Document of The World Bank FOR OFFICIAL USE ONLY 1 A3/al-Pi- Report No. 7801-PH STAFF APPRAISAL REPORT PHILIPPINES ANGAT WATER SUPPLY OPTIMZATION PROJECT August 23, 1989 Infrastructure Operations Division Country Department It Asia Regional Office This document has a rsdcted distribution md may be used by eciplents only in the performane of tbei officall dudes. Its contents may not otherwise be disclosed wihout Wodd Bak aothoon CURRENCY EQUIVALENTS Currency Unit Peso (F) I Peso - US$0.047 US$1 P 21 (April 1989) WEIGHTS AND MEASURES I meter (m) - 39.37 inches (in) 1 square meter (sq m) c 10.8 square feet I kilometer (km) 0.62 mile I hectare (ha) . 10,000 square meters (sq m) or 2.47 acres I cubic meter (cu m) D 264 US gallons, approximately I metric ton I cubic meter per second (cums) - 22.82 million US gallons per day Gigawatt hour (GWH) - I million kilowatt hours (kwh) liter (I) 0.26 US gallons liter per capita per day (lcd) - 0.26 US gallons per capita per day metric ton (ton) - 2,205 lbs or I cubic meter of water ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank COA Commission on Audit DBM Department of Budget and Management DOF Department of Finance DOH Department of Health DPWH Department of Public Works and Highways EA Engineering Area (MW'fs Engineering and Design Department) ERR Economic Rate of Return GC Government Corporation LWUA Local Water Utilities Administration MIS Management Information System MSA M\SS Service Area MWSS Meiroo.mlitan Waterworks and Sewerage System NCR National Capital Region NEDA N4tional Economic and Development Authority NPC National Power Corporation NRW Non-Revenue Water NWRC National Water Resources Council OECF Overseas Economic Cooperation Fund of Japan PMO Project Management Office PNB/UB Philippine National Bank and Union Bank RWDC Rural Waterworks Development Corporation RWSA Rural Water Supply and Sanitation Association WD Water District FISCAL YEAR January 1 to December 31 FOR OMCIAL USE ONLY PHILIPPI ANGAT WATER SUPPLY OPT7MITION PROJECr Loan and Project Summary Borroen: Metropolitan Waterworks and Sewerage System (MWSS). Guaraut3on Republic of the Philippines. Deneficiaties: The City of Manila and 36 neighboring municipalities. US$40 moilion equivalent. T-ems 20 years, including 5 years of grace, at the Bankes standard variable interest rate. The proposed project would supply water to meet the expected water demand in MWSS service area (MSA) until te . year 2000. The project has been designed to: (a) increase MWSSs water production capacity; (b) provide 15 cubic meters per second of water for an additional population of 3 million persons; (c) expand the distnbution system to increase service coverage to 75% of the MSA by 1994, particularly in poor neighborhoods; (d) improve the efficiency of MWSS's operations; and (e) strengthen MWSS's finances as well as its planning and management information systems. The project would be cofinanced by the Asian Development Bank (ADB) and the Overseas Economic Cooperation Fund of Japan (OEC?), and includes the construction of water transmission, treatment and distnbution facilities, ie. a 6 km tunnel, 18 km of aqueducts, 35 km of water mains, 520 km of distnbution pipelines, a water treatment plant for 10.6 cubic meters per second, and a water reservoir (260,000 cubic meters). During the project period, MWSS would continue to develop its institutional capabilities by carrying out a satisfactory Development Program aimed at improving the corporations's financial performance, planning and operating efficiency. ad Rid= The project would maximize benefits from existing investments, postponing alternatve investments costing three times those of the proposed project. It would provide urgently needed water to the MSA, which has about half of the county's industrial base, its commercial center and a population of about 9 million people. The project would: (a) eliminate water rationing and low pressures for about 5 million people who are already served; (b) distnbute water supply benefits to the entire MSA; (c