/rehabilitated (Number) Nov/2024 Dec/2031 0 1 Volumetric capacity of the new cells constructed in ZAF landfill (Cubic Meter(m3)) Nov/2024 Dec/2031 0 1,500,000 m3 Volumetric capacity of the new cells constructed in AM landfill (Cubic Meter(m3)) Nov/2024 Dec/2031 0 1,500,000 m3 Percentage of beneficiaries, clients and stakeholders who are satisfied with SWM infrastructure (Percentage) Nov/2024 Dec/2031 0 70 Number of equipment/machinery provided for operating the landfills and the TS. (Number) Nov/2024 Dec/2031 0 TBD Number of bins provided (Number) Nov/2024 Dec/2031 0 TBD Share of women participating in the design, construction, social and environmental safeguards activities supported under the project (Percentage) Nov/2024 Dec/2031 0 30 Contingency Plans Developed for SWM Infra and Operation (Yes/No) Nov/2024 Dec/2031 No Yes Strengthening Sector Policy and Institutional Capacity National policy for waste minimization prepared (Yes/No) Nov/2024 Dec/2031 No Yes Regulatory framework for HWM is prepared (Yes/No) Nov/2024 Dec/2031 No Yes Framework prepared for enforcement mechanism of waste minimization policies. (Yes/No) Sep/2024 Dec/2031 Page 25 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) No Yes Number of staff received training from MOLG and EQA under the project. (Number) Nov/2024 Dec/2031 NA 15 WMIS System customized and scaled-up (Yes/No) Nov/2024 Dec/2031 No Yes Number of JSCs staff received training under the project. (Number) Nov/2024 Dec/2031 0 100 Performance based-grants is piloted for selected JSCs (Yes/No) Nov/2024 Dec/2031 No Yes Billing system is upgraded (Yes/No) Nov/2024 Dec/2031 NA Yes JSCs complied with 70% of KPIs (Number) Nov/2024 Dec/2031 0 5 Number of capacity-building workshops conducted for women in SWM roles, in partnership with MoWA and other women-led organizations (Number) Nov/2024 Dec/2031 0 TBD Standardized financial management system is prepared and utilized by 60% of the targeted JSCs in charge of SWM (Yes/No) Nov/2024 Dec/2031 NA Yes National level performance standards and reporting system/platform established for LGUs (Yes/No) Nov/2024 Dec/2031 NA Yes Contingency Emergency Response Component Project Management MDLF maintains adequate staffing for project management, environmental and social safeguards and fiduciary staff throughout the life of the project (Yes/No) Sep/2024 Dec/2031 NA Yes Interim IFRs and Progress Reports are submitted to Financing Partners in a timely and satisfactory manner (Yes/No) Page 26 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) Sep/2024 Dec/2031 NA Yes Page 27 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) Monitoring & Evaluation Plan: PDO Indicators by PDO Outcomes Increased waste disposal capacity created at ZAF and AM landfills Increase in the overall waste disposal capacity at ZAF and AM sanitary landfills (Percentage) This indicator will measure the volumetric increase resulted from the construction of new cells at ZAF and Al Description Minya sanitary landfills. Frequency By end of the project Final report that will be prepared by the consultancy firm responsible for the supervision and the as built Data source drawings for the old and the new expanded cells. Methodology for Data Document review with verification/confirmation from JSC and MOLG Collection Responsibility for Data MDLF Collection Improved financial management for local SWM service providers Financial management model prepared and utilized by at least 60% of targeted JSCs and local SWM service providers (Yes/No) This indicator will assess the preparation and then utilization of the financial toolkits/model for solid waste Description service with more focus on the JSCs as service providers under Phase-1. The usage of the system will strengthen the collection efficiency and lead to efficient use of resources. Frequency By end of the project Preparation of the system: the source of data that confirms that the system preparation is the final report from the consultant with a letter of acceptance from the beneficiary JSCs. Data source Utilization of the system: the source of data that confirms the system utilization is the reports generated by the system with actual data related to budgeting and financing of JSCs, with confirmation from IVA. Methodology for Data Documents review with a validation from MOLG and IVA reports. Collection Responsibility for Data MDLF Collection People with enhanced resilience to climate risks People benefiting from climate resilient infrastructure (Number of people) CRI This indicator represents the total number of people directly benefiting from the upgraded capacity and remediation of the existing ZAF and AM sanitary landfills. These individuals, particularly those in the surrounding areas of Bethlehem and Jenin Governorates, face significant environmental and operational Description challenges. The figure may also extend to include other areas across the West Bank, which will benefit from improved waste collection and disposal efficiency. This improvement is attributed to the expanded capacity of the sanitary landfills and the construction of transfer stations (TSs). Frequency By end of the project Data source JSC reports Methodology for Data Documents review with validation from the supervisory consultants and MOLG. Collection Responsibility for Data MDLF Collection Proper operation and management of ZAF and AM landfills and transfer station (s) Landfills and TS (s) supported under the project operate and managed per defined operational standards in the POM (Yes/No) Description No description available for this corporate indicator Frequency By end of the project Data source JSCs reports, IVA reports, technical audit report Documents review with a validation from MOLG and IVA reports. It can be also confirmed by the technical Methodology for Data audit that will be conducted by end of the project to assess the technical soundness of the design and the Collection compliance with operational standards as well. Page 28 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) Responsibility for Data MDLF Collection Monitoring & Evaluation Plan: Intermediate Results Indicators by Components Priority Infrastructure Transfer Stations constructed/rehabilitated (Number) Description This indicator reflects the # of TSs that will be constructed/rehabilitated under the project. Frequency By end of the project Data source Final report from the supervisor consultant Methodology for Data Collection Documents review with a confirmation from the JSCs and MOLG Responsibility for Data Collection MDLF Volumetric capacity of the new cells constructed in ZAF landfill (Cubic Meter(m3)) This indicator reflects the volumetric capacity of the new cells that will be constructed under the Description project in ZAF landfill. Frequency By end of the project Final report that will be prepared by the consultancy firm responsible for supervision as well as Data source the as built drawings for new expanded cells. Methodology for Data Collection Documents review with verification/confirmation from JSC and MOLG Responsibility for Data Collection MDLF Volumetric capacity of the new cells constructed in AM landfill (Cubic Meter(m3)) This indicator reflects the volumetric capacity of the new cells that will be constructed under the Description project in AM landfill. Frequency By end of the project Final report that will be prepared by the consultancy firm responsible for supervision as well as Data source the as built drawings for the new expanded cells. Methodology for Data Collection Documents review with verification/confirmation from JSC and MOLG Responsibility for Data Collection MDLF Contingency Plans Developed for SWM Infra and Operation (Yes/No) Description This indicator reflects the availability of contingency plans related to operation of the sanitary landfills (the existing cells and the expanded ones) detailing how the JSCs will respond in case of contingency. This plan has to be integral part of the landfills’ operational manual. Frequency The plan will be prepared in the 1st year concerning the existing landfills and will be upgraded inline of the construction and operation of the new cells. Data source Operational Management Plan from the JSCs Methodology for Data Collection Documents review Responsibility for Data Collection MDLF Percentage of beneficiaries, clients and stakeholders who are satisfied with SWM infrastructure (Percentage) This indicator will assess the perception of beneficiaries with the SW service after being upgraded Description through “expanded capacity of SLF and the other measures implemented under the project”. Frequency Before and After the project (Pre and Post) Data source Beneficiary Satisfaction Assessment Report A consultancy firm will be outsourced under the project to conduct the assessment using both quantitative tools “questionnaires” that will be complemented with qualitative tools such as Methodology for Data Collection “focus groups and KIIs”. The assessment/field survey will be conducted twice over the project lifespan. Responsibility for Data Collection Outsourced consultancy firm managed by MDLF Number of bins provided (Number) Description This indicator reflects the # SW bins that will be provided under the project. Frequency By end of the project Page 29 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) Data source JSC reports Methodology for Data Collection Documents review with validation from MOLG. Responsibility for Data Collection MDLF Share of women participating in the design, construction, social and environmental safeguards activities supported under the project (Percentage) This indicator reflects the participation of women in the project activities through their potential Description engagement in design, supervision and the construction. This also includes the women participation in the workshops related to social and environmental safeguards activities. Frequency By end of the project Reports from the JSCs, consultancy and the implementing companies showing the percentage of Data source females who are engaged in the “design, supervision, implementation, social and environmental safeguards”. Methodology for Data Collection Documents review Responsibility for Data Collection MDLF Strengthening Sector Policy and Institutional Capacity National policy for waste minimization prepared (Yes/No) This indicator will be assessed in terms of having the national policy prepared for waste Description minimizing Frequency By end of the project Final report from the consultant who prepared the policy with confirmation from the EQA and Data source MOLG Methodology for Data Collection Documents review Responsibility for Data Collection MDLF Regulatory framework for HWM is prepared (Yes/No) Description This indicator will be assessed in terms of having the regulatory framework for HWM in place Frequency By end of the project Data source Final report from the consultant who will prepare the HWM regulatory framework with confirmation from the EQA and MOLG Methodology for Data Collection Documents review Framework prepared for enforcement mechanism of waste minimization policies (Yes/No) Description This indicator will be assessed in terms of having the enforcement mechanism prepared Frequency By end of the project Final report from the consultant who will prepare the policy with confirmation from the EQA and Data source MOLG Methodology for Data Collection Documents review Responsibility for Data Collection MDLF WMIS System customized and scaled-up (Yes/No) This indicator reflects the development/customization of a Waste Management Information System Description (WMIS) to be used by the Ministry of Local Government (MOLG) to support and inform policies on Integrated Solid Waste Management (ISWM). Frequency By end of the project Data source Final report from the software development company as well as from MOLG Methodology for Data Collection System review with confirmation from MOLG Responsibility for Data Collection MDLF Number of staff received training from MOLG and EQA under the project (Number) This indicator reflects the # of technical staff at MOLG and EQA who will receive training on specific topics Description related to ISWM. Frequency By end of the project Page 30 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) Data source Final report from the training consultancy firms/consultants Methodology for Data Collection Documents review and