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 PhilippinesTRANSCRIPT
Policy and Financing on Sewerage and Septage 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
Presentation Overview
Legal mandate
Goal and objectives
Targets
Strategies
Septage and sewerage financing options
Lessons
Industrial, 42%
Domestic, 58%
Source: Philippine Environment Monitor 2003 (World Bank)
Agricultural37%,
Industrial, 15%,
Domestic 48%
Philippines
Metro Manila
Water Quality On The Development Agenda2.2 million metric tons of organic pollution produced per year
Legal Mandate for NSSMP
The 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
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.
NSSMP Targets
Septage Management
All LGUs have SMP serving their urban barangays
• 43.6 million people with access (total urban population less Metro
Manila)
• Capital costs range from $95,000 to $1.5 million/project
• Pollution reduction: 260 million kg of BOD (24% of total generated)
• Total capital costs of $297 million
17 HUCs have sewerage systems (interceptor type) serving 50% of urban barangays to be done in 2 phases
• 3.2 million people with access
• Capital costs average $9.1 million/ project/phase
• Pollution reduction: 64 million kg of BOD (80% of total generated)
• Total capital costs of $333 million
Sewerage
Role of septage and sewerage infrastructure providers 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.
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)
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)
40% NG cost share is consistent with Solid Waste Management policy for 1st and 2nd class cities.
LGU Income Class
Municipalities & Provinces
National Government
Cities National Government
LGU share(loan/equity)
Grant LGU share Grant
1st & 2nd 60/20 20 60 40
3rd & 4th 45/15 40 75 25
5th & 6th 40/10 50 80 20
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
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
Financing -Sewerage
Sewerage projects can achieve full cost recovery through user fees 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
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!
Thank You!