MR3: GAM Solid Waste Crisis Response - Cell 5

Location:

Jordan

Project number:

49347

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Target board date:

04 May 2016

Status:

Signed

PSD disclosed:

11 Jul 2017

Translated version of this PSD: Arabic

Project Description

On 24 November 2016, the Bank signed a project with the City of Amman to finance priority solid waste investments in Amman (the "Project"). The financing is structured in two tranches:

  • Tranche I, consisting of JOD 40 million, committed at signing and used to refinance GAM's existing debt to release funds for a comprehensive solid waste crisis response programme.

    Tranche 1 is co-financed by a GBP 5 million investment grant for urgently needed solid waste investments.
     
  • Tranche II, consisting of up to EUR 50 million loan from EBRD, remains uncommitted and will finance a series of investments aimed at addressing the City's urgent solid waste needs.

    Tranche II components are expected to be co-financed by capex grants of up to 50 per cent, provided by international donor(s) and the Bank through its Shareholder Special Fund ("SSF").

    The first component under Tranche II (Tranche II-A) was signed on 10 May 2017, for the construction of a fifth cell at Al-Ghabawi Landfill and its associated leachate lagoons. The component is financed by a JOD 3.25 million EBRD loan and a GBP 4.25 investment grant.

In addition, in the solid waste sector, EBRD provided GAM a USD 13 million sovereign-guaranteed loan in 2015 to finance the construction of a landfill gas recovery system at the Al-Ghabawi landfill site under a design, build and operate contract. The loan was co-financed by an up to USD 5 million loan funded by the Green Energy Special Fund ("GESF") administered by the EBRD.

Project Objectives

The financing package forms part of the EBRD's Refugee Crisis Response Programme. GAM, which hosts around 30 per cent of the Syrian refugee population in Jordan, is largely affected by the ongoing refugee influx. This places a heavy strain on Amman's municipal infrastructure and in particular on the solid waste management system. There is an urgent need to strengthen GAM's resilience as well as to optimise its financing, and Tranche I will allow GAM to liberate urgently needed funds to enable it to deal with the on-going challenges.

Tranche II of the investment package is targeted towards financing specific investments in the solid waste sector to mitigate the effects of the refugee influx and provide more sustainable and long-term solutions. These investments will be assessed on a project-by-project basis and are expected to be co-financed by investment grants made available by other partners, including, but not limited to, the European Union.

Transition Impact

Good.

  • Institutional Support: The Project is expected to facilitate a comprehensive institutional support programme. The programme will introduce measures to increase the operational and financial management of solid waste services, leading to further commercialisation of the sector. In addition, ways of increased private sector participation, corporatisation, regulatory reform and the use of alternative technologies will be assessed in order to enable efficient and sustainable service delivery.
     
  • Framework for Markets: The Project will contribute to the strengthening of GAM's financial management by preparing it for a credit rating exercise aimed at enabling GAM to access capital markets.
     
  • Demonstration Effect: The Project will contribute to the development of sustainable, EU compliant and well-operated solid waste management structures that facilitate better cost recovery and provide an example away from the current non-economical and environmentally unsustainable practice.

Client Information

MUNICIPALITY OF GREATER AMMAN

GREATER AMMAN MUNICIPALITY

EBRD Finance Summary

EUR 4,020,476.00

Total Project Cost

EUR 8,823,973.00

Environmental and Social Summary

Each Tranche is categorised separately under the 2014 Environmental and Social Policy. Tranche I was categorised as C, since the refinancing of GAM's existing debt will have no adverse future Environmental and Social ("E&S") impacts. Tranche I was approved by the Board in May 2016.

Tranche II remains to be subject to Initial Environmental and Social Examination ("IESE") once the scope of investments under each Sub-Tranche (component) is determined. Tranche II-A component is categorised B, in-line with the assessment of the first GAM Solid Waste project (OpID 47046), signed in 2015, which concerns the same existing Al Ghabawi landfill site.

