Note that in previous years the reporting period for the PID MDTF Annual Report was September 1 to August 31. Following a decision at the 2018 OG Annual Meeting, the reporting period will now be aligned with the World Bank Group scal year, July 1 to June 30. Information is sometimes given in this report on developments that took place after June 30, 2019. This is merely for the sake of completeness and should not be construed as an extension of the reporting period. TABLE OF CONTENTS Abbreviations and Acronyms 1. The World Bank Group in the West Bank and Gaza 01 2. About the PID MDTF 01 2.1. PID MDTF Structure and Support to the Palestinian Authority 02 2.2. Strategic Priorities and Highlights Looking Ahead 03 2.3. Key Results and Updates 06 2.3.1. Water Sector 06 2.3.2. Urban Sector 06 2.3.3. Energy Sector 07 2.3.4. Bank-executed Technical Assistance 07 2.4. PID MDTF Financial Data 10 2.4.1. Pledges 10 2.4.2. Commitments 14 2.4.3. Disbursements 14 2.4.4. Allocations and Financing Needs 16 3. Country Context 21 3.1. Country Risks 22 3.2. Eye on Gaza 23 3.2.1. Water Sector 24 3.2.2. Urban Sector 24 3.2.3. Energy Sector 24 3.2.4. Dual Use 25 4. Cross-cutting Themes 26 4.1. Gender 26 4.1.1. Gender Approach 26 4.1.2. Water Sector 27 4.1.3. Urban Sector 27 4.1.4. Energy Sector 27 4.2. Citizen Engagement 29 4.2.1. Water Sector 29 4.2.2. Urban Sector 29 4.2.3. Energy Sector 29 4.3. Climate and Resilience 30 4.3.1. Water Sector 30 4.3.2. Urban Sector 30 4.3.3. Energy Sector 30 5. Sector Reviews 31 5.1. Water Sector 31 5.1.1. Sector Context 32 5.1.2. Sector Risks 34 5.1.3. Proposed Activities 39 5.2. Urban Sector 41 5.2.1. Sector Context 42 5.2.2. Sector Risks 44 5.2.3. Progress by Activities 49 5.2.4. Proposed Activities 61 5.3. Energy Sector 63 5.3.1. Sector Context 64 5.3.2. Sector Risks 65 5.3.3. Progress by Activities 68 5.3.4. Proposed Activities 71 6. Bank-executed Technical Assistance 74 7. Program Management, Project Supervision, and Outlook for the PID MDTF 84 7.1. Program and Trust Fund Management Window 84 7.2. Trust Fund Cost Recovery Framework 84 7.3. World Bank Trust Fund Annual Report 2018–2019 84 7.4. Project Supervision Window 84 7.5. Outlook 84 Annex 1: PA National Policy Agenda - National Priorities, Policies, and Policy Interventions 86 Annex 2: PID MDTF Results Matrix as of June 30, 2019 87 Annex 3: Project Results Report as of June 30, 2019 89 Annex 4: TF Financial Contributions as of June 30, 2019 (Pledged and Received) 97 Annex 5: Unaudited Trust Fund Financial Reports: TF071898, TF072778 98 Annex 6: TF Commitments to the Water, Urban, and Energy Sectors 105 LIST OF TABLES Table 1: Project Highlights 08 Table 2: TF Financial Contributions as of June 30, 2019 (Pledged and Received) 10 Table 3: PID MDTF Child Trust Funds as of June 30, 2019 12 Table 4: PID MDTF Commitments and Allocations as of June 30, 2019 16 Table 5: Proposed and Upcoming Activities 17 Table 6: Allocations and Funding Needs (US$, millions) 19 Table 7: Independent Assessment of Gender Integration in Active Project Portfolio (FY18–FY19) 26 Table 8: ICR and IEG Ratings from FY18 Closed Projects in the Water Sector 37 Table 9: Urban Sector - Key Project Ratings 48 Table 10: ICR and IEG Ratings on Closed Projects in the Urban Sector 48 Table 11: Sector Co- nancing by TF (US$) 105 LIST OF FIGURES Figure 1: Trust Fund Management Structure 02 Figure 2: Pledges by PID MDTF Year 11 Figure 3: PID MDTF Grant Distribution by Window as of June 30, 2019 14 Figure 4: PID MDTF Disbursement by Window as of June 30, 2019 15 Figure 5: PID MDTF Disbursements versus Net Grant Commitmentsa by Sector as of June 30, 2019 15 Figure 6: Gender Tag Snapshot 27 Figure 7: Water Sector PID MDTF Funding Distribution as of June 30, 2019 36 Figure 8: Urban Sector PID MDTF Funding Distribution as of June 30, 2019 46 Figure 9: Urban Sector Disbursements in Active Projects as of June 30, 2019 47 Figure 10: MDP-3 Disbursement Ratio (US$, millions) as of June 30, 2019 50 Figure 11: GSWMP Disbursement Ratio (US$, millions) as of June 30, 2019 54 Figure 12: LGSIP Disbursement Ratio (US$, millions) as of June 30, 2019 58 Figure 13: Energy Sector PID MDTF Funding Distribution as of June 30, 2019 67 Figure 14: Energy Sector Disbursements in Active Projects as of June 30, 2019 67 Figure 15: ESPIP Disbursement Ratio (US$, millions) as of June 30, 2019 69 Figure 16. Program Framework - MPA Pillars 72 Figure 17: Bank-executed TA PID MDTF Funding Distribution as of June 30, 2019 74 Figure 18: Bank-executed TA PID MDTF Disbursements as of June 30, 2019 75 Figure 19: Sector Co- nancing by TF 105 LIST OF BOXES Box 1: A Pathway toward Palestinian Water Security 33 Box 2: Operations and Maintenance in the Palestinian Water Sector 38 Box 3: Urban Roads Are Community-building Projects in Gaza 52 Box 4: Securing Sustainable Livelihoods for Waste Pickers 56 Box 5: LGSIP—Program for Results in Improving Access to Water 60 The Partnership for Infrastructure Development Multi-Donor Trust Fund (PID MDTF) Annual Report is prepared by the World Bank as the administrator of the trust fund. The team wishes to recognize the contributions of the task teams from all the sectors working on projects co- nanced by the PID MDTF. A special note of recognition and acknowledgment to the government counterparts and development partners for their cooperation and contributions during the life of the trust fund, which have ensured the achievements of the PID MDTF program. ABBREVIATIONS AND ACRONYMS AA Administrative Agreement AF Additional Financing ACIG Annual Capital Investment Grant AFD Agence Française de Développement AHLC Ad Hoc Liaison Committee APLA Association of Palestinian Local Authorities AS Assistance Strategy ASA Advisory Services and Analytics BETA Bank-executed Technical Assistance BETF Bank-executed Trust Fund C-GAP II Second Country Gender Action Plan CBR Correspondent Banking Relationship CE Citizen Engagement COGAT Coordinator of Government Activities in the Territories CPPR Country Portfolio Performance Review CSR Citizen Service Center DEEP Deprived Families Economic Empowerment Program DFID U.K. Department for International Development DISCO Distribution Companies DLI Disbursement-linked Indicator DP Development Partner DPG Development Policy Grant EC European Commission EIB European Investment Bank ESIA Environmental and Social Impact Assessment ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan ESO Environmental and Social Officer EU European Union F4J Finance for Jobs FCV Fragility, Conflict, and Violence FIF Financial Intermediary Fund FM Financial Management FARV Fixed Asset Registration and Valuation GA Grant Agreement GBV Gender-based Violence GCDP Gaza Central Desalination Plant GDP Gross Domestic Product GEDCO Gaza Electricity Distribution Company GIZ German Agency for International Cooperation (Deutsche Gesellschaft für Internationale Zusammenarbeit) GoI Government of Israel GPP Gaza Power Plant GRM Grievance Redress Mechanism HV High-voltage IBRD International Bank for Reconstruction and Development ICR Implementation Completion and Results Report ICUD Integrated Cities and Urban Development Project IDA International Development Association IEC Israel Electric Corporation IEG Independent Evaluation Group IFC International Finance Corporation IGFT Intergovernmental Fiscal Transfer IP Implementation Progress IPCC International Panel on Climate Change IPP Independent Power Producer ISR Implementation Status and Results Report IWA Israel Water Authority JEDCO Jerusalem Distribution Company JSC Joint Service Council JSC-KRM Joint Service Council for Khan Younis, Rafah, and Middle Area JV Joint Venture KfW German Development Bank (Kreditanstalt für Wiederaufbau) KPI Key Performance Indicator LAP Land Administration Project LED Local Economic Development LG Local Government LGPA Local Government Performance Assessment LGU Local Government Unit LV Low-voltage LWSC Land and Water Settlement Commission M&E Monitoring and Evaluation MCM Million Cubic Meters MDLF Municipal Development Lending Fund MENA Middle East and North Africa MIS Management Information System MoFP Ministry of Finance and Planning MoLG Ministry of Local Government MoSD Ministry of Social Development MoU Memorandum of Understanding MSMEs Micro, Small, and Medium Enterprises MTR Midterm Review MV Medium-voltage NAP National Adaptation Plan to Climate Change NDP National Development Plan NEDCO Northern Electricity Distribution Company NGO Nongovernmental Organization NPA National Policy Agenda NRW Non-revenue Water NSPIP National Service Provider Improvement Program NWBG-TF Norway West Bank and Gaza Support Trust Fund NWC National Water Company O&M Operations and Maintenance OG Oversight Group PA Palestinian Authority PAD Project Appraisal Document PCBS Palestine Central Bureau of Statistics PCCC Presidential Committee for Commodities Coordination PDO Project Development Objective PENRA Palestinian Energy and National Resources Authority PERC Palestinian Electricity Regulatory Council PETL Palestinian Electricity Transmission Company Ltd. PforR Program for Results PID MDTF Partnership for Infrastructure Development Multi-Donor Trust Fund PLA Palestinian Land Authority PMA Palestine Monetary Authority PMIS Project Management Information System PMO Prime Minister’s Office PMU Project Management Unit PPA Power Purchase Agreement PPP Public-Private Partnership PPG Project Preparation Grant PRDP-TF Palestinian Reform and Development Plan Trust Fund PSEF Private Sector Enhancement Facility PV Photovoltaic PWA Palestinian Water Authority RPP Revenue Protection Program SA Social Accountability SDC Swiss Agency for Development and Cooperation SDIP Strategic Development and Investment Plan SDP Strategic Development Plan SED Securing Energy for Development SIA Social Impact Assessment SIDA Swedish International Development Cooperation Agency SLR Systematic Land Registration SMEs Small and Medium Enterprises SMP Social Management Plan SOP Standard Operating Procedure SORT Systematic Operations Risk-rating Tool STLV Short-term Low Volume SWM Solid Waste Management TA Technical Assistance TDS Total Dissolved Solids TEDCO Tubas Electricity Distribution Company TF Trust Fund TFGWB Trust Fund for Gaza and West Bank UfM Union for the Mediterranean UNDP United Nations for Development Programme UNRWA United Nations Relief and Works Agency for Palestine Refugees in the Near East USAID U.S. Agency for International Development VAT Value Added Tax VC Village Council VNG International Cooperation Agency of the Association of Netherlands Municipalities WASH Water Supply, Sanitation, and Hygiene WB&G West Bank and Gaza WHO World Health Organization WSDP Water Security Development Program WSRC Water Sector Regulatory Council WWTP Wastewater Treatment Plan YC Youth Committee PROJECT ACRONYMS Project Acronym Project Name Number Advancing Sustainability in Performance, Infrastructure, and Reliability ASPIRE MPA of Energy Sector in the West Bank and Gaza Multi-Phase Programmatic P170928 Approach Water Security Development Program (WSDP): Gaza Central AWP-I Desalination Plant (GCDP) – Associated Works and Institutional P168739 Development Project, Phase I West Bank and Gaza Electricity Sector Performance Improvement ESPIP P148600 Project GSWMP Gaza Solid Waste Management Project P121648 GSWSP Gaza Sustainable Water Supply Program P150494 HRWMP-I Hebron Regional Wastewater Management Project - Phase I P117449 LGSIP Local Governance and Services Improvement Program P148896 MDP-2 Second Municipal Development Project P127163 MDP-3 Third Municipal Development Project P159258 NGEST Northern Gaza Emergency Sewage Treatment Project P074595 RERP Real Estate Registration Project P168576 Water Sector Capacity Building Project WSCBP P117443 Water Supply and Sewage Systems Improvement Project WSSSIP P101289 1. The World Bank Group in the West Bank and Gaza The Palestinian Partnership for Infrastructure Development Multi-Donor Trust Fund (PID MDTF) has evolved to become an integral part of the funding channels applied by the World Bank to support the West Bank and Gaza (WB&G). The PID MDTF complements the other funding sources available to the World Bank Group in the WB&G. The World Bank Group’s involvement in the WB&G dates back to November 1992, when it was asked by the cosponsors of the Middle East Multilateral Peace Talks to lead and support a program of economic assistance for the Palestinian people. The International Finance Corporation (IFC) began investing in the WB&G soon after the Oslo Accords, while the Multilateral Investment Guarantee Agency (MIGA) initiated activities in 1997 with its WB&G Investment Guarantee Trust Fund. The World Bank, IFC, and MIGA work closely together in the WB&G. All three organizations have sta representation in the eld o ce and share o ce space, facilitating coordination and information sharing. The Trust Fund for Gaza and West Bank (TFGWB) is the World Bank’s core nancing vehicle. A dedicated trust fund (TF) was established to enable the World Bank’s assistance to the WB&G, since the WB&G are neither a member of the International Monetary Fund (IMF) nor of the World Bank Group. A special arrangement was necessary to channel the World Bank’s nancial assistance normally available to member countries, and the TF for Gaza was established on October 19, 1993, by resolution No. 93-11 and International Development Association (IDA) 93-7, with the allocation of US$50 million that was transferred from the surplus of the International Bank for Reconstruction and Development (IBRD). Subsequently, on August 1, 1995, the World Bank Group Board of Executive Directors increased the TF’s territorial scope to cover the area under the jurisdiction of the Palestinian Authority (PA), accordingly renaming the instrument ‘TFGWB’. It nances Palestinian programs and projects in the areas of private sector development, water, energy, local development, social protection, education, and solid waste management (SWM). MIGA provides political risk insurance through a TF. The TFGWB has provided US$1.25 billion in grants over 26 years. The TFGWB has been replenished 18 times in addition to the rst transfer of 1993 mentioned earlier, for a total allocation of US$1.25 billion. The most recent replenishment of US$81 million was approved by the Board of Governors on July 22, 2019. As of September 10, 2019, US$1.213 billion has been disbursed.1 Grants from the TFGWB are made to the Palestine Liberation Organization for the bene t of the PA. The TFGWB activities are viewed as corresponding to the interests of the World Bank member countries. The World Bank2 continues to apply its operational policies and procedures, including safeguards policies, to the administration of the proceeds of the TFGWB. Furthermore, project performance implementation has been satisfactory with on-time disbursements. A tradition of co- nancing in the various sector engagements. Grants from the TFGWB leverage complementary resources of donors, including the PID MDTF. Donors have channeled their support to the PA through the following: (a) the World Bank-administered Palestinian Reform and Development Plan Trust Fund (PRDP-TF) for budget support; (b) the PID MDTF to provide nancial and technical support to improve the coverage, quality, and sustainability of infrastructure; and (c) direct cooperation with the Government of Norway and the Ad Hoc Liaison Committee (AHLC) through the Norway West Bank and Gaza Support Trust Fund (NWBG-TF). Continued support to the PA in an adverse overall context. The WB&G have been experiencing a decline of foreign aid, which is also re ected in the declining donor resources channeled through the World Bank. The drop in donor funding has been felt strongly during 2019, as the PA has been in a scal crisis following a series of decisions by the Government of Israel (GoI) and the PA that led the PA to not accept clearance revenues3—approximately 65 percent of total PA revenues—since the GoI began making unilateral deductions. The PA has since adopted an emergency scal plan. 2. About the PID MDTF Improving coverage, quality, and sustainability of infrastructure. The development objective of the PID MDTF is to improve the coverage, quality, and sustainability of infrastructure in the WB&G through nancial and technical assistance (TA) to the PA for infrastructure development, related capacity building, and institutional development in the water, urban development, and energy sectors. The design of the program is intended to support the core principles of sustainability, partnership, client-driven ownership, harmonization, and knowledge building. The multi-donor programmatic TF aims to improve aid e ciency by consolidation under a single fund using the World Bank’s standardized set of nancial and project management tools and procedures. The TF provides a duciary instrument to streamline nancing by development partners (DPs) of projects and programs de ned within the context of the World Bank’s Assistance Strategy (AS) for the WB&G. As such, the PID is open, programmatic, and multi-donor. The TF co- nances ongoing activities in the water, urban, and energy sectors and supports both recipient-executed and Bank-executed activities. 1. This disbursement gure covers total TF disbursements and transfers out, including service charges, credit charges, and US$1.150 billion in grant disbursements. 2. Throughout this report, the ‘World Bank Group’ will be used in contexts that include IFC and MIGA as well as IDA/IBRD. 3.Clearance revenues are taxes (value added tax [VAT] and customs duties) that the GoI collects on behalf of the PA. In March 2019, the GoI began withholding an amount (US$12 million per month) of the clearance revenue equivalent to payments made by the PA to Palestinian prisoners in Israeli prisons and families of Palestinians deceased as a result of violence. The PA contends that these payments are legitimate and has declared it would only accept the entire amount of clearance revenue collected by the GoI—almost US$200 million per month before deductions. The stando had not been resolved until the end of the reporting period on June 30, 2019. 01 2.1. PID MDTF Structure and Support to the Palestinian Authority The PID MDTF predominantly provides co- nancing to investment operations implemented by the PA. A small share of the available funding is being allocated for TA and analytical work implemented by the World Bank to underpin and strengthen the ongoing sector policy dialogue. The TF structure re ects these priorities. The main fund (‘Trustee Fund’4) comprises three sectoral windows for co- nancing and TA activities in the water, energy, and urban development sectors (‘parent funds’). Disbursing ‘child funds’ are established for each discrete activity supported under the sector windows. The World Bank signs Grant Agreements (GAs) with the PA for the nancing provided through the child funds and supervises disbursements along with implementation progress (IP) for these individual activities. In addition, the PID MDTF comprises a window for the World Bank supervision of recipient-executed projects and a window for program and TF management (see Figure 1). Within this framework, the TF provides nancing for infrastructure projects and programs and advisory services and analytics (ASA) activities that the World Bank is supporting in the water, urban development, and energy sectors. The operations in the TF continue the World Bank’s support for the PA’s strategic long-term plans for development5 and are aligned with the pillars of the World Bank’s AS FY18–21, that is, (a) setting the conditions for increased private sector investments and job creation, (b) setting up a Private Sector Enhancement Facility (PSEF) to realize private sector investments, and (c) addressing the needs of the vulnerable and strengthening institutions for improved citizen-centered service delivery.6 The third pillar of the World Bank’s four-year strategy aligns closely with the PA’s National Policy Agenda (NPA) 2017–2022 Reform Pillar, including the following policies: Responsive Local Government, Improving Services to Citizens, Strengthening Accountability and Transparency, and E ective and E cient Public Financial Management. The AS also aligns with the NPA Pillar, Sustainable Development, including the speci c objectives of Building Palestine’s Future Economy and Meeting the Basic Needs of Our Communities (for speci c policy interventions the PID MDTF targets and supports within the NPA, please refer to Annex 1). The World Bank’s AS and the PA’s NPA underpin the MDTF’s operations, and the development investment agenda allows for the donors and PA to link pledges to concrete projects and priorities identi ed in the NPA. The MDTF provides a mechanism to pool funds, based on a collective longer-term view of broader economic and governance fundamentals, coordinating donor assistance and avoiding fragmentation. Figure 1: Trust Fund Management Structure Partnership for Administration / Infrastructure Oversight Group (OG) Supervision Development (PID) - World Bank (Chair) Multi-Donor Trust Fund - MoFP Program & Trust - Donors TF071898, TF072778 Fund Management Bank-Executed Water/Sanitation Urban Energy Technical Assistance Window Window Window (cross-sectoral) Note: MoFP = Ministry of Finance and Planning 4.These two trustee level funds—a parent fund (TF071898) and a parallel fund (TF072778)—are being referred to as one “Trustee Fund” since together they make up the PID MDTF program. 5.The previous National Development Plans (NDPs) and the current NPA of the PA. 6.Assistance Strategy FY 18–21 for West Bank and Gaza, The World Bank Group. 02 2.2. Strategic Priorities and Highlights Looking Ahead In FY20 and beyond, the PID MDTF is set to continue co- nancing analytical work that underpins overall World Bank budget support and investment projects, whether these are nanced or not by the PID MDTF. The PID MDTF will focus on enhancing cross-sectoral approaches and synergies across all sectors to strengthen operations and maintenance (O&M) arrangements and build sustainability of infrastructure. This is directly related to enhancing the resource base of public sector service provid- ers, which the PID MDTF will support in a number of ways, from real estate registration to devolution of property tax assess- ment and collection to local governments (LGs), from revenue protection to liquidity support for energy distribution compa- nies (DISCOs) and to improved services driving better revenue generation for water service providers. In turn, operationally strong and nancially healthy service providers will increasingly be capable of partnering with the private sector for increased investment in infrastructure, in line with the World Bank’s AS FY18–21. Other trends that were already clear in FY19 will contin- ue: consolidated operational engagements with fewer, larger operations in each sector and an enhanced focus on cross-cut- ting priorities such as gender, citizen engagement (CE), climate co-bene ts, and resilience. The PID MDTF is at the center of the World Bank’s engagement. In the upcoming funding period of FY20, the PID MDTF will maintain the consolidated, programmatic engagement that has been developed over the last years with a focus on providing investment co- nancing and institutional strengthening support to improve sector performance. The TF will remain at the center of the World Bank’s engagement in the Palestinian infrastructure sectors, supporting the PA to achieve its objectives across the water, energy, and urban development sectors. A strong program of ASA. As in previous years, the PID’s program will build on strong analytical underpinnings to inform sector policy dialogue and provide support to implementing critical policy reforms (for sector agship reports on energy, water, and urban development, please refer to the links provided in Section 5). Additional analytical work is currently under way, including the ‘white paper’ on nancial ows in the energy sector. In the urban sector, a ‘road map’ for sustainable subna- tional nancing and an analysis of land-related taxes and revenue streams are ongoing. Both reports are expected to be delivered in the rst two quarters of FY20 and will further inform policy dialogue in the sectors. Additional funding has been allocated to the Local Government, Land, and Energy Sector programmatic ASAs7 with the objective to further scale up Bank-executed activities to support implementation of policy recommendations. In addition, key analytical activities under the recently approved Water Sector Programmatic ASA will be launched, including sector costing data baseline and funding analysis, a road map for improved cost recovery, and a transboundary wastewater treatment pro le to better understand the growing net lending issue8 in the wastewater sector. A new emphasis on sustainability of infrastructure. An interrelated set of issues applying to all PID MDTF sectors has to do with institutional coordination and scal challenges related to revenues and expenditures at municipal and national levels. In particular, arrangements for O&M of infrastructure in key sectors (water and wastewater, electricity, SWM) often lack a sound commercial approach, with limited cost recovery adding to the spiraling net lending tab. Beyond the scal challenges, quality of services su ers and coverage expansion is compromised by lack of capacity to invest on the part of the entities responsible for service provision. This is not new, but it is becoming a major agenda for the World Bank and its DPs, as it jeopardizes the sustainability of the infrastructure that is being built with the PID MDTF’s help. The MDTF has also been supporting the LGs under MDP to enhance the streams and transparency of their revenues, in particular most recently by leveraging the property tax. This is being advanced in collaboration with the World Bank’s taxation specialists by World Bank Urban and Land teams through dedicated ASAs, building on the property registration drive nanced by the PID MDTF. In addition, the World Bank is launching a study, in collaboration between the Sustainable Development and Infrastructure Practice Groups, to analyze the key sectoral revenue streams and cost coverage options based on available data, to inform future investment programming based on an understanding of nancing requirements over the entire life cycle of infrastructure and a new commitment to its sustainability in the challenging conditions of the WB&G, especially Gaza. An integrated program, leveraging synergies across sectors and across World Bank instruments. Developing an integrated program that leverages synergies across sectors has been a hallmark of the PID MDTF since its inception. The World Bank applies an approach that (a) identi es key entry points for action with a focus on policy reform areas that have the poten- tial for largest impact on sector performance but are also implementable under the prevailing country and sector context and (b) selects the most appropriate instrument to advance key initiatives within and across the sectors. Investment projects in the energy, water, and urban development sectors include speci c components nancing activities to support institutional strengthening. These are complemented by a set of Bank-executed ASAs with targeted support to speci c activities that require a higher level of support by the World Bank teams. 7.ASA is the name given in the World Bank to Bank-executed analytical studies and advisory activities. 8.Deductions made by the GoI from clearance revenues to clear utility bills owed by Palestinian Local Government Units (LGUs) and DISCOs to Israeli suppliers. 03 Analytics co- nanced by the PID MDTF inform the World Bank’s budget support. Although it is not nanced by the PID MDTF, the budget support provided to the PA under the World Bank Development Policy Grants (DPGs)9 is informed by and developed in part on the basis of sector policy reforms identi ed through work co- nanced by the PID MDTF. Key sector policy actions are included in the ‘policy matrix’ of the World Bank’s annual DPG provided to the PA. Implementation of these prior actions included in the policy matrix is the basis for the World Bank to approve and disburse the budget support provided to the PA under the DPG. The recent WB&G Strengthening Fiscal Resilience and Business Environment DGP (DPG IX, P164427) included critical reform actions across the water, energy, and LG sectors, such as the (a) delegation of property tax collection from the MoFP to the LGUs;10 (b) reform of the governance arrangements in the land sector, including restructuring oversight and decision making of the Palestinian Land Authority (PLA);11 (c) launching of a process to increase transparency and restructure debt to reduce net lending in the water sector;12 and (d) strengthened enforcement mechanisms to increase payment discipline in the electricity sector, including procedural steps for interruption and reconnection of service following nonpayment.13 This step to increase payment discipline in the electricity sector builds on a successful prior action in the WB&G Fiscal Stability and Business Environment DPG (DPG VIII, P161252)—whereby municipalities and DISCOs were to establish an escrow account to ring-fence electricity revenues to monitor payments of electricity bills to the Israel Electric Corporation (IEC) and in the future to Palestinian Electricity Transmission Company Ltd. (PETL).14 To date, about 95 percent of these municipalities and DISCOs have established escrow accounts. The PID MDTF supports cross-sectoral analytical work and reforms. Other examples of cross-sectoral synergies and mutually reinforcing reform initiatives supported by the PID MDTF include, but are not limited to, the following areas: (a) Implementing municipal nance and intergovernmental scal reforms supported in the urban sector (for example, by the MDP, Local Governance and Services Improvement Program [LGSIP], and Programmatic LG Sector Reform ASA) to complement net lending reduction driven by energy sector reforms and initiated recently in the water sector. This will help develop alternative revenue streams for LGUs that will be critical to create the conditions for establishing sustainable regional water utilities in the future, by making LGUs less dependent on revenue 3 from water supply services. (b) Providing incentives to, and developing a framework for, delegating service operation functions from individual LGUs to inter-municipal, more regional bodies, such as Joint Service Councils (JSCs), supported in the urban sector (for example, by the LGSIP and Gaza Solid Waste Management Project [GSWMP]), and to electricity DISCOs, supported in the energy sector (for example, by the Electricity Sector Performance Improvement Project (ESPIP) and Advancing Sustainability in Performance, Infrastructure, and Reliability of Energy Sector [ASPIRE] Multi-Phase Programmatic Approach [MPA], under preparation). (c) Reforming land administration, enhancing land registration, and decentralizing property tax collection (for example, through the Real Estate Registration Project [RERP] and the Land Reform ASA) to generate revenues for LGUs and create better conditions for private sector investment. (d) Developing a legal and institutional framework for sustainable water service provision and strengthening municipal water management departments supported in the water sector (for example, by the Water Sector Capacity Building Project [WSCBP], closed, and Water Security Development Program [WSDP] Gaza Central Desalination Plant [GCDP] - Associated Works and Institutional Development Project, Phase I [AWP-I] under preparation) to accelerate local service delivery consolidation in the urban sector and complement corporatization under way in the energy sector. (e) Increasing the nancial sustainability and e ciency of electricity services supported in the energy sector (for example, the ESPIP, Energy Sector Programmatic ASA, and ASPIRE MPA under preparation) to enhance reliability for provision of basic services, including water supply and sanitation (WSS) services in Gaza, and reduce net lending accumulated by LGUs. 9. DPGs are a form of Development Policy Financing, by means of which the World Bank provides budget support to a client government upon the achievement of a list of agreed reform-oriented prior actions by the government. 10. Prior Action 2: “The President has taken the necessary actions to strengthen domestic revenue collection by LGUs by authorizing the Cabinet, in cooperation with the MoFP, to delegate the MoFP’s responsibilities to collect property taxes and related penalties to LGUs, as evidenced by the enactment of Law No. 12, dated May 3, 2018, amending the 1954 property tax law.” 11. Prior Action 3: “The Cabinet has established strategic and policy oversight mechanisms for institutions in land administration, as evidenced by the adoption of Decision No. 17/229/18 signed by the Prime Minister on November 22, 2018.” The draft amendments to the Palestine Land Authority Law still await approval by the President. 12. Prior Action 8: “The Intra-agency Committee has taken the necessary steps to strengthen payment discipline and improve nancial viability of the water sector by rescheduling the debt for unpaid water bills owed by LGUs to the MoFP for at least 90 LGUs, as evidenced by: (a) the issuance of an O cial Letter signed by the Head of the Intra-agency Committee and dated October 28, 2018 enclosing a report describing the balances of the municipalities after debt rescheduling; and (b) seven debt rescheduling agreements entered between LGUs selected on a sample basis and the Intra-agency Committee.” 13. Prior Action 7: “The Cabinet has set forth procedural steps to follow before service providers can cut o electricity following the accumulation of debt, including a grievance mechanism and protection of poor and vulnerable population, as evidenced by the issuance of o cial instructions dated April 17, 2018, published in the O cial Gazette on April 22, 2018, that include the following provisions: (a) speci cation of exact periods of unpaid bills (30 days to households and 60 to non-households; (b) objections from the consumer to the distributor; (c) instructions on how to le a complaint; (d) instructions on how to reconnect power back to consumers; (e) guidelines on resolving disputes between the consumer and the distributor; and (f ) exemptions.” 14. Prior Action 1 (DPG VIII): “At the direction of PENRA, at least 90 percent of all municipalities, village councils, and DISCOs have opened a separate bank account to deposit funds collected from electricity bills to pay PETL.” 04 FY20 will see further strengthening and leveraging of those cross-sectoral synergies across the infrastructure and basic service delivery sectors, with an enhanced emphasis on fostering the foundations for sustainable O&M of infrastructure assets, as discussed earlier. Mainstreaming gender and other cross-cutting themes. In addition, the PID MDTF will continue mainstreaming cross-cutting themes such as gender, CE, climate change, and resilience. Regarding gender, in particular, the World Bank’s program in the WB&G is moving from a focus on gender mainstreaming to achieving speci c gender outcomes based on a customized gender-focused design and results framework within each project. Overall, 75 percent of projects approved in FY18 and FY19 are considered gender-tagged,15 with 100 percent gender-tagged in FY19. For projects co- nanced by the PID MDTF, following an initiative led by the Swedish International Development Cooperation Agency (SIDA), the World Bank is planning to increase its focus on implementation support—which should help improve gender results across the Palestinian water, urban, and energy sectors. A renewed focus on climate co-bene ts. The World Bank and other DPs are in a position to support and facilitate priority measures for climate adaptation and mitigation. Not only can such measures be considered ‘no-regrets’ in nature, but they are also aligned with the Palestinian development priorities articulated in the 2016 National Adaptation Plan to Climate Change (NAP). The PID MDTF will continue to co- nance activities in key sectors such as water resources management; resilient urban infrastructure; and boosting renewables in the energy mix, generating more climate co-bene ts, and boosting resilience while supporting national development priorities. An analytics-driven operational program, moving toward fewer, larger projects. Two major sector investment programs are currently under preparation: the Associated Works Project in the water sector and ASPIRE MPA in the energy sector. Both programs translate recommendations from the World Bank’s sector agship reports into operationally implementable investment programs and symbolize the programmatic evolution of the World Bank’s engagement in the infrastructure sectors into a more consolidated portfolio supported by the PID. With key activities in the urban sector having passed (LGSIP) or soon to reach (MDP) their midterm, a dialogue on the next generation of the World Bank’s LG support in the WB&G will be launched in FY20. Building creditworthiness in public service providers. In keeping with the focus of the World Bank program strategy in the WB&G, many of the projects co- nanced by the PID MDTF will help foster private sector-led development in the future and contribute to identifying and developing opportunities for private investment and private sector participation in infrastructure and service delivery. Institutional strengthening supported under the PID MDTF will help build creditworthiness of public sector institutions—creating bankable investment opportunities. With support from the ESPIP, co- nanced by the PID MDTF, Palestinian energy sector institutions are laying the groundwork for future infrastructure projects to be bankable for the private sector. Feeding into the PSEF. In this context, it is expected that PID MDTF outputs will feed into the work of the PSEF. The World Bank Group is establishing the PSEF to catalyze and leverage private investments in the WB&G in ways that support job creation, inclusive economic opportunity, and transformative social bene ts. The PSEF will be a complementary instrument to the PID MDTF, as it will encourage private sector engagement into the water, urban and energy sectors. The PSEF will attempt to directly address constraints faced by the private sector such as (a) limited long-term nancing options in the nancial sector, (b) shortfalls in public infrastructure to support economic activity, and (c) non-honoring of government obligations as in the example of energy sector where suppliers are not paid by their customers. To do so, the PSEF will utilize a variety of instruments, including the following: IFC Blended Finance will combine concessional donor funds with IFC’s own commercial funds to provide a ordable long-term nancing for high-impact projects. As of December 31, 2017, IFC has deployed in total US$840 million. Investment Co-Finance will provide grant nancing needed so that a fundamentally sound commercial private investment that falls short of nancial viability due to market failures or fragility, con ict, and violence (FCV) factors can proceed. The approach is currently being piloted through the World Bank- nanced Finance for Jobs (F4J) Project, which has established clear selection criteria and approval processes for grants to commercially sound, job-creating projects. Payment risk mitigation will complement the political risk insurance currently administered by MIGA. Payment risk mitigation can help (a) attract direct private sector investment in infrastructure, including oil, gas and mining, power, telecommunication, transport, and water; (b) enhance private sector participation in public-private partnerships (PPPs); and (c) access international capital markets on more favorable terms. TA at the institutional, legal, and rm levels will help develop a stronger environment for increased private sector activity by strengthening the legal and institutional arrangements and encourage increased investment. 15.To earn a gender tag, projects must show a clear results chain by building on evidence that identi es key gender-based gaps, proposes activities that will help close that gap, and puts in place metrics that can demonstrate results and measure impact. 