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National Sewerage and Septage

Management Program

Full Report
Final Draft
November 11, 2010

National Sewerage and Septage


Management Program
NSSMP
Full Report

__________________________________________
Department of Public Works and Highways
National Economic Development Authority
World Bank Water and Sanitation Program-East Asia and the Pacific
Asian Development Bank
AECOM International Development, Inc.

Table of Contents
Executive Summary ...................................................................................................................... 4
1
Introduction........................................................................................................................... 6
2
Current Situation and Needs ............................................................................................... 7
2.1
2.1.1
2.1.2
2.2
2.3
2.3.1
2.4

3
4
5

Obstacles to Implementing Sewerage and Septage Management Programs..............................................8


National Challenges...............................................................................................................................8
Local Challenges ...................................................................................................................................9
Sanitation and Sewerage Coverage..........................................................................................................11
Current Efforts and Best Practices...........................................................................................................11
Septage Management and Sewerage Master Plan for Metro Manila ...................................................12
Applicable Regulations and Role of Agencies ..........................................................................................16

Goal, Objectives and Scope................................................................................................ 22


Targets ................................................................................................................................. 23
Strategy ................................................................................................................................ 23
5.1
5.2
5.3
5.4

6
7

National Component.................................................................................................................................24
Local Component......................................................................................................................................25
National/Local Coordination ...................................................................................................................25
Sustainability ............................................................................................................................................25

Implementation Plan .......................................................................................................... 26


Institutional Framework .................................................................................................... 27
7.1
Organizational Structure..........................................................................................................................27
7.1.1
NSSMP Committee..............................................................................................................................31
7.1.2
NSSMP Office .....................................................................................................................................32
7.1.3
Project Facilitators ...............................................................................................................................33
7.1.4
Local Implementers .............................................................................................................................35
7.2
Implementation Arrangements..................................................................................................................36
7.3
Monitoring and Evaluation of the NSSMP ...............................................................................................37

Sanitation Planning and the Intervention and Investment Framework........................ 39


8.1
8.2
8.3
8.4
8.5
8.5.1
8.5.2
8.5.3
8.5.4
8.5.5
8.5.6
8.5.7

Developing Local Sustainable Sanitation Plans.......................................................................................39


Developing Sewerage and Septage Management Programs ....................................................................39
Designing Projects to Achieve Results .....................................................................................................40
Toolkits for Developing Projects ..............................................................................................................41
Project Intervention and Investment Framework .....................................................................................42
Framework Section 1: Information about the LGU .............................................................................46
Framework Section 2: Sanitation Plans and Project Priorities (Interventions) ....................................47
Framework Section 3: Preferred Technology Infrastructure, Product or Service .............................47
Framework Section 4: Indicators .........................................................................................................48
Framework Section 5: Cost..................................................................................................................48
Framework Section 6: Supporting Environment..................................................................................48
Promotion Campaigns..........................................................................................................................49

Financing Projects .............................................................................................................. 50


9.1
9.2
9.3
9.3.1
9.3.2
9.3.3
9.3.4
9.4

10

NSSMP Financing Framework.................................................................................................................50


Funding Process.......................................................................................................................................51
Sources of Financing ................................................................................................................................58
User Fee...............................................................................................................................................58
LGU Traditional Fund Sources............................................................................................................59
Public-Private Participation .................................................................................................................62
Official Development Assistance Fund ...............................................................................................63
Local Government-National Government Cost Sharing...........................................................................66

Project Implementation Risks ....................................................................................... 72

National Sewerage and Septage Management Program Full Report

Annex: Computation of Estimates and Targets............................................................................ 74

List of Tables
Table 1. Combined MWCI and MWSI Septage Treatment Capacity .......................................... 13
Table 2. Role of Concerned Agencies in NSSMP under CWA-IRR (Rule 7) ............................. 17
Table 3. Concerned Agencies and their Mandates Related to Sewerage and Septage ................. 18
Table 4. Expanded Role of Concerned Agencies in NSSMP ....................................................... 28
Table 5. Examples of Public-Private Partnerships........................................................................ 62
Table 6. LBP Comparative 2007 and 2008 Loan Portfolio (in billion pesos) .............................. 64
Table 7. NG-LG Cost Sharing for Brown Environment............................................................... 66
Table 8. NG-LG Cost Sharing for Solid Waste Management Projects ........................................ 67
Table 9. Estimated 2010 Expenditures for Housing and Sanitation ............................................. 68
Table 10. Projected Capital Investment Requirement .................................................................. 69
Table 11. Estimated Annual Funding Gap for Sewerage Projects................................................ 69
Table 12. NG-LG Cost Sharing for Sewerage Projects ................................................................ 70
Table 13. Economic Indicators (EIRR, NPV) .............................................................................. 72

List of Figures
Figure 1. Overall Implementation Schedule for the Metro Manila Sewerage Master Plan.......... 16
Figure 2. Organizational Chart for Implementing NSSMP .......................................................... 31
Figure 3. NSSMP Implementation Arrangements ........................................................................ 37
Figure 4. Monitoring and Evaluation of the NSSMP ................................................................... 38
Figure 5. Achieving Sustainable Results ...................................................................................... 41
Figure 6. Septage Toolkit: Sample Screen Shot ........................................................................... 42
Figure 7. Intervention and Investment Framework with Program Packages for Division 1 ........ 44
Figure 8. Septage Management Project Financing ....................................................................... 55
Figure 9. Sewerage Project Financing - Option 1......................................................................... 56
Figure 10. Sewerage Project Financing - Option 2....................................................................... 57
Figure 11. Percentage Distribution of Fund Sources .................................................................... 60
Figure 12. Source of 2007 LGU Regular Income......................................................................... 61
Figure 13. Source of LGU Regular Income by LGU Type .......................................................... 61
Figure 14. 2007 Distribution of ODA Loans ................................................................................ 63
Figure 15. LGU Credit Financing Policy...................................................................................... 66
Figure 16. 2007 LGU Distribution of Expenditures ..................................................................... 68
Figure 17. Proposed Cost Sharing for Sewerage Projects ............................................................ 70

National Sewerage and Septage Management Program Full Report

Acronyms
BLGF
BOD
BOT
DBM
DENR
DILG
DOH
DOF
DPWH
GAA
GFI
HUC
INFRACOM
IRR
JV
LBP
LGU
LWUA
MWCI
MWSI
MWSS
NGA
NGO
NEDA
NSSMP
ODA
PEN
PPP
PWRF
SpTP
STP
TWG
USAID
WD
WQMA
WQMF

Bureau of Local Government Finance


biochemical oxygen demand
build-operate-transfer
Department of Budget and Management
Department of Environment and Natural Resources
Department of the Interior and Local Government
Department of Health
Department of Finance
Department of Public Works and Highways
General Appropriations Act
government financing institution
highly urbanized city
Infrastructure Committee of NEDA
implementing rules and regulations
joint venture
Land Bank of the Philippines
local government unit
Local Water Utilities Administration
Manila Water Company, Inc.
Maynilad Water Services, Inc.
Metropolitan Waterworks and Sewerage System
national government agency
nongovernmental organization
National Economic Development Authority
National Sewerage and Septage Management Program
official development assistance
Philippine Ecological Sanitation Network
public-private partnership
Philippine Water Revolving Fund
septage treatment plant
sewage treatment plant
technical working group
United States Agency for International Development
water district
Water Quality Management Area
Water Quality Management Fund

National Sewerage and Septage Management Program Full Report

Executive Summary
This Full Report of the National Sewerage and Septage Management Program (NSSMP) was
prepared by the Department of Public Works and Highways (DPWH), in coordination with other
government agencies, as required by the Clean Water Act (CWA). It is a more detailed version
of the NSSMP Main Report and contains an annex summarizing how the estimates and targets
were computed. The intended users of this Full Report are national government agencies,
academe and donor agencies, while the intended users of the Main Report are local implementers
such as local government units (LGUs), water districts and private service providers.
The NSSMP is part of the National Sustainable Sanitation Plan (NSSP) and Philippine
Sustainable Sanitation Roadmap (PSSR), which are broader, overarching frameworks that
include the full spectrum of sanitation challenges. The primary focus of the NSSMP is sewerage
and septage management infrastructure projects and the promotions and supporting environment
needed to make them successful.
The Philippines has invested very little in proper sewage collection and treatment. More than 20
million Filipinos do not have access to improved sanitation; many who have toilets do not have
septic tanks; many septic tanks have open bottoms; and most septic tanks are not regularly
desludged. Moreover, when septage is removed from septic tanks it is often not properly treated.
Outside Metro Manila, sewerage systems are limited to very small systems in a handful of cities.
The effects of this neglect include economic losses exceeding P78 billion per year, 55 deaths per
day, and damage to ecosystems and biodiversity. Constraints to the development of sewage
collection and treatment systems include a low level of awareness and demand from the public,
low technical capacity to develop infrastructure, lack of enforcement of regulations, limited
resources of the water districts and local government units and no national program or budget.
There is a strong need for a national program that includes initiatives to address these constraints.
The goal of the NSSMP is to improve water quality and protect public health in urban areas of
the Philippines by 2020. The objective is to enhance the ability of local implementers to build
and operate wastewater treatment systems for urban centers and promote the behavior change
and supporting environment needed for systems to be effective and sustainable. The main
strategy is to facilitate a bottom-up, demand-driven project development process by providing
national government support and financial incentives. DPWH and Department of Health (DOH)
will lead a nationwide training and promotions campaign using the toolkits contained in the
NSSMP Guide for Local Implementers (Annex A of the NSSMP), and DPWH will create an
information office.
Capital costs for the NSSMP are estimated at P26.3 billion: P12.3 billion for septage
management programs and P14 billion for 17 sewerage projects. Given the magnitude of these
costs, it is not realistic to expect that LGU resources alone will be sufficient to fully fund
sewerage infrastructure. Therefore, water districts will be expected to share in the costs, and the
national government will provide 40% cost share for the 17 sewerage projects through DPWHs
annual general appropriations budget. This cost sharing will be in place for a limited period of
ten years to encourage investments in a timely manner and will be consistent with the current
national government cost sharing policy for solid waste management projects. Of the total

National Sewerage and Septage Management Program Full Report

infrastructure costs of P26.3 billion to meet the NSSMP targets, the national governments cost
share is estimated to total P5.6 billion for sewerage projects.
The Department of Environment and Natural Resources (DENR) will take enforcement action
against LGUs and water districts that do not develop septage management and sewerage projects
as mandated by the Clean Water Act. DENR will support project development through the
creation of the National Water Quality Management Fund (NWQMF). DENR regional offices
will continue to lead the establishment of Water Quality Management Areas (WQMAs) and Area
Water Quality Management Funds (AWQMFs) to support local project development. Local
implementers will use the NSSMP Guide to develop infrastructure and services supported by
effective policies, enforcement, promotion campaigns, and user fees.
Implementation will begin with the creation of the NSSMP Office in DPWH and development of
an operations manual. The National Economic and Development of Authority (NEDA)
Infrastructure Committee (INFRACOM) Subcommittee on Water Resources will be convened as
the NSSMP Committee to monitor the program. A three-part nationwide training and promotion
campaign will be conducted, followed by development of projects by local implementers. The
NSSMP Office will gather data on the number of projects developed, approximate number of
people benefiting from the projects, amount of money spent nationwide, and approximate
amount of pollution diverted from the environment. The Office may use the DOH, DILG or
LGU scorecards to monitor septage management and sewerage activities at the LGU level. The
Office will report this information to the NSSMP Committee annually starting in 2011.
Success will be measured against the following targets for areas outside of Metro Manila (Metro
Manila targets are listed in section 2.3.1):
Target 1: By 2020, all LGUs have developed septage management systems and the 17 highly
urbanized cities (HUCs) have developed sewerage systems.
Target 2: By 2020, approximately 43.6 million people have access to septage treatment
facilities and about 3.2 million will have access to sewage treatment facilities.
Target 3: By 2020, P26.3 billion has been invested in sanitation improvement projects.
Target 4: By 2020, about 346 million kilograms of BOD will be diverted from the environment
per year as a result of the sewerage and septage management projects.
Achievement of these targets is dependent upon the provision of technical assistance for the
nationwide training program and promotions campaign, incentives such as funding for feasibility
studies and national government cost share for infrastructure (through DPWH up to 40% for
sewerage projects), and effective use of the procedures and toolkits described in the Guide for
Local Implementers (Annex A of the NSSMP). Toolkits and guidance for septage management
project development is also contained in the in the Business Model for a Water District Septage
Management Program published by the United States Agency for International Development
(USAID) Philippine Water Revolving Fund Support Program.

National Sewerage and Septage Management Program Full Report

1 Introduction
Improper management of sewage is a critical issue for most developing countries because of its
impact on economic growth, the environment and public health. According to a recent study of
four countries in Southeast Asia, inadequate sanitation costs these countries an estimated
$9 billion each year and causes more than 50,000 deaths annually1. This study estimated annual
economic losses for the Philippines at more than $1.6 billion, and deaths at more than 55 per
year. The Philippine Clean Water Act (CWA) was passed in 2004 to address the need for
improvement management of domestic wastewater. It requires the water districts and/or
concessionaires in Metro Manila and other highly urbanized cities (HUCs), in coordination with
LGUs, to connect existing sewage lines to available sewerage systems. In areas not considered as
HUCs, DPWH in coordination with the DENR, DOH and other concerned agencies, shall
employ septage or combined sewerage-septage management systems. Any person who commits
any of the prohibited acts or violates any of the provisions of the CWA or its implementing rules
and regulations, shall be fined by the Secretary of DENR between P10,000 and P200,000 for
every day of violation. The CWA requires DPWH to lead the preparation of a National Sewerage
and Septage Management Program (NSSMP) as part of the integrated framework for water
quality management.
This Full Report of the National Sewerage and Septage Management Program (NSSMP) was
prepared by the Department of Public Works and Highways (DPWH), in coordination with other
government agencies, as required by the Clean Water Act (CWA). It is a more detailed version
of the NSSMP Main Report and contains an annex summarizing how the estimates and targets
were computed. The intended audience of this Full Report is national government agencies,
academe and donor agencies, while the intended audience of the NSSMP is local implementers
such as LGUs, water districts and private service providers. The NSSMP Main Report contains
two annexes: Annex A is the Guide to Local Implementers and Annex B is a listing of
technology options for septage management and sewerage projects.
The NSSMP is part of the National Sustainable Sanitation Plan (NSSP) and Philippine
Sustainable Sanitation Roadmap (PSSR)2, which are broader, overarching frameworks that
include the full spectrum of sanitation challenges such as ending open defecation and treating
sewage from markets, agriculture, industry and other point sources and non-point sources of
water pollution. While the NSSMP identifies six intervention areas to address all of these
sources, its focus is the larger infrastructure projects that local implementers (mainly LGUs,
water districts and private service providers/utilities) will develop to collect and treat wastewater
from densely populated urban centers.
The CWA mandated DPWH to lead preparation of the NSSMP within 12 months from the date
the law took effect. DPWH created an interagency steering committee (ISC) and convened a
technical working group (TWG) to prepare the NSSMP, facilitated by a consultant team
1

Hutton, G., UE Rodriguez, L. Napitupulu, P. Thang, P. Kov. Economic Impacts of Sanitation in Southeast Asia: Summary
Report. World Bank Water and Sanitation Program, 2008.
2
The NSSP is being developed by DOH. The PSSR was drafted in cooperation with the Department of Health with support from
the World Health Organization. As of May 2010 it was being finalized after initial approval by the National Economic
Development Authority Infrastructure Committees Subcommittee on Water Resources.

National Sewerage and Septage Management Program Full Report

provided by a grant from the World Bank and Asian Development Bank. The TWG included
representatives from the Department of Environment and Natural Resources (DENR), DOH,
Department of the Interior and Local Government (DILG), Local Water Utilities Administration
(LWUA), Metropolitan Waterworks and Sewerage System (MWSS) and National Economic
Development Authority (NEDA).
The NSSMP implementation plan includes training, promotions and funding from the national
government. The Guide for Local Implementers (Annex A of the NSSMP) includes a planning
process and toolkits to develop a local sanitation plan with short and long term strategies; and
combine technology options with promotion campaigns, financing and local ordinances to ensure
that wastewater management systems are sustainable over the long term. The toolkits and
examples are included in the accompanying CD. A copy of the NSSMP Main Report is available
upon request from the DPWH Central Labor Based Comprehensive Agrarian Reform
(CLB/CARP) Program Office, tel. (02) 435-1839.

2 Current Situation and Needs


The Philippines is a country of 88 million people, of which 61% or 54 million people live in
urban settings3. The greatest concentration of population in the Philippines is in the Metro
Manila area, which is composed of one municipality and 16 highly urbanized cities (HUCs), or
population centers of more than 200,000 people. Of the 11.6 million4 people in the Metro Manila
area, only about 15% have access to fully piped sewerage; the remainder relies on septic tanks or
pit latrines or practices open defecation5. Many of the septic tanks are generally of poor
construction with open bottoms, infrequently or never desludged, and designed to discharge
poorly treated and pathogen-laden effluent to groundwater, combined sewers or surface waters.
Additionally, many informal settlements exist along waterways where there are no sanitary
facilities at all, and open defecation is practiced widely. While the two water utilities are
increasing their provision of septage management services and constructing combined sewer
interceptor systems, unserved populations are still contributing many tons of pollution and
pathogens to the surface and ground waters every day, which either directly or indirectly finds its
way to drinking water aquifers, Manila Bay or Laguna Lake. While this is indeed the grim reality
of domestic wastewater practices in Manila, the problem is even worse outside of this
metropolitan area. In other cities, urbanizing areas and rural settings, there is virtually no
infrastructure for appropriate wastewater treatment and disposal.
The Philippines has invested very little in proper sewage collection and treatment. More than 20
million Filipinos6 do not have access to improved sanitation; many who have toilets do not have
septic tanks; many septic tanks have open bottoms; and most septic tanks are not regularly
desludged. Moreover, when septage is removed from septic tanks it is often not properly treated.
Outside Metro Manila, sewerage systems are limited to very small systems in a handful of cities.
The effects of this neglect include economic losses exceeding P78 billion per year, 55 deaths per
3

World Health Organization and United Nations Childrens Fund Joint Monitoring Programme for Water Supply and Sanitation
(JMP). Progress on Drinking Water and Sanitation: Special Focus on Sanitation. UNICEF, New York and WHO, Geneva, 2008,
(hereinafter WHO/UNICEF JMP, 2008).
4
National Statistical Coordination Board, 2007
5
Metropolitan Waterworks and Sewerage System. Water Supply, Sewerage and Sanitation Master Plan for Metro Manila: Final
Report. World Bank International Bank for Reconstruction and Development Grant No. TF053321, November 2005.
6
WHO/UNICEF JMP, 2008

National Sewerage and Septage Management Program Full Report

day, and damage to ecosystems and biodiversity7. Constraints to the development of sewage
collection and treatment systems include a low level of awareness and demand from the public,
low technical capacity to develop infrastructure, lack of enforcement of regulations and no
national program or budget. There is a strong need for a national program that includes initiatives
to address these constraints.
The problem is compounded by sources of wastewater other than domestic sewage, including
commercial, agricultural and industrial discharges in every socioeconomic sector of Philippine
society. Hog farms, for example, are major contributors of pollution and pathogens to the
environment in rural and urbanizing areas throughout the country, as this waste is either directly
discharged untreated or only partially treated through unlined lagoon systems. The majority of
hospitals, resorts, institutions and businesses discharge wastewater using methods that would be
considered grossly inadequate by international standards. As precious groundwater resources are
degraded, the reliance on pollution-laden surface waters increases, requiring higher levels of
treatment and cost for producing potable water. Most LGUs also need to improve their drainage
systems as a precursor to developing sewerage systems.
In recent years, mainly through the efforts of international donor agencies, there has been some
movement to implement appropriate models of sustainable sanitation for both septage
management and sewerage. Some examples of these projects include wastewater treatment
systems for hospitals and public markets, biodigesters for hog farms, and even comprehensive
septage treatment systems supported by local ordinances. While these efforts provide good
examples of best practices and appropriate technology, wide-scale replication has yet to occur.
2.1

Obstacles to Implementing Sewerage and Septage Management Programs

2.1.1 National Challenges


Cost, lack of space, flooding, poor soil,
Lack of a national program for promoting proper
and lack of political will have all been
sanitation
and wastewater management is perhaps the
identified as problems in implementing
biggest impediment to wide-scale sanitation
appropriate sewerage and septage
improvement
in the Philippines today. This limits the
management. However, the poor state of
likelihood of meeting the Millennium Development
sanitation in the Philippines today is
Goal targets.
mainly caused by a lack of awareness
about the benefits of wastewater treatment on health, wellbeing, livelihoods and the
environment. Thus, the lack of an effective national program to promote proper sanitation and
wastewater management, starting with basic education, is perhaps the biggest impediment to
wide-scale sanitation improvement in the Philippines today.
Sanitation programs are expensive. While many sanitation initiatives can be funded in full or in
part through user fees, connection charges, and the sale of wastewater residuals (fertilizer, treated
effluent and biogas), the initial capital needed to build infrastructure is often beyond a local
governments ability to borrow. While there are some financial mechanisms that local
governments can tap into to provide some of the funding for projects, wide-scale implementation
7

Rodriguez, UE, N. Jamora, and G. Hutton. Economic Impacts of Sanitation in the Philippines: Summary. World Bank Water
and Sanitation Program, 2008.

National Sewerage and Septage Management Program Full Report

of sanitation systems in the Philippines cannot happen without national government investments
in the sanitation sector. Such national funds, either through direct grants, matching grants, loan
guarantees or other funding mechanisms that provide money directly for feasibility studies or the
procurement of civil works and infrastructure is required to alleviate this shortfall.
Lack of capacity for planning and developing modern sanitation systems, in both the private and
public sectors, is another limiting factor. Improving and strengthening educational opportunities
in sanitary engineering in college curricula throughout the country will help develop a trained
and skilled workforce that will provide knowledge of modern sanitation to both local
government and the private sector. Many college programs in the Philippines currently have
strong civil engineering curricula, but lack modern sanitary engineering courses. One way to fill
this gap would be to develop a standardized sanitary engineering curriculum that can be widely
adapted to existing engineering programs throughout the country.
2.1.2 Local Challenges
In addition to the lack of education, program finance,
and capacity to plan and construct sewerage and
septage projects at the national level, cities of
different sizes face additional sector challenges
specific to their localities.

The NSSMP aims to enable LGUs to


plan for sewerage and septage
treatment through a process similar
to what they use for planning other
infrastructure projects, such as roads
and bridges.

Urban Areas
Urban areas in the Philippines face special challenges when developing wastewater
infrastructure. In cities, buildings utilize septic tanks for primary treatment with effluent directed
either to the groundwater through leaching chambers, or to surface or storm drains, which
discharge to rivers, lakes or bays, transferring the pollution burden to a larger scale. This
situation leads to several challenges to be considered when designing appropriate wastewater
treatment solutions for urban settings:

Septic tanks. Septic tanks in the Philippines are generally inadequately sized, installed
and operated. The majority of septic tanks installed before 2000 have open bottoms.
Many are located underneath homes or are otherwise difficult to access. Retrofitting old
septic tanks is therefore a very difficult task that can typically only be accomplished
during times of major building renovations;
Septage management. In most areas including Metro Manila, septic tanks are desludged
reactively, or when tanks overflow, instead of proactively on a scheduled basis. This
results in most tanks being full of sludge, a condition that prohibits proper operation.
Recently several communities have begun implementing programs that provide routine
and scheduled septage pumping, but most municipalities and cities are slow to adopt
similar programs. Sewerage systems that rely upon septic tanks for primary treatment
cannot be expected to function if septic tanks are not properly maintained;
Redevelopment challenges. In many areas, the real answer to appropriate wastewater
treatment systems is to dig up roads and install modern sewerage systems, which may
include interceptor pipes and treatment works. Major disruptions to cities for extended
periods of time are politically unpopular, and therefore very difficult to accomplish;

National Sewerage and Septage Management Program Full Report

Space for wastewater treatment systems. In urban settings, there is very limited space for
wastewater treatment works, which by their nature, should be located well away from
population centers. Tracts of land that may be available are often located in flood-prone
areas, or are being used as informal settlements, which would need to be relocated.
Relocating informal settlers is another activity that requires strong political will. Other
available tracts of land in the city are mostly small and expensive;
Lack of commercial pre-treatment programs. Pre-treatment is the process of reducing
excessive pollutants from commercial wastewater discharges so that it becomes similar in
strength and quality to domestic wastewater. A good example is a grease trap for a
commercial kitchen. Grease, when not removed from the wastewater stream, will clog
pipes, add organic matter to the sewage, increase operation and maintenance costs, and
reduce the efficiency of sewerage systems. Although required by the Plumbing Code of
the Philippines, grease is not always removed before discharge into the publically-owned
sewerage system. Similar problems can also exist for other commercial wastewater
components including lint from laundries and hotels, metals from galvanizing and
jewelry shops, and toxic chemicals from dry cleaners, printing and photography
operations; and
Lack of enabling environments. While there are many rules and laws on the books for
regulating wastewater discharge, enforcement at the local level is often weak.
Communities that develop their own sanitation ordinance will find it easier to levy fees
for sanitation services, enforce local building standards for septic tanks, and assess
penalties for non-compliance.

Urbanizing Areas
Urbanizing areas have many of the same challenges in developing appropriate wastewater
infrastructure as do urban areas, but can take advantage of opportunities for appropriate
planning. Urbanizing areas may plan for wastewater treatment and reuse similar to the process
they use for planning other infrastructure projects, such as roads and bridges. Land may be set
aside, sewerage routes designed, and sewerage infrastructure installed in coordination with other
on-going community development projects, instead of after-the-fact, which always costs more.
Additional opportunities may be achieved through scaling up or phasing infrastructure to
coincide with community growth, and decentralizing, which develops infrastructure near the
communities to be served. Decentralizing sewerage works improves the efficiency of systems
that reuse effluent by making the treated water readily available to the communities that
generated the waste in the first place.
Rural Areas
Rural areas have their own set of issues when developing sanitation projects. These areas often
suffer from lack of potable water; a need that is generally prioritized over sanitation.
Additionally, electrification and drainage infrastructure is often lacking in rural areas, which
impacts upon the type of sanitation systems developed. Land-intensive sewage treatment systems
that do not require electricity, such as lagoons and constructed wetlands, may be appropriate for
areas where energy sources are not adequate or reliable. Often, however, rural communities first
need to meet more basic sanitation requirements, such as installing toilets in homes, controlling

10

National Sewerage and Septage Management Program Full Report

groundwater pollution from poorly designed latrines, or preventing open defecation. In these
settings, programs such as Community Led Total Sanitation (CLTS) and ecological sanitation
(ecosan)8 are highly relevant.
2.2 Sanitation and Sewerage Coverage
Sanitation and sewerage coverage is very low. About 33% of the population of the Philippines
does not have sanitary toilets, and open defecation is widely practiced in both rural and urban
areas. Some homes have toilets that empty into a pit rather than a septic tank. Many septic tanks
are improperly designed with open bottoms, commonly referred to as a leaching septic tank, or
the second chamber is called the leaching chamber. Most septic tanks are not regularly desludged
and the septage removed is not treated and disposed of properly. About 85% of the people in
Metro Manila use septic tanks; nationwide figures are not available. Less than 10% of the
population has access to piped sewerage systems, meaning that raw sewage and the polluted
effluent from septic tanks flows into groundwater, combined sewers and surface waters. Of the
11.6 million people in the Metro Manila area, only about 15% has access to full piped sewerage.
This puts Metro Manila fourth to the last among cities in Asia, behind Dhaka and Phnom Penh,
in terms of sewerage coverage9. The Manila Third Sewerage Project will construct interceptor
systems that will provide about 68% of Metro Manila residents with access to improved
sanitation by the year 2012. In other cities, urbanizing areas and rural settings, there is virtually
no infrastructure for appropriate wastewater treatment and disposal.
2.3 Current Efforts and Best Practices
There have been efforts in recent years to promote improved sanitation, and best practices exist
that can be built upon and replicated. The Philippine Ecological Sanitation Network (PEN),
which includes government and nongovernmental organizations (NGOs), donors, international
organizations and private concessionaires operating in Metro Manila, has organized two national
sanitation summits and celebration of the UN International Year of Sanitation in 2008. Best
practices include the MWSS privatization of water supply and sanitation services in Metro
Manila: both concessionaires are offering
scheduled septic tank desludging services,
Dumaguete City and Water District
developing
interceptor
collection
and
Collaboration
treatment systems, and building small full
The LGU and the water district have signed a
piped sewerage systems. A successful memorandum of understanding to jointly develop
partnership between Marikina City and
a septage management program. The LGU and
WD will equally share the cost of constructing
Manila Water Company has substantially
the
treatment facility. The LGU has passed a city
increased cooperation of customers with the
ordinance
and will manage the facility and
septic tank desludging program. Dumaguete
enforce
compliance,
while the WD will own and
City passed a septage management ordinance
operate a fleet of vacuum trucks and perform
in 2006, which was replicated by Marikina
billing and collection. Revenues from the
City and the Municipality of Alabel in
collection of fees will be shared evenly.
Sarangani. Dumaguete City and the local
water district have jointly financed a septage treatment facility that will begin treating septage in
8

Ecological sanitation is a process that uses human excreta and household wastewater as resources to be recovered, treated, and
reused. Human waste (as well as sometimes animal waste, and organic kitchen waste) is processed to recover nutrients (usually
for growing crops) that would otherwise be discarded.
9
World Bank. Philippines Environment Monitor 2003.

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National Sewerage and Septage Management Program Full Report

2010, and the water district will collect fees added to the water bill. Alabel is currently operating
an LGU-wide septage collection and treatment program. Zamboanga and Cagayan de Oro Cities
are currently developing public-private partnerships for septage collection and treatment. Many
other LGUs have developed local sanitation plans and promotion campaigns, and are requiring
properly designed septic tanks for all new building permits. The USAID Philippine Water
Revolving Fund Support Program published a Business Model for a Water District Septage
Management Program in 2010. These models can be replicated in other areas throughout the
country.
2.3.1 Septage Management and Sewerage Master Plan for Metro Manila
Metro Manila and other fringe areas covered by the MWSS concession are governed by a
separate master plan for sanitation and sewerage. The Sewerage Master Plan (SMP) has a 20
year time horizon and develops targets for 2010, 2015, 2020 and 2025. Currently, the MWSS
concession areas are managed by two concessionaires: Manila Water Company, Inc. (MWCI) for
the East Zone and Maynilad Water Services, Inc. (MWSI) for the West Zone. The Final Report
on Water Supply, Sewerage and Sanitation Master Plan for Metro Manila was completed in
November 2005. The sanitation (septage management) and sewerage plans are included in
Volume 4 (Sewerage and Sanitation Master Plan Master Plan Strategy). Following are excerpts
from that report. At present, targets for septage management and sewerage under this master plan
are being reviewed by MWSS and its concessionaires, given the 15-year extension provided the
concessionaires. Most of the targets in sanitation and sewerage are being updated and fasttracked to achieve higher coverage in relatively shorter periods.
The septage volumes to be collected and treated for MWCI and MWSI have different future
trends. The septage management requirements for MWCI will increase while the requirements
for MWSI will decrease from 2015 to 2020. MWCI will need a treatment plant capacity of
1,600 m3/day by 2025 while MWSI will need a treatment capacity of 1,573 m3/day by 2015. If
the excess capacity of MWCI can be utilized by MWSI between the years 2010 to 2015, it would
not be necessary for MWSI to construct new septage treatment plants (SpTP) by 2015. The
proposed septage treatment capacities are shown in Table 1 below.

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National Sewerage and Septage Management Program Full Report

Table 1. Combined MWCI and MWSI Septage Treatment Capacity


Location
MWCI
Excess/(Backlog)
Prop. Plant Capacity at
Rizal
MWSI
Excess/(Backlog)
Prop. Plant Capacity at
Dagat-dagatan and
Paranaque
Combined
Total
Excess/(Backlog)
Total Prop. Plant
Capacity

Septage Treatment Capacity (m /day)


Year 2015
Year 2005
Year 2010

Year 2020

Year 2025

(1264)
-

495
-

(162)
800

(867)
800

(1582)
1600

(1047)
-

(1131)
600

(1573)
1000

(1123)
1200

(1490)
1500

(636)

(1735)

(1990)

(3072)

600

1800

2000

3100

Note: Based on the 2003 rate rebasing and proposed Septic Tank Effluent Disposal system.

For the above scheme, the Dagat-dagatan SpTP should be expanded to an additional capacity of
1,000 m3/day by 2025. The proposed new plant in Paraaque or Las Pias area would be
constructed to a capacity of only 500 m3/day. The Paraaque or Las Pias SpTP should be
located in the reclaimed area along Manila Bay where the proposed sewage treatment plant
(STP) for the sewerage system will be located.
Several constraints and issues were identified for the existing sanitation conditions and facilities
in the MWSS service area, and on the implementation of the sanitation programs. The following
options/strategies were formulated to address these issues:
Options/Strategies
Short Term
1. Increase accessibility of septic tanks (so they can be desludged)
2. Conduct a survey on the actual sizes of the septic tanks
3. Review septic tank designs
4. Reconsider resumption of sea disposal
5. Interim use of STPs for septage treatment
Medium Term
1. Advocate/recommend, to DOH/DA/DENR, improved CWA Implementing Rules and
Regulations (IRR)
2. Establish long-term agreements for application of septage on lahar areas (land covered
with volcanic ash)
Medium to Long Term
1. Construct additional SpTPs

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National Sewerage and Septage Management Program Full Report

Bases for Sewerage Planning


The bases for the sewerage planning in the 2005 master plan were:

Sewerage coverage required by the Concession Agreements until 2021 and rate re-basings
approved by the MWSS Regulatory Office;
Preliminary engineering criteria as set by planning and design guidelines of MWSS and
standard practices;
Sewage and commercial dirty water projections for each city/municipality, where contractual
sewerage coverage is specified;
Identification of critical areas (i.e., pollution hot spots) not covered by the concessionaires
contractual sewerage coverage that need to be urgently addressed between 2021 and 2025;
and
Longer-term strategy for sewerage coverage beyond the Master Plan period of 2025.

Catchment Areas
Using the topographic map of Metro Manila covering the East and West Zone service areas of
the MWSS, some 31 sewerage drainage catchments were delineated. The total area of the 31
catchments is 63,197 ha of which 13% is covered by existing systems. The total catchment area
exceeds the Metro Manila (or National Capital Region) area by about 6%.
Sewerage and Treatment Strategies
The 2005 Sewerage Master Plan includes the following recommendations:

New developments should utilize traditional gravity sewerage and treatment where possible;
Keep the existing septic tanks (there are over 2 million) but remove and treat the septage
regularly and collect and treat the liquid overflow (effluent);
Have decentralized sewage treatment plants that are also capable of receiving septage solids
as opposed to separate SpTPs;
Use combined and small-bore sewerage in a decentralized approach in the MWSS service
area; and
Move sewage from east to west, away from Laguna de Bay in continually more centralized
plants.

Sewerage Methodologies
The multi-criteria analysis yielded the following systems as preferred in the following order:
1. Combined Gravity Drainage (Storm water and dirty water)
This system provides the lowest cost option with the least disruption to traffic. It is in essence
what is being practiced presently in most urban areas: using the storm drains as sewers. Its chief
disadvantages are the negative human health impact, particularly with children that often play in
the drains, and the fact that the inclusion of storm water complicates the hydraulics at any
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National Sewerage and Septage Management Program Full Report

downstream treatment facility. Many LGUs also need to make repairs and improvements to their
existing drainage systems before this type of system can be developed. The drains can be
covered in some areas to minimize human exposure and excessive flows can be bypassed during
storm events. Flows in excess of 1.5 times the average dry weather flow bypass the treatment
plant.
It is recommended that combined drainage be used where possible but gradually replaced with
separate systems. Where needed, larger bore sewerage piping (trunk mains) may be needed to
convey the combined storm flow/sewage to a treatment plant.
2. Small Bore Gravity Sewerage, with Septic Tank
This system, referred to as Septic Tank Effluent Disposal (STED) involves directing the
overflow from septic tanks through small bore pipes to a small bore sewerage reticulation
system. The system requires training of subcontractors to lay the small bore, gravity pipes.
Sewage pump stations are needed when the gravity gradients become too steep. Septic tanks
would have to be regularly pumped out. A larger institutional involvement is also required to
manage the sewers for clogs, but 2 million septic tanks would favor its application in Metro
Manila. Some septic tanks will require replacement/repair over time. Where possible, larger-bore
gravity sewerage should be utilized for new developments. Although the analysis made this the
second preferred option, the STED system has more applicability for Metro Manila due to the
large number of septic tanks.
3. Small Bore Gravity Sewerage, No Septic Tank
This system (called Condominial and carrying only dirty water) has been used mostly in Brazil
to deliver sewerage services to a large sector of the population, including middle and upper
income levels. The system also requires training of subcontractors to lay the small bore, gravity
pipes. Moreover, institutional involvement is substantial as clogging does occur.
Dirty Water Treatment Strategies
The multi-criteria analysis yielded the following treatment preferences as preferred in the
following order:
1. Anaerobic [UASBR] Aerobic [SBR]
The Upflow Anaerobic Sludge Blanket Reactor, followed by a Sequencing Batch Reactor
(aerobic) was the preferred option for biologically treating sewage. This process combination
eliminates the need for primary sedimentation and a sludge digester, produces far less sludge,
and produces biogas that can be used for the generation of electricity in excess of what is used
for treatment. The SBR polishes the treated effluent to produce DENR Class C effluent.10 This
process combination has been used successfully in Brazil and India and has a particular
advantage in tropical environments.
10

50 mg/l BOD and total suspended solids (TSS)

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National Sewerage and Septage Management Program Full Report

2. Aerobic [SBR]
In some drainage catchments, particularly those with considerable dilution, the use of only an
SBR may be the preferred treatment choice. This would comprise a centralized system well
beyond the Master Plan horizon of 2025. For the 31 catchments, a total of 25 trunk systems are
recommended. The trunk system will form the backbone of the sewerage for a catchment or a
cluster of catchments with the flow leading westward to Manila Bay.
The trunk sewer system will be schematized by a pipe node network, where a node covers a
reticulation area (or sub-catchment) where sewage is collected and inputted to the node. The pipe
connecting the nodes conveys the flow. It should be noted that a number of the proposed trunk
systems cross the current East-West Zone concession boundary. The 2005-2025 Sewerage
Master Plan was developed on the basis of moving towards this long-term strategy.
Implementation Schedule
The implementation schedule for the Metro Manila Sewerage Master Plan to 2025 is presented in
Figure 1 below. For each of the time horizons (2010, 2015, 2020 and 2025), a five-year
implementation period is provided to enable the planned sewerage to be on-line at the end of the
planning horizon. Construction of the reticulation systems is a continuous five-year activity for
each planning horizon. As mentioned above, the current targets and timeline are being reviewed
and updated by MWSS and its concessionaires.
Figure 1. Overall Implementation Schedule for the Metro Manila Sewerage Master Plan

2.4

Applicable Regulations and Role of Agencies

Relevant regulations for sewerage and septage management include:


Code on Sanitation of the Philippines Septic tanks must be water-tight, inspected once a
year, cleaned when the sludge has reduced the liquid capacity by 50%, and the sludge must
be treated/disposed of properly. It is unlawful to discharge untreated effluent of septic tanks
and/or sewage treatment plants to bodies of water without approval of the Secretary of
Health.
Clean Water Act Within five years, all buildings must be connected to existing sewerage
systems in highly urbanized cities (HUCs). For non-HUCs, septage management systems
shall be employed. LGUs are required to provide land for treatment facilities.

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National Sewerage and Septage Management Program Full Report

Operations Manual on the Rules and Regulations Governing Domestic Sludge and Septage
All septage haulers and septage treatment entities must secure an Environmental Sanitation
Clearance (ESC) from the Center for Health Development of the DOH. Proper collection,
treatment and disposal of the septage are required.
Plumbing Code of the Philippines It is unlawful for any person to deposit into any
plumbing fixture connected to the excreta and storm drainage systems any oils, greases or
other things which could cause damage to the drainage system or public sewer.
Presidential Decree 198 A water district may require, construct, operate and furnish
facilities and services, within or without the district, for the collection, treatment and disposal
of sewerage, waste, and storm water. The water district may require all buildings used by
human beings to be connected to the sewer system within such reasonable time as may be
prescribed by the district. Failure to connect can be a ground for the water district to deny
water services to the non-complying building. A water district may prescribe and collect rates
and other charges for sewer services furnished.
Local Government Code Barangays are primarily responsible for general hygiene and
sanitation services. Provinces, municipalities and cities are responsible for building drainage
and sewerage infrastructure. LGUs may impose a special levy on the lands within their
jurisdiction specially benefited by public works projects or improvements funded by the local
government unit concerned. However, the special levy shall not exceed 60% of the actual
cost of such projects and improvements.

The CWA mandated DPWH to lead preparation of the NSSMP within twelve months from the
date the law took effect. From an institutional perspective, the difficult challenge of DPWH was
to convene concerned agencies to put together a program that was not very clearly defined.
Preparing the NSSMP requires long-term commitment among the agencies, all of which are
independent of DPWH, and only two of which were identified in the law (DENR and LGUs).
The Implementing Rules and Regulations of the CWA (CWA-IRR) identified some of the
critical agencies and their potential contributions in the preparation of the Program, shown in
Table 2 below.
Table 2. Role of Concerned Agencies in NSSMP under CWA-IRR (Rule 7)
Agency
DENR

DOH
LWUA

Role under CWA-IRR


Provide environmental criteria and data for prioritizing
sanitation, sewerage, septage management and combinations
of different systems and projects;
Present to LGUs, water concessionaires and water districts
sustainable options and low-cost innovative means of
managing sewage and septage;
Provide exemption from wastewater charges for pilot
EcoSan programs of LGUs;
Enforce CWA regulations
Provide specific health criteria and data
Provide guidance to water districts;
Submit proposals for projects to DPWH
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National Sewerage and Septage Management Program Full Report

Agency
MWSS
Department of Education,
Commission
on
Higher
Education (CHEd), Philippine
Information Agency (PIA)
LGUs

Role under CWA-IRR


Guide water concessionaires
Develop and implement IEC program

Submit listing of priority projects to DPWH, based on a


realistic assessment of their resources and contributions

The provisions of the CWA-IRR are merely suggestive and are drawn from the mandates of the
concerned agencies under different laws, summarized in Table 3 below. These laws also identify
the broader roles of the agencies in addressing sanitation and wastewater management. Their
participation in the program is intended to bring together the separate sector/agency programs
into a common framework, the NSSMP.
Table 3. Concerned Agencies and their Mandates Related to Sewerage and Septage
Agency
DPWH

Related Mandate/Responsibility

Legal Basis

RA 9275 Clean
Water Act (CWA)
and its IRR; EO
387 (2004),
amending EO 279
and EO 124

DENR

DOH

Mandated to prepare a National Sewerage and Septage Management


Program (NSSMP), which shall be a framework plan formulated to
address issues on sanitation and treatment and disposal of wastewater
To employ septage or combined sewerage-septage management
systems in non-HUCs
Coordinates with water districts (WDs) and concessionaires in the
preparation of a compliance plan for mandatory connection of
establishments and households to the existing sewerage system
Mandated to ensure that the planning, design, construction and
maintenance of infrastructure facilities such as national highways,
flood control and water resource development systems are in
accordance with the highest level of safety and efficiency and with the
overall national development objectives
Exercises administrative supervision MWSS
Through MWSS, and other urban water utilities, provides sewerage and
sanitation facilities and the efficient and safe treatment and disposal of
sewage within their area of jurisdiction
Coordinates with DPWH in the preparation of the NSSMP by
contributing specific environmental criteria and data for the
prioritization of sanitation, sewerage, septage management and
combinations of different systems and projects.
Enforces the CWA requirement for national implementation of septage
management
Presents to LGUs, water concessionaires, WDs and other water service
providers sustainable options such as community-based natural
treatment systems, ecological sanitation concepts, water recycling and
conservation systems and other low-cost innovative management
solutions
Regulates effluent quality
Responsible for promoting safe water supplies and exercising

CWA; EO 192

PD 856 -

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National Sewerage and Septage Management Program Full Report

Agency

DILG

LGUs

Related Mandate/Responsibility

Legal Basis

surveillance of water quality. Its major functions include the


development and implementation of sanitation programs nationwide,
and administration of a health education program.
To formulate guidelines and standards for the collection, treatment and
disposal of sewage including guidelines for the establishment and
operation of centralized sewage treatment system
Issue Environmental Sanitation Clearances for septage collection and
treatment services (detailed in the Operations Manual on the Rules and
Regulations Governing Domestic Sludge and Septage).
Approval of DOH is required for the following:
(1) Construction of any approved type of toilet, including temporary toilets,
for every house, including community toilets which may be allowed for a
group of small houses;
(2) Plans of individual sewage disposal systems and the sub-surface
absorption system, or other treatment device;
(3) Location of any toilet or sewage disposal system in relation to a source
of water supply;
(4) Plans, design, data and specifications of a new and existing sewerage
system or sewage treatment plant;
(5) The discharge of untreated effluent of septic tanks and/or sewage
treatment plants to bodies of water;
(6) Manufacture of septic tanks; and
(7) Method of disposal of sludge from septic tanks or other treatment plants.
In the preparation of the NSSMP, DOH shall provide specific health criteria
and data.
Its role in water supply and sanitation (WSS) lies in the Water Supply
and Sanitation-Program Management Office (WSS-PMO), which
provides capacity building support to local government units (LGUs) in
their performance of water services provision.
Establish a system of coordination and cooperation among the
citizenry, local executives and DILG, to ensure effective and efficient
delivery of basic services to the public.
Appropriates land, including rights-of-way/road access to the land, for
the construction of sewage and/or septage treatment facilities
Raises funds to subsidize expenses for the operation and maintenance
of sewerage treatment or septage facility servicing the area
Identifies projects for inclusion in the NSSMP
Drainage: for all cities and municipalities to provide and maintain in a
sanitary state and in good repair a satisfactory system of drainage in all
inhabited areas where wastewater from buildings and premises could
empty without causing nuisance to the community and danger to public
health. Buildings or premises producing wastewater shall be connected
to the municipal drainage system in all areas where it exists.
Basic services and facilities:
(1) For a barangay: (iii) Services and facilities related to general hygiene
and sanitation, beautification, and solid waste collection;
(2) For a municipality: (vi). services and facilities related to general
hygiene and sanitation; (viii). Infrastructure facilities intended primarily
to service the needs of the residents of the municipality and which are

Sanitation Code;
CWA

CWA; Sanitation
Code; RA 7160 Local Government
Code; NEDA
Board Resolution
No. 5, s. 1994

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National Sewerage and Septage Management Program Full Report

Agency

MWSS

Water
Districts

Local
Water
Utilities
Administr

Related Mandate/Responsibility
funded out of municipal funds, including, but not limited to, drainage,
and sewerage and flood control;
(3) For a province: (vii). Infrastructure facilities intended to service the
needs of the residents of the province and which are funded out of
provincial funds including, but not limited to drainage and sewerage,
flood control
(4) For a city: All the services and facilities of the municipality and
province
Primary implementers of the sanitation/sewerage programs with the
national government providing assistance to develop their capacities
Responsible for planning and implementation of WSS programs,
preparation of WSS master plans, monitoring of local water supply and
sanitation coverage and updating sector profile.
To provide water supply, sewerage and sanitation services, through
Manila Water and Maynilad, in Metro Manila
To fix water rates and sewerage service fees
Responsible for the planning, design, construction, operation and
maintenance of water supply and sewerage disposal systems within its
jurisdiction
To connect existing sewage lines to available sewerage systems within
5 years from start of CWA
To provide, maintain and operate water collection, treatment and
disposal facilities;
A district may require, construct, operate and furnish facilities and
services, within or without the district, for the collection, treatment and
disposal of sewage, waste and storm water.
Upon providing a sewer system in any area of the district, the district
may require all buildings used by human beings to be connected to the
sewer system within such reasonable time as maybe prescribed by the
district, provided that the property upon which such building to be
connected stands is located within 35 meters of an existing main of the
district's sewer system.
Refusal to so connect with the district's sewer system, the district may
declare the further maintenance or use of cesspools, septic tanks, or
other local means of sewerage disposal in such area to be a public
nuisance and, after notice and writing of at least 10 days, deprive said
property owner of any and all services provided by the district.
A district may prescribe and collect rates and other charges for sewer
services furnished.
A district may also fix, levy and collect a sewerage and wastewater
service stand-by or availability charge in the event sewer service is
available and no connection is made.
In HUCs, to connect existing sewage lines to available sewerage
systems within 5 years from effectivity of the CWA.
Funds from prior and future appropriations of the national government
for waterworks and sewerage systems in LGUs that are covered by
duly formed WDs shall be released to the LWUA for the account of the
WDs.

Legal Basis

RA 6324 (1971);
CWA

PD 198 Provincial Water


Utilities Act
(1973); CWA

PD 198; NEDA
Board Resolution
No. 5 (1994)

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National Sewerage and Septage Management Program Full Report

Agency
ation
(LWUA)

Related Mandate/Responsibility

MMDA

NWRB

National
AntiPoverty
Commissi
on-Water
and
Sanitation
Coordinati
ng Office

NEDA

Central Sanitation/Sewerage Program Support Office (CPSO) created


to coordinate subsector activities at the national level and to assist
LGUs to plan and manage sanitation/sewerage programs at the
community level shall be established.
CPSO is created and housed at LWUA with the LWUA Board
exercising over-all jurisdiction over its operation.
An Inter-departmental Advisory Committee (IAC) composed of
representatives from DPWH, DOH, DILG, Department of Finance
(DOF), Department of Budget and Management (DBM), LWUA,
DENR, MWSS and NEDA was created and acts as the coordination
body in the implementation and monitoring of urban sewerage and
sanitation programs particularly the five pilot areas (Davao City,
Calamba, Dagupan City, Roxas City and Cotabato City).
The CPSO shall exist for a period of about three to five years or until
its functions have been fully devolved to the LGUs.
Metro-wide services under the jurisdiction of the MMDA are those
services which have metro-wide impact and transcend legal, political
boundaries or entail huge expenditures such that it would not be viable
for said services to be provided by the individual LGUs comprising
Metropolitan Manila. These services include: Flood control and
sewerage management, which includes the formulation and
implementation of policies, standards, programs and projects for an
integrated flood control, drainage and sewerage system.
Regulation and monitoring of water utilities;
Regulation of water service providers; tariff regulation coverage; and
service and management of the sector database.
Enhance the programs, approaches and strategies to strengthen the
partnership between government and the basic sectors (including
sanitation).
To act as the coordinating and advisory body that exercises oversight
functions in the implementation of the Social Reform Agenda and
ensures that is incorporated into the formulation of national, regional,
sub-regional and local development plans.
To operate on the principle and strategy of institutionalizing the basic
sectors and NGO participation in the Social Reform Agenda
management cycle.
Coordinates the implementation of the Presidents Priority Program for
Water (P3W): serves as the main vehicle to implement the water and
sanitation agenda of the President; tasked to coordinate all water and
sanitation-related programs in relation to the implementation of the
P3W
Coordinate the preparation of national development plans and
investments, formulation of sector policies and strategies and
monitoring the implementation of policies, programs and projects.

Legal Basis

RA 7924 MMDA
mandate

PD 424 (1974)

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National Sewerage and Septage Management Program Full Report

3 Goal, Objectives and Scope


According to Rule 7 of the Clean Water Act Implementing Rules and Regulations, the NSSMP
shall be a framework plan which will be formulated to address various national issues on
sanitation and treatment and disposal of wastewater, focusing on, among others, objectives,
strategies, targets, institutional mechanism, financing mechanism, technology implementation,
programming, monitoring and evaluation and other key national concerns. The program shall
also include guidelines on sludge management for companies engaged in desludging operations.
The NSSMP provides guidance and incentives (funding options) that should be attractive to
project proponents, and a mechanism to monitor and evaluate progress.
More specifically, the NSSMP goal and objective are:
Goal:
To improve water quality and public health in the Philippines by 2020.
Objective: Enhance the ability of local implementers to build and operate wastewater treatment
systems and promote the behavior change and supporting environment needed for
systems to be effective and sustainable.
Scope of the NSSMP
While the focus of the NSSMP is on septage
The NSSMP targets LGUs, water districts and
management and sewerage, other sanitation
private service providers as the major program
and wastewater issues commonly faced by
implementers. They have the mandate to
address sewage and septage, and the greatest
local governments are also presented so that
ability to design, implement and manage
LGUs can comprehensively address the
projects.
complex reality that they face. Using the
recommended planning process presented in
Section 8, local governments determine their priority sanitation issues and develop local
sanitation plans that fit sewerage and septage management into the larger context. This context
includes the following six intervention areas:

Septage management (collection, treatment and reuse of biosolids);


Sewerage systems (interceptors, piped sewerage and centralized treatment plants);
Ecological sanitation (dry sanitation or urine diversion dry toilet [UDDT], arbor loo, excreta
reuse);
Toilets (public toilets, programs to reduce open defecation);
Systems for point sources (factories, markets, high rise buildings, schools, slaughterhouses);
and
Systems for non-point sources (open bottom septic tanks, backyard hog farms).

The NSSMP will contribute to the Sanitation Sector Roadmap, which will include programs for
the four intervention areas not covered by the NSSMP. The NSSMP targets local
implementersLGUs, water districts, and private service providers to develop on-the-ground
projects and programs. They have the mandate to address sewage and septage, and the greatest
ability to design, implement and manage projects. Water districts and private utilities may be
able to make use of the recommended planning process, but will be focused mainly on septage
management and sewerage, rather than all the intervention areas. In areas where Water Quality
Management Areas (WQMAs) have been established, local implementers can develop their

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National Sewerage and Septage Management Program Full Report

programs within the WQMA plan and also request funding from the WQM Fund. In most areas
where water districts exist, it will be advantageous for the LGU and the water district to work in
partnership, as has happened in Marikina City and Dumaguete City.
In some cases, DENR, DOH and DPWH may take the lead in addressing regional septage
management and sewerage programs that are deemed to have regional, provincial or even
national significance. Options for LGU-water district-private sector partnerships should also be
explored.

4 Targets
Following the Clean Water Act mandates, the NSSMP targets for areas outside Metro Manila
are:
Target 1: By 2020, all LGUs have developed septage management systems and the 17 highly
urbanized cities (HUCs) have developed sewerage systems.
Target 2: By 2020, approximately 43.6 million people have access to septage treatment
facilities and about 3.2 million will have access to sewage treatment facilities.
Target 3: By 2020, P26.3 billion has been invested in sanitation improvement projects.
Target 4: By 2020, about 346 million kilograms of BOD is diverted from the environment per
year as a result of the sewerage and septage management projects.
For Metro Manila, please see section 3.4.1. These targets will only be achieved if the following
occur:

The NSSMP is disseminated nationwide through an effective training program and


promotion campaign;
Technical assistance is available for local implementers through funders and government
agencies;
Adequate incentives are available, such as funding for feasibility studies, and partial grant
funding for infrastructure from the national government (DPWH and DOH);
Local implementers use an effective planning process, promotion campaign and supporting
environment (finance, policies, enforcement); and
There is serious enforcement of the Clean Water Act.

The targets are rough estimates based on calculations and assumptions detailed in the Annex.
They only include projects and activities outside Metro Manila since Metro Manilas needs are
already covered by the existing privatization agreement between MWSS and the 2
concessionaires (Maynilad and Manila Water).

5 Strategy
The main strategy to achieve the goal, objective and targets listed above is to facilitate a bottomup, demand-driven project development process by providing national government capacity

23

National Sewerage and Septage Management Program Full Report

building support and financial incentives, coupled with a sustained, effective promotion
campaign.
5.1 National Component
Implementation will start at the national level and then move down to the local level. However,
current project development efforts at the local level will continue. The NSSMP Committee will
be convened and NSSMP Office will be designated within DPWH. An NSSMP operations
manual will be developed that details the roles of each national government agency and how
LGUs can access the national government cost share through DPWH. DOH, DENR, DILG and
LWUA will be oriented and trained on the implementation of the NSSP, PSSR, and the NSSMP.
DPWH will be oriented and trained on the implementation of NSSMP, particularly on evaluating
and implementing sewerage projects.
DOH will take the lead in conducting training for LGUs to develop Local Sustainable Sanitation
Plans as described in the NSSP. DOH and/or DPWH will lead the conduct a 3-part training on
developing septage management projects and one on sewerage projects. A nationwide promotion
campaign will be undertaken to encourage mayors and water district general managers to invest
in these projects, and to increase the publics demand for and willingness to pay for these
services. DOH will incorporate the promotions campaign into its national sustainable sanitation
promotions campaign. Consultants and a budget for the campaign will be needed.
The 3-part septage management training will make use of the NSSMP Guide for Local
Implementers and the DOH Operations Manual on the Rules and Regulations Governing
Domestic Sludge and Septage to develop projects, a supporting environment (policies, user fees,
etc.) and promotion campaigns. After the first session, the participants will conduct a rapid
assessment and stakeholder workshop and develop a first draft of the septage management plan
and local ordinance, which they will present during the second session. During and after the
second session they will work on developing the financial, institutional and technical aspects of
the project. During the third session they will present their progress to date and get assistance
and advice on how to finish developing their project.
The 3-part sewerage system training will make use of the NSSMP Guide for Local Implementers
and will describe the process by which the LGUs can apply for the 40% national government
cost share. After the first session, the participants will conduct a rapid assessment and
stakeholder workshop and develop a first draft of the sewerage project plan and local ordinance,
which they will present during the second session. This assessment should include plans to
improve the drainage system if needed. During and after the second session they will work on
developing the financial, institutional and technical aspects of the project. During the third
session they will present their progress to date and get assistance and advice on how to finish
developing their project.
To allow for the 40% national government-local government cost share, the Department of
Finance will amend the current policy on solid waste management to include the sewerage
sector. This allows for up to 40% national government funding for 1st and 2nd class cities (see
Table 2 for details). To apply for the national government cost share, LGUs will need to first
secure financing for the local portion, which can include 50% from the water district and loans

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National Sewerage and Septage Management Program Full Report

from Municipal Development Fund Office (MDFO), government or private financing


institutions. The LGU will then submit their project plan and proof of financing to DPHW,
which will review it and rank it according to a simple ranking system (see the CD for a suggested
Project Prioritization Tool). Once approved in principle by DPWH, the project will be included
in the departments annual budget request and go through the budget process for Congressional
then Presidents approval. When the budget is approved, it will be released to the LGU according
to the implementation schedule approved by DPWH.
The NSSMP Office will gather data on the four targets areas: number of projects developed,
number of people benefiting from the projects, amount of money spent nationwide, and amount
of pollution diverted from the environment. This data will be collected assistance from
government agencies and donor-funded initiatives that are providing assistance to local
implementers. The NSSMP Office will report this data to the NSSMP Committee every year
starting in 2011. Success will be measured against the targets listed above.
5.2 Local Component
Following the training, local implementers will finish developing their projects using the
NSSMP Guide for Local Implementers and contact the NSSMP Office if they have questions or
need referrals for financing or technical assistance. Depending on how many projects are
developed compared to the targets, the government may decide to repeat the training after two
years, or after the next national election in 2016 when there will be a new set of mayors. DENR
regional offices will lead the creation of WQMAs, which will develop action plans and a local
WQMF to finance project development activities.
5.3 National/Local Coordination
Once positive results have been achieved in a handful of cities, best practices can be shared
throughout the country by communicating information to the NSSMP Office and through
presentations at workshops and conferences. Local lessons will essentially be rolled-up to the
national level to affect future policy and planning in a positive way and allow the national
platform to be used to constructively direct other local implementers facing similar challenges.
The NSSMP Office can become a national clearinghouse for best practices in sewerage and
septage management, matching LGUs and water districts facing similar challenges that can assist
one another.
5.4 Sustainability
To increase the sustainability of the septage management and sewerage projects that will be
developed, the projects should be developed in such a way that they provide the highest level of
project quality possible given local constraints. Project quality can be improved if the following
service standards are in place:
Design standards;
Performance standards; and
Customer service standards.
The Philippine Sustainable Sanitation Sector Roadmap includes plans to establish benchmark
standards on LGU performance and practice; create a National Water and Sanitation Sector
Monitoring and Assessment Program; create a National Sanitation Agency; amend the National

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National Sewerage and Septage Management Program Full Report

Sanitation Code to include a strong and effective regulatory framework for sanitation; and
integrate water and sanitation oversight functions at the national and local levels.
Since these recommendations will take many years to implement, the short-term strategy of
the NSSMP is for local implementers to develop project-specific standards. The NSSMP
Guide to Local Implementers (Annex A of the Main Report) provides guidance and references
on appropriate service standards that can be built into projects to enhance sustainability.
Additionally, the NSSMP prioritization toolkit used by the national government agencies to rank
projects considers these standards and overall project sustainability in prioritization decisions.

6 Implementation Plan
Implementation will start at the national level and then move down to the local level. However,
current project development efforts at the local level will continue. The NSSMP Committee will
be convened and NSSMP Office will be designated within DPWH. An NSSMP operations
manual will be developed that details the roles of each national government agency and how
LGUs can access the national government cost share through DPWH. DOH, DENR, DILG and
LWUA will be oriented and trained on the implementation of the NSSP, PSSR, and the NSSMP.
DPWH will be oriented and trained on the implementation of NSSMP, particularly on evaluating
and implementing sewerage projects.
DOH will take the lead in conducting training for LGUs to develop Local Sustainable Sanitation
Plans as described in the NSSP. DOH and/or DPWH will lead the conduct a 3-part training on
developing septage management projects and one on sewerage projects. A nationwide promotion
campaign will be undertaken to encourage mayors and water district general managers to invest
in these projects, and to increase the publics demand for and willingness to pay for these
services. DOH will incorporate the promotions campaign into its national sustainable sanitation
promotions campaign. Consultants and a budget for the campaign will be needed.
The 3-part septage management training will make use of the NSSMP Guide for Local
Implementers and the DOH Operations Manual on the Rules and Regulations Governing
Domestic Sludge and Septage to develop projects, a supporting environment (policies, user fees,
etc.) and promotion campaigns. After the first session, the participants will conduct a rapid
assessment and stakeholder workshop and develop a first draft of the septage management plan
and local ordinance, which they will present during the second session. During and after the
second session they will work on developing the financial, institutional and technical aspects of
the project. During the third session they will present their progress to date and get assistance
and advice on how to finish developing their project.
The 3-part sewerage system training will make use of the NSSMP Guide for Local Implementers
and will describe the process by which the LGUs can apply for the 40% national government
cost share. They will basically follow a similar process as the 3-part septage management
training mentioned above. Following the training, local implementers will finish developing their
projects and contact the NSSMP Office if they have questions or need referrals for financing or

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National Sewerage and Septage Management Program Full Report

technical assistance. Depending on how many projects are developed compared to the targets,
the government may decide to repeat the training after two years, or after the next national
election in 2016 when there will be a new set of mayors.
To allow for the 40% national government-local government cost share, the Department of
Finance will amend the current policy on solid waste management to include the sewerage
sector. This allows for up to 40% national government funding for 1st and 2nd class cities (see
Table 12 for details). An NSSMP operations manual will be developed that details the roles of
each national government agency and how LGUs can access the national government cost share
through DPWH. To apply for the national government cost share, LGUs will need to first secure
financing for the local portion, which can include 50% from the water district and loans from
Municipal Development Fund Office (MDFO), government or private financing institutions. The
LGU will then submit their project plan and proof of financing to DPHW, which will review it
and rank it according to a simple ranking system (see the CD for a suggested Project
Prioritization Tool). Once approved in principle by DPWH, the project will be included in the
departments annual budget request and go through the budget process for Congressional then
Presidents approval. When the budget is approved, it will be released to the LGU according to
the implementation schedule approved by DPWH.
The NSSMP Office will gather data on the four targets areas: number of projects developed,
number of people benefiting from the projects, amount of money spent nationwide, and amount
of pollution diverted from the environment. This data will be collected with assistance from
government agencies and donor-funded initiatives that are supporting to local implementers. The
NSSMP Office will report this data to the NSSMP Committee every year starting in 2011.
Success will be measured against the targets listed above.
Breakdown of Targets 1 and 2
Short-term: 2010-2016, the following are expected to be achieved.
Target 1: Half of all cities will have septage management programs.
Long-term: 2016-2020, the following are expected to be achieved.
Target 1: By 2020, all LGUs have developed septage management programs and 17 HUCs
have developed sewerage systems.

7 Institutional Framework
7.1 Organizational Structure
As mandated by the CWA, DPWH has led preparation of the NSSMP and will play a major role
in overseeing its implementation. However, given the cross-cutting nature of the sanitation
sector, the CWA Implementing Rules and Regulations (IRR) requires other national government
agencies to play key roles, and local implementers to plan and develop interventions on the
ground. The expanded role of these agencies required for NSSMP implementation is presented
below in Table 4.

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National Sewerage and Septage Management Program Full Report

Table 4. Expanded Role of Concerned Agencies in NSSMP


Agency
DPWH

Role under CWA-IRR


Lead preparation of NSSMP

DENR

Provide environmental criteria


and
data
for
prioritizing
sanitation, sewerage, septage
management and combination of
different systems and projects;
Present
to
LGUs,
water
concessionaires
and
water
districts sustainable options and
low-cost innovative means of
managing sewage and septage;
Provide
exemption
from
wastewater charges for pilot
ecosan programs of LGUs
Provide specific health criteria Implementation: Provide training and
and data
promotions campaign on the NSSMP;
provide performance-based grants for LGU
project preparation activities, and limited
grants for LGU projects <P500M that can
receive subsidy from GAA (under DOH
ceiling);
Monitoring and evaluation: Monitor
impacts of projects on improving health;
submit report to NSSMP Office.
Policy: Consider NSSMP in reviewing
performance of LGUs; link LGU
performance to priority for subsidies from
GAA;
Implementation: General supervision and
institution building support to LGUs,

DOH

DILG

Additional Role under the NSSMP


Implementation: Host NSSMP Office;
review and prioritize proposed LGU
infrastructure projects <P500M that can
receive subsidy from GAA (under DPWH
ceiling); build or contract out infrastructure
for projects selected for General
Appropriation Act (GAA) subsidy;
alternatively, enter into MOA with LGU
for LGU to implement project funded by
DPWH budget;
Monitoring and evaluation: NSSMP Office
will collect information on progress toward
achieving the targets and submit annual
reports to NSSMP Committee.
Policy: Contextualize NSSMP in overall
framework for clean water; apply water
quality standards;
Implementation: Align collection and use
of WQM Funds to partly support NSSMP
(e.g., IEC, feasibility studies, inter-LGU
cooperation in a WQMA to develop
common projects);
Monitoring and evaluation: Measure impact
of projects on improving water quality;
submit report to NSSMP Office.

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National Sewerage and Septage Management Program Full Report

capacity building through the Local


Government Academy, support promotion
campaigns and incorporate in LGU
trainings such as those provided to
Rural/Barangay Waterworks and Sanitation
Associations (RWSAs/BWSAs). Share the
sanitation technology options kit developed
by the Water Supply and Sanitation
Program Management Office (WSSPMO).
Encourage inter-LGU cooperation on
developing common projects;
Monitoring and evaluation: Monitor LGU
investments in sewerage and septage
management; submit report to NSSMP
Office.
resource Implementation: Oversee the performance
fiscal of government financing institutions such
as the Development Bank of the Philippines
(DBP), Land Bank of the Philippines (LBP)
and LWUA that provide funding for
sewerage and septage projects.

DOF

Revenue generation,
mobilization
and
management

DBM

Formulation of
national budget

LWUA

Provide guidance to water


districts;
Submit proposals for projects to
DPWH

MWSS

Guide water concessionaires

the

annual Implementation: Allocate in the annual


national budget funding necessary to
address the financial requirements under
the NSSMP.
Policy: Provide incentives for water
districts to work together with LGU
counterparts
to
propose
septage
management and sewerage projects;
Implementation: Provide funding for
septage management and sewerage projects
proposed by water districts through its loan
window;
Monitoring and evaluation: Report number
of projects implemented by water districts
to the NSSMP Office.
Implementation: Within its jurisdiction,
monitor implementation of concessionaire
contracts and measure impact on improved
community access to sewerage and septage
facilities, and improved water quality of
water bodies within concession areas.
Monitoring and evaluation: Report number
of projects implemented by concessionaries

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National Sewerage and Septage Management Program Full Report

Department Develop and implement IEC


of
program
Education,
CHEd, PIA
LGUs
Submit listing of priority projects
to DPWH, based on a realistic
assessment of their resources and
contributions

to the NSSMP Office.


Implementation: In coordination with the
NSSMP Office, incorporate information
and knowledge into school curricula and
government information campaigns.
Policy: Develop local ordinances to support
septage management and sewerage
projects;
Implementation: Prepare local sanitation
plan, collaborate with water districts in the
area
to
design
sewerage/septage
management projects, evaluate projects for
consistency with NSSMP, and if so, apply
for incentives under the program, through
local focal points, coordinate with NSSMP
Office for information on NSSMP
incentives (financial, technical assistance,
etc) and process of availing of incentives;
Monitoring and evaluation: Report progress
to the NSSMP Office.

The roles and relationships of these agencies are shown in the following organizational chart
(Figure 2).

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National Sewerage and Septage Management Program Full Report

Figure 2. Organizational Chart for Implementing NSSMP

7.1.1 NSSMP Committee


An NSSMP Committee will be convened to coordinate implementation of the NSSMP at the
national policy level. The Committee is an inter-agency body that will assist the DPWH in the
review and future revision of the NSSMP. Each member agency brings its perspective and
concerns regarding targets, incentives, project evaluation and contribution in providing national
funding assistance to project proposals submitted by LGUs.
Instead of creating a new body, the existing NEDA Infrastructure Committees Sub-committee
on Water Resources can be designated as the NSSMP Committee tasked to consider sewerage
and sanitation projects for inclusion in national infrastructure programming. The NEDA
Infrastructure Committee was created to advise the President and NEDA Board on matters
regarding infrastructure development including flood control and drainage, and water supply and
sanitation. The Committee is co-chaired by NEDA and DPWH and coordinates the activities of
all government agencies and GOCCs concerned with infrastructure development. The

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National Sewerage and Septage Management Program Full Report

Committee has created a Sub-committee on Water Resources to coordinate all activities related
to the water resources sector, including, among others, water supply, sanitation and sewerage. 11
The NEDA sub-committee (sub-com) can function as the NSSMP Committee for the following
reasons:
a) It is pre-existing, and performs the same task mandated under the CWA;
b) It has all key agencies represented, meets regularly with NEDA secretariat support;
c) Its members are sufficiently motivated to work together to push for priority projects because
of the direct link of the outputs to the budgetary process;
d) The sub-committee is well-informed of other relevant issues (public health, water quality,
water supply, development planning) and has the expertise and authority to make appropriate
decisions on prioritization of septage management and sewerage infrastructure projects for
funding.
The Subcommittee has flexible membership and can contract or expand depending on the issue
being considered. In relation to the NSSMP, the sub-com can convene annually acting as the
NSSMP Committee to consider sewerage and sanitation projects for inclusion in the national
infrastructure programming.12 The Subcommittee on Water Resources has jurisdiction over
water supply, sanitation and sewerage.
The Subcommittee on Water Resources has two functions: 1) acting as the NSSMP Committee,
it will review and revise the NSSMP based on monitoring and evaluation results; 2) acting as the
Subcommittee of the Infrastructure Committee, it shall review sewerage and septage project
proposals costing at least P500 million, and recommend the priority projects for funding support
by the national government, either through general appropriations, loans or grants. Any policy
recommendation required to facilitate the implementation of the NSSMP should be elevated to
the INFRACOM for policy guidance.
7.1.2

NSSMP Office

An NSSMP Office will be designated within DPWH that will function as the hub of all NSSMPrelated matters and be a one-stop shop for information on the NSSMP. It will be the secretariat of
the NSSMP Committee and gather monitoring data needed for NSSMP review. As a focal point
for information, the NSSMP Office will:

11
12

Conduct information campaigns targeting local implementers (LGU or cluster of LGUs


within WQMAs, working with water districts in the area) using the NSSMP Guide for
Local Implementers;
Collect information from donor agencies, development financing institutions, and private
funders on available funding options, capacity-building opportunities or technical
assistance relevant to sewerage and sanitation programs and refer project proponents to
them; and

INFRACOM Resolution No. 2, Series of 2008.


Executive Order No. 230

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National Sewerage and Septage Management Program Full Report

Collect information from the PEN which includes national government agencies (NGAs),
NGOs and donors; research and training institutions; consulting groups; technology
providers and others on available technologies, trainings or technical assistance and refer
project proponents to them.
Collect information on progress towards the NSSMP targets from LGUs, water districts,
WQMAs, and other members of the PEN and report these annually to the NSSMP
Committee. The Office may also use the DOH, DILG or LGU scorecards to monitor
septage management and sewerage activities at the LGU level.

The NSSMP Office will not act as a clearinghouse for screening projects for funding. A
proactive NSSMP Office would establish close links with the member agencies of the NSSMP
Committee especially in gathering information to monitor whether the program is on track in
achieving its goals.
The existing regulatory framework, rules and regulations will apply to the septage management
and sewerage projects that will be developed. The NSSMP Office will not have any regulatory
powers, such as setting standards for technical designs, approving tariff or user fee rates or
monitoring the compliance of LGUs and water districts. All builders of infrastructure projects
must obtain the necessary permits and clearances, including an Environmental Compliance
Certificate from DENR. For septage and sewerage treatment facilities, a discharge permit from
DENR or the Laguna Lake Development Authority (LLDA) is also required, as well as an
Environmental Sanitation Clearance from DOH. LGUs obtain approval for user fees through the
city or municipal council after public hearings are held. Water districts and other private water
providers registered with NWRB are required to obtain clearance from LWUA (for water
districts) or NWRB (for others) and conduct a public hearing before charging fees for water
services. However, neither LWUA nor NWRB has created procedures for setting fees for
sanitation services from these water providers. Therefore, a public hearing is recommended in
lieu of these procedures, which may be created in the future.
The NSSMP Office should be a physical office at DPWH, with a responsible point person and
responsive information and communication facilities (phones, email, website, etc.). This may
require a small investment from DPWH in designating personnel, office space and resources.
However, there is nothing new in these functions that cannot be performed by existing units of
the Department. It is only a matter of designation to ensure that somebody is accountable for this
function. The creation of the office should be guided by the streamlining policy of government.
The NSSMP point person also provides secretariat support for the NSSMP Committee. Since the
NEDA INFRACOM also has a secretariat, the secretariat support will only be needed when the
sub-com meets to discuss matters related to sewerage and septage.
7.1.3 Project Facilitators
Project facilitators are agencies that have supervisory, oversight or regulatory authority over the
project implementers. Several agencies play the role: LWUA with respect to water districts;
MWSS for the private concessionaires in Metro Manila; Province and Regional Development
Council (for projects involving clusters of LGUs or regionally-significant projects); DPWH and

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National Sewerage and Septage Management Program Full Report

DOH for projects in support of LGU priorities. The Centers for Health Development of the DOH
also regulate private service providers such as septage haulers and septage treatment entities.
As an example, LWUA prescribes minimum standards for construction, operations and
maintenance of facilities of local water utilities, and provides technical assistance for the
purpose. This function is critical in helping WDs identify, design and prioritize projects for
inclusion in the NSSMP priority list. In addition, LWUA has extensive experience in providing
funding support for water supply projects. This experience is valuable and easily translated to
supporting sewerage and septage management initiatives.
Project facilitators act as the extension of the NSSMP Office in providing information regarding
the NSSMP. However, these agencies also exercise some supervisory or regulatory function over
their constituents (also the project proponents) under different laws. These supervisory or
regulatory powers can be used as incentive or guide to further push the local implementers to
conform to the NSSMP framework of prioritizing projects that contribute to the overall national
goal, objective and targets.
DILG completed the Rural Water Supply and Sanitation Project, Phase V from 2001 to 2007,
through a loan provided by JBIC. The project was intended to assist LGUs in the mobilization of
communities in assuming their responsibility for operation and maintenance of level 1 water
supply system and sanitation facilities. An audit report by the Commission on Audit found that at
the end of 2006, 56% of the original budgeted cost was expended but only 10.5% of the
projected number of water supply and sanitation facilities was completed. The report further
showed that DILG relied almost solely on consultant services, which accounted for 41% of
project cost. The budget for consultancies was 94% spent by project completion, despite poor
implementation performance.13 Additional technical assistance should be provided to DILG to
improve its capacity to provide assistance to LGUs in implementing local water and sanitation
programs.
USAID supported the creation of the Philippine Sanitation Alliance, which brings together LGUs
and private sector partners to develop affordable solutions to water pollution problems. Through
a technical assistance component, LWUA and the League of Cities of the Philippines develop
institutional capacity to provide guidance to LGUs to develop sewerage treatment facilities and
septage management programs. The improved capacity of LWUA and the League of Cities of
the Philippines (LCP) should enable these agencies to guide the LGUs and WDs in developing
projects for the NSSMP.
DENR and MWSS are implementing agencies of the Manila Third Sewerage Project funded by a
grant from GEF. The project consists of seven components. The first four components aim to
assist the DENR to identify impediments to cooperation among sector agencies, and to nonconventional investments in sewerage and sanitation. The fifth to sixth components will assist
the MWSS to pursue higher investments in sewerage and sanitation by its concessionaires and in
piloting suitable technology for septage treatment and disposal. The last component will provide
technical assistance to help with project management, monitoring, evaluation and
13

Commission on Audit Report (Executive Summary, undated). www.coa.gov.ph/2006_AAR/NGAs/ES/DILG_ES06.pdf.


Accessed 27Apr 09.

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National Sewerage and Septage Management Program Full Report

dissemination14. The project, as designed, should give valuable insights on the motivations and
necessary factors needed for an effective institutional mechanism for sewerage and sanitation
management, including innovative financing mechanisms and market-based incentives. The
project is expected to be extended until 2015.
LWUA has facilitated the creation of 617 water districts nationwide, serving 14 million rural
residents and investing P17 billion in water supply projects. It conducts regular trainings for
water districts including Basic Policy, Development Planning, Business Plan, Customer Service,
and Financial Management, among others. Since 1973, LWUA has been financing water supply
projects through funds secured from national government subscriptions, bilateral and multilateral
fund sources, and from internally-generated funds and second generation funds. Recently,
LWUA has tapped government and private financing institutions as new fund sources. LWUA
allocates and relends these funds to water districts at competitive terms, or as grants. Under
recent amendments to its charter, LWUA assists water districts to graduate into creditworthy
status and access non-traditional sources of funds.15
The vast expertise of LWUA in facilitating water supply projects can easily be adapted to the
sanitation sector. In fact, LWUA has already begun extending its reach to include septage
management and sewerage projects. LWUA implements the Water District Development Sector
Project (WDDSP), which includes improving the capacity of water utilities outside Metro Manila
to design sanitation system improvements using low-cost solutions (e.g., septic tanks and septage
management, package treatment plants), and wastewater quality monitoring. The ADB-funded
technical assistance project will analyze the role of water districts in providing sanitation
services; and recommend options for increased involvement, including related institutional,
organizational, and financial aspects.
7.1.4 Local Implementers
Local implementers include LGUs, water districts, and private water and sanitation service
providers. LGUs and water districts have overlapping mandates to provide sewerage facilities to
the public under different laws. The LGU and water district can collaborate rather than compete
for projects serving the same constituency. For example, LGUs have the advantage of local
legislative power to mandate septic tank desludging and connection to sewerage systems, charge
fees and impose penalties and implement infrastructure projects; water districts have the capacity
to collect fees and operate the facilities. The LGU can be the project proponent and pass on the
facilities to the water district for regular operation and maintenance, while recovering its
investment from fees collected by the water district. In each area, the two entities will need to
discuss and agree on their respective roles and responsibilities.
In areas designated as Water Quality Management Areas (WQMAs), a cluster of LGUs can
collaborate on a common project that has been identified as a priority in the WQMA action plan.
The WQMA governing board can also use the Area Water Quality Management Fund to provide
incentives for member LGUs to initially develop projects, or use the fund for monitoring and
evaluation.
14

World Bank. 2007. Manila Third Sewerage Project. Report No. 36936-PH http://go.worldbank.org/BVHDACOES0. Accessed
27Apr 09.
15
LWUA primer. http://www.lwua.gov.ph/primer/primer_body.htm. Accessed 27Apr 09.

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National Sewerage and Septage Management Program Full Report

LGUs and water districts are recipients of technical assistance or capacity-development projects
implemented through national agencies such as the DILG, DENR and LWUA as described
above. Development partners have also implemented direct assistance to select LGUs in
planning and implementation of sanitation, sewerage and septage management projects.
7.2 Implementation Arrangements
Engagement with the NSSMP is purely demand-driven. The NSSMP Office and project
facilitators will do their best to promote the NSSMP and the benefits of following the
intervention framework. However, local implementers will identify projects based on their needs.
The local implementers will engage the NSSMP initially to gather information and possible
technical assistance from development partners or private sector providers of technologies and
services (Figure 3). Given that this is a new task and a new office, the NSSMP Office is not
expected, initially, to be actively involved in substantive matters such as providing technical
advice. This is better left to private sector or development partners who have the expertise and
access to the latest information and technologies.
LGUs may designate a counterpart office for coordination with the NSSMP Office. During the
NSSMP consultations, the Office of the Building Official was identified as the appropriate focal
point of the LGU since it is directly involved in granting permits for and monitoring new
construction projects that should comply with sewerage and sanitation regulations (including
linking up with the treatment facilities provided by the LGU or water district).
Local implementers have the option to develop sewerage and septage projects on their own. The
advantage of engaging the NSSMP process is for the local implementer to avail of financial
incentives, guidance in implementing programs consistent with the CWA, and for monitoring
purposes.
The second opportunity for the local implementer to engage the NSSMP is when it conducts a
self-evaluation to determine if the project it has prioritized is consistent with the NSSMP
Framework, using the Guide for Local Implementers (Annex A of the NSSMP).
If the project is consistent with the technical recommendations under the NSSMP (Section 8), it
will be easier for the local implementer to avail of financial incentives (available funding at
favorable terms) and technical assistance (from existing programs, especially with multilateral or
bilateral donor support) to implement the sewerage or septage project.

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National Sewerage and Septage Management Program Full Report

Figure 3. NSSMP Implementation Arrangements

7.3 Monitoring and Evaluation of the NSSMP


The flowchart below (Figure 4) describes the process of periodic review, monitoring and
evaluation of the NSSMP. After the initial version of the NSSMP is adopted, review and
updating becomes an iterative process anchored on reports from agencies tasked to gather
relevant data on the pre-determined measurable indicators.

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National Sewerage and Septage Management Program Full Report

Figure 4. Monitoring and Evaluation of the NSSMP

The NSSMP Office collects relevant information for tracking the progress of NSSMP
implementation towards meeting the targets. Monitoring information should be available from
and provided by the DENR, DOH, DILG and LWUA, as well as funders supporting project
development, and need not be generated by the NSSMP Office itself. Since these agencies are
key members of the NSSMP Committee, the task of providing the monitoring information should
be easier.

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8 Sanitation Planning and the Intervention and Investment


Framework
This section is a summary of how local implementers can develop sanitation plans and then
develop a comprehensive program package for their top priority interventions. More detailed
guidance and toolkits are contained in the Guide for Local Implementers (Annex A of the
NSSMP) and the accompanying CD.
8.1 Developing Local Sustainable Sanitation Plans
The NSSP contains guidance on the development of Local Sustainable Sanitation Plans,
including Local Sustainable Sanitation Communication and Health Promotion Plans. DOH will
lead the conduct of nationwide training on how to develop these plans. Sanitation planning
should be a participatory process that identifies and plans for the sustainable development and
implementation of sanitation projects in the context of social, economic, health and
environmental objectives. It brings stakeholders together to determine how to meet their
communitys long-term needs for sanitation improvements through effective programs that
combine infrastructure, promotions and supporting environments.
8.2 Developing Sewerage and Septage Management Programs
If an LGUs Local Sustainable Sanitation Program identifies septage management as a high
priority, it can join the 3-part NSSMP training on how to develop a septage management
program. All 17 HUCs outside Metro Manila should attend the 3-part training on how to develop
sewerage projects that will be organized by DPWH. The steps for developing sewerage and
septage management programs include the following (more detailed information is available in
Annex A of the NSSMP):
Step 1: Determine the Baseline
Review the baseline data that was collected during preparation of the Local Sustainable
Sanitation Program. If data is still needed on septic tanks and sewage, conduct a rapid technical
assessment using teams of barangay health workers, civil engineers and licensed plumbers. The
health workers should first be trained to conduct knowledge, attitudes and practices (KAP)-style
surveys focused on septic tank and sewage issues. The engineers and plumbers should be taught
how to evaluate things like accessibility and desludgability of the septic tanks, distance between
wells and septic tanks, proper and improper pit toilets, effluent drainage and greywater
discharge. The teams then go out into randomly chosen areas of the community to evaluate
sanitary facilities at the household level from a technical point of view and interview residents.
This step also includes looking at relevant development plans done by the local government and
the water utility, provincial development framework for municipalities under the provincial
government, and regional master plans.
Step 2: Stakeholders Workshop
Involve stakeholders early on to turn them into partners that will actively support and help
implement the plan. Organize a stakeholders workshop where the issues can be presented and
outputs developed that include identifying program goals and objectives and a consensus on the
priority issues and next steps.

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National Sewerage and Septage Management Program Full Report

For planning purposes, septage treatment programs are typically developed prior to the
implementation of sewerage systems, as properly functioning septic tanks help ensure the long
term sustainability of down-stream sewerage works. Planners should consider the following
general guidelines for timing septage management and sewerage projects:

Septage projects should be developed before sewerage projects; generally between years
1 and 3 of the sanitation planning cycle;
Sewerage projects should be developed between years 4 and 10 in the planning cycle, or
once septage programs are in place; and
For sewerage projects, interceptor systems may be built first, followed by piped sewage
collection systems.

Step 3: Empowering a Technical Working Group


The TWG is a formally recognized body that will define objectives and timeframes, review
alternatives and based on evaluation of several options, recommend preferred projects for
implementation. Members of the TWG should represent different stakeholder groups and be
appointed by the mayor or water district general manager.
8.3 Designing Projects to Achieve Results
To effectively achieve results on the ground that will be sustained over time, sanitation projects
must adequately address infrastructure, promotions and supporting environments simultaneously.
These broad categories are defined as follows:
Infrastructure, Products and Services: These are technologies and systems such as septic tanks
and toilets, septage treatment plants, desludging services and interceptor sewers;
Promotion: Promotion campaigns increase knowledge and awareness about sanitation issues,
change behavior and help to drive the demand for sanitation services and increase the willingness
to pay for these services;16 and
Supporting Environment: Local conditions that promote change and provide information,
resources and services that help the target audience sustain those changes. These include rules
and regulations, access to financing and the social aspects of community that encourages proper
behavior. It also includes the skills of staff and service providers.
See Figure 5 for a diagram of the three categories.

16

See United States Agency for International Development. 2009. Ten Steps to Bringing About Positive Change Through Your
Water and Sanitation Promotion Program (included in the NSSMP CD)

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Figure 5. Achieving Sustainable Results

When activities are happening at the


same time in the same places with the
same audiences, it increases the
likelihood of behavior change and
sustained change

Supporting
Environment

Infrastructure,
Products,
Services

Promotion

8.4 Toolkits for Developing Projects


The CD included with this document includes interactive computer-based toolkits that help
project planners determine the basic parameters of a given sanitation project. The toolkits help to
determine the following:

Volume of wastewater generated per day from the activity or source;


Area required for different wastewater treatment schemes;
Cost estimates for wastewater treatment infrastructure and operations;
Number of trucks for septage programs;
Full cost recovery period;
Recommended user fee or tariff to achieve full cost recovery; and
Attractiveness of an investment through the use of discounted cash flow analysis.

List of Toolkits

Septage Management Toolkit Used to determine sizing and costs of comprehensive


septage management program;
Sewerage Toolkit Used to size and cost interceptor sewer pipes based on flow, number
and spacing of outfalls; and
Financial Toolkit Used to estimate in more detail the financial feasibility of the project.

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Project Prioritization Toolkit Used by DPWH and DOH to rank projects for funding.

An example of the septage management toolkit is provided below in Figure 6. The user will fill
in data from their baseline survey in the yellow boxes for such parameters as number of water
district service connections and estimates of the number and average size of septic tanks. The
toolkit will automatically calculate daily flows, number of trucks, cost estimate for construction
and operations, and estimated time to achieve full cost recovery.
Figure 6. Septage Toolkit: Sample Screen Shot
Instructions: Fill in the
Name of the LGU:

yellow

boxes below. Find the calculated values for your program in the

_____________________________

blue

boxes.

Number of people in the coverage area:

650,000 people
130,000 households

1 How many households are there in the coverage area?


2 How many commercial/institutional establishments are in the coverage area

2,500 businesses/institutions

3 What is your compliance target? What percentage of the households do you think will participate?

90%

4 From the survey data, what percent of homes have septic tanks?

70%

5 From the survey, of the homes that have septic tanks, what is the percent of the tanks that are desludgable?

85%

6 From the survey, what is the average volume of residential septic tanks in the target community?

3 cu. m

7 From the survey, what is the average volume of commercial/institutional septic tanks in the target community?

10 cu. m

8 Septic tanks should be desludged every 3 to 5 years. What is the target desluding frequency for your program?

5 years

9 How many days a week will your program operate?

5 days per week

The design flow of your septage treatment facility is

191 cu. m per day*

Working days per month:


Working days per year:

3,897 cu. m per month


46,769 cu. m per year

In addition to the toolkits, the CD also includes sample forms and templates, including a site plan
checklist that can be used to verify that all of the required information is included on the site
plan.
8.5 Project Intervention and Investment Framework
The outputs from the sanitation planning process include a listing of septage management and
sewerage projects that are designed to address the priority issues and to achieve long-term
improvements in the community. While the projects may have some commonalities for all cities
and municipalities in the Philippines, specific projects must be customized for the communities
they will serve. This is because there is great variability in population density, variance in
settlement pattern, and dominant geophysical characteristics, all of which have a bearing on the
specific nature of the project. The following intervention and investment framework (the
Framework) shows how LGUs can combine program components to achieve long-term
sustainability for their sewerage and septage management projects. These are simply examples
for illustrative purposes. The Framework is divided into several sections to organize information
about projects, which can then be used to develop project briefs and funding requests. Figure 7
below shows sample program packages for a Division 1 LGU. The entire Framework with
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sample program packages for all 4 divisions is on the CD that accompanies this report. And the
NSSMP Guide for Local Implementers provides more detailed planning guidelines and
timeframes for project planning, and guidance on selecting appropriate technologies given local
constraints.

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Figure 7. Intervention and Investment Framework with Program Packages for Division 1
Part 1

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National Sewerage and Septage Management Program Full Report

Part 2

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The following is a description of the Framework sections. Once compiled, an LGU can use this
information for project briefs or funding requests.
8.5.1 Framework Section 1: Information about the LGU
In the Framework, LGUs are characterized primarily by population. Secondary characteristics of
population density, population settlement patterns and geophysical characteristics should be
considered by local planners. These secondary characteristics, and how they relate to developing
effective sanitation programs, are discussed below:
8.4.1.1 Population density
Densely populated urban areas generate large volumes of wastewater but often have
very limited land available for treatment plants. Sewage and septage treatment
systems for these communities generally rely on technologies that are highly
mechanized and energy intensive that take up less space. For planning purposes,
septage treatment programs are typically developed prior to the implementation of
sewerage systems, as properly functioning septic tanks help ensure the long-term
sustainability of down-stream sewerage works. Planners should consider the
following guidelines for timing septage management and sewerage projects:
o Septage projects should be developed before sewerage projects; generally
between years 1 and 3 of the sanitation planning cycle;
o Sewerage projects should be developed between years 4 and 10 in the
LGUs sanitation planning cycle, or once septage programs are in place.

Moderately populated urban areas. LGUs with moderately dense population centers
may have more open space that would allow for less mechanized wastewater
treatment systems. Moderately dense population areas generally require the following
sanitation interventions:
o Septage management. Since most homes and businesses utilize septic
tanks, septage management is still a priority for moderately dense
communities. Septage programs should be developed between years one
and three in the sanitation plan;
o Sewerage. Areas of moderate population density may have more open
space, which could allow for decentralized sewage and treatment, and less
mechanized treatment options. The sanitation planners should work
closely with planning and zoning officials at the city level with sewerage
implementation generally occurring during years 4 to 10.

Sparsely populated areas may have more land available but limited electrification.
Septic tanks and point source treatment systems for these communities may be less
important than providing for basic sanitation needs. Community assessments can help
make this determination. Sanitation interventions for these areas may include:
o Programs to address unimproved pit toilets or open defecation;

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National Sewerage and Septage Management Program Full Report

o Point source treatment. Rural areas still may have institutions such as
markets, slaughterhouses, schools and other public facilities that will
require wastewater treatment; and
o Agricultural treatment. Discharges from agricultural operations such as
pig farms and poultry houses should be evaluated and addressed.
8.4.1.2 Variance in settlement patterns. This refers to the number of rural versus urban
barangays in the LGU. Understanding how population is spread out over the LGU will
provide clues as to the prioritization of sanitation interventions:

Mostly urban barangays. These LGUs should focus on those interventions


identified for urban areas septage programs first, then sewerage;
Even mix of rural and urban barangays. These LGUs should focus on septage
management and sewerage for urban areas, while at the same time, planning and
implementing projects to improve rural sanitation; and
Mostly rural barangays. These LGUs should focus on reducing open defecation,
upgrading unimproved pit toilets, institutional point sources and agricultural point
sources.

8.4.1.3 Dominant geophysical characteristics. Understanding the topography, elevation and


other geophysical characteristics provides clues to appropriate wastewater interventions and
the challenges presented during implementation:

Coastal and low-lying areas. Common issues include high groundwater, localized
flooding near coastal areas and rivers. Feasibility studies for sewerage
infrastructure should include flood zone analysis and impact of interventions on
drinking water aquifers. Mangrove forests may provide opportunities for low cost
wastewater systems using constructed wetlands; and
Hilly and mountainous areas. Common issues include difficulty in implementing
community-wide sewerage projects as the cost for pumping becomes the limiting
factor. Explore opportunities of decentralizing wastewater treatment.

8.5.2 Framework Section 2: Sanitation Plans and Project Priorities (Interventions)


In this section, the project priorities are identified and should correspond to the local sustainable
sanitation plan.
8.5.3 Framework Section 3: Preferred Technology Infrastructure, Product or Service
Septage management and sewerage projects are technology intensive. They utilize systems for
collecting wastewater (trucks for septage, sewer pipes for sewerage) and treating wastewater.
Many interventions rely on services, such as those that organize septage collection, operation and
maintenance of sewage treatment and collection systems. There is a great variety in the type of
technology that might be used for a particular intervention. Selecting the specific product,
technology or service is determined through a feasibility study where several options are
compared and contrasted, and the most cost-effective and sustainable technology component is
selected.

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Selecting a preferred technology relies on knowledge of the proposed site and characteristics of
the wastewater to be treated. The NSSMP provides some guidance through the toolkits provided
in the Guide for Local Implementers. Wastewater treatment technology choices are generally
based upon five variables:

Available land for the treatment system;


Physical characteristics of the site;
Availability of reliable electrical power;
The nature of the wastewater to be treated; and
The classification of the receiving water.

Project implementers should use the guidance provided in the Guide for Local Implementers for
more information on how to select technologies for particular projects.
8.5.4 Framework Section 4: Indicators
The NSSMP tracks the number of people with improved access to sewerage or septage.
Determine the number of people in the coverage area and add this number to the framework.
This will help to identify the cost of the improvements on a per capita basis.
8.5.5 Framework Section 5: Cost
Project costs are broken down into three categories that are related to the costs for installing,
operating and maintaining the sewerage or septage system or other intervention. In general,
septage programs can be fully cost recoverable through user fees. Sewerage projects can be very
expensive and will generally require a mix of LGU-generated funding and share from national
government. Other programs, such as controlling open defecation, may require funds from the
LGU that may never be recovered. The Framework includes sections for listing:

Capital expenditures (CAPEX). This is the estimated cost to install the infrastructure;
Operation expenses wastewater treatment. Wastewater treatment systems require
continuous operation and maintenance for the life of the facility. The annual costs for
operating and maintaining the system is provided here;
Operation and maintenance collection system. Collection systems, including pipe lines
and pumping stations for sewerage projects, or septage trucks for septage projects also
require ongoing operation and maintenance expenses; and
Number of years for full cost recovery.

8.5.6 Framework Section 6: Supporting Environment


This refers to the user fees, funding sources including the amount of national government
subsidy, and policies that make sanitation projects possible and sustainable.

User fees and connection charges


o User fee. This is typically a monthly charge expressed as a flat fee, or
sliding scale based on a users ability to pay. The NSSMP recommends that
user fees should be developed so that the combined cost for water and
sanitation will not exceed 5% of the median family income; and

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National Sewerage and Septage Management Program Full Report

o Connection charges. These are typically one time fees in addition to user
fees that cover the cost of connecting a home or business to the sewerage
system.

Funding sources and amount of national government subsidy. There are many funding
sources available to local implementers of sanitation projects. The list includes:
o User fees and connection charges;
o Co-financing from DPWH;
o Funding from Water Quality Management Funds;
o Private sector financing such as concession agreements, management
contracts and others ; and
o Government and other private banks.
When completing this section of the framework, local implementers will determine
which funding sources are most appropriate for their projects, and how much, if any,
national government subsidy is required.

Policies, social aspects and skills. In this section of the Framework, project proponents
will determine which policies and programs will be put into place to support the
sustainability of the project. The following are some examples:
o Local sustainable sanitation plan. Each LGU should complete their plan,
which will identify the priority sanitation interventions, timeframe for
implementation and number of people with improved sanitation;
o Local septage ordinance. Projects that include septage management should
be accompanied by a local septage ordinance that is promulgated by the
LGU. This will specify the program mechanics, user fee system and
penalties for non-compliance; and
o Training and capacity building programs. Programs geared towards
developing skills for local officials, sanitation workers and the private
sector.

8.5.7 Promotion Campaigns


This section of the Framework is used to identify the type of promotion campaign that will
support the project. The USAID Ten Steps to Bringing About Positive Change Through Your
Water and Sanitation Promotion Program toolkit is included on the CD accompanying this
report. Decision makers can utilize the toolkit to determine which campaigns are most
appropriate for the project. Some examples include:

Promotion campaigns designed to increase willingness to pay for sanitation services;


Promoting behavior change, such as desludging septic tanks;
Campaigns that encourage proper use and maintenance of toilets; and
Campaigns that target homeowners and their proper use of septic tanks.

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National Sewerage and Septage Management Program Full Report

Financing Projects

9.1 NSSMP Financing Framework


The NSSMP financing framework draws from the lessons learned from the financing policies of
other environmental projects in the Philippines. It can be used to attain project financial
sustainability and ensure cost-effective utilization of funds by LGUs, water districts, WQMAs
and concerned NGAs.
The framework recommends the following principles:

The NSSMP adheres to the leadership of the private sector in the provision of
infrastructure through the use of the public-private partnerships (PPP), particularly
build-operate-transfer and its variant modes. This will enable the government to
dedicate a greater amount of resources for basic services and other infrastructure which
may not be financially viable for the private sector. The framework encourages LGUs
and WDs to develop approaches to cooperate with the private sector. LGUs/WDs
should prepare a Project Brief to be submitted to potential private investors. BOT
variants applicable to septage management and sewerage projects are detailed in this
chapter.

Promote cost sharing between the national and local governments for sewerage projects
that require significant investment requirements. DPWH will channel funds to LGUs to
complement local appropriations. While cost sharing will give incentives to LGUs to
proactively embark on sewerage projects, a cap of 40% national government share has
to be imposed to rationalize distribution of national government resources. This may
also include mainstreaming sanitation project financing in official development
assistance (ODA)-sourced lending facilities.

Enhance the capacities of LGUs and WDs in project development and DPWH in
project evaluation and monitoring by providing capacity building training, focused
technical assistance and promoting best practices. The supervisory capabilities of
concerned government agencies will be strengthened to ensure transparency and
integrity in project-related transactions.

Recover costs to ensure project sustainability. The business models included in this
report integrate cash inflows from user fees that will meet not just the cash flow needs
of the project but also achieve cost recovery of local investments over the long term.
User fees must consider affordability, follow public consultations and be supported by a
local ordinance. Costs must cover both capital and interest on infrastructure
investments as well as operations and maintenance over the life of the project.

Encourage private commercial and thrift banks and not just government financing
institutions (GFIs) to lend more for sanitation projects. A loan guarantee scheme to
expand the credit availability of private funds will not only enhance lenders interest
but may also result in lower interest rates since another party acts as guarantor, thereby
lowering the lenders risks.
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National Sewerage and Septage Management Program Full Report

Encourage projects that are supported by local ordinances. One example of a


comprehensive ordinance is one that requires mandatory desludging of septic tanks and
also gives guidelines on the type of sanitary facilities that may be built in the locality.

9.2 Funding Process


Figure 8 lays out the key aspects of the funding processes that have been built into the
framework. NSSMP proposes different funding process for septage management and sewerage
projects. While septage management requires smaller amounts, sewerage projects will need large
investments and therefore merit cost sharing from the national government.
The process follows these steps:
A. Septage Management Projects
1. The LGU/WD, after it has determined the technology to be used in its project, estimates
the capital and the related operating costs of the project. A spreadsheet-based toolkit,
which is included in the accompanying CD, can be used to make rough estimates of the
capital and operating costs and minimum user fee based on project parameters. A
separate financial toolkit estimates the financial feasibility of the project. It contains
financial models that approximate and analyze the impacts of the costs and benefits for
four types of projects and LGUs. The models have several tabs and easy to follow input
cells that automatically calculate the most frequently used decision criteria in business
today, such as: net present value (NPV), internal rate of return (IRR) and payback period.
The models use data and assumptions on the volume of water consumed in the service
area, tariff, operating and maintenance costs and projected growth rates. They also
present different financing sources and mix. It is an effective tool for making an initial,
rough estimate of the financial parameters of project and whether it can pay for itself or
not. When negative results are realized, a review of the tariff structure and expenditure
items can be done.
2. An iterative process can be performed to calculate minimum user fees depending on loan
tenor, loan-grant-equity mix and scale of operations (size of service area to be covered,
percentage of households that will participate, etc.).
3. After completing these analyses, the LGU/WD integrates the project into the LGUs local
development plan or WDs annual investment plan and indicates which components of
the project it can fund. If the LGU determines that it can source all capital investment
requirements from its own development funds, the local budgeting process of the LGU
takes place (see box). The WD can likewise follow its usual budget and disbursement
process if it has sufficient funds.

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The Local Budget Process


1.

Pre-budget preparation (Annual Investment Program)

2.

Budget call - signal to prepare proposals from departments

3.

Budget forum - all departments explain policies

4.

Technical budget hearings by finance committee

5.

Finance committee prepares local expenditure program for budget year and sources of
finance (Executive Budget prepared not later than July 15)

6.

Budget message to Sanggunian - executive budget is submitted by the LCE to the Local
Sanggunian for authorization not later than October 16

7.

Budget authorization - ordinance passed by Sanggunian where budget estimate


becomes annual appropriation

8.

Budget review (next level LGU, HUC DBM) - examination of the appropriation
ordinance as to its compliance with the budgetary requirements, general limitations and
other provisions of law

9.

Budget execution - implementation of the budget to achieve the local government goals
and objectives. Result: Funds are obligated for specific purposes; estimated incomes
received and collected

10. Budget accountability -accurate recording and reporting of incomes and expenditures;
monitoring and evaluation of financial performance,
11. Accomplishments with targets in the work plan

4. If the LGU decides that internal funding will not be used or is not adequate, it looks for a
private sector investor and explores PPP options. At this point, the LGU/WD prepares a
Project Brief for submission to the potential private investor/s. The LGU/WD gives
investors an opportunity to react to the preliminary proposal, and to submit alternative or
amended proposals to it. These are then discussed with the investors concerned. If it
succeeds with the negotiation, it then follows prescribed procedures that are available in
the NSSMP Guide.
5. If the PPP attempt is not successful, the LGU/WD can submit the project brief to
financing institutions such as Land Bank of the Philippines (LBP), Development Bank of
the Philippines (DBP) or any private bank. Water districts may also borrow from LWUA
while LGUs can access funds through the MDFO. The spreadsheet-based toolkit contains
a tab that estimates the LGUs borrowing capacity based on historical LGU data and
assumed interest rate and tenor of the loan. WDs do not have a borrowing cap but are
limited by its capacity to increase tariff through an internal policy of setting tariffs that
are not more than 5% of the average household income in the community.
6. GFIs, MDFO and some private banks through bulk loans from GFIs are conduits of
Official Development Assistance (ODA) funds that give project loans on concessionary
terms. For small water districts, thrift banks other than LWUA can also be sources of
funding. These financing institutions make preliminary assessments of the financial
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National Sewerage and Septage Management Program Full Report

capacity of the borrower and feasibility of the project and soon after, notify the proponent
(LGU or WD) of their decision. The bank gives instructions on how to proceed with the
loan application. In most cases, a pre-feasibility study is required by the banks.
7. Once financing is approved, the local implementer can now proceed to project
implementation subject to the provision of the Procurement Law.
8. In the event that a loan is not possible, the LGU/WD may review its Project Concept and
consider phasing of project implementation.
DOH, having already taken the lead on regulating septage operations, can assist LGUs in septage
management programs. DOH has performance-based grants available for LGUs to use for
project preparation costs, and sanitation can be added to the annual operating plan of provinces
so that funds can be allocated for sanitation projects. DOH also has local representatives on the
ground, the sanitary inspectors, who can assist LGUs in project development for SMPs.
B. Sewerage Projects
Sewerage projects are considered major infrastructure projects like roads and bridges and are
generally beyond the ability of the LGU to develop. DPWH is the natural choice to undertake
and share in the cost of large infrastructure projects from its annual general appropriations. As
proposed, the amount to be financed by DPWH is not more than 40% of the project cost. The
remaining 60% can be sourced from any of the financing sources discussed in the succeeding
topic (9.3). Presented below are steps that they can follow for either of the two options
recommended by NSSMP.
Option 1 suggests that the local implementer, after it has determined that it cannot fund the
project with its internal resources, can look for a private sector partner that will finance 100% of
the project cost. In the event that it cannot get the private sector to cover all the costs, the LGU
and water district may enter into a partnership to share the capital costs. The LGU may then
request up to 40% of the project costs from the national government. The remaining 60% will be
financed by the LGU and the water district, mostly through credit financing.
Option 2 considers the possibility that the LGU and WD enter into a partnership agreement first,
then together secure financing for 60% of the project cost while the national government will
finance 40%. In this case, either the LGU or WD considers the private sector as a potential
source of financing to cover its share of the project cost representing 30% each of the total cost.
In case no private sector partner responds to the invitation, the LGU or the WD or both can avail
of credit financing.

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National Sewerage and Septage Management Program Full Report

Option 1:
1. After completing step 3 of the SMP funding process, and the LGU decides that internal
funding will not be used, it looks for a private sector investor to finance 100% of the
project cost. The LGU follows the same procedure as stated under Step 4.
2. In the event that it cannot get a private sector to cover all the costs, the LGU and Water
District may enter into a partnership agreement to share in the 60% of the project cost and
source the remaining 40% from the national government.
3. Both LGU and WD may source the 60% from financing institutions and follow step 5 of
the SMP funding process.
4. Once financing for the 60% is secured, the local implementers can submit the project
proposal to DPWH for technical evaluation.
5. DPWH reviews the proposal and approves those that are found to be eligible for NG cost
sharing. When national cost share has been approved and budgeted, the LGU will
develop a financial plan with the NSSMP Office to determine when drawdowns and
disbursements will be made, and how the project will be implemented.
6. DPWH certifies to DBM that the LGUs proposal has been approved and ready for
payment. DBM deposits funds to the bank with instructions to credit or deposit the
amount to the account of the LGU. This arrangement is covered by a Memorandum of
Agreement (MOA) between the LGU and DPWH.
7. LGU and WD proceed with project development and implementation. During
implementation, the LGU will submit accomplishment reports to the DPWH NSSMP
Office and DPWH NSSMP office will monitor the completion of the project.
8. If a negative feedback is received at any point of the process flow, the LGU/WD may
review its Project Concept and consider phasing the project implementation.
Option 2:
1. After completing step 2 and having determined that internal funding is not possible, the
LGU and Water District immediately enter into a partnership agreement to share 60% of
the project cost and source the remaining 40% from the national government.
2. The LGU and WD will separately secure financing for half or 30% each of the 60% local
share. Under this option, either the LGU or WD can look for a private sector to cover its
share in the project cost, following the prescribed procedures that are available in the
NSSMP Guide.
3. In the event that no private sector agrees to participate, the LGU or the WD or both can
avail of credit financing and follow Steps 2 to 8 of Option 1.

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Figure 8. Septage Management Project Financing

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Figure 9. Sewerage Project Financing - Option 1

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National Sewerage and Septage Management Program Full Report

Figure 10. Sewerage Project Financing - Option 2

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National Sewerage and Septage Management Program Full Report

9.3

Sources of Financing

9.3.1 User Fee


Cost recovery is essential for insuring that wastewater services will be sustainable and is
consistent with the polluters pay principle. Local implementers should charge user fees not just
to meet cash flow needs but also to achieve, over the long term full, cost recovery of the amounts
they have invested. The share of the national government may not be recovered to bring down
user fee and ensure affordability. For effective pricing, the LGU/WD will need to consider
affordability, willingness to pay and the effects of the pricing scheme on revenues.17 They can
estimate users willingness to pay by conducting surveys. Prudently prepared surveys must be
used to generate data from the households and establishments that will be the basis of an
acceptable and affordable user fee.
A common way to collect user fees is by bundling it with the water utility bill. Each property
owner pays for both water supply and sewerage or septage services through their monthly water
utility bill. In this way, the cost of providing management services is spread out over five years
(recommended regular desludging cycle). This approach works well if a water district is already
providing sanitation services or has the capacity to provide the services under the new program.
In areas unserved by the WD, septic tanks can be desludged and households or commercial
establishments can pay for the service through monthly payments at the time of septage
collection or the LGU can add the fee onto the property tax bill.

17

Two potential schemes are socialized pricing and a uniform volumetric charge based on the volume of water supply used.

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National Sewerage and Septage Management Program Full Report

Recommendations on Cost Recovery Policy


1. Septage management and sewerage tariffs should be pro-poor: combined water
supply and sanitation fees should generally not exceed 5% of the average monthly
income;
2. Commercial, industrial, institutional, and agricultural dischargers should pay
proportionally more for sanitation services based on the volume and strength of the
wastewater discharged. This will encourage conservation and pre-treatment of high
strength wastewater. Fees for these entities should be based on water consumption
as well as the number of septage loads per 5 year period for septage projects, and the
quality of the effluent discharged for sewerage projects;
3. Homeowners with larger septic tanks that require multiple loads for desludging
should pay more for desludging services than homes with smaller tanks requiring
only one load. It does not necessarily follow that those homes with larger tanks use
more water, while in general terms this may be true. Larger tanks that require
multiple trips by the desludging truck should pay a set fee for each additional load
with only the first load being covered by the monthly charge;
4. When possible, septage tariffs should be structured so that there is a small surplus
above full cost recovery. This can be used to build up a fund for future sewerage
services or can be used by the local implementer to provide related services to the
poor. These services may include:
a. Constructing septic tank access ports;
b. Upgrading septic tanks where they pose a public health hazard; and
c. Providing emergency response to septage spills as needed.

9.3.2 LGU Traditional Fund Sources


Figure 11 below offers a broad summary of fund sources of most local government units for their
operating and capital financing needs. The percentages presented are based on the Commission
on Audits report of the consolidated cash inflows of all LGUs in 2007. The diagram shows only
those funds that have directly flowed to the treasury of the LGUs and were used to finance their
operating, debt servicing and infrastructure needs. The funds include LGUs regular income,
subsidies from national government agencies, borrowings and grants.

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National Sewerage and Septage Management Program Full Report

Figure 11. Percentage Distribution of Fund Sources

Regular
income (93%)

Borrowings
(4%)

Total Annual Cash


Inflows of LGUs
(100%)

Government
subsidy (2%)

Others (1%)

Source: 2007 Commission on Audit Annual Report

Regular Income
Regular income is sourced mostly from national government transfers and locally generated
receipts from real property taxes, fees, business taxes, licenses and economic enterprises.
National government transfers to LGUs are of three types: 1) formula-based block grants such as
the Internal Revenue Allotment (IRA); 2) origin-based share in national government revenues
(i.e., share in national wealth and other taxes); and 3) ad hoc categorical grants. Under the Local
Government Code (LGC), the aggregate IRA of LGUs is set at 40% of the actual internal
revenue tax collections of the government three years prior to the current year. The aggregate
IRA is then divided among different local government levels as follows: 23% to provinces, 23%
to cities, 34% to municipalities and 20% to barangays. The IRA share of each tier of local
government is then apportioned to individual LGUs based on population (50%), land area (25%),
and equal sharing (25%).
The IRA is the most significant revenue source, especially for third to sixth income class18
LGUs. LGUs are required to set aside at least 20% of their IRA for development projects or
programs (Local Government Code) Bureau of Local Government Finance (BLGF) reports that
in 2007, the ratio of IRA to non-IRA income is 2:1, which is similar to previous years. The
figures are based on unaudited Statements of Income and Expenditure (SIE) that LGUs submit to
BLGF quarterly. Figure 12 illustrates the LGUs continuous dependence on the IRA, which
makes up most of the external funds. The proportion, however, changes significantly when
broken down by LGU level. Provincial and municipal LGUs are still very dependent on external
sources mostly the IRA, while cities are at a point where locally sourced income almost matches
external sources (Figure 13). This only proves that, on average, cities are financially stronger
18

An Executive Order in 1987 divided LGUs into six classes according to the average annual income realized during the last four
calendar years immediately preceding the year of reclassification. Reclassification is done every four consecutive years by the
Bureau of Local Government Finance (BLGF) of the DOF.

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National Sewerage and Septage Management Program Full Report

than municipalities and provinces and can therefore pursue more infrastructure projects such as
sanitation. Sanitation awareness and technical assistance from concerned agencies should drive
these LGUs to put sanitation on their priority list.
Figure 12. Source of 2007 LGU Regular Income

33%

67%

External Sources

Local Sources

Source: BLGF 2007 Statements of Income and Expenditure (SIE) Publication

Figure 13. Source of LGU Regular Income by LGU Type


90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Province

City

External Sources (including IRA)

Municipality
Local Sources

Source: BLGF 2007 Statements of Income and Expenditure (SIE) Publication

Non-IRA Transfers
Non-IRA transfers can come from the Priority Development Assistance Fund (PDAF), which is
allocated to members of Congress for discretionary spending at the LGU level; share of national
wealth which comes from the 40% LGU share of tax collections and royalties; and general
appropriations of other NGAs. These general appropriations are also channeled to LGUs to start

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National Sewerage and Septage Management Program Full Report

up development projects especially if the final benefits of the project accrue to a large percentage
of the population in a particular area.
9.3.3 Public-Private Participation
Since LGUs have other many competing demands for their funds, they may not be able to fund
sanitation infrastructure solely from regular income. LGUs can look to the private sector for
capital financing and delivery of septage collection and treatment services on a contractual basis.
Table 5 presents a few examples of PPP schemes that have been used successfully by several
LGUs in the Philippines.
Table 5. Examples of Public-Private Partnerships
Type of PPP
Concession contract
Joint Venture
Design, build and lease
Franchise to private operator

Examples
MWSS (Manila Water and Maynilad)
Subic Water in Subic Bay; Bohol Water
Supply Project
Tabuk, Kalinga; Castilla, Sorsogon
General Trias, Cavite; Balibago Calapan
Waterworks Development Corp.

Joint Venture
Through a joint venture (JV) agreement, the LGU can jointly undertake sanitation programs and
projects with another party who is willing to contribute assets and share in the risks. A JV
between an LGU and a private sector partner contains some restrictions regarding
implementation. These are: 1) the undertaking should be within the expressed or implied power
of the LGU; 2) the project should operate within the territorial boundaries of the LGU concerned,
unless several LGUs are grouped together as partners; and 3) the project must be included in the
local development plan. In as far as the JV contract is concerned, the LGU must 1) validate the
authority of the contracting official; 2) the contract must go through a general review and
approval process (council resolution, posting, Commission on Audit (COA) review, conformity
with approving authority); 3) the terms of the contract should not be grossly disadvantageous to
the LGU; and 4) the LGU personnel or officers should have no direct or indirect financial or
material interest in any transaction which requires the approval of their office.
Build-Operate-Transfer
A BOT is a type of arrangement in which the private sector builds an infrastructure project,
operates it and eventually transfers ownership of the project to the government. In some
instances, the government becomes the firm's only customer and promises to purchase a
minimum, predetermined amount of the project's output. This ensures that the firm recoups its
initial investment in a reasonable time span.
A BOT arrangement is typically used in complicated, long-term projects such as power plants,
roads and water and wastewater treatment facilities. To further improve the flexibility of BOT
projects, the government continues to study other modalities like concession agreements,

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National Sewerage and Septage Management Program Full Report

management contracts and franchise agreements for possible inclusion as additional variants of
BOT under the law.
Bonds
Bonds are usually issued to pay for capital improvement projects rather than current operating
expenses. The principal amount of the bond is made out in standard denomination, payable at a
fixed time in the future while the interest is given either periodically or at maturity. LGUs must
meet three basic conditions for a bond issuance: 1) the project must be revenue-generating; 2) the
project must be part of the local development plan; and 3) the amount must be within the
limitations on debt service capacity and maximum borrowing limit prescribed to LGUs by the
Local Government Code.
9.3.4 Official Development Assistance Fund
ODA funds that come from foreign governments have decreased by 29% from US$13.3 billion
in 2000 to US$9.5 billion in 2006. Although it gradually picked up in 2007 by 3% (along with a
decrease in world rank for GDP growth, a relative indicator for developing countries, from 2005
to 2006), it has still remained in the P7 billion level.19 But since ODA is given according to the
need and income of the recipient country, the decreasing ODA is a positive indication that real
GDP is increasing over time. The GoPs ODA loans in 2007, as in 2006, were still mostly
implemented by NGAs, getting 68% of the total loan (91 loans amounting to US$6.585 billion).
The rest were implemented by GFIs while a very minimal 0.4% of the loan portfolio was
implemented by the Provincial Government of Lanao del Norte (Figure 14).
Figure 14. 2007 Distribution of ODA Loans

GFI, 7.0%

LGU, 0.4%

GOCC,
25.0%

NGAs, 68.0%

19

16th ODA Portfolio Review, NEDA 2007.

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National Sewerage and Septage Management Program Full Report

ODA Funds with Financing Institutions as Conduits


GFIs on-lend ODA funds, sometimes complemented by their internally-generated funds, directly
to LGUs through focused project financing programs. Some private financing institutions (PFIs)
also offer loans using ODA funds (borrowed by these private banks from GFIs on a wholesale
basis) supplemented by their own funds. The MDFO of the Department of Finance (DOF), on
the other hand, provides a mix of grants and loans to LGUs (depending on income class) to
finance revenue generating projects, social infrastructure and environmental projects. In 2007,
the government appropriated a total of P1.1 billion to MDFO to be used for lending operations to
local governments. Generally, the loans to LGUs by either the GFIs or MDFO have a repayment
period of 15 years with a three-year grace period on the amortization of the principal. Although
LGUs are allowed to borrow, the Local Government Code (LGC) puts a ceiling on debt servicing
which should not exceed 20% of their regular income.
While the amounts disbursed by banks specifically for sanitation are not immediately available,
there are records of disbursements that went to environment-related projects indicating that the
GFIs have recognized the sector as an investment area. LBP reported an increase of 2% in 2008
loans to the sector compared to 2007. This translates to additional investments of P4 billion in
one year funded by LBP (Table 6). Moreover, its share in the total loan portfolio is relatively
significant compared to the other sectors. LBPs Support for Strategic Local Development and
Investment Project (S2LDIP), under the $100 million facility from the World Bank, offers loans
for sanitation projects to LGUs, utility operators and private sector in cooperation with LGUs
(see details in the NSSMP Guide for Local Implementers).
Table 6. LBP Comparative 2007 and 2008 Loan Portfolio (in billion pesos)
Sector

2008

2007

Farmers and fisherfolk

21.4

12%

18

10%

Micro enterprise and SMEs

18.6

10%

19.9

11%

Livelihoods

3.3

2%

2.3

1%

Agribusiness

20.4

11%

13.7

7%

Agri-infrastructure (LGUs)

19.7

11%

17.4

9%

Agri-related projects (GOCCs)

24.9

13%

13

7%

Environment-related projects

16

9%

12.2

7%

Total sector loans

124.3

67%

96.5

52%

Others

60.4

33%

38.1

21%

Total Regular Loan Portfolio

184.7

100%

134.6

73%

DBPs Environmental Development Program (EDP) offers loans for the construction of
wastewater and sewerage treatment facilities and pollution prevention initiatives. DBP is also the
administrator of the Philippine Water Revolving Fund (PWRF), a joint undertaking of the
governments of Japan, Philippines, and the United States. PWRF aims to leverage ODA/JICA
funds with private sector money for water supply and sanitation financing. The leveraging is

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implemented through a co-financing arrangement, between DBP and a private financing


institution (PFI). PFIs will be given two types of credit enhancements: credit and liquidity risk
covers. On the former, partial credit risk guarantee is provided by LGUGC and the USAID
Development Credit Authority. For the latter, liquidity cover is provided by DBP and MDFO
through stand-by credit lines to PFIs, to enable lengthening of the PFI loan tenor beyond the
current 10 years20. The PWRF will initially provide funding for about $30 million worth of water
and sanitation projects for both public and private water service providers. PWRF and EDP have
the potential to finance a large number of septage management and sewerage projects across the
country.
Most of the lending windows of the MDFO that are now using second-generation funds (loan
repayments from LGUs) and ODA funds offer maturities up to 15 years. MDFO, through its
PWRF-Standby Credit Facility (PWRF-SCF), will also deepen the leveraging of private funds,
starting with water supply and sanitation projects by extending the stand-by credit line to LGUs
in order to lengthen the tenor of PFI loans to make financing affordable to LGU water service
providers. Hence, LGUs can now tap private bank funding at long-term tenors. Moreover, the
stand-by credit line may also be tapped for interest rate caps. Floating interest rates (currently
low and thus favorable to borrowers) are offered by private banks; should the interest rate
increase to a pre-determined cap, MDFO will re-finance the PFI loan at a fixed interest rate,
equivalent to the cap.
ODA Grants
Grant elements of concessionary loans have also been decreasing since 2006. The grant element
is the reduction enjoyed by the borrower when debt service payments expressed at their present
values discounted at 10% are less than the face value of the loan and grant. Per the ODA Act,
each ODA loan must have a grant element of at least 25%. MDFO is the main conduit of grant
funds awarded to a specific tier of LGUs. In line with the LGU Financing Framework developed
by the DOF, MDFO focuses its assistance on the less creditworthy LGUs and projects with
developmental objectives.
NGAs like the Department of the Interior and Local Government (DILG) can also channel grant
funds to LGUs by implementing foreign-assisted projects for them.
LWUA Lending Facility
LWUA has the mandate to provide funding for water and sanitation projects, but to date has only
funded water supply projects. However, agency officials have expressed interest in playing a key
role in encouraging water districts to develop septage management and sewerage programs and
in providing financing for them. LWUA is able to lend approximately $6 million to water
districts for water and sanitation projects.

20
PFI loans will be amortized over 15-20 years to match the maturity of the DBP loan. At the 10th year, the PFI has the option of
extending the tenor or terminating the loan, in which case it will get a balloon payment for the outstanding balance. The source of
the balloon payment will be the stand-by credit line.

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National Sewerage and Septage Management Program Full Report

9.4 Local Government-National Government Cost Sharing


The current DOF LGU credit policy framework states that the higher-income and more
creditworthy LGUs can avail of private commercial financing; the middle layer of LGUs can go
to government banks that use both ODA and bank funds; while the lowest layer LGUs can be
served by MDFO using ODA funds for loans and grants and technical assistance (Figure 15).
Particularly, under the brown environment sector, DOF gives grants to all levels of LGUs except
for first up to fourth class cities (Table 7).
The Solid Waste Management Commission (SWMC) has designed a new cost-sharing approach
that is compatible with the needs of LGUs. The new approach recognizes that the first to fourth
class cities are the ones that need facilities more because of the large volume of waste generated
in these areas and therefore, need more financial support from the government.
In 2009, the NEDA Board spurred investments in solid waste management facilities and projects
by giving grants to all levels of city LGUs, including first to fourth class cities. DOF Order no.
40-09 issued on December 3, 2009 allowed national government to share the cost of constructing
solid waste management facilities of up to a maximum of 40% with first and second class cities
and 25% with third and fourth class cities (Table 8). A new cost sharing scheme, patterned after
the solid waste management scheme, is being proposed for sewerage projects (see below).
Figure 15. LGU Credit Financing Policy
MDFO/other
Grants + TA

MDFO Credit
+TA

Marginally
creditworthy LGUs

GFIs/BOT

Private Sources of Credit


(Bonds, BOT)

Creditworthy
LGUs
but
unable to tap
market

Fully
creditworthy
LGUs

Non-credit
worthy LGUs

Financially
Weakest
6th Class

LGU Income Class

Financially
Strongest
1st Class

Table 7. NG-LG Cost Sharing for Brown Environment


LGU
Class

Income

1st and 2nd


3rd and 4th
5th and 6th

Municipalities and Provinces (in %)


LGU Share
National
(Loan/Equity)
Government
60/20
20
45/15
40
40/10
50

Cities (in %)
LGU Share
National
Government
100
0
100
0
80
20

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National Sewerage and Septage Management Program Full Report

Table 8. NG-LG Cost Sharing for Solid Waste Management Projects


LGU
Class

Income

1st and 2nd


3rd and 4th
5th and 6th

Municipalities and Provinces (in %)


LGU Share
National
(Loan/Equity)
Government
60/20
20
45/15
40
40/10
50

Cities (in %)*


LGU Share
National
(Loan/Equity)
Government
60
40
75
25
80
20

*excluding Metro Manila LGUs

9.4.1 LGU Expenditures for Sanitation


The 2007 BLGF aggregate Statement of Income and Expenditures (SIE) publication reports that
the total IRA of all LGUs reached P148 billion with P42 billion generated each by provinces and
cities, while municipalities received a total of P63 billion. The average IRA growth rate is
computed to be 6.67% annually so that from the 2007 IRA, it is projected that IRA will reach
P51.2 billion and P76.8 billion for cities and municipalities, respectively.
Total expenditures of all LGUs in 2007 reached P206 billion but no significant amount went to
sanitation. The largest expenditure went to operationalization of all the local offices (41%);
economic services was the second largest, accounting for 15% of total expenses. The same report
states that Health, Nutrition and Population Control covers sector expenditures for health
programs including medical, dental and health services; planning and administration of nutrition
programs; population and family planning programs; and administration of these programs while
the Housing and Community Development sector covers expenditures for the provision of
housing and sanitary services, promotion of community development, slum clearance, zoning
and control of population. A more detailed allocation of expenditures is shown in Figure 16
demonstrating that sanitation, being integrated in the housing sector, is regarded as a low priority
area.

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Figure 16. 2007 LGU Distribution of Expenditures

Given the above data, estimated maximum expenditures for housing and community
development (including sanitation) in 2010 by cities and municipalities is P3.8 billion,
representing an average of 3% of their total IRA (Table 9).
Table 9. Estimated 2010 Expenditures for Housing and Sanitation
(amounts in billion pesos)

Estimated 2010 IRA


Maximum estimated yearly
expenditure for housing and
community development from IRA*

Municipalities

Cities

HUCs

Total

83.

30.0

14.0

127.0

2.5

0..9

0.4

3.8

*amount historically spent on housing and community development, representing 3% of IRA

9.4.2 Investment Demand Projections for Sanitation


The target is for all 17 HUCs outside of Metro Manila to develop sewerage projects for 50% of
their total urban population while all the other cities and municipalities will implement septage
management programs over the next 10 years. The significant amount needed for sewerage
projects will necessarily oblige the HUCs to phase project implementation. The first phase will
serve half of the 50% of the urban population (25% of total urban population) while the second
phase will serve the remaining 25%. Investment requirements are estimated at P12.4 billion for
septage management programs and P13.9 billion for sewerage projects or a total of P26.3 billion
(Table 10). With the total investments, approximately 46.8 million people will benefit from the
investments and 324 million kilograms of BOD will be diverted from the environment.

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Table 10. Projected Capital Investment Requirement


SMP
43.6

Sewerage
3.2

Total
46.8

12.4

13.9

26.3

BOD diverted from environment (million kilogram)

260

64

324

Program efficiency (% of Total BOD generated)

24%

80%

Urban population to be served (in million)


CAPEX requirement to achieve the NSSMP
targets (in billion pesos)

9.4.3 Funding Gap for Sewerage Projects


It has been established that septage projects can be fully recovered through user fees and that
LGUs can avail of the different financing options detailed in Section 9.3. For sewerage projects
however, implementing a tariff that is sufficient for the sustainable operations and maintenance
of the facilities has been proven to be unaffordable. Moreover, given the magnitude of sewerage
infrastructure costs, financing these projects from LGU resources alone will result in
considerable disadvantage to the other sectors. The amount historically spent by LGUs on
housing and community development, representing 3% of IRA, evidently has been spent more
on housing initiatives and less on sanitation. Clearly, even if 3% of IRA is utilized solely for
sewerage, it will not be sufficient to service debts needed for the construction of the facility
(Table 11). Relying on user fees to complement IRA allocation has likewise been calculated to
be unaffordable.
Table 11. Estimated Annual Funding Gap for Sewerage Projects
(in billion pesos)
Amount
CAPEX requirement to achieve the NSSMP targets
Assumed yearly amortization if CAPEX requirement is borrowed *
Maximum estimated yearly allocation for housing and community development
from IRA* *
Estimated Annual Funding Gap

13.9

1.72
0.4
(1.32)

*Term of 15 years @ 9% interest per annum


**Amount historically spent on housing and community development, representing 3% of IRA

9.4.4 Proposed NG-LG Cost Sharing Policy


If the national government desires to more effectively address environmental problems that
actually impact not just on the concerned LGU but also on other neighboring areas, it must
consider cost sharing with LGUs for sewerage projects. More specifically, the NSSMP adopts
the current NG-LG cost sharing formula being implemented for solid waste management projects
which allows first and second class cities to get financing support from the national government
up to a maximum of 40% of project costs (Figure 17 and Table 12)

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National Sewerage and Septage Management Program Full Report

Figure 17. Proposed Cost Sharing for Sewerage Projects


Proposed Cost sharing Schem e for Sew erage Projects
LGU

WD

National Government

LGU
30%
National
Government
40%

WD
30%

Table 12. NG-LG Cost Sharing for Sewerage Projects


LGU Income Class

1st and 2nd


3rd and 4th
5th and 6th

LGU Share
(Loan/Equity)
60
75
80

Cities (in %)*


National Government
40
25
20

*excluding Metro Manila LGUs

In addition to the NG-LG formula, there is a need to establish certain minimum standards that
will be carried out by the proponents such as charging of user fees to cover operations and
maintenance of the facility at a minimum. Further, the administrative and operational efficiency
of the LGU must be strengthened so it can assume responsibility for project implementation.
Finally, the cost-sharing intervention should be time bounded.
The above criteria are included in the Project Prioritization Toolkit, an excel file included on the
CD. It is a suggested mechanism for DPWH to use to prioritize projects for funding. A more
detailed project ranking and evaluation process will be contained in the NSSMP Operations
Manual, which will be prepared prior to NSSMP implementation.
Of the total infrastructure costs of P26.3 billion to meet the NSSMP targets, the national
governments cost share is estimated to total P5.6 billion for sewerage projects. This amount
may change during implementation due to inflation and other factors.

