neda chapter 5

7/30/2019 Neda Chapter 5

1/60

121Accelerating Infrastructure Development05AcceleratingInfrastructureDevelopmentConstruction of the MRT-3 extension

Photo by: Leody Barcelon


2/60

122 Philippine Development Plan 2011-2016

The Plans infrastructure development program aims to contribute to inclusive growthand poverty reduction. It will support the performance of the countrys economicsectors and ensure equitable access to infrastructure services, especially as theseaffect the peoples health, education, and housing. Toward these ends, the governmentwill accelerate the provision of safe, efcient, reliable, costeffective, and sustainableinfrastructure.

Accelerating InfrastructureDevelopment

Crosscutting Strategies

Te countrys inadequate inrastructurehas been identied as a critical constraintto economic growth1. Tis inadequacy,in both quantity and quality, is the resulto low levels o public and private sectorinvestments in inrastructure, which allshort o the requirements o a progressiveeconomy and a growing population.Moreover, inequitable access to basicinrastructure services has also become anobstacle to poverty reduction and, moregenerally, to inclusive growth because itlimits the opportunities or economic

and social advancement available tomarginalized sectors.

o accelerate inrastructure developmentand oer equitable access to inrastructureservices, the ollowing objectives andstrategies shall be pursued across allinrastructure subsectors:

To Optimize Resources andInvestments

Low levels o investment in inrastructure

are directly caused by the countrystight scal situation. Notwithstandingthe measures to address the narrow

scal space discussed in Chapter 2,the ollowing strategies need to beimplemented to make the most oavailable resources and investments ininrastructure:

Improve Project Preparation,Development, andImplementation

Inadequate project preparation, poorproject quality-at-entry, and poorproject execution cause delays andchanges in project scope and raises costsin the course o implementation. All o

these signicantly reduce the projectsvalue and hamper the attainment oproject objectives.

o address this problem, the ollowingpolicy reorms2 shall be implemented:

Strengthening the capacity oNEDA and other governmentagencies in Value Engineering/Value Analysis (VE/VA) andRisk Analysis and Managementto ensure that inrastructure

projects are not overdesignedor overspecied and tominimize cost-overruns, project

1 See ADB. Philippines: Critical Development Constraints, ADB Publications, December 2007, p.1-62 and C.F.Habito. An Agenda or High Inclusive Growth in the Philippines. ADB Publications 2010, p. 1-61.

2 Tese reorms were recommended under the 2009 Philippines-Australia Partnership or Economic GovernanceReorms (PEGR)-unded Reorm Agenda 006-07 on Institution Strengthening o the NEDA and other oversightagencies on value engineering, contract preparation, and perormance monitoring o inrastructure projects

Low levels of investment in

infrastructure are directly causedby the countrys tight scalsituation.

Inadequate project preparation,poor project quality-at-entry, andpoor project execution causedelays and changes in projectscope and raises costs in thecourse of implementation.


3/60

123Accelerating Infrastructure Development

implementation delays, andchanges in scope o works;

Incorporation o VE/VA andRisk Analysis in the guidelines

and processes o the NEDAInvestment CoordinationCommittee (ICC);

Development o Modelransaction Documents/Contracts that may be uniormlyapplied to PPP projects o nationalgovernment agencies (NGAs)and LGUs3; and

Monitoring, management,and evaluation (MME) o PPPprojects or the immediatemitigation o potential problemsduring contract implementation,

while maintaining clear lineso accountability betweencontracting parties and theoversight agency.

o assist agencies in project preparation,a und to support the conduct oeasibility studies may be established.

Tis und will ensure that easibility

studies are undertaken in a timely andcorrect manner.

With regard to PPP projects, NEDA-ICC approval o business cases shallbe secured beore proceeding to ulleasibility studies to save on projectpreparation costs. Tis shall include thego or no-go decision on a project at anearly stage and shall be required o allPPP projects irrespective o modality.

Synchronize Planning andBudgeting

Te MEF and the OPIF representsubstantial progress in ensuring the

consistency and responsiveness o theexpenditure program with the nationaldevelopment agenda o the government.Despite these, there is still a need toguarantee that only those inrastructureprograms and projects that will generategenuine economic benets and areconsistent with established developmentplans will be adequately unded or timelyimplementation.

By synchronizing the prioritization oprograms and projects on one hand andallocating appropriate unding acrossgovernment agencies on the other, thegovernment ensures that only programsand projects that are strategic and criticalto the realization o developmental goalsshall be prioritized or unding. As a priorstep, however, government agencies mustdemonstrate that proposed projects indeedmake positive net contributions to nationaleconomic and social welare.

Coordinate and Integrate

Inrastructure InitiativesDevelopment initiatives acrossinrastructure subsectors shall becoordinated and integrated. Tis ensuresthat the requirements o these subsectorsare addressed within the undamental levelso the inrastructure sector and that theircontributions are ully utilized. Intendedoutcomes are better realized i there is acoordinated and integrated strategy orinrastructure initiatives.

LGUs play a key role in inrastructuredevelopment. While local autonomy isduly recognized, the nancial and technical

Development initiatives across

infrastructure subsectors shallbe coordinated and integrated.Intended outcomes are betterrealized if there is a coordinatedand integrated strategy forinfrastructure initiatives.

3 Specic BO/PPP model transaction documents/contracts have already been developed or our subsectorsnamely: (a) urban mass rail; (b) bulk water supply; (c) solid waste management (SWM); and (d) IC. A contractdrating tool which aims to encompass all other projects and sectors not covered by the our model contracts hasalso been developed. Te model contracts and the contract drating tool are both posted on the NEDA websiteunder the Programs and Projects section.


4/60


capacity o LGUs must be enhanced i theyare to become more eective developmentpartners. Teir capacity or planning mustalso be improved so that local and nationalplans can be harmonized.

o aid planning and project development,the collection, management, and integrationo key inrastructure and related data bothat the national and local levels will beimproved.

To attract Investments inInfrastructure

Improving investor condence isnecessary in order to generate additionalnancing and attract service providers.Both, in turn, ease the burden ogovernment in providing inrastructure.

Te ollowing strategies aim to makethe country an attractive destinationor investments by establishing a stable,consistent, and transparent policyenvironment and by reducing the money-and time-cost o doing business:

Improve the Institutional andRegulatory Environment o theInrastructure sector

Regulatory agencies play a vital rolein inrastructure development sincethey strongly inuence, or good or ill,the provision o existing inrastructureservices and the levels o orthcominginvestments. Tey also aect theaccessibility o such services, particularlythe rates at which these are madeavailable.

Improving the regulatory environmentor inrastructure thereore becomes

contingent on institutional reorms,which will involve:

a. the separation o operation andregulatory unctions o agencies inorder to remove conicts o interestthat arise naturally when suchunctions are perormed by a singleentity;

b. the establishment o anindependent body that consolidatesin itsel all regulatory unctionsto support the provision o publicinrastructure services in subsectors

with multiple regulators;

c. the creation o a regulatoryramework where this is lacking andnecessary; and

d. the strengthening o regulatoryinstitutions through capacity buildingand reinorced independence.

Regulatory agencies should pay specialattention to vertical integration trendsin supply and distribution utilities.

Tese may acilitate transer-pricing andresult in inefciencies rom the supplyside to the distribution side. Tis issuebecomes critical in sectors where naturalmonopolies are present, such as energyand water, where returns on investmentare guaranteed and where distribution isregulated while supply is not.

Encourage PPPs

Te huge investment requirements o

the inrastructure sector, coupled withthe governments need to observe scaldiscipline, means that governmentshall tap the private sector or thenancing, construction, operation,maintenance, and rehabilitation omajor inrastructure in high-priorityareas, such as transportation, power and

water.

o this end, the environment or theimplementation o PPPs shall beimproved by revisiting the ollowing

guidelines and policies:

a. RA 7718 and its ImplementingRules and Regulations (IRR);

b. Guidelines and Procedures orentering into Joint Venture (JV)

Agreements between Governmentand Private Entities; and


5/60


c. RA 9184 or the GeneralProcurement Reorm Act.

Te objective o the review shall beto clariy ambiguous provisions and

streamline the procedures and processeso project approval and implementation.Experience during the global nancialcrisis and constraints encountered byconcerned agencies in processing andimplementing PPP projects will also beconsidered to make these guidelines andpolicies more responsive and attractiveto the private sector.

To Foster Transparency andAccountability in InfrastructureDevelopment

Encourage StakeholderParticipation

Government shall encourage the activeparticipation o the public and civilsociety in governance, monitoring,and eedback. ransparency andaccountability are integral to apredictable policy environmentconducive or investment.

To Adapt to Climate Changeand Mitigate the Impacts ofNatural Disasters

Institutionalize CCA andDRRM in InrastructureDevelopment.

Te impacts o climate change andnatural disasters add to the countrysinrastructure problems andhamper resolution o the constraintsearlier discussed. Hence, CCA and

DRRM will be institutionalized ininrastructure development.

Plans and designs should include thepossible eects o climate change andnatural disasters in order to developdisasterresilient inrastructure

and help mitigate the adverse impactso climate change. LGUs should alsoincorporate CCA and DRRM strategiesinto their respective plans, programs andbudgets to allow timely, efcient and

eective mitigation and disaster responseat the local level.