05 Responding to emergencies and addressing the crisis in Gaza. Finally, the PID MDTF will have to maintain its critical role as a rapid and e cient channel to respond to emergency situations and address the prevailing crisis in Gaza. With existing and new partners on board, additional nancing (AF) has been provided to Gaza-speci c activities during the last scal year. In the challenging and fragile operating environment of the WB&G, the PID will continue functioning as a reliable channel to provide nancing in the future. The shortage of funding for O&M poses a major issue to the PA, particularly under the current scal crisis. This may also require the use of external resources, such as funding channeled through the PID, to cover a share of O&M cost for the operation of critical infrastructure to avoid major humanitarian emergencies—particularly in the fragile context of Gaza. 2.3. Key Results and Updates The IP of the activities co- nanced by the PID MDTF is assessed as satisfactory.16 Most of the TF’s active projects are on track to achieve their Project Development Objectives (PDOs), monitored by key performance and results indicators tracking progress toward agreed targets. The PID’s co- nancing contributed in achieving critical project results within the TF objective parameters. Table 1 summarizes key development outcomes and impact on nal bene ciaries. The detailed Results Frame- work—with an update on the current values of key performance indicators—is included in Annex 2. During this reporting period, the PID MDTF’s co- nanced projects have focused on infrastructure nancing and capacity building—pertaining to the water, urban, and energy sectors—with the objective to improve service delivery, strengthen key institutions, and advance critical sector reforms. 2.3.1. Water Sector Four projects co- nanced by the PID MDTF in the water sector were completed during FY18—the WSCBP, Water Supply and Sewage Systems Improvement Project (WSSSIP), North Gaza Emergency Sewage Treatment Project (NGEST), and the Gaza Sustainable Water Supply Program (GSWSP). These projects were rated Moderately Satisfactory or Satisfactory in their Implementation Complementation and Results Reports (ICRs) and these ratings were con rmed or upgraded by the Indepen- dent Evaluation Group (IEG). Particularly, the IEG elevated the rating of the WSSSIP’s outcome from Moderately Satisfactory (ICR rating) to Satisfactory, since the project achieved or moderately exceeded most of its targets in extremely challenging economic, political, and security circumstances. See Section 5.1 for corresponding ICR and IEG ratings. AWP-I. The Palestinian water sector has progressed and the PID MDTF will continue to support the development and reform of the sector. AWP-I—proposed by the Palestinian Water Authority (PWA)—remains in line with the Water Sector Strategic Development Plan (SDP) 2017–2022 with an objective to improve bulk water quality and to strengthen the PWA’s capacity. Speci cally, the WSDP/GCDP is planning to achieve these objectives through two main channels: (a) a desalination plant with the initial capacity to produce 55 million cubic meters (MCM) a year of desalinated water and (b) associated works that include the construction of a north-south water carrier, including storage reservoirs to convey and properly blend desalinat- ed water with groundwater sources in accordance with World Health Organization (WHO) guidelines for potable water. By means of investments in both infrastructure development and institutional strengthening of the PWA, AWP-I will ultimately help Gaza, which su ers from chronic poor groundwater quality and faces an increase in domestic demand for water, to increase safe water supply from a range of sources, including seawater desalination. 2.3.2. Urban Sector Third Municipal Development Project (MDP-3). The urban sector’s agship MDP-3, which seeks to consolidate and deepen the signi cant gains from the First Municipal Development Project (MDP-1) and the Second Municipal Development Project (MDP-2) on transparency and service delivery, is the result of intertwining interventions by the World Bank and DPs in close cooperation with the PA. MDP-3 plays a salient role in strengthening the institutional development, accountability, and nancial sustainability of local governance and service delivery in the WB&G. Through MDP-3, nearly 88 percent of 346 infrastructure subprojects in the WB&G, for a total of US$48.39 million, are completed or nearing completion. A total of 83 km of roads have been rehabilitated or constructed, amounting to 47 percent of total output target. Moreover, the Municipal Development and Lending Fund (MDLF) has successfully piloted direct transfer and administration of grants received from MDP-3 for nine selected municipalities in the West Bank. In terms of bene ciaries of subprojects nanced under its rst stage (Cycle 1), MDP-3’s reach has already exceeded the target (0.5 million) with the current count (1.9 million) based on preliminary monitoring data. LGSIP. As MDP-3 progresses, the LGSIP also continues to demonstrate improvement in meeting its objective for enhancing the institutional capacity of village councils (VCs) and strengthening the LG nancing system for more accountable and sustainable service delivery. As of April 2019, 338,157 people had bene tted from improved service delivery, which signi - cantly surpassed the midterm review (MTR) target of 230,000. The LGSIP has also outperformed expectations by providing 74.5 percent of the VCs with transparent and predictable Annual Capital Grants. 16.IP can be considered ‘Satisfactory’, as all activities are rated—based on the World Bank rating scale—as Moderately Satisfactory or better (that is, Moderately Satisfactory or Satisfactory). 06 GSWMP. Despite some implementation challenges and delays with the GSWMP last year, its overall IP ratings improved from Moderately Unsatisfactory to Moderately Satisfactory through a series of proactive measures implemented by the PA and the World Bank task team. Such measures included holding regular meetings with the Coordinator of Government Activities in the Territories (COGAT) and coordinating with Israeli customs o cers to import necessary equipment on time for land ll construction. Sofa Al Fukhari Sanitary Land ll was formally inaugurated in June 2019 and is in preparatory stages for full operation. The project generated 44,677 temporary jobs in its construction activities and, as of late June 2019, the project’s improvements directly bene ted 203,677 people. RERP. Another upcoming urban sector project, the RERP received approval by the Board of Executive Directors on July 22, 2019. The PID MDTF (US$3 million) is co- nancing the RERP (US$12.6 million) with the TFGWB (US$5 million) and the World Bank TF Global Partnership for Results Based Approaches (GPRBA) (US$4.6 million) to enhance tenure security and improve real estate registration services. The RERP will advance the registration of properties in Areas A and B of the West Bank and will bolster the ongoing systematic approach, which bene ts citizens, businesses, and public entities through property registra- tion. 2.3.3. Energy Sector ESPIP and its AF. The PID MDTF’s support to the Palestinian energy sector has advanced through the ESPIP and its AF. With the Board approval of the ESPIP AF on January 14, 2019, including co- nancing from the TFGWB (US$5 million) and PID MDTF (US$7 million), the project is contributing to institutional capacity development of Palestinian Energy and National Resources Authority (PENRA) and to rooftop solar photovoltaic (PV) systems in Gaza—while also supporting long-term nancial and operational sustainability. PETL has completed procurement of the equipment required for O&M of the Jenin substation, and PENRA reports 100 percent electricity bills collection rate from the Jenin substation in 2018. Also, all six DISCOs completed the IT systems review and gap analysis, which will determine priority needs for development of a comprehensive Management Information System (MIS). The ASPIRE MPA, another World Bank energy sector agship project supported by the PID MDTF, is under preparation to ensure a ordable and reliable energy in the WB&G. The ASPIRE MPA will improve the operational and nancial performance of electricity sector institutions and promote diversi cation of energy sources primarily by improving infrastructure for regional electricity interconnections and enabling private sector engagement in renewable energy. 2.3.4. Bank-executed Technical Assistance In addition to sector-speci c activities, the PID MDTF has extended its Bank-executed TA through four active channels: (a) Programmatic Technical Assistance: Towards Water Security for the Palestinians (hereafter ‘Water Security TA’), (b) Palestinian Local Government Sector Reform Support (hereafter ‘LG Sector TA’), (c) Support to the Palestinian Land Sector Reform (hereaf- ter ‘Land Sector TA’), and (d) West Bank & Gaza Energy Sector Programmatic Technical Assistance (hereafter ‘Energy Sector TA’). First, the Water Security TA was approved on June 27, 2019, to strengthen the operational and nancial performance of the water and wastewater sector institutions in the WB&G in support of the 2014 Water Law. In June 2019, the PWA and Youth Committee (YC)—created as an initial activity under this TA to support the PWA’s work in policy service delivery and monitoring—organized a workshop that has created a blueprint of youth involvement at the service delivery level. Second, the LG Sector TA, with a primary aim to support policy reform development, is currently assessing potential revisions on the LGU revenue and expenditure assignments and LG planning methodologies. After careful review during FY20, the LGU revenue and expenditure assignments, along with reform measures on the intergovernmental scal framework, will be presented for discussion with the PA. Third, the PID MDTF- nanced Land Sector TA organized the dissemination workshop in December 2018 for a report on the Socio-Economic E ects of Weak Land Registration and Land Administration System in the West Bank. Through this workshop with the PLA, the Land and Water Settlement Commission (LWSC), Prime Minister’s O ce (PMO), MoFP, and DPs discussed the primary ndings of this report, which in turn informed the preparation of the RERP. Lastly, during the reporting period, the Energy Sector TA provided international technical expertise to PENRA and the DISCOs to design the Revenue Protection Program (RPP), MIS, and Gaza rooftop solar components of the ESPIP. 07 Table 1: Project Highlights PROJECT KEY DEVELOPMENT BENEFICIARIES PROGRESS MDP-3 Nearly 88 percent of 346 infrastructure subprojects (amounting to Ministry of Local Government PDO US$48 million) are completed or nearing completion.17 (MoLG), MDLF, and Municipalities 83 km of roads have been rehabilitated or constructed amounting to 47 percent of total output target. The MDLF has successfully piloted direct transfer and administration of grants received from MDP-3 for nine selected municipalities in the West Bank. A road map and action plan for the MDLF’s transformation into a lending intermediary for municipal borrowing have been prepared and shared with DPs for consultation. IP The diagnostic study of PPP was completed in March 2019, which primarily identi ed the gaps in the enabling environment for PPP at the local level. The number of bene ciaries of subprojects (Cycle 1) has already surpassed the target (0.5 million versus the current count of 1.9 million). GSWMP The construction of Sofa Al Fukhari Sanitary Land ll, with a capacity of 45,000 temporary jobs were PDO 2.2 MCM, has been completed and o cially inaugurated. created as part of the construc- Overall rehabilitation works on the existing dumpsite have been tion activities. completed. 204,000 people directly bene ted Purchase of land ll equipment for the operational phase has been from project improvements. completed and delivered. Solid waste steel containers of various capacities were supplied. The rehabilitation of the Sofa Al Fukhari access road was completed in August 2019. 600,000 m3 of clay soil of the excavated material from the construction of the land ll was transferred to vacant government land in September IP 2018. A new website page for Joint Service Council for Khan Younis, Rafah, and Middle Area (JSC-KRM) was developed, including a system for receiving complaints electronically (that is, an online Grievance Redress Mechanism [GRM]). LGSIP In FY 19. 74.5 percent of the VCs received transparent and predictable MoLG PDO Annual Capital Grants, surpassing the target of 60 percent. VCs Timely communication and transfer to VCs of the formula-based Annual JSCs Capital Investment Grant (ACIG) has been sustained for three years. Bene ciaries of improved service In FY 19. 178 VCs were eligible to receive funding for subprojects under delivery in program villages LGSIP amounting to US$4.3 million. reached 338,000 people, Steps to improve the transparency in the allocation of the Transporta- surpassing the mid-term target of tion Fee were adopted by MoLG, marking a critical milestone. 230,000. 10 out of 13 disbursement-linked indicators (DLIs) have been achieved. - The World Bank team. veri ed the achievement of 1 of the 3 remaining DLIs in FY20 while the other 2 DLIs remain incomplete (see Section 5.2.3 IP for details). Several training activities were delivered to VCs and MoLG in alignment with the Capacity Development Action Plan. ESPIP PENRA reports 100% collection rate of the bills issued for electricity PENRA PDO provided by PETL to the Northern Electricity Distribution Company PETL (NEDCO) and Tubas Electricity Distribution Company (TEDCO) in 2018 Palestinian Electricity Regulatory from the Jenin substation. Council (PERC) PETL has completed procurement of all the equipment required for DISCOs O&M of the Jenin substation. Each of the six DISCOs across the WB&G completed a detailed review of their customer database to identify 16,000 high-value customers to be covered under the RPP. The RPP procurement process is under way. All six DISCOs completed the IT systems review and gap analysis to identify priority needs for development of a comprehensive MIS, whose procurement is expected to be launched in November 2019. IP The Gaza rooftop solar initiative was formally launched in October 2018 with the signing of the PENRA-Gaza Electricity Distribution Company (GEDCO) agreement. The technical assessment for Nasser hospital and three priority clinics is under review. The procurement process is expected to begin in November 2019. Water Security TA In April 2019, the rst Palestinian Water Innovation Challenge was PWA N/Aª carried out. (early results after In June 2019, the PWA and the YC organized a workshop to (a) re ect on Tubas and other municipalities late FY19 the work so far and lessons learned; (b) discuss the PWA’s vision of expanding the YC into a water youth forum and necessary steps for that; approval) and (c) develop a clear action plan of youth involvement at the service delivery level. 17. The MDLF reported that 191 subprojects have been completed while 114 subprojects are currently under implementation. 08 PROJECT KEY DEVELOPMENT BENEFICIARIES PROGRESS LG Sector TA Preliminary recommendations on revising LGU revenue and expendi- MoLG N/A ture assignments are under review. Benchmarking JSC performance has been completed. National Working Group For institutional development, discussions with key stakeholders have been carried out. Land Sector TA The main ndings of ‘the Socio-Economic E ects of Weak Land PA N/A Registration and Land Administration System in the West Bank Report’ LWSC were shared in a workshop with the PLA, LWSC, PMO, MoFP, and DPs in PLA December 2018. MoLG GeoMoLG A detailed assessment of the registration process was completed including detailed recommendations on methods to streamline, accelerate, and reduce systematic land registration (SLR) costs. An assessment report mapping existing SLR processes and work ows has been completed. The institutional change that aims at increasing transparency at the PLA was approved by the Cabinet and signed by the Prime Minister in November 2018 (Decision No. 17/229/18). It now awaits the signature of the President. Energy Sector TA This TA continues to provide technical and capacity-building support to PENRA N/A the PA on the ongoing reforms to support implementation of the Israeli-Palestinian electricity debt agreement that was signed in PETL September 2016. DISCOs During 2018/19, this TA provided international technical expertise to GEDCO PENRA and the DISCOs for design of the RPP, MIS, and Gaza rooftop solar components of the ESPIP. KEY Satisfactory or Highly Satisfactory PDO: Progress toward achieving the PDO Moderately Satisfactory IP: Overall Implementation Progress Moderately Unsatisfactory / Unsatisfactory Note: a. Progress of the PDO and IP of Bank-executed ASAs are not formally rated. 09 2.4. PID MDTF Financial Data 2.4.1. Pledges By June 30, 2019, a total of US$191.7 million had been pledged to the PID MDTF, which is in its seventh year. The Governments of Croatia, Denmark, Finland, France, the Netherlands, Norway, Portugal, and Sweden remain as active donors to the MDTF, and the Governments of the United Kingdom and Australia joined during the reporting period. Of the pledged amount, US$170.2 million has been paid in. Total donor pledges during FY19 amounted to approximately US$47.2 million equivalent from Norway in the amount of NOK 73.0 million (US$8.4 million equivalent) pledged in November 2018; Sweden in the amount of SEK 90.0 million (US$10.0 million equivalent) pledged in December 2018; the United Kingdom in the amount of GBP 18.0 million (US$22.1 million equivalent); and Australia in the amount of AUD 10.0 million (US$6.8 million equivalent). Of the additional pledges made during FY19, US$28.7 million was already paid in. PID MDTF Parallel Parent Trust Funds TF071898 TF072778 Approval June 6, 2012 Approval December 9, 2016 Activation July 20, 2012 Activation December 15, 2016 End of disbursement December 31, 2022 End of disbursement December 31, 2027 Table 2: TF Financial Contributions as of June 30, 2019 (Pledged and Received) JUNE 2019 PLEDGED FINANCIAL TO DATE - TOTALS CONTRIBUTIONS (in millions) TO DATE PLEDGED PAID-IN TO DATE RECEIVABLES CONTRIBUTORS CURRENCY Pledge Currency USD Pledge Currency USD Pledge Currency USD Croatia USD 0.2 0.2 0.2 0.2 0.0 0.0 Sweden SEK 433.0 54.2 433.0 54.2 0.0 0.0 Denmark DKK 360.0 59.7 340.0 56.8 20.0 3.0 Finland EUR 11.0 13.0 11.0 13.0 0.0 0.0 France EUR 3.5 4.4 3.5 4.4 0.0 0.0 Netherlands USD 4.0 4.0 4.0 4.0 0.0 0.0 Norway NOK 220.0 27.1 220.0 27.1 0.0 0.0 Portugal EUR 0.2 0.2 0.2 0.2 0.0 0.0 United Kingdom GBP 18.0 22.1 2.8 3.5 15.2 18.5 Australia AUD 10.0 6.8 10.0 6.8 0.0 0.0 USD TOTALS: 191.7 170.2 21.5 Note: For reporting, total nancials will be presented jointly. However, disaggregated information by TF number and Unaudited Trust Fund Financial Reports can be found, respectively, in Annexes 4 and 5 of this report. 10 Pledges to the PID MDTF during FY19 have increased substantially to US$47.2 million, following a much lower pledged amount of US$7.8 million during FY18. When these two gures are averaged out, the result is US$27.5 million per year over FY18/FY19, which is similar to the level seen in FY16/FY17. This means that the PID MDTF is still receiving a similar average amount in pledges as in the previous years while receiving in FY19 US$47.2 million, the largest amount of pledges during a single scal year since its inception. Granted that this increase is at least partially a result of (a) an increased focus on Gaza and (b) reduction in direct budget support, it is also evidence of continued commitment to Palestinian infrastructure develop- ment by many DPs. It is also relevant to note that two new donors—Australia and the United Kingdom—joined the PID MDTF during the report- ing period and that talks are under way with the European Union (EU) for it to join as well. Figure 2: Pledges by PID MDTF Year $ 50,000,000 $ 47,219,918 $ 45,000,000 $ 40,000,000 $34,557,002 $ 35,000,000 $27,980,203 $29,428,584 $ 30,000,000 $ 26,664,412 $ 25,000,000 $ 20,000,000 $18,142,213 $ 15,000,000 $ 10,000,000 $ 7,752,287 $ 5,000,000 $0 FY13 FY14 FY15 FY16 FY17 FY18 FY19 11 Table 3: PID MDTF Child Trust Funds as of June 30, 2019 Project Grant Grant Amount Grant Grant Closing Disbursements Grant Name Execution Legal Status Project ID Effectiveness (after any canceled Number Approval Date Date funds) USD USD Date TF071898 TF016476 SECOND MUNICIPAL Recipient LEGALLY P127163 26-Mar-14 17-Apr-14 28-Feb-18 25,799,060 25,799,060 DEVELOPMENT Executed CLOSED PROJECT TF018376 SOUTHERN WEST Recipient LEGALLY P154102 11-May-15 15-Jun-15 30-Jun-16 1,500,000 1,500,000 BANK SOLID WASTE Executed CLOSED MANAGEMENT PROJECT ADDITIONAL FINANCING TF018377 GAZA SOLID WASTE Recipient PENDING P121648 24-Oct-14 9-Jul-14 30-Nov-20 750,000 0 MANAGEMENT Executed PROJECT Recipient ACTIVE P127163 7-Dec-14 29-Jan-15 28-Feb-18 12,000,000 11,999,001 TF018378 GZ EMERGENCY RESPONSE AF MDP-2 Executed TF0A1061 SECOND MUNICIPAL Recipient LEGALLY P127163 14-Apr-16 26-Oct-16 28-Feb-18 6,899,293 6,899,293 DEVELOPMENT Executed CLOSED PROJECT - ADDITIONAL FINANCING TF0A4511 LOCAL GOVERNANCE Recipient ACTIVE P148896 14-Mar-17 14-Mar-17 31-Dec-20 13,000,000 2,310,833 AND SERVICES Executed IMPROVEMENT PROGRAM (LGSIP) TF0B0101 MDP-3 ADDITIONAL Recipient 2-May-19 17-Jun-19 28-Feb-22 5,000,000 0 PENDING P159258 FINANCING FOR Executed EMERGENCY LABOR-INTENSIVE GAZA MUNICIPAL SERVICES TF017221 NGEST SOLAR POWER Bank LEGALLY P149853 14-Apr-14 19-Aug-14 31-Mar-16 149,832 149,832 FEASIBILITY STUDY Executed CLOSED TF0A3599 PALESTINE LOCAL Bank ACTIVE P161279 3-Oct-16 12-Oct-16 31-Dec-20 700,000a 581,880 GOVERNMENT Executed SECTOR REFORM SUPPORT TF0A4202 WEST BANK & GAZA Bank ACTIVE P162545 1-Jan-17 3-May-17 30-Jun-21 2,000,000 935,322 ENERGY SECTOR Executed PROGRAMMATIC TECHNICAL ASSISTANCE TF0A2807 PROJECT Recipient LEGALLY P148600 9-Jun-16 1-Aug-16 31-Dec-18 0 0 PREPARATION GRANT Executed CLOSED FOR ESPIP TF0A5078 Recipient ACTIVE P148600 15-Aug-17 16-Jan-18 30-Jun-22 7,000,000 3,005,391 WEST BANK AND GAZA ELECTRICITY Executed SECTOR PERFORMANCE IMPROVEMENT RPOJECT Recipient ACTIVE P148600 15-Jan-19 11-Jun-19 30-Jun-22 7,000,000 0 TF0A9136 ESPIP AF Executed TF014530 PID MDTF PROGRAM Bank ACTIVE P130100 18-Jun-12 2-Apr-13 31-Dec-22 700,000 519,445 AND TF Executed MANAGEMENT FUND TF017186 GAZA SUSTAINABLE Recipient LEGALLY P150494 12-Oct-15 5-Jan-16 31-May-18 2,398,161 2,398,161 WATER SUPPLY Executed CLOSED PROGRAM: ADDITIONAL WORKS TF015756 WATER SECTOR Recipient LEGALLY P117443 5-Feb-14 2-Jun-15 31-Dec-17 2,852,452 2,852,452 CAPACITY BUILDING Executed CLOSED CO-FINANCING FUND TF016501 THIRD ADDITIONAL Recipient LEGALLY P074595 8-May-14 18-Nov-14 30-Jun-18 5,000,000 5,000,000 FINANCING FOR THE Executed CLOSED NORTH GAZA EMERGENCY SEWAGE TREATMENT PROJECT TF018268 GAZA EMERGENCY Recipient LEGALLY P101289 3-Dec-14 26-Jan-15 31-Dec-17 8,239,352 8,239,352 WATER SUPPLY AND Executed CLOSED SEWAGE SYSTEMS IMPROVEMENT PROJECT ADDITIONAL FINANCING TF0A7564 WATER SECURITY Bank ACTIVE P167309 1-May-18 2-May-18 31-Jan-21 900,000 55,567 TECHNICAL Executed ASSISTANCE Sub-Total 101,888,150 72,245,589 12 Project Grant Grant Amount Grant Grant Closing Disbursements Grant Name Execution Legal Status Project ID Effectiveness (after any canceled Number Approval Date Date funds) USD USD Date TF072778 TF0A4947 SUPPORT TO THE Bank ACTIVE P163872 24-Apr-17 22-Jun-17 31-May-21 1,500,000 581,728 PALESTINIAN LAND Executed SECTOR TF0A6154 MUNICIPAL Recipient ACTIVE P159258 21-Jul-17 14-Dec-17 28-Feb-22 20,000,000 7,486,854 DEVELOPMENT Executed PROJECT III - PID MDTF TF0B0359 WEST BANK AND Recipient PENDING P168576 22-Jul-19 Not yet 30-Nov-23 3,000,000b 0 GAZA REAL ESTATE Executed effective REGISTRATION PROJECT (RERP) Sub-Total 24,500,000 8,068,583 Totals combining TF071898 and TF072778 126,388,150 80,314,171 Note: a. The LG Sector TA received a US$600,000 replenishment from the PID MDTF in FY20 that is not re ected here. b. Since the RERP was not approved during FY19 (that is, by the end of the reporting period), the grant amount is not included in the subtotal or total. 13 2.4.2. Commitments PID MDTF funding in the amount of US$126.5 million has been committed18 for co- nancing, the large majority of which in recipient-executed activities. The largest share of co- nancing, US$84.9 million, is committed to the recipient-executed urban sector window (hereafter the ‘urban window’), which includes solid waste and land management. The recipient-executed water sector window (hereafter the ‘water window’) follows with an approximate total of US$18.5 million in commitments, all of which to closed projects. Committed co- nancing under the recipient-executed energy sector window (hereafter the ‘energy window’) has doubled since the last annual report, amounting to a sum of US$14.0 million. As of end-FY19, 13 GAs for recipient-executed activities—amounting to US$115.7 million—had been signed with the PA during the lifetime of the MDTF. These 13 include a new GA signed during FY19 for the ESPIP AF of US$7.0 million. Two additional GAs were pending at the end of FY19: (a) MDP-3 AF (signed as of September 2, 2019) and (b) the GSWMP—which is expected to be signed before February 2020.19 As many of the PID MDTF’s co- nanced projects closed during FY18, the GAs of those projects closed during this reporting period. In fact, 6 of the 13 GAs closed during FY19, including 3 in the water window (WSSSIP, GSWSP, and NGEST); 2 in the urban window (MDP-2 and MDP-2 AF); and 1 in the energy window (Project Preparation Grant [PPG] for the ESPIP). Figure 3: PID MDTF Grant Distribution by Window as of June 30, 2019 15% Water Total $18,489,965 69% Urban Total $84,948,352 11% Energy Total $14,000,000 4% Bank-executed TA Total $5,249,832 1% Program and Trust Fund Mgmt up to 3% $700,000 A total of US$5.25 million across ve di erent activities has been committed to the Bank-executed TA window. During FY19, an additional US$1.0 million was added to the Energy Sector TA (P162545), and an additional 5 US$0.8 million was added to the Land Sector TA (P163872). The program and TF management commitment remained unchanged from the previous year, at US$0.7 million. Details of the co- ¬nancing commitments to the sectors by the TFGWB for FY19 can be found in Annex 6. 2.4.3. Disbursements Total PID MDTF disbursements have reached US$80.2 million, 63 percent of commitments.20 With all grants under the water window now having closed, disbursements in the sector are accordingly 100 percent (US$18.5 million). Undisbursed funds of US$3.6 million from the WSSSIP (closed in FY18) have returned to the PID MDTF. Under the recipient-executed urban window, disbursements have reached US$56.0 million, equivalent to 65.9 percent of total sector commitments and 48.4 percent21 of active sector commitments. While MDP-2 GAs reached nearly 100 percent disbursement at the end of FY19, the LGSIP had disbursed 17.8 percent of its commitments and MDP-3 had disbursed 37.4 percent.22 Under the energy window, which for now is made up only of the ESPIP, disbursements have reached US$2.9 million or 20.8 percent of total commitments. 18. Since PID MDTF inception and includes commitments to closed projects. 19. The GA for the GSWMP will be signed when the environmental assessment of the activity is completed, which is expected by February 2020. The bulk of the project has been nanced by the TFGWB and this US$0.75 million grant will be its rst co- nancing from the PID MDTF. 20. For detailed disbursement gures by sector and project, please refer to the sector reviews (Section 5). 21. While MDP-2 closed during FY18, one of the three GAs under the project remained open throughout FY19. Thus, this gure (48.4 percent) includes TF018378—Gaza Emergency AF of MDP-2—which only recently closed in FY20. 22. MDP-3 AF is not included in this disbursement gure since the GA was pending at end-FY19. 14 Disbursements under PID MDTF Bank-executed TA activities have reached US$2.3 million (43.7 percent of commitments for Bank-executed TA). TF management disbursements totaled just over US$0.5 million since PID MDTF inception as of the end of FY19. Figure 4: PID MDTF Disbursement by Window as of June 30, 2019a $60 M $ 55,995,041 $50 M $40 M $30 M $18,489,965 $20 M $10 M $2,910,853 $2,295,807 $517,651 $0 M Water Total Urban Total Energy Total Bank Executed Program & TF TA Mgmt. Note: a. These disbursement gures are cumulative since the inception of the PID MDTF in 2012, including both TF071898 and TF072778. Figure 5: PID MDTF Disbursements versus Net Grant Commitmentsa by Sector as of June 30, 2019b $84,948,352 $80M $70M $60M $55,995,041 $50M $40M $30M $18,489,965 $20M $18,489,965 $14,000,000 $10M $5,249,832 $2,910,853 $700,000 $2,295,807 $517,651 $0M Water Total Urban Total Energy Total Bank Executed TA Program and TF Mgmt. Net Grant Commitment Disbursed Note: a. Net grant commitments here refer to the signed grant amounts minus any canceled amount that has returned to the PID MDTF. b. These disbursement gures are cumulative since the inception of the PID MDTF in 2012, including both TF071898 and TF072778. 15 2.4.4. Allocations and Financing Needs Total PID MDTF funding commitments and allocations at the end of FY19 amounted to US$191.6 million, with US$0.2 million unallocated. Of the US$65.0 million allocated funds, US$55.3 million is for new operations. Table 4: PID MDTF Commitments and Allocations as of June 30, 2019 Commitments & Allocations in USD Pledged $191,744,620 Commitments to Closed Projects Water sector 18,489,965 Urban sector 34,198,352 Energy sector 0 Bank-executed TA 149,832 Subtotal closed $52,838,150 Active (and pending) Portfolio Commitments Water sector $0 Urban sector $50,750,000 Energy sector $14,000,000 Bank-executed TA $5,100,000 Program and trust fund management (up to 3%) $700,000 Central administration fee $3,146,877 Subtotal active $73,696,877 Total committed $126,535,027 PID MDTF Allocated Funds (AWP-I) $34,000,000 Water sector $34,000,000 LGSIP AF $2,000,000 RERP (as of FY20 this is committed) $3,000,000 Urban Sector $5,000,000 ASPIRE MPA $18,000,000 Energy Sector $18,000,000 Local Government Sector Reform TA (as of FY20 this is committed) $600,000 Sustainability of Infrastructure - Operations & Maintenance ASA $250,000 Bank-executed TA $850,000 Program and Trust Fund Mgmt. (up to 3%) $5,052,339 Central Administration Fee $2,144,295 Additional Costs $7,196,633 Total Allocated $65,046,633 Total Unallocated $162,960 A number of ongoing and pipeline operations are proposed for co- nancing under the PID MDTF. In line with the objective to maintain fewer but more comprehensive programs, nancing needs are largely concentrated on the agship operations in each sector. In the water sector, the proposed AWP-I is being allocated US$34 million, and in the energy sector the ASPIRE MPA—which builds on the ESPIP—is being allocated US$18 million. In addition, some of the ongoing operations that have a critical role in the portfolio supporting the PA’s priorities in the water, urban, and energy sectors have identi ed funding gaps that are included in the proposal for allocations during the upcoming funding period. Table 5 summarizes the objective and rationale for the funding needs, while Table 6 provides a breakdown of the allocated funding by source and the estimated funding gap by type of activity. The estimated nancing gap amounts to around US$78.5 million in the water sector, US$6.5 million in the urban sector, and US$150 million in the energy sector. The World Bank supports the PA in its e orts to cover the nancing gap. However, the World Bank only nances—whether through the TFGWB or PID MDTF—a share of overall sector needs appraised as viable investments. The funding gap summarized in Table 6 is based on the capital investment needs identi ed by the PA line agencies in the water, urban, and energy sectors. Speci c gures included in this table result from the World Bank’s assessment of feasible activities with high priority that could be included in the ongoing or proposed activities to be co- nanced under the PID MDTF. The World Bank has allocated its own funding from the TFGWB to the proposed activities, totaling US$39.0 million for FY20. 16 Table 5: Proposed & Upcoming Activities Project Allocated Funding FY 20 PID Period Financing Gaps Objective Co-financing AWP-I (P168739) December 17, 2019 US$34 million US$8 million To improve the quality and quantity (expected Board date) of bulk water supplied to the municipalities served in the project areas and strengthen the capacity of the Palestinian Water Authority. AWP-I will address the immediate water needs in the southern and middle governorates of Gaza by funding the necessary infrastructure to secure and blend the additional, and not previously available, fresh water quantities (33 MCM per year). This project will also bolster the establishment of a small unit to manage bulk water supply operations in Gaza, as well as lay the foundation for the enhancement of performance of service providers as part of a national program. Additionally, the project will identify bulk water investments and prepare detailed designs to initiate preliminary action to address the water shortages in the West Bank. The capacity of the PWA will be improved through (a) the establishment of a bulk water unit in Gaza, (b) the design of a National Service Provider Improvement Program (NSPIP), and (c) advancing priority investment planning for bulk water supply in the West Bank. HRWMP-I (P117449) On-going; closing US$0 million US$5.5 million To reduce the environmental December 2022 pollution from wastewater produced in the Hebron Municipality. HRWMP-I is critical to establishing basic wastewater services for Hebron City and improving environmental protection along Wadi As-Samen by reducing uncontrolled sewage and making treated e uent available for agriculture. The key results of HRWMP-I are (a) treatment of the current wastewater stream discharged from Hebron Municipality in Wadi As-Samen, (b) sustainably managed treatment of wastewater loads from Hebron Municipality, and (c) increase of water potentially available for irrigating farmers’ lands. Currently, the project is nanced through US$4.5 million from the TFGWB, EUR 25 million from Agence Française de Développement (AFD) including EUR 15 million delegation arrangement funds provided by the European Commission (EC), and U.S. Agency for International Development (USAID) parallel nancing in kind for the construction of an access road and related infrastructure. Tax contribution of around US$6.73 million is provided in kind by the PA through tax exemptions for the AFD/EC and USAID contributions, whereas the estimated contribution from Hebron Municipality for O&M is US$7.5 million. This leaves a nancing gap of US$5.5 million, which is expected to be covered from AF before commencement of the O&M contract. RERP (P168576) Pending in FY19 US$3 million US$0 million To enhance tenure security and (approved as of FY20) improve real estate registration services. The 4-year RERP is essential in advancing the registration of properties in Areas A and B of the West Bank and supporting the ongoing systematic approach, which comprehensively bene ts citizens, businesses (including micro, small, and medium enterprises [MSMEs]), and public entities. Gender outreach and inclusion have been mainstreamed through the design of the project to ensure that the rights of women and vulnerable groups are protected through their participation in the SLR process and the promotion of their registration rights. The project components include (a) Systematic Land and Property Registration, (b) Institutional Modernization of the PLA, and (c) Project Management and Outreach. GSWMP (P121648) Ongoing; closing US$0 million US$1.5 million To improve solid waste management November 2020 services in the Gaza Strip. The GSWMP is a comprehensive strategic infrastructure and capacity-building project, with the MDLF managing the southern component of the project covering three of the ve governorates in the Gaza Strip—the Middle Area, Khan Younis, and Rafah Governorates. The project target comprises approximately 64 percent of Gaza’s total geographic area and 46 percent of Gaza’s total population (approximately 800,000 people). The GSWMP is initiating measures to improve overall SWM systems through supporting a combination of (a) strategic infrastructure investments, (b) institutional strengthening and capacity building, and (c) skills and technology development. The supplemental nancing, which amounts to around US$1.5 million, is needed for leachate treatment and the construction of a transfer station that was eliminated at the MTR due to budget limitations. 17 Project Allocated Funding FY 20 PID Period Financing Gaps Objective Co-financing LGSIP (P148896) Ongoing; US$2 million US$0 million To strengthen the local government closing nancing system and improve local December 2020 service delivery in Program villages. The LGSIP, which provides key input to the Palestinian National Village Support Program, had fallen short of the necessary nancing to meet its commitment due to population growth and the increasing number of VCs. With additional nancing expected from the PID MDTF during FY20, as well as counterpart funding from the PA, the LGSIP is expected to cover its nancing gap. MDP-3 (P159258) Ongoing; closing US$0 million US$5 million To enhance the institutional capacity February 2022 of municipalities in the West Bank and Gaza for more accountable and sustainable service delivery. MDP-3 seeks to consolidate and deepen the gains from MDP-1 and MDP-2 on transparency and service delivery by strengthening the institutional capacities of municipalities and improving the enabling environment for the private sector to participate in service delivery. The project is best placed to continue to advance municipal-level reforms as well as to align those to the necessary reforms at the central level to materialize the PA’s vision. Particularly, the project intends to contribute to the sector goal of enabling municipalities to ultimately become creditworthy and be able to access resources from the market for municipal infrastructure. The current nancing gap of US$5 million would be used for a revolving fund in the MDLF for a pilot lending program for select municipalities. ASPIRE MPA February 10, 2020 US$18 million US$31 million To Ensure Sustainable and Reliable (expected Board date) (for Phase I) Energy Services for the people of (P170928) - Phase I West Bank & Gaza. The ASPIRE MPA - Phase I serves as a part of an MPA which focuses on creating conditions that incentivize the private sector and simultaneously mitigate the risks while investing in a fragile and uncertain environment. Through the MPA, PENRA is expected to achieve greater diversi cation of energy sources with increased nancial and operational sustainability. Phase I of the MPA entails three components: (a) improving infrastructure for regional electricity interconnections, (b) improving sustainability of service delivery, and (c) enabling private sector engagement in renewable energy. 18 Table 6: Allocations and Funding Needs (US$, millions) Proposed Activity Remaining Funding Needs Allocated PID Funding (Financing Gap) AWP-I TFGWB PID Other 3 - Improved supply of bulk water to southern and middle governorates of Project cost for south and Gaza middle governorates = 117 2.5 – Capacity Building. 15 34 60 2.5 – Project Management and Implementation Support. WSDP GCDP: Associated Works 75a – Project expansion to Northern Phase II (AWP-II) 0 0 0 Gaza and Gaza City. Gaza Wastewater 0.6 – National Wastewater Strategy. Management Sustainability 6 0 0 Projectb HRWMP-I 5.5 - Plant operation, supervision, and 0 0 0 support over 5 years Future National Service 15 - For PWA-requested support for (a) service providers to move up the Improvement Projects performance ladder; (b) separation of 0 0 0 water service provision from other municipal services; (c) clustering of service providers to achieve economies of scale; and (d) promotion of future PPPs Water Allocation & Financing Gap 21 34 60 104.1 RERPc 0 5 3 4.6 GSWMP - AF 1.5 - Supplemental nancing for leachate treatment and the construction 0 0 2 of a transfer station that was eliminated at the MTR due to budget limitations LGSIP AF 0 0 2 0 MDP-3 5 - Revolving fund in the MDLF for a pilot lending program for select municipali- 0 0 0 ties Urban Allocation & Financing Gap 5 5 6.6 6.5 19 ASPIRE MPA 15 - Support for solar PV rooftop in the 14 18 0 WB&G, including battery waste management 45 - In the West Bank for construction of priority high-voltage (HV)/medium voltage (MV) substations and transmis- sion, upgrade of key MV/low-voltage (LV) transmission lines, and support to PERC on regulatory reform 38 - In Gaza for implementation of MV/LV priority transmission needs 70 - PETL liquidity support facility for IPPs Energy Allocation & Financing Gap 14 18 0 168d Total Funding Needs 278.6 Note: a. Options to cover the US$75 million funding gap for AWP-II include future contributions to the PID MDTF and TFGWB replenishments, as well as other donor nancing. b. The Gaza Wastewater Management Sustainability Project, an emergency operation to be processed in FY20 with US$6 million TFGWB nancing, will support NGEST O&M for three years while helping build the necessary arrangements for long-term sustainability of the plant. c. The RERP was approved by the World Bank Group Board on July 22, 2019, that is, already in FY20. It is still included in the table since the approval was after the FY19 reporting period. d. The ASPIRE MPA—which will require a US$200 million funding envelope—will be implemented over eight years. Of the US$168 million in nancing needs identi ed here, US$137 million is for future subsequent phases of the MPA (2020–2028), based on activities identi ed in preparation stage discussions, while US$31 million is for Phase I. The funding already allocated from the TFGWB and PID MDTF is only for Phase I. The speci c funding needs for each future phase will be de ned in due course and presented in future PID-MDTF meetings. 