reduce the dependence of commercial and industrial consumers on deep welis and excessive use of underground water, which is damaging the aquifer, (d) restore normal pressures, decreasing the potential health risk posed by sewage infiltration into unpressurized distibution mains; and (e) strengthen one of the countrys largest corporations, which would influence other water utlities in the Philippines. There are no unusual project risks. The major risk, ie., delayed implementaton of the various components which could postpone overall project completion by one or more years, is mitigated by MWSSs experience with similar works and the fact that the raw water transmission system, the critcal component of the project, has already been contracted. when this component is completed, any other completed works would produce immediate benefits by using the existng facilities. Failure This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. - ii - to reduce non-revenue water would tncrease the cost of water and reduce the population benefited under the proJect However, the resuts achieved in paiu of the distribution already rehabilitated indicate that the proposed "--mrevenue water targets are achievable. Poiect C5 Local Foreimn Total - (USS mfllion) - IBRD-Financed Works 27.7 22.7 50.4 ADB-Financed Works 31.2 54.1 85.3 OECF-Financed Works 33.6 42.7 76.3 Locally-Financed Works 19.4 4.6 24.0 Base Cost (December 1988) 111.9 124.1 236.0 Physical Contingencies 8.3 9.3 17.6 Price Contingencies 12.5 18.3 37.8 Total Proiect Cost / i39.7 151.7 291A Interest During Construction 37.3 33.2 70.5 Total Finangcia R.eautred 177.0 184.9 361.9 Fina Plan World Bank 12.9 27.1 40.0 Asian Development Bank 37.5 92.5 130.0 OECF Loan (Govenument's Equity to MWSS) 29.3 50.7 80.0 Bonds-Local Banks 46.3 8.9 55.2 Intemal Cash Generation 28.8 5.7 34.5 Other Local Funds 22.2 - 22.2 TOTAL 177.0 184.9 361.9 Esmated sbement Bank Fiscal Year FY90 FY21 FY92 FY93 EY94 FY95 (US$ milion) Annual 5.2 6.8 8.4 10.0 8.0 1.6 Cumulative 5.2 12.0 20.4 30.4 38.4 40.0 cnoic Rat of Retum: 15% Mag: IBRD21605 M/ Incduding taxes and duties equivalent to US$7.6 million. PHIUPNES ANGAT WATRlt SUPPLY OPTEMATON PROJECr Table of Conten Loan and Proiect Summary i 1. THE WATER SUPPLY AND SEWERAGE SECTOR . . . . . . . . .1 Sector Background . . . . . . . . . . . . . . . . .1 Sector Organization . . . . . . . . . . . . . . . . 2 Sector Financing ................. 2 Sector Issues and Constraints. . . . . . . . . . . . 2 Previous Bank Lending . . . . . . . . . . . . . . . 4 Sector Strategy ................. 4 2. WATER DENAND ................. 5 The Project Area ................. 5 Population.. ............... 5 Levels of Service ................. 5 Water Demand. ............... . 6 New Water Connections . . . . . . . . . . . . . . . 7 Non-Revenue Water . . . . . . . . . . . . . . . . . 7 Forecasted Demand and Supply . . . . . . . . . . . . 8 Production Capacity ............... . 8 3. THE PROJECT.9 Project Origin. 9 Rationale for Bank Involvement . . . . . . . . . . . 9 Project Objectives . . . . . . . . . . . . . . . . . 9 Project Description. 9 Project Cost .11 Financing Plan .11 Project Implementation . . . . . . . . . . . . . . . 13 Technical Assistance .14 Procurement .14 Disbursements . . . . . . . . . . . . . . . . . . . 14 Project Supervision .15 This report is based on the finding of an appraisal mission consisting of X. Fernandez (financial analyst), J. Koxel (sanitary engineer), and consultants F. Nielsen (municipal engineer) and K. Waterhouse (sanitary engineer) Who visited Manila in April 1989. The report was edited by P. Brereton. - iv - 4. THE BORROWER .16 The Borrower and Executing Agency. 16 Personnel and Training . . . . . . . . . . . . . . . 16 Operations and Maintenance . . . . . . . . . . . . . 17 Billing and Collection . . . . . . . . . . . . . . . 18 Accounting and Auditing . . . . . . . . . . . . . . 18 5. FINANCIAL ANALYSIS .... . . ...... . . . . . . 19 Past and Current Financial Performance . . . . . . . 