Tranche II-A investments involve emergency investments for the construction of a new cell 5 and associated leachate lagoons to expand the existing landfill cells. These investments will not require any additional land acquisition, resettlement or displacement and will not affect any sensitive sites. The E&S issues and impacts are expected to be site-specific and readily identified and addressed through appropriate mitigation measures. The new landfill cell 5 will be designed to EU standards in line with requirements of the EU Landfill Directive. The whole waste management system in Amman will require further enhancement to be in line with EU Waste Framework Directive ("WFD"), which would need to involve, among other measures, separate collection and safe disposal of hazardous materials of domestic origin which are currently landfilled in the municipal landfill. This will also enable the operation of the landfill in accordance with the EU Landfill Directive. Environmental and Social Due Diligence ("ESDD") for Tranche II-A has been undertaken by independent external consultants and focused on the implementation of Operational Procedures for the whole landfill, including waste acceptance procedures, covering of waste and H&S issues at the landfill.

The ESDD for the first GAM Solid Waste project, which was signed in 2015, focused on LFG transaction. It identified a number of deficiencies with GAM's EHSS management systems and capacity, significant E&S risks at the existing landfill and other waste management facilities and operations. In addition, GAM's E&S performance in a past World Bank project had not been strong. As a result and in order to improve GAM's E&S management and controls, a TC package to support both the corporate development of a new solid waste management company and the capacity of implementation was approved. The Bank mobilised donor funds for consultancy services to support GAM to implement an ESAP. GAM has made considerable progress in selecting the E&S support consultants and their appointment will be a Condition Precedent to Tranche II-A being disbursed.

ESDD for Tranche II-A determined that the waste previously dumped in the future area for Cell 5 had been removed to the edge of Cell 4, spread over a large area, clearly visible and not compacted or covered. GAM should remove this waste and ensure that it is placed in the active tipping area of the Cell 4, compacted and covered. The 2015 ESDD Report recommended that GAM consults the MoEnv to seek clarity on the requirements for an EIA with regard to Cell 4 and future work at the landfill site, and GAM still has to action this recommendation as part of the revised ESAP also to cover Cell 5 and any future cells.

ESDD for Tranche II-A also reviewed the current situation with separate collection and management of hazardous waste in Amman, and identified that GAM lacks adequate operating procedures to prevent small quantities of hazardous waste arriving at the landfill and will therefore need to develop a comprehensive set of Landfill Operating Procedures in accordance with EU Landfill Directive requirements, including procedures for waste acceptance and rejection. This has been added to the ESAP, and GAM would need to commit to it as a condition of the Bank's investment under Tranche II-A. The status of implementation of the earlier Landfill Gas Recover ("LFG") project investments for GAM, overall progress of the existing Environmental and Social Action Plan ("ESAP") implementation and on-site monitoring has also been reviewed. Although some progress has been made in the implementation of the existing ESAP items, many still need further action. The ESAP has been updated to reflect the E&S review on Tranche II-A to ensure impacts are appropriately mitigated.

Some additional actions and mitigating measures identified during ESDD for the new investments to meet EBRD Performance Requirements have been added to the existing ESAP, to be implemented by GAM.

GAM will continue to provide the Bank with annual environmental and social reports, including updates on the implementation of the ESAP, environmental monitoring and SEP. The Bank will conduct close monitoring of this Project, including monitoring site visits as and when required.

This PSD section will be updated upon completion of ESDD for Tranche II.

Technical Cooperation

The following technical co-operation (TC) assignments are included as part of this project:

Pre-signing

  • Solid Waste Action Plan, to assist the Bank in the definition of the specific investments to be included in the Project. EUR 40,000 to be financed from the MEI team budget.
     
  • Technical, Environmental and Social Due Diligence and Financial Management Training, to specify and detail the technical, environmental and social feasibility of the urgent solid waste investment needs and to ensure that GAM has the financial skills and knowledge to process the tranches of the project within the Banks timeline and according to the Banks requirements. EUR 450,000, financed by the EBRD Infrastructure Project Preparation Facility.

Post-signing

  • Project Implementation Support, including assistance for the procurement of goods and works and in implementing the Environment and Social Action Plan for the urgent solid waste investments needs. The estimated cost of the Framework assignment is up to EUR 2.5 million, proposed to be funded by an international donor or the SSF.
     
  • Stakeholder Participation Programme to facilitate the cooperation between associated parties in the crisis response context and aimed at enhancing public ownership and raising public awareness on issues related to the project implementation and solid waste management. The estimated cost of the Framework assignment is up to EUR 500,000, proposed to be funded by an international donor or the SSF.

Company Contact Information

Engineer Ameen Saraireh, Senior Environmental Advisor
+962 6 4641253
Greater Amman Municipality

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