Observation Responsibility for Data Collection MDLF Number of JSCs staff received training under the project (Number) Description This indicator reflects the # of technical staff at JSCs who will receive training on specific topics related to ISWMP. Frequency By end of the project Data source Final report from the training consultancy firms/consultants Methodology for Data Collection Documents review and Observation Responsibility for Data Collection MDLF Performance based grants is piloted for selected JSCs (Yes/No) This indicator reflects the availability of performance-based grants that will be tested under ISWMP1 with Description a forward looking to be adopted by the PA in ISWMP2. Frequency By end of the project Final report from the consultant who prepared the mechanism as well as the allocation letters to JSCs in Data source the framework of piloting the performance grant mechanism. Methodology for Data Collection Documents review Responsibility for Data Collection MDLF Billing system is upgraded (Yes/No) Description This indicator will be assessed in terms of having an upgraded billing system for JSC in charge of SWM. Frequency By end of the project Data source Final report from the consultant who upgraded the system Methodology for Data Collection Documents review Responsibility for Data Collection MDLF Number of JSCs complied with 70% of KPIs (Number) This indicator will assess the compliance of the targeted JSCs with the KPIs for SW service efficiency and Description operation. This list of KPIs is proposed in the PAD supplemental attachment and will be reviewed amended (as needed) during project implementation. Frequency By end of the project Data source IVA reports An independent verification agent will be contracted under the project to assess the compliance of the Methodology for Data Collection selected JSCs with KPIs. Responsibility for Data Collection IVA under the supervision of MDLF Number of capacity-building workshops conducted for women in SWM roles, in partnership with MoWA and other women-led organizations (Number) Description This indicator reflects the female participation in the workshops related to SWM. Frequency By end of the project Reports from the JSCs and (consultants who will be in charge of social and civic engagement activities) Data source showing the females participation in CB workshops related to SWM. Methodology for Data Collection Documents review Responsibility for Data Collection MDLF Standardized financial management system is prepared and utilized by 60% of the targeted JSCs in charge of SWM (Yes/No) Description This indicator will be assessed in terms of utilizing the standardized financial system by the targeted JSCs. Frequency By end of the project Data source IVA reports as well as the JSCs reports Methodology for Data Collection Documents review Responsibility for Data Collection MDLF National level performance standards and reporting system/platform established for LGUs (Yes/No) This indicator will be assessed in terms of having the performance and reporting system in place Description based on the piloted performance sub-grants. This system will be used as a platform that will be Page 31 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) adopted nationally under phase 2. Frequency By end of the project Data source MOLG Methodology for Data Collection Documents review Responsibility for Data Collection MDLF Project Management MDLF maintains adequate staffing for project management, environmental and social safeguards and fiduciary staff throughout the life of the p (Yes/No) This indicator will assess adequacy of MDLF staffing to handle the social, environmental, and fiducia Description will also assess the satisfactory management of the project. Frequency Yearly or when the ISR is prepared by the Bank following the supervision missions Data source ISR reports, mission aid memories Methodology for Data Collection Documents review Responsibility for Data Collection World Bank team Interim IFRs and Progress Reports are submitted to Financing Partners in a timely and satisfactory manner (Yes/No) This indicator reflects the commitment and compliance of MDLF to submit the progress and Description interim IFRs in a timely and satisfactory manner as stated in the grant agreement. Frequency Twice a year (semiannually and annually) MDLF financial department that submit the IFRs, Strategic planning department that submit the Data source semiannual and annual progress reports Methodology for Data Collection Documents review Responsibility for Data Collection World Bank team Page 32 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) Annex 2. Fiduciary Arrangements Financial Management Arrangements Financial Management Design and Assessment Report Implementation Arrangements and Staffing. Fiduciary activities, including procurement, financial management and disbursements will be handled by the project team at MDLF. They will manage the day-to-day financial management and disbursement aspects of the project. MDLF will report to the WB directly and will be in charge of the FM and disbursement arrangements of the project, it will ensure that the financial management and disbursement arrangements under the project are carried out in accordance with WB guidelines and procedures to ensure that the funds are used for the intended purpose. Staffing.  Project activities including financial management and disbursements will be handled by the existing Finance tam at MDLF.  