19 Water and Sewerage Tariffs . . . . . . . . . . . . . 20 Overall Financial Plan And Inv :stment Program . . . 20 Financial Projections . . . . . . . . . . . . . . 22 Monitoring and Evaluation . . . . . . . . . . . . . 23 6. ECONOMIC AND SOCIAL ANALYSIS . . . . . . . . . . . . . 24 Project Benefits . . . . . . . . . . . . . . . . . . 24 Least-Cost Solution . .24 Economic Rate of Return . . . . . . . . . . . . . . 25 Marginal Cost . . . . . . . . . . . . . . . . . . . 25 Affordability . . . . . . . . . . . . . . . . . . . 26 Impact on the Urban Poor . . . . . . . . . . . . . . 26 Environmental Impact . .27 Project Risks . .27 7. AGREEMENTS TO BE REACHED AND RECOMMENDATION . . . . . 28 ANEXS: Annex 1 Existing Water Supply and Sewerage Systems . . . . 29 Annex 2 Water Demand ..... . . . . ....... . . . 34 Annex 3 Project Description .... . . . ....... . . 49 Anmex 4 Project Cost Estimates and Financing Plan .... . 51 Annex 5 Implementation Schedule . . . . . . . . . . . . . . 58 Annex 6 Economic and Social Analysis . . . . . . . . . . . 59 Annex 7 Estimated Schedule of Loan Disbursements . . . . . 67 Annex 8 MWSS's Development Program . . . . . . . . . . . . 68 Annex 9 Water and Sewerage Charges . . . . . . . . . . . . 73 Annex 10 MWSS's Financial Projections . . . . . . . . . . . 77 Annex 11 Monitoring Indicators . . . . . . . . . . . . . . . 80 Annex 12 Assumptions for Financial Projections . . . . . . . 81 Annex 13 Documents Available in the Project Files . . . . . 84 CHART: MWSS's Organization Chart MAP: IBRD-21605 1. THE SECTOR Sector Ba Ir I systems are Metropolitan Manila, where only about 750,000 people or 9% of the metrapolitan popladon 1.1 The provision of water supply and are served, and three other cities wher service is sanitation serviees in the Phflippines ha improved provided to the central areas. Because of the limited considerably over the past two decades. Following a sewerage systems and inefficient private sanitary major sector review in 1973, the current sector waste disposal facflities, untreated or poorly treated institutions were established and sector objectives, domestic sewage is a major source of water pollution. strategies and development plans defined. Between 1972 and 1980, water supply senvces were extended 1.3 The Philippine has abundant water to an additional three million people, bringing the reourcs for domestic water supply, irrigation and tota population with access to safe water to around industral use. Average annual rainfall is about 22 million or about 45% of the population. By end- 2,300 mn, and there are 18 major and over 400 1987, about 63% of the population had access to safe principal vers, abowt 60 natural lakes, and a water, including 31% which was served by piped signdicant well-documented quantity of groundwater. osptems. The rest of the pouato (about 21.2 However, most of the rain is concentrated in four million) relied on open dug wells, rainwater cisterns, months, the monsoon season, when floods and lakes, ponds and streams of often doubtful quality tyhoon damage are major problems. During the Although absolute service levels are improvln& the remainder of the year, the rivers dry up, necessitating quaity of service in the areas covered is often poor, expensive dawrs and water regulation. With rapid with low water pressures throughout and rationed population growth, the most accessible water sources, service in some areas. and the least costly to develop for community use, are already exploited, and mey are now inadequate to 1.2 Santation services have also been support the present service areas. Development of exanding. Although the 1980 census estimated that water sources to serve the larger urban areas in the only about 56% of the population had access to future will thus need to exploit more distant rivers, at water-borne sewerage (either sanitary sewers or a higher development cost. Simialy, the supply of combined sewer/storm drain systems), septic tanss or rural communities increasingly requires development pits for excreta disposal, a survey by the Depaent