To Provide Productive EmploymentOpportunities

Adopt a Labor-Intensive SchemeWhere Applicable

Inrastructure can contribute signicantlyto local employment generation and canharness skills and technical expertise othe workorce. o provide productiveemployment opportunities that willcontribute to inclusive growth, theinrastructure sector shall adopt anemploymentintensive or laborbasedscheme whenever it is most optimal ininrastructure development. Saety andhealth in public works undertakings shallbe ensured at all times.

Infrastructure Subsectors

TransportAssessment, Issues, andChallenges4

In the MPDP 20042010, thedevelopment o the countrys transportinrastructure was principally aimedat the decentralization o progress anddevelopment by providing opportunitiesor growth, especially in regions and areasadjacent to Metro Manila. owards thatend, the ollowing major thematic areas

in transport were pursued and becamethe primary ocus o both public andprivate investment: (a) the developmento the nautical highway system androad-roll-on/roll-o (RORO) terminalsystem linking the entire country; (b) thedevelopment o tourism inrastructure

4 Source: Updated MPDP 20082010

The impacts of climate change

and natural disasters add to thecountrys infrastructure problemsand hamper resolution of theconstraints earlier discussed.Hence, CCA and DRRM will beinstitutionalized in infrastructuredevelopment.


6/60


to provide access to major tourismdestinations; (c) the afrmative action orpeace and development in Mindanao andother deeply impoverished areas; and (d)the decongestion o Metro Manila and

the spread o development to adjacentregions.

Facilities or RORO have been builtor rehabilitated in 22 ports identiedunder the Strong Republic NauticalHighway (SRNH), with 42 ROROships operating in the identied SRNHroutes run by 25 shipping operators as othe end o 2009. Economic gains havebeen recorded in connection with theintermodal road-RORO terminal system(RRS) connecting Mindanao, Visayas,and Luzon, with a reduction in traveltime by around 12 hours and a reductiono transport cost by 37-43 percent orpassengers and 24-34 percent or cargo.

Te Subic Bay Port Development Projectwas also completed and was expectedto generate signicant benets with theincrease in the ports container capacityrom 100,000 to 600,000 EUs (20-ootequivalent units).

Te SubicClarkarlac Expressway

(SCEx), linked to the existing NorthLuzon Expressway (NLEX), was alsocompleted and has been operational,reducing travel time rom Subic to Manilaand rom arlac to Manila. Te constructiono the arlac-Pangasinan-La Union ollExpressway (PLEx) extending the SCExrom arlac to La Union is ongoing and isexpected to relieve trafc congestion alongthe existing Manila North Road. In theSouthern Luzon Corridor, the completiono the Batangas Port Development Projectand the Southern agalog Arterial Road

(SAR) Expressway will pave the way orthe development o the industrial belt southo Metro Manila.

With respect to roads and bridges, thecompletion o substantial improvementand rehabilitation is expected to reducetransport costs and induce economicactivities, particularly in the rural areas. As oDecember 2009, 22,468 km. (75.15%) o all

national roads had been paved, o whicho 13,525 km. were national arterialroads and 8,943 km. national secondaryroads. Meanwhile 93 percent o thetotal 314,456 linear meters o national

bridges have been made permanent. Asor local roads, o the 30,924.76 km. oexisting provincial roads, 30.2 percentor 9,345.15 km. have been paved, while69.5 percent, or 21,464.50 km, areunpaved, with 0.4 percent or 115.11km. o still undetermined condition. Othe 14,810.44 km. o city roads, 61.7percent, or 9,138.348 km. have beenpaved and 35.8 percent, or 5,308.220km, are unpaved, with 2.5 percent or363.872 km. o undetermined quality.

Major tourist destinations identiedin the previous Plan included CebuBoholCamiguin, ClarkSubic,Cordillera, Davao, Ilocos, Boracay, andPalawan, among others. o serve PanayIsland and its immediate environs, theNew Iloilo Airport was completed in

June 2007. Te New Bacolod (Silay)Airport or Negros Island destinationswas inaugurated and opened oroperations on January 18, 2008. TeCaticlan Airport is currently being

rehabilitated, and the Kalibo Airportsterminal building was initially expandedto cater to the increasing visitor trafc toBoracay Island and nearby destinations.

o serve the Cordillera area, theacilities o the San Fernando Airportin La Union were upgraded, while therst phase o improvements on theBusuanga (Coron) Airport in Palawan

was substantially completed.

On the goal o developing SubicClarkas an Asian logistics center, the Civil

Aeronautics Board (CAB) approvedand published the IRR o EO 253expanding air services at DiosdadoMacapagal International Airport(DMIA) and Subic Bay International

Airport (SBIA). Developments atDMIA include the expansion andrehabilitation o the existing passengerterminal and the installation o radarequipment to enhance the saety o


7/60


ights, as well as to ensure round-the-clock airport operations even inadverse weather. Te CAB and theRP Air Panel negotiated air servicesagreements (ASAs) rom 2006 to 2010

with Singapore, urkey, Oman, Russia,Libya, Cambodia, United Kingdom,Spain, Brunei, Australia, Kuwait, UAE,Qatar, Malaysia, Finland, Iran, Tailand,Netherlands, Hong Kong, Canada,Macau, Palau, Bahrain, PeoplesRepublic o China, India, Japan,Republic o Korea, Nepal, and NewZealand. Tese agreements resultedin increases in capacity entitlements,new routes, more access points,multiple airline designation, and airlinecooperative arrangements. Te CAB

was able to negotiate an average o 200300 tons capacity per week or cargo,

which covers Manila, Subic, Clark, andother points in the Philippines.

While there are completed and ongoingtransport projects implementedthrough PPP under the BO Law,private-sector participation in transportinrastructure development has beencontinually enhanced to augment thegovernments budgetary support or

capital investment. Tis eort includedthe development and construction oexpressways, railways, and airports;the privatization o individual portsor groups o ports; and the operationand maintenance o transport acilities.For the roads subsector, the JICA-assisted Master Plan on High StandardHighway Network Development, whichidentied a long list o potential PPPexpressway projects, was completed in

July 2010. In addition, the PreparatorySurvey or PPP Inrastructure

Development Project, which aims toidentiy bottlenecks in PPP projectimplementation and select priorityinrastructure projects, is underway andclose to completion.

Some o the maintenance o landtransport assets (i.e., maintenance onational, provincial, and city roadsnationwide; improvement o drainage;

installation o adequate trafc lights, androad saety and pollution monitoringdevices) had been undertaken in the last ew

years using revenues rom the Motor VehicleUsers Charge (MVUC). Objectivity in the

prioritization and allocation o resourcesor national road maintenance was alsoenhanced using a computerized system

with comprehensive and up-to-datetechnical and economic criteria and data.For local roads, an incentive-based policyreorm program is currently underway. Tisuses incentives or grants to nance roadmaintenance and rehabilitation to motivateLGUs to institute policy reorms in localgovernment systems and processes, andimprove perormance in road rehabilitationand maintenance and other service delivery.

Despite notable accomplishments in thetransport sector, the institutional andbureaucratic reorms proposed underthe previous Plan seeking to separatethe operation and regulation unctionso transport agencies have not beenachieved. Tis notwithstanding, the civilaviation subsector underwent a degreeo reorganization with the enactment oRA 9497 on March 4, 2008 creating theCivil Aviation Authority o the Philippines

(CAAP). RA 9497 grants the new bodyscal autonomy through the corporatizationo the preceding civil aviation agency, whileretaining its technical regulation unctionsover the civil aviation industry. Teeconomic regulation unctions meanwhilerest with the CAB. Tere is a need to pursuea ull restructuring o the air transportorganizations as well as those or the portsand or rail transport.

o become globally competitive and addresssaety issues, especially those raised by civil

aviation stakeholders, the governmentis implementing the CommunicationsNavigation Surveillance/Air rafcManagement (CNS/AM) systemin accordance with International Civil

Aviation Organization (ICAO) standards.A similar project was completed in 2004the Nationwide Air Navigation FacilitiesModernization Project (Phase 3)toreplace ageing air navigation equipment.


8/60


Likewise, maritime saety measures havebeen pursued in domestic shipping incompliance with International SaetyManagement (ISM) and National SaetyManagement (NSM) codes and the

Maritime Industry Authority (MARINA)Ship Saety Inspection System. Shipinspection has also been enhanced throughthe Japan International Cooperation

Agency ( JICA)-assisted Project on theEnhancement o Ship Inspection completedin 2005. A MOA between MARINAand the Philippine Coast Guard (PCG)to implement ship saety inspection wassigned on September 14, 2005. o strictlymonitor compliance by ships and to enorcemaritime saety rules and regulations bydeputized maritime enorcers, MARINA,on March 16, 2009, signed a memorandumo understanding (MOU) with the PCG,Philippine National Police-MaritimeGroup (PNP-MG), the Union o Local

Authorities o the Philippines (ULAP), andthe Liga ng mga Barangay (LNB). In 2010,a total o 356,831 mandatory predepartureinspections (MPDI), 992 port state controlinspections, and 5,476 Saety o Lie at Sea(SOLAS) compliance inspections wereconducted by the PCG.