The Finance and Administrative Department will keep all accounting records and ensure all transactions are recorded in the appropriate software and accounting system (Oracle + Excel spreadsheets). Currently MDLF Finance and Administrative Department is sufficient for supporting project activities, it is comprised of a Finance and Administration Manager, Financial Controller, Senior Accountant, and two Accountants which allows for proper segregation of duties. MDLF’s FM capacities were assessed during project preparation and throughout the FM supervisions of running WB projects and were found adequate for project implementation. The Project Operations Manual (POM) will clarify how the Finance Department time is utilized on ongoing Bank projects that are managed by MDLF and the new ISWM project Project FM risk. The country level financial management risk in the PA system is rated as High before mitigation. The risk is mitigated through a very experienced and knowledgeable implementer that has sufficient capacity as well as project- specific audits by an independent external auditor. The overall project risk from a financial management perspective after mitigation is Substantial. The FM arrangements for the project are designed to ensure that funds are used for the purpose intended, and timely information is produced for project management to comply with the Bank’s fiduciary and disbursement requirements. Below are the main risks and mitigating measures for the implementing entity. Project Risks • There is a risk that relates to the nature and complexity of the activities under component 1 being construction and heavy engineering works, which in return might result in higher risks of ineligible and inaccurate expenditures • Risk of commingling project’s funds with other ongoing projects and/or with other development partners’ funds • The risk arising from the nature of the performance-based subsidies to JSC under sub-component 2.2 and the verification mechanism of those payments, this also relates to the risk of subsidy payments being subject to inadequate internal controls to ensure their eligibility and accuracy • Risk of poor coordination of financial management issues between the difference stakeholders, including MOLG, MDLF, JSC and municipalities. • Risk resulting from the lack of internal controls by MDLF over M&E procedures by MDLF over the sub-projects implemented by the municipalities or the JSC • The political situation and the imposed access restrictions to the West Bank, may affect the physical and financial progress of the operation and the verification of actual physical progress on the ground. Page 33 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) • Risk that the financial procedures manual will have to be promptly developed to meet the Project’s FM requirements and to include detailed explanations of all advances, subsidies and expenditure processes and procedures and relevant safeguards Mitigating Measures The following measures will mitigate FM-related risks: the FM arrangements were designed to mitigate the identified FM risks, which would suit the available capacity during implementation, including: • The project will be ring-fenced through the institutional set up. After declaration of effectiveness, separate DA accounts will be opened for the project for each Trust Fund and each DP separately, and there will be no co- mingling of funds. Two USD Designated Account (DA) will be opened at an approved local commercial bank to receive grant funds from the Bank and to be managed by MDLF, monthly bank reconciliations will be prepared and approved, in addition to the follow up on non-reconciling items. • MDLF will open a separate general ledger in its accounting system to separately account for ISWM funds and expenditure incurred by window, component, development partner, and by transfer station or JSC. Also, MDLF will maintain a comprehensive sub-grants/sub-project allocation sheet, this sheet should include all sub-projects linked to the funds of respective development partners. This tool would minimize the risk of commingling of project’s funds with other development partners’ funds. • On regular basis, MDLF will diligently oversee and supervise the amount and size of works, construction and engineering works being implemented and the percentage of progress on field, through its technical and engineering department, appointed local technical consultants (LTC), and established internal controls for reviewing and approving contractor payments. As part of the Bank financial supervision, those procedures will be regularly reviewed to ensure full compliance and report any exceptions that might exist. • Under Sub-component 2.2, MDLF will only make performance-based subsidies to selected JSC and municipalities, after ensuring that all related internal controls and verification procedures are properly implemented as specified in the POM. In addition to the verification agent appointed to review the achievement of the performance-based subsidies, the Bank team will regularly review payments made at least semi-annually and report any exceptions that might exist. • An independent external auditor, acceptable to the Bank, will be hired on a competitive basis, to perform an annual external audit for the project’s financial statements. MDLF will be responsible for preparing the TOR for the audit engagement. • As part of the POM, an FM chapter should be developed, which lays out and describes the main FM and disbursements responsibilities and procedures relevant to the Project to ensure compliance with Bank FM and disbursement guidelines. Budgeting. MDLF upcoming budget is prepared during the Q3 of the year before, the Board of Directors approve the final version of the Budget by the end of the calendar in most cases. The finance department at MDLF prepares the budget using base line figures and adjusting for any expected increases or decreases in expenditures and operational cost. In addition to this, a rough estimate of expected revenues (7% management fees of project budgets) is also calculated and Page 34 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) compared to the total expenditures to determine shortage/surplus and any other necessary adjustments. We reviewed the 2024 budget, around 70% to 80% of the MDLF budget is salaries. The 2025 budget is still under progress and should be finalized by November 2024, no material observations were noted. MDLF own operational budget is around USD 3-4 million, not including the projects operational budget Project Planning and Budgeting: A disbursement plan will be prepared as well as a financial budget for the life of the project (broken down by year and by quarter). MDLF will prepare the budget for the coming year, which will include the figures for the year, analyzed by quarter. The budget for each quarter will reflect the detailed specifications for project activities by components, schedules (including the Procurement Plan), and expenditures on monthly and quarterly activities. The budget will also include detailed cash projections (based on six-months cash projections). The budget will separately identify activities to be financed by individual DPs, including the World Bank, and MDLF will submit it to the DPs as part of the semiannual IFRs. The annual budget will be sent to the Task Team Leader (TTL) at least two months before the beginning of the fiscal year for review, only those activities that are included in an annual work plan and budget shall be eligible for financing out of the proceeds of the grant. Variance analysis will be provided along with the semi-annual IFRs to be submitted by MDLF. The annual work plans, budgets and cash forecasts may be revised during project implementation subject to the Bank’s prior written approval Accounting and Financial Reporting. The Project will follow International Financial Reporting Standards (IFRS), cash basis for accounting or the modified cash basis as deemed appropriate. MDLF maintains an acceptable, Oracle-based, accounting system. The accounting system is not part of the government systems (Bisan) since MDLF is an independent semi-government organization. Also, the accounting system is not linked with any municipality in the West Bank and Gaza. However, the accounting system is computerized and is capable to capture project-related transactions. The accounting system is capable of tracking and reporting on the project’s funds separately by window, component, development partner, and by municipality. Also, the system is capable to generate Semiannual IFRs, while the variance analysis and the Designated Account reconciliation are performed manually by means of spreadsheets/excel sheets. To minimize the risk of commingling of project’s funds with other DPs’ funds, MDLF will maintain a comprehensive sub-grants allocation sheet, this sheet should include all sub-projects or construction projects linked to the funds of respective development partner. This tool will also enable MDLF to track the financial and the physical status of each sub-project and construction work. Accounting records will be maintained in local currency (ILS) and USD, with the possibility to report financial information and statements in USD Information Systems: A new cost center will be opened in Oracle system for the Project, in addition to this a separate cost center will be opened for each DP to ensure all accounts and funds per DP are separated and no co-mingling of funds. The FM system should be capable of producing timely, relevant, and reliable financial information that will enable MDLF management to plan, implement, monitor, and appraise overall progress toward achievement of its objectives. The FM system should be in place and efficiently operational before commencement of the project. Financial Section of the POM: MDLF will develop and/or update a detailed FM section of the POM which will cover all administrative, financial, and accounting, budgetary, and human resources procedures relevant to all the project advances, expenditures, processes and cycles and activities to be financed under the project. The POM should describe the FM arrangements and procedures, including controls and oversight arrangements. A POM acceptable to the Bank should be submitted by the time of negotiations Page 35 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) Financial Reporting and Monitoring: MDLF will maintain their own accounting records and project financial information in a manner acceptable by the Bank. Specifically, MDLF will be responsible for: (i) presenting the grant financial data; (ii) preparing activity budgets (disbursement plan) quarterly as well as annually, monthly DA reconciliation statements, and periodic SOEs (if needed), withdrawal schedule for approval, semiannual IFRs (consolidated for all components) and annual financial statements; and (iii) ensuring that the project’s FM arrangements are acceptable to the World Bank. MDLF will produce semiannual and annual reports as outlined below and submit these to the Bank. Semiannual IFRs (submitted within 45 days after period-end): • Financial reports include a statement showing for the period and cumulatively (project life or year-to-date) inflows by sources and outflows by main expenditure classifications; opening and closing cash balances of the project; and supporting schedules comparing actual and planned expenditures with detailed deviation analysis between actual and budgeted figures. This financial information should be presented for each DP separately • Contract listing, reflecting all signed contracts under the grant with the value of each amount disbursed under each contract as at the report date. • DA statements and reconciliations showing deposits and replenishments received, payments supported by Withdrawal Applications, interest earned on the account, and the balance at the end of the reporting period. • A reconciliation statement between the World Bank Client-Connection platform and the Project financial statements/information • Comparison of budget versus actual for the period and cumulatively from project inception, with justification of significant variance • Cash flow projection for the coming six months • Physical progress reports endorsed by the technical consultant or staff at MDLF, which include narrative information and output indicators linking financial information with physical progress especially for subproject works, and highlighting issues that require attention • fixed assets schedule • Contract list • List of grants and advances balances to municipalities in the West Bank and Gaza Annual Project Financial Statements (submitted within six months after year-end): • A Balance sheet statement, showing the project assets, liabilities and net fund movement • A Statement of Sources and Uses of Funds (by category and component showing Bank and counterpart funds separately (if any) • A Statement of Cash Position for the project’s funds from all sources. • Statements or disclosure notes reconciling the balances on the designated bank accounts to the bank balances shown on the Statement of Sources and Uses of