20 3. Country Context Uncertainty dominates the political and economic conditions in the WB&G. More than 25 years after the Oslo Accords were signed, the peace process between the PA and the GoI remains in a stalemate. A recent discord is centered on the GoI—following a law it passed in 2018—beginning in March 2019 to deduct an annual amount of US$138 million from clearance revenues23 to o set payments made by the PA to Palestinian inmates in Israeli prisons and families of Palestinians deceased as a result of violence. The PA responded to the GoI action by deciding to reject all clearance revenues—so long as any unilateral deduction was being made by the GoI—and to adopt an emergency scal plan. The plan involves signi cant reductions in PA expenditures, including sta salaries, and short-term borrowing from domestic banks.24 Palestinian reconciliation e orts have stalled. Concerning Palestinian internal dynamics, the reconciliation process between the Ramallah-based PA and Hamas has all but stopped. In 2018, the PA signi cantly cut public o cials’ salaries in Gaza and placed many sta on early retirement. Commercial banks transferred less money to Gaza. The liquidity squeeze exacerbated the humanitarian crisis in Gaza. In response, regional donors have sent food aid and cash into Gaza. A new Cabinet took o ce in April 2019. In January 2019, former PA Prime Minister Rami Hamdallah, who had been leading the PA’s reconciliation e orts with Hamas, tendered his resignation together with his cabinet of ministers. Mohammad Shtayyeh was sworn in as the new PA Prime Minister on April 13, 2019, along with a new cabinet of ministers that was approved by President Abbas. In September 2019, the new Prime Minister assigned PA ministries with the task of updating data on Gaza civil servants, to address unpaid salaries. Donor support continues to decline. With regard to the international community, low levels of donor aid to the WB&G have continued. The United States is no longer sending direct support to the Palestinians, and the operations of USAID in the WB&G have ceased completely as of February 1, 2019. The United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) has seen major reduction in donor contributions. Before the cuts, support from the United States had made up almost a third of the UNRWA operating budget (including in the WB&G, Jordan, Lebanon, and Syria). Sluggish growth and a growing gap between Gaza and the West Bank. The Palestinian economy experienced minimal growth during FY19. According to data from the Palestine Central Bureau of Statistics (PCBS), Palestinian economic growth faltered in 2019, with the economy contracting in the rst quarter of the calendar year by 1 percent.25 This 1 percent contraction of the entire Palestinian economy concealed two very di erent realities: the West Bank contracted by 2.1 percent due to a decline in private and public consumption, while Gaza actually grew by 3.6 percent. Because of the economy’s relatively strong nish in 2018, real GDP of the whole economy had still grown by 3.8 percent from the rst quarter of 2018 to the rst quarter of 2019. And while Gaza’s real GDP grew from the fourth quarter of 2018 to the rst quarter of 2019, it was rebounding from a deterioration during 2018. Unemployment remains high and has risen signi cantly in Gaza. During the second quarter of 2019, overall unemployment was 26 percent—similar to the unemployment level in 2018. Within the West Bank, unemployment was 15 percent—2 percent lower than its 2018 average—mostly due to more jobs created in domestic commerce, hotels, and restaurants. Labor market indicators clearly show the growing divergence between the West Bank and Gaza economies as unemployment in Gaza was more than three times higher than that in the West Bank at 47 percent in 2019—up from 43 percent in 2018. In recent years, poverty has continued to rise. Around 24 percent of Palestinians lived below the US$5.5 per day poverty line in 2016/2017 (latest available data)—2.9 percent higher than in 2011. The gap in poverty levels between the West Bank and Gaza increased substantially from 2011 to 2016/2017, with 46 percent of Gaza below the US$5.5 per day poverty line compared to 9 percent in the West Bank. The West Bank, when considered separately, actually saw an improvement since 2011. Coping mechanisms have mitigated impact of the scal crisis. Despite the loss of nearly two-thirds of PA revenues since March 2019—due to the clearance revenue stando with the GoI—recession has been avoided by various measures and coping mechanisms that have insulated the impact on disposable income. Including the committed clearance revenue, the PA’s total de cit for the rst half of 2019 was US$415 million. During the same time period, donor aid was US$194 million26 —which would have resulted in a US$221 million nancing gap, but without clearance revenues the nancing gap was over US$1 billion—more than double the PA nancing gap for all of 2018 (US$400 million). The aid received in 2018 (US$676 million) was 6 percent lower than in 2017 due to lower funding from international donors, which was only partially o set by increased aid ows from regional donors. In recent years—and even more during the current scal crisis—the PA has resorted to debt nancing from the domestic banking sector and used the irregular practice of running up arrears to private suppliers and to the public pension fund to nance its needs. 23. Clearance revenues are VAT and import duties that the GoI collects on the PA’s behalf and transfers monthly to the PA, constituting 65 percent of the PA’s revenues and 15 percent of gross domestic product (GDP)—roughly US$ 200 million per month. 24. Unless otherwise noted, this section cites data and analysis from the World Bank’s September 2019 Economic Monitoring Report to the Ad Hoc Liaison Committee. The stando between the PA and GoI remained unresolved at the end of the reporting period on June 30, 2019. 25. This 1 percent contraction is of real GDP compared to that of the previous quarter (fourth quarter of 2018) on a seasonally adjusted basis. 26. This US$194 million is US$266 million in budget support received minus US$72 million in development nancing the PA transferred back to the United States. 21 Substantial risks to the domestic nancial sector. During the rst half of 2019, the Palestinian nancial sector, composed primarily of traditional banking, continues to face substantial risks against the backdrop of a deepening scal crisis. According to reporting by the Palestine Monetary Authority (PMA) through June 2019, the banking system’s assets exceeded US$16 billion. Direct credit continued to grow at a faster rate than deposits, reaching US$8.9 billion by June 2019. The resulting slight uptick in the overall credit-to-deposit ratio (driven by growth in both public and private lending), currently at 71 percent, should be monitored given the historical range of 50–60 percent over recent years. A review of credit exposure to the private sector indicates persistent sectoral concentration, with two-thirds of all private lending going to construction, trade nance, or consumer loans. 3.1. Country Risks The PID MDTF program operates in a high-risk environment due to the constant threat of political instability and violence. The World Bank assesses and manages the risks related to the operations it nances based on a Systematic Operations Risk-rating Tool (SORT). The risk assessment is mandatory at all stages of the operation, from the concept stage to project appraisal and implementation. Project-speci c risk assessments are included in disclosed Project Appraisal Documents (PADs), and the risk ratings are updated regularly in the publicly available Implementation Status and Results Reports (ISRs). Key project documents, including the most recent results and risk assessments, are available online—links for which are included in this report. A summary of sector risks, and identi ed mitigation measures, is included in the sector context sections of this report. Resilience in the face of a bleak outlook. The economic outlook for the WB&G is bleak, but the Palestinian economy has—with signi cant donor support—proven resilient over years of potential economic catastrophe. Going forward, however, uncertainty about a resolution for the clearance revenue stando will weigh on the economy. Over the last two decades, the Palestinian economy has been driven by large in ows of transfers as other sources of growth have been long hindered by the ongoing Israeli restrictions on movement and access. Under a baseline scenario that assumes a continuation of the Israeli restrictions, persistence of the internal divide between the West Bank and Gaza, and a decline in aid levels, the Palestinian economy is expected to slip into a recession in 2020 and 2021, even if additional, one-o transfers from clearance revenues are made. As nancial bu ers are depleted, the reduced revenues will require sizable cuts in public spending, which in turn will translate into reduced consumption and investment. The decline in growth implies a sizable decline in real per capita income and a rise in poverty. Stando over clearance revenues risks jeopardizing scal improvement trajectory. After a steady improvement in the scal position over the past decade, the stando over clearance revenues has severely constrained the PA budget, leading to a signi cant expansion in expenditure arrears. Given that clearance revenues constitute 65 percent of the PA’s total revenues and 15 percent of GDP, the loss has resulted in a severe liquidity squeeze, forcing the PA to adopt an emergency cash management plan that includes paying partial salaries and reducing spending on goods and services. The PA has so far managed to cope well given the signi cant loss in revenues. However, if the scal crisis is not resolved, the PA is facing the prospect of a buildup in arrears to employees, suppliers, and the pension fund that could approach US$1.4 billion in 2019 as well as exhaustion of its credit with domestic banks.27 The liquidity squeeze also has direct impacts on PID MDTF sectors and the investments it supports. One recent case is the northern Gaza wastewater treatment plant (WWTP), which was built with PID MDTF nancing and inaugurated in 2018. This is an essential facility that serves around 400,000 people. The World Bank project closed in June 2018, and the PWA was able to keep payments to the O&M contractor current only until October 2018. This led to the termination of the contract for cause in July 2019, after which the PWA has been struggling to keep the plant in operation. Owing to an EUR 241,000 emergency grant from AFD, the PWA has been able to keep treating around 90 percent of the wastewater ow, after a brief interruption in mid-September 2019. An interruption in wastewater treatment would have dire environmental and public health consequences and would compromise the integrity of the plant itself. In view of this, the World Bank is preparing an emergency operation ( nanced with US$6 million from the TFGWB)28 to support NGEST O&M for at least two years and help the PWA build up the plant’s sustainability. Growing risks to the nancial sector. The Palestinian nancial sector continues to face substantial risks against the backdrop of the scal crisis. The negative impact of the deepening scal crisis on the quality of loan portfolios across the banking sector has started to materialize as both nonperforming loans and classi ed loans have been on an upward trajectory, respectively growing by approximately 36 and 38 percent over the 12-month period June 2018 to June 2019. With the severe liquidity shortage facing the PA, it has resorted to domestic banks to nance its needs, raising the sector’s exposure to the PA for the rst time in a number of years. Banks are also rescheduling outstanding loans held by PA employees who are receiving a reduced salary, compounding the destabilizing e ect on the sector. However, the fact that the PA is simultaneously building up an asset in the form of tax revenues not received from the GoI ameliorates the situation as the increased exposure may be seen as a temporary trend. Another cause of concern is a possible disruption in correspondent banking relationships (CBRs) between Palestinian banks and their Israeli counterparts due to de-risking by Israeli banks. The immunity and indemnity packages given by the GoI to banks with CBRs are set to expire in May 2020 and February 2021, respectively, when a longer-term and more sustainable intervention is expected to be in place. 27. Unless otherwise noted, this section cites data and analysis from the World Bank’s September 2019 Economic Monitoring Report to the Ad Hoc Liaison Committee. 28. The Gaza Wastewater Management Sustainability Project (P172578). 22 Donor support remains essential to sustain reforms and enable provision of services to the Palestinian population. Beyond the current scal crisis, and in the short to medium term, there is no feasible alternative to budget support as a key source of nancing. Long-term scal sustainability, however, cannot be achieved without a prudent and stringent scal consolidation program by the PA. This program needs to address reform areas such as the pension system, civil service reform, health referrals, and untargeted transfers. Consolidation e orts will also help create scal space for additional public investment in areas not viable for the private sector, and through which the PA can create a better environment for doing business. Private sector engagement in the WB&G is essential for any sustainable growth and job creation. However, a weak, albeit improving, domestic business climate is an obstacle for private sector activity and development. Investment levels are extremely low, due to the associated high risk, and have resulted in a deindustrialization of the economy. Productive investments are inhibited by the high-risk backdrop of the WB&G as well as a patchwork regulatory climate which has been vulnerable to capture by vested interests. The WB&G ranked 117 out of 190 economies in the 2020 Doing Business report—23 spots better than the 2017 ranking (140). This signi cant improvement in ranking occurred because of the PA’s exceptional e ort in boosting access to credit through (a) a new Secured Transactions Law and (b) a new collateral registry that enhances access to credit and legal rights. Access to nance, meanwhile, is an ongoing challenge. While it is not seen as an impediment for large rms, access to nance continues to be a challenge for small and medium enterprises (SMEs) and informal rms. SMEs also su er from power cuts and costly backup arrangements to secure critical basic services, particularly in Gaza.29 The GoI’s restrictions on movement, access, and trade remain signi cant impediments to Palestinian private sector activity and job generation. Restrictions on access to resources have severely constrained economic activity in the West Bank. Restrictions on trade have extremely limited export-led growth, critical for a small economy, and hence hampered development of the private sector. Most Palestinian imports and exports pass through Israeli ports and incur security delays that can increase costs by an average of US$538 per shipment. Given the severe land constraints in the West Bank due to lack of access to Area C and in the Gaza Strip due to high population density, limited land registration and unclear property rights are a major challenge for urban, housing, and ultimately all business development. Still, the private sector has the potential to become the sustainable engine for growth, and greater focus is needed on removing the constraints and creating the right conditions for it to ourish. In the water, urban, and energy sectors, support is needed to continue helping sector institutions to become more e cient and e ective—building creditworthiness that will comfort private investors. 3.2. Eye on Gaza Gaza’s economy fell into a deep recession in 2018, contracting by 7 percent year on year. Before 2018, the Strip’s economy has never taken such a deep downturn that was not con ict induced. Economic bu ers are almost fully depleted, following Gaza’s long-term isolation. Gaza’s economy has been kept a oat in recent years, despite its isolation, due to large transfers including donor aid and spending through the budget of the PA, both of which amounted to 70–80 percent of Gaza’s GDP. However, these two sources have signi cantly declined recently, pushing Gaza into a deep recession. The deterioration was seen in most economic sectors but mainly in construction, public administration, and defense—Gaza’s main drivers of growth in recent years. If transfers through the PA’s budget continue to decline and the UNRWA funding gap is not o set, this will have a severe, negative impact on economic activity, service provision, and social conditions in the Strip. The outlook for the WB&G, particularly Gaza, is worrisome as sources of growth are slowly diminishing. Under a baseline scenario that assumes a continued stalemate, the persistence of the internal divide, and continued decline in aid, investment levels are not expected to pick up and sources of growth going forward will become extremely restricted. As a result, real GDP growth of the Palestinian economy is projected to hover around 1 percent between 2019 and 2021. Zooming more into the recent real Gaza GDP growth rate in 2017, there was a stark gap between Gaza (−12.5 percent) and the West Bank (+8.5 percent), and it continued in 2018 with −6.9 percent in Gaza and +3.1 percent in the West Bank. Gaza experienced a severe liquidity squeeze during 2018, which put the Strip on the verge of economic and social collapse. It caused corrosion of livelihoods, including a signi cant uptick in youth unemployment in Gaza. Unemployment among Gaza’s youth was extremely high at 64 percent while it was even higher for women, amounting to 70.6 percent.30 (Unemployment has uctuated in recent years, rising from 43 percent in 2018 to 47 percent in 2019.31) To help address the Gaza liquidity squeeze, the World Bank quickly mobilized US$17 million for the Gaza Emergency Cash for Work and Self-Employment Support Project—creating short-term jobs for vulnerable youths—while bridging the gap with the provision of social protection. In the current context, the PID MDTF’s nancial and technical support to Gaza in key sectors—water, urban, and energy—is critical as an immediate crisis response and for creation of an environment for sustainable growth. A continuation of service delivery in the three sectors is crucial both to the livelihood of the people and as a stimulant for production. Furthermore, substantial infrastructure investments along with sectoral policy reforms will be able to provide a boost to the economy and improve the quality of life for Gaza’s population—if they can be sustained, which is behind the growing focus on O&M and sustainability of infrastructure in discussions between the World Bank teams, the Palestinian authorities and DPs. 29. World Bank Group. 2020. Doing Business 2019. 17th Edition. Washington, DC: World Bank. 30. The World Bank’s Economic Monitoring Report to the Ad Hoc Liaison Committee, April 30, 2019, 6. 31. Most of the data in this section come from the PCBS, as quoted in the World Bank’s September 2019 Economic Monitoring Report to the Ad Hoc Liaison Committee. 23 3.2.1. Water Sector The water situation in Gaza is critical. Water supplied through the municipal networks is not potable, and more than 97 percent of households rely on potable water delivered by expensive and unregulated small-scale private providers. Overexploitation and sewage in ltration into the aquifer have resulted in the pollution of 95 percent of groundwater resources with high proportions of nitrates and chlorides—well above the WHO standards for potable water.32 Water quality measurements in 2018 indicated that the salinity of groundwater used for municipal distribution networks was in the range of 800–3,000 mg/liter of total dissolved solids (TDS). This unacceptable level of salinity in the groundwater has contributed to the low level of satisfaction in the reliability and quality of municipal piped water supply.33 AWP-I. Formulated by the PWA in partnership with the World Bank and other international organizations, AWP-I is poised to play a powerful role in addressing poor water quality in Gaza and the signi cant increase in domestic demand expected in the medium term, which is projected to reach around 145 MCM a year by 2030. AWP-I covers all of Gaza and comprises two main elements: (a) construction of a desalination plant and (b) construction of a north-south water carrier, including storage reservoirs to convey and properly blend the desalinated water with groundwater sources to achieve water supply meeting WHO potable water standards. AWP-I will also contribute toward enhancing the capability of sector institutions. It will establish a small unit to manage bulk water supply operations in Gaza, laying a solid foundation for the future establishment of the National Water Company (NWC), which is mandated by the Water Law of 2014 to manage and operate bulk water throughout the WB&G. The proposed Associated Works Phase I project, to be co- nanced by the PID MDTF, is under the AWP-I umbrella, focusing on no-regrets investments to supply bulk water to all 16 municipalities in central and southern Gaza (about 870,000 people) with at least 90 liters per capita per day, meeting WHO quality and quantity standards for potable water. 3.2.2. Urban Sector The PA continues to face a severe scal crisis with wide repercussions across sectors including the LG. Due to the worsening economy, LGUs have been forced to a varying degree to scale back spending on services, O&M, and sta salaries. The World Bank rolled out emergency operations during FY19—including in its urban sector portfolio—to help mitigate the economic crisis in Gaza. In addition to the cash for work and self-employment support mentioned earlier, the World Bank processed AF on an emergency basis to MDP-3, with co- nancing of US$10 million from the TFGWB and US$5 million from the PID MDTF. MDP-3. An amount of US$10 million of the MDP-3 AF went to a new project component on emergency labor-intensive Gaza municipal services. While the ongoing MDP-3 strengthens the institutional capacity of municipalities in the WB&G for more accountable and sustainable service delivery, this AF scales up MDP-3 support to all 25 Gaza municipalities through labor-intensive municipal infrastructure development along with O&M activities. Beyond the US$5 million from the PID MDTF in this AF, the MDTF had previously provided US$20 million in co- nancing to MDP-3. 3.2.3. Energy Sector Increasing electricity supply in Gaza remains a challenge. Current electricity availability (about 170 MW) is a third of Gaza’s needs (500 MW) with up to 120 MW received from Israel and around 45–60 MW from the Gaza Power Plant (GPP) when fuel is available. Electricity supply from Egypt, which was around 25 MW in the past, is yet to be restored. The completion of an additional 161 kV interconnector with Israel has been on hold for a long time as the responsibility and mechanism for payment of purchased electricity are being decided. Public services are acutely a ected by electricity rationing with the health sector (highly dependent on diesel generators) and water and wastewater services operating at minimal service levels. Three hospitals and 10 medical centers have already suspended services. ESPIP. The WB&G ESPIP aims to improve energy security in Gaza with solar energy as stated in its Component 3. The ESPIP’s Component 3 is entirely focused on Gaza and encompasses two subcomponents: (a) solar revolving fund for households and SMEs (US$3.5 million) and (b) solar for health facilities (US$2.3 million). Detailed technical assessment for the rooftop solar PV kits was completed with funding from the programmatic TA. The rooftop solar revolving fund was formally launched by PENRA and GEDCO in Gaza City on October 11, 2018. However, the registration process has been extremely slow for two reasons: (a) the extensive reduction in salaries and jobs due to scal constraints and reduced aid ows has a ected the pool of potential bene ciaries, as the initial phases were focusing on salaried employees, and (b) Gaza is temporarily receiving 12–16 hours of electricity supply due to the fuel provided by a grant from Qatar. While this has provided much-needed respite to residents, combined with the ongoing economic constraints, it has also tempered the urgency of the need for solar systems. 32. WHO guidelines in relation to TDS levels are as follows: excellent, less than 300 mg/liter; good, between 300 and 600 mg/liter; fair, between 600 and 900 mg/liter; poor, between 900 and 1,200 mg/liter; and unacceptable, greater than 1,200 mg/liter. 33. The Performance of Palestinian Local Governments: An Assessment of Service Delivery Outcomes and Performance Drivers in the West Bank and Gaza, June 2017 (the data were collected in 2016/2017). 24 ASPIRE MPA. Moreover, a new operation in the energy sector, designed as an MPA from 2020 to 2027, builds on activities supported by the ongoing ESPIP. Particularly, under Component 3: Enabling Private Sector Engagement in Renewable Energy, the ASPIRE MPA will attempt to expand the Gaza solar revolving fund for rooftop PV systems to poor and vulnerable households, in coordination with the Ministry of Social Development (MoSD). Moreover, under Subcomponent 3.3: Pilot improved battery recycling in Gaza, the ASPIRE MPA will (a) assist in the identi cation of best practices to support small-scale battery recycling, (b) identify the required equipment that would be allowed under the import restriction regime, and (c) support two to three small factories to upgrade and retool their operations. 3.2.4. Dual Use One of the major trade restrictions facing the Palestinian economy is limited access to key production inputs, namely those deemed as ‘dual use’. Dual-use goods are products and technologies that are normally used for civilian purposes but may have military applications. Like many other advanced economies, Israel controls its exports of dual-use goods. However, the list imposed by the GoI on the WB&G contains broad categories of products going well beyond internationally established practices. These controls were rst re ected in a 2007 law, but the list has since been signi cantly expanded. Particularly, these dual-use restrictions—along with the unpredictable application of the GoI ‘dual-use’ policy—adversely 9 a ect the delivery of public infrastructure projects, particularly in the urban sector in Gaza, as they require building materials, machinery, and chemicals that are considered dual use. The dual-use list includes 56 items restricted for both the West Bank and Gaza and an additional 62 items that only apply to Gaza. The economic costs on the Gaza economy from the dual-use list as currently implemented have been shown to be signi cant. Removing dual-use restrictions for legitimate businesses would bring about an additional cumulative growth of roughly 11 percent to the Gaza’s economy by 2025, compared to a scenario with continued restrictions.34 Recommendations for reducing the impact of dual-use restrictions. While considering Israeli security concerns, the appropriate actions are needed to allow Palestinian, particularly Gazan, businesses to access key inputs needed for the economy to grow. Easing dual-use restrictions and allowing the economy to bene t from modern technology would create additional growth sources for Gaza. According to the World Bank’s April 2019 Economic Monitoring Report to the Ad Hoc Liaison Committee, the following short-term and midterm recommendations could be pursued: In the short run, the current process to administer the Gaza dual-use list could be made more e cient by creating a ‘single window’ for the entire list as the short-term mitigation measure. For example, at present, there are two computerized systems for submitting requests to import dual-use items into Gaza: one for construction-related materials (GRM) and Presidential Committee for Commodities Coordination (PCCC). Once COGAT’s review and approval functions at Erez are streamlined, a ‘single window’ could be set up for the submission and approval of the entire dual-use list currently spread between the GRM and PCCC. This ‘single window’ could signi cantly facilitate the approval of complex infrastructure projects that require items across di erent segments of the dual-use list. In the midterm, a risk-based approach can be set up for Gaza to enable access to dual-use items for legitimate businesses and utility operators through greater monitoring and veri cation. Once the administrative procedures for a single window submission and approvals have been established, a risk-based classi cation can be developed based on the dual-use item in question, its importer, and intended nal use. This classi cation can then be used to determine the level of risk involved in the trade transaction and hence the level of monitoring required. To ensure that dual-use items are not being diverted for illicit use, either physical or remote monitoring can be implemented. Where physical monitoring is required, existing United Nations assets could be used to carry out the monitoring and submit reports to the parties. Moreover, given the relatively small size of Gaza, more sensitive items could be warehoused in Erez or just outside Karm Abu Salem under COGAT’s direct supervision and brought into Gaza as needed for the use by legitimate business or utility operators, further mitigating the possibility of diversion for illicit use. 34. The World Bank’s Economic Monitoring Report to the Ad Hoc Liaison Committee, April 30, 2019, 4. 25 4. Cross-cutting Themes 4.1. Gender The PID MDTF is taking actions to strengthen the gender focus across activities. The World Bank’s program in the WB&G is moving from a focus on gender mainstreaming to achieving speci c gender outcomes based on a customized gender-focused design within each project. Within the PID MDTF’s co- nanced projects, and following an initiative led by SIDA, the World Bank is planning to increase its focus on implementation support—which should help improve gender results across the Palestinian water, urban, and energy sectors. While new actions under the PID MDTF are critical to improve implementation of gender-focused activities, gender focus in the project design stage has progressed during FY19. The World Bank’s Second Country Gender Action Plan (C-GAP II) for Palestinian Territories (FY18–21) is under implementation, led by the Human Development Practice Group Program Leader and Gender Focal Point for the West Bank and Gaza with support from a Washington-based gender specialist to monitor and report on overall Country Management Unit activities while also providing technical guidance to teams based on availability of project resources. Concerted e orts to implement C-GAP II have meant that all new projects must identify speci c gender gaps and incorporate measurable actions to close those gaps during project design to meet the new ‘gender tag’ criteria (Figure 6).35 Overall, 75 percent of projects approved in FY18 and FY19 are considered gender-tagged, with 100 percent being gender-tagged in FY19. Table 7: Independent Assessment of Gender Integration in Active Project Portfolio (FY18–FY19) S. No. Operational Projects Allocated Funding Sector Approval Date Analysis Action M&E Gender Tagged FY19 Approved 1 MDP-3 AF (P168544) Urban 10-May-2019 Yes 2 ESPIP AF (P167914) Energy 15-Jan-2019 Yes FY18 Approved 3 ESPIP (P148600) Energy 27-Jul-2017 Yes 4 MDP-3 (P159258) Urban 21-Jul-2017 No Note: M&E = Monitoring and evaluation. 4.1.1. Gender Approach Aligned with the framework of C-GAP II, the World Bank’s overall approach to gender in the WB&G during FY19 has focused on two main thematic areas: (a) improving economic opportunities for women through private employment, entrepreneurship, and access to assets and (b) strengthening women’s voice and agency while nding new ways to engage men and boys. Alongside these thematic areas, there is a cross-cutting objective to overcome mobility constraints exacerbated by con ict contexts. On the institutional front, the World Bank now has in place a formal process to improve gender responsiveness through direct support of projects during implementation as well as to better communicate upstream reporting on gender tag status. Relatedly, the objectives of the gender approach are in line with the strong attention paid to youth, job creation, and vulnerability in the World Bank Group’s FY18-21 AS for the WB&G. Gender tag: To earn a gender tag, projects must show a clear results chain by building on evidence that identi es key gender-based gaps, proposes activities that will help close that gap, and puts in place metrics that can demonstrate results and measure impact. The recently launched report on ‘Enhancing Job Opportunities for Skilled Women in the Palestinian Territories’ provides a rich, data-driven context of challenges facing skilled young women, an untapped resource, in their search for work. Findings of the report have been used to inform the design of projects across sectors to ne-tune focus on equitable jobs. 35. In 2017, the World Bank introduced the ‘gender tag’ as a tool that shifts away from traditional gender mainstreaming into more precise monitoring and measuring how projects are contributing to change in closing gender gaps. 26 Figure 6: Gender Tag Snapshot Action Analysis Projects that create M&E Buidling the jobs for young Indicators Number Evidence Base women, promoting of jobs created, Gaps in female safety to/from & at voice & agency youth employment work. 4.1.2. Water Sector AWP-I. Targeted gender support to AWP-I is currently under way, with a focus on addressing the low share of female representation across technical and managerial positions in the water sector. As such, speci c actions were included in the project to address gender-based constraints in accessing jobs, including introduction of employment incentives such as ex work in the planned new Bulk Water Supply Unit and holding targeted training for female sta to strengthen their engagement across the value chain of bulk water supply management and O&M. 4.1.3. Urban Sector MDP-3. The MDP-3 AF sets a speci c target for creating jobs for women, which goes beyond the previous MDPs that focus only on their engagement in consultative processes. That is also important, but it has been challenging to gauge impact thus far. Therefore, discussion with the LGUs will be carried out to better understand if there are speci c issues in how reporting is conducted and scope for improvement. RERP. The RERP activities, particularly those under Component 1, are intended to address the identi ed gender gaps. The development and endorsement of a Gender Action Plan (GAP) within the rst six months of the project will assist the agencies in identifying gender challenges and measures to address them. Once the GAP’s recommended mitigation activities are de ned, the project will support the PLA and LWSC in implementing recommended actions to improve outreach to women in the registration process. The GAP will also seek to ensure that women—members of vulnerable groups in the project areas—are informed of their rights to property ownership, particularly regarding inheritance. Targeted training nanced under the project will (a) include training to apply a gender lens to property rights and the SLR process, (b) actively promote technical knowledge capacity-building programs for female sta , and (c) disaggregate the number of training participants by gender. Additionally, the Project Management Information System (PMIS) will help produce gender-disaggregated data and, in turn, hard statistics on rates of female property ownership. The data will inform the GAP analysis and will continuously help the PLA and LWSC make informed decisions to improve women’s access to land and property. In particular, the gender-disaggregated spatial statistics will allow the agencies to tailor public outreach activities during the SLR process toward more gender-inclusive messages in communities where women’s property ownership rates are lower than others. In addition to four gender-targeted DLIs’ outputs (GAP and recommended actions), the project includes a PDO indicator that will measure the percentage of property titles registered to women under the project. This innovation is noteworthy, since the RERP is the rst World Bank output-based project with speci c gender-targeted DLIs. 4.1.4. Energy Sector ESPIP. Aligned with the call to action from the World Bank Group AS FY18–21 for the WB&G, the ESPIP is examining the future of work for women, including through a review of Palestinian women entrepreneurs working in innovative energy elds, such as the renewables sector. Through the launch of their Gaza Solar Initiatives, the project has launched a female engineers’ network and is planning to collect data on recruitment across energy-related companies as well as key government agencies and to conduct a di erentiated analysis of SME energy needs to help inform technical speci cations required for the design of customized solar systems. All this will be part of a communications and outreach program, which will not only disseminate the bene ts of solar PV but also provide a platform for elevating the role of women businesses in decision-making processes linked to critical sectors. Challenges and Recommendations Still, there is scope to enhance design, and even more to improve the gender focus during project implementation. Operationally, the World Bank’s di erent project teams vary on resource needs to (a) monitor progress on gender e ectively, 27 (b) fully integrate gender in project design, (c) engage e ectively on gender with the counterpart, and (d) understand social and behavioral norms that a ect gender outcomes. With the introduction of the new ‘gender tag’ system, the PID MDTF’s co- nanced projects continue to face data limitations and a lack of knowledge regarding the implementation challenges on the ground. For example, while there are numerous activities engaging women, there is little evidence to showcase how such participation is a ecting project outcomes or the agency of individual women. There are resource constraints—such as technical and nancial—to delve into issues pertaining to the speci c needs of women and men in the three sectors. Gaps in agreement around sectoral gender priorities and messaging are also evident, potentially hindering ownership on preidenti ed entry points. Furthermore, limited capacity of the counterpart to monitor results, which are getting more speci c with the gender-tagging, serves as an impediment. Lastly, limited coordination with social and behavioral issues leads to missed opportunities to address how norms can ultimately a ect employment outcomes and opportunities for engaging women in decision making across the PID MDTF co- nanced projects. Given the importance and urgency of building capacity in the PID MDTF program around the new gender tag to address such challenges, the following recommendations should be pursued with support from donors: 1.Enhance PID MDTF capacity by means of dedicated sta in order to (a) Provide direct support to teams during project preparation and implementation; (b) Communicate gender focus during client engagements and liaise with implementing partners and the PID MDTF donor community; and (c) Build capacity in line ministries, implementing partners for gender monitoring and gender-based violence (GBV) risk mitigation. 2.Bolster the evidence base where gaps in di erentiated knowledge exist while also leveraging available data sets to provide new analysis. 