Compliance with international maritimesecurity standards has been implementedthrough the adoption o the InternationalShip and Port Facility Security (ISPS)Code. Vessel rafc Management Systems(VMS) have been installed in the Porto Manila, Corregidor Island, and thePort o Batangas ollowing the securityprovisions o the Code. Tere are plans orthe installation o similar standards in othermajor ports.

In 2005, the Study on Wooden-Hulled

Ships (WHS) recommended standards,rules, and regulations or the continuedoperation o existing wooden-hulled ships,and the construction, saety, and operationo new ones. On October 27, 2010, theRulebook on the Construction and Repairo Wooden-Hulled Ships and Wooden-Hulled Boats with Outriggers was approvedby the MARINA Board. As part o thedomestic shipping eet modernization

program, MARINA entered into aMOA with the Development Banko the Philippines (DBP) MaritimeLeasing Corporation (now, DBPLeasing Corporation) on June 2, 2008.

Te aim is to provide loan acilities toqualied ship owners or operators whoare interested in the acquisition o ROROships to be deployed in SRNH routes.

As o June 2010, seven companies haveavailed o the said acility involving theacquisition o 12 RORO ships. EO 588,entitled Strengthening the PhilippineShipbuilding and Ship Repair Sectorand Instituting Measures to Promote ItsGrowth and Development, was issuedon December 8, 2006. Tis mandatedthe ormulation o a ComprehensiveDevelopment Plan or the PhilippineShipbuilding and Ship Repair Industrythat was completed on October 16, 2007and subsequently endorsed to the Ofceo the President on December 3, 2007together with the drat memorandumcircular directing the implementation othe Plan.

o urther promote the developmento domestic shipping, RA 9295 entitledan Act Promoting the Development

o Philippine Domestic Shipping,Shipbuilding, Ship Repair and ShipBreaking, Ordaining Reorms inGovernment Policies towards Shippingin the Philippines and or OtherPurposes was enacted on May 3,2004. Te law deregulated the domesticshipping industry by allowing domesticoperators to set their own passengeror cargo rates, hence promotinginvestments in the industry.

Notwithstanding the accomplishments

in the transport sector, several issues andchallenges still remain to be addressed,such as the ollowing:

Lack o Integrated andCoordinated ransportNetwork

A major shortcoming o the sector isthe absence o an integrated and well-


9/60


coordinated national transport plan thatwill guide the prioritized unding andimplementation o transport projects,as well as the physical planning andintermodality o transport inrastructure.

Tis situation is likely a consequenceo the current institutional setupcharacterized by weak coordination,regulation, and oversight or transportpolicies and plans.

Te lack o integration betweennational and local government plansand programs/projects is also a majorproblem that results in gaps in thetransport network, contributingto the low capacity and quality oinrastructure acilities. Tis is partly aconsequence o the insufcient capacityo LGUs to nance and manage localprojects, particularly roads, and thelack o national government unds tomaintain the existing national transportinrastructure base.

Global assessments o the countrystransport inrastructure network indicatethat its quality and capacity remain low.

Tese deciencies stem mainly rominadequate and unreliable unding

or construction and development otransport inrastructure, as well as orthe management and maintenance oexisting transport inrastructure assets.

o promote productivity and tradecompetitiveness, seamless multimodaltransport networks and logisticssystems are needed. Te MPDP20042010 recognized the need ora transport logistics system that willdecongest Metro Manila by ensuringefcient linkages between its business

centers and nearby provinces. In 2007,the SubicClarkManilaBatangas(SCMB) Corridor, which connects thethree regions accounting or two-thirdso the countrys GDP, was envisionedas a major transshipment and logisticshub in the Asian region ollowing thecreation o the Luzon Urban Beltway(LUB) Super Region. Te SCMB

Corridor handles more than 80 percent othe volume o the national cargo throughput,but its potential is constrained by inefcientlogistics operations and inrastructuresupport. Tis has primarily resulted in high

transport costs o goods and services that hasmade the corridor less competitive. What isneeded is a seamless multimodal logisticssystem along the SCMB Corridor tosupport intraregional trade and investment,an increase in the level o services o anintegrated transport system, and an efcientow o commodities, supplies, and inputsto tourism areas and various economicand industrial zones. Other strategiclogistics corridors need to be identied anddeveloped in a similar manner.

Overlapping and ConictingFunctions o ransport and OtherConcerned Agencies

Te institutional structure o the transportsector needs to be studied thoroughly todetermine the most efcient institutionalsetup and the corresponding institutionalreorms to improve the quality o transportservice, and to prevent conicts betweendierent modes o transport that serve thesame purpose. A requisite, however, is a

long-term policy ramework to achieve anintegrated and well-coordinated nationaltransport plan. Tis policy ramework

would also address governance issues in thesector by raising the level o accountabilityo decision-makers and serve as the basisor a multimodal transport plan to guideinvestment planning, programming, andprioritization, among others. Specicpolicies related to governance may beincluded in the policy ramework to ensurethat the public sector is perormance-oriented and that outcome-based services

are promptly delivered.

ransport Saety and SecurityConcerns

Road accidents are now the ourth leadingcause o death in the Philippines accordingto the DOH. Te ADB Regional SaetyProgram published in 2005 estimated thenational cost o trafc accidents or the


10/60


A safe, secure, efcient, viable,

competitive, dependable,integrated, environmentallysustainable, and people-orientedPhilippine transportation system.

Philippines at US$1.9 billion (or roughly 2.8% o GDP). In addition, truck overloadingcontinues to be a problem. According to a

JICA-DPWH axle load survey in 2004 anda DPWH survey in 2005, about 11 percent

o the 3-axle trucks and 12 percent o the4-axle semitrailers were overloaded.

On the other hand, the maritime subsectorsrecord in the area o saety is alarminglybad, with an average o more than 160accidents per year over the last decade.Maritime accidents are a major problemowing to a combination o actors such as:(a) a mostly retro-tted and aging eet;(b) underappreciation o cargo balancingon-board vessels; (c) loss o experiencedcrews to oreign shipping; and (d) naturaldisturbances.

Additionally, the Federal Aviation Authority(FAA) o the US has downgraded thecategory o the Philippines aviationcapability in providing saety certicationand oversight or international carriers,citing technical and regulatory deciencies,among others.

Underdeveloped ransportFacilities in Conict-Aected and

Impoverished AreasAs a result o armed conict and inequity inthe distribution o income, economic activityand investments have been constrainedin some areas o the country. In particular,conict-ridden areas have experienceddamages in their transportation networkand have suered rom the disrupteddelivery o basic services, thereby adverselyaecting the peoples welare and the qualityo lie.

Strategic Plan and FocusTe current state and perormanceo the transport sector indicatesgaps and bottlenecks that need to beaddressed to support the governmentsthrust toward competitiveness and itsdevelopment goals. What is envisioned

is a sae, secure, efcient, viable,competitive, dependable, integrated,environmentally sustainable,and people-oriented Philippinetransportation system that will ocus

the sectors development objectivesand strategies on resolving identiedissues and challenges.

o Ensure an Integratedand Coordinated ransportNetwork

1. Adopt a comprehensive long-term National ransport Policy(NP)

o guide the accomplishment otransport objectives and goals and toimprove governance in the sector, acomprehensive long-term NP mustbe put in place. Tis will guide therestructuring o the transport sectorinto a well-coordinated and integratedmultimodal transport system. Te NPshould clearly establish the governmentspolicies in the areas o resourcegeneration and allocation; the criteriaor the preparation o agency plans,programs and projects; cost recovery

and subsidies; regulations or passengertransport services; urban transport andsettlements; transport logistics; andgovernance. In the interim, the NPshall be operationalized through anexecutive order, and in the medium-term, through a legislative enactment.

Te NP would eliminate uncertaintyand lend predictability and consistencyto government decisions, therebypromoting accountability.

With regard to PPP project

implementation, policies related to riskallocation (e.g., allocation o regulatoryrisk), delivery o ROW, and governmentnancial support or viability gapunding o transport projects will beestablished. Additionally, the NP

will institutionalize CCA and DRRstrategies in recognition o the majorimpacts o environmental, geologic,and meteorological hazards on the


11/60


The user-pays principle shall be

applied at the very least for thepurpose of asset preservation.

The SCMB Corridor and otherstrategic logistics corridorsmust be developed to becomeseamless intermodal logisticscorridors.

development and preservation otransport inrastructure. It will alsopromote a people-oriented transportsystem that mainstreams genderconsiderations.

Te roles o the private sector vis--vis those o government agencies andother authorities as well as LGUsin the development, operation andmanagement o various transportinrastructures will be dened inconjunction with the crating o aNP. For rail transport, or example,the government can be the primarydeveloper o the railway inrastructure,

while the private sector can beresponsible or the operations andmaintenance o the acility includingthe provision o rolling stock.

Likewise, the NP shall considerthe denition o the roles o nationalgovernment entities and LGUs intransport inrastructure developmentand management (e.g., cost sharingpolicy/subsidy), notwithstandingthe Local Government Code o1991, including scope o duties andresponsibilities, as well as the linking

o national and local plans, and budgetallocation.