Funds. • Notes to the Financial Statements for significant accounting policies and all other relevant information Internal Controls. MDLF maintains an effective system of internal control and procedures over financial reporting to provide reasonable assurance that the financial information is reliable and accurate, that assets are safeguarded, and that transactions are properly authorized and recorded. • At MDLF, through FM and Disbursements Manuals, approval and authorization tasks are functionally segregated among the Finance Dept. staff within the organizational structure. Page 36 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) • Dual and cross verification and signature procedures are established; authorizations and responsibilities are clearly defined and an approval or authorization for the transactions over certain limits is required. Fiduciary main checkpoints are summarized hereunder: The MDLF staff follow MDLF financial procedures and internal controls for approving payments as per the financial policies and procedures manual approved by the World Bank. Proper segregation of duties exists to sign off on all documents at MDLF as follows for the contactors: (1) Financial Request signed by contractor, supervising engineering office (in addition to a separate letter from the office to approve the contractor’s work), and the municipality (2) Payment Request (approved by municipality, supervising engineering office/including the appointed PMO and LTC, in addition to MDLF technical and financial personnel sign off the form, (3) Payment Order signed by the MDLF Finance Directorate and MDLF General Director, and (4) Payment Transfer co-signatories by MDLF General Director and the Minster of Local Government. For professional consultancy services, starting with number (2) above, MDLF ensures the technical approval from the MDLF’s relevant department. Furthermore, the supervision performed did not reveal any inadequacy in internal controls. This will be further investigated and reviewed, when supervisions are performed on regular basis. In addition to the highlighted internal controls, MDLF has an up-to-date manual of policies and procedures that includes all required procedures and business performance reviews when reviewing and approving construction contracts and relevant contracts. The bulk of the project’s expenditures will finance works, construction, goods and equipment and installation services, with some consultancy service contracts and incremental operating costs. Financing of those expenditures will be either through direct payments WA, or advances and replenishment requests, depending on the size of the contracts and invoices. An appointed LTC will be contracted to perform supervision on the ground. All claims will be verified (technically) by the LTC and subsequently MDLF technical/engineering department before being processed further for payment by the MDLF. On a monthly basis, the financial officer will reconcile the project account bank statement with the account book balance, in addition to this the finance team will ensure that applicable internal controls are effectively implemented when processing eligible expenditures, whether related to component 1 or 2 activities. Reconciliations should be prepared by the financial officers and checked by an independent person. All reconciling items (if any) should be listed, explained, and followed up on. Copies of the reconciliation together with the account bank statement should be kept in the project files and should be attached to the IFRs. External Auditing. The financial statements of MDLF are audited on an annual basis by a qualified audit firm. The 2023 audited financial statements of MDLF were signed and issued on 1 February 2024, a clean audit opinion was issued by the Audit Firm Mazars, with a nil management letter. MDLF prepares its financial statements using the International Financial Reporting Standards (IFRS) following the accrual basis of accounting, and for each Project managed by MDLF, a separate financial statement is prepared and audited by the external audit firm. The Bank’s team reviewed the audited financial statements of MDLF and did not note any material observations or discrepancies that would affect the FM design and assessment of the Project. The Project’s audited financial statements will be audited by a qualified private sector audit firm that should be a member of the Palestinian Association of Certified Public Accountants (PACPA) and acceptable to the Bank, the audited financial statements and related notes need to explicitly show sources and uses of funds relevant to the Bank. A copy of Project’s annual audited financial statements will be shared with the Bank team for review and comments and for no-objection as well. The Audit firm will be asked to audit the project’s financial statements in accordance with the International Standards on Auditing (ISA) based on ToR acceptable to the Bank. MDLF will be responsible for preparing the ToR for the audit Page 37 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) assignment and submitting it to the Bank for no-objection. The project’s audited financial statements will be due for submission within six months after the end of each calendar year. In addition to the audit report, the appointed auditor will be expected to prepare a Management Letter giving observations and comments, and recommending improvements in accounting records, systems, controls, and compliance with financial covenants in the Bank Grant Agreement (GA). Additionally, MDLF will submit the audited financial statements for the entity as a whole. According to the World Bank Policy on Access to Information issued on July 1, 2010, the audit report with audited financial statements of the project will be made available to the public. Internal audit function. The current internal audit function at MDLF is considered effective. The internal audit function follows a risk-based approach, with adequate coverage of matters of financial and compliance interest. The internal audit will compare financial and physical progress of subprojects as well as assess whether payments have been made in accordance with established procedures. At