Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 54430 - EG
CARBON FINANCE ASSESSMENT MEMORANDUM
ON A
PROPOSED CARBON OFFSET PROJECT
WITH
THE MINISTRY OF FINANCE OF THE ARAB REPUBLIC OF EGYPT
FOR THE
VEHICLE SCRAPPING AND RECYCLING PROGRAM
April 19, 2010
Transport and Energy Sector Unit
Sustainable Development Department
North Africa and Middle East Region
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents may not otherwise be disclosed without
World Bank authorization.
1
CURRENCY EQUIVALENTS
Exchange Rate Effective March 10, 2010
EGP 5.43
July1
=
FISCAL YEAR
–
USD 1.00
June 30
ABBREVIATIONS AND ACRONYMS
AEL
BOOT
CBP
CDCF
CDM
CDM EB
CER
CFAM
CIDA
CO2
DNA
DOE
DSM
EA
EE
EII
EMP
EPC
ER
ERPA
ESCO
FTL
GHG
IRR
LMS
M&V
MC
MW
MWh
NOx
Asian Electronics Limited
Build Own Operate Transfer
Community Benefit Plan
Community Development Carbon
Fund
Clean Development Mechanism
CDM Executive Board
Certified Emission Reduction
NPV
O&M
PDD
SO2
Net-present value
Operations and Maintenance
Project Design Document
Sulfur dioxide
SSC
Small-scale
tCO2e
tons of carbon dioxide equivalent
UNFCCC United Nations Framework Convention on
Climate Change
Carbon Finance Assessment
Memorandum
Canadian International
Development Agency
Carbon dioxide
Designated National Authority
Designated Operational Entity
Demand-Side Management
Environmental Assessment
Energy Efficiency
Econoler International
Environment Management Plan
Energy Performance Contract
Emission Reduction
Emission Reduction Purchase
Agreement
Energy Service Company
Fluorescent Tub Lights
Green House Gas
Internal rate of return
Load Management System
Monitoring and Verification
Municipal Corporation
Megawatt
Megawatt hour
Nitrogen oxide
Vice President:
Country Director:
Sector Director
Sector Manager:
Task Team Leader:
Deal Manager:
Shamshad Akhtar, MNAVP
David Craig, MNC03
Laszlo Lovei, MNSSD
Jonathan Walters, MNSSD
Ahmed Eiweida
Holly Krambeck
2
Arab Republic of Egypt
VEHICLE SCRAPPING AND RECYCLING PROGRAM
TABLE OF CONTENTS
1
STRATEGIC CONTEXT AND RATIONALE .................................................................4
Country and Sector Context ................................................................................................4
Rationale for World Bank Involvement and Contribution to Sustainable Development ...6
2
CARBON FINANCE PROGRAM .....................................................................................7
Overview .............................................................................................................................7
Description of the Carbon Finance Program ......................................................................8
Economic and Financial Analysis .....................................................................................18
Program Implementation and Institutional Arrangements ................................................20
Safeguards .........................................................................................................................29
Environmental Analysis ....................................................................................................30
Carbon Finance Stakeholder Consultations ......................................................................33
Risks..................................................................................................................................35
ERPA Main Terms/Conditions .........................................................................................35
1.1
1.2
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
Annex 1: Country and Sector Background...................................................................................36
Annex 2: Participating Entities in the PoA and CDM Project Cycle ...........................................41
Annex 3: Emissions Reduction Calculation Methodology ..........................................................42
Annex 4: Implementation Arrangements and GHG Monitoring Plan .....................................4255
Annex 5: Program Protocol .........................................................................................................67
Annex 6: Risk Identification Worksheet .....................................................................................71
Annex 7: Documents in the Project File ......................................................................................77
Annex 8: Program Participating IBRD Staff ................................................................................79
3
1
STRATEGIC CONTEXT AND RATIONALE
1.1
Country and Sector Context
1.1.1 Aging Mass Transport Vehicle Fleet
The Egyptian mass transport fleet is aging – the average age of a taxi in Egypt is 32 years old, and
more than 64,000 microbuses are greater than 20 years old. The aging fleet is prone to frequent
break-downs and, because older vehicles are typically unequipped with modern catalytic
converters, low quality emissions.
Figure 1: Distribution of Age of All Registered Vehicles in Egypt1
40%
35%
33%
35%
30%
25%
21%
20%
15%
11%
10%
5%
0%
Under 15 Years
15 to 25 Years
25 to 35 Years
More than 35 Years
Figure 2: Distribution of Model Years of Registered Taxis in Egypt and the Greater Cairo
Region2
Egypt Environmental Affairs Agency. September 2009. “Egypt State of the Environment Report 2008.”
http://www.eeaa.gov.eg/english/reports/SoE2009en/Egypt%20State%20of%20Environment%20Report.pdf
2 Ministry of Interior of Egypt. World Bank interview with Deputy Minister. September 10, 2009.
1
4
The aging fleet is a contributing factor to Egypt’s high road fatality rates and poor air quality
levels. To illustrate, the average number of fatalities per 100,000 registered vehicles in OECD
countries is 13, whereas the national average in Egypt is 286 fatalities per 100,000 registered
motor vehicles– more than 2000% higher than the OECD average.3,4 Further, according to the
most recent Egypt State of the Environment Report prepared by the Egypt Environmental Affairs
Agency in 2009, vehicle emissions in the Greater Cairo Region account for 26% of total PM10
pollution, 90% of total carbon monoxide emissions, 90% of total hydrocarbon emissions, and 50%
of total nitrogen oxide emissions.5
1.1.2 Greenhouse Gas Emissions
It is estimated that by the end of 2009, the Egyptian transportation sector will have been
responsible for more than 40 million metric tons of global greenhouse gas emissions, most of
which will have been emitted by road-based vehicles.6
Figure 3: Estimated Annual Metric Million Tons CO2e Emitted per Year in the Egypt
Transportation Sector7
Annual Million Metric Tons CO2e
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
-
Domestic aviation
Road
Domestic navigation
Other (Transport)
About 40 percent of national transport emissions, or 14 million tons CO2e, may be attributed to the
Greater Cairo Region (GCR) alone, where nearly half of all motorized vehicles in Egypt operate.
The rapidly growing population in the Greater Cairo Region (GCR) --16 million in 2006 to 27
OECD International Traffic Data and Analysis Group. November 2009. “IRTAD Database, November 2009 -- Risk Indicators.”
http://www.internationaltransportforum.org/irtad/pdf/risk.pdf.
4 World Health Organization. 2009. “Global Status Report on Road Safety.”
http://www.gtkp.com/uploads/public/documents/Themes/9789241563840_eng.pdf.
5 Egypt Environmental Affairs Agency. September 2009. “Egypt State of the Environment Report 2008.”
6 Data sources: International Energy Administration. 2008. "IEA World Energy Statistics and Balances" ISSN 1683-4240;
International Panel on Climate Change. 2006. "2006 IPCC Guidelines for National Greenhouse Gas Inventories." http://www.ipccnggip.iges.or.jp/public/2006gl/index.html; Analysis: World Bank Carbon Finance Unit, 2009.
7 ibid
3
5
million by 2027 – is expected to exacerbate conditions unless significant interventions are made in
transport infrastructure and/or technology. 8
1.2
Rationale for World Bank Involvement and Contribution to Sustainable Development
The proposed Egypt Vehicle Scrapping and Recycling Program will establish a mechanism
through which owners of taxis, microbuses, trailer trucks and buses may voluntarily surrender their
vehicles for managed scrapping and recycling, in exchange for financial incentives that may be
used towards the purchase of new vehicles from participating vehicle dealers, under a closely
monitored process.
The program is fully consistent with the World Bank CAS objective of expanded supply and
improved efficiency of infrastructure services (CAS Outcome 2.2). The FY09-11 lending program
(CAS Progress Report, June 2008) includes the proposed Urban Transport Development Program
(P115837) in the amount of USD 150 million IBRD financing. Working with the Government of
Egypt, the World Bank has also secured an additional USD 100 million from the Clean
Technology Fund (CTF) in the form of an IDA-like credit.
The Egypt Vehicle Scrapping and Recycling Program, while not supported by these funding
sources, will complement, as a stand-alone carbon finance operation, the proposed Urban
Transport Development Program and provide incentives to address the cost of new technologies
and support national scalability.
Per the request of the Government of Egypt’s Ministry of Finance, the IBRD is providing the
following assistance (Letter of Intent signed by the World Bank Country Director and Minister of
Finance on September 3, 2009):

As Trustee of the Carbon Funds, purchasing a pre-determined number of Certified
Emissions Reductions (CERs) generated by the program, upon United Nations Framework
Climate Change Convention (UNFCCC) registration and annual verification. Specifically,
only those CERs generated by the Greater Cairo Region taxis participating in the program
shall be purchased by the Carbon Funds through the Bank as Trustee. For purchasing terms,
see Section on Emissions Reduction Purchase Agreement Main Terms and Conditions.
Revenue generated through the purchase of these CERs shall be used to support program
implementation;

Preparation, review, and submittal of all relevant documentation required for
registration and verification under the UNFCCC process;

Advisory on the development of a Framework Environment and Social Assessment
(FESA) and pubic bidding process for the recycling facility, thus enhancing the
environment and social development and safeguards compliance dimensions of the
program; and

Development of an on-going, auditable monitoring plan for measuring annual
greenhouse gas emissions associated with the program.
8
Japan International Cooperation Agency. March 2008. “The Strategic Urban Development Master Plan Study for Sustainable
Development of the Greater Cairo Region in the Arab Republic of Egypt.
6
Carbon finance plays a critical role in ensuring the sustainability of the Egypt Vehicle Scrapping
and Recycling Program by ensuring that the program’s social and environmental objectives are
met. Specifically, the Clean Development Mechanism will support:

Monitoring of greenhouse gas emissions reductions associated with the program,
which otherwise would not be undertaken;

An advance payment derived from carbon finance that shall be used towards the site
preparation for the development of a recycling facility. At present, scrapped vehicles are
only set aside for storage. As space is limited and prolonged storage could pose
environmental hazards, this is only short term solution. With carbon finance support and
the program’s FESA, a recycling facility will ensure that scrapped vehicles neither take up
land that could be used for other purposes, nor pose unnecessary environmental hazards;
and

Pending a short-term funding shortfall, the subsidy that the Ministry of Finance uses
to encourage vehicle owners to surrender their old vehicles for managed scrapping and
recycling.
2
CARBON FINANCE PROGRAM
2.1
Overview
The Egypt Vehicle Scrapping and Recycling Program of Activities (PoA) has been designed by the
government of Egypt to support the enforcement of Traffic Law #121 (2008), 9 which states that
owners of mass transport vehicles that are greater than 20 years old are not eligible for new
operating licenses or license renewal. “Mass transport vehicles” are henceforth defined to include:
taxis, microbuses, trailer trucks, and buses. The Law was designed to accelerate the rate of fleet
replacement, which would improve air quality (including the reduction of greenhouse gas
emissions) and reduce the number of traffic accidents involving these older vehicles.
Because the Law does not specify how affected vehicles are to be disposed of, vehicle owners have
strong incentives to either: a) sell vehicles to regions where the law does not apply; b) convert
vehicles to private use (private vehicles are not affected by the Law); and/or c) dismantle the
vehicles and sell the engines for use in other vehicles. Without a scrapping and recycling program
component that ensures that the older vehicles are taken off the road and that the vehicle
components are permanently (and safely) disposed of, the Law cannot have its intended impact on
safety, air quality, and greenhouse gas mitigation.
The Egypt Vehicle Scrapping and Recycling PoA fills this gap, without contradicting other
regulations. The PoA establishes a national program through which owners of taxis, microbuses,
trailer trucks, and buses affected by the law may voluntarily surrender their vehicle for managed
9
The Government of the Arab Republic of Egypt. 9 June 2008. Law #121 for the Year 2008 Concerning the
Amendment of Select Traffic Law Articles Issued by Law #66 for the Year 1973. Article 4, Paragraph 2.
7
scrapping and recycling, in exchange for financial incentives that may be used towards the
purchase of a new vehicle from a participating vehicle dealer,10 under a closely monitored process.
As Trustee of the Carbon Funds, the IBRD shall enter an agreement with the Egypt Ministry of
Finance to purchases Certified Emissions Reductions (CERs) generated by participating taxis from
the Greater Cairo Region only. Revenue generated through the sale of these CERs shall be used to
offset the significant up-front cost burden on the Ministry of Finance.
2.2
Description of the Carbon Finance Program
2.2.1 Program Development Objective
The development objective of the program is to reduce greenhouse gas (GHG) emissions and air
pollution associated with the aging fleet of taxi, microbuses, minibuses and buses in Egypt, starting
with taxi replacement in the Greater Cairo Region as the first set of projects under a Clean
Development Mechanism (CDM) Program of Activities (PoA).
The PoA shall contribute to the GoE’s package of financial incentives to vehicle owners in the
Greater Cairo Region to purchase fuel efficient and less polluting vehicles, and put in place an
environmentally sound system of scrapping and recycling old vehicles. This shall, in turn,
encourage increased number of voluntary participation from old vehicle owners, accelerate the
implementation of the program and ensure the program is implemented within an environmental
sustainable framework.
Currently, the only projects included in the PoA, and for which IBRD as Trustee of the Carbon
Funds, has committed to purchase Certified Emissions Reductions (CERs), are 11 taxi projects in
the Greater Cairo Region. According to the most recent vehicle registration data provided by the
Ministry of Interior, more than 49,000 vehicles in the GCR’s taxi fleet are more than 20 years old.
These vehicles have fuel efficiencies, on average, of about12.87 liters gasoline or 12.23 m3 CNG
per 100 km.11 Taxi owners will trade in their old vehicles for scrapping and recycling, in exchange
of new low emissions vehicles with average fuel efficiency of 9.4 liters gasoline or 8.3 m3 CNG
per 100 km.12 Due the large scale of the program, the taxi scrapping program has been divided
into eleven separate projects, called “CDM Project Activities” (CPAs) according to UNFCCC PoA
guidance. These CPAs are expected to be completed according the following schedule:
“Participating Vehicle Dealer” shall refer to those dealers that have signed a Protocol with the Ministry of Finance,
in which the vehicle dealer indicates its understanding and agreement of responsibilities under the PoA.
10
11
Based on surveys of 600 old vehicles conducted for the preparation of the Program of Activities Design Document.
12
Fuel efficiency data, based on typical taxi driver usage (i.e. primarily urban conditions), has been provided directly by the
respective auto manufactures.
8
Figure 4: Greater Cairo Region Expected Taxi CPA Schedule
CPA #
001
002
003
004
005
006
007
008
009
010
011
Months Included
April
May, June
July August
September, October
November, December
January, February
March, April
May, June
July August
September, October
November, December
Year
2009
2009
2009
2009
2009
2010
2010
2010
2010
2010
2010
# Vehicles
763
4,781
4,793
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
2.2.2 Additional Projects under the Program of Activities
At any given time, within a period of 28 years from PoA registration, the Ministry of Finance may
submit additional projects for consideration by the UNFCCC Executive Board.
As of time of writing, the following additional projects are under consideration by the Ministry of
Finance for inclusion under the PoA at a later stage.

Additional Old Taxi Scrapping Projects
The Ministry of Finance is considering expansion of the Greater Cairo Region taxi projects
to the following regions:
o
o
o
o
Alexandria: serving West Delta governorates and Matrouh Governorate;
Dakahleya: serving East and Central Delta governorates;
Ismailia: serving Suez Canal and South and North Sinai governorates; and
Assiut: serving Southern governorates and the Red Sea Governorate.

Old Microbus Scrapping Projects
According to the Ministry of Finance, there are about 64,000 eligible private microbuses
registered country-wide that would be affected by Law #121. If implemented, the private
sector microbus program would be run in a manner very similar to the taxi scheme
described above.

Old Bus and Minibus Scrapping Projects
The Ministry of Finance, working with the Cairo Transport Authority (CTA), is also
considering the scrapping of old buses (~1,100 buses) and minibuses (~613 minibuses) that
are currently owned and operated by the CTA. The CTA has proposed scrapping and
recycling the following vehicles which are more than 20 years old:
o
o
600 NASR#81buses (50-80 PAX) (model year: 1987)
805 NASR #871 buses (50-80 PAX) (model year: 1978)
9
o
o
203 Mercedes OM314 minibuses (20-25 PAX) (model year: 1986)
200 NASR #974 minibuses (20-25 PAX) (model year: 1986)
The CTA is considering the following new bus vehicle types for replacement. Final
decision on replacement vehicle type is pending final financial analysis and approval of
CDM participation:
o
o
o
Diesel hybrid;
Compressed natural gas (CNG);
EURO III Diesel.
Any additional project(s) must meet the following criteria in order to be considered by IBRD under
the PoA:
1)
The proposed project meets the applicability requirements of baseline and
monitoring methodology AMS III.C “Low Emissions Vehicles,” Version 11, and uses
associated methodologies and tools required by AMS III.C.
2)
The Ministry of Finance is the Project Entity, responsible for coordinating and
managing the proposed project, as well as assurance that there is no overlap between the
proposed projects and all other proposed projects that fall under the PoA.
3)
The proposed project is approved by the coordinating entity prior to consideration
in the PoA.
4)
Participating owners of taxis, microbuses, trailer trucks, and/or buses are directly
implicated in Traffic Law #121 (2008), 13 which states that owners of mass transport
vehicles (including taxis) greater than or equal to 20 years old in a given year may not
receive new operating licenses or license renewals.14 By definition, this means that the
project boundary includes only those vehicles that are registered in the Arab Republic of
Egypt.
5)
The proposed project will involve vehicle owners the surrendering their old vehicle
for managed scrapping and recycling in exchange for incentives on voluntary basis that
may be used towards the purchase of a new vehicle from a participating vehicle-dealer
under a monitored scheme. The new vehicles are pre-approved by the Ministry of Finance,
in accordance with the Protocol (Annex 5 of the PoA-DD).
6)
Replacement vehicles used in the proposed project have been pre-approved by the
Ministry of Finance (see section A.4.2.1 of the PoA-DD)
13
The Government of the Arab Republic of Egypt. 9 June 2008. Law #121 for the Year 2008 Concerning the
Amendment of Select Traffic Law Articles Issued by Law #66 for the Year 1973. Article 4, Paragraph 2.
14
See full Arabic text and English translation of the stipulation and description of 3-year grace period in Annex 13,
provided to the DOE.
10
7)
The mechanism considered under proposed project is publically advertised and is
voluntary for vehicle owners.
8)
The proposed project includes an initial inspection of the participating vehicles to
ensure eligibility. Inspection criteria include:
a.
b.
c.
d.
e.
The vehicle is affected by Traffic Law #121;
The owner holds legal title to the vehicle;
The vehicle is legally licensed and registered in Egypt;
The vehicle’s original chassis and engine serial numbers are intact; and
The vehicle (and/or its engine) is operational.15
9)
A Processing and Storage site is available for conducting project activities, as
described in Section A.4.1 of the PoA-DD.
10)
The Ministry of Interior provides support for security, licensing, and monitoring at
the Processing and Storage Site.
11)
A facility for vehicle recycling, which has successfully completed an
Environmental Impact Assessment process in accordance with national regulations, shall be
available at some date to recycle project vehicles. For national interim guidelines on
environmental standards vehicle recycling facilities, see Annex 19 of PoA-DD.
12)
The CPA project database management is overseen by the Project Entity (Ministry
of Finance), and the following data is collected and managed for all participating vehicles
in the proposed project:
a. Vehicle owner name;
b. Vehicle owner contact information, including home and mobile phone
numbers;
15
If the vehicle is non-operational, it may still be eligible to participate in the program, but it would not be counted
towards the annual CER calculations. In very few cases, an old vehicle could be non-operating due to an accident. In
such cases, the taxi owner submits a request to The Ministry of Finance, and a date is set for inspection by a certain
technical committee assigned to determine the actual value of the old vehicle. The technical committee is comprised of
three members: two from the Ministry of Interior and one from the General Authority for Government Services, which
is under the Ministry of Finance (See Decree #1 in Annex 2). Based on the inspection, if the actual value of the vehicle
is less than EGP 5,000 (which is paid by the Ministry of Finance for each scrapped vehicle), the Ministry of Finance
issues a cheque that corresponds with the actual value, and the taxi owner pays the difference to the bank and then
continues with the remaining procedures. Since inception of the project, there have been only seven such cases until
December 2009 and a separate database is kept for such cases. For example: An owner of an old taxi vehicle had an
accident before surrendering the vehicle for scrapping. Accordingly, the vehicle is not operating and cannot be
accepted by the Ministry of Interior staff, who inspect vehicles before scrapping. This taxi owner has submitted a
request to the Ministry of Finance, and the aforementioned technical committee has inspected his old vehicle and
decided it is worth only EGP 2,000. Thus, the vehicle owner paid EGP 3,000 to the bank and provided the Ministry of
Finance with a copy of the bank receipt of the EGP 3,000 paid. He then went to the scrapping site where his old
vehicle has been scrapped and Ministry of Finance issued him a cheque for EGP 2,000 only so that he submits it at the
bank and accordingly this would add up to a total of EGP 5,000 which is the down-payment . Then all other
procedures continue as usual.
11
c.
d.
e.
f.
g.
h.
i.
j.
k.
Date of proposed project participation registration;
Model and model year of old vehicle;
License, and engine and chassis serial numbers of old vehicle;
Scrapping certificate number;
Model and model year of new vehicle;
License, and engine and chassis serial numbers of new vehicle;
Name of bank issuing loan for new vehicle (if applicable);
Record of survey results; and
Record of complaints from participants.
13)
The proposed project is uniquely identified in an unambiguous manner by providing
the project registration date of the vehicle owner for all participating vehicles in the
proposed project.
14)
Vehicle dealers offering eligible replacement vehicles, the Ministry of the Interior,
banks, and the insurance company have signed a Protocol with the Project Entity (Ministry
of Finance) to signify their understanding of the PoA and willingness to participate (Annex
5 of PoA-DD).
15)
Vehicle owners were not required by Law to surrender their vehicles for scrapping
and recycling.
16)
Section A.4.6 of the proposed project provides information showing that the
proposed project is not a de-bundled component.
17)
Proposed project crediting period does not exceed PoA end date.
18)
met.
Additionality assessment criteria for each proposed project (as per section E.5.2) are
19)
Monitoring requirements as presented in PoA-DD monitoring plan (see Annex 4 of
PoA-DD) are met.
20)
All supporting documentation for each proposed project are provided.
2.2.3 Expected Results
Implementation of the Greater Cairo Region taxi replacement and recycling projects is expected to
achieve the following:
2.2.3.1 Reduction in Greenhouse Gas Emissions and Improvement in Air Quality
Overall emissions reductions from participating taxis in the Greater Cairo Region are expected to
be 1.3 to 2.3 million tons CO2e from 2010 through 2019. Please see Program of Activities Design
Document (PoA-DD) Section E.6 Estimation of Emissions Reductions of a CPA for details on how
these estimates are derived. Since the new vehicles will have catalytic converters not present in the
scrapped vehicles and because the new vehicles are more fuel efficient that the vehicles to be
scrapped (see survey results in the Program of Activities Design Document --PoA-DD – for further
details), then the project will likely improve air quality as well.
12
2.2.3.2 Improvement in Traffic Conditions
Traffic congestion in Greater Cairo can be mitigated by means of removing from roads frequently
broken old vehicles, which would not only improve air quality, but also reduce economic and GDP
losses associated with increased trip time during traffic congestion. To illustrate, according to
project implementation data provided by the Ministry of Finance for the first three Greater Cairo
Region taxi projects,16 the average age of the 8,845 vehicles that have participated in the scheme
from April 21, 2009 through August 13, 2009 is 31 years-old, indicating that many of the 20-yearold vehicles (and/or their engines) targeted by the law are likely to continue operations (as private
vehicles, in areas not affected by the law, etc.) in absence of incentive for scrapping created by the
PoA. The Ministry of Interior has provided the following data, which indicates the success of the
PoA to date (April 2009 through August 2009) in aiding the enforcement of Law #121:
Indicator
% of Greater Cairo Region (GCR) taxis that have been replaced through the program:
% reduction in traffic-offence citations among GCR taxis affected by Law #121 over
the same period last year:
% reduction in number of accidents involving GCR taxis affected by Law #121 over
the same period last year:
Value
18.5%
4.0%
6.5%
2.2.3.3 Support of Socioeconomic Livelihood for Vehicle Owners Affected by Law #121
Without the program, in addition to the environmental and traffic safety consequences, many
drivers could lose their economic livelihoods. Through the program, owners are offered the
following incentives, which are outlined in both Prime Minister Decree #471: Guidelines for
Incentive Program and the Protocol, signed by the Ministry of Finance and the Ministry of Interior,
as well as participating banks, vehicle dealers, insurance company, and advertising firm. These
incentives include:

Up to EGP 5,000 (EUR 621; 1 EGP = EUR 0.124) payment for the surrendered
operational vehicle, provided by the Ministry of Finance;

Payment of vehicle sales taxes by the Ministry of Finance;

Exemption of customs fees on imported vehicle components from the Ministry of
Finance;

Below market-rate interest loan from participating banks;17,18

Loan-guarantee from the Ministry of Finance against default in special cases;

Below market-price for new vehicle;

Option to participate in advertising scheme, where a portion of advertising revenues
are directly-paid by an advertising agency to the lending bank towards vehicle owners’ debt
service payments;19
16
CPA#1: April 2009; CPA#2: May-June 2009; CPA#3: July-August 2009
“Participating Bank shall refer to those banks that have signed a Protocol with the Ministry of Finance, in which the
bank indicates its understanding and agreement of responsibilities under the PoA – Annex 5.
18
As of time of writing, the three participating banks – the Bank of Alexandria, Banque Misr, and the National Bank
of Egypt – are offering a rate of 6.24%, which is less than typical commercial rates of 8% to 9% (commercial rates
confirmed by representatives from each of the three banks during the DOE validation site visit on December 7, 2009).
17
13

Reduced maintenance and spare parts cost;

Insurance for all new taxi vehicles against all standard causalities (theft, fire,
accidents, etc.).
In the event of a funding shortfall, Decree #471 includes a provision by which the value of
incentives may be cut by up to 50 percent. The Ministry of Finance intends to apply CDM
revenues, in part, to make up for these gaps if they arise.
The following table summarizes the program costs and benefits from the perspective of the vehicle
owners:
19
As of time of writing, the participating advertising firm (which has signed a contract with participating banks, in
which the firm indicates its understanding and agreement of responsibilities under the PoA) offers a fixed rate of EGP
550 per month for a period of up to five years (which is the loan term).
14
Figure 5: Participating Vehicles in the Greater Cairo Region Taxi Scrapping Projects (as of March
2010)
Price after
Scrapping
and
Discount
(EGP)
37,000
Total Monthly
Loan
Installment
Including
Insurance
(EGP)
940
Installment
Paid by
Advertising
Company
(EGP)
550
Installment
Left to be
Paid by the
Owner
(EGP)
390
Vehicle Type
Sperenza A113
Fuel
Motor Gasoline
Sperenza A113
CNG
40,000
1,010
550
460
Sperenza A516
Motor Gasoline
48,400
1,220
550
670
Sperenza A516
CNG
51,900
1,310
550
760
Hyundai Verna 1.6
Motor Gasoline
48,900
1,235
550
685
Hyundai Verna 1.6
CNG
53,200
1,340
550
790
Hyundai Verna GLS 1.6
Motor Gasoline
52,400
1,320
550
770
Hyundai Verna GLS 1.6
CNG
56,700
1,427
550
877
Chevrolet Lanos
Motor Gasoline
48,475
1,220
550
670
Chevrolet Lanos
(Full Option)
Motor Gasoline
50,925
1,284
550
734
Lada 2107 1.6
Motor Gasoline
37,000
940
550
390
Peugot Pars 405 1.6
Motor Gasoline
69,750
1,755
550
1205
These prices and installment rates have been widely advertised in local newspapers and made
available to all taxi drivers in Greater Cairo.
2.2.3.4 Generation of New Employment and Contribution to the Economy
Since all participating vehicle models must be assembled locally, the program also acts as an
economic stimulus program, supporting the local auto industry. The PoA requires employment of
professionals and workers in each step of the vehicles’ retirement-replacement activities, vehicle
assembly, finance, insurance, scrapping and recycling, vehicle inspection, etc.
2.2.4 Alternatives Considered
A typical project under the PoA will be a two-month project, where eligible vehicle owners may
voluntarily surrender their vehicles for scrapping, in exchange for an array of incentives, many of
which may be used towards the purchase of a new and more energy efficient vehicle. The projects
will support the enforcement of Traffic Law #121 (2008), by ensuring that vehicles affected by the
law are surrendered and scrapped, rather than being converted to private use, sold to areas
15
unaffected by the Law, or partially disassembled, with the motor being resold for future use.
Following are alternatives that have been considered:
1) Do Nothing
In the event that there is no program to support Traffic Law #121 (2008), no reasonable means
would exist to ensure that vehicles affected by the law are actually fully taken out of service – and
therefore no means to ensure that the Law is having any material effect on improving traffic
conditions, air quality or GHG emissions.
2) Establish Mandatory Scrapping Projects
Under this alternative, the Ministry of Interior would establish a mandatory scrapping regime,
whereby non-compliance would be heavily penalized. The difficulty with a mandatory scheme is
enforcement. That is, while the Ministry could readily identify violators who continue to drive old
mass transport vehicles affected by the law, the Ministry would not be well positioned to monitor
re-sale of vehicles for private use, re-sale to other regions, or re-sale of the vehicle engines. Thus,
a mandatory scheme would not have the same impact on GHG emissions mitigation as the
proposed projects could.
3) Establish Voluntary Scrapping Projects, without Incentives
Under this alternative, vehicle owners with vehicles that are affected by Traffic Law #121 (2008)
would have a choice – they could either generate revenue from their old vehicle (e.g., convert their
vehicle to private use (to keep or to sell); sell their vehicle to a region unaffected by the Law; sell
individual parts, including the engine, etc.) or voluntarily surrender their vehicle for scrapping,
without any fiscal incentive. It is clear that under this alternative, the level of participation would
be very low, compared to participation with the proposed PoA, which could contribute to the
financial compensation to participants.
4) Establish Voluntary Scrapping Project, with Incentives but without CDM Support
This alternative would describe current conditions, where projects are implemented, but only
partially, because carbon finance would directly support the PoA in three respects that would not
occur otherwise: 1) Carbon finance supports the on-going monitoring of GHG emissions
reductions associated with the program, which otherwise would not be undertaken; and more
importantly, 2) The advance funding derived from carbon finance support shall be used towards
the development of a recycling facility. At present, scrapped vehicles are only set aside for storage.
As space is limited and prolonged storage could pose environmental hazards, this is only short
term solution – with carbon finance support, a recycling facility will ensure that scrapped vehicles
neither take up land that could be used for other purposes, nor pose unnecessary environmental
hazards.
5) Establish Voluntary Scrapping Project, with Incentives and with CDM Support
Under this alternative, vehicle owners may voluntarily surrender their old vehicles in exchange for
a range of financial incentives that may be used towards the purchase of a new vehicle from a
participating auto dealer. With the CDM support, the old vehicles are transferred to a monitored
recycling facility, where vehicles and their components are safely and permanently scrapped.
Selected alternative: Given the short-comings of alternatives 1-4, the selected alternative is #5:
Establish Voluntary Scrapping Project, with Incentives and with CDM Support, above. The
16
selected alternative is in compliance with all mandatory applicable legal and regulatory
requirements, including those laws and regulations that have objectives other than greenhouse gas
reductions.
2.2.5 Global Experience and Lessons Learned Considered in Program Design
Although the Egypt Vehicle Scrapping and Recycling Program of Activities will be the first
registered transport-sector Program of Activities under the UNFCCC Clean Development
Mechanism (CDM) system worldwide, and only the third transport sector CDM activity to be
registered in the world, the IBRD and Carbon Finance Unit has been able to draw upon its 10years of carbon finance project development experience to enhance the design of the program and
mitigate risks occasionally inherent in the CDM registration and monitoring process. Specifically,
the following lessons and measures have been taken into consideration:

Close collaboration with the Designated Operational Entity (DOE):
Prior to submittal to the UNFCCC Executive Board for consideration, all Clean
Development Mechanism projects and programs must be validated by a third-party
independent UNFCCC accredited auditor, called a Designated Operational Entity, or DOE.
The DOE validation is a multi-step process that, if not well managed, can result in
significant registration delays. Based on past experience, to mitigate delays, the following
actions have been taken: 1) The DOE was consulted before program preparation began, to
ensure that the DOE team was aware of and in agreement with proposed program
parameters and procedures; 2) Rather than submit program supporting documentation on a
piece-meal, per-request basis, the Carbon Finance Unit prepared a full 200+ page annex of
all supporting program documentation for DOE review prior to the validation site visit; 3)
The Carbon Finance Unit organized a meeting with the DOE and Program Coordinator
(Ministry of Finance) on the last day of the validation site visit to go over the DOE’s
preliminary findings, to ensure agreement and understanding of how each finding could be
addressed; and 4) The Carbon Finance Unit has maintained close communications with the
DOE throughout the process.

Ensuring ownership of the program design documents by the national Program
Coordinator:
Often, consultants will prepare CDM program design documentation and monitoring plans
on behalf of the Program Coordinators, requiring their participation only to review final
drafts. Lessons learned show that without the Program Coordinator participation in not just
the final review, but also the preparation of the program design documents, there is a risk
that the Program Coordinators will not fully understand the implementation and monitoring
responsibilities that they are undertaking, thus increasing the risk of non-compliance. For
the Egypt Vehicle Scrapping and Recycling Program, the Carbon Finance Unit prepared
the program design documents and monitoring plan in full collaboration with the Program
Coordinator (Ministry of Finance) -- the Coordinator contributed to sections of the design
documents as it was being prepared. As a result of this process, the Coordinator has strong
ownership over the documents, which ensures that there is a full understanding of what the
requirements are of the Coordinator through the CDM process.
17
2.3
Economic and Financial Analysis
2.3.1 Accounting Costs and Revenues
According to a Prime Ministerial decree, the Ministry of Finance is authorized to disburse a
subsidy of up to EGP 5,000 (USD 911) per eligible surrendered vehicle. This amount may be less,
in the event: a) the vehicle is determined to be non-operational by the on-site engineer inspector; or
b) in the even financial resources are insufficient to continue offering the full subsidy. A copy of
the relevant decrees outlining these procedures (as well as their English translations), may be
found in Annex 2 of the Program of Activities Design Document (PoA-DD). For 49,000 vehicles,
assuming not all vehicles will receive the maximum subsidy, the total cost burden on the MoF may
be close to USD 40 million.
As a point of comparison, the Egyptian vehicle subsidy is relatively conservative compared to
vehicle scrapping subsidies offered by other countries as shown in Figure 4:
Figure 6: Average Vehicle Scrapping Subsidies in 2009 20
4500
4000
3500
US$ at PPP (2009)
3000
2500
2000
1500
1000
500
0
* Morocco taxi scrapping program is currently under design; a ~ US$3,000 subsidy (figure does not account for PPP)
has been proposed by the government.
Extrapolated from: The Economist. 19 November 2009. “Vehicle-Scrapping Subsidies.” (Original Data Source:
OECD; Egypt scrapping subsidy adjusted for PPP using PPP conversion factors from: The International Monetary
Fund. October 2009. “World Economic Outlook Database, October 2009.”)
20
18
The Ministry is also responsible for site preparation activities for the Recycling Facility, estimated
to be approximately USD 11.7 million. The combined accounting cost, then, to the Ministry of
Finance is approximately USD 52 million.
As with other vehicle scrapping programs around the world, the Ministry’s investment is expected
to have a positive multiplier income effect across the economy in various industries. For example,
in an addition to the benefits of additional vehicles sales by local vehicle manufacturers,
participating vehicle dealers, banks, insurance companies, advertising firm, and recycling facility
all generate profits from the program activity that may not have otherwise been realized during the
program period.21
Through carbon finance, the Greater Cairo Region taxi projects are expected to generate additional
revenue. Expected emissions reductions from 2010 through 2018 from 49,000 participating
vehicles are: 1,305,480 to 2,287011 tons CO2e (range is dependent on the actual vehiclekilometers traveled by project vehicles each year). Assuming a market price of US$11 per
Certified Emissions Reduction (CER) generated through 2013 and a price of USD 6 per CER
generated after 2013, these tons are worth between USD 10 and USD 18 million. Of this total, the
IBRD as Trustee of the Carbon Funds shall purchase at least USD 4.9 million worth of CERs
through 2013, with the option to purchase more. The Ministry of Finance may secure other buyers
for the remaining CERs.
2.3.2 Opportunity Costs and Economic Benefits Attributed to Stakeholders
Since the monetary equivalent of the economic costs and benefits associated with the program are
unknown (these analyses are outside the scope of the IBRD as Trustee on behalf of the Carbon
Funds for the carbon finance engagement, as completion and approval of the framework
environment and social assessment are considered sufficient evidence), a more meaningful
qualitative analysis of opportunity costs (i.e., economic costs) and economic benefits associated
with the Program is provided.
The caveat of an opportunity cost presentation is that without the program, these opportunity costs
would not necessarily have been revenues. For example, while the Ministry of Finance forgoes tax
and VAT revenue from each new vehicle sold, in absence of the program, it is unknown whether
the new vehicle would have been sold within the program period and thus whether the forgone tax
revenue can truly be stated as an opportunity cost. The same caveat applies to the following
opportunity costs borne by all stakeholders:

Ministry of Finance: tax and VAT revenue from vehicle imported components; staff
time and resources;

Commercial banks: Additional interest-rate income associated with non-discounted
interest rates; and

Auto Dealers: Additional revenue from non-discounted vehicle prices.
21
The actual profit per vehicle by private sector entities is proprietary. Participation in the program is voluntary, and
these entities have reduced prices/interest rates such that they can still meet their business goals while simultaneously
ensuring the program is affordable to drivers (the program is also voluntary for drivers, and annual instalment
payments, by vehicle type, have been widely published throughout the local media – samples of these advertisements
have been audited by the Designated Operational Entity and are included in PoA-DD Annex 14.
19
In terms of economic benefits, in addition to the accounting revenues earned by private
stakeholders, generated employment, and stimulus to the local vehicle assembly industry, a
monetary value could potentially be applied to the total reduction of air pollution associated with
the PoA as well as accidents.
For example, in a study entitled “Arab Republic of Egypt Cost Assessment of Environmental
Degradation,”22 the estimated cost of air pollution in the Greater Cairo Region and Alexandria was
about 2.1 percent of GDP in 1991. Assuming this percentage has not significantly changed over
time (i.e., the cost of air pollution has grown at the same rate as GDP), then the cost of air
pollution would be about USD 4.4 million today. 23 Assuming about 75 percent of this pollution
was generated in Cairo, and assuming 26 percent of this 75 percent was generated from road-based
transport, then the annual cost of air pollution from road transport in the Greater Cairo Region
would be about USD 850 million. If, each year, the 49,000 vehicles participating in the program
reduced air pollution from transport by one percent due to their inclusion of modern catalytic
converters and average 44 percent improvement in fuel efficiency, then over 10 years, the program
would pay for itself though air pollution reduction alone.
2.4
Program Implementation and Institutional Arrangements
2.4.1 Program Implementation -- Logistics
Under each project, vehicles greater than 20 years old are replaced with new vehicles that are, by
virtue of the more modern technologies employed, more energy efficient, less polluting, and safer.
All eligible new replacement vehicles are pre-approved by the Ministry of Finance, in agreement
with the respective vehicle dealer.
The vehicle replacement happens in two phases, or sites, in all project activities implemented
under the PoA. As of time of writing, for the Greater Cairo Region taxi projects, these two sites are
in separate locations (an active Vehicle Processing and Storage Site and a proposed Scrapping and
Recycling Site), but they may be combined at a later stage into a single area, already identified by
the Ministry of Interior, for all Greater Cairo Region projects, with additional satellite Processing
and Storage Sites in other regions (which would feed into the central recycling facility in the
Greater Cairo Region):




Alexandria: serving West Delta governorates and Matrouh Governorate;
Dakahleya: serving East and Central Delta governorates;
Ismailia: serving Suez Canal and South and North Sinai governorates; and
Assiut: serving Southern governorates and the Red Sea Governorate.
For the purpose of describing each site’s functionality, they are described separately, below, even
though these two sites may be located on the same land parcel.
World Bank. 29 July 2002. “Arab Republic of Egypt Cost Assessment of Environmental Degradation: Sector Note.”
Report #25175-EGT
22
Estimated Egypt 2010 GDP = USD 208 billion: International Monetary Fund. October 2009. “World Economic
Outlook Database: Egypt.”
23
http://www.imf.org/external/pubs/ft/weo/2009/02/weodata/weorept.aspx?sy=2007&ey=2014&scsm=1&ssd=1&sort=c
ountry&ds=.&br=1&c=469&s=NGDPD&grp=0&a=&pr.x=91&pr.y=6
20
Processing and Storage Site
The majority of PoA activities undertaken by Project Participants in the Greater Cairo Region
occur at the Processing and Storage Site, which, as of time of writing, is located on CairoAlexandria Desert Road, about 20 km west of downtown Cairo (see map below).
Figure 7: Location of Processing and Storage Site for Greater Cairo Region
Processing and
Storage Site
The following activities take place at this site:

Inspection of old vehicles for program eligibility;

Preparation of surrendered vehicles for temporary on-site storage (liquids are
drained and batteries are removed);

Distribution of subsidy for surrendered vehicles;

Purchase of new vehicles from independent vendor representatives;

Storage of new vehicles in parking lot;

Inspection of new vehicles;

Licensing;

Advertising procedures (issuance of a letter from the advertising firm indicating
approval for licensing of each new vehicle);

First-aid kit distribution;

Program security and monitoring; and
21

Ancillary services (café, on-site fire trucks and staff, administration, etc.).
Following are some photographs taken on site in 2009, illustrating these multiple functions:
22
2
1
4
6
3
5
7
1) On-site bank office; 2) New vehicle inspection and recording of motor and chassis serial number; 3) On-site
auto-dealer office; 4)Advertising on new vehicle; 5) Various on-site stations; 6) World Bank team inspects site; 7)
New vehicles (foreground) and scrapped vehicles (background).
23
As of time of writing, the Recycling Site has not yet been constructed – advance payment funding
from CER generation is expected to be used towards the cost of site preparation. The site itself,
which is already government-owned, has been identified and reserved for this purpose.
Both of these sites – the Processing and Storage Site and the Scrapping and Recycling Site -- are
located on government-owned property, outside of the city-proper. It is expected that, pending
CDM registration, the Processing and Storage Site in the Greater Cairo Region will be relocated to
the proposed Scrapping and Recycling Site.
On December 31, 2008, five auto dealers signed a Protocol with the Ministry of Finance,
indicating their understanding of and willingness to participate in the Greater Cairo Region taxi
projects under the PoA.
For the Greater Cairo Region taxi projects, the Ministry of Finance has authorized the following
project replacement vehicles offered by these five dealers:
Figure 8: New Vehicles to be Used in Greater Cairo Region Taxi CPAs, and Corresponding
Fuel Efficiency24
Estimated Fuel Efficiency
Vehicle Type
Fuel
(L or m3 / 100 km)
Motor
Sperenza A113
9.7
Gasoline
Sperenza A113
CNG
8.7
Motor
Sperenza A516
10.3
Gasoline
Sperenza A516
CNG
9.3
Motor
Hyundai Verna 1.6
8.5
Gasoline
Hyundai Verna 1.6
CNG
7.7
Motor
Hyundai Verna GLS 1.6
8.5
Gasoline
Hyundai Verna GLS 1.6
CNG
7.7
Motor
Chevrolet Lanos
9.2
Gasoline
Chevrolet Lanos (Full
Motor
9.2
Option)
Gasoline
Motor
Lada 2107 1.6
11.1
Gasoline
Motor
Peugot Pars 405 1.6
8.8
Gasoline
Additional vehicles may be added over time, through amendment to the Protocol.
24
Fuel efficiency data, based on typical taxi driver usage (i.e. primarily urban conditions), has been provided directly
by the respective auto manufactures.
24
Important note: the manufacturers’ fuel efficiency estimates are used only as a starting point for
ex-ante emissions reduction estimates (see PoA-DD Section E.7.1 – Parameter FEv,y) and as a
check for monitoring quality control (see PoA-DD Section E.7.2). Actual emissions reduction
calculations are based on annual fuel efficiency surveys, conducted in accordance with sampling
guidance presented in EB 50 Report, Annex 30, “General Guidelines for Sampling and Surveys for
Small-Scale CDM Project Activities” (see PoA-DD Section E.7.2).
At any stage in the PoA, the Ministry may approve additional new taxi, microbus, trailer trucks, or
bus models for inclusion (but as of time of writing, the IBRD, as Trustee on behalf of the Carbon
Funds, shall only purchase emissions reductions from the Greater Cairo Region taxi projects). New
models, as they are approved, shall be reported to the UNFCCC.
2.4.2 Organizational Structure and public-private-partnerships
To limit the cost-burden on the government, the program has been structured as a public-private
partnership (PPP), with the provision of incentives spread across both the public sector (e.g.,
Ministry of Finance and Ministry of Interior) and the private sector (e.g., vehicle dealers,
commercial banks, insurance companies, advertising agencies).
The organizational structure of program, hence, involves various government and private sector
parties contributing to its overall operation. Key parties have voluntarily signed a cooperative
agreement to participate in the program, including the Ministry of Finance, Ministry of Interior
(Traffic Police), three participating commercial banks, five vehicle companies (who assemble
locally), an advertising firm, and an insurance agency. Ministry of Environment plays an important
independent role of program oversight from environment perspective, approving framework
environment and social assessment (FESA) and environmental management plan (EMP), giving
permits to the private sector entity which will operate the scrapping and recycling facility, carry
out regular inspections to ensure environment compliance to EMP. Furthermore, the Egypt
Environment Affairs Authority (EEAA), affiliated to the Ministry of Environment, is Egypt’s
Carbon Finance Designated National Authority (DNA), which is responsible for preparing a Letter
of Approval (LoA) that indicates whether the program supports sustainable development in Egypt.
The following diagram summarizes the functions of the different participants.
25
Figure 9: Program Institutional Organization
The Ministry of Finance is responsible for the management and monitoring of all projects that fall
within the proposed PoA. In addition to providing on-site general management and oversight of all
recording and monitoring of project activities, the Ministry of Finance is also responsible for
providing vehicle owners with financial incentives, coordinating the activities of all the PoA
Participants, publicly advertising the projects, guaranteeing the loan against default in the case
vehicles cannot be recovered/re-possessed, conducting quarterly QA/QC surveys among vehicle
owners, and managing complaints and comments that are received via a hot-line and survey.
The Ministry of Interior has provided land to be used for all projects that fall within the Greater
Cairo Region. For each project, the Ministry of Interior is responsible for on-site security and
regulation enforcement, licensing, registration, and vehicle inspection. The Ministry of Interior is
also responsible for finding vehicles in case of loan default.
26
The vehicle dealers, advertising firm, insurance firm, and commercial banks work directly with the
vehicle owners and report directly to the Ministry of Finance to implement the vehicle replacement
and financial incentive scheme.
The recycling firm shall be hired by the Ministry of Finance to manage all recycling activities,
which shall be monitored by the Ministry of Interior for security and safety purposes, as well as the
Ministry of Environment on a random audit-basis to ensure the facility is operating within the
firm’s environmental management plan (as presented in the approved Environmental Impact
Assessment) and relevant regulations.
While the Ministry of Environment is not a PoA Partner (i.e., it has not signed the Protocol for
PoA implementation), it will still play a critical role in the projects by:

Reviewing and approving Environmental Impact Assessments, per Egyptian law,
for each Processing and Storage Site and Recycling Facility Site;

Approving environmental monitoring plans submitted by PoA (and/or project)
Participants; and

Performing random spot-checks / audits of on-going operations of these facilities
and enforcing monitoring plans presented in the Framework Environment and Social
Assessment (FESA); and

As the Designated National Authority (DNA), prepare a Letter of Approval for the
program, confirming that it supports Egyptian sustainable development objectives.
The following table provides a summary of these duties.
Figure 10: Program Stakeholder Responsibilities
PoA Participant
Ministry of Finance
Role
 Oversees PoA management and on-site
Processing and Scrapping Site management;
 Provides vehicle owners with payment
for surrendered eligible vehicles;
 Pays vehicle sales taxes on behalf of the
owner;
 Exempts
customs
on
imported
components of the vehicle;
 Guarantees the loan against default in
select cases;
 Places program advertising in local and
national media
 Manages comments and complaints
from participants (via hotline and periodic
participant survey);
 Maintains registered project database;
 Upon PoA registration, shall oversee
CDM project monitoring activities, as
presented in this PoA-DD.
27
PoA Main Stakeholders
Government Entities
Ministry of Interior
Ministry of Environment
EEAA
Commercial Banks
National Bank of Egypt;
Banque Misr; and
Bank of Alexandria
Vehicle Dealerships
Speranza
Hyundai
Chevrolet
Peugeot
Lada
Role
 Provides land for Processing and
Scrapping Site and for Recycling Facility
Site for GCR projects;
 Manages initial vehicle inspection;
 Manages licensing of new vehicles;
 Provides security and monitoring
services for Processing and Scrapping Site;
and
 Locates vehicles in case of loan default.
 Program oversight from environment
perspective
 Approving FESA and EMP
 Giving environment permit to the
private sector entity to operate the scrapping
and recycling facility
 Carry out regular inspections to ensure
environment compliance to EMP.
 As DNA, prepare Letter of Approval for
program
 Provide loans to eligible vehicle owners
who have surrendered their old vehicles
(due to scale, banks were able to charge
interest rate slightly below market ref);
 Provide branch office representatives at
Processing and Scrapping Site.
 Provide discounted vehicles to eligible
vehicle owners who have surrendered their
old vehicles;
 Prepare vehicles for mass transport use
(e.g., install meters and paint exteriors);
 Provide up-to 3-year warranty on
vehicles;
 Provide routine maintenance;
 Guarantee loans against default, where
the dealer repossesses the vehicle and pays
the outstanding loan to the Bank;
 Provide branch office representatives at
Processing and Scrapping Site; and
 Shall cooperate with Ministry of
Finance on arranging annual monitoring
surveys after PoA registration (but shall not
28
be responsible for conducting surveys).
Insurance Company
Misr Insurance
Advertising Firm
Instant Media
 Provides insurance for all replacement
vehicles;25
 Provides branch office representatives at
Processing and Scrapping Site.
 Provides loan supplements plus monthly
cash payment to vehicle owners in exchange
for use of internal and external advertising
space;
 Provides branch office representatives at
Processing and Scrapping Site;
 Shall cooperate with Ministry of
Finance on arranging annual monitoring
surveys after PoA registration (but shall not
be responsible for conducting surveys).
Owners of project vehicles (i.e., vehicles which, according to Traffic Law #121 (2008), are no
longer eligible for license issuance or renewal due to the vehicle’s age) are considered to be the
Activity Implementers, since they are ultimately responsible for the ownership and operation of the
new vehicles. It should be noted that when participating vehicle owners sign their bank loan
documentation, they also sign an agreement waiving their rights to any CERs generated from a
project.
2.4.3 Monitoring Plan
See Annex 4 for description of the program monitoring plan, per UNFCCC guidelines.
2.5
Safeguards
The project triggers the IBRD’s Environmental Assessment Policy (OP/BP 4.01) and is designated
a Category A.
Figure 11: Safeguard Policies Triggered by the Program
Yes
[X]
[]
[]
[]
[]
[]
[]
Safeguard Policies
Environmental Assessment (OP/BP 4.01)
Natural Habitats (OP/BP 4.04)
Pest Management (OP 4.09)
Physical Cultural Resources (OP/BP 4.11)
Involuntary Resettlement (OP/BP 4.12)
Indigenous Peoples ( OP/BP 4.10)
Forests (OP/BP 4.36)
No
[]
[X]
[X]
[X]
[X]
[X]
[X]
Per commercial banks requirements, all vehicles participating in the program are insured under the vehicle owner’s
name.
25
29
Safety of Dams (OP/BP 4.37)
Projects in Disputed Areas (OP/BP 7.60)
Projects on International Waterways (OP/BP 7.50)
Piloting the Use of Borrower Systems to Address Environmental
and Social Issues in Bank-Supported Projects (OP/BP 4.00)
[]
[]
[]
[X]
[X]
[X]
[]
[X]
The Ministry of Finance contracted an independent consulting firm, EcoConServ, to carry out
Framework Environmental and Social Assessment (FESA), of which the IBRD reviewed and
cleared the TORs.
The full substantially completed report was disclosed on the Ministry of Finance website:
<http://www.mof.gov.eg/English/PDF/Draft%20Report.pdf>, as well as on the InfoShop on
December 29, 2009. Based on comments raised by the IBRD Safeguards team, the final draft
FESA was prepared by the consulting firm received by the IBRD from Ministry of Finance on
February 7, 2010.
The overall objective of the FESA was to assess the impacts of the different proposed design
elements of Egypt Vehicle Scrapping and Recycling Program, and to propose measures to enhance
its environmental and social performance. The FESA study aimed to (a) supply relevant data
concerning the environmental and social impacts of the Program, (b) assess and compare the
impacts taking into account the relevant national and international requirements and guidelines, (c)
consult the relevant stakeholders on such impacts and their management, (d) analyze the program
alternatives, and (e) provide a set of mitigation measures, monitoring plan, and institutional
capacity program to manage the environmental and social impacts. One important element of the
study was to prescribe a series of conditions and good practices to be followed at the program
level, which would further be elaborated for each specific project, for which an Environmental and
Social Impact Assessment would be required, once the specific arrangements for each component
under this program were identified.
A public consultation was held in December 28, 2009, with representatives of the Ministry of
Finance, participating commercial banks, participating car manufacture companies, and
representatives of the Egyptian Environmental Affairs Agency. An announcement for the public
consultation was published in governmental newspapers on December 21, 2009. The public
consultation began with a presentation from the project coordinator and then a presentation from
the consulting firm. All viewpoints of the participants had been taken into consideration in
preparation of the final study.
2.6
Environmental Analysis
According to Egyptian law, a Framework Environmental and Social Assessment (FESA) is
required. The Ministry of Finance contracted an independent consultant, EcoConServ, to conduct
the assessment in accordance with relevant environmental and social regulations (and relevant
subsequent decrees, as outlined in the FESA report):




Law 4/1994 for Environmental Protection;
Law 12/2003 for Labor Work;
Law 93/1962 for Discharge of Wastewater; and
Law 38/1967 for General Cleanliness.
30
The full report was disclosed on the Ministry of Finance website on December 21, 2009 as well as
in the World Bank InfoShop on December 29, 2009. The FESA has been prepared by the
Government of Egypt (GoE) and will be implemented by the project entity, Ministry of Finance.
2.6.1 Positive Impacts
The program will result in several environmental benefits, such as:

Reduction of CO2 emissions: 1,305,480 to 2,287011 tons CO2e from 2010 through
2018;

Reduction of CH4 and N2O emissions over the program period; and

Reduction of traffic congestion in Greater Cairo by means of removing from the
roads old vehicles, which frequently break down.
The program will result in socio-economic benefits, such as:

Raising the income of the drivers through: ownership of a vehicle in good condition
that can work longer hours, reduction of fuel consumption, and reduction of maintenance
costs;

Providing more job opportunities to the drivers, and to workers in vehicle factories
and storage facilities;

Increasing business for the companies and banks during the financial crisis;

Increasing the prices of the old vehicles in order to improve participation in the
program;

Improved economic conditions will have a positive effect on drivers’ living
conditions.

Providing job opportunities for the scrapping and intermediate storage facilities’
employees and for their transportation to and from the site; and

Reducing economic and gross domestic product losses associated with increased
travel time during traffic congestion.
Regarding potential indirect and/or long term impacts due to anticipated future activities in the
project area, as the project components become more defined during the implementation phase,
further detailed environmental and social impact assessments, especially for the Recycling Facility,
will be carried out as necessary.
2.6.2 Potential Adverse Impacts
Potential adverse impacts during construction include:

Handling and Disposal of Solid Waste at the Scrapping & Recycling Plant
o
The soil is to be excavated and not used in earth filling. The environmental
impacts of soil waste focus on changing the landscape of the dumping site and dust
dispersion during transportation.
o
The environmental impacts of garbage are changing of the landscape of the
site, as well as bad odors and insects.
31

Handling and Disposal of Liquid Waste
o
Regarding the construction of the permanent scrapping and intermediate
storage facility, the environmental impact of domestic wastewater of the
construction staff will be avoided due to the use of the public sewer system and
toilets at the nearest camp for the Ministry of Interior.
o
Regarding the construction of the scrapping and recycling facility, domestic
wastewater of the construction staff will be isolated so as to avoid any impacts in
terms of the landscape, odors and insects, etc.

Air Emissions
o
Dust emissions are expected during earth moving and filling and during the
transport of soil waste to the temporary storage facility site.
o
Impact of gaseous emissions from construction equipment (generators,
cranes, loaders and trucks), will be extremely minor.

Noise
o
Although the construction activities include noise, the impact upon the
cumulative noise levels is insignificant.

Socio-Economic Impacts
o
Possible traffic congestion
o
Possibility of increasing noise levels
o
Possibility of injury on site
Potential adverse impacts during operations include:

Management of Solid Wastes
o
Scrapped Vehicles
The environmental impact of scrapped vehicles is rare. It happens only when there
is heavy rainfall on rusty metals, which leads to soil and underground water
contamination.
o
Batteries
The only battery management practice that will take place at the scrapping and
intermediate storage facility will be the removal of the batteries. All other
management practices will be performed at the recycling facility. Improper storage
of batteries is a fire hazard.
o
Garbage
The environmental impacts of garbage are change of the landscape of the site, and
bad odors and insects.

Management of Liquid Wastes:
The main environmental impacts for the fuel are release of fuel due to improper handling or
storage. Improper handling could occur during the draining of fuel from vehicles, and may
lead to seepage of fuel, resulting in soil contamination or underground water
contamination.
32

Traffic Flow
The truck round-trip time will depend on the location of the recycling plant, and
accordingly the distance between the recycling plant and the current scrapping and
intermediate storage facility site as well as sites to be determined later when the project
expands and starts implementation in other governorates.

Socio-Economic Impacts
o
Insufficient space for the scrapped vehicles
o
The potential of pollution due to oil and other substances in the batteries
o
Possibility of an increase in noise levels due to the compressor
o
Possibility of theft in the site
o
Job opportunities for informal mechanics may be reduced
The FESA includes a clear EMP that deals which each of the above mentioned potential adverse
impacts, which will be implemented by the Ministry of Finance and monitored by the Ministry of
Environment. Egypt has a reasonably good legal and regulatory framework related to
environmental and social protection, including requirements for environmental assessments and
mitigation.
2.6.3 Alternatives
Regarding alternatives for the site, four options were studied under the FESA and
recommendations made.
2.6.4 Stakeholder Consultations and Disclosure
A public consultation was held in 28 December 2009 with representatives of the Ministry of
Finance, banks, car manufacture companies, and representatives of the Egyptian Environmental
Affairs Agency. An announcement for the public consultation was published in governmental
newspapers on 21 December 2009. The public consultation began with a presentation from the
project coordinator and then a presentation from the Chief Supervisor of the FESA. All viewpoints
of the participants have been taken into consideration in preparation of the final study. Additional
audited stakeholder consultations, as per the requirement of the UNFCCC guidelines for carbon
finance projects, have also been carried and described in Section 2.7.
The FESA has been disclosed in the website of Ministry of Finance, as well as in the World Bank
InfoShop on December 29, 2009.
2.7
Carbon Finance Stakeholder Consultations
An additional set of audited stakeholder consultations are required under UNFCCC guidelines for
carbon finance projects. Following is a summary of this process, as reported to the UNFCCC. Two
sets of stakeholder consultations have been arranged for the PoA: PoA Partner meetings and
vehicle owner meetings.
Program Stakeholders
For the PoA stakeholders, there has been a two-part stakeholder consultation process. First, a
consultation was held in December 2008, when the PoA stakeholders signed a Protocol indicating
their understanding of the program and their willingness to participate (see PoA-DD Annex 5 for a
33
copy of the signed Protocol). A second consultation was held on October 25, 2009, in which PoA
stakeholders were made aware of the Ministry of Finance’s intent to partially finance the PoA
through carbon finance. Presentations by the Ministry of Environment, the Ministry of Finance,
and the IBRD were given about the process, and attendees signed a document indicating their
understanding of the PoA as a carbon finance activity and that they have no objection to the
leveraging of this funding source (see PoA-DD Annex 18 for a signed copy of the agreement).
Vehicle Owners
For vehicle owners, a different stakeholder consultation approach was used that leverages the
extensive public advertising and survey work already undertaken by the Project Entity (Ministry of
Finance) with regards to all eleven taxi projects planned for the Greater Cairo Region. The
Ministry:

Beginning on March 12, 2009, before the first project was implemented on April
21, 2009, press releases were published in a wide array of local and national newspapers,
advertising the program, including rules and conditions. A selection of advertisements,
notices, and articles are presented in PoA-DD Annex 14. Full versions of these materials
are available upon request from the Ministry of Finance.

New vehicle Bank loan documents include language about carbon finance – when
vehicle owners sign for their bank loans, they indicated their willingness to waive their
right to any of the emissions reduction credits associated with the PoA (PoA-DD Annex
17).

In March 2009, a hot-line number was established and published in the newspapers,
the Ministry of Finance website, and posted on the Processing and Scrapping Site, which
vehicles owners could use to express complaints with the system. All complaints are
managed by the Ministry of Finance (PoA-DD Annex 10).

In April 2009, the Ministry began a quarterly telephone survey program of vehicle
owners for quality assurance purposes (PoA-DD Annex 8 and Annex 9).

In September 2009, the telephone survey script was revised to include information
about carbon finance, and a question was added to ensure that vehicle owners were aware
that carbon finance is being used to help fund the program.

Also in September 2009, advertisements were posted at the Processing and
Scrapping Site enabling any vehicle owner to voluntarily participate in a telephone survey
(as opposed to awaiting random selection) to provide input (PoA-DD Annex 10).
In summary, for reference, the following documentation may be found in PoA-DD Annexes 8, 9,
10, 14, 17, and 18, which have been provided to the Designated Operations Entity (DOE) for the
purpose of validation:







Copy of PoA Partner Protocol (PoA-DD Annex 5);
Copy of invitation to PoA Partners (PoA-DD Annex 18);
Copy of PoA Partner meeting attendance record (PoA-DD Annex 18);
Copy of PoA Partner agenda (PoA-DD Annex 18)
Copy of PoA Partner meeting minutes (PoA-DD Annex 18);
Copy of PoA Partner attendee signatures (PoA-DD Annex 18);
Sample selection of public notices advertising the project (PoA-DD Annex 14);
34

Copy of notice posted notice advertising the comment hot-line (PoA-DD Annex
10);

Website link for hotline info and program guide:
<www.mof.gov.eg/Arabic/PDF/whatnews-a-10-5-09.pdf>;

Copy of the survey given to vehicles owners (PoA-DD Annex 8);

List of complaints received through survey as of May 2009 (PoA-DD Annex 9);

Bank loan language describing waiver of CER ownership rights (PoA-DD Annex
17); and

Copy of loan contract with CER rights waiver (PoA-DD Annex 17).
2.8
Risks
See Annex 6, the Program’s Risk Identification Worksheet.
2.9
ERPA Main Terms/Conditions
Contract Volume
Contract CERs are:
At least seventy-five percent (75%) of the first
464,548 CERs generated by the Program, as set out in
ERPA, shall be generated by no later than December
31, 2012.
The Contract CERs will be allocated by the
Nominated Representative pro rata to the Trustees as
follows:
IBRD as Trustee of the DCF –232,274 CERs
IBRD as Trustee of the SCF –232,274 CERs
35
Annex 1: Country and Sector Background
The total population of Egypt over the ten-year period between 1996 and 2006 increased from 59
million to 73 million, with an average annual growth rate at 2.04%. The Greater Cairo Region
(GCR) comprises five governorates and is home to a rapidly growing population – 16 million in
2006, increasing to more than 27 million by 2027. 26
The Urban Transport Strategy for Greater Cairo Region has identified the following urban
transport, traffic management and environment issues as the most critical challenges associated
with sustaining urban transport sector growth in the GCR: 27
 Institutional Fragmentation & Insufficient financial resources: Overlaying all of the
above problems are serious institutional fragmentation, duplication and inadequate financial
arrangements leading to under investment in transport facilities.
 Poor public transport system: GCR relies on under developed, overcrowded and unreliable
passenger transport services.
 Aggravated traffic congestion: GCR is experiencing very high traffic congestion. This has
serious economic consequences on reducing labor productivity, leading to loses in GDP, and
contributes to deteriorating air pollution conditions.
 High accident rate: The road transport death rate in GCR is very high. At least 1,000
residents die each year in motor vehicle accidents, more than half of them pedestrians, and over
4,000 are injured.
 Air and noise pollution: Mobile source air pollution in GCR is serious both with regard to
particulate matter as well as noxious chemicals. Noise levels are high and aggravated by very
large and old proportion of the microbuses, minibuses and taxi fleet.
It is estimated that by the end of 2009, the Egyptian transportation sector will have been
responsible for more than 40 million metric tons of global greenhouse gas emissions, most of
which will have been emitted by road-based vehicles.28 About 40 percent of national transport
emissions, or 14 million tons CO2e, may be attributed to the GCR alone, where nearly half of all
motorized vehicles in Egypt operate (Figure 10).
Japan International Cooperation Agency (JIKA), March 2008. “The Strategic Urban Development Master Plan
Study for Sustainable Development of the Greater Cairo Region in the Arab Republic of Egypt: Draft Final Report.”
27
World Bank, Greater Cairo Urban Transport Strategy, 2006.
28
IEA. 2007; Analysis: World Bank Carbon Finance Unit, 2009
26
36
Figure 12: Estimated Annual Metric Million Tons CO2e Emitted per Year in the Egypt
Transportation Sector29
Annual Million Metric Tons CO2e
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
-
Domestic aviation
Road
Domestic navigation
Other (Transport)
The overall investment program in the GCR urban transport is defined in the Greater Cairo Urban
Transport Master Plan (JICA 2003). The Master Plan studies have provided a new framework for
consideration of an integrated urban transport system that emphasized putting “people’s mobility
before that of vehicles.” The Master Plan took account of three “missions” for the urban transport:
 A safe and environment-friendly transport system that would significantly reduce
the carbon signal, focusing on modal shift toward low carbon public transport systems;

An economically effective urban transport system; and

An equitable people’s mobility.
The Master Plan includes investments for the period 2003 to 2022 in the amount of US$17 billion
(Figure 11).30
29
Data sources: International Energy Administration. 2008. "IEA World Energy Statistics and Balances" ISSN 16834240; International Panel on Climate Change. 2006. "2006 IPCC Guidelines for National Greenhouse Gas
Inventories." http://www.ipcc-nggip.iges.or.jp/public/2006gl/index.html; Analysis: World Bank Carbon Finance Unit,
2009.
30
This cost may appear as high, but when expressed as a % of the gross income of the metropolitan area over the same
period it is actually as low as only 0.5%.
37
Figure 13: Investments Proposed in the Transportation Master Plan until 2022
Mass Rapid Transit (Metro)
LRTs
Suburban Railway
Clean Technology Buses
Priority Bus Facilities
(BRTs)
Nile Ferry
Regional Roads
Primary Roads
Intersections
Expressways
Total
Million
US$
2,725
1,475
2,550
1,100
Share of
investment
15.7%
8.5%
14.6%
6.2%
500
10
325
325
525
7,875
17,410
2.9%
0.1%
1.9%
1.8%
3.0%
45.3%
100.0%
However, the high cost of clean technology and lack of a clear investment prioritization
mechanism have been a major hindrance to scalability. As the GCR continues to expand, the
demand will continue to increase faster than the availability of funding. While it is possible to
develop lists of projects that, if implemented, would address the lack of transport capacity and
other deficiencies in the present supply of transport services, it is more difficult to determine how
they would best be funded. To address these issues, the IBRD has provided assistance to the
Government, under the Greater Cairo Urban Transport Strategy,31 to prioritize investment needs. A
sound analytical and scoring method has been applied to assess priority needs and provide reliable
evidence and advice to support the making of political decisions on which investments to approve
and implement. These efforts have included cost-effectiveness, economic and social returns,
environmental impact and potential to attract the private sector participation. Identified
investments as high priorities are those proposed for financing under this project.
Meantime, the Government has already completed lines # 1 and 2 of the underground Metro
totaling 65km, is currently constructing line # 3 for completion by 2012 and line # 4 for
completion by 2017, totaling 70 km. Several Expressways and Nile Ferry transport are under final
stage of studies.
The adopted Urban Transport Strategy for GCR is driven by the good practice principles/integrated
building blocks, as shown in the chart below (Figure 12).
31
World Bank. 2006.
38
Figure 14: Building Blocks of the Greater Cairo Transport Strategy
BUILDING BLOCKS OF THE STRATEGY
Sustainable Urban Transport
Funding
Efficient Urban Transport
Institutions
•Pricing Policy of UT services
•Streamlined Subsidies
•Other Financing sources
•Planning / Policy Formulation
•Priority Investments
•Monitoring and Information Systems
• Regulations and PPP framework
Objective: Efficient, Environmental Friendly
and Affordable
Urban Transport Services in GCR
Efficient
Public Transport System
Improved Traffic Management
Practices
• Road-based high capacity mass
transit systems
•Restructured bus network
(formalize the informal)
•Efficient Operators
(contracting out and PPPs)
•Traffic/Parking inst. Capacity
•Traffic Management Plans
•Parking Strategies/Policies
•Implementation/Monitoring
•Enforcement of Traffic Rules
•Priority Toll corridors
Do Nothing Scenario: Vehicle ownership rates, congestion, and emissions are expected to
significantly increase through the next 20 years. Without immediate investment in urban transport,
by 2022, GHG emissions will increase to at least 16 million tons (and this is very conservative),
average trip speed (of all modes) will decline from 19 kph to 12 kph, and an average roundtrip
journey to work will take more than 1.5 hours. The economic cost of a “do nothing” scenario
would be at least LE 7.5 billion (US$ 1.6 billion) per annum (Figure 13).
Figure 15: Consequences of a “Do Nothing” Scenario
Speed in km /h
Time
150
20
21.4
minutes
km/H
30
11.6
10
Speed
100
Time
50
0
2001
100
37
0
2022
2001
Year
Eco Losses
20
10
8
16
12.2
Pollution
5
Billions EL
millions tons
Pollution
15
2022
Year
7.5
6
4
2
Eco Losses
3
0
0
2001
2001
2022
2022
Year
Year
39
The FY09-11 lending program (CAS Progress Report, June 2008) includes the proposed project in
the amount of US$150 million IBRD financing. Working with the GoE, the IBRD has also secured
an additional US$100 million credit from the Clean Technology Fund (CTF), which is a at IDAlike terms, and its investment plan has been approved by the CTF Trust Fund Committee in
January 2009. The Bank is also assisting the Government in leveraging Carbon Funds, whose
value would be proportional to the emissions reductions associated with these investments.
This is not business as usual. Despite large investments made in metro lines and urban road
capacity over the last two decades in the GCR, the level of investment in transport infrastructure
and services has failed to keep pace with the increasing demands. With the IBRD, CTF and the
subject Carbon Finance Program, the consolidation and acceleration of programs that promote
more efficient transport systems and accelerated GHG emission reduction (ER) would be possible.
The IBRD is indeed committed to climate change and global mitigation measure to reduce GHG
emissions. Implementation of the combined urban transport program (IBRD, CTF and CF) is
expected to result in about 17.7-19.5 million tons CO2e emissions reduction over the next ten years
period.
40
Annex 2: Participating Entities in the PoA and CDM Project Cycle
Egypt Ministry of Finance
Program Coordinator and recipient of revenues
generated from sale of Certified Emissions
Reduction (CER).
The IBRD as Trustee of the Carbon Funds
Preparation of UNFCCC documentation;
Technical assistance provision to the Program
Coordinator for project preparation.
TuV Nord
The Designated Operational Entity (UNFCCC
accredited Clean Development Mechanism
auditing firm) responsible for validating the
PoA and the first CPA. The same DOE or
another DOE may be responsible for validating
the remaining CPAs and/or on-going
verification of annual emissions reductions.
Egypt Environmental Affairs Agency (EEAA)
The Designated National Authority (DNA)
responsible for ensuring Clean Development
Mechanism projects registered in the Host
Country
support
national
sustainable
development goals. The PoA cannot be
registered with the UNFCCC without a Letter
of Approval from the DNA indicating
compliance.
The United Nations Framework Convention on The UNFCCC is responsible for registering
Climate Change Executive Board
CDM projects (and PoAs) and certifying
annual emissions reduction credits.
41
Annex 3: Emissions Reduction Calculation Methodology
1) Baseline Emissions Calculation
Using a combination of default parameters and data collected from vehicle owner surveys, the
annual emissions from baseline vehicles are estimated as follows:
V
(1) BE y   CCv ,c  FEv  VEH v , y  VKTv , y
v 1
Where V refers to the set of baseline vehicle types to be replaced. Each vehicle type, v, shares the
following characteristics:



Fuel type used;
The average fuel efficiency; and
Average annual vehicle-km travelled.
Parameter
BEy
CCv,c
Unit
tons CO2e
tons CO2e / unit of fuel
FEv
unit of fuel / km
VEHv,y
# vehicles
VKTv,y
km
(2)
Description
Baseline emissions in year y
Carbon-equivalent content of fuel (used in a given vehicle
type v) per unit of fuel combusted (calculated – see Formula
2)
Fuel efficiency of a baseline vehicle, type v, measured in
terms of average number of units of fuel combusted (e.g.,
litres) per km travelled
Number of baseline vehicles, type v, to be replaced in a given
project year, y
Average annual vehicle-km travelled by baseline vehicles,
type v, in a given project year, y
CCv,c  EFv  HVv,c  FVv
Parameter
CCv,c
Unit
tons CO2e / unit of fuel
EFv
tons CO2e / kJ
HVv,c
kJ / kg
FVv
kg / unit of fuel
Description
Carbon-equivalent content of fuel (used in a given vehicle
type v) per unit of fuel combusted (calculated – see Formula
2)
IPCCC emissions factors for tons CO2e per unit of combusted
fuel used in vehicle type v
International Energy Agency (IEA) country (lower) heating
values for fuel in country c used in vehicle type v
kg of fuel used in vehicle type v per unit of fuel (e.g., liters for
motor gasoline; m3 or kg for CNG) used in vehicle type v
42
2) Project Emissions Calculation
V
PE y   CCv ,c  FEv , y  VEH v , y  VKTv , y
(3)
v 1
Where V refers to the set of project vehicle types to replace the baseline vehicles. Each vehicle
type, v, shares the following characteristics:



Fuel type used;
The average fuel efficiency (per year); and
Average annual vehicle-km travelled (per year).
Parameter
PEy
CCv,c
Unit
tons CO2e
tons CO2e / unit of fuel
FEv,y
unit of fuel / km
VEHv,y
# vehicles
VKTv,y
km
(4)
Description
Project emissions in year y
Carbon-equivalent content of fuel (used in a given vehicle
type v) per unit of fuel combusted (calculated – see Formula
2)
Fuel efficiency of project vehicle, type v, measured in terms of
average number of units of fuel combusted (e.g., liters) per km
travelled in a given year, y
Number of project vehicles, type v, to be replaced in a given
project year, y
Average annual vehicle-km travelled by project vehicles, type
v, in a given project year, y
CCv,c  EFv  HVv,c  FVv
Parameter
CCv,c
Unit
tons CO2e / unit of fuel
EFv
tons CO2e / kJ
HVv,c
kJ / kg
FVv
kg / unit of fuel
Description
Carbon-equivalent content of fuel (used in a given vehicle
type v) per kJ (calculated – see Formula 2)
IPCCC emissions factors for tons CO2e per unit of
combusted fuel used in vehicle type v
International Energy Agency (IEA) country (lower) heating
values for fuel in country c used in vehicle type v
kg of fuel used in vehicle type v per unit of fuel (e.g., litres
for motor gasoline; m3 or kg for CNG) used in vehicle type v
3) Emissions Reduction Calculation
(5)
BE y  PE y  ERy
Parameter
BEy
PEy
ERy
Unit
tons CO2e
tons CO2e
tons CO2e
Description
Baseline emissions in year y
Project emissions in year y
Emissions reductions in year y
43
E.6.3. Data and parameters that are to be reported in CDM-SSC-CPA-DD form:
Data / Parameter:
Data unit:
Description:
Source of data used:
Value applied:
EFv
tons CO2e / kJ
IPCCC emissions factors for tons CO2e per unit fuel combusted (fuel used in
vehicle type v (project and baseline vehicles)
Unless internationally-accepted, government provided national data is available,
use: International Panel on Climate Change. 2006. "2006 IPCC Guidelines for
National Greenhouse Gas Inventories."
http://www.ipcc-nggip.iges.or.jp/public/2006gl/index.html
For the purpose of estimating project and baseline emissions for the Greater
Cairo Region taxi CPAs associated with the proposed PoA, the following IPCC
factors have been used:
Fuel
Motor gasoline
Diesel
Liquefied petroleum gases (LPG)
CNG
Justification of the
choice of data or
description of
measurement methods
and procedures actually
applied :
CO2e Default Factor
(kg/TJ)
69,300
74,349
63,100
56,100
The entity managing SSC-CPA preparation should always refer to IPCC
Guidelines for National Greenhouse Gas Inventories for the most up-to-date
factors (no such internationally-recognized GHG emissions factors for fuels are
maintained by the Egyptian government).
In the event the project vehicle is powered entirely by electricity, then the
emissions factor must be determined in accordance with the relevant sections
for category I.D. projects, as per AMS-III.C requirements.
If the project vehicle is a hybrid, then both the fossil fuel and electricity
emissions factors must be used, with the allocation ratio (e.g., x% electricity
and y% fossil fuel used per kJ of work) based ex-ante on data provided by the
manufacturer (which is collected along with other data already collected from
the manufacturer, such as fuel efficiency data – thus, no additional activity is
required) and ex-poste based on fuel consumption surveys (which are already
conducted for the monitoring scheme ).
Any comment:
Data / Parameter:
Data unit:
Description:
Source of data used:
HVv,c
kJ / kg
International Energy Agency (IEA) country (lower) heating values for fuel in
country c used in vehicle type v (project and baseline vehicles)
Unless internationally-accepted, government provided national data is available,
use: International Energy Administration. 2008. "IEA World Energy Statistics
44
Value applied:
and Balances" ISSN 1683-4240.
http://lysander.sourceoecd.org.libproxywb.imf.org/vl=5267889/cl=24/nw=1/rpsv/statistic/s35_about.htm?jnlissn=16834
240
For the purposes of estimating project and baseline emissions for the Greater
Cairo Region taxi CPAs associated with the proposed PoA, the following IEA
factors have been used:
Fuel
Motor gasoline
Diesel
Liquefied petroleum gases (LPG)
CNG
Justification of the
choice of data or
description of
measurement methods
and procedures
actually applied :
Heating Values
(kJ/kg)
44,800
43,300
47,300
47,143
The entity managing SSC-CPA preparation should always refer to the countryspecific data contained in the IEA World Energy Statistics and Balances for the
most up-to-date factors.
Any comment:
Data / Parameter:
Data unit:
Description:
Source of data used:
Value applied:
FVv
kg / unit of fuel
kg of fuel used in vehicle type v per common unit of fuel (e.g., litres for motor
gasoline; m3 or kg for CNG (project and baseline vehicles)
US Environmental Protection Agency. 2000. "Inventory of U.S. Greenhouse
Gas Emissions and Sinks: 1990–1998: Annex Q."
http://www.epa.gov/climatechange/emissions/downloads06/00CR.pdf
For the purposes of estimating project and baseline emissions for the Greater
Cairo Region taxi CPAs associated with the proposed PoA, the following US
EPA factors have been used (since fuel volume factors do not tend to change
over time, fuel volumes for most commonly used transportation fuels have been
provided):
Fuel
Motor gasoline
Diesel
Biodiesel (100%)
Biodiesel (20%)
Biogasoline (100%)
Fuel Cell
Natural gas liquids
Ethane
Ethanol (100%)
Liquefied petroleum gases (LPG)
45
1 kg = x litres
1.36
1.18
1.36
1.36
1.18
1.00
1.60
1.26
1.26
1.84
Aviation gasoline
Kerosene type jet fuel
CNG
* CNG is expressed in terms of kg, not litres
1.42
1.26
1.00
Justification of the
choice of data or
description of
measurement methods
and procedures actually
applied :
Any comment:
Data / Parameter:
FEv
Data unit:
Description:
unit of fuel / km
Fuel efficiency of a baseline vehicle, type v, measured in terms of average number
of units of fuel combusted (e.g., litres) per km travelled
Baseline vehicle owner survey
Source of data used:
Value applied:
The baseline fuel efficiency and the project fuel efficiency may vary between CPA
types. For example, the baseline fuel efficiency figures established for the Greater
Cairo Region taxi CPAs may differ from those associated with an Alexandria
microbus CPA.
The following values are those that have been applied for the purpose of
calculating expected emission reductions in section B.5 (CDM SSC-CPA-DD), for
the first Greater Cairo Region taxi CPA.
Motor Gasoline Vehicle:
CNG Vehicle:
Diesel Vehicle:
Justification of the
choice of data or
description of
measurement methods
and procedures
actually applied:
12.87 litres/100km
12.23 m3/100km
14.14 litres/100km
Vehicle owner survey is conducted in accordance with sampling method presented
in approved SSM AMS III-AA, which corresponds with EB 50 Report, Annex 30,
“General Guidelines for Sampling and Surveys for Small-Scale CDM Project
Activities.”:
“Measurements shall be undertaken on representative sample of vehicles in
accordance with the statistical methods (Use 90% confidence interval and ±10%
error margin to determine the sample size)…”
Relevant survey questions for this parameter include:


Fuel Type (e.g., motor gasoline, CNG, etc.)
Average Fuel Efficiency (e.g., L/100km)
The survey is conducted on the project site, where vehicle owners apply for
entrance into the program, surrender their old vehicles, and receive their new
vehicles
46
Any comment:
As previously discussed in the PoA-DD Section E.4, baseline fuel efficiency
remains constant through the CPA project duration.
Data / Parameter:
Data unit:
Description:
Source of data used:
VEHv,y
# vehicles
Number of baseline vehicles, type v, to be replaced in a given project year, y
Project participant registration data, maintained by the Project Entity (Egypt
Ministry of Finance)
The number of participating vehicles is expected to vary by CPA.
Value applied:
The following values are those that have been applied for the purpose of
calculating expected emission reductions in section B.5 (CDM SSC-CPA-DD),
for the first three Greater Cairo Region taxi CPAs. They have been collected
from the project participant registration database, maintained by the Project
Entity (Ministry of Finance).
CPA #
0
1
2
Justification of the
choice of data or
description of
measurement methods
and procedures
actually applied :
Months Included
April
May, June
July August
Year
2009
2009
2009
# Vehicles
763
4,781
4,793
The Project Entity (Ministry of Finance), which is responsible for all CPAs
within the PoA, maintains a record of vehicle scrapping certificates issued to
vehicle owners, whose approved vehicles have been surrendered for scrapping.
The Project Entity uses these certificates as the basis for providing vehicle
owners with a payment for the surrendered vehicle. Through this regularly
updated database, the number of baseline vehicles – i.e., the number, age, and
type of scrapped vehicles – can be reliably tracked.
See Annex 7 for project database screen-shot and sample daily report on the
number of participating vehicles.
Any comment:
Data / Parameter:
Data unit:
Description:
Source of data used:
Value applied:
VKTv,y
km
Average annual vehicle-km travelled by baseline vehicles, type v, in a given
project year, y
Baseline vehicle owner survey
The average annual vehicle-km travelled is expected to vary by CPA.
The following value has been applied for the purpose of calculating expected
emission reductions in section B.5 (CDM SSC-CPA-DD), for the Greater Cairo
Region taxi CPAs.
Average annual vehicle-kilometres travelled: 38,816 km per year.
As mentioned previously, the actual value applied in ex-post emissions
reduction estimates will be based on actual vehicle-kilometres travelled by
47
project vehicles (see section E.7.1 for further details).
Justification of the
choice of data or
description of
measurement methods
and procedures actually
applied :
Vehicle owner survey is conducted in accordance with sampling method
presented in approved SSM AMS III-AA, which corresponds with EB 50
Report, Annex 30, “General Guidelines for Sampling and Surveys for SmallScale CDM Project Activities”:
“Measurements shall be undertaken on representative sample of vehicles in
accordance with the statistical methods (Use 90% confidence interval and
±10% error margin to determine the sample size)…”
Relevant survey questions for this parameter include:




Vehicle model year
Average weekday distance traveled (km/day)
Average weekend distance traveled (km/day)
Odometer reading (if available)
The survey is conducted on the project site, where vehicle owners apply for
entrance into the program, surrender their old vehicles, and receive their new
vehicles.
Additional comments
(if any):
E.7.
Application of the monitoring methodology and description of the monitoring plan:
E.7.1. Data and parameters to be monitored by each SSC-CPA:
48
An independent consultant had surveyed 600 participating vehicle owners (590 valid sample
observations) to determine whether they would be willing to have monitoring devices installed in
their vehicles as a prerequisite to project participation, and the overwhelming majority indicated
that they would be against this practice (see Chart 1 below).
Chart 1: % Surveyed Vehicle Owners Willing to Have an Electronic Monitoring Device
Installed in Vehicle for Purposed of Tracking Greenhouse Gas Emissions
Yes
14%
No
86%
Although monitoring devices could provide more accurate results, the potential negative effect on
project participants, combined with the additional cost, the Project Entity shall manage monitoring
activities using the same method employed to collect baseline data – vehicle owner surveys.
Data / Parameter:
Data unit:
Description:
Source of data to be
used:
Value of data applied
for the purpose of
calculating expected
emission reductions in
section B.5
FEv,y
unit of fuel / km
Fuel efficiency of project vehicle, type v, measured in terms of average number
of units of fuel combusted (e.g., litres) per km travelled in a given year, y
Annual vehicle owner survey
The baseline fuel efficiency and the project fuel efficiency may vary between
CPA types. For example, the baseline fuel efficiency figures established for the
Greater Cairo Region taxi CPAs may differ from those associated with an
Alexandria microbus CPA.
The following values are those that have been applied for the purpose of
calculating expected emission reductions in section B.5 (CDM SSC-CPA-DD),
for the first Greater Cairo Region taxi CPA.
Starting Values (Averages Based on Data Provided by the Manufacturer)
Motor Gasoline Vehicle:
9.39 litres/100km
CNG Vehicle:
8.34 m3/100km
49
Schedule for Ex-Ante Estimation of Values through CPA Duration
While a vehicle’s fuel efficiency will begin to plateau after many years, as is the
case with the baseline vehicles, vehicles will experience wear and tear associated
decline in the early years. Although actual data for this parameter will be
collected through surveys throughout the duration of the SSC-CPA, the following
schedule may be used to estimate, ex-ante, declines in fuel efficiency for all SSCCPAs.
Project Year
0
1
2
3
4
5
6
7
8
9
10
Fuel Efficiency %
Change from
Baseline
0%
0%
0%
0%
1%
2%
3%
4%
5%
6%
7%
Note: this schedule is only intended to be used for estimates prior to project
implementation. Upon project commencement, this table is not used – actual
measured parameters are used. This table is intended only to serve as a general
ex-ante reference point only.
Calculated Ex-Ante Estimation of Values through CPA Duration
Project Year
0
1
2
3
4
5
6
7
8
9
10
Description of
measurement methods
and procedures to be
Fuel Efficiency
(Motor Gasoline)
L/100 km
9.39
9.39
9.39
9.39
9.48
9.58
9.68
9.77
9.87
9.97
10.07
Fuel
Efficiency
(CNG)
m3/100 km
8.34
8.34
8.34
8.34
8.42
8.51
8.59
8.68
8.76
8.85
8.94
A vehicle owner survey shall be conducted in accordance with sampling method
presented in approved SSM AMS III-AA, which corresponds with EB 50 Report,
Annex 30, “General Guidelines for Sampling and Surveys for Small-Scale CDM
50
applied:
Project Activities”.
Relevant survey questions for this parameter include:


QA/QC procedures to
be applied:
Fuel Type (e.g., motor gasoline, CNG, etc.)
Average Fuel Efficiency (e.g., L/100km)
The survey, which is nearly identical to the survey used in the baseline, shall be
conducted in one of three locations: 1) the participating advertising agency,
where drivers are required to go each month to pick up advertising supplement
payment and receive new ads for the vehicle; 2) the participating auto
dealerships, where drivers are required to receive inspections and maintenance
services; and 3) over the phone, as part of a regular quarterly survey conducted
by the Project Entity as part of its quality assurance program. 32 The survey shall
be the sampling guidance presented in approved methodology AMS-III-AA,
which is most relevant to the presented CPAs and corresponds with EB 50
Report, Annex 30, “General Guidelines for Sampling and Surveys for SmallScale CDM Project Activities”:
Measurements shall be undertaken on representative sample of vehicles in
accordance with the statistical methods (use 90% confidence interval and ±10%
error margin to determine the sample size).
Any comment:
Data / Parameter:
Data unit:
Description:
Source of data to be
used:
Value of data applied
for the purpose of
calculating expected
emission reductions in
section B.5
Description of
measurement methods
and procedures to be
applied:
VEHv,y
# vehicles
Number of project vehicles, type v, to be replaced in a given project year, y
Project participant registration data, maintained by the Project Entity (Egypt
Ministry of Finance)
The number of participating vehicles is expected to vary by CPA.
The following values are those that have been applied for the purpose of
calculating expected emission reductions in section B.5 (CDM SSC-CPA-DD),
for the first three Greater Cairo Region taxi CPAs. They have been collected
from the project participant registration databse, maintained by the Ministry of
Finance.
CPA #
Months Included
Year
# Vehicles
0
April
2009
763
1
May, June
2009
4,781
2
July August
2009
4,793
The Project Entity (Ministry of Finance), which is responsible for all CPAs
within the PoA, maintains a daily record of new vehicles issued to participating
vehicle owners. Through this regularly updated database, the number of project
vehicles – i.e., the number and type – can be reliably tracked.
32
As of time of writing, discussions are underway between the Ministry of Finance and Ministry of Interior regarding
the integration of data collection as part of the annual vehicle license registration process.
51
See Annex 7 for project database screen-shot and sample daily report on the
number and type of replacement vehicles introduced to a Greater Cairo Region
taxi CPA.
QA/QC procedures to
be applied:
As indicated in the Project Monitoring Plan (Section E.7.2), numbers checks and
balances are in place to ensure the identity of each vehicle in the Project Vehicle
Database is verifiable.
Any comment:
Data / Parameter:
Data unit:
Description:
Source of data to be
used:
Value of data applied
for the purpose of
calculating expected
emission reductions in
section B.5
Description of
measurement methods
and procedures to be
applied:
QA/QC procedures to
be applied:
VKTv,y
km
Average annual vehicle-km travelled by project vehicles, type v, in a given
project year, y
Annual vehicle owner survey
The average annual vehicle-km travelled is expected to vary by CPA.
The following values, based on the baseline survey, have been applied for the
purpose of calculating expected emission reductions in section B.5 (CDM SSCCPA-DD), for the Greater Cairo Region taxi CPAs.
Average annual vehicle-kilometres travelled: 38,816 km per year.
A vehicle owner survey shall be conducted in accordance with sampling method
presented in approved SSM AMS III-AA, which corresponds with EB 50 Report,
Annex 30, “General Guidelines for Sampling and Surveys for Small-Scale CDM
Project Activities”:
Relevant survey questions for this parameter include:

Program participation start date

Average weekday distance traveled (km/day)

Average weekend distance traveled (km/day)

Odometer reading
The survey, which is identical to the survey used in the baseline, shall be
conducted in one of three locations: 1) the participating advertising agency,
where drivers are required to go each month to pick up advertising supplement
payment and receive new ads for the vehicle; 2) the participating auto
dealerships, where drivers are required to receive inspections and maintenance
services; and 3) over the phone, as part of a regular quarterly survey conducted
by the Project Entity as part of its quality assurance program. 33
Measurements shall be undertaken on representative sample of vehicles in
accordance with the statistical methods (use 90% confidence interval and ±10%
error margin to determine the sample size).
Any comments:
33
As of time of writing, discussions are underway between the Ministry of Finance and Ministry of Interior regarding
the integration of data collection as part of the annual vehicle license registration process.
52
Important note: the manufacturers’ fuel efficiency estimates are used only as a starting point for
ex-ante emissions reduction estimates and as a check for monitoring quality control. Actual
emissions reduction calculations are based on annual fuel efficiency surveys, conducted in
accordance with UNFCCC sampling guidance.
At any stage in the PoA, the Ministry may approve additional new taxi, microbus, trailer trucks,
or bus models for inclusion in the CPAs. New models, as they are approved, shall be reported in
the UNFCCC CPA project design documents.
For the purpose of describing each site’s functionality, they are described separately, below, and
throughout the remainder of the CFAM.
Processing and Storage Site
The majority of PoA activities undertaken by Project Participants in the Greater Cairo Region
occur at the Processing and Storage Site, which, as of time of writing, is located on CairoAlexandria Desert Road, about 20 km west of downtown Cairo (see map, below).
The following activities take place at this site:

Inspection of old vehicles for program eligibility;
53

Preparation of surrendered vehicles for temporary on-site storage (liquids are
drained and batteries are removed);

Distribution of subsidy for surrendered vehicles;

Purchase of new vehicles from independent vendor representatives;

Storage of new vehicles in parking lot;

Inspection of new vehicles;

Licensing;

Advertising procedures (issuance of a letter from the advertising firm indicating
approval for licensing of each new vehicle);

First-aid kit distribution;

Program security and monitoring; and

Ancillary services (café, on-site fire trucks and staff, administration, etc.).
Scrapping and Recycling Site
As of time of writing, the Scrapping and Recycling Site has not yet been constructed – advance
payment funding from certified emissions reduction (CER) credit generation is expected to be
used towards the cost of site preparation.
54
Annex 4: Implementation Arrangements and GHG Monitoring Plan
The monitoring for all SSC-CPAs is managed by the Project Entity (Ministry of Finance).
Sampling Plan for Project Emissions Monitoring
According to AMS III.C., “Monitoring shall track the number of low-emission vehicles operated
under the small-scale CDM project activity and the annual units of service for a sample of the
vehicles (and emissions from electricity generation shall be taken into account for electric
vehicles), as well as the quantity of fossil fuel used.”
Estimated emissions reductions are derived from annual measurements of average annual vehicle
distance driven and average fuel efficiency. These parameters are estimated through sampling,
according to the Sampling Plan presented below.
Average annual vehicle distance driven and average fuel efficiency data are collected from project
vehicles by a vehicle owner survey, which is conducted in accordance with sampling method
presented in approved SSM AMS III-AA, which corresponds with sampling guidance presented
in EB 50 Report, Annex 30, “General Guidelines for Sampling and Surveys for Small-Scale CDM
Project Activities.”

Sampling Objective
The objective is to determine the mean annual value of parameters FEv,y and VKTv,y.
Measurements shall be undertaken on representative sample of vehicles, determined in
accordance with statistical methods, based on a 90% confidence interval and ±10% error
margin.

Field Measurement Objectives and Data to be Collected
The following data shall be collected specifically to estimate the FE v,y and VKTv,y
parameters:
o
o
o
o
o
Vehicle registration number;
Program participation start date;
Odometer reading;
Fuel Type (e.g., motor gasoline, CNG, etc.); and
Average Fuel Efficiency (e.g., L/100km).
Surveys shall be conducted over a two week period on an annual basis, beginning 8
months after PoA registration and every 12 months thereafter.

Target Population and Sampling Frame
The target population comprises the new vehicles registered under the program. The
Project Vehicle Database, which is managed by the Ministry of Finance (see below),
contains a full list of population members, including date of program participation, model
type, fuel type, registration number, and vehicle owner contact information.

Sample Method
55
For the purpose of SSC-CPA project emissions monitoring, a simple random sample shall
be taken.

Desired Precision / Expected Variance and Sample Size
Samples are collected per program stage (as defined in the decrees that give the Ministry
of Finance the legal power to coordinate the program, e.g., Greater Cairo Region taxis,
Alexandria microbuses, Luxor buses) -- this is because the new technology employed in
each stage is the same.
Based on EB 50 “General Guidelines for Sampling and Surveys for Small-Scale CDM
Project Activities” 90/10 guidelines for estimating project sample size, the following
minimum number of samples must be collected:
n
[ Z 2  p  (1  p)]
e2
Where:
o
n = sample size
o
Z = z critical value (1.645 for 90% confidence level)
o
p = estimated portion of an attribute present in a population (0.5, since this
is unknown)
o
e = confidence interval (10%)
68 
[1.6452  0.5  (1  0.5)]
0.10 2
The survey team must use either the number of samples resulting from this formula or 1%
of the estimated un-segmented population size – whichever is greater.
Standard deviation for project vehicle data is expected to be less than the deviation
observed for baseline data. This is because baseline data cover a wide range of vehicle
models and model years, whereas project vehicles are limited to only a few models over
one or two model years. If project monitoring standard deviation is 10% greater than that of
the baseline, additional observations shall be collected.

Procedures for Administering Data Collection and Minimizing Non-Sampling
Errors
The annual surveys (see above and Annex 4), which are identical to the survey used in the
baseline, are conducted in one of three locations: 1) the participating advertising agency,
where drivers are required to go each month to pick up advertising supplement payment
and receive new ads for the vehicle; and 2) the participating auto dealerships, where drivers
56
are required to receive inspections and maintenance; and/or 3) the Processing and
Scrapping Site, where owners pay monthly loan installments in person. 34
An independent consulting firm carries out the survey at these sites over a two-week period
each year, and the firm’s credentials, as well as the survey results, are monitored and
verified by the Designated Operations Entity (DOE) on an annual basis.
For quality control purposes, survey results shall be compared against the Ministry of
Finance’s Project Vehicle Database, which includes project vehicle license numbers and
date of program registration. Since each vehicle has a unique registration and license
number, even if the driver of a vehicle owned by another party were to change, the vehicles
are still trackable through survey results.
Also for quality control purposes, in addition to checking for outliers, fuel efficiency
figures shall be measured against manufacturer-estimated fuel efficiency, provided to the
Ministry of Finance prior to participation in the program. In the event that reported fuel
efficiency is more than 25 percent greater than manufacturer-stated fuel efficiency (e.g.,
25% fewer liters of fuel are required per 100 km than the manufacturer’s stated vehicle fuel
efficiency), a red flag is raised and survey results are re-evaluated. These survey results
shall accompany the sample survey results for annual verification. Further, upon PoA
registration, the Ministry shall consider the addition of a survey question for quality control
purposes – what drivers have spent on fuel, as a check to their fuel usage estimates.

Implementation
Surveys shall be conducted over a two week period on an annual basis, beginning 8 months
after PoA registration and every 12 months thereafter. The data collection is managed by an
independent consulting firm and results, as well as qualifications of the consulting firm are
monitored and verified by the Designated Operating Entity (DOE).
Special Cases
Some project vehicles may cease to operate during the 10-year SSC-CPA crediting period, due to
accident or need for extensive repairs. In this event, one of the following events will occur:
1)
The Vehicle Owner will receive a new vehicle, according to procedures developed
by the Ministry of Finance; or
2)
In the event of loan default, the Ministry of Finance will coordinate the necessary
steps to repossess the vehicle / license.
Thus, in both of these events, the vehicles are accounted for, and the annual number of
participating vehicles may be adjusted accordingly.
System of Checks and Balances for Processing and Storage Site
34
As of time of writing, discussions are underway between the Ministry of Finance and Ministry of Interior regarding
the integration of data collection as part of the annual vehicle license registration process.
57
The SSC-CPA structure, which is the same for all SSC-CPAs, contains many duplicative efforts
that serve the purpose of checks and balances for monitoring. The following detailed process
description illustrates the large number of built-in redundancies that ensure that there is a large,
auditable trail for registration documentation.
Step 1: Application for Bank Loan
First, the vehicle owner approaches a participating bank branch at the Processing and Storage Site,
where the following transactions occur:

The vehicle owner receives information about the scheme, upon which the owner
can make an informed decision regarding participating and new vehicle choice, including:
o
Frequently Asked Questions guide (provided to the DOE);
o
Loan application form;
o
Loan requirements;
o
List of prices and models of available new vehicles (also published in
newspapers, provided to the DOE, in addition to full hardcopies);
o
Contact information for participating vehicle dealers;
o
Pricing sheet for maintenance and spare parts costs and vehicle warranty.

Upon receipt of the information above, the owner may complete a loan application
form and sign an authorization for a credit rating check. Upon completion, the owner is
expected to submit the following documentation to the participating bank:
o
o
o
o
o
check.
Completed loan application form;
Copy of the vehicle owner’s national ID card;
Copy of a current and valid vehicle license (associated with the old vehicle);
A recent utilities bill; and
An authorization document signed by vehicle owner for the credit rating

Upon completion of a positive credit rating check (maximum of five working
days), the vehicle owner is informed, and the bank opens a current account on behalf of
the owner. In this step, the following documents are issued and signed:
o
o
o
Preliminary approval letter issued by the bank;35
Loan contract to be signed by the vehicle owner; and
Signing of promissory notes for the vehicle loan and insurance loan.36
“Preliminary” does not mean that the bank can cancel the approval, but means that there is another “final approval”,
by which the vehicle owner can receive and license the new vehicle)
35
36
The insurance premium is paid on annual basis by the bank to the insurance company. This premium is divided into
monthly instalments, which are part of the monthly loan instalment paid by the vehicle owner. Thus, the participating
bank opens two parallel loans for each vehicle owner: one primary loan for the vehicle and another for the insurance.
However, this is an internal process executed by the bank – from the perspective of the vehicle owner; there is one
loan with one monthly payment, which includes the insurance payment.
58
Step 2: Designation of New Vehicle
Next, the vehicle owner visits one of the participating vehicle dealers at the Processing and
Storage Site and submits:

Preliminary loan approval letter from the participating bank.
The owner then requests a new vehicle, and the vehicle dealer reserves a vehicle for the owner by
designating/specifying the new vehicle’s chassis and engine number. By specifying the engine
and chassis number, the vehicle dealer is obligated to have this specific car manufactured and
ready to be delivered to its owner within a reasonable timeframe. 37 When the vehicle is ready for
delivery, (timing depends on the level of demand on the vehicle model), the vehicle dealer
contacts the vehicle owner and issues:

New vehicle designation letter (which specifies the new vehicle’s chassis number,
engine number, model, and fuel type).
Step 3: Old Vehicle Inspection and Scrapping
When vehicle owners bring their vehicles to the Processing and Scrapping site, a Technical
Engineer, hired by the Ministry of Interior (Traffic Department) conducts a vehicle inspection.
Inspection criteria include:





The vehicle is affected by Traffic Law #121;
The owner holds legal title to the vehicle;
The vehicle is legally licensed and registered in Egypt;
The vehicle’s original chassis and engine serial numbers are intact; and
The vehicle (and/or its engine) is operational.38
Technical Engineer demonstrates how motor and chassis numbers are recorded from old vehicles
at a Processing and Storage Site in the Greater Cairo Region
Upon successful completion of the inspection, the vehicle owner submits:





A traffic violation report for the old vehicle;
Preliminary approval letter issued by the bank;
New vehicle designation letter;
License plates from old vehicle;
Old vehicle for scrapping and recycling.
In return, the owner receives:
37
Originally, the designation was a one-week period; however, experience with the Greater Cairo Region Taxi
Scrapping and Recycling Program has indicated that demand for some models can be so great, that it is not possible
for vehicle manufacturers to produce enough vehicles to meet this one-week turnaround.
38
In some cases, non-operational vehicles are eligible to participate in the program; however, these vehicles are not
included in CER calculations.
59

Scrapping certificate (original plus one copy); and

Inspection report (two copies).39, 40
Sample Scrapping Certificate and Inspection Report, issued upon successful completion of
surrendered vehicle inspection
Vehicle storage is executed by the Ministry of Interior. This process includes:
39
If the vehicle is non-operational, it may still be eligible to participate in the program, but it would not be counted
towards the annual CER calculations. In very few cases, an old vehicle could be non-operating due to an accident. In
such cases, the taxi owner submits a request to The Ministry of Finance, and a date is set for inspection by a certain
technical committee assigned to determine the actual value of the old vehicle. The technical committee is comprised
of three members: two from the Ministry of Interior and one from the General Authority for Government Services,
which is under the Ministry of Finance. Based on the inspection, if the actual value of the vehicle is less than EGP
5,000 (which is paid by the Ministry of Finance for each scrapped vehicle), the Ministry of Finance issues a cheque
that corresponds with the actual value, and the taxi owner pays the difference to the bank and then continues with the
remaining procedures. Since inception of the project, there have been only seven such cases until December 2009 and
a separate database is kept for such cases. For example: An owner of an old taxi vehicle had an accident before
surrendering the vehicle for scrapping. Accordingly, the vehicle is not operating and cannot be accepted by the
Ministry of Interior staff, who inspect vehicles before scrapping. This taxi owner has submitted a request to the
Ministry of Finance, and the aforementioned technical committee has inspected his old vehicle and decided it is
worth only EGP 2,000. Thus, the vehicle owner paid EGP 3,000 to the bank and provided the Ministry of Finance
with a copy of the bank receipt of the EGP 3,000 paid. He then went to the scrapping site where his old vehicle has
been scrapped and Ministry of Finance issued him a cheque for EGP 2,000 only so that he submits it at the bank and
accordingly this would add up to a total of EGP 5,000 which is the down-payment . Then all other procedures
continue as usual.
40
The vehicle owner submits the original scrapping certificate to the auto dealer in order to receive the new vehicle.
The vehicle dealer, in turn, shows the original scrapping certificates to MoF (the Fund for Financing Purchase of
Transport Vehicles) on monthly basis in order to get its customs exemption and payment of the sales tax. As for the
inspection report, the vehicle owner receives two copies where s/he keeps one and submits the other to MoF
representatives at the Processing and Storage Site for issuance of scrapping subsidy check.
60



Destruction of old vehicle’s chassis number and engine number;
Drainage of vehicle liquids (fuel, oil, etc.); and
Removal of engine battery.
Specific details regarding this process may be found in the Framework Environmental
Management Assessment (see Section C).
Step 4: Ministry of Finance Issuance of Subsidy Check
After completion of vehicle surrender, the vehicle owner submits the following documents to the
Program Coordinator (Ministry of Finance) representative at the Processing and Storage Site
(typically on the same day) in exchange for receipt of the vehicle subsidy check:






Copy of the vehicle owner’s national ID card;
Copy of a current and valid vehicle license (associated with the old vehicle);
Copy of scrapping certificate;
Copy of inspection report;
Preliminary loan approval letter from the participating bank; and
New vehicle designation letter.
An on-site representative from the Ministry of Finance enters data from these documents into a
database, which is centrally managed by the Ministry of Finance. Further details on this process
may be found towards the end of this Section.
Step 5: Participating Advertising Agency (Optional)
Next, the driver submits the following documents to the advertising agency:





Copy of scrapping certificate;
Copy of inspection report;
Preliminary loan approval letter from the participating bank;
Copy of the vehicle owner’s national ID card; and
Copy of a current and valid vehicle license (associated with the old vehicle).
Upon approval, the agency then gives the vehicle owner a letter indicating his/her participation in
the ad program.
Step 6: Bank Loan Final Approval
Upon receipt of the subsidy check from the Ministry of Finance and the (optional) approval letter
from the advertising firm, the vehicle owner returns to the on-site participating bank branch,
where the vehicle owner submits:

Subsidy check, which is deposited in the vehicle owner’s new current account as
the loan down payment; and

Letter from advertising agency.
61
After the owner signs an official general power of attorney for the vehicle, with the bank as the
beneficiary, the bank issues the driver:

Final loan approval letter.
The Bank, at this point, also submits the following materials to its headquarters:





Copy of the vehicle owner’s national ID card;
Copy of a current and valid vehicle license (associated with the old vehicle);
Letter from the advertising agency;
New vehicle designation letter; and
Final loan approval letter.
Step 7: Receipt of New Vehicle
Next, the vehicle owner submits the following documentation to the vehicle dealer:



Scrapping certificate (original);
Inspection report (copy); and
Final loan approval letter.
In return, the vehicle dealer issues the driver:

Receipt for purchase of new vehicle.
Step 8: Licensing of New Vehicle and Final Document Processing
To prevent bottlenecks with the on-site Ministry of Interior Traffic Department, the vehicle dealer
is responsible for assisting drivers in the licensing process. Specifically, the vehicle dealer
prepares the following documentation on behalf of the owner:




New vehicle technical inspection certificate;
Certificate for meter;
Certificate for fire extinguisher; and
Certificate for first aid kit.
The dealer also receives payment from the vehicle owner for compulsory insurance (in
accordance with national law) and license tax and prepares:


Tax payment receipt; and
Insurance payment receipt.
The dealer then submits the following package to the on-site Ministry of Interior Traffic
Department for licensing:


Copy of letter from the advertising agency;
Tax payment receipt;
62









Insurance payment receipt;
Scrapping certificate (copy);
New vehicle designation letter;
New vehicle technical inspection certificate;
Receipt for purchase of new vehicle;
Final loan approval letter;
Certificate for meter;
Certificate for fire extinguisher; and
Certificate for first aid kit.
Upon receipt and review of these materials, a new vehicle license is issued by Ministry of Interior
and given to the taxi owner on-site (owner is called, by phone, when license is ready for pick-up).
The original materials are sent to the Ministry of Interior for filing, and the Department provides
daily reports on the number of new vehicles licensed to the Ministry of Finance representative onsite.
With all paperwork in order, the vehicle owner is given his/her new vehicle. The vehicle dealer
then proceeds to send out the following materials to complete the process:
To Ministry of Finance representatives on-site:

Periodic vehicle report.
To the dealer’s headquarters, copies of the following:








Scrapping certificate;
Inspection report;
Vehicle owner’s national ID card;
Preliminary approval letter issued by the bank;
New vehicle designation letter;
Receipt for purchase of new vehicle;
Final loan approval letter; and
Letter from the advertising agency.
Step 9: Advertising Application (Optional)
Upon receipt of new license and registration, the vehicle owner can then take their vehicle to the
participating advertising agency to have ads applied to the vehicle.
63
The following diagram summarizes these steps from the perspective of the vehicle owner:
Process Flow Diagram from perspective of the vehicle owner
Verification of Scrapped Vehicle and Replacement Vehicle Numbers
Regarding the monitoring of vehicle scrapping, AMS III.C states that, “In case the project activity
involves the replacement of equipment, and the leakage effect of the use of the replaced
equipment in another activity is neglected, because the replaced equipment is scrapped, an
independent monitoring of scrapping of replaced equipment needs to be implemented. The
monitoring should include a check if the number of project activity equipment distributed by the
project and the number of scrapped equipment correspond with each other. For this purpose
scrapped equipment should be stored until such correspondence has been checked. The scrapping
of replaced equipment should be documented and independently verified.”
Upon PoA registration, the Ministry of Finance shall be responsible for hiring an independent
auditor to verify that the number of project activity vehicles distributed and the number of
scrapped vehicles correspond with each other.
64
After the chassis and motor identification numbers are physically removed from a submitted old
vehicle, owners receive a “scrapping certificate” (see Annex 11, provided to the DOE). Hard
copies of these certificates are kept by the Ministry of Finance, and scrapped vehicle
identification details are periodically entered into a database, also maintained by the Ministry of
Finance. Because the Ministry is responsible for providing subsidies to each vehicle owner that
has voluntarily scrapped his or her vehicle as part of the program, the Ministry has a strong
incentive to ensure that each owner only receives one, correct payment per scrapped vehicle.
Auto dealers are required to report the motor and chassis numbers of allocated new vehicles to
participating Banks, as well as to the Ministry of Finance, for entry into the Program Database.
Duplicate copies of vehicle allocation and loan documents that specify the specific vehicle
allocation are kept by the auto dealers and participating Banks.
Finally, the recycling facility shall be required to report recycling activities to the Ministry of
Finance for inclusion in the Program Database. Specifically, the facility will need to maintain
copies of scrapping certificates for each participating vehicle.
Upon PoA registration, independent auditors shall be able to compare the following records
against each other to verify the number of scrapped vehicles:

Ministry of Finance Program Database;

Physical copies of the scrapping certificates maintained by the Ministry of
Finance;

Physical copies of scrapping certificates maintained by the recycling facility; and

New vehicle allocation and loan documentation maintained by participating banks
and auto dealers.
General Program Management Quality Assurance and Quality Control
The Ministry of Finance conducts periodic QA/QC surveys among vehicle owners and manages
complaints and comments that are received via a hot-line and survey. Copies of the hotline
advertisements and the survey have been provided to the DOE and are included in the Program of
Activities Design Document (PoA-DD).
On-Site Security
The Ministry of Interior de-registers the scrapped vehicles and provides vehicle owners with new
operating licenses and registration for their new vehicles. The Ministry also maintains patrols at
the storage facility to ensure vehicles are properly prepared for storage (fluids drained, batteries
removed, and air removed from tires) before the vehicles are shipped to the recycling facility.
Further, the Ministry provides the following security services:

Security against theft: for old surrendered scrapped vehicles, new vehicles to be
licensed, rooms used by all partners’ employees, the room(s) where batteries of old
vehicles are stored;

Security against fire: having 2 fire brigades and their staff (an additional brigade
was added in December 2009) for any fire that might occur due to any reason at any part of
the site -- offices, old vehicles, new vehicles, stored batteries, etc;
65


Having security towers overseeing the site and the surrounding area;
Security at the entrance of the site.
Monitoring of Environmental Management Plan Compliance
Upon PoA registration, the Ministry of Environment will be responsible for ensuring that the
recycling facility carried out its operational mandate and environmental monitoring plan as agreed
upon during the permitting process.
Standardization of Process for All SSC-CPAs
Upon registration of the PoA, the Ministry of Finance has agreed to complete the following
activities prior to the first certification of emissions reduction credits:

Complete a standardized process-flow diagram that auditors could use to more
easily follow the paper-trail of activities leading up to new vehicle registration and include
in the existing guidelines prepared for taxi drivers;

Prepare standardized check-lists for each participant, including drivers, at the
Processing and Storage Sites and the Scrapping and Recycling Site;

Prepare standardized job descriptions, and, where appropriate, training guidance
for all participants;

Require on-site data collection activities to be reviewed twice against hard-copy
documentation prior to submittal to the Ministry of Finance program head office. At the
head office, data shall be compared on a regular basis against data supplied by auto
manufacturers. While this process already exists to some extent, it shall be formalized and
auditable upon registration; and

