Projects Accepting Applications::LGU Urban Water Sanitation Project

LGU Urban Water and Sanitation (LGUUWSP) Project 1 and 2

What is LGUUWSP?

The LGU Urban Water and Sanitation Project loans 1 and 2 are financing facilities that supports the Philippine Government’s LGU Urban Water and Sanitation Program that aims to assist local government units (LGUs) in

• improving and sustaining the provision of water, sanitation, drainage and other environmental services to their urban populations
• building institutional capacity for the planning and management of water and sanitation services at all levels of government

Objectives

The overall program aims to:

• Assist LGUs in improving and sustaining the provision of water, sanitation, drainage and other environmental services to their urban populations;
• Build institutional capability for decentralized, planning implementation and management of water and sanitation services at all levels of government—national, provincial and municipal; and
• Test the implementation of the Government’s policy framework vis-à-vis LGU financing of local infrastructure.

Program Rules

1.The program promotes full cost recovery, that is, the tariff to be paid by the consumers should cover the cost of operation and maintenance and the repayment of the LGU DBP Loan, and to the extent possible, the reimbursement of LGU equity.
2.The system shall be operated by a private operation under a long-term lease contract with the LGU.

Recipients and Beneficiaries of the Program

The Program aims to support the water supply requirement in the urban centers of approximately 250 small and medium-sized municipalities, benefiting about 6 million people. There are two sets of target markets:

1. Part A: Water and Sanitation Facilities component
   • construction/improvement/rehabilitation of Level III water facilities
   • provision/improvement of sanitation facilities
   • construction/improvement of urban drainage

2. Part B: Technical Assistance Component

Basic Program Principles

The program is based on two underlying principles aimed at ensuring project sustainability:

1. The “demand-driven approach” in project development and implementation (i.e., the program shall provide services that the consumers want and are willing to pay for and that the services shall be managed at the lowest appropriate levels); and

2. The adoption of commercial principles in the management/operation of the water utilities by involving the private sector (i.e., the facilities must be operated as commercial entities and water treated as an economic commodity).

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