Palestinian Prime Minister Salam Fayyad signed a deal with the World Bank on Monday to finance three projects in the Gaza Strip but said they could not go ahead until Israel had lifted its blockade.

The $29 million agreement covers an electric utility management project as well as water and wastewater projects in the West Bank and the Gaza Strip.

Half of the money is earmarked for the Gaza Strip, which Hamas Islamists seized from Palestinian President Mahmoud Abbas's Fatah forces a year ago.

At a signing ceremony with David Craig, the World Bank's director in the West Bank and Gaza Strip, Fayyad said "implementing the projects ... requires lifting the siege imposed on the Gaza Strip (and) reopening the border crossings".

Fayyad said around 40 percent of $7.7 billion in aid pledged by international donors to the Palestinians at a conference in Paris last year was to have gone for projects in the Gaza Strip.

Israel tightened restrictions at its Gaza border terminals after the Hamas takeover, cutting back the supply of fuel and other goods. It has has promised to increase the flow gradually under an Egyptian-brokered truce that began on June 19.