Te government will also addressthe inadequate linkage between theplanning and budgeting processes toensure that resources are allocated totheir most important uses or transportinrastructure and management.

2. Develop strategic transportinrastructure and maintain/managetransport inrastructure assets

a. Prioritize asset preservation

While transport connectivity is outmost importance, the upgrading o thequality and capacity o existing transportinrastructure will be prioritized beoreexpanding the coverage o the networks.

Te latter will be based on a strategicplan that takes modal complementation

into account. For rail transport, the qualityo the existing railroad tracks and servicesmust be upgraded.

In the allocation o resources, higher

priority shall be given to asset preservationor maintenance and rehabilitation othe existing transport inrastructurenetwork rather than new construction ordevelopment.

Te user-pays principle shall be appliedat the very least or the purpose o assetpreservation. Tis principle may be invoked

whenever pricing o the service is possibleand potential users unwilling to pay or theservice can be excluded. Te same argumentmay be invoked or ull investment-costrecovery. Te ocus shall be the upgradingo the quality and capacity o existing ports,roads, airports, and rail lines.

Additional unding or maintenance shouldbe provided to heighten and eectivelymaintain existing inrastructure assets. Teprevious annual appropriation o PhP4billion or road maintenance on top o theRoad Fund should be reinstated. Budgetaryallocation may be urther augmentedthrough the GAA. Te government shall

also enhance a user-pays culture ininrastructure management. As proposedunder the previous Plan, RA 8794 (An

Act Imposing a Vehicle Users Charge onOwners o All ypes o Motor Vehicles andor Other Purposes) may be amended toinclude a uel levy or some other orm oroad user contribution in order to expandthe Road Fund. For long-term sustainability,the stability o available and adequatemaintenance unds shall be ensured. oascertain the sustainability o local transportnetworks, an incentives-based reorm

agenda or LGUs shall be put in place, whereapplicable, to help LGUs improve theirperormance in transport inrastructuremanagement and maintenance.

b. Provide access to major and strategic tourismdestinations and production areas

Dependable transport access will beacilitated in coordination with LGUs


12/60


The dual roles of agencies,

and government entities thatsimultaneously serve asregulators and operators shallbe addressed by establishinga separate and independentregulator (or regulators)

to support major and strategic tourismdestinations. National and localcoordination will be ostered to provide thenecessary transport inrastructure to linkproduction and agricultural areas to major

roads leading to markets and populationcenters.

c. Promote environmentally sustainable andpeople-oriented transport

Te government will continue to promotean environmentally sustainable and people-oriented transport system. Te shit romthe use o ossil uel to renewable energysources to power vehicles shall be pursued.Non-motorized transport acilities suchas sidewalks, ootbridges, underground

walkways, and bicycle ways will beprovided to ensure saety o pedestrians andbicycle users. ransportation design andsystems shall consider the rail, elderly anddierentlyabled persons, among others.

3. Develop an integrated multimodallogistics and transport system

a. Identiy and develop strategic logistics corridorsbased on a National Logistics Master Plan

Te SCMB Corridor and other strategiclogistics corridors must be developed tobecome seamless intermodal logisticscorridors. In support o this, a LogisticsMaster Plan shall be completed to guideoverall development. Tis plan shallconsider the intermodality o the transportnetwork system, the industrial and areadevelopment plans and the identicationo the necessary initiatives, programs,and projects. It will promote subregionaleconomic-cum-logistics cooperation and

will ully utilize the logistics systems that

link the regions traversed by the logisticscorridor (e.g., Central Luzon, MetroManila, and Southern agalog or theSCMB corridor). Te aim shall be aneconomic corridor where developmentbenets not only large cities but also smallertowns and rural areas along the corridor.5

Te extension o the SCMB logisticscorridor arther to the north and to thesouth will also be pursued. o supportthis, the viability o establishing anefcient long-distance, high-speed

mass rail transit system, integrated withthe mass transit commuter rail systemin Metro Manila, shall be exploredalongside the rationalization o theroles o various government agenciesand entities concerned with mass railtransport development. Te easibilityo reight-rail services or all strategiclogistics corridors will also be considered.

b. Improve the RRTS

Interisland logistics shall be enhanced byurther developing the RRS. Studieson the domestic shipping industry shallalso be undertaken to identiy concretemeasures to lower interisland shippingcosts. Where needed, the maritimeregulator shall intervene to ensurecompetition in the industry pursuantto RA 9295. Eorts to improveperormance and efciency in portoperations shall likewise be pursued.

c. Explore ASEAN connectivity through sea

linkages

Te Philippine archipelagos proximityto other Asian countries is an obviousreason to explore the establishmento an ASEAN RORO Network, aPhilippine initiative adopted as one othe agship programs in the ASEANConnectivity Masterplan during the17th ASEAN Summit in Ha Noi,Viet Nam. In support o this initiative,the government shall study thedevelopment o existing RORO ports

to accommodate international ROROships as well as the necessary regulatoryramework to promote such service. Tedevelopment o port acilities throughPPP to cater to cruise tourism, bothservicing interisland and internationalcruise vessels, may also be explored.

5 National Competitiveness Council (NCC)


13/60


Water is a basic need and

everyone has the right to beprovided with access to basicservices related to water. Inaddition, economic growth itselfmust be supported, specically

by meeting the needs of prioritygrowth and production centersfor water supply, sewerage,sanitation, irrigation and oodmanagement.

d. Expand the Air Services

Full implementation o EO 219 shallbe pursued. Te Philippines shall allowairlines rom oreign countries to y

to any airport in the country exceptNinoy Aquino International Airport(NAIA), which is currently congested.

Te Government shall ensure thateach participating oreign countryshall reciprocate by allowing airlinesrom the Philippines to y to any oits airports. Each oreign country mayalso exclude one o their major airportsduring the period o exclusion o NAIA.(Please reer to Chapter 2: CompetitiveIndustry and Services Sectors).

o address the overlapping andconicting unctions o transportand other concerned agencies

4. Separate the regulatory andoperation unctions o transport andother concerned agencies

In line with the goal o separating theoperation and regulation unctions otransport agencies, the port, rail andair transport organizations shall be

restructured. Te dual roles o air, water,and rail transport sector agencies, as wellas other government entities involved inthe provision o transport inrastructureand services that simultaneously serveas regulators and operators shall beaddressed by establishing a separate andindependent regulator (or regulators)

with jurisdiction over all airports, ports,or railways.

In rail transport, the policy, planning,and regulation unctions shall be

separated rom the delivery o trainservices, which also serves to allowprivate sector participation. In theprevious plan, the interim institutionalstrategy or the rail subsector was toestablish a Strategic Rail Authority inthe Department o ransportation andCommunications (DOC) or policy,strategy, and regulation. However, thelong-term plan calls or an independent

rail regulator. o encourage private sectorparticipation, ROW acquisition andinrastructure shall be subsidized by nationalgovernment appropriations, while privateconcessionaires provide the rail services.

o ensure transport saety andsecurity

5. Comply with saety and securitystandards

Standards on saety and security shallbe regularly upgraded and updated inkeeping with international standards andpractices and strictly implemented andenorced. Maritime saety and security

will be enhanced through the raticationo maritime saety and security-relatedconventions. Road saety will be promotedthrough the implementation o the RoadSaety Action Plan.

o promote development oconict-aected and highlyimpoverished areas

6. Provide linkages to bring communitiesinto the mainstream o progress anddevelopment

ransport networks in underdevelopedregions and conict-aected areas shallbe improved to open up economicopportunities and help solve peace andorder problems.

Water

Water is a basic need and everyone hasthe right to be provided with access tobasic services related to water. In addition,economic growth itsel must be supported,

specically by meeting the needs o prioritygrowth and production centers or watersupply, sewerage, sanitation, irrigationand ood management. Te water sectorsgreatest challenge is to balance equity andefciency in the management o waterresources to ensure adequate, sae and


14/60


sustainable water or all. Efcient andeective management o water resourcesis undamental to achieving inclusiveeconomic growth while ensuring asustainable environment.

Crosscutting Issues andStrategies in the Water Sector

Assessment, issues, andchallenges

Access to potable water and basicsanitation

MDG 7 commits the country to halving thenumber o people without access to waterand basic sanitation by 2015. Meeting thistarget is a major challenge or a number oreasons. One, the lack o sector data presentsa logistical challenge in the determination opriority waterless areas. wo, investments in

water supply and sanitation have also beensignicantly low relative to overall publicspending (World Bank 2005), which maybe due to the lack o a coherent nancingramework in the sector. Tree, publicinrastructure spending by the nationalgovernment shows a bias or Metro Manilaand other urban areas, including spending

or water supply, sewerage and septagemanagement. And our, the absence o aclear monitoring system makes it difcultto assess and address the sustainability odeveloped inrastructure.

Inefcient and insufcient supportor growth and production centers

Te absence o a single lead agency tocoordinate development in the watersector is one o the major hurdles to theefcient implementation o strategic

water inrastructure. Tere are at least 30agencies involved in the water sector, withspecic but oten overlapping or conictingmandates or water supply, irrigation,ood management, pollution control,

watershed management, nancing,policy ormulation and coordination,among others. Tis situation presentsdifculties or eective coordinationand implementation o projects and

programs to sustainably meet wateruse and management. (e.g., in meetingthe needs o competing users o water;linking water service provision withbasic sanitation services; and ensuringeective and efcient ood riskreduction and management).