the beginning of every financial year, the IA Department presents the planned activities or reports that will be issued in the forthcoming year. Examples of the Internal audit reports issued by MDLF recently includes the IA report on the Financial Department issued in October 2023, the report included one minor observation that was considered low, in addition to management’s responses and agreed action plan to address this observation. The Bank’s team reviewed the IA report and did not note any major observations that influence the FM design and assessment. Grievances and Redress Mechanism (GRM) including reporting or whistleblowers mechanism for any fraud or corruption allegations. Grievances and whistleblower (fraud and corruption) reports will be received through multiple channels that include the official complaints platform of MDLF and Anti-Corruption Committee call center, websites, the national call center and online complaints and grievances form. All cases will be referred to MDLF and documented through the necessary systems and resolved through MDLF management direct involvement. The Bank team will review on a regular basis cases and reports of grievances, redress and reported fraud and corruption allegations (if any), discussions, findings and action plans will be formally documented and shared with all stakeholders as deemed necessary. Flow of funds and banking arrangements: Bank financing will be Grants to be disbursed through two project-specific Designated Accounts (DA) opened by the MOF and operated and managed by MDLF for each TF. MOF will open the DA which is denominated in USD into which replenishments from Bank resources will be transferred and will be used in financing the components according to the approved budget. • Withdrawal Applications submitted to the Bank will be prepared by MDLF, final authorization and signatures sits with the MOPIC before submission to the Bank. Project expenditures will be documented through IFRs. • MDLF will vest the sole responsibility to disburse on behalf of the project to suppliers, contractors, and consultants. Additionally, MDLF will maintain a monthly reconciliation statement between their records and the Bank’s records per the World Bank’s Client Connection. Such reconciliation will set out the disbursements by category as well as the DA balance. Disbursement and payment requests will be based on approved contracts and services predefined in the project documents. • DA bank account records will be reconciled with bank statements on a monthly basis by MDLF. A copy of each bank reconciliation statement together with a copy of the relevant bank statement will be reviewed monthly by the Project Finance Dept., who will investigate and resolve any identified differences. Detailed banking arrangements, including control procedures over all bank transactions (for example, check signatories, transfers, and so on), are documented in the Financial Section of the POM. • The figure below describes the funds flow for the project: Page 38 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) Flow of funds Funds Flow and Disbursement Arrangements. The proceeds of the Grants will be disbursed in accordance with the World Bank's disbursements guidelines. This will be outlined in the Disbursement and Financial Information Letter (DFIL) and in accordance with the Bank’s Disbursement Guidelines for Projects (IPF). The Project will follow “Report Based Disbursements” using IFRs as Withdrawal Application templates. The WA-IFRs will provide actual expenditures for the preceding quarter and cash flow projections for the next six months. The IFRs together with the withdrawal application will be reviewed by the Bank’s financial specialist and approved by the task team leader before the request for disbursement is processed by the Bank’s Loan Department. Reimbursement, Direct Payments, and Special Commitment Issuance Applications can be accepted if the amount is above the “Minimum Application Size” as specified in the Disbursement Letter. Disbursement process documentation. Requests for payments from the Grant will be initiated through the use of Withdrawal Applications (WAs) using any of the disbursement methods stipulated in the disbursement and financial information letter (DFIL). The documentation supporting expenditures will be retained at MDLF and readily accessible for review by the external auditors and Bank implementation support missions. All disbursements will be subject to the conditions of the Grant Agreement and disbursement procedures as defined in the DFIL. Page 39 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) There will be two USD DA accounts. There will be an advance amount specified in the DFIL that can be requested through the first WA. Subsequent disbursements into the DA will be requested through WAs, reconciled bank statements, copies of all bank statements and other necessary and related supporting documents. The supporting documentation for requests for direct payment should be records evidencing eligible expenditures (copies of receipt, suppliers’ invoices). The ceilings of the DA and the financial institution at which the DA have been agreed during negotiations will be stipulated in the DFIL. E-disbursement will be used to submit WAs. Under e-Disbursement, all transactions will be conducted and associated supporting documents and IFRs scanned and transmitted online using the World Bank’s Client Connection system. The use of E-Disbursement functionality will streamline online payment processing to: (a) avoid common mistakes in filling out WAs; (b) reduce the time and cost of sending WAs to the World Bank; and (c) expedite the World Bank processing of disbursement requests. Implementation Support At least two implementation support missions will be carried out annually and will include field visits. Bank staff based in Palestine will provide day-to-day support to MDLF and other counterparts and follow-up visits or remote discussions will be conducted as needed. During the Bank's missions, the project's FM and disbursement arrangements will be reviewed to ensure compliance with the Bank's requirements. Procurement Arrangements The project will follow the World