3. Invest in the understanding of social and normative issues that contribute to poor outcomes in women’s ability to access basic services or work in infrastructure sectors (for example, due to social norms, GBV). Additionally, the PID MDTF should not operate in a silo but should identify opportunities to link up with other sectors. For example, for issues that a ect gender indicators in PID MDTF- nanced projects such as childcare, ex work, and school-to-work transitions, there are critical synergies to harness in private and nancial sector development, education, and social protection. For further details about the World Bank’s GAP, please see C-GAP II. 36 36. http://documents.worldbank.org/curated/en/446441520342346745/Second-Country-Gender-Action-Plan-C-GAP-II-for-Palestinian-Territories-FY2018-2021. 28 4.2. Citizen Engagement Mainstreaming CE is a signi cant component in the World Bank Group’s Assistance Strategy for the WB&G—where innovation in the CE eld continues to develop. In addition to the integration of indicators of citizen feedback or e ective grievance redress in many World Bank operations, the World Bank has played a salient role (through the regional CE platform) in engaging DPs around social accountability and in using the experiences of the WB&G to inspire other clients in the region through South-South exchange.27 For example, the MoSD shared its institutionalized technology-enabled grievance redress system with clients in Tunisia and Lebanon . Since 2009, the PA has established complaint-handling systems in many ministries and governorates, which has led to the establishment of a total of 56 complaint units. Rather than having project-based GRMs, which often disappear as projects close, complaint-handling mechanisms are thus anchored in ministries implementing several programs in parallel at a time. One of the key entry points has been the integration of systems of citizen feedback and citizen participation into municipal development. The WB&G is rst in the region to measure citizen perceptions of outcomes related to participatory municipal processes. This work—coming out of work in the PID MDTF’s co- nanced MDPs—was presented to the World Bank CEO in 2018, clearly demonstrating the correlation between successful municipal one-stop shops and grievance systems and better performance on key services (water, roads, solid waste, and electricity).38 Given the importance and e ectiveness of CE, the PID MDTF’s co- nanced projects continue to align with the 2014 Strategic Framework for Mainstreaming Citizen Engagement in World Bank Group Operations, providing citizens with a stake in decision making to improve intermediate and nal development outcomes in the WB&G. 4.2.1. Water Sector AWP-I. It will require active engagement with municipalities—the immediate bene ciary of the bulk water—as well as a broader program to engage citizens in this process. The project recognizes that there are substantial challenges in water distribution, including a culture of nonpayment (further exacerbated by a severe economic crisis and nonpayment of PA salaries in Gaza). In view of this, the proposed project will use the four years of construction to sow the seeds of a more citizen-oriented approach to solving problems in the sector, through pilots that will inform the World Bank’s water sector strategy in the WB&G and through a participatory approach to infrastructure development and institutional reform of the bulk water supply in Gaza. 4.2.2. Urban Sector MDP-3. The MDP-3 AF is deepening and mainstreaming CE and social accountability into the functioning and performance incentives of municipal development. MDP-3 also seeks to strengthen the quality of the municipal-citizen relationship and enhance opportunities for citizen feedback through all phases of the municipal expenditure cycle, including implementation of the capital grant subprojects. In concrete terms, the ongoing changes to the municipal investment process will integrate good practice and lessons learned from participatory budgeting and participatory M&E pilots on participation, disclosure, and accountability. Complaint-handling mechanisms are scaled up and linked to the national GRM of the MoLG. RERP. Its CE activities will seek to promote active stakeholder and citizen participation to help complete the SLR process. The project will build on and expand socially inclusive CE tools, including LGU communication platforms, public displays, community meetings, con ict resolution, and an active GRM. The project will include a project-speci c GRM and will support the development of public awareness campaigns to further inform people and communities in the project areas of the SLR process and options available to them to voice their concerns. The project will also nance customer surveys to monitor customer satisfaction with registration services and with the public outreach of the process, which will provide a venue for CE. 4.2.3. Energy Sector ASPIRE MPA. It will ensure the implementation of a CE mechanism with a feedback loop. PENRA will conduct a series of outreach activities for female and male consumers, including public consultations and communications across di erent customer types in the WB&G for the duration of the MPA (until 2026) to seek feedback. PENRA will monitor the share of citizens reporting that the transparency, responsiveness, and legitimacy of the GRM is satisfactory or has improved. CE activities also aim to improve the DISCOs’ ability to install smart meters and to ensure timely payments by their customers, which in turn will contribute to achieving the MPA’s objective. 37. Palestinian representatives shared their experience during a regional conference on CE in FCV contexts in Jordan; their approach to measuring citizen satisfaction for every municipality is being scaled up in a national system in Tunisia. Experience in grievance redress systems in cash transfer schemes has been shared and experts on municipal grievance redress from the WB&G will now use their expertise to strengthen similar systems in Tunisia and elsewhere in the region. 38. According to the Citizen Engagement section in the Country Portfolio Performance Review (CPPR) 2019, for every 10 percent increase in citizens using a citizen service center (CSC) to resolve an issue, there is a 6 percent increase in the municipality’s performance index on a basket of services (water, sewage, waste collection, roads); for every 10 percent increase in the percentage of citizens using a municipal grievance redress system, there is a 1.7 percent increase in the municipal performance index. 29 4.3. Climate and Resilience The PID MDTF’s co- nanced projects are increasing focus on the urgent need to address climate and resilience challenges in the WB&G. The WB&G is frequently subject to natural hazards including drought, extreme heat, water scarcity, and extreme precipitation, which substantially exacerbate the vulnerability of the population and infrastructure. Climate variability is likely to (a) compound the existing priority environment challenges faced by the WB&G and Middle East and North Africa (MENA) and (b) bring about extreme heat and changes in hydrological ows. The International Panel on Climate Change (IPCC) predicts that the mean annual temperature increase over the next century in the WB&G will be larger than global annual mean warming—which is approximately between 2.2 to 5.1°C—resulting in severe and recurring droughts. These climate uctuation challenges are an impediment to future sustainable economic growth, productivity potential, food security, and social stability and security for the WB&G. Thus, the necessity for the PID MDTF to carefully direct its co- nancing to ensure that adaptability and resilience in its three critical sectors—urban development, energy, and water—has been considered in project design to maximize climate co-bene ts, whether linked to adaptation or mitigation. 4.3.1. Water Sector AWP-I. The upcoming AWP-I will address and respond to Gaza’s vulnerable situation caused by a signi cant decrease in the average annual rainfall and groundwater recharge volume. The growing demand and over-abstraction of groundwater (by an estimated 180 MCM per year) have led to increased salinity of the aquifer; most of the wells have salinity and nitrate levels above the WHO standards. To combat the decreasing availability and quality of the water, AWP-I will provide adaptation bene ts by assisting in the provision of bulk water of acceptable quality and quantity, while at the same time contributing to a decrease in the pumping of the aquifer. AWP-I climate co-bene ts are estimated by the World Bank’s MENA climate team at 95.7 percent of the overall AWP-I project cost, including about US$32.5 million in climate co-bene ts from the PID MDTF. 4.3.2. Urban Sector MDP-3. An ongoing urban sector agship project, it supports many subprojects that will contribute to mitigating climate risks with its AF. For example, road subprojects with drain upgrades help eliminate ash ooding during the rainy season. Additionally, installation of solar PV panels in municipal buildings and more e cient lighting in public facilities promotes clean and renewable energy, reduces costs, and helps overcome the electricity shortage in Gaza, given the limited fuel availability for the GPP. Most notably, MDP-3’s Component 2 will o er capacity-building activities to strengthen community awareness on climate change and help alleviate natural disaster risks. RERP. It received approval by the Board of Executive Directors on July 22, 2019, and will promote climate change adaptation through many activities. Increased tenure security allows owners and occupants to feel secure enough to leave their land and property in the event of severe climatic events, while ensuring their property rights and facilitating compensation in case of permanent damages to property. Moreover, secure property rights and clear ownership titles will increase incentives for owners to invest in climate-smart agriculture techniques, high-quality building materials, and proper connection to water and electricity networks that are vital for climate change resilience. The issuance of property titles will also help mitigate arti cial land shortages in the West Bank that have contributed to dramatic spikes in land values. According to the 2016 NAP, increased land values have prompted many instances of agricultural areas being converted to residential areas that emit higher levels of greenhouse gases. With such expectations, climate co-bene ts for the RERP were calculated as 68.6 percent of the project’s nancing.39 4.3.3. Energy Sector ASPIRE MPA. The PID MDTF’s co- nanced projects for the Palestinian energy sector also align with the World Bank Group Climate Change Strategies along with the MENA Reginal Strategy Update 2019. Most relevantly, the ASPIRE MPA, which is currently under preparation, will aim to diversify energy sources by increasing shares of renewable energy at the end of the proposed seven-year MPA (2020 to 2027). With an aim to ensure sustainable and reliable energy services for the people of the WB&G, Component 3 emphasizes enabling private sector engagement in renewable energy through (a) grid reinforcement and update and (b) scale-up of rooftop solar PV systems for MSME, health, and residential Sectors, led by PENRA in coordination with the DISCOs. The World Bank and DPs are in a position to support and facilitate measures for climate adaptation and mitigation—with the PID MDTF being a strategic vehicle to do so. Not only can such measures be considered ‘no-regrets’ in nature, but they are also aligned with the Palestinian development priorities articulated in the 2016 NAP. The PID MDTF will continue to co- nance activities in key areas such as water resources management, resilient urban infrastructure, and renewable energy—generating climate co-bene ts while supporting national development priorities. 39. As evaluated by a World Bank team that assesses climate co-bene ts systematically for all new projects. 30 5.SECTOR REVIEWS 31 01 5.1.1. Sector Context To address the systemic challenges to water security in the WB&G, the PWA has developed two key complementary policy instruments to pave the way for a transformational and sustainable shift in the sector. These framework documents are the Water Law (of 2014) and a medium-term SDP 2017–2022. The Water Law clari es sector roles and responsibilities. At the national level, (a) the PWA is responsible for the management of water resources, sector planning, and development; (b) the independent Water Sector Regulatory Council (WSRC), established in 2014, regulates and monitors the operation of water service providers; and (c) an NWC would be established as the bulk water provider for both the West Bank and Gaza. Services at the local level are to be delivered through a limited number of regional water utilities, which would be formed through the aggregation of existing small service providers (water departments at LGUs). The SDP has ve main objectives (a) enhancing the integrated management and sustainable development of water sector resources; (b) improving the quality, continuity, and reliability of water supply services, as well as ensuring equitable water distribution; (c) improving wastewater services and structure, including collection, treatment, and reuse; (d) developing water sector institutions to reinforce good governance within an integrated legal and institutional framework; and (e) improving the nancial sustainability of service providers. The World Bank has supported these reforms under a previous World Bank operation. Lack of capacity and political realities have, however, limited full implementation of the Water Law and the SDP, while the external political and economic context has limited availability and access to adequate quantities of acceptable quality water. Additionally, the e ectiveness of the PWA has been constrained by the establishment of a parallel structure in Gaza. The WSRC still lacks full statutory authority, including the ability to license service providers and establish the fees essential for nancial sustainability of the sector. Today, the ability of the WSRC to exist is threatened by lack of operational budget. In March 2017, the PWA drafted a road map for establishing the NWC from the existing West Bank Water Department and another road map for the establishment of regional utilities, but implementation has so far been very slow. Most service providers are departments within the municipal structure and are still governed under the Local Government Act of 1997. Moreover, LGUs are reluctant to cede water-related revenue streams, leading to an absence of cost recovery for the 10 MCM a year of bulk water purchased by the PA from Israel. Palestinians face signi cant and growing shortfalls in water supply for domestic use. The available water for domestic supply in the West Bank is just 62 liters per capita per day. Supply in Gaza is higher with 89 liters per capita per day in Gaza, but this water is not t for drinking and for other domestic uses. With the WB&G population of approximately 4.8 million growing at an average annual rate of 2.8 percent, the domestic supply gap is projected to increase to 171 MCM a year by 2030, unless supply and service options are expanded. Water resource availability in the WB&G is determined largely through negotiated agreements with Israel for groundwater abstraction and imports of additional supply. The population of the WB&G has doubled over the past 25 years while groundwater resources allocations under Article 40 of the 1995 Oslo Agreement, intended for a ve-year interim period, have not changed. Growing demand is not matched with resources or a realistic strategy to close the gap between availability and need. To ll the gap in water supply, purchases from Israel have provided additional quantities but are increasing the PA’s scal burden. With a lack of natural resources due to the limited access to shared aquifers, 79 MCM a year is being purchased from Israel. In the West Bank nearly 60 percent of water for domestic supply (69 MCM) is purchased from Israel. In Gaza 10 MCM is purchased from Israel and this will soon be increased to 20 MCM. Over the past decade, the scal burden to the PA for keeping WSS services operating has more than doubled. While in 2008 the PA’s operating subsidy to WSS services was US$52 million, this has steadily increased, reaching US$115 million in 2018. This increase has been due to (a) an increase in the volume of water purchased from Israel (48 MCM in 2008 to 79 MCM in 2018), (b) an increase in the incremental cost of water purchase (from NIS 2.9 to 3.6 per m3), and (c) an increase in the volume of wastewater owing across the green line from the West Bank that is treated in Israel. This implicit subsidy is the di erence between the charges for bulk water and wastewater treatment from Israel and the costs recovered from service providers and their customers. This di erence is deducted from clearance revenues collected by Israel on behalf of the PA. In addition, some electricity costs related to water treatment and pumping are also covered by the PA from clearance revenues or other sources. Water supplied through municipal networks in Gaza is now undrinkable and almost everyone relies on water from small-scale private providers as a coping mechanism. The key source of water supply available in Gaza is groundwater from the coastal aquifer, which relies on rainfall for recharge. In the last ve years, average annual rainfall in Gaza has decreased by 20–30 percent, and the average recharge volume has dropped by 10–20 percent. The increased demand and over-abstraction of groundwater (by an estimated 180 MCM a year) has led to increased salinity of the aquifer, an ecological catastrophe. Most of the 260 municipal wells have salt and nitrate levels above the WHO guidelines. Water 14 quality measurements in 2018 indicated that the salinity of groundwater entering the municipal network was in the range of 800–3,000 parts per million of TDS.40 The 10 MCM a year currently supplied from Israel is mixed with groundwater, but the mixed water is still not t for human consumption. As a result, although 95 percent of the population is connected to the piped network, access to improved drinking water is just 1 percent compared to universal access 20 years ago. About 97 percent of the drinking water consumed in Gaza is supplied, mainly via tanker, by small-scale private providers or nongovernmental organizations (NGOs). They are not systematically regulated in terms of abstraction, quality, and cost (which is often seven times the cost of public water supply). 40. The WHO guidelines in relation to TDS levels are as follows: excellent, less than 300 mg/liter; good, between 300 and 600 mg/liter; fair, between 600 and 900 mg/liter; poor, between 900 and 1,200 mg/liter; and unacceptable, greater than 1,200 mg/liter. 32 There are notable disparities in water access and satisfaction levels between households in the West Bank and those in Gaza; 54 percent of households in the West Bank are satis ed with the reliability and quality of water supply, while only 36 percent of households in Gaza have similar satisfaction. 41 Box 1: A Pathway toward Palestinian Water Security The pathway to improved water security in the WB&G depends on e cient use of natural and nancial resources to better meet demand. This is to be achieved and fast-tracked by (a) addressing gaps between water supply and demand and incorporating desalination, water importation, wastewater treatment, and reuse; (b) strengthening the water sector institutions in alignment with the water law structure; and (c) enhancing the nancial viability and sustainability of water sector institutions. Since all options for a secure water supply require collaboration with Israel, the dialogue needs to be reframed. Quantities and prices of water sales from Mekorot to the WB&G should be reexamined within this new framework. A prioritized investment plan for the West Bank is needed to make the most strategic use of the additional water from Israel. Alternative service provision, especially in Gaza, is a short-term necessity and requires better oversight. Priority should be given to energy and operational solutions for the short-term low volume (STLV) desalination plants. Investments in the Gaza bulk supply system are needed to use water from Israel and the STLV plants. Immediate improvement of the bulk non-revenue water (NRW) is needed. A majority of the NRW is in the southern area of West Bank, on account of commercial losses and water theft. Without full operationalization of the Water Law, nancial ows in the sector, in particular, remain fragile and ine cient. The water sector institutions need to be strengthened in alignment with the water law structure. For this to happen, the PA’s commitment to the reform process would be required, translating into immediate actions and approval of required bylaws and regulations. Institutional e ciencies should be implemented toward commercialization and corporatization of service provision. The institutional setup of water service provision should be structured to encourage and enforce the ring-fencing of water revenues. The capacity of the PWA and its role in leading the implementation of a programmatic and prioritized approach to sector reform need to be augmented. In support of e ciency improvements, planned institutional and infrastructure investments need to be solidi ed to end fragmentation of service provision and donor support in the sector. A national service improvement platform should be designed and support from multiple donors sought to implement it. Based on existing levels of (in)e ciency, the expansion of nonconventional water sources—mainly desalinated water and water purchased from Israel—would translate into a scal burden of around US$400 million a year to keep WSS services running. The current implicit subsidy is US$1.45 per m3 of water purchased. With the need to develop or purchase 250–300 MCM of nonconventional water a year by 2030, the scal burden would be between US$363 million and US$435 million. Current service provision ine ciencies need to be addressed quickly before (or as) service providers become responsible for managing ever larger volumes of water and wastewater. Though some service providers in the West Bank have managed to improve performance indicators such as reducing NRW and increasing billing to collection ratios, there is a long way to go. Financial viability and sustainability of the water sector institutions can only be achieved if Israel is on board. The practice of net lending can be eliminated once Israel starts transparent and predictable billing and the PA pays on time. Addressing NRW at the bulk level requires Israel to join forces with the PWA to combat thefts and share information. While there is no demonstrable gender disparity in terms of access to and satisfaction with water supply, global evidence reveals that lack of access has a disproportionate impact on women—including on their human capital accumulation, economic empowerment, and safety. According to a recent World Bank study on water and gender, poor toilet facilities and inadequate water are among the reasons “why post-pubescent girls drop out of school and women miss days from work.”42 And similarly to the wider MENA region, women tend to be responsible for household tasks and cooking; therefore, lack of access to reliable and clean water can have implications on their day-to-day time use in such activities.43 41. The Performance of Palestinian Local Governments: An Assessment of Service Delivery Outcomes and Performance Drivers in the West Bank and Gaza, June 2017 (these data were collected 2016/2017). 42. Das, Maitreyi. 2018. The Rising Tide: A New Look at Water and Gender. World Bank 43. World Bank Focus Group Discussions in Lebanon (2014) revealed that women resort to di erent coping strategies in carrying out chores as a result of poor quality and quantity of water. 33 The PWA, with support from donors, has proposed to increase supply from seawater desalination under the WSDP/GCDP through investments in both infrastructure development and institutional strengthening, to address the chronically poor groundwater quality in Gaza and the increase in domestic demand (which is projected to reach around 145 MCM by 2030). The design of the WSDP/GCDP was carried out in partnership with international institutions, including the European Commission (EC), the European Investment Bank (EIB), the Union for the Mediterranean (UfM), the Islamic Development Bank, and the World Bank. The WSDP/GCDP comprises two main components: (a) a desalination plant with initial capacity to produce 55 MCM a year of desalinated water and (b) associated works, part of which to be nanced under AWP-I, that include the construction of a north-south water carrier, including storage reservoirs to convey and properly blend the desalinated water with groundwater sources to achieve water supply meeting the WHO guidelines for potable water. A previous World Bank-supported project supported the completion of the design, bidding documents, and environmental impact assessments for the associated works. Securing the required funding and completing the subsequent construction of WSDP/GCDP activities will take several years, leaving the water situation in Gaza, and particularly in the southern and middle governorates, in urgent need of improvement. Sanitation coverage is high, but connection to sewerage networks is much higher in Gaza than in the West Bank. In Gaza, access to improved sanitation is universal, with 78 percent of population connected to sewerage networks and the remainder relying on on-site services. In the West Bank, despite near universal access to improved sanitation, access to sewerage connections is only 30 percent, with rates varying widely by governorate and by household income. About one-quarter of the 62 MCM of wastewater generated annually in the West Bank is collected in sewerage networks, and two-thirds of this is treated (about 13 MCM). However, almost none of this treated wastewater is reused, due to lack of planning and constraints in developing the necessary infrastructure to pipe the treated e uent to farming areas. Despite considerable investment in expanding sewerage networks, two-thirds of West Bank residents are still using cesspits, which places the groundwater resource at risk of contamination. The biggest problem is the 25 MCM of untreated sewage discharged into wadis each year from 350 locations. Some of that ows into Israel, where it is treated and reused in agriculture. However, Israel charges the PA for treating this wastewater; in 2018 Israel billed the PA more than US$30 million for these costs. In Gaza, about 90 percent of wastewater is collected and partially treated but then discharged to the environment rather than being reused. Treatment plants are overloaded and function poorly, partly because of underfunding and partly because of Israeli restrictions on the entry of energy and materials to Gaza. Current treatment capacity is 13 MCM per year in the West Bank and 60 MCM per year in Gaza, while treatment needs are estimated at 62 MCM per year in the West Bank (assuming that all wastewater is collected) and 80 MCM per year in Gaza.44 O&M of wastewater schemes is facing serious challenges due to lack of technical capacity and sustainable revenue streams. For example, there is no cost recovery mechanism for the WWTP that was constructed under the recently closed NGEST (see Box 2). 5.1.2. Sector Risks Risk Category Mitigation Measures Political and governance • The political and security situation in the West Bank • The PWA and World Bank will monitor the situation on and the relationship of the PA with GoI remain an ongoing basis, and the World Bank will address its volatile. impact on project implementation and achievement of • Continuing tensions in the relationship between the the PDO through discussions with the PA and the PA and Hamas on the one hand and Israel on the relevant authorities in the GoI. other may a ect project implementation. • The recent political developments, including the April 2019 elections in Israel and the possibilities of a peace plan, reinforce the need for managing political and gover- nance risks to the extent possible. 44. Infrastructure Audit of the Water Sector in Palestine. PWA report funded by Norway, November 2018. 34 Sector strategies and policies • The PWA has in place a reasonable set of sector • The project will fund updates of the SDP to ensure it strategies and policies supported and endorsed by continues to be relevant. the donors. • Weak capacity and the volatile political environ- • AWP-I will establish a bulk water unit in Gaza that will ment a ect the implementation of the Water Law be one of the seeds for the future creation of the NWC, and the SDP. envisaged under the SDP and the Water Law. Institutional capacity building • Current capacities at the national level in the water • AWP-I will support the development of the capacities sector may not be adequate to adoption or full needed to ensure the sustainability of the bulk supply operationalization of new roles. infrastructure. • The scal situation of the PA has deteriorated • The PWA will provide electricity/fuel for the operation recently, with substantial tax revenues being of the Gaza STLVs and establish a payment mechanism withheld by Israel to pay for water and electricity for the additional quantities of imported water from supplied. Israel. • AWP-I foresees the design and adoption of an NSPIP, which will help municipal service providers improve their technical e ciency, commercial management practices, and ultimately nancial viability and ability to pay for the bulk water supply services that they will receive. • A Programmatic Technical Assistance: Towards Water Security for the Palestinians (P167309) is planned to provide complementary support to the PWA related to facilitation with GoI as well as capacity and sustainability. Fiduciary • The high duciary risk rating is due to lack of • Mitigating measures will include ‘ring-fencing’ World capacity, security restrictions on supervision in Gaza, Bank funds through a dedicated designated account for and inventory control weaknesses identi ed in each TF—and putting in place controls over fund ows. earlier projects. • There has also been a case of attempted fraud under a previous project, which is now closed. Environment and social • Impacts during operation are related to increased • There will be continuous close support to the PMU by demand for energy, wastewater facilities, and the World Bank safeguards team. increased costs of the service provision. • Capacity building will be provided for PMU environmen- • Contractors may not adequately supervise and tal and social o cers, as well as site engineers, on the monitor environmental and social safeguards during supervision of and reporting on (a) environmental perfor- the construction phase, including risks related to GBV. mance, (b) occupational health and safety, and (c) social • The environmental and social specialists to be aspects, including the code of conduct and GRM. recruited within Project Management Units (PMUs) to • PMUs may seek the support of independent consul- manage safeguards implementation are likely to have tants in conducting regular monitoring, preparing limited experience in these matters. environmental and social progress reports, and provid- ing training as needed. 35 Stakeholders • There is a substantial risk of stakeholders not • In the case of AWP-I, TA is being provided to ensure engaging meaningfully in project activities, that municipalities in the central and southern Gaza particularly in paying for the new bulk water in the governorates sign the memoranda of understanding case of AWP-I. and work closely with the PMU and the new bulk water • The introduction of new entities and the unit in Gaza. transformation of others in the water sector will • Hiring specialized consultants to engage local commu- change existing relationships in the sector and may nities, including women and other vulnerable groups as create con ict. well as a YC, on the bene ts, expectations, and concerns linked to projects co- nanced by the PID MDTF. • The World Bank team will work closely with co- nanced projects’ PMUs to ensure that all stakehold- ers are appropriately consulted and their concerns are properly addressed. • Water projects co- nanced by the PID MDTF will coordinate with other ongoing World Bank projects in the urban sector to ensure that there is a holistic approach to the engagement with municipalities. More detailed analysis and policy recommendations in the water sector are available in recent World Bank analytical works: • Toward Water Security for Palestinians: West Bank and Gaza Water Supply, Sanitation, and Hygiene Poverty Diagnostic: http://hdl.handle.net/10986/30316 • Securing Water for Development in West Bank and Gaza: Sector Note: http://hdl.handle.net/10986/30252 Figure 7: Water Sector PID MDTF Funding Distribution as of June 30, 2019a Recipient-Executed projects in Water Sector: US$18.5 million $2,852,452 15% Water Sector Capacity-building Co- Financing Fund $8,239,352 45% Water Supply & Sewage Systems Improvement Project, including Gaza Emergency Additional Financing 13% $2,398,161 Gaza Sustainable Water Supply Program $5,000,000 27% Northern Gaza Emergency Sewage Treatment (NGEST) Note: a. Including all projects co- nanced by the PID MDTF in the water sector that had closed as of end-FY18. 36 Table 8: ICR and IEG Ratings from FY18 Closed Projects in the Water Sector WSCBP ICR Rating IEG Rating Outcome (achievement of PDO) Moderately Satisfactory Moderately Satisfactory Bank Performance Moderately Satisfactory Moderately Satisfactory Financial Management Satisfactory Procurement Satisfactory Monitoring and Evaluation Modest Modest WSSSIP ICR Rating IEG Rating Outcome (achievement of PDO) Moderately Satisfactory Satisfactory Bank Performance Moderately Satisfactory Moderately Satisfactory Financial Management Moderately Satisfactory Procurement Moderately Satisfactory Monitoring and Evaluation Substantial Substantial NGEST ICR Rating IEG Rating Outcome (achievement of PDO) Moderately Satisfactory Moderately Satisfactory Bank Performance Moderately Satisfactory Moderately Satisfactory Financial Management Satisfactory Procurement Moderately Satisfactory Monitoring and Evaluation Modest Modest GSWSPa ICR Rating IEG Rating Outcome (achievement of PDO) Satisfactory Bank Performance Satisfactory Financial Management Satisfactory Procurement Moderately Satisfactory Monitoring and Evaluation Substantial Note: a. The IEG did not prepare a report for the GSWSP 27 37 Box 2: Operations and Maintenance in the Palestinian Water Sector The NGEST closed on June 30, 2018, after successfully (a) mitigating the immediate health and environmental safety threats to the communities surrounding the old Beit Lahia sewage lakes and (b) developing a longer-term wastewater management solution through the construction of the northern Gaza WWTP. The PWA signed a two-year O&M contract for the WWTP that would have expired on February 29, 2020. However, on July 1, 2019, the O&M contract was terminated by the joint venture (JV) for cause as the PA has not been able to honor its nancial obligations under the contract. This is largely due to the nancial de cit that the PA has been experiencing. Failure of the treatment process would have dangerous health and environmental safety consequences as the sewage would go back to the old Beit Lahia sewage lakes. The World Bank escalated the matter with the PWA Minister, the Finance Minister, and the Prime Minister and agreed on a way to salvage the situation, but e orts to maintain the contractor failed and the PWA’s PMU is now operating the plant on a very basic level with help from an EUR 256,000 grant from AFD. PWA lawyers are drafting/negotiating a ‘Settlement Agreement’ with the O&M JV that proposes a reasonable payment schedule for all remaining dues (US$2.5 million) to be paid out of the national budget. The PWA reports that it can sustain the operations of the NGEST at the current level through February 2020. However, the PWA will need to put in place a more sustainable arrangement starting March 2020. Given the situation in Gaza and the huge scal burden on the PA, the World Bank has resolved to help the PWA oat a new O&M contract starting from March 2020 with support from an emergency operation, nanced with US$6 million from the TFGWB and possibly another US$0.6 million from the Netherlands. The World Bank could partially cover the O&M contract on a declining basis while at the same time providing TA to build sustainability elements. At the time of signing of the O&M contract, the PWA was committed to bringing the Coastal Municipalities Water Utility in as the utility operator of the WWTP. Lack of institutional structure, capacity, and required funding from the bene ciary municipalities and/or the PA is a ecting the ability of the stakeholders to sustainably operate and maintain NGEST facilities. Going forward, a high level of commitment from the PWA to achieve a reasonable sector structure and governance is required, and commitment from the donor community will also be essential, not just in the case of NGEST but also other such plants in Gaza and the West Bank that need to be kept in operation. 38 5.1.3. Proposed Activities AWP-I (P168739) Duration Five years Board Approval Date December 17, 2019 (expected Board date) Expected Closing Date December 31, 2024 Total Grant Financing US$102 million PID MDTF Grant Amount US$34 million TFGWB Grant Amount US$15 million Status Under preparation The project aims to improve the quality and quantity of bulk water supplied to the municipalities served in OBJECTIVE the project areas and strengthen the capacity of the Palestinian Water Authority. Gaps That Need to Be Filled Water from the coastal aquifer in Gaza is extracted at three times the safe yield; the aquifer is contaminated due to ine cient wastewater treatment, and salinity is increasing due to sea water intrusion. This leaves 97 percent of Gazans relying on unregulated private water tankers and small-scale informal desalination plants for drinking water. In the West Bank, there is also a need to further advance investments in bulk water supply and conveyance and to develop an integrated bulk water supply master plan for the West Bank. PWA’s Requests for Potential World Bank Interventions The PWA has requested the World Bank’s help to improve water supply for the population of the WB&G and to strengthen the operational performance of selected water service providers by piloting a national program for enhancement of performance of service providers. In addition, the PWA is requesting support in preparing to advance priority investments in the West Bank. Several donors including Kuwait, the Netherlands, Sweden, France, the United Kingdom, Australia, and Italy have expressed their interest in co- nancing this intervention. Proposed Investment Grant The proposed AWP-I project will address the immediate water needs in the southern and middle governorates of Gaza by funding the necessary infrastructure to secure and blend the additional, and not previously available, fresh water quantities (33 MCM per year). The additional fresh water will comprise water from the two STLV plants (4.7 MCM per year) and water purchased from Mekorot (10 MCM per year)—and will be blended with brackish groundwater (15.3 MCM per year) to supply around 30 MCM of potable bulk water (meeting WHO guidelines) of at least 90 liters per capita per day to the 16 municipalities in the project area (approximately 870,000 people).45 It will also support the establishment of a small unit to manage bulk water supply operations in Gaza, as well as laying the foundation for enhancement of performance of service providers as part of a national program. In addition, to initiate preliminary action to address the water shortages in the West Bank, the project will identify bulk water investments and prepare detailed designs (as well as the required environmental and social impact assessments [ESIAs]). The capacity of the PWA will be improved through (a) the establishment of a bulk water unit in Gaza, which would in time be transferred to the local water utility; (b) the design of an NSPIP; and (c) advancing of priority investment planning for bulk water supply in the West Bank. 45. Based on the Palestinian Central Bureau of Statistics’ 2017 Census; 49 percent are women. 