Gaza Central Desalination Plant Associated Works Program GCDP

Gaza Central Desalination Plant & Associated Works Program (GCDP) Donors Information Session Brussels, 30 th April 2019

Water Crisis in Gaza 2018 Water Sources in Gaza in MCM, by percent of total supply Import from Israel; 10. 0; 11% Private reverse osmosis units 140. 0 (unregulated); 3. 0; 3% Short Term Low Volume Desalination; 3. 2; 3% Supply & Demand for Domestic Water - Gaza 2018 (in MCM/Y) 117. 0 120. 0 100. 0 80. 0 60. 0 Groundwate r (nonpotable); 78. 8; 83% 78. 8 40. 0 20. 0 16. 2 0. 0 2018 The gap in supply and demand for safe drinking water will continue to grow, unless interventions advance to increase potable supply. Potable Supply (desalination / import) Non Potable Supply (groundwater) Demand 2

PWA Interventions to Alleviate the Crisis Short-term interventions: • 3 Short-term Low-Volume Desalination Plants • Import from Israel Medium-term intervention: • Gaza Central Desalination Program (by 2023) Supply and Demand Projections for Domestic Water Use in Gaza in MCM/Y (2018 - 2032) 200 181. 8 160. 3 180 160 140 137 128. 6 117 120 13. 2 80 60 110 55 Total: 46. 2 MCM 40 0 13. 2 38 100 20 26 7 13. 2 16. 2 Total: 16. 2 MCM 6. 2 10 30 30 2018 2021 2023 2028 2032 Import from Israel and RSDS Gaza Central Desaination Project Desalination (STLV + private RO units) Groundwater (mixed and potable)* Demand Source: PWA 3

Overview of the Program The figure below is a schematic design of the Program, including the Gaza Central Desalination Plant (GCDP) and the Associated Works (AW). AL MONTAR CONNECTION POINT Source: PWA PIPELINES Total capacity of the GCDP: GAZA CENTRAL DESALINATION PLANT Length of the km 55 MCM/Y North-South Carrier: 160 Associated Works include as well a comprehensive upgrade of the existing water distribution network 4

The Program: Cost Breakdown The chart below illustrates the breakdown of costs by component in the GCDP & AW Program (in million EUR) IFIs Program Management Support, EUR 20 m, 3% Contingencies, EUR 26. 8 m, 5% Management and Supervision, EUR 27 m, 5% Operation Subsidy for Five Years, EUR 46 m, 8% Desalination Plant and Energy Components, EUR 302. 5 m, 52% Associated Works, EUR 160 m, 27% Total: 582. 3 million EUR 5

Key Progress: Securing Funding for the Program 6

Progress in Securing the Funding for the Program Increase in the Program’s Funding Pledges received after March 2018 Conference (in million EUR) 500 460. 1 M EUR 450 407 M EUR Current Pledges and the Funding Gap for the Program (in million EUR) Funding gap, EUR 121. 0 m, 21% 350 300 Is. DB, EUR 242. 4 m, 42% Other donors, EUR 46. 6 m, 8% World 250 200 150 100 50 0 Pledges as of March 2018 Pledges as of April 2019 Bank & PID EUR 37. 4 m, 6% EU, EUR 86. 1 m, 15% Kuwait (Part of Is. DB), EUR 48. 8 m, 8% 7

Suggested Financial Mechanism • Funds will flow through accounts at the Islamic Development Bank, the European Investment Bank the and World Bank as illustrated below:

Key Progress: Associated Works Implementation 9

Progress Towards Implementation of the Associated Works of the Program (6 Components) April 30, 2019 January 2018 Detailed design ready March 2019 Arrangements for the entry of materials identified and agreed 2018 March 2020: June 2020: Start of construction of the two WB components Mekorot Improvements (South) completed August 2019 April 2019 Lists of materials shared with COGAT April 2019 Contract awarded for the Mekorot improvements and opening the bid for the South Carrier May 2021 Mekorot Improvements (Gaza City) completed May 2019 Contract awarded (Southern Carrier System) 2019 Start of construction of 2 components funded by Kuwait May 2022 Network Reconfiguration (South) completed 2020 2021 September 2019 September 2021 Start of tendering for the two components funded by the World Bank Southern Carrier System completed 2022 Ø Tendering for the two remaining components is pending funding disbursement. Ø Aspired conclusion date for all of the AW: 2023 10

Overview of Contract Packages PIPELINES 11

PID MDTF- Administrative Organization Administration / Supervision Program & Trust Fund Management Water/ Sanitation Window Partnership for Infrastructure Development Multi-Donor Trust Fund (PID MDTF) Urban Window Energy Window Oversight Group (OG) • World Bank (Chair) • Mo. FP (Co-Chair) • Donors Bank-Executed Technical Assistance (cross-sectoral)

Fund Flow Arrangements Funds (USD) [direct payments or to DA] World Bank Project DA Account (PWA) IFRs/SOEs and claims through WA with authorized signatures Invoices Funds (USD/ ILS) Vendors / Contractors / Consultants

EIB Support to the Program 14

EIB Support to GCDP As an immediate response to overcome the water catastrophe, supported by the EC, the EIB provided support to GCDP as following: November 2012 - EUR 4 m Technical Assistance to: - Finalise the conceptual design for the 55 MCM Desalination Plant - Prepare tendering documents to select the EPC and the O&M contractors May 2015 - EUR 600 k Technical Assistance to: Prepare a feasibility study and a for the procurement of on-and off-site Power supply plants for GCDP 2014 – 2016 EIB financed and implemented a Resettlement Action Plan May 2016 EIB & PWA Developed Program Management Architecture – Financed by EC EIB supported development of ESIA – financed by the EC March 2018 – EUR 7. 1 m EIB approved to pre-finance EUR 7. 1 m for: - Program Management Team (PMSC) and Probity Auditor - Finalize Alliance Approach for procurement of the Desalination Plant

EIB Trust Fund & Current Financial Contributions q The Gaza Envelope was created in December 2018, under EIB’s current exiting FEMIP Trust Fund, to hold contributions from EU Member States q First European Union Member States, Slovenia, Romania, Malta and Cyprus, have transferred their contribution as announced during the Pledging Conference in March 2018 q The Gaza Envelope is open to other donors that have allocated funds for the Desalination Plant and/or its power supply and for new donors wishing to contribute to the project q Tailor-made additional Fund might be created if needed based on donor requests.

Next Steps & Timeline A. To launch the tender for the Program Management Support Consultant (PMSC) with EUR 6. 3 million B. Procurement of the Desalination Plant * § § § Introducing alliance approach to partners: Done Procurement manual : May 2019 Prequalification phase : May 2019 (tentative) Start of detail design : December 2019 (tentative) Signature of engineering, procurement and construction contract: October 2020 (tentative) C. Procurement of Renewable Energy Plant * § § Updated renewable energy feasibility study: April 2019 Launch of tender and procurement process: September 2019 (tentative) Signature of engineering, procurement and construction contract: March 2020 (tentative) Design and construction: March 2021 (tentative) * Moving forward with the procurement of the Desalination Plant and the RE Plant is subject to the progress in the financing plan

Progress Towards Implementation of the GCDP April 30, 2019 November 2017 March – April 2019 Agreement on the Alliance Approach Arrangements for entry of materials identified 2017 December 2019 Preparation of the basic design and the BOQs January 2019 PA commitment to energize GCDP 2023 2020 2019 May 2019 Procurement Manual Start of the modification of tender documents Final proposal submitted Completion of the GCDP 2018 September 2018 August 2020 April – May 2020 1 st Review of the BOQs by COGAT October 2020 Award of the contract and start of the construction July 2020 2 nd Review of the BOQs by COGAT 18

Energy Supply By 2023, 25 MW will be needed for the GCDP. The EIB developed a power supply analysis study to find the best energy supply option. The solution consists of conventional and renewable power to meet the plant’s needs as following: Diesel / Gas : An on-site fossil fuel plant to provide (34 MW). Grid Connection: The Plant has the capacity to be connected to the grid Renewable Energy: covers on average 15% of the total annual power consumption. The diversity of power supply options to the desalination plant is unique and would ensure providing energy supply to the plant.

