Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Management Program
Full Report
Final Draft
November 11, 2010
__________________________________________
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
6
7
National Component.................................................................................................................................24
Local Component......................................................................................................................................25
National/Local Coordination ...................................................................................................................25
Sustainability ............................................................................................................................................25
10
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
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
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
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.
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.
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.
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
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
Rodriguez, UE, N. Jamora, and G. Hutton. Economic Impacts of Sanitation in the Philippines: Summary. World Bank Water
and Sanitation Program, 2008.
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.
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;
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
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.
11
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.
12
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
13
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
14
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
15
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
16
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
Agency
MWSS
Department of Education,
Commission
on
Higher
Education (CHEd), Philippine
Information Agency (PIA)
LGUs
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
CWA; EO 192
PD 856 -
18
Agency
DILG
LGUs
Related Mandate/Responsibility
Legal Basis
Sanitation Code;
CWA
CWA; Sanitation
Code; RA 7160 Local Government
Code; NEDA
Board Resolution
No. 5, s. 1994
19
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; NEDA
Board Resolution
No. 5 (1994)
20
Agency
ation
(LWUA)
Related Mandate/Responsibility
MMDA
NWRB
National
AntiPoverty
Commissi
on-Water
and
Sanitation
Coordinati
ng Office
NEDA
Legal Basis
RA 7924 MMDA
mandate
PD 424 (1974)
21
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
22
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 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
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
24
25
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
26
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.
27
DENR
DOH
DILG
28
DOF
Revenue generation,
mobilization
and
management
DBM
Formulation of
national budget
LWUA
MWSS
the
29
The roles and relationships of these agencies are shown in the following organizational chart
(Figure 2).
30
31
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
32
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
33
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
34
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.
35
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.
36
37
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.
38
39
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.
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)
40
Supporting
Environment
Infrastructure,
Products,
Services
Promotion
List of Toolkits
41
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.
650,000 people
130,000 households
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
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
42
20
245
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.
43
Figure 7. Intervention and Investment Framework with Program Packages for Division 1
Part 1
44
Part 2
45
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;
46
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:
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.
47
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:
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.
48
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.
49
Financing Projects
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.
50
51
2.
3.
4.
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.
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
52
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.
53
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.
54
55
56
57
9.3
Sources of Financing
17
Two potential schemes are socialized pricing and a uniform volumetric charge based on the volume of water supply used.
58
59
Regular
income (93%)
Borrowings
(4%)
Government
subsidy (2%)
Others (1%)
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.
60
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
City
Municipality
Local Sources
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
61
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,
62
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
63
2008
2007
21.4
12%
18
10%
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%
24.9
13%
13
7%
Environment-related projects
16
9%
12.2
7%
124.3
67%
96.5
52%
Others
60.4
33%
38.1
21%
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
64
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.
65
MDFO Credit
+TA
Marginally
creditworthy LGUs
GFIs/BOT
Creditworthy
LGUs
but
unable to tap
market
Fully
creditworthy
LGUs
Non-credit
worthy LGUs
Financially
Weakest
6th Class
Financially
Strongest
1st Class
Income
Cities (in %)
LGU Share
National
Government
100
0
100
0
80
20
66
Income
67
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)
Municipalities
Cities
HUCs
Total
83.
30.0
14.0
127.0
2.5
0..9
0.4
3.8
68
Sewerage
3.2
Total
46.8
12.4
13.9
26.3
260
64
324
24%
80%
13.9
1.72
0.4
(1.32)
69
WD
National Government
LGU
30%
National
Government
40%
WD
30%
LGU Share
(Loan/Equity)
60
75
80
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.
70
21
22
The same assumption was used in the Manila Third Sewerage Project study.
23
71
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%
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;
72
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 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
73
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:
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.
Annex 75
Septage
350
300
250
Median
High
Low
200
150
100
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
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
Annex 76
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)
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:
Annex 77
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
Annex 78
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.
Annex 79
Please see the National Projections file on the CD for more details on how the septage figures
were calculated.
Annex 80
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.
Annex 81
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