39 Proposed Components and Indicators: Component 1: Improved Supply of Bulk Water to Southern and Middle Governorates of Gaza (US$91 million), including Southern main carrier system infrastructure to blend storage and distribute bulk water to service providers (US$48 million); Network improvement for infrastructure in middle and Khan Younis governorates to deliver the additional 10 MCM per year of bulk water that will be purchased from Israel (US$10 million); and Recon guration of drinking water distribution networks in southern and middle governorates to adapt networks to receive bulk water from the new interconnected system (US$33 million). Component 2: Capacity Building (US$9.5 million). Analytical and TA activities will be critical to inform and support the Establishment of a unit to operate bulk water supply in Gaza; Design of a National Service Improvement Program for water service providers; and Development of a Priority Investment Plan for bulk water supply in the West Bank, including the detailed designs and ESIAs. Component 3: Project Management and Implementation Support (US$16.5 million), including Project management, including retroactive nancing; Project supervision; and Part of the O&M costs associated with the operation of the two small desalination facilities The proposed PDO-level indicators include (a) volume of potable water delivered to bene ciaries; (b) percentage of tests meeting WHO standards; (c) number of bene ciaries receiving potable water, broken down by gender; (d) the Gaza Bulk Water Supply Unit being established and operational; and (e) the NSPIP being designed and approved. The project is expected to be submitted for approval to the World Bank Group Board of Executive Directors in December 2019. 40 41 5.2.1. Sector Context Despite increasing di culties, LGUs continue to perform and provide basic services. Well-functioning LGUs play a critical role in state building as they are at the forefront of service delivery. Municipalities have a long history of local infrastructure and service provision as they even predate the PA. Two major national programs for LGUs, the Municipal Development Program and the National Village Support Program, supported by DPs, are progressing satisfactorily and steadily implement local infrastructure projects while sustaining e orts to improve governance in all 142 municipalities and 284 VCs. SWM, a high priority for the PA and within the LG sector, received a boost with the completion of the Sofa land ll in southern Gaza, supported by the GSWMP with co- nancing from the PID MDTF. Reforms to improve LG performance are being implemented, with key reform areas seeing major progress. Improvements in the allocation and disbursement of the Transportation Fee, a major source of revenues for the LGUs, are now being introduced. The reform of this intergovernmental scal transfer is pursued through the National Village Support Program that is partially supported by the LGSIP co- nanced by the PID MDTF. The PA also decided to devolve the collection of property tax to LGUs on a pilot basis. This breakthrough decision (being implemented through a pilot covering a small number of municipalities) is a critical step in increasing revenues from local taxes to improve the scal situation of LGUs. In turn, improved scal positions of LGUs will allow them to become creditworthy, an essential step toward (a) establishing an LGU credit market, another objective of the sector reform program, and (b) promoting private sector participation in local service delivery. In both areas, the PA remains committed and, through the MDLF, is carrying out studies to initiate lending to LGUs and to mobilize private sector nance to support municipal infrastructure development. The newly formed government continues to support the LG Sector Strategy (2017–2022). This sector strategy sets out a number of actions including reviewing the roles of LG institutions, their administrative and technical relationships, and restructuring local authorities to improve local service delivery, among others. The strategy stems from the NPA, summarized as ‘Putting Citizens First’, that also expects LGUs to be responsive by improving services to citizens, strengthening transparency and accountability, and building resilient communities. The sector, however, continues to su er from fragmentation and recurring nancial, capacity, and occupation-induced constraints. Amalgamating small LGUs (85 percent of VCs are below 4,000 inhabitants while many municipalities have populations below 5,000 inhabitants) is a sector objective that has not been achieved. In actuality, the number of VCs has increased in the past few years. Achieving economies of scale with such tiny population size of numerous LGUs is di cult, leaving many LGUs unable to deliver services. This is exacerbated by the fact that they are mandated to provide basic services within 27 functions to a largely urban population in the context of an eroding revenue base and a crippling economic slowdown. Because of shrinking municipal budgets due to the recurrent con ict, poor municipal management, volatile revenue collections, and a culture of nonpayment among users, only SWM, street maintenance, and water supply are consistently provided. The LGUs report that other critical infrastructure needs such as wastewater management and urban transport also remain unmet because they require signi cant investment. For SWM, despite the completion of Al Minya land ll in 2015 in the southern West Bank, the closure of over 50 open dumpsites, and the passing of relevant legislation, SWM remains a highly pressing issue. The shortage of accessible land for construction of a sanitary land ll is the most signi cant challenge in the sector in the West Bank. The middle area of the West Bank is in dire need of a sanitary land ll and still has a number of open random dumpsites. However, due to restrictions by the GoI on Area C, the pursuit of this option has stalled. Consequently, there is a heavy load on the operating land lls overburdening Zahret Al Finjan land ll’s daily capacity in the north and adding pressure to the Al Minya land ll in the south. Available resources—local revenues and external aid—can hardly respond to such critical infrastructure needs. The Gaza Strip is on the brink of collapse and Gaza municipalities struggle to prevent service delivery levels from deteriorating further. The continuing isolation of Gaza limiting economic activity, the reduced transfers from the scally constrained PA, and severe cuts in UNRWA funding (a major funding source of services in Gaza) have almost crippled service delivery in the strip and living conditions are on the verge of a full humanitarian crisis. Stepping up critical emergency support to Gaza municipalities has been a priority during the current reporting period. The land sector and land-related issues remain a top priority for the PA, as emphasized in the NPA 2017–2022. To date, 38 percent of land in the West Bank is currently registered, with a signi cant portion of unregistered properties remaining in the urban-economic centers. Access to land in the WB&G remains one of the largest impediments to economic growth. Acceleration of land registration is needed for the development of the business environment and the housing and construction sectors, key contributors to GDP. The most signi cant economic impact of land registration is in the nancial sector with the lending and mortgage markets, as only registered land can be used for collateral. The World Bank analysis delivered under the Land Sector TA nanced by the PID MDTF conservatively estimated that the collateral value of unregistered land in PA-controlled areas ranges between US$7 million and US$35 billion. The additional collateral would improve access to nance for households and MSMEs that are currently unable to generate nancing. There is also a signi cant loss of potential revenue for the PA and particularly LGUs from land-related taxation (for example, idle land tax, and capital gains tax) stemming from incomplete land records. 42 Contribution of PID-MDTF to Sectoral Objectives The PID-MDTF signi cantly supports the main objective of the sector—to improve the coverage, quality, and sustainability of local services in the WB&G. Co- nancing from the PID MDTF aligns support with the World Bank nancing for projects that (a) address upstream issues (policy reforms and institutional development) and (b) implement LGU infrastructure activities coming out of their Strategic Development and Investment Plans (SDIPs). The PID MDTF supported projects also catalyze parallel support from other DPs for both the service delivery improvements at the local level as well as capacity building necessary for e ective LG. (a) Policy reforms. The programmatic LG Sector TA has initiated important reform initiatives to improve LG. Extensive consultations have been carried out and a preliminary set of recommendations are under review to rationalize the revenue and functional assignments to LGUs. Improvements to public FM, procurement, and audit practices have also been supported. Through the LGSIP Program for Results (PforR), reform of the Transportation Fee has been introduced to make the allocation for LGUs from the TF transparent, predictable and timely. Additionally, through the Land Sector TA, technical support was provided to the PLA and PMO on the amendment of the PLA Laws of 2002 and 2010, which included provision of a Board of Directors for the PLA and increased oversight on state property management. (b) Infrastructure development. Two programmatic PID MDTF co- nanced operations support infrastructure development in all the 142 municipalities and in 284 VCs: the MDP (the second phase completed in February 2018 and the third phase now under implementation) and the LGSIP (now on its third year of implementation). In the case of the MDP, grants are provided based on a formula that rewards performing municipalities in the areas of participatory planning, transparent budgeting and FM, and CE. The top-up (performance) grants augment the allocations the MDP provides to support implementation of the SDIPs of the municipalities. LGSIP on the other hand supports the implementation of the Palestinian Village Support Program. The grants of LGSIP are disbursed as program indicators are achieved, including those that relate to predictable allocation of Annual Capital Grants, promotion of joint service projects, and reform of the TF. Ultimately, VC infrastructure investments are also supported by LGSIP as they receive capital grants from the PA upon achievement of agreed LGSIP performance indicators. Additionally, the PID MDTF co- nanced SWM projects have been directly supporting large-scale infrastructure development, together directly and indirectly bene tting large portions of the population in the WB&G. (c) Fiscal sustainability. Likewise, the MDP and LGSIP aim to make the LGUs sustainable. From a scal standpoint, both operations encourage e cient allocation of the limited resources available to the LGUs as well as mobilization of own source revenues. These projects are client-driven and are therefore likely to be sustained by the PA and the LGUs themselves. Through MDP, studies are under way to develop a legal and policy framework to promote private sector participation in municipal service provision. This way, access by local authorities to nance is expanded (as they start to tap the market for infrastructure development, for example), and at the same time, the ability of the local authorities to collect user fees will be enhanced. Likewise, the SWM projects have program elements which introduce gradual improvements in billing and payment mechanisms to ensure the long-term sustainability of the operation. MDP-3 is likewise nalizing the road map for lending by the MDLF to LGUs. This will introduce a culture of LGU borrowing that would contribute to tightening investment programming (making LGUs prioritize viable investments) and promoting cost recovery. The land sector ASA will conduct a study assessing the various taxes on properties, which are active and could potentially be implemented. This will help identify increased potential sources of revenue for LGUs and the PA (for example, vacant land tax, transfer tax, and capital gains tax). (d) Institutional development. Building institutions is an important goal of all programs supported by the PID MDTF. Apart from MDP and LGSIP, which feature extensive and sustained capacity development activities, the ASA on LG Sector Reform (PID MDTF nanced TA) supports activities aimed at improving the institutions involved in LG: the municipalities and VCs (at the local level), and the MoLG and MDLF (at the national level). The TA for example is looking at how the functional and revenue assignments can be rationalized to enable the LGUs to perform better given the multitude of mandated functions and the limited resources available at their disposal. As referenced above, the TA under MDP-3 will facilitate the development of a road map for the MDLF performing a lending function. Additionally, the upcoming RERP along with the Land Sector TA will provide capacity development for the two land agencies and TA to streamline and hasten systematic registration and provide improved land-related services to citizens. (e) Improved aid e ciency. The PID MDTF supported programs that have e ectively brought together a number of DPs to collaborate on the priority programs of the PA. The MDP introduced and sustained a performance assessment system that drives the allocation of DP funding (in the form of grants) toward LGU priorities de ned through a national planning process for the local level—the SDIP. Through the LGSIP, DP support to key reforms is pursued through a package of time-bound agreed actions with the PA. Both the MDP and the LGSIP serve as a platform for DPs to pursue parallel activities (for example, support to Area C, and capacity development of certain LGU functions). 43 Opportunities (a) The government’s commitment to carry out reforms remains strong. E orts to strengthen municipal nance deserve further support and provide opportunities to create long-lasting impact. Helping ensure the success of the pilot of devolution of property tax administration by LGUs (and eventual roll out to as many municipalities as possible) is one such opportunity. Another would be the institutionalization of the grant transfer system (being carried out through the MDP and LGSIP) in the annual government budget. Finally, supporting activities to pave the way for creating a credit market for municipalities will help expand available resources for municipal infrastructure. These reform-oriented activities can be supported by the ongoing LG Sector TA that is planned for restructuring to account for the emerging needs of the sector. The ASA (TF0A3599) is proposed to be expanded to cover these activities and will require some US$600,000 additional funding from the PID MDTF. (b) Strengthening performance and capacity monitoring will support better allocation of scarce funding for LGUs as well as improving targeting and focus of capacity-building activities. As the government strives to increasingly make its budget allocations performance based, a more systematic and budget-process-aligned LGU monitoring will be extremely important. Consolidating the existing LGU performance monitoring systems (within MoLG, MDLF, and di erent LGUs) into a national system in an organic unit within the MoLG will be an important step. It will be necessary to provide capacity support for this national LGU performance monitoring system. It can build upon the Local Government Performance Assessment (LGPA) that was completed in 2017. (c) Improving competitiveness of major urban centers can bring about economic growth and improved service delivery. The PID MDTF-supported operations have helped municipalities carry out the mandated planning processes through preparation of SDIPs. The major cities and municipalities whose size and economies lend themselves to more advanced planning support should begin preparing capital expenditure frameworks (featuring long-term investment plans owing from spatial development strategies), designing land value capture programs, and managing assets. These planning activities will enhance city competitiveness. Downstream support to municipalities will be required to prioritize infrastructure and investments that will help attract private sector-led development. The growth scenarios developed for ve major urban areas under the World Bank- nanced Integrated Cities and Urban Development Project (ICUD) are generating consolidated infrastructure plans with preliminary cost estimates and provide a good basis for targeted support to leading municipalities and urban areas. (d) Supporting completion of land registration and ongoing reform of the land sector could provide a signi cant boost to the Palestinian economy and create added opportunities for investments at the local level. The RERP will facilitate increased access to land, nance, and improved services for the private sector, including SMEs, by supporting property registration and automation of services. The ASA’s state property assessment will investigate the opportunities for partnering with the private sector for development purposes, which will become increasingly more feasible with the registration of state properties under the RERP. 5.2.2. Sector Risks Risk Category Mitigation Measures Political and governance • Violence and con ict with Israel have escalated • DPs will continuously make coordinated e orts to during 2018–2019, creating a growing humanitarian reduce the incidences of blocked entry of project inputs crisis. by engaging the GoI. • Unpredictable application of the GoI ‘dual-use’ • Concerning risks in Gaza, the resilience of those policy for project inputs is a signi cant risk and can Palestinians, together with the commitment of the contribute to delays in project execution. MDLF (enlisting the support of critical stakeholders) • Further deterioration of the scal position of the towards the timely implementation of projects, will Gaza municipalities can impair their capacity to plan serve as crucial factors to mitigate risks from this FCV and execute project activities. context. • Regular monitoring of the political situation through- out implementation of the projects will help determine when to make necessary adjustments to projects’ objectives and targets. 52 44 Sector strategies and policies • On land risks in the sector, inconsistencies and • Concerning land, an ongoing PID MDTF- nanced ASA fragmentation within the sector’s legal framework will support the PA with analysis and technical expertise have contributed to low levels of real estate for the ongoing reform of the legal framework governing registration in the West Bank. the land. • The persistent economic contraction and the • AF, while modest compared to the needs, will help reduced scal transfers and aid are severely mitigate the deteriorating services at the local level. compromising the ability of the municipalities to • The World Bank’s support to the municipalities is continue rendering services at the local level. mobilizing additional resources from DPs. • Backpedaling on progressive reforms (for example, • Dialogue with key stakeholders, including the MoLG, property tax devolution) could create additional MoFP, MDLF, and Association of Palestinian Local hurdles for the MDLF to initiate municipal lending. Authorities (APLA), will be continuously held. Institutional capacity • Concerning land, the newly established agency • The RERP has addressed the institutional challenges of LWSC is a ected by nancial constraints and high the land agencies through project design. operating costs, which slow the pace of registration. • The RERP will implement training, automation of SLR • The PLA is operating with outdated, paper-based processes, capacity development, and the PMIS. systems, which restrict their capacity to process new • The Land Sector TA continues to provide TA support to titles. the institutional functions of the two land agencies. • LGs in Gaza are facing constraints, particularly with • MDP-3 AF will mitigate risks with capacity development the reduced transfers from the PA. support to LGUs. • Financial stresses on municipalities and JSCs present • Targeted support to central- and local-level institutions risks to the quality and sustainability of operation of provided through a set of interventions, including TA and the new infrastructure. nancial incentives in investment programs, will continue to consolidate the sector and to enhance e ectiveness in policy making, oversight, and implementation support. Fiduciary • Monitoring of procurement and FM • The overall responsibility for project procurement rests performance—especially in Gaza—is limited due to with the MDLF, which acts as the World Bank’s the Gaza blockade and the restriction on movement counterpart for procurement and FM. and access for project sta . • The MDLF operates a Gaza satellite o ce, sta ed with • The weak FM of the PA, particularly in accounting technical, safeguards, and administrative personnel and reporting, and delays in implementing working in Gaza on a full-time basis, to lead project procurement reforms make the country-level support to the Gaza municipalities and in monitoring duciary risk substantial. project activities. • The World Bank’s systems include checks to ensure that no payments are made to designated persons or individuals directly by the World Bank. • In the PID MDTF’s co- nanced projects, the procedures for processing the various types of procurement are well documented in the project operations manuals. • Regarding land, additional procurement specialists for both the PLA and the LWSC will be recruited and designated for the project, and the World Bank will continue to work closely with both agencies to enhance their capacity to process procurement activities e ciently. 45 Environment and social • Concerning the urban sector in Gaza and its dense • Careful planning, construction management, and population, construction activities are expected to coordination with local authorities on projects with have impacts on community safety and interruption construction aspects will minimize negative to tra c and other municipal services. impact—helping to keep the impact localized and short • Concerning the land part of the sector and the new term. RERP, the settlement process will a ect some land • A Resettlement Policy Framework (RPF) was prepared users and encroachers and could negatively a ect and disclosed; the MDLF has substantial experience in women and the most vulnerable groups. managing environmental and social safeguards from a series of World Bank- nanced investment operations. • Under the RERP, a Social Impact Assessment (SIA), a Social Management Plan (SMP), and a GAP will help mitigate the risk. • The current grievance redress system and public outreach practices for both the PLA and LWSC will be further strengthened under the project. More detailed analysis and policy recommendations in the urban sector are available in recent World Bank analytical works: • The Performance of Palestinian Local Governments: An Assessment of Service Delivery Outcomes and Performance Drivers in the West Bank and Gaza: http://documents.worldbank.org/curated/en/920051497530257564/pdf/ACS22456-REVISED-WB-LGPA-report-TO-IDU-6MB-Nov-16-2017.pdf • Public Expenditure Review of the Palestinian Authority - Chapter 5: Intergovernmental Fiscal Relations: http://documents.worldbank.org/curated/en/320891473688227759/Public-Expenditure-Review-Palestinian-territories Figure 8: Urban Sector PID MDTF Funding Distribution as of June 30, 2019a Recipient-Executed Urban Sector: US$84.9 Million 30% Second Municipal Development Project $25,799,060 8% Second Municipal Dev Project-AF $6,899,293 14% Gaza Emergency Additional Financing-MDP $12,000,000 2% Southern West Bank Solid Waste Management Project $1,500,000 1% Gaza Solid Waste Management Project $750,000 15% Local Governance and Services Improvement Program $13,000,000 24% Third Municipal Development Project $20,000,000 6% Third Municipal Development Project AF (GA Pending) $5,000,000 Note: a. Including all (active and closed) projects co- nanced by the PID MDTF. 46 Figure 9: Urban Sector Disbursements in Active Projects as of June 30, 2019a $7,563,853 G-SWMP $10,750,000 $7,010,833 LGSIP $18,000,000 $14,151,470 MDP 3 $51,000,000 $0M $10M $20M $30M $40M $50M $60M Disbursements Net Commitment Note: a.Including all project nancing sources, that is, not just the PID MDTF. 47 Table 9: Urban Sector – Key Project Ratings MDP-3 Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Financial Management Satisfactory Satisfactory Project Management Satisfactory Satisfactory Counterpart Funding Satisfactory Satisfactory Procurement Satisfactory Satisfactory Monitoring and Evaluation Satisfactory Satisfactory GSWMP Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Financial Management Satisfactory Satisfactory Project Management Moderately Satisfactory Moderately Satisfactory Counterpart Funding Moderately Satisfactory Moderately Satisfactory Procurement Satisfactory Satisfactory Monitoring and Evaluation Moderately Satisfactory Moderately Satisfactory LGSIP Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Technical Satisfactory Satisfactory Fiduciary Systems Moderately Satisfactory Moderately Satisfactory E&S Systems Satisfactory Satisfactory Disbursement Linked Indicators (DLIs) Satisfactory Satisfactory Monitoring and Evaluation Satisfactory Satisfactory Table 10: ICR and IEG Ratings on Closed Projects in the Urban Sector MDP-2 ICR Rating IEG Rating Outcome (achievement of PDO) Satisfactory Satisfactory Bank Performance Satisfactory Satisfactory Financial Management Satisfactory Procurement Monitoring and Evaluation Substantial Substantial 48 5.2.3. Progress by Activities MDP-3 (P159258) Duration Four-and-a-half years Board Approval Date July 21, 2017 Project Closing Date: February 28, 2022 Total Grant Financing US$51 million PID MDTF Grant Amount US$20 million Approval: July 21, 2017 PID MDTF Additional Financing Grant US$5 million Approval: May 23, 2019 TFGWB Financing US$16 million Approval: April 1, 2017 TFGWB Additional Financing Grant US$10 million Approval: May 23, 2019 Status Active To enhance the institutional capacity of municipalities in the West Bank and Gaza for more accountable OBJECTIVE and sustainable service delivery. Key Project Ratings Management Ratings Previous Rating Current Rating Management Ratings Progress toward achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Financial management (FM) Satisfactory Satisfactory Project management Satisfactory Satisfactory Counterpart funding Satisfactory Satisfactory Procurement Satisfactory Satisfactory Monitoring and Evaluation Satisfactory Satisfactory Specific Project Ratings Municipal performance and service delivery Satisfactory Satisfactory Capacity development to municipalities and Satisfactory Satisfactory Palestinian institutions Municipal partnership projects Satisfactory Satisfactory Project implementation support and management Satisfactory Satisfactory costs (US$2.08 million) Emergency labor-intensive Gaza municipal services Satisfactory 49 Figure 10: MDP-3 Disbursement Ratio (US$, millions) as of June 30, 2019 $10,000,000 TF0A8699 (TFGWB AF) $0 $10,000,000 $5,000,000 TF0B0101 (PID AF) $0 $5,000,000 $ 9,335,385 TFA4800 (TFGWB) $6,664,615 $16,000,000 $12,513,146 TFA6154 (PID) $ 7,486,854 $ 20,000,000 $36,848,530 MDP-3 $14,151,470 $ 51,000,000 $0 M $ 10 M $20 M $ 30 M $ 40 M $50 M $ 60 M Undisbursed Disbursements Net Commitment Background MDP-3 was approved on July 21, 2017, and was then co- nanced with US$16 million from the World Bank’s TFGWB and US$20 million from the PID MDTF. The project is aligned with the PA’s long-term strategy to consolidate and strengthen service delivery in the LG sector and to nurture nancially sustainable LGUs as speci ed in the MoLG’s LG Sector Strategy for 2017–2022. The project continues to consolidate and scale up past gains under MDP-1 and MDP-2 in municipal performance and accountability enhancement. It also aims to strengthen the enabling environment at the central level and municipal partnerships with the private sector to improve the e ciency and sustainability of municipal services. AF in the amount of US$15 million was approved on May 23, 2019, US$10 million from the TFGWB to support labor-intensive municipal services delivery in the Gaza Strip, and US$5 million from the PID MDTF to partially address nancing gaps under the project. Component 1: Municipal performance and service delivery nances municipal infrastructure for improved service delivery through a combination of (a) block grants to provide basic funding for eligible municipalities for infrastructure development based on needs and equity and (b) performance grants to provide an incentive for eligible municipalities to improve their performance. Component 2: Capacity development to municipalities and Palestinian institutions provides capacity development support to municipalities and apex-level institutions, namely, the MDLF and MoLG. Component 3: Municipal partnership projects provides TA and project nancing to municipalities to (a) engage more e ectively with the private sector and (b) work across administrative boundaries to develop joint and/or innovative investments for municipal service delivery and local economic development (LED). Only the TA portion under Subcomponent A will be nanced by the TFGWB. Component 4: Project implementation support and management costs nances project management. Component 5: Emergency labor-intensive Gaza municipal services ( nanced exclusively by the TFGWB in the amount of US$10 million) nances the costs associated with the scale-up of the project’s support to Gaza municipalities to enable them to expand local services provision though labor-intensive O&M and municipal infrastructure development activities. The project is co- nanced through the World Bank-administered PID MDTF including contributions from the Government of Denmark. France (through AFD), Germany (through the German Agency for International Cooperation (Deutsche Gesellschaft für Internationale Zusammenarbeit, [GIZ] and German Development Bank (Kreditanstalt für Wiederaufbau, [KfW]), Switzerland (through Swiss Agency for Development and Cooperation [SDC]), and the Netherlands (through the International Cooperation Agency of the Association of Netherlands Municipalities [VNG]) provide parallel nancing. The EU and AFD committed to provide additional support to expand MDP-3 activities in the second cycle of the project in the amounts of EUR10 million and EUR 4 million, respectively. The PA will also provide counterpart funding of no less than 10 percent of the total amount committed by DPs. 50 Opportunity MDP-3 is at the center of a series of interlocking interventions by the World Bank and DPs in collaboration with the PA aimed at strengthening the institutional development, accountability, and nancial sustainability of local governance and service delivery in the WB&G. MDP-3 seeks to consolidate and deepen the gains from MDP-1 and MDP-2 on transparency and service delivery by enhancing the institutional capacities of municipalities and improving the enabling environment for the private sector to participate in service delivery. The project is best placed to continue to advance municipal-level reforms as well as to align it to the necessary reforms at the central level to materialize the PA’s vision. In particular, the project intends to contribute to the sector goal of enabling municipalities to ultimately become creditworthy and be able to access resources from the market for municipal infrastructure. PID MDTF in Action A joint Implementation Support Mission for the project was carried out by the World Bank and DPs in June 2019 to review IP and to discuss work program for the scale-up operation by the AF. In its second year of implementation, the mission assessed the overall progress of MDP-3 as Satisfactory in terms of both the PDO and IP. Implementation thus is in full swing, with all LGUs now carrying out investment projects funded under the rst cycle of grants from the project, while capacity development activities are intensi ed to improve strengthen the capacity of 143 municipalities. Work on important sector reform areas on LG, including on municipal lending and private sector participation in local service delivery, has also began. Finally, municipalities in Gaza are now poised to implement labor-intensive municipal infrastructure activities to be funded by the scaled-up MDP-3 with the AF now declared e ective. Key Achievements The MLDF has advanced the buildup of the portfolio of infrastructure subprojects for Cycle 1. There are 346 subprojects in the WB&G amounting to EUR 42.58 million (US$48.39 million), of which nearly 88 percent of subprojects are completed or nearing completion.46 The project continues to be dominated by roads micro-subprojects (56 percent of total number of subprojects and 72 percent of total subproject costs). So far, 83 km of roads have been rehabilitated or constructed amounting to 47 percent of total output target. The MDLF has successfully piloted direct transfer and administration of grants received from MDP-3 for nine selected municipalities in the West Bank. This activity will contribute to strengthening FM practices of municipalities, a precondition for creditworthiness, and therefore a step toward the MDLF assuming a lending function. A total of 80 municipalities (59 in the West Bank and 21 in Gaza) will bene t from capacity development packages in the areas of xed asset registration and valuation (FARV), Financial Policies and Procedures Manual (FPPM), social accountability (SA), preparation of SDIPs, FM, O&M, e-municipality, and CSCs. A road map and action plan for the MDLF’s transformation into a lending intermediary for municipal borrowing have been prepared and shared with DPs for consultation. The diagnostic study of PPP was completed in March 2019, which primarily identi ed the gaps in the enabling environment for PPP at the local level. Successively, detailed TA packages have been proposed to support the policy, regulatory, and institutional capacities of various stakeholders at the local level to promote engagement with the private sector for municipal service delivery and LED. The project’s reach in terms of bene ciaries of subprojects (Cycle 1) has already surpassed the target (0.5 million versus current count of 1.9 million) based on preliminary monitoring data. Moving Forward The good experience, thus far, with piloting the delegation of FM responsibilities in nine municipalities is expected to encourage rolling out the pilot to more municipalities. This initiative not only helps pave the way for strengthening accountability of municipalities but also empowers those that are keen on becoming e ective service providers. With ample resources from MDP-3 devoted to improving FM in municipalities, expanding the number of municipalities under this pilot should be possible. Toward advancing the government’s agenda to establish a sustainable municipal nance system in the WB&G, the MDLF plans to organize a workshop with stakeholders to consult on the road map for the MDLF’s transformation into a lending intermediary for municipal borrowing. 46. The MDLF reported that 191 subprojects have been completed while 114 subprojects are currently under implementation. 51 The project is due for MTR in early 2020. The MTR will provide an opportunity to (a) improve communication with the public at large on the project objectives, (b) improve coordination of donor inputs, (c) consolidate lessons learned from implementation, and (d) re ect on the ndings of the technical audit of the infrastructure investment. The MTR will also pave the way to start the discussion on the next wave of support in the LG sector. It was agreed that the MDLF will start preparing for the MTR before the end of 2019. Additional Information To access all project information including PADs, ICRs, and ISRs, please refer to the following link: http://projects.worldbank.org/P159258/?lang=en&tab=overview Box 3: Urban Roads Are Community-building Projects in Gaza Municipal roads are among the priorities, if not the top priority, of (LGUs in the WB&G, especially in Gaza, which has become a lagging region resulting from its continued economic and physical isolation brought about by the con ict. MDP-3 is responding to this need with funding for the infrastructure alongside capacity support to allow the LGUs to carry out their service delivery mandates in a transparent, participatory, and sustainable manner. In downtown Khan Younis in southern Gaza, a roads project was completed in early 2019 and inspected by DPs. The neighborhood leaders, municipal sta , contractors, and local children were all very excited about the newly completed stretch of a road. Designated as a one-way, two-lane urban road, the 800 m street looks like a busy corridor common in many cities. It is undoubtedly a road meeting ideal standards of urban design: wide sidewalks of interlocking tiles (sustainable technology—allows water runo to be easily absorbed into the ground), lined with fast-growing trees (protected with steel tree-guards), carriageways painted with directional signs and separator lines, new street lighting, drains upgrade, and so on. But how the neighborhood sees the road and the road project, a small investment of only about US$140,000, gives one a di erent perspective of urban roads, especially in an area that has su ered fragility, con ict, and violence. From the community’s perspective, not only is this project serving its mobility purpose—smoother tra c ow of both vehicles and pedestrians—but it is also signi cantly improving the quality of life. On the side, it has helped improve drainage (and eliminated ash ooding during the rainy season). More importantly, the residents feel that the road has brought them closer together. A cohesive community—resulting from numerous consultations on design—resolves issues including (a) minor right-of-way issues (for example, moving temporary or semipermanent obstructions along the sidewalks), (b) management of the street during construction, and (c) community contribution to complete street lighting. The community is proud of what it sees as a tremendously improved street where sidewalks also serve as impromptu playgrounds for children during lean tra c hours and a ‘living room extension’ for residents who take advantage of the wide sidewalk space and bring out chairs to engage in friendly debates on local a airs. The children gleefully report that they help keep the street clean. Business is also ourishing, shop owners report, as more customers are encouraged to visit with the improved access to the area. Supporting the municipalities in Gaza continues to be a critical task given the overall security and socioeconomic situation in the Strip. MDP-3 investments in local infrastructure, however small they may be, can bring about signi cant impacts and help alleviate the deteriorating economic conditions in the neighborhoods. 