Policy and Financing on Seweraga and Septage Management in the Philippines
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EASAN : Policy and Financing on Seweraga and Septage Management in the Philippines

EASAN : Policy and Financing on Seweraga and Septage Management in the Philippines

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  • Contrary to popular belief, domestic wastewater (blackwater and greywater coming from residences) is the largest contributor of pollution in major water bodies of the Philippines, estimated at about 48%. In MM alone, it contributes to about 58% of the pollution loading – PEM 2003
  • The Philippine CWA is a milestone legislation in abating pollution of water bodies and related resources in the country.
  • The National Sewerage and Septage Management Program or NSSMP aims to accelerate sewerage and septage management projects in urban and peri-urban population in the next 10 years.
  • Septage Mgt. Targets:43.6 million people with access total urban population less Metro Manila)Capital costs range from P4 to 63 million/projectPollution reduction: 260 million kg of BOD (24% of total generated) Total capital costs of P12.4 billionSewerage Tagets:3.2 million people with accessCapital costs average P380 million/project/phasePollution reduction: 64 million kg of BOD (80% of total generated) Total capital costs of P13.9 billion
  • Part of the challenges in financing the sector will include: a) local governments do not see septage and sewerage as a priority undertaking; and that b) most systems require huge capital cost; c) service providers (including the LGUs do not have the technical capacity to operate and maintain such systems)On the part of water districts, the CWA clearly emphasized the role of water supply utilities for sewerage facilities; and to borrow from LWUA GFIs, private banks, and to engage the private sector in operating septage and sewerage systems
  • DOH has developed sanitation tools and sub-programs for LGU implementation under the NSSP. Tools and guidebooks for sanitation baseline survey/mapping and sanitation planning will be utilized for NSSMP project development (DoH-DPWH collaboration)Septage and sewerage projects may be identified following the guidance notes from the NSSMP (guide for local implementers) and Technology options developed under Phase 1 of the study – NSSMP framework plan
  • As part of the Government of the Philippine’s water and sanitation sector reform plan, it has approved the 40% subsidy for sewerage projects for the 17 highly urbanized cities. This cost sharing scheme is approved by NEDA Executive Board in Approved by NEDA Executive Board in 2009.DOF Order no. 40-09 issued on December 3, 2009.Does not include Metro Manila due to special SWM requirements and management arrangements. 40% NG cost share is consistent with Solid Waste Management policy for 1st and 2nd class cities.Previous policy inhibits 1st class cities to avail of any grant (no subsidy), suggesting that cities are already financially viable and that grants should only be channeled to poorer LGUs (3rd-6th class). However the NSSMP sought exemption from this policy, arguing that 1st and 2nd class cities are the most densely populated, generating huge volumes of wastewater, therefore needing greater investments for sanitation infrastructure.
  • We can expect widespread implementation if:Septage projects Nationwide training program to develop projectsNationwide promotion campaign to motivate decision makersCost share between water districts and LGUsParticipation of private sector companies for collection and treatment with LGU providing policy (ordinance) and ensuring strict implementation; DENR enforces CWA provisionsSewerage projects can achieve full cost recovery through user fees in 15 years.Capital costs average P760 million for an HUC to cover 50% of its urban population. If this is shared 50/50 with the water district, this leaves P380 million for the LGU to finance up frontTherefore, NG cost share is CRITICAL to help cover capital costsRecommend the 50% coverage be done in two phases of 25% each to make it more affordable
  • On program design – correct assessment of relevant data are needed to guide sound decision-making2) On participation – participaory approaches must be applied in all stages of theprojectcycle to gain program consensus at earlystage3) On implementation– thereisgenerallyweakcapacity in all levelsbuttheLGUs, beingthemainimplementers of theporgram, wouldneedspecialattention. Most of Philippinecitiesstilllackthenecessaryfiduciary and procurementskills. Implementationrisks are alsohighestwithLGUsgiventhepoliticalrisks and limitedresourcesavaialable.4) On financing –LGU financingremains to be traditional (through GFI lending); new approaches such as OBA or output-basedfinancing and other performance-basedschemesneed to be explored. PPP arrangnementsmayalso be exploredgiventhestronginterest of GoP (thruthe PPP Center) and gooddemonstration of concessionagreement in Metro Manila.