While the National Water ResourcesBoard (NWRB) has the legal mandateor water governance, its existingstructure and budget limit the exerciseo its unctions. o address the existingleadership gaps, the mandate o theSubcommittee on Water Resources(SCWR), initially created underthe Committee on Inrastructure(INFRACOM) to ensure theimplementation o the Philippine WaterSupply Sector Roadmap, was expandedto become the key policy coordinationbody or the water sector. 6 Despite this,however, the sector remains weak interms o regulation and allocation o

water resources.

Furthermore, eective planning,target-setting, monitoring andimplementation are impeded bythe lack o up-to-date, integrated,harmonized and comprehensive dataon the sector. Such data is signicantin the development o new watersources; and in the design o CCA andDRRM mechanisms. But initiativesto establish a knowledge-sharingnetwork among stakeholders in waterhave so ar proved unsustainable

since there is no clear ramework andreliable nancing or the continuousupdating and improvement o accessto inormation.

6 Te SCWR is an interagency committee or the Water Resources Sector established through NEDA BoardCommittee on Inrastructure Resolution No. 2, Series o 2008 composed o representatives rom key nationalgovernment agencies, leagues o cities and municipalities, academe and civil society. Its key unction is to advisethe NEDA Board and INFRACOM on policies and issues related to the Water Sector.

The absence of a single lead

agency to coordinate developmentin the water sector is one of themajor hurdles to the efcient

implementation of strategicwater infrastructure. There areat least 30 agencies involved inthe water sector, with specic butoften overlapping or conicting

mandates for water supply,irrigation, ood management,pollution control, watershedmanagement, nancing, policy

formulation and coordination


15/60


Strategic Plan and Focus

o address issues on equity andefciency o access to water

1. Practice Integrated WaterResources Management (IWRM) inthe sector

IWRM7 has been identied as theoverall strategy or: (a) the eectiveprotection and regulation o wateror security and ecosystem health; (b)the provision o responsive servicesor present and uture needs; (c) theimproved eectiveness, accountabilityand synergy among water-relatedinstitutions and stakeholders; and (d)adaptive and proactive responses toemerging as well as uture challenges,such as CCA and DRRM. Whilethe concept is widely accepted,however, IWRM practices have notbeen mainstreamed in policies, plansand programs. Similarly, integratingthe ecoefcient approach8 to thedevelopment o water inrastructure tosupport the desired transgenerationaloutcomes in the sector has yet to berealized. Te experience o numerous

recent instances o disasters,nonetheless, has raised awarenessand increased the acknowledgemento the benets o IWRM. Now isan opportune time, thereore, toimplement coordinated activitiesto mainstream IWRM practicesand promote the development oecoefcient water inrastructure.

Because o the ragmented nature othe water sector, the establishmento a comprehensive and accessible

inormation management systemis necessary to ensure coordinated

planning and implementation. Datacollection methodologies have to besynchronized to support planning andbudgeting o key programs and projects.Mechanisms that allow consistent

updating and harmonization o raw datashould be put in place alongside thesharing o such data among the relevantstakeholders, project developers, and keypolicy-makers.

2. Rationalize nancing in the watersector to ulll MDG commitments

Te low level o investments in thewater supply and sanitation sectorhinder the achievement o the MDGso the sector. Te lack o a coherentnancing ramework must be addressedby rationalizing nancing in the watersector to make the ullest use o limitedpublic unds and encourage concessionalnancing, and private sector investments.

3. Work towards a lead agency or thewater sector

A lead agency or the entire water sectorshould be ultimately developed. Te leadagency should be able to assume the

unctions o policy making, coordination,and resource regulation or the sector. Itshall be provided with sufcient capacityand authority to implement key policies,plans, and projects in the water resourcessector. In the meantime, NWRB shouldbe strengthened so it can continue itsunction as the sectors overall economicand resource regulator.

7 IWRM promotes the coordinated development and management o water, land and related resources in orderto maximize the resultant economic and social welare in an equitable manner without compromising thesustainability o vital ecosystems.

8 Ecoefciency is having more value with less impact on the environment; it emphasizes monitoring o materialand energy ows o stocks and lie cycle assessment. While ecoefciency has been successully integrated inindustrial and business processes, its application in water inrastructure development will require the establishmento both physical and nonphysical inrastructures (i.e., policies, institutional ramework, nancing, etc).


16/60


4. Develop capacities o NGAs, LGUs,and water-service providers (WSPs) or thesustainable management o inrastructureand better service provision

Te capacities o planning and implementinginstitutions must be developed to improvethe perormance o various structural andnonstructural inrastructures or the watersector. NGAs and LGUs should enhancetheir capacities in eective water governance,sustainable use o water resources, and planningor CCA, among others. LGUs and WSPsshould be assisted in developing relevant,practical, and up-to-date management toolsthat support integrated water resourcesmanagement and technologies. Serviceproviders should likewise be capacitated inplan development, budgeting and operations,among others, in order to improve coverage,efciency and sustainability o inrastructure.

Water Supply

Assessment, Issues, Challenges

Limited Access 9

Most assessments show a limited overallcoverage and low level o access to sae

drinking water in many areas o the country.Among others, the World Bank (2005) noted

a decline in access to improved waterservices rom the late 1990s to 2002.

Te 2010 Report o the WHO/UNICEF Joint Monitoring Programon the MDGs10 observed minimal

increases in coverage over the past twodecades, particularly in urban areas.Moreover, there is a wide disparityin coverage between urban and ruralareas (see able 5.1). Regional dataurther reveals a broad inequity oaccess even among rural areas.

Te Philippines Progress Report onthe MDG 2010, on the other hand,suggests that the sector is on trackto attain its MDG commitment(Figure 5.1). Nonetheless, achieving100-percent coverage remains achallenge, since 15.73 million peoplecontinue to have no access to a sae

water supply.

Data on the number o serviceproviders remain inconsistentand have not been consolidated.Notwithstanding this, able 5.2shows the approximate proportion othe population with access to cleandrinking water within the scope

o certain groups o ormal serviceproviders. Approximately 20 percent

9 Reasonable Access availability o at least 20 liters per day rom a source within 1 kilometer o the dwelling (WorldBank and UNICEF Joint Measurement Programme: www.wssino.org, accessed 22 November 2010)10 Te WHO/UNICEF Joint Monitoring Programme (JMP) or Water Supply and Sanitation is the ofcial UnitedNations mechanism tasked with monitoring progress towards MDG-7 or halving the proportion o the populationwithout access to water and basic sanitation.

able 5.1 Estimated Coverage o Access to Water: 1990-2008

Source: WHO/UNICEF JMP 2010 Report

Year

URBAN AREAS (in %) RURAL AREAS (in %)

Total HouseholdConnections TotalHousehold

Connections

1990 93 40 76 8

1995 93 46 79 13

2000 93 51 82 18

2005 93 57 85 23

2008 93 60 87 25


17/60


able 5.2 Levels o Access to Sae Drinking Water

Note:WDs: Water DistrictsPO: Private Operators (e.g., concessionaires, private developers, etc.)CBOs: Community-based Organizations (e.g., rural or barangay water service associations, cooperatives, etc.)SSIPs: Small Scale Independent Providers

Source: WB Report, Philippines: Meeting Inrastructure Challenges, 2005, as quoted in the NEDA Philippine Water Supply Sector Roadmap,2010

(Footnotes)/a As defned in NEDA Board Resolution No. 12, Series o 1995: Level I (point source) - a protected well or developed spring system withouta distribution system; Level II (communal aucet system or standpost) - a system composed o a source, reservoir, distribution system andcommunal aucets; and Level III (waterworks system or individual household connections) - a system composed o a source, reservoir, pipeddistribution system and household taps

Access to formal levels of service/a Informal Access

Level 3:

45%

Level 2:

10%

Level 1:

25%

Self-provision through private

wells, tanked or vended watersupply or piped supply providedby SSIPsWDs:

20%P O s :5%

LGUs andCBOs: 20%

LGUs and CBOs:35%

continue to rely on inormal access,which are generally not consideredsustainable.

Low Investment Levelsand Lack o Financing orWaterless Areas

Investment levels are too low to meet thegrowing demand or water. Among thekey constraints to expanded coverageand improved quality o service are the

low taris which hinder cost recoveryand prevent the accumulation o undsor new capital expenditures. Whilecost recovery has been identied as aprinciple o regulatory policy, there hasbeen minimal progress to achieve it.Regulatory oversight has been highlyragmented, as exemplied by theexistence o: (a) three entitiesNWRB,LWUA and the dierent LGUsthat

exercise primary regulatory unctions;and (b) specialized regulatory bodies suchas the Subic Bay Regulatory Board andMetropolitan Waterworks and SewerageSystemRegulatory Ofce (MWSS-RO). Tese institutions have dierentregulatory practices, processes, tari-settingmethodologies, and more importantly,overlapping unctions or jurisdictions,resulting in variances in regulatory rulesand enorcement across types o serviceproviders. Te lack o a single independent

regulator or the water supply sector is amajor reason or the absence o a clearregulatory ramework with a credible andeective tari methodology that is shieldedrom political intrusion, ounded onaccountability to consumers, and conduciveto new investments to meet supply needs.

