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OP 10.21, Annex B - Eligible Activities


These policies were prepared for use by World Bank staff and are not necessarily a complete treatment of the subject.
OP 10.21 - Annex B
November, 1993
 

Activities that are eligible for funding by the Multilateral Fund of the Montreal Protocol (MFMP) conform to the following specifications, adopted by the Parties in June 1990. 1These specifications are reprinted verbatim from Report of the Second Meeting of the Parties to the Montreal Protocol on Substances that Deplete the Ozone Layer, London, June 27-29, 1990 (UNEP/OzL. Pro. 2/3, Annex IV), pp. 42-44.


Indicative List of Categories of Incremental Costs2
 

1.  The evaluation of requests for financing incremental costs of a given project shall take into account the following general principles:

(a)  The most cost-effective and efficient option should be chosen, taking into account the national industrial strategy of the recipient party. It should be considered carefully to what extent the infrastructure at present used for production of the controlled substances could be put to alternative uses, thus resulting in decreased capital abandonment, and how to avoid deindustrialization and loss of export revenues;

(b)  Consideration of project proposals for funding should involve the careful scrutiny of cost items listed in an effort to ensure that there is no double-counting;

(c)  Savings or benefits that will be gained at both the strategic and project levels during the transition process should be taken into account on a case-by-case basis, according to criteria decided by the Parties and as elaborated in the guidelines of the Executive Committee;

(d)  The funding of incremental costs is intended as an incentive for early adoption of ozone protecting technologies. In this respect the Executive Committee shall agree which time scales for payment of incremental costs are appropriate in each sector.

2.  Incremental costs that once agreed are to be met by the financial mechanism include those listed below. If incremental costs other than those mentioned below are identified and quantified, a decision as to whether they are to be met by the financial mechanism shall be taken by the Executive Committee consistent with any criteria decided by the Parties and elaborated in the guidelines of the Executive Committee. The incremental recurring costs apply only for a transition period to be defined. The following list is indicative:

(a)  Supply of substitutes

(i)  Cost of conversion of existing production facilities:

  • cost of patents and designs and incremental cost of royalties;
  • capital cost of conversion;
  • cost of retraining of personnel, as well as the cost of research to adapt technology to local circumstances;

(ii)  Costs arising from premature retirement or enforced idleness, taking into account any guidance of the Executive Committee on appropriate cut-off dates:

  • of productive capacity previously used to produce substances controlled by existing and/or amended or adjusted Protocol provisions; and
  • where such capacity is not replaced by converted or new capacity to produce alternatives;

(iii)  Cost of establishing new production facilities for substitutes of capacity equivalent to capacity lost when plants are converted or scrapped, including:

  • cost of patents and designs and incremental cost of royalties;
  • capital cost;
  • cost of training, as well as the cost of research to adapt technology to local circumstances;

(iv)  Net operational cost, including the cost of raw materials;

(v)  Cost of import of substitutes;

(b)  Use in manufacturing as an intermediate good

(i)  Cost of conversion of existing equipment and product manufacturing facilities;

(ii)  Cost of patents and designs and incremental cost of royalties;

(iii)  Capital cost;

(iv)  Cost of retraining;

(v)  Cost of research and development;

(vi) Operational cost, including the cost of raw materials except where ) otherwise provided for;

(c)  End use

(i)  Cost of premature modification or replacement of user equipment;

(ii) Cost of collection, management, recycling, and, if cost effective, destruction of ozone-depleting substances;

(iii) Cost of providing technical assistance to reduce consumption and unintended emission of ozone- depleting substances. 

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  1. In addition to the definition adopted by the Parties, it is important to note that MP funds contributed for incremental costs should not be subject to any form of national or local taxation.
  2. In addition to the types of expenditures indicated, the MFMP has funded projects supporting the development of institutional capacity to support local initiatives and coordination functions.

 

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OP 10.21 - Investment Operations Financed by the Multilateral Fund for the Implementation of the Montreal Protocol



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