OFFICIAL USE

JORDAN

GAM WASTE TO ENERGY PROJECT

FEASIBILITY STUDY

TERMS OF REFERENCE

1.BACKGROUND

The European Bank for Reconstruction and Development (the “EBRD” or the “Bank”) is discussing with the Greater Amman Municipality (“GAM”, “Municipality” or “City”)) potential financing of solid waste investments in Ghabawi Landfill (cells 4 and beyond) and the accompanying project components.

GAM is responsible for solid waste management in Amman and is allowed to grant concessions/licenses to other operators. It has its own budget, funded mainly by public money including a significant proportion from direct taxation of businesses and households, building permits and property development. GAM also receives a budget from the Central Government, which is agreed each year between the City Council and Council of Ministers.

The Bank was approached by GAM to provide a sovereign guaranteed loan to complete a landfill gas (“LFG”) recovery investment at cells 1-3 of the Ghabawi solid waste landfill facility which was originally part of the World Bank (“WB”) investment. The investment programme is currently under way. However, a more holistic approach is required for the solid waste management services to be improved substantially and across the whole of the city.

GAM is responsible for MSW collection, transfer and disposal within the 22 districts of Amman and five additional neighbouring districts of the metropolitan area of Amman combined with the street sweeping services. Industrial, medical and hazardous waste is under the jurisdiction of the

Ministry of Environment.

In March 2015, GAM issued Tender No. (32/1/2015) requesting proposals from qualified companies interested in a PPP (Design-Build-Operate-Transfer contract) for the MSW waste-to-energy facility for the Greater Amman Municipality (the “WtE RFP”). The project aims to decrease the amount of waste destined for landfilling by the recovery of recyclable materials and by producing renewable energy in the form of fuel and/or electricity. The scope of services covers design, permit application, financing, constructing, operating, maintenance and transfer (DBOT) to GAM. The Service Contract period shall be 15-30 years. The plant is to be located at Al Shaer Transfer Station or Ghabawi Landfill. Bidders are encouraged to submit proposals for both sites or for the one they find more suitable for their proposed project. The technical solution that may include but is not limited to the following MSW processing technologies:

  • mixed waste material recovery facility
  • anaerobic digestion
  • composting
  • thermal processing facility with energy recovery through
  • gasification, pyrolysis, mass-burn combustion
  • refuse derived fuel production
  • any combination of these technologies with an initial capacity of 1,200 to 1,500 t/day and with at least two fully redundant processing lines.

In light of the above, Great Amman Municipality (“GAM”) has approached the European Bank for Reconstruction and Development (the “Bank” or the “EBRD”) with a request to assess the possibility of financing medium and long term solid waste management facilities for the Municipality of Amman (the “Project”). This should include all stages of waste management from collection, processing, treatment and disposal and include all intermediate steps during the analysis.

The Bank wishes to commission a suitably qualified consultant (the “Consultant”) to prepare a comprehensive feasibility study (“FS”) to determine a priority investment programme (the “PIP”)that meet the WtE RFP requirements and evaluate its benefits, including assessing its environmental and social feasibility.

In addition, as part of a broader engagement, the Bank retained Fichtner to assess the solid waste sector in Amman in order to identify and develop an all-rounded approach to the sector.

2.OBJECTIVES

The Consultant will review the WtE RFP requirements, Fichtner report, and other reports regarding the MSW strategy of Amman and verify whether a bankable project meeting theCity’s objectives below can be delivered. This Project will be based on an effective least-cost investment programme that meets GAM objectives for MSW. The investment plan will be justified on the basis of thorough technical, legislative, financial and economic analysis. Furthermore, the Consultant will develop an efficient Project Implementation Plan, including procurement schedule considering the current WtE RFP, and carry out an assessment of the resource efficiency opportunities (including energy efficiency and renewable energy potential and the impact on GHG emissions) and environmental and social impactsof the investment programme.

The Feasibility Study should meet the requirements of the PPP Law of Jordan that defines the approval process for a PPP.