Te program or waterless areas, which aimsto provide water to 212 waterless barangays

The Philippines Progress Reporton the MDG 2010 suggests thatthe sector is on track to attain itsMDG commitment. Nonetheless,achieving 100-percent coverageremains a challenge, since 15.73million people continue to have noaccess to a safe water supply.

Figure 5.1 Percentage Access to Sae Water

Source: Philippines Progress Report on the Millennium Development Goals 2010

70

75

80

85

90

1990 1995 2000 2005 2010 2015

PERCEN

TAGE(%)

YEAR


18/60


in Metro Manila and 432 waterlessmunicipalities outside Metro Manila, hasbeen allotted an annual budget o PhP1.5billion. Because the administration o theunds was largely discretionary, 40 percent

(212 municipalities) o 432 municipalitiesidentied as beneciaries o the und werenot even part o the original list.

Moreover, there is no clear policyramework to guide the nancing o watersupply programs and projects. Currently,nancing originates rom a variety osources. National government nancing isprimarily administered through LWUAand MWSS or onlent through GFIs orthe Municipal Development Fund Ofce(MDFO). Additionally, congressional undsor water supply projects are signicant butuncoordinated and largely allocated to areasbased on political considerations. Localgovernment unding, on the other hand, hasmostly been or operation and maintenancerather than capital expenditures. (WorldBank 2005) Private-sector nancing hasbeen skewed towards Metro Manila, and,there has been limited private investmentby water utilities and private householdsoutside Metro Manila.

Lack o New Water Sources to MeetExisting and Future Demand inGrowth Centers

Te rapid increase in population resultingin the pollution o water systems and, insome areas, the exhaustion o groundwaterreserves has quickly widened the gapbetween supply and demand or potable

water, especially in tourism destinations,industrial areas and highly urbanizedcities. Furthermore, extended dry seasonsas a result o climate change are expected

to exacerbate the demand or water. Newwater sources must be identied anddeveloped to address this gap. Te existenceo nancially viable areas or water supply

means there is a good opportunityor the private sector to be engaged insource development.


o Address EquitableProvision o Water Supply andto Ensure imely Provision oWater to Key Growth Centers

Te ollowing strategies11 will bepursued:

1. Strengthen Economic Regulation

Te creation o a single, independenteconomic regulator or water supplyservices is a priority strategy to addressinstitutional ragmentation and thelow level o investments in the sector.Legislative action is required to resolvethe conicting mandates o variousagencies involved in the regulation o

water services. Pending positive actionrom Congress, however, NWRBmust be strengthened to allow partialresolution to the current situation. Tisinterim action must also be supportedby the ormulation o a National Water

Resources Policy (NWRP) to providea policy ramework or both economicand resource regulation in the watersupply subsector.

2. Implement a priority program orwaterless areas

Consultations with stakeholders afrmthe need or a specic program that willensure the achievement o MDG 7 by2015 and continuing 100-percent accessto water in the medium term. Critical

to the new program or water supply,however, is identiying key beneciariesbased on an updated assessment andidentication o remaining waterless

The rapid increase in populationresulting in the pollution of watersystems and, in some areas,the exhaustion of groundwaterreserves has quickly widened thegap between supply and demandfor potable water, especially intourism destinations, industrialareas and highly urbanized cities.

11 Te strategies herein identied are consistent with the Philippine Water Supply Sector Roadmap (PWSSR).Te PWSSR is the water supply sector plan and guide with long-term development outcomes supported bymedium-term strategies and annual operational plans ormulated and subscribed to by the dierent nationalgovernment agencies, along with other stakeholders. Implementation o the strategies stated therein is crucialto achievement o the development goal to provide access to sae, adequate and sustainable water supply or all.


19/60


municipalities in the Philippines andensuring sustainability o water serviceprovision.

3. Develop sustainable new water

sources to meet demand

A comprehensive approach, adhering tothe IWRM ramework or projecting thedemand-supply gaps across the countryand or planning the development onew water sources should be developednot only to support the growingpopulation, but also economic activityin growth centers -based on a viablenational land-use plan. Extended dryseasons because o climate change wouldurther exacerbate the demand or

water, so that new water sources must bedeveloped in a timely manner to ensuredomestic water supply. Tis may adoptecoefcient12 measures, including thereuse o excessive rainwater and recycled

wastewater or nonhousehold purposesto rationalize water distribution.

Resource regulation shall be strengthenedto ensure that surace and ground watersupply sources are sustainably developedand utilized. Alternatives should also

be identied and prioritized basedon a value-engineering perspective,which optimizes options and timing odevelopment to provide value or moneyand minimize cost to consumers.

4. Localize national policies to supportsustainable extension o water services

Since LGUs are on the rontline inthe provision o services each localgovernment should be able to developits own local plans, strategies and

corresponding budget allotments,consistent with national policies andtargets, including those identied in the

PWSSR and the MDG. Tis should helpharmonize and operationalize programs toaddress existing implementation issues andensure the sustainable and efcient deliveryo water supply to waterless and remote

areas.

Sanitation, Sewerage, andSeptage Management

Assessment, Issues, andChallenges

Weak Sanitation Governance

Many institutions are armed withsanitation-related mandates, but notone o them takes the lead in pushingor reorms in the sector. Although theDOH plays a key role due to the impactso poor sanitation on health, only a smallunit in the agency is concerned withsanitation. Its role is limited to policyormulation, thereby causing signicantgaps between policy implementationand enorcement. In particular thereis an inability to deliver commitmentsmade under existing laws. Moreover,the Sanitation Code ormulated in 1975may no longer be appropriate or the

requirements o a rapidly urbanizingpopulation, particularly increasingpopulation densities. Te said codealso does not consider the anticipatedcomplications caused by climate change.

Inequitable Access to BasicSanitation Facilities and Sewerageand Septage ManagementServices

As in the water supply subsector, statisticson sanitation are uncoordinated and

conicting. Tis notwithstanding, WHO/UNICEF JMP on the MDGs show ageneral trend o improving13 coverage

Many institutions are armed with

sanitation-related mandates, butnot one of them takes the lead inpushing for reforms in the sector.Although the DOH plays a keyrole due to the impacts of poorsanitation on health, only a smallunit in the agency is concernedwith sanitation. Its role is limited topolicy formulation, thereby causingsignicant gaps between policy

implementation and enforcement.

12 Ecoefciency is having more value with less impact on the environment; it emphasizes monitoring o material andenergy ows o stocks and lie cycle assessment. While eco-efciency has been successully integrated in industrial andbusiness processes, its application in water inrastructure development will require the establishment o both physical andnon-physical inrastructures (i.e., policies, institutional ramework, nancing, etc).

13 For MDG monitoring, an improved sanitation acility is dened as one that hygienically separates human excretarom human contact.


20/60


rom 1990 to 2008, with corresponding

reductions in open deecation. Froma 1990 baseline coverage o about 55percent, the MDG target is to increasecoverage to 84 percent by 2015. TeDOH, however, sets a higher nationaltarget o 91 percent, with 96 percent orurban areas and 86 percent or rural areas.Similar to access to water supply, accessto sanitation is much lower in rural areascompared to urban areas with a visibledisparity amongst regions as well.

Based on WHO/UNICEF JMP

estimates, the Philippines is on track tomeeting its MDG target or sanitation.Data rom the DOH and 2010 ProgressReport on MDGs, however, showuctuating year-on-year coverage due tolow investment levels, combined with arapidly increasing population and theincreasing requency o natural disastersthat aect the sustained operations oexisting acilities.

For sanitation acilities to be

sustainable and make an impact onhealth outcomes, sewerage or septagemanagement support is required.Unortunately, there have beenew investments in proper sewagecollection and treatment, especiallyoutside Metro Manila. Less than 10percent o the population has accessto sewerage services. Outside MetroManila, selected highly urbanizedcities (HUCs) provide services toless than 3 percent o their respectivearea populations (WB 2005). Tis

situation poses major health andenvironmental problems, especiallyin HUCs and during or ater naturaldisasters (i.e., at evacuation centersand during rehabilitation o aectedareas).