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9.4.5 Economic Justification of NG-LG Cost-Sharing Policy


A comparison of costs that will be incurred and benefits that will accrue to society as a result of a
policy can justify the national cost share being proposed.
Capital and Operating Costs
Capital cost for the first phase of the NSSMP sewerage projects is estimated at P7 billion while
operating costs will average P696 million annually over the next fifteen years. These costs, all at
2010 prices, will then have to be compared against any benefits associated with the operations of
the facilities.
Avoided Health Costs
Discharging polluted effluent into the environment has harmful effects on people; about 55
people die each day due to poor sanitation in the Philippines. Sanitation facilities and programs
are expected to reduce harmful discharges, with a consequent reduction in public health
expenditures. As mentioned in the beginning of this report, a 2008 study estimated the economic
costs of poor sanitation at P78 billion per year. Such savings are therefore attributable to policies
that promote sanitation services.
Improved health conditions are expected to arise with the project. To a certain extent, savings on
medical expenses and avoided lost opportunities due to incidence of water-borne diseases are the
results of improved health condition. The reduction on cost of time due to reduction in illness is
based on the number of days an economically-active individual is rendered inactive due to
ailments and valued based on the individuals foregone earnings. Savings on medical expenses
are based on the avoided cost of medical treatment for each period of illness.
A 2004 survey21 estimates (using the Value of Statistical Life Approach) that the willingness to
pay by an individual to reduce risk of death from water-related illnesses is PhP300,000 per 1,000
population (Php300 per person) or about Php402 per at 2010 prices.
Avoided Environmental Costs
Use of sanitation facilities will mean fewer expenditures to restore or maintain the environment.
Assuming that the environmental charge is a reasonable estimate of the increase in customer
satisfaction resulting from improved sanitation, it is being used as the practical value for the
environmental benefit of the project22. In this report the calculated environmental tariff of P9 per
cubic meter, representing 50% of the P18.01 average water tariff among big WDs23, is applied.

21

Under the Feasibility Study of the Manila Third Sewerage Project.

22

The same assumption was used in the Manila Third Sewerage Project study.

23

WSP August 2009 Report

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Net Benefits
Table 12 shows the economic internal rate of return (EIRR) and the net present value (NPV) of
all costs incurred and benefits that will accrue to the HUCs in the next fifteen years due to the
development of Phase 1 of the sewerage projects. A project is considered economically viable if
its NPV is greater than zero. This also denotes that the projects EIRR is greater than the social
discount rate of 15% (NEDA prescribed rate). In performing the calculations, the study assumed
that there is no opportunity cost for the unemployed, thus benefits accrue only from the
economically-active population. Further, only 20% of the total health benefits have been
assumed to be attributable to the project since it is recognized that other factors (i.e., good
hygiene, solid waste management) may contribute to improved health.
The indicators prove that the country stands to realize significant benefits if it decides to
aggressively encourage the development of sanitation projects. If one considers the other
intangible benefits like increased land values and increased tourism receipts, the NSSMP can be
considered even more economically desirable. Further, net benefits will definitely increase
substantially with a much wider adoption of sanitation services nationwide (Table 13).
Table 93. Economic Indicators (EIRR, NPV)
NPV @ 15% social discount rate
EIRR
Assumptions:
Health benefits (data for NCR)
Morbidity rate (per 100,000, 2007)
Ave. daily wage rate (in pesos, 2010)
No. of days of illness
Ave. medical expense (in pesos, 2009)
Percentage of economic active population (2007)
Willingness to pay to reduce risk of death (in pesos, 2010)
Environmental benefits
Environmental charge (ave. pesos/HH/month)
Social Discount Rate

Php791.10
19%

785.60
425.00
5
1,743.00
61.70%
402.00
273.20
15%

10 Project Implementation Risks


Overall the project implementation risks are high. The implementation risks that have been
identified are presented below:

Failure of the national government to effectively roll out the NSSMP through promotions
and training. A preliminary budget of $260,000 was estimated in a concept note
submitted to DPWH by the AECOM team. This risk is determined to be moderate. It is
likely that eventually project roll out funds will be provided but also likely that this will
be delayed or be inadequate, which will delay the overall implementation of the project;

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National Sewerage and Septage Management Program Full Report

Inadequate national and local funds to develop sewerage and septage management
projects. This risk is determined to be moderate to high. The NSSMP will require
investments of P14 billion over 10 years to meet the targets;

Weak political will to develop projects. This risk is determined to be moderate. To be


effective, leaders at the national, provincial and local government levels will need to
support implementation of the NSSMP. This is unlikely to happen initially, which will
increase the chance of delay. Past experience shows that there is little political will for
sanitation projects based on the experience of the solid waste initiatives. While some
national agencies will promote the program, it is unlikely that strong support from the
highest levels of government will be realized for the first few years of the project; and

Weak enforcement of existing laws and regulations. History shows that national agencies
such as DENR and DOH are slow to enforce the laws within their jurisdiction. An
effective NSSMP requires a robust enforcement program, and this is unlikely at least in
the near future.

Failure of government to allocate land and rights of way for infrastructure projects. This
is a major constraint for developing solid waste management facilities, in addition to
problems of social acceptability; and

Difficulty in timing the three components for successful project interventions


(infrastructure, promotions, supporting environment). If infrastructure is built before the
other two components are in place, sustained and effective operation and payment of user
fees is unlikely.

73

National Sewerage and Septage Management Program Full Report

Annex: Computation of Estimates and Targets


A. Estimates used in the Intervention and Investment Framework
1. Septage
Capital costs for septage collection and treatment systems were based on data from the USAID
Philippine Water Revolving Fund Support Program (PWRF) Metro Cebu Septage Management
Project Feasibility Study Report published in January 2009, and the Dumaguete Septage
Management program. Additional data from the Manila Water Company (MWC) South Septage
Treatment Plant and the Maynilad Water Dagat-dagatan septage facilities was also used. PWRF
data is believed to be the most accurate study of septic tank prevalence and septage collection
and treatment costs in the Philippines and was relied upon extensively for this report.
From the Metro Cebu Study
Population of Coverage Area:
1,800,000 people
Cost of Septage Treatment Facility: P280,000,000
Cost of Trucks:
P55,000,000
Notes/Assumptions
1. Population of coverage area includes some highly urbanized areas as well as rural areas
in Metro Cebu;
2. The percentage of households with septic tanks in Metro Cebu is similar to the
percentages in other urbanized areas of the Philippines;
3. The percentage of desludgable septic tanks in Metro Cebu is similar to the percentages in
other urbanized areas of the Philippines;
4. The percentage of septic tanks that will be desludged in a given LGU is based on the
percentage in the Metro Cebu study.
5. PWRF calculations include assumptions for population growth, which were used to
develop these targets.
6. There is an economy of scale in wastewater and septage treatment: generally the cost per
cubic meter for treatment goes down with higher volumes. However, this is often
balanced out because larger systems generally require more expensive, energy-intensive
technologies that smaller systems usually dont need. This, plus the large variation in the
population size of LGUs, and differences in site conditions makes it difficult to apply a
national average to a specific LGU or project. Therefore, while costs are provided, they
are only estimates of average costs. Actual costs may be much higher or lower depending
on the actual site conditions and other factors. LGUs are cautioned that the only way to
determine actual costs is to do a feasibility study. It is also useful to perform a costbenefit analysis comparing several technologies.
The following calculations illustrate how the indicative costs for septage projects were derived
for the Intervention and Investment Framework for septage projects:
Calculation 1: CAPEX
Calculation 2: OPEX - Treatment (annual operations of treatment equipment)
Calculation 3: OPEX Collection (annual operations of collection equipment)
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National Sewerage and Septage Management Program Full Report

Calculation 1. Cost of treatment and trucking investment per capita (number of people in
coverage area)
As referenced above, there is an economy of scale with septage programs where the larger
facilities generally cost less per unit volume of septage treated than smaller systems. For larger
systems, the PWRF and Metro Manila systems provide good cost estimates. The Dumaguete
example is indicative for medium sized systems. The costs vs. population for septage programs
are expressed on a cost curve, which is provided at the end of this section. The median data
points that are used for developing the cost cure are:

P186 per capita for larger systems;


P200 per capita for medium sized systems; and
P250 per capita for smaller systems.

For example, for larger systems, the costs are derived as follows:
(P280,000,000 treatment plant expense + P55,000,000 trucks) 1,800,000 people =
P186.125 per person in the coverage area
Apply this ratio to other large LGUs to estimate the cost of the required investment for septage
treatment and trucking. Example:
Indicative LGU A: population in coverage area: 800,000
Investment in treatment and trucks estimation:
800,000 people x P186.125 per person = P148,900,000
The septage toolkit, found on the compendium CD automatically calculates the median cost
factor based on the population.
Septage Cost Curve
Refer to the chart below for the cost curve for sewerage projects. The data presented is
extrapolated and based on limited data points, but may be useful for understanding trends.

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National Sewerage and Septage Management Program Full Report

Septage

350

Pesos Per Person

300

250

Median
High
Low

200

150

100
0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

People In Coverage Area

The cost information represents the capital expenditures for septage collection (trucks) and
treatment systems. The data is presented as cost in pesos per person in the coverage area. It does
not include costs for land, or special site development costs, such as improving ingress and
egress to accommodate septage trucks.
The high and low values should be viewed as a 75% confidence level, meaning 75% of septage
projects would fall somewhere within this range. Higher costs might be realized for projects
where the land available for septage treatment is very limited, that might require highly
mechanized technologies, or if bedrock or groundwater is present, which could complicate
construction. Lower costs might be realized where land for septage treatment is large and
available, which would allow technologies using less mechanization. There are also certain
innovative technologies that might result in lower costs. Notice that the low end of the cost curve
drops off significantly for smaller projects. This reflects the additional opportunities for smaller
project to take advantage of low cost technologies such as lime stabilization and wetlands
treatment, to name a few. Smaller projects may also realize cost savings by purchasing surplus or
used trucks.
Calculation 2. An estimate of the annual operating expenses was provided in the Investment and
Interventions Framework for indicative projects. To estimate the cost of operating the treatment
system, the septage tool24 was used to determine the cost of operations for the Metro Cebu
example including the loan principal and interest. For the Framework, assumptions of 80%
loanable amount at 11% annual interest for a 5 year term were used. From this calculation, a
24

The tools can be found in the NSSMP Guide to Local Implementers.

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National Sewerage and Septage Management Program Full Report

percentage of the total capital cost of the treatment system is obtained for annual operations. For
the purpose of the Framework, the average value of 21.4% of the total CAPEX (treatment plus
trucks) is used for calculating the annual treatment plant operating expenses. It was then applied
to the other indicative LGUs.
For example, LGU A has a CAPEX of 148,000,000. Multiply this by 0.214 and the annual
estimated treatment facility operating cost per year is P31,900,000
Calculation 3. A similar ratio was prepared for the annual collection costs (trucking expenses).
The septage toolkit was used to obtain a value of 10.7% of the CAPEX as an average annual
collection cost.
Therefore, for LGU A, P148,900,000 x 0.107 = P15,900,000 average annual collection expenses.
2. Sewerage
As with septage, it is difficult to apply an average cost based on a national average to a specific
sewerage project. The cost of sewerage components such as pipelines and treatment equipment
depends upon many factors including site conditions, capacity of local implementers, electrical
power reliability, ingress and egress to the site, among other factors. A large indicative sewerage
project in Metro Manila and a MWC CAPEX metric (below) were utilized for determining cost
estimates based on population.

CapexMetric
140,000

Cost(Php)percum

120,000
100,000
80,000

Masterplan
Packagesystems

60,000

Combinedsewerdrainage
Othersources

40,000
20,000
0

10,000
110 100
2 200 300
3 5004 1,00052,000 63,000 5,000
7
8
920,0001030,000
1150,000
12

13

Capacity(cum/day)

Source: Manila Water Company, Inc.

A median range for developing sewerage collection and treatment systems of between P4,094 to
P6,000 per capita for CAPEX is provided as follows:

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National Sewerage and Septage Management Program Full Report

Sewerage systems for large flows serving more than 200,000 people: P4,100/capita;
Sewerage systems for moderate flows serving between 100,000 and 200,000 people:
P5,050/capita; and
Sewerage systems for smaller systems with fewer than 100,000 people: P6,000/capita

This is based in part on the Marikina City sewerage projects of MWC, which will serve 635,000
people at a cost of P2.6 billion. This computes to P4,094 per person. The Marikina example is
indicative of larger sewerage projects. For smaller projects, the MWC cost curve indicates
smaller systems have a higher per person cost. For the purposes of the NSSMP, a median cost of
P6,000 per person is used for smaller sewerage systems serving under 100,000 people.
For operating expenses (OPEX) an estimate of 10% per year for operating expenses for the
wastewater treatment component and 7.5% per year for the operating expenses for the sewer
lines was used as a rough estimate based on OPEX cost data from MWC. MWC cautions that
actual prices for operations may be somewhat higher in the provinces or outside of the largest
metropolitan areas.
NOTE: There may be some opportunities for cost savings using an innovative sewerage method
known as condominial sewerage. In this scheme, the homeowners install shared sewer branches,
which they own and maintain, while the city installs the larger pipes in the streets and the sewage
treatment plant. A recent pilot project was installed in Brazil with encouraging results. For this
project of 160,000 people, the average per capita cost is the equivalent of P3,400. As there are
currently no similar projects in the Philippines, this data point is not being used for indicative
costs for the purposes of the NSSMP.
Sewerage Cost Curve
Refer to the chart below for the cost curve on sewerage projects. The data present is extrapolated
and based on limited data points, but may be useful for understanding trends.
Sewerage

10000

Pesos

8000
Median
High
Low

6000
4000
2000
0
0

50000 100000 150000 200000 250000 300000


People

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National Sewerage and Septage Management Program Full Report

For the data presented, sewerage projects include the cost of the sewer pipelines, lift stations and
interceptors required for sewer collection, as well as the wastewater treatment works. The data
does not differentiate between types of sewer systems (combined or sanitary) or the type of
wastewater treatment technology, nor does it consider the cost of land, rights of way or providing
access.
The high and low values should be viewed as a 75% confidence level, meaning 75% of sewerage
projects would fall somewhere within this range. Higher costs might be realized for projects
where the land available for sewerage is very limited, uneven topography, or bedrock or
groundwater is present, which could complicate construction. Lower costs might be realized
where land for sewerage works is large and available, which would allow technologies using less
mechanization. Additional savings may be realized where slopes are gentle and even, which
would minimize the cost of installing pump stations. There are also certain innovative
technologies that might result in lower costs.
Read the graph by finding the number of people that will benefit from the proposed sewerage
project along the bottom axis. Then find the range of costs in terms of pesos per person within
the sewerage coverage area. For example, a sewerage project that serves 100,000 people, the cost
per person would likely (75% confidence level) be P3,900 and P6,750 .
Example: HUC A
This is an interceptor sewerage project using activated sludge for 200,000 people. As this is a
larger system, the CAPEX is estimated at P4,100/capita, x 200,000 people = P820 million.
Operation of the wastewater facility is estimated at 10% of the CAPEX per year or P82 million.
Operation of the piped sewerage collection system is estimated at 7.5% of the CAPEX per year
or P61.5 million.
Again it should be noted that is an estimate of average costs. Actual costs may vary greatly from
this amount.

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National Sewerage and Septage Management Program Full Report

B. Estimates Used for the Targets


1. Septage Management and Sewerage Projects by 2020

Please see the National Projections file on the CD for more details on how the septage figures
were calculated.

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National Sewerage and Septage Management Program Full Report

2. Pollution Targets
Both septage management and sewerage programs will divert pollution (measured in kg of
biochemical oxygen demand or BOD) from the environment by treating and disposing of it in an
environmentally-sound manner.
Septage Treatment
Currently, much of the septage that is desludged from septic tanks is not properly treated prior to
disposal. The following are estimates of the percentage of homes that have septic tanks per
division (from the PWRF Metro Cebu study, and USAID-supported surveys in Zamboanga and
Dumaguete Cities).
Division 1: 70%
Division 2: 60%
Division 3: 50%
Division 4: 40%
Division 5: 40%
Recent household surveys in Zamboanga and Dumaguete Cities provide interesting results
related to desludging practices of residential septic tank owners. In Zamboanga City, 54% of
respondents say they have never desludged their septic tank, while 50% in Dumaguete make the
same claim. Of those that have desludged, 41% in Zamboanga and 40% in Dumaguete claim to
have desludged in the last two years. These strong correlations from two different surveys
conducted by separate investigators provide a strong indication that on average, 20% of the
homes with septic tanks are desludging every two years or 10% per year. It is further assumed
that this septage has an average BOD of 4,700 mg/l (MWSS mean value, which is 14.1 kg/three
cubic meter tank), and that 95% of this flow is discharged to the environment without treatment.
Please see the National Projections file on the CD for the computations of the BOD values for
septage management.
Sewerage
Sewerage systems directly reduce the impact of sewage on surface waters by capturing the waste
and treating it prior to discharge. A per capita figure of 0.2 pounds of BOD generated per day is
assumed for combined sewer systems. This is based on a figure of 0.15 pounds per person listed
in the Handbook of Mechanical Engineering25 plus 0.05 pounds for commercial and industrial
sources. It is further assumed that 80% of the BOD from the collected sewage is removed
through the treatment process. The calculation therefore is made as follows:
Number of people served by the sewer system x 0.2 lbs of BOD/person/day 2.2 pounds per kg
x 365 days. Therefore,
3,235,221 people x 0.2 lbs BOD/day/2.2 pounds per kg x 365 X 80% = 85,880,412 kg of BOD
per year is diverted from the environment.

25

Hicks, Tyler Gregory, P.E. 2006. Handbook of Mechanical Engineering. McGraw Hill Handbooks.

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National Sewerage and Septage Management Program Full Report

Conclusion
While sewerage costs are much higher on a per capita basis, the true value is apparent when
comparing the efficiency of BOD removal, which is 80% for sewerage and 24% for septage
management programs. (Please see the National Projections file on the CD for details on how
the efficiency rate was calculated for septage management.)

Annex 82

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