Other scope of the assignment shall include, inter alia:

  • Review the needs of the Client and/or Beneficiary, including definition of WtE RFP Project and establishment of the area to be covered by the investment.
  • Review the specific needs[1] for solid waste management in the area based on previous studies.
  • Review the applicable legislation at local and national level in place regarding waste (e.g. targets on material and energy production from waste), country Strategy and assess the implications on the WtE RFP Project.
  • Review and analyse the current system of solid waste separation, collection and reprocessing forrecyclingand, if appropriate, make assessment on how the WtE RFP Project fits into them, taking into consideration international best practices in waste management (eg BREFs) and following the EU waste hierarchy options at the maximum extent. Identify potential industrial users of separated materials and barriers existing to the development of a market for such products.
  • Review and analyse the current situation of the waste treatment/separation/recycling/landfilling in the area in terms of condition of major equipment and facilities, recent past years performances, operation and maintenance (“O&M”) practices, capacity of the City to manage and address all relevant environmental and social risks and impacts, compliance with national laws and regulations and any liability issues.
  • Carry out a detailed analysis[2] to select the best WtE RFP Project option and site location for disposal (and where appropriate, separation and recycling), including existing and new locations, taking into consideration international best practices in waste management. The Consultant will produce a multi-criteria analysis justifying the selected option or options (no more than three) and summarise it in tabular form. Processing methodologies that should be analysed, include but not limited to:
  • mixed waste material recovery facility;
  • anaerobic digestion;
  • composting;
  • thermal processing facility with energy recovery;
  • refuse derived fuel production; and
  • any combination of these.
  • Once the WtE RFP Project option and site selection has been confirmed, screen the project against the EBRD’s Environmental and Social Policy (2014, “ESP”) and associated Performance Requirements (“PRs”) to propose, and agree with the EBRD, the project category (A or B) and confirm the environmental and social due diligence required.
  • If the project is categorised as B (once agreed with the EBRD) carry out an Environmental and Social Assessment (E&S Due Diligence, “ESDD”) of the proposed Project to identify its environmental and social risks, impacts and benefits and to structure the Project to comply with the ESP and PRs. If the Project is categorised as A, this ToR will be revised by the EBRD.
  • Estimate potential reductions in greenhouse gas (“GHG”) emissions arising from the possible closure of any old landfills, as well as assess possible utilisation of biogas from existing and planned landfill sites as well as any further waste processing that generates biogas, and the impact on climate change mitigation.
  • Based on the results of the above, draw up a detailed priority investment programme (“PIP”) for the WtE RFP Project selected options, including but not limited to collection vehicles, recycling stations, processing and treatment technologies, wells, piping, and in case future use of the exiting dumpsite is not recommended, closure of the existing landfill and opening of a new sanitary landfill.
  • Make necessary recommendations for institutional changes (organisation of solid waste management, changes in law or institutional, including human resources, changes) regarding solid waste management in the City, based on previous studies already developed by GAM.
  • Conduct a financial analysis of the WtE RFP Projectoptions and waste management operations, including treatment and processing. Create a business plan over the lifetime of the WtE RFP Project with detailed calculations of realistic capital expenditure (“CAPEX”), revenues, expenses, debt service coverage ratio for an hypothetical loan and Internal Rates of Return (“IRR”) (both economic and financial).
  • To prepare financial projections for selected waste treatment solution facilities; the projections shall be fully consistent with the proposed WtE RFP Project, strategic development plan and be based on prudent assumptions on the future PPP Contractor (the Concessionaire) revenues and expenditures. Financial projections shall include annual balance sheets, income and cash flow statements.
  • Design a general timetable of the implementation of the Project for each potential scenario considering the current WtE RFP.
  • Develop a VfM and affordability analysis for the best contractual option and business model for any required treatment and processing plants.
  • Calculation of the Bank’s standard measuring indicators and SRI impact indicators (Annex 3).

3.SCOPE OF WORK

The Assignment can be categorised into the following five tasks:

3.1:Baseline study.

3.2:Project proposal.

3.3:Financial analysis.

3.4:Project implementation plan.

3.5:Environmental and Social Assessment.

The consultant is expected to capitalise and build up the analysis based on existing studies about the market and solid waste services already developed by the client and develop its own opinions and recommendations. The Consultant is highly encourage to review that information since some of the scope required in this engagement have been already considered in other studies.

3.1Baseline study

This task involves the review of the present status of the waste management services in the Project area. This analysis shall allow the Bank and the GoJ to better understand the present situation in institutional, legal and financial, as well as technical and environmental terms.