52 GSWMP (P121648) Duration Six years Board Approval Date March 31, 2014 Project Closing Date: November 30, 2020 Total Grant Financing US$10.75 million PID MDTF Grant Amount US$0.75 million Approval: October 24, 2014 TFGWB Grant Amount US$10 million Approval: March 5, 2014 Status Active OBJECTIVE To improve solid waste management services in the Gaza Strip. Key Project Ratings Management Ratings Previous Rating Current Rating Management Ratings Progress toward achievement of PDO Moderately Satisfactory Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Satisfactory Financial management (FM) Satisfactory Satisfactory Project management Moderately Satisfactory Satisfactory Counterpart funding Moderately Satisfactory Moderately Satisfactory Procurement Satisfactory Satisfactory Monitoring and Evaluation Moderately Satisfactory Moderately Satisfactory Specific Project Ratings Component 1: Solid Waste Transfer and Disposal Moderately Satisfactory Satisfactory Facilities (Cost US$20.15 million) Component 2: Institutional Strengthening Moderately Satisfactory Satisfactory (US$1.65 million) Component 3: Primary Collection and Resource Moderately Satisfactory Moderately Satisfactory Recovery (US$5.10 million) Component 4: Project Management:(US$3.95 million) Moderately Satisfactory Satisfactory Contingencies (US$4.41 million) Moderately Satisfactory Satisfactory 53 57 Figure 11: GSWMP Disbursement Ratio (US$, millions) as of June 30, 2019 $750,000 TF018377 (PID) $0 $750,000 $2,436,147 TF16835 (TFGWB) $7,563,853 $10,000,000 $3,186,147 GSWMP $7,563,853 $10,750,000 $0 M $2 M $4 M $6 M $8 M $10 M $12 M Undisbursed Disbursements Net Commitment Background The GSWMP is a comprehensive strategic infrastructure and capacity-building project, with the MDLF managing the southern component of the project covering three of the ve governorates in the Gaza Strip, namely the Middle Area, Khan Younis, and Rafah Governorates. The project target constitutes approximately 64 percent of Gaza’s total geographic area and 46 percent of Gaza’s total population (approximately 800,000 people). The three governorates are served by JSC-KRM. The GSWMP is aimed at improving SWM services in the Gaza Strip through the provision of environmentally and socially sound—as well as e cient—waste disposal schemes. The GSWMP is initiating measures to improve overall SWM systems through supporting a combination of (a) strategic infrastructure investments (including construction of a new land ll, two transfer stations, equipment, access road, closure of the existing dump site, and purchase of land for the new land ll); (b) institutional strengthening and capacity building; and (c) skills and technology development. The project faced a series of delays and setbacks during the rst three years of implementation, mainly due to the di culties encountered in land acquisition, engineering design, and the execution of contracts. These problems were further compounded by a lack of space to accommodate the excavated soil and transportation, the presence of scattered waste in the new land ll area, and illegal dumping—which was due to a lack of designated space for incoming waste as well as entry restrictions on imported goods and material to the project site. Despite these initial implementation delays, the project made a turnaround following a restructuring in 2017. A series of action plans have been carried out, helping to improve the implementation pace and activity schedule. The project is currently on track to achieve all the PDO-level indicators. Opportunity Through the GSWMP, a new sanitary land ll and access road have been constructed in the southern region of the Gaza Strip with capacity to serve three governorates until 2027, and beyond 2027, to serve the entire Gaza Strip until 2040. Solid waste transfer stations will be constructed to facilitate the solid waste collection process, especially for smaller trucks and donkey carts. The construction of these stations will be completed within a holistic approach that will enhance public participation and awareness throughout the implementation of the project. The project also aims to strengthen the institution in charge—JSC-KRM. The new land ll will be equipped to operate at international standard, and it will be complemented by a system of solid waste transfer stations in each governorate area. A comprehensive capacity building program—including institutional strengthening measures and training—will improve service provision at the di erent stages of SWM, including the supply of new solid waste collection vehicles to the newly expanded JSC-KRM and its member municipalities. Studies and investments in recycling and resource recovery will take place encouraging the participation of the private sector, in addition to further involvement and participation of the population through broad public outreach and public awareness activities. 54 PID MDTF in Action The GSWMP supported JSC-KRM to continue providing solid waste services and to maintain waste collection and disposal quality. The construction works of the Sofa Al Fukhari Land ll has been completed and the land ll was formally inaugurated in June 2019 and is currently in the nal preparation stage before starting operation. The successful completion of the land ll construction marks a major project millstone as it constitutes the largest component supported under the GSWMP and paves the way for the completion of the remaining project activities, including the equipping and rehabilitating of transfer stations at Rafah and Khan Younis areas. Once operationalized, the land ll will serve the three main governorates in Gaza, providing a rst-of-its-kind sanitarily managed solid waste disposal system in Gaza. In addition to the improved SWM infrastructure, the institutional capacity of JSC-KRM will be strengthened through a hands-on professionalization contractor—which will support improvement in operational management and maintenance that will be needed in the newly constructed facilities. JSC-KRM will establish and expand service agreements with member municipalities, which will help further strengthen the SWM institutions in middle and southern Gaza—as well as in the solid waste sector at large. The GSWMP continues to engage and collaborate with other donors in the sector to diversify its sources of funding, thereby expanding and scaling up the various project activities to further enhance the project’s long-term development impact, in line with the strategic goals of the PA and the MDLF. Key Achievements As of June 2019, the construction of Sofa Al Fukhari Sanitary Land ll, with a capacity of 2.2 MCM, was completed and the land ll was o cially inaugurated. It is now in the early preparatory stages to start full operation. Overall rehabilitation works on the existing dumpsite have been completed. The interim cell was constructed in a sanitary manner to accommodate daily incoming waste during the construction of the new land ll. Large quantities of scattered waste were also removed during the construction process. Land ll equipment for the operational phase has been purchased and delivered. The equipment includes a tractor waste handler, two compactors, two-wheel loaders, two backhoe loaders, two dump trucks, a vacuum jitter, a skid steer loader, and a thermal fogger. Solid waste steel containers of various capacities (1 m3, 4 m3, 40 m3) were supplied for transfer stations and ve collection systems (or for collection routes in the case of the small containers). The rehabilitation of the Sofa Al Fukhari access road was completed in August 2019, and the construction of the Rafah transfer station is expected to be completed in December 2019. About 600,000 m3 of clay soil of the excavated material from the construction of Sofa Al Fukhari Sanitary Land ll was transferred to vacant governmental land in September 2018, and the transportation of the excavated soil has been accomplished in compliance with operational policies and safeguards requirements. A total of 44,677 temporary jobs were created as part of the construction activities; as of end of June 2019, 203,677 people directly bene ted from GSWMP project improvements. The project provided an improved sustainable livelihood for 16 waste pickers through alternative livelihood training and job placement. A new website page for JSC-KRM was developed, including a system for receiving electronic complaints (that is, a GRM). Moving Forward As of June 2019, the project had available parallel nancing through six donors and the PA amounting to US$31 million, of which 61 percent had been disbursed and 82 percent had been committed against contracts. As most of the civil works are currently completed for the Sofa Al Fukhari Land ll, the focus has now shifted to operationalization of the facility in line with international standards and best practices. JSC-KRM will be responsible for operating the new land ll and transfer stations, while TA and institutional support will be provided to help strengthen its management capacity through an international professionalization contractor that will be hired though the project grant. The professionalization contractor will help support JSC-KRM to develop standard operating procedures (SOPs) and protocols, which will help professionalize its solid waste services. Further, the contractor will help institutionalize the SOPs—including with regard to management and administration of the solid waste facilities—through provision of direct coaching, training, and technical operational advice to the sta of JSC-KRM. 55 As the project transitions into operation, the increased cost of managing the improved facilities and issue of cost recovery by JSC-KRM are posing a major challenge. The project is addressing the issue of cost recovery through Component 2 (institutional strengthening and capacity building). While the cost recovery mechanism of the JSC is making improvements, supplemental operational funding will be needed until full cost recovery is achieved. The project is exploring other means of such funding, including a temporary subsidy scheme through a US$2 million grant from the GPRBA. In the remaining project implementation period, the focus will be on nalizing the main outstanding project activities, including (a) the completion of the construction of the Sofa Al Fukhari access road and the Rafah and Khan Younis transfer stations; (b) closure of both the Sofa Al Fukhari and Deir el Balah dumpsites; (c) preparation of the facilities for transfer and disposal services, along with support to JSC-KRM in business planning and in facilitating primary and secondary collection, cleaning activities (closure of random dumpsites), and recycling resource recovery; and (d) implementation of a substantial communication and awareness program covering GRMs and building the capacity of the JSC to ful ll its outreach mandate. In addition, the project will prioritize developing a communication strategy between the JSC and the municipalities, with the goal of strengthening the solid waste service delivery chain and making the system operationally and nancially sustainable across middle and southern Gaza. Additional Information To access all project information including PADs, ICRs, and ISRs, please refer to the following link: http://projects.worldbank.org/P121648/gaza-solid-waste-management-project?lang=en Box 4: Securing Sustainable Livelihoods for Waste Pickers With a high unemployment rate in Gaza (53.7 percent) and every second person in Gaza living below the poverty line, residents of the Gaza Strip also face greater technical, environmental, social, institutional, and nancial challenges, due in large part to restricted access to goods and services. Frequent border closures cause considerable delays for the entry and servicing of waste management equipment and these delays contribute to a fragmented and poorly managed waste collection and disposal system. This exacerbates public health and environmental concerns. Additionally, the generally impoverished economic circumstances of Gaza’s population have contributed to their inability to pay for basic solid waste collection and disposal services. Meanwhile, a number of dumpsites across the Strip are reaching high saturation and unsanitary levels that necessitate immediate closure. Al Fokhari is one of these dumpsites. At the Al Fokhari dumpsite, a group of waste pickers used to recover recyclables to make a living. And this was among the poorest, most stigmatized, and most vulnerable groups of the population. With support from the World Bank and AFD through the GSWMP and the Deprived Families Economic Empowerment Program (DEEP) by the United Nations for Development Programme (UNDP), JSC-KRM implemented a livelihoods restoration program for the waste pickers. The program takes a gradual bottom-up approach that guides the waste pickers and their families to come up with alternative forms of livelihoods after leaving the dumpsite. The program began with o ering temporary jobs related to waste management in the municipalities for about a year. This move o ered a transitional yet transformational period for the waste pickers, gradually helping them move out of the marginalization circle and integrating them into the society around them. The education as well as the health care o ered during this period helped in building con dence and self-esteem among the group of waste pickers and their families. The livelihoods restoration program, with support from DEEP, started right after this transitional period. It largely capitalized on the di erent existing potentials that the waste pickers and their families have. Intense capacity-building, training, and preparatory activities were o ered to mobilize the former waste pickers and put them on track to run the type of projects that each chose after running the needed feasibility and market assessments. Source: http://blogs.worldbank.org/sustainablecities/securing-sustainable-livelihoods-waste-pickers 56 LGSIP (P148896) Duration Five years Board Approval Date November 2, 2015 Project Closing Date: December 31, 2020 Total Grant Financing US$18 million PID MDTF Grant Amount US$13 million Approval: March 13, 2017 TFGWB Grant Amount US$5 million Approval: September 2, 2015 PID MDTF AF Grant Amount US$2 million (proposed) Status Active To strengthen the local government nancing system and improve local service delivery in program OBJECTIVE villages. Key Project Ratings Management Ratings Previous Rating Current Rating Management Ratings Progress toward achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Technical Satisfactory Satisfactory Fiduciary systems Moderately Satisfactory Moderately Satisfactory Environmental and social systems Satisfactory Satisfactory Disbursement Linked Indicators (DLIs) Satisfactory Satisfactory Monitoring and Evaluation Satisfactory Satisfactory Specific Project Ratings Technical Satisfactory Satisfactory Fiduciary systems Satisfactory Satisfactory Environmental and social systems Satisfactory Satisfactory Disbursement Linked Indicators (DLIs) Satisfactory Satisfactory 57 Figure 12: LGSIP Disbursement Ratio (US$, millions) as of June 30, 2019 $300,000 TFA1039 (TFGWB) $ 4,700,000 $ 5,000,000 $ 10,689,167 TFA4511 (PID) $ 2,310,833 $ 13,000,000 $ 10,989,167 LGSIP $ 7,010,833 $ 18,000,000 $0 M $5 M $10 M $ 15 M $ 20 M Undisbursed Disbursements Net Commitment Background Strengthening LGUs and enabling them to perform as fully functional LGs that are accountable to citizens are key priorities for the PA. However, for several years LG sector support was provided through channeling development funds into service delivery infrastructure without giving much attention to the sustainability of LGU management, nancing, and performance. The PA, nonetheless, has been striving to shift to supporting accountable and responsive local infrastructure service delivery. Accordingly, the LGSIP responds to this vision of the PA by piloting a transparent and predictable nancing mechanism for funding minimum LGU functions and capacity development at the lowest of LGU tiers. Embedded in the LGSIP is also the notion of incentivizing consolidation of service delivery through capacitating JSCs to provide joint services on behalf of VCs. The LGSIP uses a PforR nancing instrument. It nances activities under the following three subprograms: (a) Delivery of Local Services by VCs, (b) Infrastructure Service Delivery through Joint Projects, and (c) Capacity Support for strengthening Local Governance Institutions. KfW, the Belgian Technical Cooperation, SDC, and GIZ provide parallel nancing across these three sub-programs. The LGSIP also supports the government’s program for delivery of local services in Area C communities, through parallel nancing from the SDC, Denmark Representative O ce, AFD, EU, and U.K. Department for International Development (DFID) as well as the PA. The PforR segment is co- nanced from the World Bank’s TFGWB with a grant amount of US$5 million and from the PID MDTF with the amount of US$13 million. Opportunity Building on the annual transfer system to VCs through the World Bank- nanced LGSIP, the PA is encouraged to scale up the program to include the Transportation Fee and other budgetary allocations that would help VCs establish a sustainable nancing arrangement for service delivery in villages. The rst step of reforming the existing system for Transportation Fee allocation has been achieved. The PA had put in place a formula-based scal transfer system that will allocate Annual Capital Grants to VCs in a transparent and predictable manner. However, more needs to be done to ensure timely execution of the transfer to VCs as well as enlarging the per capita grant allocation provided to VCs. In addition to the strong nancial incentives o ered under the program, the progress of implementation of joint projects needs to be intensi ed to demonstrate the bene ts of economies of scale to o er additional incentives for VCs to collaborate and address common needs jointly. 58 PID MDTF in Action A Program Implementation Support Mission for the LGSIP was carried out jointly by the World Bank and DPs in April 2019. The main objective of the mission was to follow up on progress of agreed actions at the program MTR. Overall, the program continues to show progress in meeting its PDO. Key Achievements As of April 2019, the number of people bene ting from improved service delivery in program villages reached 338,157, surpassing the MTR target of 230,000. In FY19, 74.5 percent of the VCs received transparent and predictable Annual Capital Grants, surpassing the target for PDO Indictor 1 of 60 percent. Timely communication and transfer to VCs of the formula-based ACIG has been sustained for three consecutive years. In FY19, 178 VCs were eligible to receive funding for subprojects under the LGSIP amounting to US$4.3 million. Steps to improve the transparency in the allocation of the Transportation Fee were nally adopted by the MoLG, marking a critical milestone toward reforming the Inter-governmental Fiscal System. The TF reform directive was approved by the Minister of Local Government; this directive outlines the TF allocation criteria that will be applied annually on all LGUs until the end of the program (that is, end of FY20). 10 out of 13 DLIs had been achieved by the end of the reporting period. 47 Concerning the three outstanding DLIs48 at the end of FY19: - DLI 5.1 has not been met, because extra time was used in the process of approving joint projects to make sure the joint projects will bene t the VCs. This DLI is expected to be completed during FY20. - DLI 6.1 was veri ed as achieved after FY19 on July 11, 2019. - DLI 6.2 has not been met because of the scal crisis facing the PA (that is, the disbursement of the Transportation Fee is a ected by availability of funding from the general budget). This DLI will be reviewed at the next supervision mission, planned in December 2019. Several training activities were delivered to VCs and the MoLG in alignment with the Capacity Development Action Plan in the areas of procurement, budgeting, infrastructure procurement, infrastructure management, and community planning. No progress was reported in FY18 DLI 5: Aggregated expenditure percentage of approved Joint Projects. Moving Forward Despite progress made toward improving transparency and predictability of the Transportation Fee, as illustrated by the adoption of the TF reform directive by the MoLG, these e orts have not been followed by the next step of disbursing at least 25 percent of annual allocation of TF to VCs using the approved allocation criteria outlined in the directive. Based on consultations with the MoLG and MDLF, a simple restructuring will be carried out to re ect changes in the Results Framework in terms of indicators, targets, and methodology for collecting data. The MoLG and MDLF expressed the desire for discussion on sustaining support to VCs after the completion of the LGSIP (that is, December 2020). 47. The following DLIs had been achieved by the end of the reporting period: DLI 1.1: MOLG adopted standardized Governance Framework for joint local service provision by more than one VC and adopted formula for annual Capital Investment Grant allocation for VCs/JSCs; DLI 1.2: The MOLG issued Procurement Instructions for LGUs to follow in procuring local services; DLI 2.1: Communication of the ACIG allocation to VCs by January 15 and transfer of ACIGs to eligible VCs by January 31, in FY 17; DLI 2.2: Communication of the ACIG allocation to VCs by January 15 and transfer of ACIGs to eligible VCs by January 31, in FY 18; DLI 3.1: 50% of VCs meeting the Program eligibility criteria annually in FY 17; DLI 3.2: 60% of VCs meeting the Program eligibility criteria annually in FY 17; DLI 4.1: 6 joint projects approved in FY 17; DLI 4.2: 10 joint projects approved in FY 18; DLI 7.1: Five Year Capacity Development Plan prepared in FY 16; DLI 7.2: Annual Capacity Development Plan executed in FY 17. 48. The three DLIs that were not completed by end FY19 are DLI 5.1: Aggregated expenditure percentage of approved Joint Projects—30% in FY 18.; DLI 6.1: Not later than FY17, the Recipient submitted its Transportation Fee reform directive to its Cabinet of Ministers for approval; DLI 6.2: No later than FY 18, at least 25% of annual allocation of the Transportation Fee is disbursed using the criteria set out in the Program Operations Manual progress. 59 Additional Information To access all project information including PADs, ICRs, and ISRs, please refer to the following link http://projects.worldbank.org/P148896?lang=en. Box 5: LGSIP—Program for Results in Improving Access to Water Uncharacteristically for a traditional village, Qibya, a small VC of around 6,000 inhabitants to the west of Ramallah city, decided to introduce a revolutionary solution to its persistent water problems. For many years, the town endured year-long irregular water supply and water cuts during summer time. The old water network contributed to the dire water situation. But nonpayment by residents also resulted in huge arrears to the PWA. After numerous consultations, the VC and the local community decided to introduce prepaid water meters to households to ensure better water service to Qibya. Installing prepaid meters allows consumers to predetermine the volume of water they are willing to pay for and pay the cost of such predetermined volume up front, with an option to add value to the account for additional supply when needed. In the Qibya case, the prepayment also includes installment payment of arrears by each household. Thus, the meters not only ensure payment for service delivered (actually an advance payment for expected consumption) but also enable an a ordable way of paying o accumulated arrears to the PWA. The VC sought funding support of US$56,000 from the LGSIP to help defray the costs of the meters and their installation. The local community contributed a substantial amount (US$30,000) to implement the project and enabled completion of the project in 2018. The project helped improve the water services delivered to citizens and reschedule the payment of old arrears and, importantly, it allowed residents to get rid of the previous problem of accumulating water arrears to the PWA. Moreover, the project is now generating nancial surplus which will allow the VC to further develop the town by implementing small-scale infrastructure projects and maintenance work. 60 5.2.4. Proposed Activities RERP (P168576)a Duration Four years Board Approval Date July 22, 2019 Total Grant Financing US$12.6 million PID MDTF Grant Amount US$3 million Approval: May 14, 2019 TFGWB Grant Amount US$5 million Approval: May 13, 2019 GPRBF Grant Amount US$4.6 million Approval: May 14, 2019 Status Pending OBJECTIVE To enhance tenure security and improve real estate registration services. Note: a. The RERP was approved by the World Bank Group Board on July 22, 2019. It is still included in the table since its approval was after the FY19 reporting period. The percentage of surveyed and registered land in the West Bank under previous registration e orts was low. In 2005, with nancing from the World Bank and Government of Finland (GoF), the First Land Administration Project (LAP I) was launched to modernize land administration services. LAP I developed procedures for the issuance of land titles, piloted SLR, and modernized land service o ces. The follow-up LAP II was launched in 2012 to scale up the systematic registration process. However, the project failed to make progress toward its objectives and was cancelled in 2016. In response to the cancellation of LAP II, the PA renewed its commitment to the land sector and endorsed a new reform program proposed by the PMO—'the Road Map for Reforming the Palestinian Land Sector’. The road map outlines a comprehensive, multiphase, multistakeholder approach including speci c policy, legal, and institutional reforms needed in the short to long term. The PA also proceeded with institutional restructuring, (a) establishing the new agency, the LWSC, to accelerate progress in rst-time SLR, and (b) appointing joint leadership for the two land agencies—LWSC and the PLA. SLR has progressed under the new agency. The LWSC has built on lessons learned and recommendations from LAP I and II, including to partner with LGUs to improve SLR e ciency and governance. To date, 38 percent of land in the West Bank is currently registered, with a signi cant portion of unregistered properties remaining in the urban-economic centers. Under the new leadership, the PLA has completed internal restructuring and made further e orts to continue with reforms in line with the approved road map. The World Bank and DPs responded to continued requests from the PA to reengage in the sector after the cancellation of LAP II and has provided TA for implementation of the road map through the ongoing PID MDTF- nanced Land Sector TA. After the progress of the PA and its demonstration of commitment to sector reform and SLR, it was agreed to prepare a new operation to support the land sector. The total nancing for the four-year RERP (P168576) is US$12.6 million, which is nanced by the TFGWB in the amount of US$5 million, with co- nancing from the World Bank TF GPRBA for US$4.6 million and US$3 million from the PID MDTF. The PDO is to enhance tenure security and improve real estate registration services. These objectives will be achieved through advancing the registration of properties in Areas A and B of the West Bank and will support the ongoing systematic approach, which comprehensively bene ts citizens, businesses (including MSMEs), and public entities through real estate registration. Additionally, gender outreach and inclusion have been mainstreamed through the design of the project to ensure that the rights of women and vulnerable groups are protected through (a) their participation in the SLR process and (b) the promotion of their registration rights. 61 The project components are as follows: Component 1: Systematic Land and Property Registration will support the PA and LWSC with their strategic plan to complete SLR over a four-year period through a results-based payments approach and will include support for the enhancement of institutional functions and capacity at the LWSC. Under this component, a GAP will be developed and implemented. Component 2: Institutional Modernization of the PLA will be implemented by the PLA and will aim to build the agency’s technical capacity and support its transformation into a modern, service-oriented organization that provides e-services to the government, businesses, and citizens. Business process re-engineering and automation will streamline the PLA service provision, achieve digital transformation, increase service quality and transparency, and improve service delivery. The component will also support the development of mass valuation models. Component 3: Project Management and Outreach will support the project management functions in the PLA and LWSC, including M&E, project coordination, social safeguards, and procurement. The external project audit, the SIA, SMP, and midterm and nal project evaluations will be conducted under this component. The project was approved by the World Bank Group Board of Executive Directors on July 22, 2019. 62 63 01 5.3.1. Sector Context Substantial energy security challenges in the WB&G. The WB&G continues to face signi cant energy security issues, already severe in Gaza, but also emerging in the West Bank. In Gaza, the available power supply remains uncertain, with limited electricity imports from Israel and intermittent fuel supply for the GP). In the past year, due to Qatar-funded diesel supply, electricity availability in Gaza has ranged between 8 and 16 hours a day. The West Bank largely bene ts from 24-hour power supply, but power shortages are emerging beyond the peak winter and summer months. Palestinian electricity demand is expected to continue to grow, although the economic concerns in the Gaza Strip are likely to keep growth well below the projected average annual rate of around 3.5 percent for the coming years. The issue of cost-e ective energy sources, especially in Gaza, continues to be a key concern for nancial sustainability of the sector and for fostering economic growth. Vulnerable energy supply situation and the need of securing energy supply and promoting renewable energy. The WB&G continues to rely primarily on Israeli imports to meet electricity needs. Currently, more than 90 percent of electricity supply in the WB&G is imported from IEC. Modest amounts of electricity continue to be imported from Jordan into the West Bank while supply from Egypt to Gaza has been disrupted since February 2018. The only large-scale generation capacity in the WB&G is the troubled GPP. The 140 MW diesel- red plant was developed as an independent power project and has been operating since 2004. Due to the high cost of diesel and intermittency of fuel supply, the plant runs at barely half capacity. For Gaza, the complex measure of converting the GPP to run on natural gas remains the most viable longer-term option and extensive discussions are ongoing to secure gas supply and build the gas supply infrastructure. Reconstructing the Gaza north substation and building the 161 KV transmission line for increased imports from Israel is the quickest solution. In parallel, the development of renewables continues, particularly rooftop solar PV for small customers and public services (for example, health facilities): a valuable addition to the energy mix across Gaza and the West Bank. Continued e orts for building sector creditworthiness through institutional reforms. The Palestinian electricity sector continues to implement institutional reform measures and is making strides toward establishing its creditworthiness. PENRA and the DISCOs in the West Bank have successfully implemented a range of measures to increase collection rates from residential, commercial, and industrial customers. Still, major challenges remain: (a) payment collection in areas not covered by DISCOs continues to be done by municipalities and VCs; (b) payment collection from public sector customers and refugee camps is almost nonexistent; (c) issues related to the Gaza utility’s nancial condition remain dire; and (d) improving the technical performance of the sector, including through continued consolidation of the municipalities and village councils in DISCOs, requires political willingness. Despite important e orts by PERC, the cost recovery electricity tari is not applied to all customers. There is an urgent need for timely settlement by the MoFP, or the relevant line ministry, of bills issued for electricity supplied to public facilities (for example, hospitals, police stations), subsidy payments, and unpaid bills from refugee camps. The next stage will require alignment of nancial ows across the sector, to enable PENRA and PETL to reduce electricity burden on the clearance revenue (net lending) mechanism and e ectively engage private power producers. Meaningful improvement in revenue collection situations in the WB&G. The operational performance of the distribution utilities in the West Bank has been improving, with revenue collection in 2018 reported to be more than 80 percent of the electricity purchased by residential, commercial, and industrial customers. The tari calculation accounts for 15–17 percent technical and nontechnical losses. Partly due to limited supply, the revenue collection situation in Gaza is more complicated, at barely 50 percent reported, with no payment to IEC. LGUs, including municipalities and VCs, continue to manage about a quarter of the overall electricity distribution and there is no information on their collection rates. However, they are reporting improved repayment rates to IEC, with less than 25 percent being in default in 2018. Under the interim Power Purchase Agreement (PPA) signed between PETL and IEC, PETL is supplying electricity to two DISCOs and has maintained a 100 percent collection rate from the DISCOs and 100 percent repayment record to IEC. Net lending mechanism and high accumulation of outstanding debt. The poor track record of paying Israeli power import bills is linked to the so-called net lending mechanism as well as high accumulation of outstanding debt. The internal arrangements within the PA result in power purchased from IEC being only partially paid for directly by the DISCOs from the collections, with the unpaid portion expected to be partially settled through the net lending mechanism and partially accumulated as outstanding debt. The Jerusalem Distribution Company (JDECO) is not covered by the net lending mechanism, so all unpaid bills accumulate as outstanding debt. In total, the outstanding payment from all customers in the WB&G to IEC continues to remain around NIS 1.5 billion in 2018. Progress and challenges in implementation of the 2016 PA and GOI agreement. Implementation of the September 2016 PA and GoI agreement to settle past electricity sector debt continues. In July 2017, PENRA and PETL reached a major agreement with IEC and Israeli authorities on an interim PPA for the energization of the rst of the four planned HV substations, in Jenin. The energization of the Jenin substation has allowed additional power to be delivered to the north of the West Bank. Initial information indicates that PETL has begun establishing a track record of paying for 100 percent of the power purchased from IEC. This important milestone is a critical step in the overall sector reform process. In May 2018, PETL and IEC initialed the PPA with expectation of the pending issues to be resolved in due course. However, progress toward the PPA has stalled due to outstanding technical issues, including tari levels and application of regulations and continuing political complexities. 64 Importance of deeper nancial and operational reforms and projects co- nanced by the PID MDTF. The Palestinian electricity sector is ready for the next phase of deeper nancial and operational reforms, which are crucial to enable infrastructure investments, engagement of the private sector, and diversi cation of power supply. This is made possible by the sector’s progress over the past decade and builds on the ongoing energy sector projects, including the ESPIP and the Securing Energy for Development (SED) report. This new, next-generation, higher-impact operation is being designed as an MPA called ASPIRE MPA; further details are provided in Section 5.3.4. 5.3.2. Sector Risks Risk Category Mitigation Measures Political and governance • Internal tension between West Bank and Gaza • PENRA Gaza remains the principal interlocutor between stakeholders assumed to continue, with possible the World Bank and GEDCO. implications for PENRA to operate in Gaza. • GEDCO is being engaged in critical sector dialogue • Political instability and the long-lasting Israeli through PENRA. restrictions on movement, access, and trade continue • Strategic alliance has been established with other to be signi cant impediments to project sector stakeholders with interventions in the electricity implementation in the WB&G, particularly in Gaza. sector, including the WHO and the International Committee of the Red Cross. • The World Bank is developing partnerships with local NGOs, educational institutions, and others to provide additional implementation support to enhance e ectiveness. Sector strategies and policies • Delays in resolving the pending issues under the • The ESPIP is helping PENRA and PETL continue with initialed PPA between PETL and IEC would impede institutional reform measures. The next stage will require the reform and consolidation process of the energy alignment of nancial ows across the sector, to enable sector. PENRA and PETL to improve payment discipline and • The poor track record of paying Israeli power import engage private power producers e ectively. bills, if maintained, will result in continued • Sector engagement continues providing support to accumulation of arrears. ensure the successful implementation of the • Delays in achieving tangible results would hamper Israeli-Palestinian electricity debt agreement and the the reform process and the improvement in e ciency PPA. of the distribution system in targeted areas. • Inclusive process across all DISCOs and PENRA applied during the rollout of RPPs and performance improvement programs for sector stakeholders. Institutional capacity building • Gaps in technical capacity at the PENRA PMU • The PMU’s Sta Sustainability Plan, which involved the gradual transfer of PMU sta from the ESPIP budget to PENRA payrolls, is being revisited. While this has resulted in signi cant savings to the projects, it may have had an impact on the quality and seniority of the mid-level sta attracted and assigned to the PMU. Fiduciary • Delays in launching the procurement process of key • The PENRA PMU capacity requires strengthening, packages especially with regard to procurement. • Close supervision of all procurement and FM by the PENRA PMU, as well as built-in preventive actions (for example, technical audits), will reduce this risk. 65 Environment and social • Potential negative impacts of constructing and • The Environmental and Social Management Plan operating rooftop solar PV panels and other (ESMP) for the Gaza rooftop solar initiative in the ESPIP is equipment may include noise, dust, interruption of included in the contract to minimize and mitigate services, health and safety risks, and waste disposal. environmental impacts. • Some activities of the proposed and PID MDTF’s • For the proposed ASPIRE MPA, an Environmental and co- nanced ASPIRE MPA might need temporary or Social Management Framework (ESMF) and an RPF have permanent land acquisition requiring involuntary been prepared by the client and are being reviewed by resettlement. the World Bank by project appraisal. • Some external factors, such as movement • Site-speci c instruments are being reviewed by the restrictions, might increase the construction and World Bank, as required. operation risks in the context of the WB&G. • The PENRA PMU will build in-house capacity and recruit a full-time quali ed Environmental and Social O cer (ESO) to conduct subproject screening and assessment of environmental and social risks. Stakeholders • The consolidation of DISCOs may change • The sector engagement strategy aiming at thoroughly stakeholder relationships in a way that may make engaging stakeholders and strengthening professional some of them resist the reforms. relationships among them. More detailed analysis and policy recommendations in the energy sector are available in World Bank analytical works: • Securing Energy for Development in West Bank and Gaza http://documents.worldbank.org/curated/en/351061505722970487/pdf/119769-WP-P157348-v1-Securing-Energy-PUBLIC-ACS.p df • Securing Energy for Development in West Bank and Gaza - Annexes: http://documents.worldbank.org/curated/en/384001505723088507/pdf/119769-WP-P157348-v2-Annexes-Securing-Energy-PUBL IC-ACS.pdf 66 Figure 13: Energy Sector PID MDTF Funding Distribution as of June 30, 2019a Recipient-Executed Energy Sector: US$14 Million 50% 50% AF-WB&G Elec. Sector WB&G Elec. Sector Performance Improvement Performance Improvement $7,000,000 $7,000,000 Note: a. Including all projects; the remaining funds that were in the PPG for the ESPIP (TF0A2807) have been transferred to the ESPIP (TF0A5078). Figure 14: Energy Sector Disbursements in Active Projects as of June 30, 2019a $3,410,853 ESPIP $23,000,000 $0 M $5 M $10 M $15 M $20 M $25 M Disbursements Net Commitment Note: a. Including all project nancing sources, that is, not just the PID MDTF. 67 5.3.3. Progress by Activities ESPIP (P148600) and AF (P167914) Duration Six years Board Approval Date July 27, 2017 Project Closing Date: December 20, 2023 Total Grant Financing US$23 million PID MDTF Grant Amount US$7 million Approval: May 12, 2017 PID MDTF AF Grant Amount US$7 million Approval: January 14, 2019 TFGWB Grant Amount US$4 million Approval: May 10, 2017 TFGWB AF Grant Amount US$5 million Approval: November 14, 2018 Status Active To enhance the energy sector’s institutional capacity, improve e ciency of the electricity distribution OBJECTIVE system and pilot a new business model for solar energy service delivery in Gaza. Key Project Ratings Management Ratings Previous Rating Current Rating Management Ratings Progress toward achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Financial management (FM) Satisfactory Satisfactory Project management Satisfactory Satisfactory Procurement Moderately Satisfactory Moderately Satisfactory Monitoring and Evaluation Satisfactory Satisfactory Specific Project Ratings Component 1: Strengthening the Capacity of Palestinian Electricity Sector Institutions, PETL, Satisfactory Satisfactory and PERC (US$2.50 million) Component 2: Improving the Operational Performance of Palestinian Electricity DISCOs Satisfactory Moderately Satisfactory US$5.30 million) Component 3: Improving Energy Security in Gaza Satisfactory Moderately Satisfactory with Solar Energy: (Cost $2.50 M) Component 4: Technical Assistance, Capacity Satisfactory Satisfactory Building, and Project Management (US$0.70 million) 68 Figure 15: ESPIP Disbursement Ratio (US$, millions) as of June 30, 2019 ESPIP Disbursement Ratio $7,000,000 TF0A9136 (PID AF) $0 $7,000,000 $5,000,000 TF0A9139 (TFGWB AF) $0 $5,000,000 $4,089,147 TF0A5078 (PID) $2,910,853 $7,000,000 $3,500,000 TF0A5065 (TFGWB) $500,000 $ 4,000,000 $19,589,147 ESPIP $ 3,410,853 $23,000,000 $0 M $5 M $10 M $15 M $20 M $25 M Undisbursed Disbursements Net Commitment Background The ESPIP AF was approved by the World Bank’s Board on January 14, 2019, and is being co- nanced by the TFGWB (US$5 million) and the PID MDTF (US$7 million). The ESPIP was approved by the World Bank’s Board on July 27, 2017, and is being co- nanced by the TFGWB (US$4 million) and the PID MDTF (US$7 million). The project is designed to sustain and expand the achievements of the World Bank engagements and to further support the reform process led by PENRA—which should foster well-performing sector institutions, a diversi cation of power sources, and increased participation of the private sector. Opportunity The ESPIP and the AF are designed to provide continued support to PENRA’s long‐term vision of strengthening nancial and operational sustainability of the electricity sector and diversifying power sources through short‐term measures to enhance the energy sector’s institutional capacity, improve e ciency of the electricity distribution system, and increase availability of rooftop solar PV systems in Gaza. The ESPIP supports institutions and interventions along the Palestinian energy supply chain, covering generation, transmission (PETL), DISCOs, and regulation (PERC). Given the fragile and complex nature of operations in the WB&G, the scope of the ESPIP components was designed to allow exibility to support scale‐up. Building on the current status of electricity sector reforms and institutional development, signi cant additional e orts are required to achieve sustained improvements. Such e orts include (a) addressing power supply constraints that limit private sector development and job creation, particularly in Gaza, (b) supporting implementation of the Israeli‐Palestinian electricity debt agreement and the interim and long‐term PPAs with Israel, and (c) enabling diversi cation of power supply and sources. The AF is strengthening ESPIP activities for continued support to development of the energy sector in the WB&G. PID MDTF in Action The ESPIP is in a crucial and labor-intensive technical assessment and implementation phase. During 2019, the PPG was settled against the ESPIP and closed. The ESPIP through the PPG had provided advance funding toward operational support to PETL, procurement of equipment to operate new HV substations, and technical and legal consultancy services, which have largely been completed. PETL has started generating revenues through the sales of power under the interim PPA and is now self- nanced. The ESPIP will continue to nance partial operational costs of the PMU, which is embedded in PENRA. 