Adb WaterDistrictDevtProj Phil Psi Apro May2010

Philippines: Water District Development Sector Project
The proposed Water District Development Sector Project (WDDSP), a US$50-million loan for approval
by Asian Development Bank (ADB) in November 2010, aims to assist the Philippine Government in its
effort to improve water supply and sanitation services for the urban population outside Metro Manila,
and to achieve the related Millennium Development Goal (MDG) targets. The project will support the
institutional development of Local Water Utilities Administration (LWUA) and contribute to water sector
reform. The project will also provide assistance to LWUA to implement pilot projects for sanitation and
support capacity-building for water districts. ADB approved a US$1.2 million project preparatory
technical assistance (PPTA) in September 2008; the PPTA report has yet to be posted on the ADB
website. Since 1975, ADB has supported the Philippine water sector by approving five loan projects for
LWUA for a total amount of US$178 million.
Background. Water districts are local government- (ii) institutional fragmentation, and (iii) lack of public
owned and -controlled corporate entities that awareness and willingness to pay for sanitation.
provide water supply and sanitation services within
their areas of responsibility, which may include one WDDSP pilot water districts. These include:
or more cities and municipalities. The majority (i) Metro La Union Water District; (ii) Quezon
(about 67%) of a total 500 water districts are Metro Water District; (iii) Legazpi City Water
classified as small, while only about 3% are Districte; (iv) Leyte Metro Water District;
categorized as large, and about 1% as very large. (v) Koronadal City Water District. Criteria for water
LWUA provides water districts with financial and district selection was based on (i) demand for
technical assistance, and serves as their regulator. improved water supply and sanitation; (ii) fiscal
LWUA has established itself as the dominant lender capacity, financial management, commitment to
to the sector, focusing primarily on the larger and reform, and governance; (iii) focus on serving low-
more viable water districts. As a result, smaller water income communities; (iv) well-defined investment
districts serving poorer areas of the country have had needs; and (v) project preparedness.
much less access to LWUA funding and have not
been able to enhance service coverage and quality. In TOR of PPTA consultants. The objective of the
2004, Executive Order (EO) 279 was approved to PPTA is to design the WDDSP following a
provide for comprehensive reform of the financing consultative process. The consultants are tasked with
policies of the water supply sector and to streamline the following:
LWUAs organizational structure. EO 279 mandates
that LWUA focus its lending operations and Develop and recommend mechanisms for public
assistance on less creditworthy water districts, with consultation and community participation in
the aim of graduating them to creditworthy status. project planning; operation and maintenance;
Creditworthy water districts are expected to access project implementation and management,
the commercial financial market for funding. particularly in relation to levels of service
performance; tariffs; and environmental protection.
Main issues for water districts. Issues identified are: Assess whether there is a role for NGOs in project
(i) the high number of small utilities with low activities.
efficiency, (ii) lack of capacity for project
development and implementation, (iii) low service Carry out public consultations that include NGOs.
quality (e.g., interrupted supply, uncertain water
quality, high level of nonrevenue water, low pressure, Hold discussions with LWUA, water districts,
low coverage), (iv) need to enhance financial related government agencies, consumer groups,
performance, and (v) major investment needed for and other stakeholders to identify key issues and
infrastructure expansion and rehabilitation. While obtain their views on capacity building needs.
water districts are also mandated to provide
sanitation in their service areas, there are only a few Develop a capacity building program, outline
examples where this is practiced; this is mainly due training programs and recommended interventions,
to (i) lack of cost recovery for sanitation, and estimate related costs.
May 2010 Public Services International Asia-Pacific Regional Organisation (PSI-APRO)

Initial Poverty and Social Assessment (IPSA). An PSI/AGWWAS engagement on ADBs water policy.
IPSA, also prepared during project preparation, Aside from WDDSP, PSI/AGWWAS have engaged
contains the following: ADB on several fronts on the Banks 2001 Water for
All policy:
The main stakeholders are the water users, water
districts, local governments and LWUA. Nov 2005: Submitted comments on ADBs Water
There will be several public consultation meetings Policy Review and raised issues on the human right
over the course of the project preparation (e.g., to water, failure of private sector participation in
workshops, seminars). water service delivery, and the need to promote
PUPs to meet MDG targets in water and sanitation
A participation plan needs to be prepared. services.
Employment opportunities will result from
construction activities financed by the project and May 2007: Organized a forum on ADBs Water
from economic growth facilitated by improved Policy at ADB Annual Meeting in Kyoto (Japan),
water supply. and at a parallel Peoples Forum on ADB; in these
public forums, PSI/AGWWAS presented the role
Clauses on core labor standards will be included of workers as major stakeholders in the water
into all the bidding documents. sector and harmful impacts of water privatization
on workers.
Labor retrenchment was not flagged as an issue.
Dec 2007: Organized a forum on "World Water
AGWWAS-ADB dialogue on WDDSP. PSI affiliate Challenges: Japanese Standpoints" at the 1st Asia-Pacific
AGWWAS (Alliance of Government Workers in the Water Summit organized by ADB and Asia-Pacific
Water Sector) initiated discussions on WDDSP with Water Forum in Oita (Japan) in which ongoing
Project Team Leader Rudolf Frauendorfer in campaigns on water privatization, strengthening
September 2009. Two of the pilot water districts (La public water systems and PUPs were highlighted.
Union, Koronadal) have existing unions which are PSI water affiliates also contributed to an NGO
affiliates of AGWWAS. Follow-up meetings were publication released in Oita by the Reclaiming Public
held at ADB Headquarters in Manila in December Water network on different public management
2009 and March 2010. AGWWAS plans to organize models in water in Asia-Pacific region.
a consultation forum on WDDSP in mid-2010, in
cooperation with ADB. In its dialogue with ADB,
AGWWAS presented their concerns on, among FOR MORE INFORMATION:
http://www.adb.org/Projects/project.asp?id=41665
others:
http://www.adb.org/water/policy/psi-comments.pdf
PSI/AGWWAS' program on building Quality http://www.adb.org/Water/policy/AGWWAS-
Water Services through Public-Public Partnership comments.pdf
(PUPs). http://www.adb.org/AnnualMeeting/2007/ngoprogra
m-details.asp#cso-forum
Privatization of water services does not ensure safe, http://www.apwf.org/project/openevents.html
clean, reliable, affordable water-for-all nor achieve http://www.apwf.org/archive/documents/openevent/
MDG targets. message/No.45.pdf
Need for more consultation with workers unions
CONTACT PSI-APRO:
on WDDSP, including on capacity-building
Level 4 Wisma AUPE,
programs.
295 Upper Paya Lebar Road,
AGWWAS project on Capacity Building of Singapore 534929
Water District Workers through Performance Email: lakshmi.vaidhiyanathan@world-psi.org
Benchmarking. Website: www.world-psi.org

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Philippines: Water District Development Sector Project

May 2010 Public Services International Asia-Pacific Regional Organisation (PSI-APRO)

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