The Philippines is on track tomeeting its MDG target forsanitation. Data from the DOHand 2010 Progress Report onMDGs, however, show uctuating

year-on-year coverage due to lowinvestment levels, combined witha rapidly increasing populationand the increasing frequency ofnatural disasters that affect thesustained operations of existing

facilities.

able 5.3 Estimated Coverage or Sanitation: 1990-2008

Source: WB/UNDP JMP 2010 Report

YearURBAN AREAS (in %) RURAL AREAS (in %)

Improved Open Defecation Improved Open Defecation1990 70 8 46 23

1995 73 7 52 21

2000 76 6 59 18

2005 78 5 65 15

2008 80 4 69 14

Source: Philippines Progress Report on the Millennium Development Goals 2010

Figure 5.2 Percentage Access to Sanitary oilets

70

75

80

85

90

1990 1995 2000 2005 2010 2015

PERCENTA

GE(%)

YEAR


21/60


Low Investment and Financing

Despite several national sewerage andsanitation policies like the SanitationCode o 1975 and the Clean Water

Act, demand or sanitation, sewerageand septage acilities, as well asrelated investments, remain low.Open deecation is still practicedin many areas, especially is highlypopulated ones, resulting in polluted

waterways and the spread o atal andinectious diseases. Only 3 percent opublic investments in water supplyare used or sanitation. (PSSR 2010)Investments, by LGUs are limitedsince ew o them have the capacityto implement, operate and maintainthese systems. Low investment isalso due in part to the low demand,

which arose rom a lack o popularunderstanding on the dangers o opendeecation and open sewers. Ofcialdevelopment assistance (ODA) orsanitation, septage and sewerage islargely administered by DPWH,DENR or MWSS or Metro Manila.Private sector investments are likewiselimited because sanitation, sewerageand septage are perceived to be

nonrevenue services, with high capitalrequirements relative to any projectedreturns. Ideally, these services shouldbe linked to revenue-generating waterservice provision to acilitate costrecovery. Without a strong regulatoror water, sanitation, sewerage andseptage management services, thereis no imperative or incentive or

water service providers to extend thecoverage o sewerage services.

Lack o Awareness o the Value

o Sanitation and its ServicesMost LGUs accord the lowest priorityand allot only minimal budgets or

sanitation, septage and sewerage servicesbecause the benets are indirect atbest. Te low demand or sanitation atlocal levels also extends to wastewatercollection and treatment, thus urther

deerring the development o necessaryinrastructure.

Furthermore, research on innovativetechnologies to provide economicallyand ecologically efcient sanitation,sewerage and septage acilities is lacking.

echnical capacity to plan, implement,operate, and maintain these acilities isalso limited both at national and locallevels. Capacities to monitor the extentand level o service are likewise limitedthereby adversely aecting eectiveplanning and budgeting or the subsector.


o Improve Health Outcomesand Eect a SustainableEnvironment through ImprovedSanitation, Septage, and SewerageProvision

Te ollowing strategies14 will be pursued:

1. Develop eective national leadershipand sanitation governance

An empowered lead entity at the nationallevel must be established to ensure thatsanitation, sewerage and septage targetsand plans are met and that critical policies,including the National Sanitation Code,are strictly implemented.

Furthermore, necessary reorms areneeded to pull in investments insanitation, sewerage and septage acilities

throughout the country, especially inhighly urbanized cities (HUCs). Tus,any amendment or revision to existingnational policies should articulate specic

Only 3 percent of public

investments in water supplyare used for sanitation. Lowinvestment is also due in part tothe low demand, which arose froma lack of popular understandingon the dangers of open defecationand open sewers.Without astrong regulator for water,sanitation, sewerage and septagemanagement services, there is noimperative or incentive for waterservice providers to extend thecoverage of sewerage services.

Most LGUs accord the lowestpriority and allot only minimalbudgets for sanitation, septageand sewerage services becausethe benets are indirect at best.

14 Te strategies herein identied are consistent with the Philippine Sustainable Sanitation Roadmap (PSSR),Similar to the PWSSR, the PSSR was developed and subscribed to by the dierent national government agencies,along with other stakeholders. It presents the plan and guide with long-term development outcomes supportedby medium-term strategies and annual operational plans to be able to provide sae and adequate sustainablesanitation or all and ensuring a clean and healthy Philippines.


22/60


national targets and detailed strategiesthat can eliminate open deecation as wellas acilitate local planning and budgetingor expansion o coverage, among others.

Tis could be accompanied by legislative

action, i required.

2. Develop a regulatory ramework

A single, independent economic regulatoror water supply, sewerage and septagemanagement should be established toensure the ollowing: (a) accountabilityo service-providers to their customers;(b) sustainability o acilities throughimproved tari methodologies; and (c)increased coverage through the provisiono incentives and impetus or expansiono services within their areas. (See alsostrategies or water supply).

3. Rationalize investments andnancing to provide inrastructure instrategic areas.

Because o the high capital requirementso sewerage and septage managementprojects, government intervention isneeded to support the private sectorin increasing service (septage and

sewerage) coverage. Tus, a nancingramework should be developed tosupport sustainably the expected increasein demand or sanitation, septage andsewerage. Alternative PPP packages maybe considered, among others.

In the light o current constraints, it isnecessary to be deliberate, especiallyin the implementation o septage andsewerage programs and projects includingthe development o septage/seweragetreatment plants. Highly vulnerable areas

such as HUCs, which are population-dense and susceptible to sanitationproblems, should be prioritized. However,it would also be advantageous to includepriority tourism spots given theirpotential or economic development.

Te PSSR requires the ormulationo programs by other key NGAs andLGUs to support the achievement o the

envisioned outcomes. Tis includesthe incorporation o sanitationmeasures in the design o signicantinrastructure, such as schoolbuildings and housing structures.

4. Mainstream sanitation inemergency/disaster response

Water-induced or related calamitiesresulting rom climate change increasethe vulnerability o communitiesthat lack proper sanitation acilities.Hygiene promotion, coupled withsanitation response measures, shouldbe mainstreamed in disaster relie andrehabilitation eorts.

5. Improve service delivery throughvigorous communication

o increase the eectiveness onational policies, a comprehensiveand vigorous communication strategymust be undertaken to educatethe public and decision-makersand increase demand or theseservices. Inormation, education, andcommunication (IEC) campaignsamong others, are to be developed.

Tis includes dissemination oinormation on sanitation technologyoptions and standards among LGUsand service providers. Tese campaignsaim to change behaviors towardsproper hygiene in order to increaseutilization o household sanitationinrastructure, such as sanitarylatrines and septage collection tanks.Development planners and managersshould also be provided similar IECmaterials with added inormation on

wastewater treatment and disposal

methodologies.


23/60


Irrigation

Assessment, Issues andChallenges

Inadequate Provision oIrrigation

Irrigation plays a vital role in thedevelopment o agriculture as well asin the attainment o ood sufciency.

As o the end o 2009, irrigatedagriculture comprised about 1.54million hectares o land or about 49percent o the estimated irrigablearea o 3.126 million hectares.

Around 765,000 hectares are servedby national irrigation systems(NISs), while communal irrigationsystems (CISs) and private irrigationsystems (PISs) serve around 558,000and 217,000 hectares, respectively.

According to the National IrrigationAuthority (NIA), it spent aboutPhP119 billion rom 1983 to 2009,representing around 78 percent o

its total approved appropriations or thesame period. Despite this, only less thanhal o the total potential productive areashave been irrigated (see able 5.4).

While over 1.6 million hectares remainundeveloped or agriculture, these sameareas are threatened by ongoing changesin land use (e.g., conversion into housingdevelopments, gol courses, etc.). Itis unclear whether such conversionsare warranted by real long-termdevelopment trends or these are merelyresponses to the articially repressedstate o agriculture and the protractedlyunsettled status o property rights inagricultural land. Tereore, it may be aprudent course to protect productive landrom rapid and irreversible conversions tononagricultural uses.

Unsustainable Use o IrrigationWater

Because irrigation is the largest use owater in the country, a primary concern

Irrigation plays a vital role in thedevelopment of agriculture aswell as in the attainment of foodsufciency.

Irrigation is the largest use ofwater in the country, a primaryconcern should be to optimize theproductive use of water in irrigatedagriculture to attain its full benets

and minimize waste.

able 5.4 Status o Irrigation Development as o 31 December 2009

Source: NIA as o June 2010

Region

Estimated

TotalIrrigableArea (ha)

Service Area (ha) RemainingPotential

Area to beDeveloped

(ha)

NationalIrrigationSystem

CommunalIrrigationSystem

PrivateIrrigationSystem

TotalIrrigation

Devt(%)

CAR 99,650 22,622 35,351 22,912 80,885 81 18,765

1 277,180 57,567 96,654 27,329 181,550 65 95,630

2 472,640 142,530 41,775 23,095 207,400 44 265,240

3 498,860 202,311 78,008 20,555 300,874 60 197,986

4 246,960 53,146 53,133 17,962 124,241 50 122,719

5 239,660 20,530 70,050 29,484 120,064 50 119,596

6 197,250 53,191 20,372 5,499 79,062 40 118,188

7 50,740 10,040 22,529 2,539 35,108 69 15,632

8 84,380 19,104 29,748 4,466 53,318 63 31,0629 76,080 15,162 19,739 1,972 36,873 48 39,207

10 120,700 26,419 23,564 14,764 64,747 54 55,953

11 149,610 33,971 15,639 25,915 75,525 50 74,085

12 293,610 62,437 22,255 17,296 101,988 35 191,622

ARMM 156,720 16,520 7,095 225 23,840 15 133,440

CARAGA 162,300 29,427 21,719 3,316 54,462 34 107,838

TOTAL 3,126,340 764,977 557,631 217,329 1,539,937 49 1,586,963


24/60


should be to optimize the productive useo water in irrigated agriculture to attainits ull benets and minimize waste. Tereis currently no incentive to conserveirrigation water, although payments are

made on a per-hectare basis regardless othe actual water consumption needs o thecrops. Subsidies disguise the true cost oproviding irrigation services. In order topromote conservation and the sustainableuse, treating water as an economic goodprovides the basis or putting into placemechanisms that capture its economic

value, since water is a nite and limitedresource with competing uses and users.

