Status Report on Water

1
Status Report on Water

• Philippines
• Buboy Dargantes,
• Victor Chiong and
• Ed Chavez

2
Philippines
Population 88.57 million 62 urban, 38 rural
3
Source of water

• Surface and groundwater, however 58 of
  groundwater is contaminated
• Only 1/3 of river systems suitable for public
  water supply

4
Philippine Water Resources

• Countrys resources described as a paradox of
  abundance

• 20 Major River Basins
• at least 1400 sq.km. basin area
• 343 Principal River Basins
• at least 40 sq.km of basin area
• 119 Proclaimed watersheds, 59 natural lakes
• 12 Water Resources Regions (political)
• 50,000 sq.km. of groundwater reservoirs
• 2, 400 mm ave. annual rainfall sustains 479 BCM
  of annual renewable resources from surface and
  groundwater resources

5
Philippine Water Resources
and scarcity
Only 1/3 of the river systems are classified as
sources of drinking water supply
Many areas experience water shortage during dry
season.
Approximately up to 58 of groundwater is
contaminated with coliform.
Many stress on the resources due to
overexploitation of groundwater sources,
excessive and wasteful use, inefficiencies in the
distribution system (high NRW), salt water
intrusion, forest denudation, watershed
degradation, population growth
6
Uses of water

• 28.52 billion m3 of water were withdrawn from
  various sources
• 75 used for agricultural purposes
• 9 industrial
• 17 domestic consumption

7
Quality of Potable Water

• Between 1994 and 2000, 31 of illnesses are
  water-related diseases
• More than 500,000 morbidity and 4,000 mortality
  cases
• Cholera cases

8
Water Services

• Approximately 5,000 service providers
• LGU Operated systems
• Provincial, city or municipal engineering
  departments
• Out of 4,800 LGU operated systems, 3,100 are
  estimated to be at the barangay level

9
Water Services

• Water Districts
• In urban areas outside of Metro Manila, water
  districts served 15.3 million people in 700
  cities and municipalities (2003)
• Assisted and financed by LWUA
• LGUs appoint the board members

10
Water Services

• Large Private Operators
• Maynilad
• Manila Water
• Gaisano
• Small Scale Independent Providers
• Bulk water selling
• Associative Water Systems
• Community based water associations (BWASA/RWASA)
• Cooperative Water system

11
Access to Potable Water

• Potable water
• 80 nationwide (2006) same data in 2002
• 7 less from 1990 record
• Only 22 or rural population have access to piped
  household connections
• 876 water less communities (less than 50 of HH
  have access to piped water), Metro manila has 212
  waterless communities (NEDA, 2006)

12
Privatization of Water Services

• 1997 Privatization of MWSS water distribution,
  billing and sewerage function for 12 million
  people in Metro Manila
• Concession contract for 25 years awarded to 2
  private companies to service 2 zones
• Maynilad (West Zone) joint venture by the
  French Suez and Filipino Benpres Holding later
  bailed out for 503.9M and now being serviced by
  DMCI and Metro Pacific
• Manila Water (East Zone) Ayala Corporation with
  British United Utilities and US Bechtel

13
Before 1997 MWSS Privatization

• Foundations for privatization laid down by WB and
  past 4 administrations
• Marcos 300 M public enterprises will be
  restructured , reduce state participation in
  economy
• PD 2029 AND 2030 creation and regulation of
  public enterprises and privatization of
  government assets
• Aquino Proclamation No. 50 (COP and APT
• mandated to identify the assets of the government
  that would have to be privatized while the latter
  is tasked to handle the marketing and actual sale
  of the said properties.

14
Before 1997 MWSS Privatization

• Ramos
• Extended COP and APT
• RA 6957 BOT Law
• Private enterprises to finance, construct,
  operate and maintain infrastructure projects
• EO 286 Reorganization of MWSS
• 1995 Water Crisis Act legal framework for MWSS
  privatization
• WB loan 48M (1996) rehabilitation of sewerage
  network of a private treatment plant 60M for
  privatization of water service delivery of Subic
  Bay Freeport
• 1996 ADB TA grant of 582M to assist MWSS in
  introducing private sector participation
• MWSS has 800M loan from WB, ADB and JBIC

15

• National Water Code (1976)
• Creation of NWRB
• onferred with policy-making, regulatory and
  quasi-judicial functions. The NWRB is responsible
  for ensuring the optimum exploitation,
  utilization, development, conservation and
  protection of the country's water resource
• revising and consolidating the laws governing the
  ownership, appropriation, utilization,
  exploitation, development, conservation and
  protection of water resources.

16
Regulation of Water
17
Regulation of Water
18
Government Agencies Involved

• National Water Resources Board regulate and
  control the utilization, exploitation,
  development, conservation and protection of water
  resources
• Local Water Utilities Administration monitor
  and supports development and water delivery of
  local water districts runned by local governments
  outside of Metro Manila

19

• MWSS- Regulatory Office
• Monitors consumers complaints, water and
  wastewater quality and capital expenditures of
  two concessionaires
• Maynilad (West Zone)
• Manila water (East Zone)
• Conducts public consultations and rate rebasing
  exercise

20
Other Government Agencies Involved

• National Level
• Department of Environment and Natural Resources
• Department of Public Works and Highways
• Department of Health
• Department of Interior and Local Government
• GOCCs i.e. National Power Corporation and the
  National Irrigation Administration

21
Tarrif and Financial Issues

• Since 2002, NWRB has been tasked with economic or
  financial regulation of water utilities
• MWSS-Regulatory office approves petition for
  tariff increases by the 2 concessionaires
• Public Service Act sets 12 as ceiling for
  revenue return rate
• Local water districts charge different rates, but
  based in provisions set by Local Water District
  Law
• In cases wherein a rate dispute emerges, the
  NWRB, in its quasi-judicial capacity, is provided
  with the mandate to resolved and decide such
  disputes.
• Currently there are pending bills in both the
  House of Representatives and the Senate proposing
  the creation of a Water Regulatory Commission for
  the financial regulation of water utilities.

22
Financing Reforms in the Water Sector
23
Financing Reforms in the Water Sector

• EO 279 s. 2004 objectives
• Rationalization of allocation of scarce financial
  resources
• Freedom of choice among water service providers
  in sourcing financing
• Increased participation of LGUs, GFIs and PFIs in
  financing
• Grant of incentives for the graduation of water
  service providers into creditworthy status
• Establishment of an independent economic
  regulator
• Rationalization of LWUA's organizational
  structure.

24
Financing Reforms in the Water Sector

• The DOF ensures that water sector programs funded
  by donor agencies are aligned with the
  government's reform agenda and policy direction.
• Collaboration with DBP, USAID and JBIC to
  establish the Philippine Water Revolving Fund
  (PWRF), a financing facility designed for
  creditworthy water service providers.
• Working with the World Bank in the Small Water
  Utilities Improvement and Financing (SWIF)
  Project, designed to improve the performance and
  financial viability of SWSPs to enable them to
  access market-based financing.
• Supporting the ongoing multi-donor funded
  stakeholder consultations on water sector
  economic regulation.

25
Financing Reforms in the Water Sector

• LWUA strengthening of institutional set-up with
  World Bank technical assistance whose activities
  include
• Review and revision of LWUA standards and
  procedures
• Development of alternative contracting
  arrangements
• Strengthening of LWUA financial management and
  treasury functions
• Improving the system of benchmarking utility
  performance
• Updating the creditworthiness classifications of
  water districts and designing incentives for less
  creditworthy providers to graduate into
  creditworthy status.

26
Financing Reforms in the Water Sector

• Creation of the Project Development and
  Efficiency Improvement Fund (PDEIF) within LWUA
  for
• project development studies that can build a
  pipeline of bankable projects for financing by
  LWUA, GFIs and PFIs
• short-gestating, high-impact technical and
  financial efficiency improvement programs to
  facilitate the graduation of providers into
  creditworthy status

27
Financing Reforms in the Water Sector
Public-Private Partnership in Financing through
the PWRF, designed to facilitate access to
commercial finance leveraged by ODA and to
familiarize commercial banks with the sector.
(Nine water districts already obtained loans from
commercial banks.) Securitization plan for LWUA
assets through the PWRF Support Program.
28
Financing Reforms in the Water Sector

• Addressing Financing Constraints through the SWIF
  Project (initially involving 11 utilities)
• Capacity building to improve performance and
  generate project proposals for submission to the
  Board of Directors for PFI and GFI financing
• Water tariff studies including consumer surveys
  for participating utilities
• Support for the development of financial products
  for small utilities

29
Laws Relating to Water as Part of the Commons

• The Philippines does not have an expressed
  provision or law recognizing access to water as a
  fundamental human right ESCR
• MTPDP Thrust 4 To Create Healthy Environment
  for the People

30

• Groundwater extraction is effectively controlled
  and regulated by the National Water Regulatory
  Board in tandem with the Department of Natural
  Resources. The extraction of ground water may be
  carried out only after acquiring a license or
  permit from the NWRB. The extraction of surface
  water from different water sources, on the other
  hand, is controlled by the DENR which is
  responsible for the issuance of water rights.