Policy and Financing on Seweraga and Septage Management in the Philippines Presentation Transcript

  • 1. Policy and Financing on Sewerage andSeptage Management in the Philippines Chairman Rene C. Villa, Local Water Utilities Administration East Asia Ministerial Conference on Sanitation and Hygiene (EASAN 3) Bali, Indonesia September 10, 2012
  • 2. Presentation Overview Legal mandate Goal and objectives Targets Strategies Septage and sewerage financing options Lessons
  • 3. Water Quality On The Development Agenda2.2 million metric tons of organic pollution produced per year Industrial, Philippines 15%, Domestic 48% Agricultural 37%,Metro Manila Industrial, 42% Domestic, 58%Source: Philippine Environment Monitor 2003 (World Bank)
  • 4. Legal Mandate for NSSMPThe Clean Water Act of 2004 requires The Department of Public Works and Highways (DPWH) to prepare a national program on sewerage and septage management (Section 7) Include a priority listing of projects for LGUs and to come up with a priority investment list, for national government allocation of funds for construction and rehabilitation of sewerage and septage infrastructure
  • 5. Goal and Objectives  Goal: to improve water quality and public health in the Philippines by 2020.  Objectives: - to enhance the ability of local implementers to build and operate wastewater treatment systems - promote the behavior change and supporting environment needed for systems to be effective and sustainable.
  • 6. NSSMP TargetsSeptage Management SewerageAll LGUs have SMP serving 17 HUCs have sewerage systems their urban barangays (interceptor type) serving 50% of urban• 43.6 million people with access barangays to be done in 2 phases (total urban population less Metro Manila) • 3.2 million people with access• Capital costs range from $95,000 • Capital costs average $9.1 million/ to $1.5 million/project project/phase• Pollution reduction: 260 million • Pollution reduction: 64 million kg of BOD kg of BOD (24% of total (80% of total generated) generated) • Total capital costs of $333 million• Total capital costs of $297 million
  • 7. Role of septage and sewerage infrastructureproviders in the country Local governments contribute in managing and improving water quality within their territorial jurisdictions (from planning, appropriation of site and access, and water quality monitoring) Water districts operating within the 17 highly urbanized cities are encouraged to finance 50% of the capital cost in septage and sewerage.
  • 8. Strategies Local governments to develop local sustainable sanitation programs in line with the National Sustainable Sanitation Plan Develop and plan septage management and sewerage projects for implementation (on-going World Bank-WSP TA) Department of Public Works and Highways (DPWH) is the lead implementing agency – coordination office and management of training and capacity building for the 17 highly urbanized cities Department of Health (DOH) is co-leader in capacity building for local government units (nationwide training and promotion on septage management)
  • 9. Recent development on cost-sharing policy:National government approval of the NSSMP A 40% subsidy for sewerage projects is made available for the 17 HUCs (10 years implementation) LGU Municipalities National Cities National Income & Provinces Government Government Class LGU share Grant LGU share Grant (loan/equity)1st & 2nd 60/20 20 60 403rd & 4th 45/15 40 75 255th & 6th 40/10 50 80 2040% NG cost share is consistent with Solid Waste Management policy for 1stand 2nd class cities.
  • 10. Financing Options: promising but limited examples  Encourage 50-50 cost sharing between local governments and Water Districts - Dumaguete City example  Private sector is becoming active – Metro Manila concessionaires moving outside MM, can finance, but will most likely cherry pick only a few of the best areas  Zamboanga City and Cagayan de Oro City will bid out septage collection and treatment to private companies  There are many existing financing options available – government financing institutions & private banks.  Environment Department developing National Water Quality Management Fund and Area WQM Funds, but will only be able to fund project preparation, not capital costs
  • 11. Financing - Septage Septage management projects can achieve full cost recovery through user fees in 8-15 years Capital costs range from $95,000 to $1.5 million.Financing - Sewerage• Sewerage projects can achieve full cost recovery through user fees in 15 years• Average capital cost is $18.2 million
  • 12. Financing -SewerageSewerage projects can achieve full cost recovery through userfees in 15 years.However: Capital costs average $18.2 million for an HUC to cover 50% of its urban population. If this is shared 50/50 with the water district, this leaves $9.1 million for the LGU to finance upfront Therefore, NG cost share is CRITICAL to help cover capital costs Recommend the 50% coverage be done in two phases of 25% each to make it more affordable
  • 13. Key obstacles and lessons Design of sanitation programs and projects should be based on sound evidence and backed by strong political will. Full participation of key stakeholders is always necessary. Implementation remains to be a huge challenge – weak capacity at the local level Major bottlenecks in current service delivery systems have to be addressed. There are promising innovative financing models but limited in practice - focus on doable approaches Be opportunistic in instituting reforms - the playing field will always be imperfect!
  • 14. Thank You!