NIAs Delicate System andFinancial Perormance

NIAs operation has rarely been protableas the agencys operating expenses arexceed its operating income. In orderto improve the agencys scal position,strategies to increase collection efciencyo irrigation service ees (ISFs)15 wereimplemented, particularly institutingincentive policies on ISF back-accountcollections. Te net eect o suchschemes resulted in a steady increase inNIAs corporate income, and although

the agency still runs annual net decits(cash and noncash expenses), the decitsdecreased rom PhP648 million in 2000to only PhP24 million in 2009.

With respect to the agencysorganizational restructuring, the DBM-approved Rationalization Plan is inits third year o implementation (parto a ve-year phased implementationperiod). Tis saw the gradual turnovero operation and maintenance (O&M)activities, partially or wholly, rom NIA

to irrigators associations (IAs). Despitesignicant achievements over the years,NIA still has to maintain momentumin order to achieve the sustainable scalstability needed to perorm its mandate.

Weak Perormance oIrrigation Systems

Te perormance o most o theNISs and CISs has remained poor.

Causes include inadequate O&M,lack o routine repair and ineectivemanagement o available irrigation

water sources due to nancial,technical and institutional deciencies.Irrigated cropping intensity o NISsnationwide averaged ar less than the200-percent target applied in projectpreparation. In addition, most o theservice areas are dysunctional andbadly need rehabilitation.


o Provide Basic SupportServices and Inrastructure aswell as Critical GovernanceReorms in Shaping a SectorResponsive to the Challengeo Ensuring Food Security orFilipinos across Generations

Te ollowing strategies will bepursued:

1. Rehabilitate existing irrigationsystems and construct new small-scale systems

Support services and inrastructure shallbe geared towards the rehabilitation,repair and maintenance o existingirrigations systems. A rationalized undmechanism should be implemented,specically or the immediaterehabilitation o damaged irrigationacilities and systems, over and abovethe allocation intended or regular

maintenance activities. Fundingmechanisms envisioned shall includea National Irrigation ManagementFund (NIMF), a Communal Irrigation

The performance of most of theNISs and CISs has remainedpoor. Causes include inadequateO&M, lack of routine repairand ineffective management ofavailable irrigation water sourcesdue to nancial, technical and

institutional deciencies.

15 ISF is a means to generate revenues to cover operations and maintenance (O&M) costs. Personnel costsaccount or around 80 percent o NIAs operating expenses. Substantial sta resources (up to 40 percent o eldsta time) are spent on collecting ISF rom individual armers.


25/60


Development Fund (CIDF) and aPatubigayan rust Fund (PF). Teseshall serve as repositories o irrigationunds intended or repair, rehabilitationand improvement as well as extended

nancial assistance to the irrigationsector. For immediate rehabilitation

works resulting rom disasters, calamityunds as a part o NIAs appropriationsmay also be considered or nationalsystems.

Construction o new inrastructureshall ocus on small-scale irrigationand water impounding systems (exceptmultipurpose systems) based on a viablenational land use plan. Tese systemsare easier to implement and are morecost-efcient than large irrigationsystems (except multipurpose systems).

Te determination o locations or newirrigation systems also actor in CCAand DRRM considerations.

2. Protect irrigated and potentialirrigable lands

With the governments thrust toensure ood sufciency as well as therecognition o the alarming rate o

depletion o irrigable lands due toconversion, a review o governmentpolicies protecting productive land shallbe undertaken. o complement suchinitiative and to clearly identiy gaps,land-use mapping indicating the extento irrigable areas vis--vis irrigatedareas is required. (Cross reerence with

Agriculture Chapter.)

3. Develop a volume-based pricingmechanism

As part o a long-term strategy toensure its efcient use, wholesaling owater at the resource at the headgate toIAs is expected to drastically cut downcollection expenses. Tis would entailIAs paying only a single ee, with the IAstaking responsibility or collecting ISFrom its members. Volumetric (volume-based) pricing at the headgate enhancesaccountability, since it provides: (a)

greater contract assurances or servicedelivery by the water supplier/s to the IAs;and (b) incentive to properly maintain thedistribution system, improve the equityo head- and tail-end distribution and

conserve water resources. Pilot-testing ovolumetric pricing has revealed constraintsto implementation or open canals, as such,thereore, this will initially be introduced inNISs where secondary irrigation acilitiesor its components have been ully turnedover to IAs through the IM program. Inthe interim, NIA may adopt and improvesocially-acceptable demand-managementstrategies.

4. Implement irrigation managementtranser (IM)

IM aims to transer to IAs the completeO&M responsibility on secondary canalsand on-arm structures in larger systems,and o entire systems covering more than3,000 hectares. Under such a scheme, itis estimated that the NIA will be let tomanage less than 10 percent o the total NISarea, which should substantially reduce thesubsidies/operational costs extended by thegovernment. IM acilitates stakeholderparticipation in decision-making and

planning, provides better access to servicesand training or its members, producessome income rom ISF shares and ensuresthe equitability o irrigation water deliveryand distribution, among others.

Flood and Drainage Management

Assessment, Issues, andChallenges

Inadequate disaster mitigation andresponse

Te country devotes a substantial portion oits resources in the recovery eorts rom theeects o ooding. Te cumulative impacto oods on the loss o lives and damageto properties and livelihood (see able 5.5)results in a deceleration, i not a setback,o social progress and economic activity inaected areas.

The country devotes a substantial

portion of its resources in therecovery efforts from the effectsof ooding. The cumulative

impact of oods on the loss oflives and damage to propertiesand livelihood results in adeceleration, if not a setback, ofsocial progress and economicactivity in affected areas.


26/60


Furthermore, the countrys archipelagiccharacter, with many small islands, makesit highly vulnerable to the eects o climatechange. Climate data or the past 50 yearsshows rising temperatures trends, changing

changes in rainall patterns, and an increasingnumber o extreme climate events like cyclones,ooding, and drought. (Philippine Strategy onClimate Change Adaptation 2010)

Recent events like typhoons Ondoy andPepeng in 2009 which resulted in massivedamage to lives and properties were wrought byunpredictable weather patterns resulting romclimate change. Existing ood control structuresin identied high-risk areas nationwide haveproved inadequate in handling the unexpectedincrease in stormwater discharge, which otenresults in massive ooding both in HUCs andrural areas.

Lack o Financing

DPWH has identied several critical oodcontrol projects nationwide which, owing toinsufcient unds, cannot be immediatelyimplemented. Tis perennial unding problemnot only aects the implementation o thehard inrastructure component o projects, butalso aects the inherent activities such as the

relocation o inormal settlers and the acquisitiono ROW. Tis also aects the implementationo complementary nonstructural measuressuch as ood orecasting, warning, andmonitoring systems, evacuation plan, hazardmapping and watershed managementactivities. Additionally, O&M spending thatdepends heavily on government allocation arenot exempt rom unding constraints.

LGUs and other implementing agencies alsolack unds or regular O&M o existing oodcontrol programs. Since ood structures are

exposed annually to the brunt o typhoons,regular maintenance works have to be carriedout to maintain optimal capacities o saidstructures.

able 5.5 Flood-related Impacts: 1980-2005

Source: Flood Risk Management Project Along Selected Principal Rivers,Implementation Program, DPWH, September 2010*Total damages in inrastructure, agriculture and private property in million pesos.**Department o Social Welare and Development (DSWD) data.

YearCasualties** Damage Value*

(PhP M)Dead Missing Injured1980 36 4 55 1,472

1981 484 264 1,922 1,273

1982 337 223 347 1,754

1983 126 168 28 523

1984 1,979 4,426 732 416

1985 211 300 17 3

1986 171 43 155 1,838

1987 1,020 213 1,455 8,763

1988 429 195 468 8,675

1989 382 89 1,088 4,494

1990 676 262 1,392 11,713

1991 5,201 4,278 357 74

1992 145 95 51 7,359

1993 814 214 1,637 25,038

1994 266 54 260 3,401

1995 1,255 669 3,027 57,781

1996 124 49 97 10,109

1997 199 28 66 4,842

1998 498 116 873 17,823

1999 56 3 25 1,555

2000 338 59 370 7,217

2001 431 134 418 6,924

2002 169 33 71 829

2003 139 28 182 4,567

2004** 1,046 437 836 7,679

2005** 62 36 51 2,487

Total 16,594 12,420 15,980 198,609


27/60


2. Apply CCA and DRRM strategies in theplanning and design o lood managementstructures

Recognizing the eects o climate change on

the requency o storms and rainall intensity,design criteria or ood control structuresshould be revisited to ensure that capacitieso structures are adequate to handle theexpected increase in oodwater volume.Protocols on dam-water release duringtyphoons should also be reviewed. Moreover,downstream interventions will have to becomplemented by upstream activities such as

watershed management to minimize siltationwhich signicantly reduces eectiveness oood control structures, especially when letunabated.

Te adoption and mainstreaming o the eco-efciency concept in water inrastructure is anexample o such an adaptation strategy. Excess

water during rainy seasons can be impounded,stored and then released or uture use insectors such as irrigation and water supply.

Equally important are immediate post-disaster response and interventions. LGUs andimplementing agencies alike are enc