31

• Water is expressly provided as a common resource
  owned and maintained by the state through
  Presidential Decree No.1067, also known as the
  Water Code of 1976. The underlying principles of
  the said code are as follows
• a. All waters belong to the State.
• b. All waters that belong to the state can not
  be the subject to acquisitive prescription.
• c. The State may allow the use or development of
  waters by administration concession.
• d. The utilization, exploitation, development,
  conservation and protection
• of water resources shall be subject to the
  control and regulation of the government through
  the National Water Resources Council, hereinafter
  referred to as the Council. (now known as the
  NWRB)
• e. Preference in the use and development of
  waters shall consider current usages and be
  responsive to the changing needs of the country.

32
Water Conflicts /Issues

• Privatization of Water Utilities
• Non-fulfillment and arbitrary amendments in the
  service targets set in the concessionaires
  contract.
• 21 hours supply vs. 24 hours
• 212 waterless communities vs. 100 in 2006
• Non revenue water gone up by 1
• Balooning Rates
• IWater tariffs have gone up to 565 (Php 32.99/
  m3) percent in the West Zone and 791 percent (Php
  20.68/ m3) in the East zone. Due to the MWSS
  Board Resolution declaring the concessionaires as
  mere agents and contractors, Manila Water and
  Maynilad continue to bill consumers with the cost
  of their corporate income taxes amounting to
  P6.33 billion and P56.018 billion, respectively.
  ncreased by almost 1000 by 2006
• Foreign currency adjustments
• Accelerated Extraordinary Price Adjustments
• Mandatory rate rebasing every 5 years
• NWRB Ruling which declared the concessionaires
  not public utilities
• Exceed 12 profit limitation based on Pass on
  corporate income taxes to customers
• Pass on corporate taxes to consumers
• Foreign ownership

33
Critical Water Supply Issues

• Low performance by water utilities- both private
  and public slow service expansion, low coverage,
  low service quality, high NRW, limited access to
  funds, and dependence on govt subsidies
• Unequal access between urban and rural areas,
  between income groups and between geographic
  areas due to supply problems or differences in
  quality and performance of WSPs
• 432 waterless municipalities outside MM, 210
  communities within MM, and 201 in conflict areas
• Limited space for community/people participation
  in tariff setting
• Institutional fragmentation
• Weak and fragmented regulatory framework
• Access to financing and low sector investment
• Problematic access to sanitation and sewerage
  only 4-5 are connected to sewerage systems

34
Issues

• Debt Generation
• Competing water usage
• Management of water resource base (watershed,
  water harvesting)
• Bulk water selling
• Violation of natural monopoly in water service
  delivery
• Water governance
• Corruption, regulation

35

• Search for Alternatives to Water Privatization

36

• Associative water / Community owned water systems
  (e.g. formation of AWC)
• Legislative and judicial advocacy
• Participation in committee hearings, legislators
  sponsor resolutions and privilege speeches on the
  issue of water privatization
• FDC as member of the Technical Working Group of
  Committee on Natural Resources of the House of
  Representatives to study review of privatization
  and economic regulation
• Filed petitions before regular courts and supreme
  courts

37

• Research and Study on Alternatives-DRTS
• Characterization of water service providers
• Characterization of associative water systems
• Characterization of LGU-operated waterworks
• Benchmarking of water districts

38

• Documentation of best practices of water service
  providers
• Rural and Barangay WSAs
• Water service cooperatives
• LGU-operated waterworks

39

• Case studies of water use conflicts
• Legal remedies and metalegal options to address
  policy deficits in water resources management
• Community participation in the management of
  watersheds as sources of water supply

40

• Social acceptability and economic feasibility of
  conjunctive uses of water supply
• Social acceptability of water quality variability
• Economic feasibility of supplying water at
  various levels of quality for different domestic
  applications
• Assessment of the implementation of sanitation
  policies at the local levels