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West Bank, Solid Waste Management

Blending private sector expertise and investment with Output-Based Aid to deliver modern, affordable solid waste management for the West Bank

Background

The population of the West Bank generates around 500 tonnes of solid waste per day, and the volume is increasing. Disposal of such high quantities of waste presents significant challenges, and much of it is simply tipped onto open sites with disastrous environmental consequences.

The Southern West Bank Solid Waste Management (SWM) project operate the Al Menya landfill which offers an efficient, safe solution to this problem. Instead of open dumping, rubbish that cannot be recycled will be buried in a modern landfill system. This kind of landfill both contains the waste and reduces emissions of greenhouse gases.

The deal

The World Bank and other donors provided the necessary funding, but were concerned that the local capacity to manage the project was insufficient. DevCo provided advisory support to the Joint Services Council for Hebron and Bethlehem (JSC-H&B) to identify an experienced private sector partner to manage the new facility.

A management contract for the operation of the Al Menya landfill was signed by JSC-H&B with a Greek consortium. To improve the sustainability of the project and the sector, a US$8m grant from the Global Partnership on Output-Based Aid (GPOBA) is also being provided. Output-Based Aid (OBA) is used in cases where poor people are excluded from services because they cannot afford to pay the full user costs of accessing the service. OBA provides the supplier with a subsidy for providing services to low income users, which complements or substitutes the user fees they would normally charge. In this project, OBA will offset the costs of  the improved solid waste management service for poorer households during the first four years of the new landfill operation, and provide well-designed incentives to increase service quality which in turn will affect customer willingness to pay, gradually recovering costs borne by the service providers.

Role of PIDG

Funding from DevCo was used to cover the costs of legal assistance to support the technical due diligence of the PPP transaction and the design of the pilot OBA component of the project. This component was crucial to the success of the project, as it provided comfort that service improvements would be implemented by municipalities and that gradual progress towards financial sustainability of the full SWM system would be achieved.

Supplementary funding was provided by TAF to part finance technical due diligence - including defining the Waste Acceptance Protocol (an affordability and willingness to pay test), and assistance with technical inputs in the transaction documents.

Development Impact

Access to Infrastructure

New or Improved Access to Infrastructure

 

840,000 people, including 320,550 women

Job creation

Long Term

 

20 people

Additional Benefits

  • Financial additionality

It is very unlikely that the project would have happened without DevCo’s intervention and staff expertise. The grant agreement with GPOBA was also key in the success of the transaction.

  • Design additionality

Involvement of the private sector will help curb disposal of waste at unregulated dump sites and ensure efficient and appropriate operations and maintenance of the landfill.

  • Environmental benefit

Reduction in greenhouse gas emissions is estimated at 13,400 tonnes over seven years.

  • Demonstration effect

As the first genuine PPP in the West Bank, the project demonstrates an innovative mechanism to deliver public services. It will establish a track record for the JSC-H&B in PPP, and help it attract further private sector participation in other infrastructure projects.