69 The Gaza rooftop solar revolving fund for households and MSMEs was launched in October 2018. Bank of Palestine and Al Quds Bank have signed agreement with PENRA as the rst participating banks, and two additional banks are expected to join subsequently. The rst stage procurement for 100 solar PV kits has been concluded and following the selection of the rst 100 bene ciaries, contracts will be signed. The revolving fund design continues to be reviewed given the changing conditions in the Gaza Strip. While reduced salaries and limited job opportunities have a ected the number of household applicants, the demand from private businesses has remained stable and more emphasis is likely to be shifted to solar PV for MSMEs. Under PENRA’s overall leadership, the six DISCOs across the WB&G have accepted a common methodology toward the RPP and MIS. This is crucial to support improvement of quality and consistency of data available to each DISCO and to PERC, PETL, and PENRA and improve overall planning and management of the sector. The RPP procurement process for all six DISCOs is under way and is expected to conclude in December 2019. MIS procurement for the ve West Bank DISCOs is being launched, in November 2019, separately from the Gaza DISCO, expected in December 2019, due to the requirement for separate on-ground implementation arrangements. The ESPIP continues to foster a community of technical sta representing each DISCO, which has been working together through implementation and will ideally continue to collaborate and share knowledge and experience beyond the project. Key Achievements PENRA reports 100 percent collection rate of the bills issued for electricity provided by PETL to NEDCO and TEDCO in 2018 from the Jenin substation, which was energized following the signing of the interim PPA. PETL has completed procurement of all the equipment required for O&M of the Jenin substation. Each of the six DISCOs across the WB&G completed a detailed review of their customer database to identify 16,000 high-value customers to be covered under the RPP. The RPP procurement process is under way. All six DISCOs completed the IT system review and gap analysis to identify priority needs for development of a comprehensive MIS. The MIS procurement process is expected to be launched in November 2019. The Gaza rooftop solar initiative was formally launched in October 2018 with signing of the PENRA-GEDCO agreement. Participating bank agreements have been signed with Bank of Palestine and Al Quds Bank with two more banks expected to join. The bene ciary selection and procurement process for the rst phase targeting 100 households and SMEs will conclude in November 2019; installations are expected to commence in January 2020. The technical assessment for Nasser hospital and three priority clinics is under review. The procurement process is expected to begin in November 2019. Moving Forward The RPP, including the MIS, is designed to directly support the overall reform agenda of PENRA, not only by improving the DISCOs’ operational performance but also by strengthening the business functions of the DISCOs toward long-term sustainability. In the coming year, the focus will shift toward ensuring speedy and e ective implementation. Implementation of the rst phase of the Gaza rooftop solar initiative is likely to encounter a range of challenges—to be expected since it is piloting a new business model in a very complex environment. Additional Information To access all project information including PADs, ICRs, and ISRs, please refer to the following link: http://projects.worldbank.org/P148600?lang=en. 70 5.3.4. Proposed Activities ASPIRE MPA (P170928) Duration Eight years Board Approval Date February 10, 2020 (Expected) Expected Program Closing Date June 30, 2028 Total Grant Financing US$32 million for Phase I PID MDTF Grant Amount Phase I: US$18 million TFGWB Grant Amount Phase I: US14 million Status Under preparation To improve operational and nancial performance of electricity sector institutions and promote OBJECTIVE diversi cation of energy sources. Status of Sector Reform Over the last two decades, the electricity sector reform process has improved and consolidated the energy sector from a fragmented municipal-based system to a more e cient sector model. PETL was created in 2013 as a ‘single buyer and transmission system operator’ to bring about cohesion in the sector. As PETL and the DISCOs are relatively new institutions, there is a continued need for sustained support to help them provide more coherent, reliable, and e cient services. Gaps That Need to Be Filled Key governance reforms remain to be fully implemented across the supply chain. These include (a) scaling up PETL’s role as the single buyer, including ensuring its nancial sustainability; (b) consolidating remaining local, municipal, and village-level distributors into existing or new DISCOs; (c) strengthening monitoring of sector performance, tari setting, licensing, and regulation; (d) establishing a robust mechanism for evaluating and signing PPAs; and (e) improving payment discipline in the sector. The payment issues are contributing to nancial de cits of more than US$150 million per year. Increasing the electricity supply in Gaza remains a challenge. The available power supply is limited to 6–12 hours per day, depending on availability of fuel supply for the GPP and imports from Israel. In recent months, the situation has improved due to Qatar nancing for the fuel supply. Imports from Egypt have stopped since February 2018. GEDCO recovers less than 50 percent of its total billed amount and is not paying for any electricity or fuel purchases, which is one of the major barriers in improving supply in Gaza. The electricity system in the WB&G is highly integrated with the Israeli electricity system, and any new domestic power generation or imports require coordination with IEC. There are opportunities to increase imports from Jordan and Israel through existing and new interconnections; these could provide more cost-e ective power sources and increased stability of supply. Renewable energy, particularly solar PV systems, has attracted a high level of interest from the private sector, but this has not translated into many projects due to issues of grid availability and sector creditworthiness. PA’s Request for Potential World Bank Intervention Through the ASPIRE MPA, PENRA is seeking support to implement the Electricity Sector Strategy (2017–2023) and National Renewable Energy Policy (2017–2022) while contributing to the realization of PENRA’s 2030 vision, as described in the SED report. This involves achieving greater autonomy and improved performance through (a) advanced transmission and distribution infrastructure, (b) domestic generation through independent power producers (IPPs), and (c) nancial and operational sustainability of its institutions. The electricity sector can contribute toward enhancing the performance of the economy, improving scal sustainability (including through de cit reduction), and ensuring improved competitiveness through greater service delivery e ciency and enhanced private sector engagement. ASPIRE is being prepared as an MPA, a new World Bank instrument that is appropriate for operations addressing multiple dimensions through successive or partly overlapping phases. 71 The Proposed Investment Grant Achieving PENRA’s 2030 vision requires a multipronged approach as described in Figure 16. Pillar 1 focuses on the transmission, distribution, and interconnection infrastructure necessary to import electricity from neighboring countries and improve quality and reliability of power supply across the WB&G. Pillar 2 focuses on the management of distribution systems for reliability and quality and on demand-side activities to improve revenues and increase e ciency. Pillar 3 seeks to create an enabling environment for the private sector to contribute to the goal of cost-e ective, diversi ed electricity supply in the WB&G through adoption of solar PV technology for own use and as IPPs. Pillar 4 builds on the continuing implementation of reform measures by PENRA and the PA to improve the electricity sector’s performance. Phase I focuses on building critical infrastructure required to enable scaling up of imports from Israel and Jordan and contribution of solar power plants and scaling up the RPP and revolving fund for solar PV systems for households and businesses. Subsequent phases will implement priority activities under the four pillars using a continuous learning and adaptive management approach. The scope and timing of the future phases will depend on availability of funding. Figure 16. Program Framework - MPA Pillars Additional Information To access all project information including the Concept Note and (following project approval) PADs, ICRs, and ISRs, please refer to the following link: http://projects.worldbank.org/P170928?lang=en 72 73 01 6. Bank-executed Technical Assistance In addition to the sector-speci c activities nanced by recipient-executed co- nancing agreements described in the preceding section, the MDTF structure includes a window to nance Bank-executed TA. Disbursing accounts under this window are established for consulting services managed by the World Bank related to infrastructure sector planning and strategy formulation initiatives. The Bank-executed TA window provides the opportunity to develop and implement cross-sectoral integrated approaches across the infrastructure sectors, such as the already completed recipient-executed supply study for the water sector. During FY19, four Bank-executed TA activities remained ongoing—(a) Water Security TA, (b) LG Sector TA, (c) Land Sector TA, and (d) Energy Sector TA—with the land and energy activities being scaled up by US$0.8 million and US$1.0 million, respectively. These TA activities have been designed to complement World Bank support across the sectors and further enhance impact of the recipient-executed activities. The Water Security, LG Sector, and Energy Sector TAs, for example, are all supporting improvement in nancial and operational performance of Palestinian institutions, which will help mitigate the impact of the net lending issue—which stretches across all these sectors. Reforms under the recently replenished Land Sector TA will foster better planning and service delivery at the local level across all the infrastructure sectors. These land reforms—together with support under the Energy Sector TA to attract private sector investment—should help foster an improved business environment that could have larger implications on these infrastructure sectors as well as the overall Palestinian economy. Figure 17: Bank-executed TA PID MDTF Funding Distribution as of June 30, 2019a Bank-executed TA: US$5.2 Million 38% Feasibility Study for Solar Power Supply - NGEST $2,000,000 13% Energy Sector TA $700,000 17% LG Sector TA $900,000 29% Water Security TA $1,500,000 3% Land Sector TA $149,832 Note: a. Including all ASAs funded under the PID MDTF. 74 Figure 18: Bank-executed TA PID MDTF Disbursements as of June 30, 2019a $581,728 Land Sector TA $1,500,000 $926,800 Energy Sector TA $2,000,000 $581,880 LG Sector TA $700,000 $55,567 Water Security TA* $900,000 $0 M $1 M $1M $2 M $2 M $3 M Disbursements Project Amount Note: a. Including only active ASAs. * The Water Security TA includes an additional US$125,000 in nancing from other sources, but as of end-FY19, all disbursements are from the PID MDTF. 75 Programmatic Technical Assistance: Towards Water Security for the Palestinians (P167309) Duration Three years Bank Management Concept Approval Date June 27, 2019 Completion Date December 29, 2022 Total Grant Financing US$1.025 million PID MDTF Grant Financing US$0.9 million Grant Financing US$0.125 million MENA Region-wide TA MDTF - Parallel (TF072755) US$0.05 million World Bank Budget US$0.075 million Status Active To strengthen the operational and nancial performance of the water and wastewater sector institutions in OBJECTIVE the West Bank and Gaza in support of the Water Law. Background The World Bank is supporting the operationalization of the 2014 Water Law and SDP through HRWMP-I (P117449, under implementation) and AWP-I (P168739, to be appraised shortly). HRWMP-I is critical to establishing basic wastewater services for Hebron City and improves environmental protection by reducing discharge of untreated sewage and making treated e uent available for agricultural purposes. AWP-I supports bulk infrastructure investments to address urgent water quantity and quality needs in Gaza by blending fresh water from Mekorot (Israeli bulk supplier), desalinated water from STLV desalination plants, and brackish groundwater to achieve the WHO standard for potable water. This blended water will subsequently be supplied to residents in the service area through the water distribution network. The World Bank has identi ed—including through the 2018 Water Supply, Sanitation, and Hygiene (WASH) Poverty Diagnostic—that there are persistent gaps in institutional capacity and incentives, underlying nancial vulnerabilities, and political realities that are limiting the full implementation of the Water Law and the SDP, meriting further analytical support and TA. The e ectiveness of the PWA has been constrained by the restrictions imposed by the GoI and by the establishment of a parallel structure in Gaza. In the absence of a fully empowered PWA (and the WSRC), most service providers are still governed under the 1997 MoLG Law. The operational capacity of service providers remains weak, compromising their ability to (a) operate and maintain infrastructure and (b) further expand and improve service delivery. At the same time, the WSRC still lacks full statutory authority, including the ability to license service providers and collect the fees essential to nancial sustainability. In March 2017, the PWA drafted a road map for establishing the NWC from the existing West Bank Water Department, but little progress has been made toward implementing the road map. The nancial ows in the sector, in particular, remain fragile and ine cient. There is an increasing dependence of the PWA on bulk water purchases from Mekorot, while LGUs are reluctant to cede water-related revenue streams, leading to an absence of cost recovery for the 80 MCM a year of bulk water purchased by the PA from Israel. With plans to increase water purchases from Mekerot, and given the current weak operational and nancial performance, particularly in Gaza, this would add to the current arrears and increase the scal burden on the PA. At the service provider level, less than 30 percent of the 300 water service providers across the WB&G, regardless of their institutional setup, generate su cient revenues to cover O&M costs. The complex and unresolved political context of the WB&G further undermines e cient public service delivery. For example, Israel charges US$0.39 per m3 of Palestinian wastewater that enters Israel—being subsequently treated at the Shoket WWTP; the method of calculation for the charge is not transparent. These payments are deducted from the Palestinian VAT and custom duties collected by Israel, and the payments hence have a signi cant scal impact that undermines the viability of the sector. In 2017, Israel deducted around US$100 million (net lending) for unpaid Mekorot (Israeli bulk supplier) water bills and sewage treatment costs. 76 Opportunity This combination of nancial issues puts the ongoing operational viability of infrastructure supported by the World Bank (through AWP-I, HRWMP-I, and other assets) at risk. Speci cally, specialized support is required to (a) support the PWA in transboundary conversations related to water and wastewater; (b) facilitate institutional change and capacity building (that is, enhancing the ability of the PWA, WSRC, and service providers) both in Gaza and the West Bank (according to the roles presented in the Water Law); and (c) design and implement sector innovations and incentives. Such innovations and incentives include the systematic improvement of service providers’ operational and nancial performance, the acceleration of private sector engagement in the sector, and the e cient reuse of wastewater. PID MDTF in Action The Concept Note for the Programmatic Technical Assistance was approved on June 27, 2019. The only activity that was carried out while the Concept Note was being processed was youth mainstreaming in the water sector. The World Bank’s support to the PWA is complemented by funding from the NWBG-TF and from the Netherlands Representative O ce in Ramallah. Key Achievements In April 2018, the YC for the Palestinian water sector was established to support the PWA’s work in policy, service delivery, and monitoring. The YC is composed of a multidisciplinary group of 17 young professionals (ages 20–35) who are conducting the PWA’s youth engagement in the water sector. In April 2019, the rst Palestinian Water Innovation Challenge, which was funded by the Kingdom of the Netherlands, was implemented in coordination with the YC, awarding prizes for developing the most innovative and entrepreneurial solutions to advance the sustainability of the Palestinian water sector, both in Gaza and the West Bank. The event introduced youth ideas and initiatives to improve water resources management and service delivery; incubators will develop prototypes that could be adopted by the PWA. 49 In June 2019, the PWA and the YC organized a workshop to (a) re ect on the work so far and lessons learned; (b) discuss the PWA’s vision of expanding the YC into a water youth forum and necessary steps for that; and (c) develop a clear action plan of youth involvement at the service delivery level. Moving forward, it was agreed to develop an action plan for YC expansion work at the national policy level while also working on Hebron and Gaza at the local level. Furthermore, the PWA added youth activities to the proposed Associated Works Project part of the broader CE thinking. Moving Forward The Programmatic TA will support the PWA and other water sector stakeholders in conducting critical dialogues and analyses necessary to improve the performance of sector institutions. With support from PID MDTF through this activity, TA will be provided in the following areas of activity: Component 1: Support to the Palestinian Water Authority in development of the data, capacity, and agreements necessary for e ective transboundary management of bulk water and wastewater. This component will provide technical and capacity-building support to the PWA to improve the planning, pricing, and coordination on critical issues related to bulk water and transboundary wastewater. Component 2: Support to national and local institutions in the West Bank and Gaza in developing data, capacity, agreements, and frameworks for improved operational and nancial performance. This component will support (a) collection and analysis of sector nancial data, (b) strengthening of the WSRC, and (c) engagement of civil society and youths—to strengthen the performance of sector institutions. During FY20, the TA will support the following: Transboundary Wastewater Assessment. The Programmatic TA will support consultancy services to (a) conduct a rapid scan and assessment of all locations where untreated wastewater ows into Israel and (b) prepare a deep dive into the situation in Hebron, developing a net ow pro le (quality and quantity) of the wastewater discharged into the wadis. The resulting Wadi As-Samen Trans Boundary Wastewater Treatment Pro le will include (a) risk analysis and a risk mitigation plan for treating the wastewater streams, (b) options for permanent measurement stations to capture daily ows, (c) solutions for e uent disposal and other options for eliminating the need to incur pollution charges from Israel, (d) requirements for coordination with Israel Water Authority (IWA), and (e) an implementation plan. PWA in youth engagement. Building on early success, the Programmatic TA will engage consultants and mobilize World Bank sta to (a) provide training to the PWA in the development of a road map to mainstream youths in the water sector and to institutionalize youth engagement e orts, (b) provide a framework to expand the youth engagement in Gaza, building on experience in the West Bank, and (c) link the YC to the AWP-I and HRWMP-I operation. 49. A video has been prepared that captures the experience of the inaugural Palestinian Water Innovation Challenge. 77 Palestinian Local Government Sector Reform Support (P161279) Duration Four years Grant Agreement Date October 3, 2016 Completion Date June 30, 2021 Total Grant Financing US$0.7 million PID Grant Amount US$0.7 million Status Active To carry out a set of analytical work and advisory services and provide implementation support to OBJECTIVE strengthen the capacity of the MoLG and other government agencies with core mandates in the LG sector to re ne and implement LG sector reforms. Background The LG Sector Strategy (2017–2022) sets out a comprehensive set of policies towards achieving the PA vision for the sector, “good local governance which is capable of achieving sustainable development with active community participation.” These include (a) setting up a conducive legislative and regulatory framework, (b) improving LG performance, (c) enabling LGs to be nancially stable and sustainable, (d) promoting LED, and (e) broadening citizen participation in LG decision making and program implementation. The PID MDTF is at the forefront of supporting the sector strategy through the programs and projects that feature elements relating to the ve sector policies mentioned above. This project provides ASA support in the core reform areas that relate to the sector policies. It aims to provide the PA with implementation support to target and consolidate critically needed reform e orts where quick wins as well as long-term results could be rationalized in a programmatic manner. It complements current e orts of the World Bank and other DPs to improve performance at di erent tiers of LG—municipalities through the MDP, VCs through the LGSIP, and cities and their peri-urban areas through the ICUD. Opportunity The sustained commitment of the PA to institute reforms to support more e ciently functioning LGUs provides windows of opportunity for creating impact. The ASA is well positioned to respond to such opportunities, including the following: (a) Devolution to LGUs of property tax collection. The PA issued a landmark decision in 2018 to devolve property tax collection to LGUs, after years of debate. The decision is followed through by a pilot program covering a small number of municipalities through TA from the Dutch government. This could have far-reaching implications, including likely increased, steady, and predictable own-revenue streams in LGUs. However, it will also require intensive capacity building for LGUs that have little experience with local taxation. (b) Introduction of automatic annual transfers to LGUs in the national budget. Transfers from the central level of the PA are derived largely from the Transportation Fee. The Transportation Fee has been challenged by issues of transparency in the allocation—as well as issues of predictability and timeliness of the allocation’s release. Through the LGSIP PforR, reforms to the administration of the Transportation Fee entitlements for LGUs were carried out (a Cabinet directive approving the allocation formula and the reporting/dissemination of information on availability of TF allocations has been issued). This ASA can take advantage of the counterparts’ strong desire to put in place a more sustainable intergovernmental scal transfer (IGFT) system. The MoLG has started discussions in the Cabinet and is seeking World Bank guidance on its approach, with consideration to the particularities of the Palestinian context. (c) Continuation of the LGPA. This World Bank analysis, widely cited in discussions in uencing further support to LGUs and in the design of capacity development programs, needs to be sustained and carried on by the MoLG as a continuing oversight activity. The World Bank has initiated discussions with the MoLG and MLDF on a plan to get the MoLG to start carrying out this function—even with a limited capacity. (d) Growing demand for tailored support to particular LGUs, as well as some large Palestinian cities. Many LGUs feel that while current programs (for example, the MDP and LGSIP) do provide much-needed help in planning and nancing their activities, impacts remain limited. They believe their priorities are not adequately addressed by these operations because of design (that is, limited options for eligible subprojects) and limited budget allocations that can barely nance a single transformative LGU subproject. Improving local economy and better service provision require LGUs to formulate and implement integrated urban development frameworks featuring prioritized and costed 78 long-term infrastructure plans. The ongoing the ICUD, which is covering ve urban areas in the WB&G, is supporting this integrated approach and is generating spatial plans and preliminary investment programs from urban growth scenarios that have been developed through the planning exercises under the ICUD. These spatial plans and preliminary investment programs can be the basis for targeted support to a few cities that play vital roles in the Palestinian economy. PID MDTF in Action The past several months saw sustained dialogue between the World Bank, PA, and DPs on key pieces of reform this ASA is supporting. These include revenue and functional assignment rationalization and intergovernmental scal transfer system improvements. The MoLG is committed to seeing through an objective review of the mandated sources of revenues for LGUs relating to the numerous services LGUs are entrusted to deliver. It is worthwhile to note that the views of the APLA were directly sought on this issue, alongside related issues pertaining to LGU borrowing (the municipalities welcome e orts to introduce municipal credit) and the devolution of property tax collection. The ASA activities also require coordination with other DPs that are pursuing similar reform e orts, including the property tax administration currently being piloted through Dutch government support, the public nancial management support from GIZ, and other DPs that are supporting similar activities. The World Bank is coordinating with the DPs on their initiatives. Further, progress of work under this ASA is also shared with the DPs to ensure coordination of activities and consistency in messages to the PA. Key Achievements The main activity—support to development of policy reforms—is on track. Preliminary recommendations on revising LGU revenue and expenditure assignments are under review, while discussions are ongoing on the reform of the intergovernmental scal framework. Benchmarking JSC performance is completed. During FY20, reform measures on the intergovernmental scal framework, along with LGU revenue and functional assignment, will be presented for discussion with the PA. For institutional development, discussions with key stakeholders have been carried out, and the de ned need is to consolidate e orts at institutionalizing LGU performance monitoring, coupled with provision of capacity building support to operationalize the resulting monitoring arrangements. This will also build on the LGPA carried out earlier with PID MDTF support. Moving Forward A restructuring of this ASA is being initiated to revise the scope to (a) add new activities that will respond to the new conditions and priorities set out by the PA and (b) drop those activities being carried out through other World Bank-supported ASAs or DP-funded projects. Additional funding of US$600,000 is estimated to be required for delivery of the restructured ASA. 79 Support to the Palestinian Land Sector Reform (P163872) Duration Four years Grant Agreement Date May 1, 2017 Completion Date May 31, 2021 Total Grant Financing US$1.5 million PID MDTF FY17 Grant Amount US$0.7 million PID MDTF FY19 Replenishment Amount US$0.8 million Status Active (i) Assess and quantify the economic, scal and social impact of a weak land administration system and of restrictions on access to land in the Palestinian territories; and (ii) assist the Palestinian Authority to re ne OBJECTIVE and implement key policy, regulatory, and legal aspects of the Government Road Map for Reforming the Palestinian Land Sector (Road Map). Background Land reform in the WB&G is fundamental for improving tenure security, stimulating economic growth, generating public sector revenues, and building trust between the government and citizens. DPs’ support to the Palestinian land sector over the past 10 years led to mixed but largely unsatisfactory results, due to various constraints within the PA’s control. An important factor that contributed to a sustained unsatisfactory outcome was the governance structure of the PLA and its weak leadership, as well as ine ciencies in the work organization and methodology for SLR. During the last two years, a number of measures were undertaken by the PA to show its seriousness to turn around the sector’s weak performance, including (a) the approval of a waiver on all new registration fees, aiming at increasing citizen’s interest in obtaining land titles, and (b) the establishment of the LWSC in 2016 as an independent agency to complete SLR. The LWSC has since completed rst-time land registration for 112,827.58 dunums. Additionally, the PA prepared the Road Map for Reforming the Palestinian Land Sector outlining speci c policy, legal, and institutional reforms, which was subsequently approved by the Cabinet in September 2017. These steps led to renewed engagement by DPs to support a comprehensive, multiphase, multistakeholder approach to reforming the sector, subject to the PA demonstrating the highest level of commitment. This activity nanced by the PID MDTF was established to support the ongoing reform of the Palestinian land sector and is composed of two correlated tasks: (a) a study on the potential economic, scal, and social bene ts from reforming the land sector and (b) TA to support the PA in the implementation of key elements of the road map. After the progress in SLR by the PA and its commitment to sector reform, the World Bank agreed to support a new operation in the land sector nanced by the PID MDTF. The activities of the ASA informed the preparation and design of the new operation (see RERP project details in Section 5.2.4). Additionally, it was agreed to extend the closing date of the Land Sector TA and increase the nancing from the PID MDTF by an additional US$0.8 million to continue and augment the ongoing TA activities of the ASA and support early implementation of the proposed RERP (P168576). The activities will include (a) design of a PMIS for the LWSC, (b) TA to support the continued reform of the legal framework as outlined under Pillar II of the road map, (c) policy development for property valuation and taxation, (d) policy development for state property management, and (e) continued TA support for nalization of the Geospatial Information Management Action Plan. Opportunity Reforming the land administration system is of utmost importance for a future Palestinian state and to ensure its economic development, and it is one of the potentially most impactful reform agendas in the WB&G. The PA has demonstrated a renewed commitment to the land sector and its reform program. Institutional restructuring has been taking place and rst-time SLR has been accelerated. It is vital for the reforms outlined under the road map to continue, and for SLR to be supported to avoid stalling. The ASA activities will provide key technical support to scale up and hasten SLR activities, as well as inform the institutional and legal reform process of international best practices in land administration. With alignment of the ASA and the proposed operation, the PID MDTF will provide programmatic support to the holistic development of the Palestinian land sector. 80 PID MDTF in Action Work is ongoing on the following: (a) mapping of existing business processes (work ows and data ow related to rst registration and (b) preparation of a conceptual design of an automation system for these processes. Workshops with the LWSC have taken place, and an assessment report has been completed. The draft conceptual system design to streamline internal SLR processes is expected in the new reporting period. TA to support the development of a PMIS was also launched in alignment with the work ow analysis. These activities continued in the new reporting period with a mission that took place in August 2019. The ASA received replenishment from the PID MDTF in the amount of US$800,000 during the reporting period. Key Achievements Dissemination Workshop. The main ndings of ‘the Socio-Economic E ects of Weak Land Registration and Land Administration System in the West Bank Report’ were discussed in a workshop with the PLA, LWSC, PMO, MoFP, and DPs in December 2018. Support to road map Pillar I: Completing Systematic Registration: - A detailed assessment of the registration process was completed including detailed recommendations on methods to streamline, accelerate, and reduce SLR costs. - An assessment report mapping existing SLR processes and work ows has been completed. Support to road map Pillar II: Institutional Reform of Land Sector Agencies. Through the ASA, technical support, guidance, and input were provided to the PLA and PMO on the amendment of the PLA Laws of 2002 and 2010. The legal amendment consolidated the laws, included provision of a Board of Directors for the PLA, and increased oversight on state property management. The institutional change, which aims at increasing transparency at the PLA, was approved by the Cabinet and signed by the Prime Minister in November 2018 (Decision No. 17/229/18). It now awaits the signature of the President. Moving Forward The ASA will continue with the following activities during the new reporting period: PMIS. TA to support the design and development of a PMIS for the LWSC to monitor work plans, budgets, targets, and outputs and to record gender-disaggregated data. State Property Management Policy. A review of the existing legal framework for state land management in the WB&G will be conducted, including current practices, challenges, and protection of state real estate assets—and their potential use for investments. Taxes on property. A study assessing the various taxes on properties, which are active and could potentially be implemented, will be initiated. The study will assess all taxes and fees on properties and land, comparing with neighboring countries to optimize these taxes and address property market distortions, including speculation and underutilization. Geospatial information infrastructure. Continued TA support will be provided to the MoLG’s GeoMoLG Unit for the nalization of the Geospatial Information Management Action Plan. 81 West Bank & Gaza Energy Sector Programmatic Technical Assistance (P162545) Duration Five years Grant Agreement Date January 1, 2017 Completion Date June 15, 2021 Total Grant Financing US$2 million PID MDTF FY17 Grant Amount US$1 million PID MDTF FY19 Replenishment Amount US$1 million Status Active OBJECTIVE Enhancing energy sector institutional capacity and e ciency, and piloting models for renewable energy. Background The Programmatic TA provides support to the PA from external consultants and World Bank sta in the following areas of activity (particularly supporting the implementation of the ESPIP and ESPIP AF): (a) supporting PENRA's ongoing reform, (b) enabling private sector participation, (c) building capacity of sector institutions, and (d) contributing to preparation of the new multiphase program (ASPIRE MPA). Opportunity The TA continues to provide implementation support for the two ongoing operations, the ESPIP and ESPIP AF, through consultancy and technical advisory support for the RPP, MIS, and rooftop solar systems. This in-depth and hands-on support will continue in the coming years as PENRA and DISCOs implement this new approach. Given the di erence in technical and human capacity among the six DISCOs, a more customized approach toward capacity building is being developed. In addition, three new tasks have emerged that require TA support. The rst, already commenced, is to support PENRA in the preparation of an electricity sector white paper and nancial model, capturing the progress from PENRA’s recent and ongoing reform e orts and identifying needs for the next phase of reforms. Second, PENRA, PETL, and DISCOs (especially the Gaza DISCO) have requested speci c technical support and capacity strengthening for both operational e ciency and improved engagement with the private sector. This is part of a broader reform agenda toward creating nancial discipline and transparency, which are necessary prerequisites for increased investments in the sector. This reform agenda complements an EU-supported PENRA/MoFP/GEDCO joint initiative to conduct an institutional review and audit of GEDCO. Depending on progress, this may lead to the development of a Gaza Energy Finance Platform to support a ‘Gaza Power 24/7’ road map. Third, to identify potential nancial instruments to improve nancial discipline in the sector to strengthen con dence of potential IPPs by reducing perception of payment risk. These new activities will directly contribute to the new operation that is being designed for the energy sector in the WB&G ASPIRE MPA. In light of the continuing need for TA, implementation support, and capacity strengthening, the Programmatic TA has been extended until FY21. PID MDTF in Action The TA continues to enable PENRA, PETL, and the DISCOs to bene t from external technical expertise on issues critical for success of the ESPIP. This includes international experts on the RPP, MIS, and rooftop solar applications. The international solar experts conducted several site visits to Gaza to identify the clinics and conduct technical reviews, resulting in nal design of the solar PV kits and solar PV systems. This has been extremely valuable to overcome the sta ng and travel constraints faced by PENRA. Experts have provided hands-on support, training, and technical expertise to PENRA and each of the DISCOs on the RPP and MIS. Given the diverse nature, capacities, and priorities of the DISCOs, it has taken over a year to get everyone to a common understanding of the issues and opportunities and to agree on a common solution. The presence of external experts has enabled PENRA to encourage harmonization across the DISCOs, which will prove valuable in building a cohesive and coordinated electricity sector. 82 Key Achievements This TA continues to provide technical and capacity-building support to the PA on the ongoing reforms to strengthen sector institutions and improve the electricity sector's commercial and operational e ciency, speci cally to support implementation of the Israeli-Palestinian electricity debt agreement that was signed in September 2016. During 2018–2019, this TA provided international technical expertise to PENRA and the DISCOs for design of the RPP, MIS, and Gaza rooftop solar components of ESPIP. This has enabled PENRA and the six DISCOs to build an e ective collaborative structure, which is crucial for e ective procurement and successful implementation. Moving Forward As PENRA continues implementation of the reform measures, it is crucial to memorialize the reform pathway and capture the bene ts accruing to the sector to identify remaining gaps and future reform measures. Going forward, this TA will support PENRA in nalizing and adopting a nancial model for the sector, building on the nancial model developed under the SED report. In addition, this TA will also support PENRA in preparation of a sector white paper that will capture the reform e orts and results achieved—and will de ne the next stages of reform. As the ESPIP involves implementation of new approaches for revenue protection by the six DISCOs, in coordination with PENRA and PETL, the next phase of this TA will provide implementation-stage training support to the DISCOs to ensure 21 e ective implementation and utilization of these systems. This includes providing case study examples from other World Bank client countries in workshop format. Since the Gaza DISCO is unable to join the West Bank DISCOs for in-person workshops in Ramallah, it has been agreed to hold a dedicated training for GEDCO sta in Egypt, which could also include participants from PENRA, PETL, and the West Bank DISCOs. This task fully complements the ESPIP’s subcomponent on capacity building. Finally, PENRA’s vision for the electricity sector involves extensive engagement of the private sector as power producers (IPPs) and service providers. However, PENRA has identi ed a speci c technical gap in its understanding of project nancing, structuring, and management. Building on World Bank global experience, customized trainings will be o ered to PENRA, PETL, and DISCO sta . 83 7. Program Management, Project Supervision, and Outlook for the PID MDTF 7.1. Program and Trust Fund Management Window The Program and Trust Fund Management Window (hereafter the ‘TF Management Window’) nances a portion of the management and administration costs associated with implementing the PID MDTF that are borne by the sector teams, country management, and central support functions. Up to 3 percent can be allocated to this window from the Trustee Fund. To date, US$0.7 million has been allocated to the TF Management Window, of which US$0.5 million has been disbursed. No additional allocations were made to this window during FY19, and approximately US$0.2 million was disbursed during FY19. 7.2. Trust Fund Cost Recovery Framework As previously reported, the TF cost recovery framework was updated by the World Bank to improve e orts to recover the indirect costs for TFs that include both Bank-executed and recipient-executed TF components in a single nancing arrangement. The new parallel TF (TF072778) established in 2016 has been receiving all new contributions in the last three reporting periods. The TF Indirect Rate is levied on the cost of personnel charged to Bank-executed Trust Funds (BETFs) to recover the World Bank’s indirect costs associated with TF- nanced activities. Under the recovery framework, a TF Indirect Rate equal to 17 percent of the cost of personnel (sta salaries, consultant fees, and bene ts, except for extended assignment bene ts) will be charged to the BETF. The Budget, Performance Review, and Strategic Planning Vice Presidency Unit of the World Bank will regularly monitor the amount of indirect costs incurred, to ensure that the total amount of revenues generated through TF-related fees and indirect rates do not exceed the total amount of indirect costs attributed to TFs. 7.3. World Bank Trust Fund Annual Report 2018–2019 The World Bank Trust Fund Annual Report for 2018–2019 is available online.50 This report includes review of the PID MDTF, highlighting achievements in wastewater treatment and municipal development, including some of the bene ts to the Palestinian people (for example, improved sanitation for 378,000 Gazans). The report summarizes key results, nancial trends, and reforms pertaining to World Bank Group TFs and nancial intermediary funds (FIFs). TFs and FIFs are key pillars of the World Bank Group’s development nance, responding to emerging global needs and providing exible and customized development solutions to help clients. The tools are held to the same high duciary standards, responsible investment strategy, and robust operational procedures applied to all other World Bank Group activities. They have enabled the World Bank Group to support priority development issues to complement IDA and IBRD operations, generate knowledge and analytics, pilot and scale up innovations, and build strong partnerships. 7.4. Project Supervision Window To date, no supervision costs have been nanced through the PID MDTF. Project supervision has been covered exclusively by the World Bank implementation support budgets. Given the number and complexity of operations co- nanced by the PID and the need to boost implementation support in speci c cross-cutting areas such as gender and CE, management will consider allocations to this window in the upcoming period. 7.5. Outlook The PID MDTF has seen an increase in funding and a growing number of supporters during the last scal year. Both DFID and the Government of Australia have been welcomed as new partners to the PID MDTF, and the EC has expressed interest in joining. Long-standing supporters, such as Sweden and Norway, have replenished the fund with additional contributions. Given the pressing sector nancing needs and the PA’s prevailing scal crisis, the World Bank would expect replenishments and new funding at similar levels to those during the reporting period to be contributed to the PID MDTF in FY20. This funding level would be complemented with co- nancing that is available for the infrastructure sectors from the TFGWB following approval of a US$81 million replenishment by the World Bank Board of Executive Directors in July 2019. In FY20, the World Bank has allocated about US$20 million (out of the US$81 million) to the infrastructure and sustainability sectors that are co- nanced by the PID MDTF. 50. https://www.worldbank.org/en/publication/trust-fund-annual-report-2019. 84 Discussions are currently ongoing with the EC, which is considering joining the PID MDTF. The Netherlands is currently appraising a TF replenishment before the end of 2019. AFD has indicated its intention to renew contributions to the PID MDTF in the near future, as has Norway. After a recent pledge during FY19, DFID has expressed interest in an additional contribution to the MDTF. The World Bank will continue reaching out to other DPs that might be interested in joining forces to supporting the PA in addressing their infrastructure development needs in a harmonized and programmatic manner. On the administrative front, the PID MDTF Oversight Group (OG) will need to decide on how to re ect updates to the World Bank’s Administrative Agreement (AA) template for the PID MDTF. As the MDTF was established in 2012, it still applies an older AA template that was updated in 2016 in a global agreement between the World Bank and DPs. Some DPs had expressed their wish to apply the new AA template to the PID MDTF. Members of the PID MDTF OG met in June 2019 to discuss options for how to reconcile the old and new template for AAs. The meeting examined two possible options to ‘move’ the PID MDTF to the new template: (a) retro tting the existing AA to match the new template and (b) setting up a new TF account based on the new AA template; DPs expressed their initial preferences accordingly. The implications of each of the two options were later examined more closely in discussions with the World Bank’s TF management experts and lawyers, and it was found that the rst option would avoid several problems that would arise if a new TF were to be created: A new TF under the new template would run in parallel with the existing ones under the old template, which would increase administrative complexity considerably—without any discernible bene t. In particular, a new TF would make it di cult to pool funds from the old and new TFs in support of a particular project—and pooling funds is the primary purpose of having an MDTF. Establishing a new TF would mean retaining the existing ones under the old template until they are exhausted. This would take several years—the parallel TF only closes in 2027. This would defeat the purpose of migration to the new template, as it would keep a signi cant amount of resources under the old model for a long time. The end result of a ‘restated/retro tted’ AA is exactly the same as that of a new AA with the new template, as all the requirements/features of the new template would be incorporated in the restated/amended AA. In view of this, the World Bank has been conducting discussions with all the PID MDTF DPs to build a consensus around this option, as it would only work if all the DPs accepted it. This will be one of the matters for discussion at the OG meeting that is scheduled for November 6, 2019. Finally, management of the PID MDTF has been handed over to the incoming program leader for Infrastructure and Sustainable Development. Mr. Ivo Imparato joined the World Bank’s WB&G Country Management Unit and took over managerial responsibilities for the PID MDTF from Mr. Björn Philipp as of August 15, 2019. 85 Annex 1: PA National Policy Agenda - National Priorities, Policies and Policy Interventions (English translation of NPA is uno cial) The objectives of the PID MDTF and the projects and programs supported by the MDTF are fully aligned with the NPA, including, but not limited to, the following areas: Pillar National Priorities Allocated National Policies Funding Policy Interventions Reform and restructure local government and administration. Responsive Local Decentralize services to LGUs, while building their capability Government and scal capacity to carry out these services. Expand LGU taxation, revenue-raising and resource Citizen-Centered management mandates. Government Develop an e ective system of intergovernmental transfers. Develop and implement a government-wide service Improving Services improvement strategy to Citizens Strengthen service delivery in partnerships with the private sector and civil society. Government Reform Strengthen transparency in government, including the approval and implementation of access to information Strengthening legislation. Accountability Strengthen the role of nancial and administrative audit and Transparency institutions. E ective Government Strengthen results-based management and integrated planning and budgeting. E ective, E cient Ensure scal sustainability and improve public nancial Public Financial management Management Reform and restructure Palestine’s public institutions to increase e ciency and improve service quality. Establish Palestine’s utilities, prioritizing the electricity and water sectors. E ective Public Plan and invest in strategic infrastructure (water, electricity, Economic independence Financial transportation and telecom networks, airports, seaport and Management industrial parks). Bridge the West Bank-Gaza development gap. Meeting the Basic Expand community access to clean water and sanitation. Sustainable Needs of Our Expand community access to reliable energy. Development Communities Improve public transportation and road safety. Resilient Communities Ensuring a Expand SWM and recycling. Sustainable Expand wastewater management, treatment and reuse. Environment Manage, protect and promote sustainable use and conservation of natural resources (land, water and energy). Increase energy e ciency and reliance on renewable energy. 86 Annex 2: PID MDTF Results Matrix as of June 30, 2019 Results Matrix – Active Projects Results Indicators Unit of Measure Baseline Previous Current End Target Improve the quality of bulk water supplied to the Municipalities served in the project areas and strengthen the capacity of the Strengthening the capacity of the PWA to improve the quality and availability of bulk water The Gaza Bulk Water Supply Unit (BWSU) is established and operational Yes / No No - No Yes Bulk water supplied by the BWSU to bene ting municipalities Volume in m3 0 - 0 30,000,000 Bulk water samples meeting the quality standards set by WHO for potable water Percentage 0 - 0 95 Municipalities / Communities reached to raise awareness of the Bulk Supply operations Number 0 - 0 16 Improving the supply of drinking water in the southern and middle governorates of Gaza Water to be supplied from Israel per year Volume in m3 5,000,000 - 5,000,000 10,000,000 Municipalities receiving enough bulk potable water from BWSU to allow for the per capita water endowment to Number 0 - 0 16 satisfy WHO recommendations Enhance the institutional capacity of Local Government Units and strengthen the local government financing system for more accountable and sustainable service delivery. Improving Local Service Delivery People provided with improved living conditions and access to improved services (50% of which female Number 0 171,298 2,307,618 850,000 bene ciaries) (2016–2022) People bene tting from improved solid waste disposal services in Gaza (Khan Younis, Rafah, and Middle Gaza) Number 0 474,000 617,000 948,000 Enhancing Performance of Local Government Sector Institutions Number of municipalities that move up one rank in the Number 0 0 0 100 performance assessment system (2018-2022) Number of municipalities with operational and enterprise surplus and no increase in arrears. (2018-2022) Number 40 40 50 80 Percentage of VCs receiving transparent and predictable Annual Capital Grants Percentage 0 53 75 70 87 Results Matrix – Active Projects Results Indicators Unit of Measure Baseline Previous Current End Target Strengthening Good Governance in the Local Government Sector Municipalities with public disclosure of executed budget Number 0 0 0 100 and executed SDIP (2018-2022) Bene ciaries that feel Program investments re ected their needs Percentage 0 0 0 75 Bene ciaries satis ed with municipal sub projects executed Percentage 0 0 0 80 under MDP-3 VCs submitting their annual budget to MoLG electronically on time and have disclosed budgets publicly Percentage 10 70 75 60 Municipalities with functional complaint system Number 22 22 22 100 (2018-2022) Enhance institutional capacity of the energy sector, improve efficiency of the distribution system in targeted areas, and pilot a new business model for solar energy service delivery in Gaza. Enhancing Operational Performance of Electricity Sector Institutions Electricity losses per year in West Bank DISCOs Percentage 23 23 23 19 DISCOs with fully operational MIS Number 0 0 0 6 Rate of response to grievances received related to the Percentage 0 0 0 100 project Improving Financial Performance of Electricity Sector Institutions PETL collection rate Percentage 0 0 100 90 Audits completed by PERC Number 0 0 0 2 Pilot a new business model for solar energy in Gaza Total installed rooftop solar PV systems Number 0 0 0 800 Lessons learned report Number 0 - 0 2 88 Annex 3: Project Results Report as of June 30, 2019 URBAN SECTOR Third Municipal Development Project NET COMMITMENT TOTAL OVERALL RATING TOWARDS PROJECT PROJECT ID GRANT NO. AMOUNT DISBURSEMENT CLOSING DATE IMPLEMENTATION ACHIEVEMENTS (US$, millions) (US$, millions) PROGRESS OF PDO TF0A4800 Basic Info with key dates P159258 TF0A6154 51.00 19.04 28/02/2022 S S TF0B0101 The project development objective (PDO) is to enhance the institutional capacity of municipalities in the West Bank and Gaza for Project Development Objectives more accountable and sustainable service delivery. PROJECT DEVELOPMENT OBJECTIVE INDICATORS Strengthened municipal institutions Number of municipalities that move up one rank in the performance assessment system (Number, Custom) Actual Actual Baseline End Target (Previous) (Current) VALUE 0.00 0.00 0.00 100.00 DATE 01-Sep-2017 03-Jan-2018 17-Jul-2019 28-Feb-2022 COMMENTS The PDO indicator will measure number of municipalities that move up one rank in performance. The ranking system has 10 ranks based on 4 categories (D, C, B and A) with 21 KPIs from D to A++. Accountable and responsive service delivery People provided with improved urban living conditions (Number, Custom) Actual Actual Baseline End Target (Previous) (Current) VALUE 0.00 0.00 1,969,461.00 500,000.00 DATE 01-Sep-2017 03-Jan-2018 17-Jul-2019 28-Feb-2022 COMMENTS The Corporate Result indicator (CRI) measures the cumulative number of people living in urban areas that have been provided with access to improved services, housing, tenure, neighborhoods, public spaces, parks, resilience, and/or urban environmental conditions, through the direct interventions of operations supported by the World Bank. Its a new CRI and will added to the World Bank Portal. Target of 500.000 will be reviewed in 2019. Female bene ciaries (Number, Custom Breakdown) Actual Actual Baseline End Target (Previous) (Current) VALUE 0.00 0.00 0.00 250,000.00 DATE 01-Sep-2017 03-Jan-2018 17-Jul-2019 28-Feb-2022 89 Municipalities with public disclosure of executed budget and executed SDIP (Number, Custom) Actual Actual Baseline End Target (Previous) (Current) VALUE 0.00 0.00 0.00 100.00 DATE 01-Sep-2017 03-Jan-2018 17-Jul-2019 28-Feb-2022 COMMENTS The disclosure will take place on social media platform (Facebook), municipal bulletin board, the MoLG’s homepage, and/or other platforms. From year 3 (2019), the readable format from the MoLG will be used, once endorsed by the MoLG. Financially sustainable municipalities Number of municipalities with operational and enterprise surplus and no increase in arrears (Number, Custom) Actual Actual Baseline End Target (Previous) (Current) VALUE 40.00 40.00 50.00 80.00 DATE 01-Sep-2017 03-Jan-2018 17-Jul-2019 28-Feb-2022 COMMENTS These indicators will measure municipalities that have surplus in their operational and enterprise account and no increase in arrears from last year. Municipalities that ful ll these criteria have not increased net debt to suppliers of water and electricity. Baseline will be updated in June Note: Link to latest ISR: http://documents.worldbank.org/curated/en/160101564506825537/pdf/Disclosable-Version-of-the-ISR-GZ-Third-Municipal- Development-Project-P159258-Sequence-No-04.pdf 90 Gaza Solid Waste Management Project NET TOTAL OVERALL RATING TOWARDS COMMITMENT PROJECT PROJECT ID GRANT NO. AMOUNT DISBURSEMENT CLOSING DATE IMPLEMENTATION ACHIEVEMENTS (US$, millions) PROGRESS OF PDO (US$, millions) Basic Info with key dates P121648 TF018377 10.00 7.56 30/11/2020 S S Project Development Objectives The objective of this project is to improve solid waste management services in the Gaza Strip. PROJECT DEVELOPMENT OBJECTIVE INDICATORS Improve solid waste management services in the Gaza Strip through more e cient solid waste systems Percentage increase in fees collected annually within the JSC towards cost recovery. (Percentage, Custom) Actual Actual Baseline End Target (Previous) (Current) VALUE 15.00 37.00 37.00 60.00 DATE 15-Dec-2017 18-Feb-2019 02-Oct-2019 16-Nov-2020 Improve solid waste management in the Gaza Strip through more environmentally sound SW systems Contaminated land managed or dump-sites closed under the project (Hectare(Ha), Custom) Actual Actual Baseline End Target (Previous) (Current) VALUE 0.00 0.00 0.00 10.00 DATE 15-Dec-2017 18-Feb-2019 02-Oct-2019 27-Nov-2020 Solid Waste collected from the targeted populations, disposed in a new sanitary land ll developed under the project. (Percentage, Custom) Actual Actual Baseline End Target (Previous) (Current) VALUE 0.00 0.00 80.00 80.00 DATE 15-Dec-2017 18-Feb-2019 02-Oct-2019 20-Nov-2020 91 Improve solid waste management in the Gaza Strip through more socially sound SW systems Wastepickers whose lives depend on the existing SW context integrated into inclusion programs (Number, Custom) Actual Actual Baseline End Target (Previous) (Current) VALUE 0.00 16.00 16.00 16.00 DATE 20-Dec-2017 18-Feb-2019 18-Feb-2019 20-Nov-2020 PDO. Direct project bene ciaries (number) and percentage of which are female (Number, Custom) Actual Actual Baseline End Target (Previous) (Current) VALUE 0.00 617,000.00 948,000.00 948,000.00 DATE 15-May-2014 18-Feb-2019 18-Feb-2019 30-Nov-2020 Female bene ciaries (Percentage, Custom Supplement) Actual Actual Baseline End Target (Previous) (Current) VALUE 0.00 49.00 49.00 49.00 Note: Link to latest ISR: http://documents.worldbank.org/curated/en/465471554396559951/pdf/Disclosable-Version-of-the-ISR-Gaza-Solid- Waste-Management-Project-P121648-Sequence-No-11.pdf 92 Local Governance and Services Improvement Program NET COMMITMENT TOTAL OVERALL RATING TOWARDS PROJECT PROJECT ID GRANT NO. AMOUNT DISBURSEMENT CLOSING DATE IMPLEMENTATION ACHIEVEMENTS (US$, millions) (US$, millions) PROGRESS OF PDO Basic Info with key dates P148896 TF0A4511 18.00 6.39 31/12/2020 S S TF 18377 Project Development Objectives The objective of this project is to improve solid waste management services in the Gaza Strip. PROJECT DEVELOPMENT OBJECTIVE INDICATORS Strengthen local government nancing system and improve local service delivery in Program villages. PDO indicator 1: VCs receiving transparent and predictable Annual Capital Grants (Percentage, Custom) Actual Actual Baseline End Target (Previous) (Current) VALUE 0.00 53.00 74.50 70.00 DATE 16-Sep-2015 20-Sep-2018 16-Apr-2019 31-Dec-2020 COMMENTS Achieved target for current year PDO indicator 2: Timely communication to VCs of the formula based Annual Capital Investment Grant (ACIG) allocations and timely transfer of ACIGs to eligible VCs (Yes/No, Custom) Actual Actual Baseline End Target (Previous) (Current) VALUE No Yes Yes Yes DATE 16-Sep-2015 20-Sep-2018 16-Apr-2019 31-Dec-2020 COMMENTS Achieved target for current year PDO indicator 3: People bene ting from improved service delivery in Program villages (Number, Custom) Actual Actual Baseline End Target (Previous) (Current) VALUE 0.00 369,778.00 338,157.00 350,000.00 DATE 16-Sep-2015 20-Sep-2018 16-Apr-2019 31-Dec-2020 COMMENTS Achieved target for current year 93 PDO indicator 4: Bene ciaries that feel Program investments re ected their needs (Percentage, Custom) Actual Actual Baseline End Target (Previous) (Current) VALUE 0.00 0.00 0.00 75.00 DATE 16-Sep-2015 20-Sep-2018 20-Sep-2018 31-Dec-2020 COMMENTS No data yet. Bene ciary survey to be initiated by October 2018. Note: Link to latest ISR: http://documents.worldbank.org/curated/en/358801559923593264/pdf/Disclosable-Version-of-the-ISR-Local-Governance-and- Services-Improvement-Program-P148896-Sequence-No-07.pdf 94 ENERGY SECTOR West Bank and Gaza Electricity Sector Performance Improvement Project NET TOTAL OVERALL RATING TOWARD COMMITMENT PROJECT PROJECT ID GRANT NO. DISBURSEMENT CLOSING DATE IMPLEMENTATION ACHIEVEMENTS AMOUNT (US$, millions) PROGRESS OF PDO (US$, millions) TF0A2807 Basic Info with key dates P148600 23.00 3.51 30/06/2022 S S TF0A5078 The Project’s development objective is to strengthen the capacity of the PWA to more e ectively plan, monitor, and regulate Project Development Objectives water sector development in the West Bank and Gaza. PROJECT DEVELOPMENT OBJECTIVE INDICATORS Improve operational performance of Electricity Sector Institutions PETL collection rate (Percentage, Custom) Actual Actual Baseline End Target (Previous) (Current) VALUE 0.00 - 100.00 90.00 DATE 03-Jul-2017 - 30-May-2019 30-Jun-2022 COMMENTS Collection rate is de ned as the Total collected revenue against the Total billed revenue by PETL. Electricity losses per year in West Bank DISCOs (Percentage, Custom) Actual Actual Baseline End Target (Previous) (Current) VALUE 23.00 - 23.00 19.00 DATE 03-Jul-2017 - 30-May-2019 30-Jun-2022 Pilot a new business model for solar energy in Gaza Lessons learned report (Number, Custom) Actual Actual Baseline End Target (Previous) (Current) VALUE 0.00 - 0.00 2.00 DATE 03-Jul-2017 - 30-May-2019 30-Jun-2022 95 Total installed rooftop solar PV systems (Number, Custom) Actual Actual Baseline End Target (Previous) (Current) VALUE 0.00 - 0.00 800.00 DATE 03-Jul-2017 - 30-May-2019 30-Jun-2022 Installed solar PV systems for SMEs (Number, Custom Supplement) Actual Actual Baseline End Target (Previous) (Current) VALUE 0.00 - 0.00 250.00 Installed solar PV systems in female headed households and SMEs (Number, Custom Supplement) Actual Actual Baseline End Target (Previous) (Current) VALUE 0.00 - 0.00 100.00 Note: Link to latest ISR: http://documents.worldbank.org/curated/en/214751561668179743/pdf/Disclosable-Version-of-the-ISR-West-Bank-and-Gaza- Electricity-Sector-Performance-Improvement-Project-P148600-Sequence-No-04.pdf 96 Annex 4: TF Financial Contributions as of June 30, 2019 (Pledged and Received) JUNE 2019 FINANCIAL PLEDGED TOCONTRIBUTIONS DATE - TF071898 TO millions) (inDATE PLEDGED PAID-IN TO DATE RECEIVABLES CONTRIBUTORS CURRENCY Pledge Currency USD Paid-in Currency USD Pledge Currency USD Croatia USD 0.2 0.2 0.2 0.2 0.00 0.0 Sweden SEK 310.0 40.3 310.0 40.3 0.00 0.0 Denmark DKK 220.0 37.9 220.0 37.9 0.00 0.0 Finland EUR 8.7 10.6 8.7 10.6 0.00 0.0 France EUR 3.5 4.4 3.5 4.4 0.00 0.0 Netherlands USD 4.0 4.0 4.0 4.0 0.00 0.0 Norway NOK 73.0 9.8 73.0 9.8 0.00 0.0 Portugal EUR 0.2 0.2 0.2 0.2 0.00 0.0 USD TOTALS 107.3 107.3 0.0 JUNE 2019 PLEDGED TO FINANCIAL DATE - TF072778 CONTRIBUTIONS TO(inDATE millions) PLEDGED PAID-IN TO DATE RECEIVABLES CONTRIBUTORS CURRENCY Pledge Currency USD Paid-in Currency USD Pledge Currency USD Croatia USD 0.0 0.0 0.0 0.0 0.0 0.0 Sweden SEK 123.0 13.9 123.0 13.9 0.0 0.0 Denmark DKK 140.0 21.8 120.0 18.8 20.0 3.0 Finland EUR 2.3 2.4 2.3 2.4 0.0 0.0 France EUR 0.0 0.0 0.0 0.0 0.0 0.0 Netherlands USD 0.0 0.0 0.0 0.0 0.0 0.0 Norway NOK 147.0 17.4 147.0 17.4 0.0 0.0 Portugal EUR 0.0 0.0 0.0 0.0 0.0 0.0 United Kingdom GBP 18.0 22.1 2.8 3.5 15.2 18.5 Australia AUD 10.0 6.8 10.0 6.8 0.0 0.0 USD TOTALS 84.4 62.9 21.5 97 Annex 5: Unaudited Trust Fund Financial Reports: TF071898, TF072778 WORLD BANK GROUP Partnership for Infrastructure Development in the West Bank and Gaza Multi Donor Trust Fund (WORLD BANK REFERENCE 71898) - Multi Donor Fund UNAUDITED TRUST FUNDS FINANCIAL REPORT Expressed in United States Dollars 07/01/2018 06/04/2012 to (date of inception) to 06/30/2019 06/30/2019 Receipts (Note 1) Cash Contributions 0.00 107,343,830.46 Investment Income (Note 5) 1,044,965.79 2,853,195.84 Transfers within Hierarchy 6,222,734.23 6,511,850.07 Contributions via Transfers (6,222,734.23) (6,511,850.07) Total Receipts 1,044,965.79 110,197,026.30 Disbursements (Note 1) Project Disbursements Disbursements to Grantee (2,211,320.86) (69,909,004.22) Direct costs Disbursed by WBG Staff Costs (Incl. Benefits) (Note 6) (380,966.06) (1,034,445.37) STC/STT Costs (174,646.79) (481,744.99) Total Personnel Costs (555,612.85) (1,516,190.36) Travel expenses (52,679.28) (185,230.81) Media workshop (1,976.57) (12,101.44) Other direct costs (555.98) (555.98) Total Direct Costs Disbursed by WBG (610,824.68) (1,714,078.59) Total Project Disbursements (2,822,145.54) (71,623,082.81) Non-Project Disbursements Administrative fees and expenses(Note 3) (162,215.41) (2,664,527.93) Total Non-Project Disbursements (162,215.41) (2,664,527.93) Total Disbursements (2,984,360.95) (74,287,610.74) Excess of receipts over disbursements / (disbursements over receipts) (1,939,395.16) 35,909,415.56 Fund Balance Beginning of period 37,848,810.72 0.00 End of period 35,909,415.56 35,909,415.56 Fund balance consists of Share in pooled cash and investments 35,909,415.56 Undisbursed Commitments as of 10/18/2019 (Note 4) 25,565,172.62 98 Page 1 of 4 TF511001 WORLD BANK GROUP Partnership for Infrastructure Development in the West Bank and Gaza Multi Donor Trust Fund (WORLD BANK REFERENCE 71898) - Multi Donor Fund UNAUDITED TRUST FUNDS FINANCIAL REPORT Status Beneficiary VPU/Div TF Hierarchy TTL Name Active WEST BANK& GAZA MNCA4 Trustee Account Mr Bjorn Philipp Contribution details by Donor 07/01/2018 06/04/2012 Donor Currency to (date of inception) to 06/30/2019 06/30/2019 CROATIA MINISTRY OF FOREIGN AND EUROPEAN AFFAIRS USD 0.00 200,000.00 DANISH MINISTRY OF FOREIGN AFFAIRS (DANIDA) DKK 0.00 220,000,000.00 FINLAND - MINISTRY FOR FOREIGN AFFAIRS EUR 0.00 8,650,000.00 FRANCE - AGENCE FRANCAISE DE DEVELOPPEMENT EUR 0.00 3,500,000.00 NETHERLANDS-MINISTER OF FOREIGN AFFAIRS USD 0.00 4,000,000.00 NORWAY - MINISTRY OF FOREIGN AFFAIRS NOK 0.00 73,000,000.00 PORTUGAL - MINISTRY OF FOREIGN AFFAIRS EUR 0.00 150,000.00 SWEDISH INTERNATIONAL DEVELOPMENT COOPERATION SEK 0.00 310,000,000.00 AGENCY (SIDA) Contribution paid-in details by Donor 07/01/2018 06/04/2012 06/04/2012 Donor Currency to (date of inception) (date of inception) 06/30/2019 to to 06/30/2019 06/30/2019 In USD Equivalent CROATIA MINISTRY OF FOREIGN AND USD 0.00 200,000.00 200,000.00 EUROPEAN AFFAIRS DANISH MINISTRY OF FOREIGN DKK 0.00 220,000,000.00 37,926,344.64 AFFAIRS (DANIDA) FINLAND - MINISTRY FOR FOREIGN EUR 0.00 8,650,000.00 10,600,228.95 AFFAIRS FRANCE - AGENCE FRANCAISE DE EUR 0.00 3,500,000.00 4,390,050.00 DEVELOPPEMENT NETHERLANDS-MINISTER OF FOREIGN USD 0.00 4,000,000.00 4,000,000.00 AFFAIRS NORWAY - MINISTRY OF FOREIGN NOK 0.00 73,000,000.00 9,772,212.86 AFFAIRS PORTUGAL - MINISTRY OF FOREIGN USD 0.00 182,835.00 182,835.00 AFFAIRS SWEDISH INTERNATIONAL SEK 0.00 310,000,000.00 40,272,159.01 DEVELOPMENT COOPERATION AGENCY (SIDA) Page 2 of 4 TF511001 99 WORLD BANK GROUP Partnership for Infrastructure Development in the West Bank and Gaza Multi Donor Trust Fund (WORLD BANK REFERENCE 71898) - Multi Donor Fund UNAUDITED TRUST FUNDS FINANCIAL REPORT Disbursement details by Grant 07/01/2018 06/04/2012 Grant Grant Name Executed Currenc Grant Amount to (date of inception) By y 06/30/2019 to 06/30/2019 TF014530 PID MDTF Program and Bank USD 700,000.00 162,215.41 517,651.32 TF Management Fund TF015756 Water Sector Capacity Recipient USD 2,852,451.80 0.00 2,852,451.80 Building co-financing fund TF016476 Second Municipal Recipient USD 25,799,059.71 0.00 25,799,059.71 Development project TF016501 Third Additional Recipient USD 5,000,000.00 0.00 5,000,000.00 Financing for the North Gaza Emergency Sewage Treatment Project TF017186 Gaza Sustainable Water Recipient USD 2,398,161.00 101,839.00- 2,398,161.00 Supply Program : Additional Works TF017221 NGEST Solar Power Bank USD 149,832.36 0.00 149,832.36 Feasibility Study TF018268 Gaza Emergency Water Recipient USD 8,239,352.30 15,884.85- 8,239,352.30 Supply and Sewage Systems Improvement Project Additional Financing TF018376 Southern West Bank Recipient USD 1,500,000.00 0.00 1,500,000.00 Solid Waste Management Project TF018378 GZ Emergency Recipient USD 12,000,000.00 4,094.09 11,999,000.59 Response AF MDP-2 TF019350 Water Sector Capacity Recipient USD 0.00 0.00 0.00 Building Fund TF0A1061 Second Municipal Recipient USD 6,899,292.76 0.00 6,899,292.76 Development Project - Additional Financing TF0A2807 Project Preparation Recipient USD 0.00 1,919,235.44- 0.00 Grant for ESPIP TF0A3599 Local Government Bank USD 700,000.00 176,182.17 581,879.56 Sector Reform ASA TF0A4202 West Bank & Gaza Bank USD 2,000,000.00 381,785.28 926,800.05 Energy Sector Programmatic Technical Assistance TF0A4511 Local Governance and Recipient USD 13,000,000.00 1,333,333.33 2,310,833.33 Page 3 of 4 TF511001 100 WORLD BANK GROUP Partnership for Infrastructure Development in the West Bank and Gaza Multi Donor Trust Fund (WORLD BANK REFERENCE 71898) - Multi Donor Fund UNAUDITED TRUST FUNDS FINANCIAL REPORT Disbursement details by Grant 07/01/2018 06/04/2012 Grant Grant Name Executed Currenc Grant Amount to (date of inception) By y 06/30/2019 to 06/30/2019 Services Improvement Program (LGSIP) TF0A5078 West Bank Gaza Elec. Recipient USD 7,000,000.00 2,910,852.73 2,910,852.73 Sector Performance Improvement-ESPIP- P148600-PID MDTF TF0A7564 Water Security Bank USD 900,000.00 52,857.23 55,566.62 Technical Assistance TF0A9136 West Bank Gaza Elec. Recipient USD 7,000,000.00 0.00 0.00 Sector Performance Improvement-ESPIP- P148600-PID-MDTF- Additional Financing Notes: 1. This statement is prepared on the modified cash basis of accounting 2. Other costs (where applicable) represent all disbursements incurred prior to July 2000. 3. Administrative fees are generally collected from the trust fund in the same month in which contributions are received, however for administrative purposes, collection of fees may occur in the month following receipt of the contribution. 4. Amounts committed relate to the amounts yet to be disbursed for active and pending recipient executed grant agreements and the undisbursed balance of bank executed trust funds. 5. Investment income of this trust fund is credited to TF071898 ( Partnership for Infrastructure Development in the West Bank and Gaza Multi Donor Trust Fund ) in accordance with administration agreement(s) and hence forms part of the fund balance of this trust fund. 6. Where applicable, amounts displayed against "staff costs (including benefits)","Extended Term Consultants/Temporary costs (ETC/ETT)" costs & "Short Term Consultants/Temporary Costs (STC/STT)" costs include charges to cover the cost of benefits and general communication facilities and IT costs unless otherwise specified in the Administration Agreement for the Trust Fund. Page 4 of 4 TF511001 101 WORLD BANK GROUP Partnership for Infrastructure Development in the West Bank and Gaza Multi Donor Trust Fund - Parallel of TF071898 (WORLD BANK REFERENCE 72778) - Multi Donor Fund UNAUDITED TRUST FUNDS FINANCIAL REPORT Expressed in United States Dollars 07/01/2018 12/09/2016 to (date of inception) to 06/30/2019 06/30/2019 Receipts (Note 1) Cash Contributions 36,455,205.21 62,885,893.97 Investment Income (Note 5) 1,073,221.05 1,397,178.52 Total Receipts 37,528,426.26 64,283,072.49 Disbursements (Note 1) Project Disbursements Disbursements to Grantee (7,486,854.38) (7,486,854.38) Direct costs Disbursed by WBG Staff Costs (Incl. Benefits) (Note 6) (153,652.20) (343,487.00) STC/STT Costs (47,234.16) (148,955.79) Total Personnel Costs (200,886.36) (492,442.79) Travel expenses (40,303.36) (85,770.87) Media workshop (1,613.06) (2,128.20) Other direct costs (1,380.54) (1,386.38) Total Direct Costs Disbursed by WBG (244,183.32) (581,728.24) Total Project Disbursements (7,731,037.70) (8,068,582.62) Non-Project Disbursements Administrative fees and expenses(Note 3) 0.00 (1,000,000.00) Total Non-Project Disbursements 0.00 (1,000,000.00) Total Disbursements (7,731,037.70) (9,068,582.62) Excess of receipts over disbursements / (disbursements over receipts) 29,797,388.56 55,214,489.87 Fund Balance Beginning of period 25,417,101.30 0.00 End of period 55,214,489.88 55,214,489.88 Fund balance consists of Share in pooled cash and investments 55,214,489.88 Undisbursed Commitments as of 10/18/2019 (Note 4) 12,998,203.37 Page 1 of 3 TF511001 102 WORLD BANK GROUP Partnership for Infrastructure Development in the West Bank and Gaza Multi Donor Trust Fund - Parallel of TF071898 (WORLD BANK REFERENCE 72778) - Multi Donor Fund UNAUDITED TRUST FUNDS FINANCIAL REPORT Status Beneficiary VPU/Div TF Hierarchy TTL Name Active WEST BANK& GAZA MNCA4 Trustee Account Mr Bjorn Philipp Contribution details by Donor 07/01/2018 12/09/2016 Donor Currency to (date of inception) to 06/30/2019 06/30/2019 AUSTRALIA-DEPARTMENT OF FOREIGN AFFAIRS AND AUD 10,000,000.00 10,000,000.00 TRADE DANISH MINISTRY OF FOREIGN AFFAIRS (DANIDA) DKK 0.00 140,000,000.00 FINLAND - MINISTRY FOR FOREIGN AFFAIRS EUR 0.00 2,300,000.00 NORWAY - MINISTRY OF FOREIGN AFFAIRS NOK 73,017,000.00 147,017,000.00 SWEDISH INTERNATIONAL DEVELOPMENT COOPERATION SEK 90,000,000.00 123,000,000.00 AGENCY (SIDA) UNITED KINGDOM - DFID GBP 18,000,000.00 18,000,000.00 Contribution paid-in details by Donor 07/01/2018 12/09/2016 12/09/2016 Donor Currency to (date of inception) (date of inception) 06/30/2019 to to 06/30/2019 06/30/2019 In USD Equivalent AUSTRALIA-DEPARTMENT OF FOREIGN AUD 10,000,000.00 10,000,000.00 6,834,000.00 AFFAIRS AND TRADE DANISH MINISTRY OF FOREIGN DKK 50,000,000.00 120,000,000.00 18,835,892.98 AFFAIRS (DANIDA) FINLAND - MINISTRY FOR FOREIGN EUR 0.00 2,300,000.00 2,446,510.00 AFFAIRS NORWAY - MINISTRY OF FOREIGN NOK 74,454,000.00 147,017,000.00 17,351,312.39 AFFAIRS SWEDISH INTERNATIONAL SEK 90,000,000.00 123,000,000.00 13,903,534.60 DEVELOPMENT COOPERATION AGENCY (SIDA) UNITED KINGDOM - DFID GBP 2,800,000.00 2,800,000.00 3,514,644.00 Page 2 of 3 TF511001 103 WORLD BANK GROUP Partnership for Infrastructure Development in the West Bank and Gaza Multi Donor Trust Fund - Parallel of TF071898 (WORLD BANK REFERENCE 72778) - Multi Donor Fund UNAUDITED TRUST FUNDS FINANCIAL REPORT Disbursement details by Grant 07/01/2018 12/09/2016 Grant Grant Name Executed Currenc Grant Amount to (date of inception) By y 06/30/2019 to 06/30/2019 TF0A4947 Support to the Bank USD 1,500,000.00 244,183.32 581,728.24 Palestinian Land Sector TF0A6154 Municipal Development Recipient USD 20,000,000.00 7,486,854.38 7,486,854.38 Project III - PID MDTF TF0B0195 Support to the Bank USD 0.00 0.00 0.00 Palestinian Land Sector II Notes: 1. This statement is prepared on the modified cash basis of accounting 2. Other costs (where applicable) represent all disbursements incurred prior to July 2000. 3.Administrative fees are generally collected from the trust fund when commitment is made to recipient. 4. Amounts committed relate to the amounts yet to be disbursed for active and pending recipient executed grant agreements and the undisbursed balance of bank executed trust funds. 5. Investment income of this trust fund is credited to TF072778 ( Partnership for Infrastructure Development in the West Bank and Gaza Multi Donor Trust Fund - Parallel of TF071898 ) in accordance with administration agreement(s) and hence forms part of the fund balance of this trust fund. 6. Where applicable, amounts displayed against "staff costs (including benefits)","Extended Term Consultants/Temporary costs (ETC/ETT)" costs & "Short Term Consultants/Temporary Costs (STC/STT)" costs include charges to cover the cost of benefits and general communication facilities and IT costs unless otherwise specified in the Administration Agreement for the Trust Fund. Page 3 of 3 TF511001 104 Annex 6: TF Commitments to the Water, Urban, and Energy Sectors Funding in the amount of US$163.0 million has been committed for co- nancing from the TFGWB to the water, urban, and energy sectors during the period corresponding with the lifetime of the PID MDTF (2012–present). As in the case of the PID MDTF, the largest share of co- nancing, US$71.1 million, has been committed to the urban sector, which also includes solid waste and land management. The TFGWB has committed a total of US$45.4 to the water sector and US$46.5 to the energy sector. Of the combined co- nancing committed to the sectors, the TFGWB has co- nanced 55 percent of the water sector commitments, 43 percent of the urban sector commitments, and 77 percent of the energy sector commitments. Table 11: Sector Co-financing by TF (US$) TFGWB PID MDTF Other TFs Total by Sector Water sector 45,360,206.56 18,489,965.10 19,199,596.65 83,049,768.31 Urban sector 71,100,000.00 84,948,352.47 9,227,838.48 165,276,190.95 Energy sector 46,500,000.00 14,000,000.00 0.00 60,500,000.00 Total by TF 162,960,206.56 117,438,317.57 28,427,435.13 308,825,959.26 Percentage of total co- nancing 53% 38% 9% Figure 19: Sector Co- nancing by TF $ 350M $ 308,825,959 $ 300M $ 250M $ 200M $165,276,191 $ 162,960,207 $ 150M $ 117,438,318 $ 100M $ 83,049,768 $ 84,948,352 $71,100,000 $45,360,207 $60,500,000 $46,500,000 $ 50M $18,489,965 $ 28,427,435 $14,000,000 $ 19,199,597 $ 9,227,838 $ 0M Water Sector Urban Sector Energy Sector Total by TF Total by Sector TFGWB PID MDTF Other TFs 105