Key Progress: Energization 20

Securing Energy for Water and Wastewater Facilities in Gaza imp All of th le wa men e rec we stew ted w ently re at a net conn er fa ter a pos work ecte cilitie nd ene sible , an d to s di th rg to for y ne secu t was e bas ede r ic o d a e the per t lea ati on. st

Bulk supply through a 161 kv line connection High Voltage 161 k. V Line from Israel to Gaza • Connecting Gaza with a High Voltage Line 161 k. V from Israel. • This will facilitate the bulk imports of Electricity to Gaza • 161 k. V line, which could deliver an additional 30 MW in 1 -2 years and 70 MW in 3 -4 years PENRA is proposing to gradually replace the ten 22 k. V distribution feeders by a double circuit 161 k. V capable to transmit electric power of about three times the existing capacity. • The 161 line can add 30% to Gaza’s current grid. • Connection of 161 Kv line from Israel to Gaza will provide power to the GCDP through the existing grid 2

Gas for Gaza (G 4 G) facilitates the agreement and construction of a natural gas pipeline to Gaza from the Israeli • Pipeline route: 44 km (~40 km in Israel and ~4 km in Gaza) • Gaza Power Plant (GPP) operational capacity: 4 turbines, which if operational, can generate a max. 140 MW • Current level of energy supply: 75 MW • Prospective energy supply: up to 560 MW based on GPP expansion • Intended completion date: Providing ongoing progress is realized with G 4 G, Gaza could be connected to natural gas by 2023 • Governance: The G 4 G Task Force is the official platform of the G 4 G project, coordinating all aspects of the pipeline project in both Gaza and Israel. G 4 G will be used to supply the GCDP with power through: • Electricity generated by the GPP, evacuated to the grid; • Dedicated gas pipeline from the GPP to the GCDP, using the turbines to convert the gas into electricity; or • A combination of the above two options G 4 G has the capacity to halve the operational costs of the GCDP. Connecting Gaza to natural gas is the central solution to Gaza’s energy deficit and the basis for economic development. 23

Key Progress: Entry of Materials 24

Progress in Entry of Materials The Task Force is the primary platform for sharing information, advancing approvals for entry of materials, and discussing challenges relevant to the implementation of the Program. Permanent Members • • • PWA COGAT OQ World Bank EU Recent Meetings and Discussion Topics 5 March 2019 • Energization, security, and material entry 12 March 2019 • Arrangements for material entry and storage for the Associated Works 17 April 2019 • Arrangements for material entry and storage for the GCDP • Advancing material approvals for the Associated Works 25 Confidential - Not for distribution

Progress in Entry of Materials Timely and lasting approval • One-time, upfront approvals (“Capsule model”) of all materials, heavy machinery and personnel valid for the duration of the Program. Coordination: • The Task Force will serve as the primary platform to process all types of approvals. Material entry: • Contractors will arrange their entry schedules with the Palestinian Crossing Authority based on their needs. • The entry of fragile materials in sealed containers was approved in principle. • Parties started discussions on entry of materials by sea and construction works in the sea • Arrangements for processing the approvals for the entry and exit of heavy machinery and equipment have been defined. Monitoring: • Gaza Reconstruction Mechanism (GRM) arrangements will be utilized through UNOPS for monitoring, storage and utilization of materials. 26 Confidential - Not for distribution

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