The following shall, inter alia, be addressed:

3.1.1.Market review

  • Organisation. Describe and assess how solid waste management is organised. Describe the historic background for the structure of the sector. Also describe the governance structure.
  • Waste Generation. Describe/define the main categories of waste and estimate current and future quantities, including composition analysis. Describe any large generators of general or specific municipal solid waste, providing existing quantities and future forecast.
  • Source separation. Describe existing (and/or past) experience with waste separation at source (household and business/industries). Describe the regulatory requirements and enforcement standards. Describe the market for extracted materials.
  • Recycling. Describe existing (and/or past) experience with recycling (household and business/industries). Describe results, how it is/was organised, ownership, financial and payment details. What are the government plans and requirements/enforcement records. Describe potential opportunities to capture value from recycled material, including from sales of green energy.
  • Waste Collection, Transportation and Treatment. Describe and assess how waste collection and transportation is currently organised. Describe the main service providersin terms of, inter alia:
  • List and describe all market participants in the waste collection sector. For each service provider, provide the following information
  • Ownership (private or public) of these service providers.
  • Providing service for industrial waste and/or households waste collection.
  • Which assets does the entity have; age and state of the assets?
  • Who controls/manages the entity?
  • Which areas/waste generators does the entity serve?
  • Nature of licencing, duration of contracts and award format. These should include formal contracts with the City and/or the waste generators.
  • How is the entity paid – officially and unofficially? Describe flow of funds from the waste generator generators (or directly from the City as the case might be) to the entity.
  • What types and quantities of waste are handled?
  • Who supervises the performance of the entity (if any)?
  • Outline the entity’s key economic incentive drivers in the system.
  • Quality of service provided.
  • Any available financial statements.
  • Assess the potential for private sector participation in waste collection, transportation, treatment and processing and outline potential transaction and contractual structures for such participation, including a full VfM analysis of the recommended transaction structure.
  • Identify room for improvements in terms of: (i) tendering process/procedures; (ii) licencing requirements and; (iii) the contents of the legal contracts (also advise the optimum duration of the contracts).
  • Waste treatment and final disposal. Describe and assess how waste treatment and final disposal is currently organised. Describe each of the main players in terms of, inter alia:
  • Who owns the entity?
  • History of the entity (organisational and structural).
  • Which assets does the entity have; age and state of the assets?
  • Who controls/manages the entity?
  • Formal contracts with the City and/or the waste generators.
  • How is the entity paid? Describe flow of funds from the waste generator (or directly from the City as the case might be) to the entity.
  • What types and quantities of waste are handled?
  • Who supervises the performance of the entity?
  • Outline the entity’s key economic incentive drivers.
  • Service provided / environmental compliance.
  • Any available financial statements.
  • Assess the potential for private sector participation in waste treatment and disposal operations and outline potential transaction and contractual structures for such participation.
  • Paying for and Financing of Waste Management. Describe and assess how the current waste management system is financed. Describe the system in terms of, inter alia:
  • Direct payments (budgeted and actual) made from the city, Governorate or national budget (from where to where).
  • Payments (billed and actual) made by households.
  • Payments (billed and actual) made by industry.
  • Others.
  • Prepare a payment “flow chart” for each of the payments made by waste generators and describe the roles and responsibilities of each of the “intermediaries” which the payment passes through and describe how the funds are allocated to different functions. Describe how the waste management financing and payment system provides financial incentives to the various stakeholders.

3.1.2.Organisation in the City

The Consultant will study the organisation of solid waste management in the City and compare its findings with best practices in solid waste operations and identify areas for improvements.

3.1.3.Waste collection and transportation

The Consultant will examine waste collection and transportation practices and identify areas for operating and financial improvement.

The Consultant will describe how waste is taken to the collection points from the household and by whom (men, women or children) and how often. Any concerns and /or priorities for improvement of the services will be described and differentiated according to gender where applicable. The Consultant will identify if there are any informal waste collection activities taking place in the City. If so, the numbers of people involved, how it is undertaken and paid for, a socio-economic description of those carrying this out and whether these informal activities take place on the dumpsite or in different areas of the city should be provided.

An assessment of current waste collection, recycling and disposal habits of residents, tendency to separate waste, littering and general public awareness regarding the current waste management systems will be appraised by visual inspections of collection points, site visits to the dumpsite, research carried out by local team members and information provided by the client.

The Consultant should also look into route optimisation and developing an updated route schedule to maximise use of existing and future resources.

Furthermore, the Consultant will assess the potential for private sector participation (“PSP”) in waste collection and transportation and outline potential transaction structures for such participation.

3.1.4.Waste treatment and the existing landfill

The Consultant will study the waste treatment practices at the existing landfill; compare them to international practices and identify areas for improvement (if appropriate, including a comment on how to capture the potential for recycling).

3.1.5.Paying for and financing of waste management

The Consultant will describe and assess how the current waste management system is financed and will describe the system in terms of inter alia: