Environmental Service S.A.

MIGA issued four guarantees to Urbaser S.A. of Spain in association with its 15-year concession agreement with the Cairo Cleaning & Beautifying General Authority, an affiliate of the Municipality of Cairo. The guarantees cover a $1.23 million equity investment in the project enterprise, Environmental Service S.A. (Enser); a $2.43 million loan guaranty for an eight-year commercial bank loan made by National Société Générale Bank to Enser; a $2.07 million loan guaranty to National Société Générale Bank for a one-year revolving short-term commercial loan to the project enterprise and a performance bond to the Cairo Cleaning & Beautifying General Authority; and $1.08 million loan guarantee to Sogelease, a local leasing company, for a purchase option of Enser under the lease agreement. MIGA’s gross exposure under the project is $6.41 million. The guarantees are for 10 years and cover the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract.

The project will contribute to modernizing Cairo’s waste management sector, preserving the city’s environment, and bolstering public health and the quality of life of its citizens. Under the former waste removal system, much of the city’s waste was left uncollected and was often discarded in unofficial dumpsites close to housing developments, where it was either burned or left untreated. This practice created pollution, and posed health and safety concerns for both adults and children throughout the city. The project will increase coverage of waste collection from roughly 75 percent of households in the concession area to 100 percent coverage.

The project will also serve to protect and improve the health and quality of life of a particular community most adversely affected by Cairo’s waste—the Zabbaleen. The Zabbaleen are a people who make their livelihood from collecting and recycling Cairo’s solid waste. They traditionally transport the waste to their homes, which has led to a very high percentage of tuberculosis and hepatitis infections in their communities.

Roughly 450 of the 2,000 local jobs expected to be generated by the project are set aside for the Zabbaleen. Moreover, employment of the Zabbaleens will include protective equipment and uniforms, greatly improved work conditions and sanitation standards, medical benefits, training, and improved collection techniques. Medical waste will be pre-sorted at the source and transported in sealed, rigid and marked containers to incineration sites.

The project is consistent with Egypt’s development goals, as embodied in the World Bank Group’s county assistance strategy: improving the country’s infrastructure, reducing unemployment, and preserving the environment.