Bank Procurement Regulations for IPF borrowers for Works, Goods, Non-Consulting and Consultants’ Services dated September 2023. “The Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006, and revised in January 2011 and as of July 1, 2016, shall apply to the project. Further, the PA Public Procurement Law (PPL) No. 8 of 2014 became effective on July 1, 2016. When approaching the national market for specific procurements to be identified in the Procurement Plan, specific components of the national procurement procedures may be used subject to requirements specified in Section-V of Procurement Regulations. Procurement for components under parallel financing will be carried out under the procedures outlined in the MDLF Procurement Manual and the modalities in place for ongoing project implemented by MDLF. The Bank’s Standard Procurement Documents shall be used for all procurements to be carried out under open international procurement procedures. Procurement arrangements. The overall responsibility for project procurement will rest with the MDLF who will implement procurement for all components. MDLF will manage the procurement process, ensuring involvement of relevant stakeholders throughout the procurement process (i.e., MOLG and JSCs). MDLF, in close consultation with MOLG/JSCs, will also be responsible for contract management, including the supervision of works by contractors, the review and approval of consultants’ deliverables and the receipt/inspection and acceptance of goods, and the release of payments to the consultant/contractor/supplier in accordance with the signed contracts. International and National Competitive Bidding. For international competitive bidding (ICB), procurement of all goods, works, and non-consulting services will be carried out using the World Bank’s Standard Procurement Documents (SPDs). For national competitive bidding (NCB), MDLF will use the national SBD along with the World Bank additional requirements agreed with HCPPP (eligibility, anti-corruption, environmental and social safeguards, etc.). Page 40 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) Procurement Capacity and Risk Assessment. An updated procurement risk and capacity assessment of the MDLF was carried out to identify risks and agree on mitigation measures. The overall procurement risk is Substantial due mainly to the inherent fiduciary risk in the country and the prevailing security situation in West Bank. At the project level, the principal risks and risk management measures are outlined below: The key procurement risks include: • The prevailing security situation and instability in West Bank, particularly in the northern governorates could resulted in implementation delays in works contracts. • Moreover, the prevailing security situation has adversely affected the supply chain of imported goods to the West Bank through Israeli ports. This was caused by delays in releasing equipment and supplies imported to the West Bank and accumulated at the Israeli ports, and the disruption of maritime trade in the Red Sea. This could result in delivery delays for the imported equipment needed for the rehabilitation of the landfills under Component 1. • Lack of proper coordination and the interaction of various entities may cause procurement and project implementation delays. • Further deterioration of the political situation in West bank may limit competition and discourage participation by qualified international Contractors/Consultants. • Cost sharing of contracts among the Bank and donors could delay project procurement due to disagreement on the applicable procurement procedures and/or the mechanism for the review of procurement decisions for jointly financed contracts. The following key measures to mitigate procurement risks are included in the project design: • MDLF will act as the Bank’s counterpart on procurement. The project implementation structure was established, and the detailed responsibilities of the various entities will be defined in the Project Implementation Document. • MDLF will work on scheduling the major procurement packages under the Infrastructure Component (Component 1) taking into account delays that may result from the prevailing security conditions. • The contract management capacity will be strengthened with qualified engineering consulting firms to supervise the construction contracts. • The procurement section of the POM would make reference to the MDLF Procurement Manual, which includes the details of the procedural requirements that the MDLF will follow to handle procurement and contract management under the project. • For contracts jointly financed by the bank and other donors, it was agreed that the Bank Procurement regulations will apply and the Bank SPDs will be used when approaching the international market. • Procurement packaging was determined to allow wide competition, including encouraging possible association among local and international contractors/consultants. The MDLF has prepared the PPSD and the draft Project Procurement Plan for the first 18 months of project implementation. The PPSD and the Procurement Plan have been finalized by appraisal and will be reviewed and cleared by the World Bank by negotiations. The PPSD identified the capacity of the local market to undertake the activities where possible and provides the basis and justification for procurement decisions, including the approach to market and selection methods. The PPSD revealed that most of the works’ packages under the Priority Infrastructure Component (i.e. ZAF and Al Minia Landfills) will be procured following open international competitive procedures using the World’s Bank Standard Procurement Documents. The project will also finance goods and consultants’ services under the capacity development and project management components. The procurement arrangements for the CERC component will be Page 41 The World Bank Integrated Solid Waste Management Project-Phase I (P500392) identified once this component is activated during implementation. MDLF has also prepared a Procurement Plan for the first 18 months of the project. The Procurement Plan must be inserted, managed, and updated in STEP during project implementation. Page 42