Prepare, in writing, a back-up plan in the event on-site data entry experiences
unforeseen technical difficulties or staff changes.
66
Annex 5: Program Protocol
Translation of the
Program Protocol to implement the Taxi Vehicle Replacement and Recycling Project
On 31/12/2008, among:
1.
The Ministry of Finance (the Fund for financing purchase of transport vehicles),
(address), represented in signing this protocol by H.E. Dr. Youssef Boutors-Ghali – Minister
of Finance.
2.
Ministry of Interior, (address), represented in signing this protocol by...........
3.
……Bank, .... (address), represented in signing this protocol by...........
4.
……Bank, .... (address), represented in signing this protocol by...........
5.
……Bank, .... (address), represented in signing this protocol by...........
6.
… .Ban.., .... (address), represented in signing this protocol by...........
7.
....... company, .... (address), represented in signing this protocol by...........
8.
....... company, .... (address), represented in signing this protocol by...........
9.
....... company, .... (address), represented in signing this protocol by...........
10.
....... company, .... (address), represented in signing this protocol by...........
11.
....... company, .... (address), represented in signing this protocol by...........
12.
....... company, .... (address), represented in signing this protocol by...........
13.
....... insurance company, .... (address), represented in signing this protocol by...........
Preamble
The traffic law number 66 for the year 1973, amended by the law number 121 for the year 2008,
states in the text of Article 4/2 that licensing cannot be renewed for taxi vehicles and mass transport
vehicles that have passed twenty years since the year of manufacturing, and the vehicle owner can
transfer the license of his vehicle to the new vehicle replacing it. As per Article five of the law #
121/2008, this is effective 3 years from expiry of the license. And with the purpose of supporting taxi
vehicles’ owners referred to above, and helping them replace their old vehicles with new ones
through financial incentives to motivate them to replace their vehicles in a timely manner and through
simple quick procedures that do not disturb the livelihood of owners of such vehicles, knowing that
these vehicles represent a primary or sole source of income for its owner/driver(s).
Accordingly, partners signing this protocol have agreed to participate in implementing the taxi
vehicle replacement and recycling project suggested by the Ministry of Finance and approved by the
Prime Minister, each party in relation to their obligations, and believing in the importance of this
project and its positive impact in general and in relation to the partners, including old taxi vehicles’
owners who are willing to participate in this project and enjoy its financial incentives and simplified
procedures and surrender their old vehicle for scrapping in exchange for a EGP 5000 cheque from the
67
Ministry of Finance to be delivered to the bank issuing the loan as the down-payment for purchasing
the new vehicle and he will have to pay other obligations associated with the loan contract and
bearing the consequences of violating these obligations. As such, partners signing this protocol have
agreed to be accountable for their obligations stated hereinafter and that the taxi vehicle owner will be
accountable for his obligations mentioned in the First article of this protocol. These obligations are as
follows:
First - Obligations of the old taxi vehicle
1.
Surrendering the old vehicle for scrapping in exchange for EGP 5000 cheque issued
by the Ministry of Finance (the Fund for financing purchase of transport vehicles) to be
delivered to the bank issuing the loan for the vehicle owner as a down-payment.
2.
Signing a contract with the bank to finance the purchase of a new car from the auto
dealer and bearing the obligations stated in it, especially the obligation to issue an insurance
policy (stated in Article 2/1), and paying the monthly installments to the bank including the
insurance policy installment in a timely manner. In addition, he commits that in case of not
paying the installments in the due dates mentioned in the loan contract, the bank will transfer
the ownership of the vehicle to the auto dealer after receiving the value of its outstanding loan
amount and the traffic department will cancel his vehicle license and transfer it to whomever
the auto dealer decides, or the bank can transfer the vehicle license to the Ministry of Finance
(the Fund for financing purchase of transport vehicles), depending on each case.41
Besides, if he doesn’t pay bank installments then the installments he has already paid are the
bank’s.
3.
Doing a power of attorney at the notary public once the new vehicle is assigned to
him by the auto dealer that the bank has the right to transfer the ownership of the vehicle to
the auto dealer and the vehicle’s license to whomever the auto dealer specifies and after
taking the banks’ outstanding amounts from the auto dealer, or to the Ministry of Finance (the
fund for financing purchase of transport vehicles) according to the Ministry’s obligation
number 4. All these procedures would be in the case of not paying two consecutive loan
installments. It is noteworthy that it should be stated in the power of attorney that it cannot be
cancelled without both parties’ consent.
4.
After receiving the new vehicle and licensing it, he should let the advertising
company put the advertisement on the vehicle or inside it and maintain these ads according to
the timing and way specified by the advertising company’s contract with the bank. He should
also keep the ad outside or inside the vehicle in good shape.
5.
Doing the vehicle maintenance at the auto dealer every 10,000 km or two months
whichever is sooner, according to the list of prices attached to the purchase contract.
6.
Renewing the vehicle license every three months during the first year and every six
months starting from the second year, as long as the bank has not notified the traffic
department that he has not paid the installments before renewing the license.
7.
Sticking to the obligation of banning usage of the vehicle for purposes other than
being a taxi vehicle for a duration of five years from the date of licensing except after paying
the custom duties that has been exempted for the imported components in addition to paying
the sales tax amount that has been paid for the vehicle by the Ministry of Finance (the Fund
for financing purchase of transport vehicles) and paying all outstanding installments and
other due amounts to the bank.
8.
In the case of death of the vehicle owner, legal heirs are held liable for the deceased
liabilities; otherwise, previous points will be applicable.
41
i.e. if the vehicle is found by the Ministry of Interior, then the ownership and license are transferred to the
auto dealer, while if the vehicle is not found then the transfer is done to MoF.
68
Second – Obligations of the bank providing the loan
1.
Coordinate the necessary steps to issue an insurance policy for the new vehicle
against accidents, theft and fire with the beneficiary being the bank in the case of total loss
and with the beneficiary being the auto dealer in the case of accidents that can be repaired.
This is applicable for the entire duration of the loan contract.
2.
Issuing a contract with the owner of the old scrapped vehicle and providing him with
a loan to purchase a new vehicle from the auto dealer to use it as a taxi vehicle, after doing
the necessary inquiry about the vehicle owner. The bank should pay the loan amount directly
to the auto dealer in three days time after delivery of the new vehicle to the owner and
providing the bank with all required documents. This contract should include obligations of
both parties especially the loan term which is five years, the return due on the loan, the timing
of paying installments including the insurance installment and the consequences of delay in
paying installments.
3.
Issuing a contract with the company advertising outside and inside the vehicles
referred to above, and collection of the amounts paid by the company with the borrower
being the beneficiary.
4.
Paying the insurance premium against accidents, theft and fire to the insurance
company and adding this premium to the loan installments collected from the vehicle owner.
5.
Notifying the traffic department in the case of the vehicle owner’s default for two
consecutive months, or not doing the regular maintenance of the vehicle as specified earlier
(every 10,000 km or two months whichever is sooner) if the auto dealer notifies the bank.
And the traffic department should accordingly refuse renewal of the vehicle license and take
the necessary steps to find it. After finding the vehicle, if its owner pays during two days or
delivers the vehicle for maintenance at the auto dealer in addition to paying the amount to be
determined by the Ministry of Interior in coordination with the Ministry of Finance in both
cases for finding the vehicle, then the vehicle is released.
6.
Taking the necessary steps to transfer the ownership of the vehicle found to the auto
dealer, as specified in the power of attorney done by the vehicle owner to the bank, in the
case of not releasing it, and transferring its license to the auto dealer or whomever it specifies
in one week at most from the date payment of the amounts due to the bank by the auto dealer
and any returns or expenses as a result of delay.
7.
Taking the necessary steps to claim the amount to be paid by the insurance company
in the case of occurrence of any of the risks insured against (accidents, theft and fire) that has
lead to the vehicle’s total loss.
8.
Sending a letter to the traffic department to remove the ban on it in case the owner
pays all the amounts due or settles the loan amount as an early settlement, with the condition
of sticking to the owner’s obligations towards the advertising company until the contract
expires or according to what parties agree to (vehicle owner, advertising company and the
bank).
9.
Transferring the ownership of the vehicle to the auto dealer after having it pay the
installments to the bank, in addition to the license in the case of death of the vehicle and the
incapability of his legal heirs to fulfill the deceased obligations mentioned in this protocol.
Third – Obligations of the insurance company
1.
Issuing an insurance policy for the vehicle with the beneficiary being the bank
against accidents, theft and fire.
2.
Paying the amount of the policy to the bank in the case of total loss of the vehicle in
order to cover the unpaid installments and any other related due amounts, if any, and paying
the extra amount to the vehicle owner.
69
3.
Approving the quotation for repairing the vehicle during three days after being
notified by the auto dealer in the case of occurrence of accidents that can be repaired.
4.
Paying the amount due for repairing the vehicle to the auto dealer in case of
occurrence of accidents that can be repaired.
Fourth – Obligations of the auto dealer
1.
Selling the new vehicle to the owner of the old vehicle bearing all legal obligations in
this regard, including delivering the new vehicle within five days at most from the date of the
letter from the bank to the auto dealer, and deducting from the price the value of the customs
on the imported components that have been exempted and the value of the sales tax
applicable on the vehicle which will be paid by the Ministry of Finance.
2.
Delivering the vehicle with the specifications and prices approved by MoF where
prices will be valid for six months.
3.
Doing the regular maintenance for the vehicle (every 10,000 km or 2 months
whichever is sooner) and making the spare parts available with the specifications and prices
and timeframes mentioned in the purchase agreement with the buyer. In addition, such
vehicles will be given priority in the service centers and the auto dealer should inform the
bank in the case that the vehicle owner does not abide by the regular maintenance.
4.
Payment of the outstanding amount of loan installments and delay interest due on the
vehicle owner within a week from the date of being informed by the bank that the vehicle has
been found, where the bank will then transfer the ownership of the vehicle in the following
week to the auto dealer using the power of attorney done by the vehicle owner to the bank
and also transfer the vehicle license. Accordingly, the auto dealer can sell the vehicle to be
used for any purpose it wishes and it can also sell its license for others without any
prohibition.
5.
Paying the fees due for transferring the ownership in the case of transferring the
ownership to it by the bank.
6.
Doing the irregular maintenance as requested by the vehicle owner and making spare
parts available upon request.
Fifth – Obligations of the Ministry of Interior
1.
Preparing three areas at least to issue licenses for the new vehicles and renewing
them, and they are the traffic department of Tebbin in Cairo Governorate, Al Salam in Cairo
Governorate and Nekla in Giza Governorate.42
2.
Licensing the new vehicle to its owner as a taxi vehicle and stating in the license a
ban for the benefit of the bank which cannot be removed unless the bank approves.
3.
Making the license valid for 3 months in the first year and for 6 months starting from
the second year for vehicles owners who pay their installments regularly to the banks and
unless the bank has notified the traffic department of their default.
4.
Taking necessary procedures to find the vehicle in case the bank notifies the traffic
department that the owner has not paid 2 consecutive loan installments, or that he has not
done the regular maintenance every 10,000 km or 2 months whichever is sooner as per the
purchase agreement with the auto dealer.
5.
Issuing a certificate of “stopping the search” for the vehicle after 3 months from the
date of notifying the traffic department by the bank that the vehicle owner has not paid 2
consecutive loan installments. This will be done in case the Ministry of Interior was not able
to find the vehicle.
42
Upon implementation, a traffic unit has been represented at the scrapping site to license new vehicles so as to
facilitate the delivery and licensing process for the vehicles’ owners at one site.
70
6.
Releasing the vehicle if the owner pays the due amounts in 2 days to the bank which
in turn notifies the Ministry officially, or that he has gone to the auto dealer to do the regular
maintenance. This will be done after paying the amount specified by the Ministry of Interior
in coordination with the Ministry if Finance for finding the vehicle.
7.
Taking necessary steps to license the vehicle for the auto dealer in case of finding it
and that the bank has transferred its ownership to the auto dealer as per item 5 of the banks
obligations and in the case of not releasing the vehicle as per item 6 of obligations of the
Ministry of Interior.
8.
Transferring the license of the vehicle to the Ministry of Finance (the fund for
financing purchase of transport vehicles) or whomever the Ministry specifies and issuing new
license plates in the case of issuing a certificate of “stopping the search” for the vehicle as per
item 4, in addition to removing the original license plates from the traffic department file.
9.
Refusing to renew the license of the vehicle or transferring it to others in case of
using it for a purpose other than being a taxi vehicle within 5 years from the date of licensing
unless he pays to the Ministry of Finance the customs that have been exempted on the
imported components as well as the sales tax that has been paid to the Ministry of Finance.
10.
Approving usage of the vehicle in advertising and specifying the rules that should be
followed by the advertising company after getting the governors approval.
11.
Allocation of a suitable area to turn in old vehicles and scrap them (which is Cairo
Alexandria desert road, behind the general department for Giza security, Giza Traffic
Soldiers Camp.)
Sixth – Obligations of the Ministry of Finance (the Fund for financing purchase of
transport vehicles)
1.
Taking necessary steps to exempt imported components used in manufacturing the
vehicles from customs as per article 3/5 of the customs exemptions law.
2.
Paying the sales tax applicable on the new vehicle on behalf of the vehicle owner.
3.
Coordination with the Ministry of Interior to find the vehicle in case the owner does
not pay 2 consecutive loan installments to the bank.
4.
Guaranteeing paying the outstanding installments amount to the bank after 3 months
from the date of being notified by the bank that the client is not paying. This will be in return
for transferring the license of the vehicle, using the power of attorney done by the vehicle
owner to the bank, to whomever the Ministry of Finance specifies.
5.
In the case of finding the car after the payment is done by MoF to the bank, the
vehicle would be the Ministry’s and the bank should transfer its ownership to the Ministry
using the power of attorney done by the vehicle owner to the bank.
6.
If pertinent governors issue any decrees related to issuing new taxi vehicles licenses,
MoF (the Fund for financing purchase of transport vehicles) will pay EGP 20,000 to the auto
dealer in the case the bank notifies the traffic department that the vehicle owner has not paid
2 consecutive loan installments. And in such case, the vehicle license will be transferred to
the Ministry of Finance (the Fund for financing purchase of transport vehicles) using the
power of attorney done by the vehicle owner to the bank.
In the case of any dispute arising between participating parties, settlement should be done by the
board of directors of the Fund for financing purchase of transport vehicles and its decisions are
binding to all parties.
Signatures
1.
Ministry of Finance, represented by H.E. Dr. Youssef Boutros-Ghali, Minister of
Finance
71
Signature: ………………………………. Date:
/ /
2.
Ministry of Interior, represented by ………………………….
Signature: ………………………………. Date: / /
3.
Insurance Company, represented by ………………………..
Signature: ………………………………. Date: / /
4.
….…. Bank, represented by ……………………………………
Signature: ………………………………. Date: / /
5.
….…. Bank, represented by ……………………………………
Signature: ………………………………. Date: / /
6.
….…. Bank, represented by ……………………………………
Signature: ………………………………. Date: / /
7.
….…. Bank, represented by ……………………………………
Signature: ………………………………. Date: / /
8.
….…. Company, represented by ……………………………………
Signature: ………………………………. Date: / /
9.
….…. Company, represented by ……………………………………
Signature: ………………………………. Date: / /
10.
….…. Company, represented by ……………………………………
Signature: ………………………………. Date: / /
11.
….…. Company, represented by ……………………………………
Signature: ………………………………. Date: / /
12.
….…. Company, represented by ……………………………………
Signature: ………………………………. Date: / /
13.
….…. Company, represented by ……………………………………
Signature: ………………………………. Date: / /
72
Annex 6: Risk Identification Worksheet
Risk factors
Description of risk
Ratinga
of risk
Mitigation measures
Ratinga of
residual risk
Moderate
The economy grew by about 7% and tax revenues
should be buoyant. In addition, management of
Government assets and sizeable privatization
proceeds help reduce the need to borrow.
Government plans to reduce deficits gradually by
at least 1 percentage point every year for the next
five years, and the deficit fell by more last year.
Moderate
I. Country and/or Sub-National Level Risks
Macroeconomic
Framework
Inflation regained momentum reaching double-digit
levels in January-February 2008, after slowing down in
Sept-Dec 2007 which underscore the importance of
consistent economic policies. This increase was initially
driven by soaring international food prices. The first and
second round effects of the measures adopted by the
government last May (increase in civil servants salaries
and partial elimination of subsidies) also contributed to the
acceleration of the price level. M2 growth dropped to 17
% (year-on-year basis) in May 2008 after peaking to 23.9
percent in April.
The CBE is taking monetary policy actions to
react to the situation and has already increased its
overnight deposit and facility interbank interest
rates four times since Feb-08 by a cumulative 1.75
percentage points to 10.5 percent and 12.5 percent,
respectively.
The large (expected to remain stable despite these
measures) budget deficit and the high domestic debt raises
its vulnerability to market perceptions although FDI and
capital inflows have been substantial recently.
Egypt’s substantial foreign exchange reaching
US$33.8 billion at end-February 2008 and
moderate (mostly concessional) external debt of
$34.5 b or 21.6% of GDP reduces its vulnerability
to external shocks.
Exports of hydrocarbons, tourism and Suez Canal
revenues are vulnerable to regional political turmoil.
Country
Engagement
With IBRD
Oil prices reached record levels - and should they
increase- are not expected to do so significantly (in an
extent to harm Egypt’s exports). Also, the domestic
economy has proven to be somewhat resilient to regional
turmoil.
Interest in Bank products and advice could wane.
Management of the social and political tensions that may
come into play during the course of the reform. (The
current administration is reform-oriented and owns Banksupported programs).
Low
Demonstrated speed and flexibility in use of Bank
instruments.
Reduction in cost of IBRD finance has enhanced
WB competitiveness.
Mobilizing popular support for reforms remains a
considerable concern to reformers.
Strong partnership behavior, e.g. in CAS Progress
Report.
Some reassurance can be drawn from the fact that
in the last two years, Egypt has been successful in
implemented an ambitious reform program.
73
Low
Country
Governance
Possible deficiencies in the institutional capacity to
implement the reform program
Low
Voice and participation not too strong
Systemic
Corruption
The country ranks 105 (out of 180) on the Transparency
International corruption perceptions index for 2007 (a net
decline from its position in 2006: 70 out of 163). There is
a risk that this perception can have a negative impact on
new investment in particular and business environment in
general.
Moderate
The Bank Group will continue to promote policy
debate on reforms to keep the strong partnership
with the Government.
In January 2007, the Government signed a feebased technical assistance agreement aimed at
reviewing options for improving governance, with
a focus on: (i) systemic regulatory/red tape reform;
(ii) review of Freedom of Information Act; and
(iii) public offering of State-owned enterprises
Since late 2005, the Government has increased its
focus on anti-corruption issues and has asked for
Bank support to that effect. As cited above, the
Government signed a fee-based technical
assistance agreement aimed at reviewing options
for improving governance, including fighting
corruption.
Low
Low
Egypt has been successful in receiving significant
capital inflows (both FDI and portfolio
investments), and the Government has been
working towards improving business environment.
Bank program supports reform and capacity
building in fiduciary systems, e.g. FM,
procurement and PPP.
II. Sector Governance, Policies and Institutions
Sector Specific Risks
This is the first CF transaction in Egypt in the Urban
Transport sector. Sector is known be fragmented in
responsibility, with several duplication of efforts.
III. Operation-specific Risks
Technical Design
Being a Program of Activities (PoA), the program
could be complex to design and implement.
74
Substantial
This carbon finance program is clearly led by
Ministry of Finance in Egypt. In the advice of
the Bank, MoF informed the CF National
Designated Authority within Ministry of
Environment and held in December 28, 2009, a
public consultation workshop with the
participation of the Ministry of Finance,
participating commercial banks, participating car
manufacture companies, and representatives of
the Egyptian Environmental Affairs Agency.
Moderate
Substantial
Program is phased in a flexible way, giving
emphasis to first component, to taxi scrapping,
which is well prepared and conceptualized.
Subsequent components will be implemented at
the pace that is suitable for Government’s
Moderate
Implementation
Capacity and
Sustainability
Financial
Management
Procurement
Social And
Environmental
Safeguards
Ministry of Finance, which is the Project Coordinating Substantial
Entity, does not have any prior experience with
implementing carbon finance projects.
This is a stand-alone CF program
NA
This is a stand-alone CF program
Although the program is expected to result in major
GHG ER and improvement in Cairo air quality, and
several other socioeconomic benefits, as identified in
the completed Framework Environmental and Social
Assessment report (FESA), the program also
involves potential adverse impacts during the
construction and operation of a scrapping &
recycling facility, related to the following (see FESA
in InfShop for full details):
NA
High
action/priority.
Bank and Carbon Finance team provides
substantial hand-holding support in each step to
a core team assignment for this program within
MoF.
GoE expressed in several letters to the Bank its
commitment to low carbon technology and
sustainability of efforts beyond this CF
program.
This is a stand-alone CF program
This is a stand-alone CF program
The nature and significance of the environmental
and social impacts expected to result from these
aspects of the Program have been discussed and
addresses in an integrated Framework
Environmental and Social Assessment report
(FESA), which was disclosed in December 29,
2009.
The overall objective of the FESA was to assess
the impacts of the different proposed design
elements of the Program, and to propose
measures to enhance its environmental and social
performance. The FESA (a) supplied relevant
data concerning the environmental and social
impacts of the Program, (b) assessed and
compare the impacts taking into account the
relevant national and international requirements
and guidelines, (c) consulted the relevant
stakeholders on such impacts and their
management, (d) analyzed the program
alternatives, and (e) provided EMP, incl a set of
mitigation measures, monitoring plan, and
institutional capacity program to manage each of
the mentioned potential adverse the
environmental and social impacts.
Handling and Disposal of Solid Waste at the
Scrapping & Recycling Plant.
Handling and Disposal of Liquid Waste.
Air Emissions
Noise
Possible traffic congestion
Possibility of increasing noise levels
Possibility of injury on site
One important element of the study was to
prescribe a series of conditions and good
practices to be followed at the program level,
which would further be elaborated for each
specific project, for which an Environmental and
Social Impact Assessment would be required,
75
Moderate
NA
NA
Substantial
once the specific arrangements for each
component under this program were identified.
The EMP will be implemented by the Ministry of
Finance and monitored by the Ministry of
Environment.
Program Validation
Prior to submittal of program documents to the
UNFCCC Executive Board for review, such
documents must be validated by an independent
third-party auditor accredited by the UNFCCC.
Moderate
As of time of writing, such documents have been
submitted to the DOE. The DOE has completed its
review and issued a “PoA Findings Report” and a
“CPA Findings Report”. These reports are
precursors to the draft and final Validation Reports.
UNFCCC
Registration
Upon validation, the Egypt Vehicle Scrapping and
Recycling Program will be the first of its kind – the
first transport PoA, and the first scrapping program –
to start the process of registration under the
UNFCCC CDM program. Given such a pioneer
nature, there are uncertainties as to how the
UNFCCC Executive Board will react.
Substantial
IV. Overall Risk (including Reputational Risks)
Overall Risk
Egypt has a reasonably good legal and regulatory
framework related to environmental and social
protection, including requirements for
environmental assessments and mitigation.
The Carbon Finance Unit had been working
closely with the DOE before preparation of
program documentation. This ensures prior
agreement on the survey techniques and program
design methods and avoids delays or substantial
revisions in the long run. The Carbon Finance
Unit maintains an open line of communication
with the DOE, to ensure the validation process is
on track.
Based on comments received to date from the
DOE, it would seem that there is a strong
likelihood that the program will be successfully
validated.
The Carbon Finance Unit has prepared all of the
program documents in-house to ensure high
standard technical preparation of the documents
and sufficient quality assurance and control. The
CF Unit has also maintained consistent
communication with the DOE, DNA and
Program Coordinator to ensure full
understanding and compliance with the
UNFCCC requirements.
Low
Moderate
Moderate
Memo items:
a
Rating of risks on a four-point scale – High, Substantial, Moderate, Low – according to the likelihood of occurrence and magnitude of potential adverse impact.
76
Annex 7: Documents in the Project File
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Coordinating Entity and PoA Participants Contact Information
Public Funding

Prime Minister’s Decree Number 470 for the Year 2009 Regarding Organizing
the Fund for Financing Purchase of Transport Vehicles – Arabic (Final) and English
(DRAFT)

Prime Minister’s Decree Number 471 for the Year 2009 Regarding Regulation
of Providing Financial Incentives for the Buyers of Transport Vehicles Replacing
Trailer Trucks, Taxi Vehicles and Mass Transport Vehicles – Arabic (Final) and
English (DRAFT)
Decree Number 1 for the Year 2009 -- issued by the Head of the Board of Directors of
The Fund for Financing Purchase of Transport Vehicles (regarding management of
non-operational old vehicles)
Baseline

Model for Ex-Ante Baseline Estimation for 11 Greater Cairo Region Taxi
CPAs

Ex-Ante Estimated Vehicle Replacement Schedule for 11 Greater Cairo Region
Taxi CPAs
Monitoring Plan

Monitoring Plan

Baseline and Project Monitoring Survey (English)
PoA Protocol (Original signed version and English translation)
Documentation of Prior Consideration of Carbon Finance
Sample Daily Monitoring Report and Registered Vehicle Database Screenshot
Vehicle Owner QA/QC Survey -- Arabic (Final) and English (DRAFT)
Summary of Vehicle Owner QA/QC Survey Complaints and Corresponding Bank -- Arabic
(Final) and English (DRAFT – complaints only)
Complaint Hotline Number Public Notice
Processing and Storage Site Driver Documentation
Program Overview Q&A Prepared by the MoF – Arabic (Final) and English (DRAFT)
Traffic Law #121
Select Newspaper Articles and Advertisements about the PoA
Original Vehicle Data Received from the Ministry of Interior (Arabic) and Analysis (English)
Baseline Survey Reports (September 2009 and December 2009)
Vehicle Owner CER Rights Waiver
Stakeholder Meeting Documentation

Attendance sign-in sheet and agreement (original Arabic and English
translation)

Stakeholder consultation agenda

Meeting minutes

Stakeholder consultation letters of invitation
FESA Documentation
Recycling Facility Public Tender (original and English translation)
77
21 IBRD Documentation

Project Idea Note (ENVCF)

QAT Project Idea Note Review (ENVCF)

Letter of Intent (ENVCF)

Draft ERPA (ENVCF)

Project Concept Note (MENA)

ISDS (MENA)

PID (MENA)

Risk Identification Worksheet (MENA)
22 UNFCCC Process Documentation

UNFCCC Form for Early Consideration of CDM

PoA-DD

CPA-DD Template

CPA-DD Filled-in for First CPA

PoA Preliminary Findings Report

PoA Validation Findings Report

CPA Validation Findings Report

PoA Draft Validation Report (DVR)

Modalities of Communications Form (signed by all parties)
78
Annex 8: Program Participating IBRD Staff
Ahmed Eiweida
Holly Krambeck
Harikumar Gadde
Hocine Chala
Maged Hamed
Knut Opsal
Ahmed Mostafa
Gael Gregoire
Maya Karam
Monica Teresa Restrepo
Eduardo Dopazo
Sidney Nakahodo
Martina Bosi
Megan Meyers
Rama Reddy
Claudia Barrera
Laila Kotb
Task Team Leader, Lead Urban Specialist
Deal Manager, Carbon Finance Specialist
Methodology Specialist
Regional Safeguards Advisor
Senior Environmental Specialist
Senior Social Specialist
Carbon Finance Regional Coordinator
MENA CF Coordinator
Counsel, LEGCF
Counsel, LEGCF
Spanish Carbon Fund Manager
Spanish Carbon Fund Analyst
Danish Carbon Fund Manager
Danish Carbon Fund Analyst
Methodology Team Leader
Methodology Specialist
Country Office Program Assistant
79