| Project Detail |
The Project will enable water districts (WDs), corporatized water utilities operating outside Metro Manila, to expand and rehabilitate supply systems and to build pilot sanitation facilities, in order to reduce water-related diseases due to unsafe drinking water and the lack of sanitation facilities. It will also provide capacity development technical assistance to strengthen the sustainability of WDs and promote partnerships between local government units (LGUs) and WDs in septage management. Project Rationale and Linkage to Country/Regional Strategy: The government seeks to urgently catalyze urban water supply and sanitation investments to expand access to potable water and to address water resources pollution and overburdened service and infrastructure capacities in many provincial cities and towns. 90% of Metro Manilas 12 million population has access to piped water, while less than half of the 33 million in provincialother urban areas do. Sanitation remains a big challenge outside Metro Manila where there are no significant sewerage systems and most septic tank effluents are discharged without treatment. The 1973 Provincial Water Utilities Act (Presidential Decree or PD 198) sought to address grossly inadequate water and sanitation infrastructure by encouraging local government units (LGUs) to form corporatized utilities called water districts (WDs). PD 198 also established LWUA, a government-owned specialized lender mandated by law to oversee the development of water supply systems in the countryside and to support WDs. This water district-specialized lender model has become a working model for other Asian countries. A WD is a local corporate entity that operates and maintains a water supply system in one or more provincial cities or municipalities. Classified as a government-owned and controlled corporation (GOCC), a WD is run by a five-person Board of Directors appointed by the Mayor or Governor, through a General Manager. LWUA helps the WD develop its system and achieve sustainability, taking local conditions into account. WDs are not subsidized by LGUs and must operate on a cost recovery basis. To ensure affordability, WDs offer a lifeline tariff for poor households, and tariff increases are implemented only after a public hearing. Most WDs provide access to poor households through installment or socialized payment schemes for connection fees. For sustainability, tariffs are socialized, with big commercial/industrial users subsidizing smaller, more numerous, consumers. When a WD defaults on its debt obligations, LWUA can take over management, fully or partially, and assign a sixth Board member. At the end of 2014, approximately 500 operational WDs were serving more provincial households than other types of water supply providers including LGU-run water utilities, private operators and small barangay/community systems. Private operators mostly target larger and dense franchise areas, while many LGU-run and community systems are small and struggle financially. WDs are GOCCs with a development mandate, with operations ranging in size from 30,000+ service connections to a few hundred. In general, WDs provide better service, according to studies, than LGU-run utilities, because of corporatization and LWUAs financing, training and technical assistance. But chronic underinvestment by WDs has resulted in resource pollution and over-extraction, limited system coverage, and high non-revenue water (NRW) levels. Most WDs have low efficiency and profitability and weak institutional and technical capacity, and are not yet bankable. 60% of operational WDs [305 WDs] are small with less than 3,000 connections and/or a low point-rating score; 271 WDs are non-operational. Impact: Improved public health and living conditions for the communities outside Metro Manila that participating WDs serve. |