of deeper groundwater, at increased costs. Water of Heath (DOH) at end-1986 showed that about 69S pollution is also a growing problem, and in 1986 the of all households had safe excre disposal facilities, National Pollution Control Commission identified 37 about 15% had unsafe facMites and about 16% had major and principal rives as seriously polluted due to none at alL In terms of population seved, about 62% discharges from domestic sewage, municipal solid of the rural and 80% of the urban populaions had wastes and industial wastes. Health statisdcs reflect access to saniay facilides, with Metropolitan Manila this situation, indicating the nationwide prevalence of having the hiest serwve level at 93%. Pit or pour- water-bome and sanitation-related diseases. flush latrines predominate throughout the countly. In Substantdal improvement of the countys water supply Metrpolia Manila, the dominant disposal facilites and sanitadon systems must therefore have high are septic tns, many of which are not well priority, to reduce the incidence of these diseases and maintained and are inefflcient in treating the wastes to improve the general living standard of the which they disbcharge to surface water drainage populaion. systems. The only areas with sanitry sewerage .2 - Sector Owiganizat illingness to pay for them. Accordngy, individual house connections are usuaUly provided in the larger 1.4 The National Water Resources Council metropolitan and provincial urban arsa, standpipe (WRC), which includes representatives of the various systems on the basis of the community's financial sector institutions, is responsible for coordination and ability and wllingness to pay for them, and wells with integration of al aeivities related to development and hand pumps in the 'ural areas. Tarifts In management of water resources The Metropolitan Metropolitan Manil- have allowed MWSS to eam a Waterworks and Sewage System (MWSS, fnancial rate of return of 8% on its revalued net fixed established in 1972, is responsible for the assets in operadon. For provincial water supply development, operation and maintenance of water (WDs), tariff are supposed to generate adequate supply and sewerage systems in or around levels of revenue to meet operation and maintenance Metropolinan Manila. The MWSS Service Area MSJA) costs and cover debt servicing costs or depreciaton, of about 150,000 ha includes Mania City, four whichever is greater. In rural areas, tariffs are neighborng cites and 32 municipalities. The Local expected to meet operation and maintenance costs Water Utilities Admisation (LWUA), established in and the capital costs of distnbution works related to 1973, is responsible for providing technical and individual connections; the Government usualy financial assistance for water supply and sanitadon fiances the remaining capital costs. However, because development to about 730 provincial cities with of extensive poverty and political reluctance by some populations above 20,000 and, since 1987, to rural local governments to increase tariffs, water tariffs in communities. Both MWSS and LWUA are semi- the WDs are usually Inadequate, resting in financial autonomous corporations under the Department of deficits and ddayed payments to LWUA, jeopardizing Public Works and Highways (DpWH). The the financial viability of the sector. For water entites Department of Health (DOH) implements the rumal with excessive debt burden, some grant fiancing may sanitation program and monitors drnkig water be needed to strengthen thewr finances and provide a quality, reasonable debt to equity ratio. 1.5 The operation and maintr e of 1.7 Due to the depressed economic provincial water supply sysms is the responsiolty of conditions and politicl changes that occurred duing locally-established Water Districts (WDs), which are 198486, ivestment in water and sanitation services also semi-autonomous public uties, sering one or the sector declined. However, in 1987, the more ;inicipalte. Rural Water Supply and Govment confirmed its commitment to sector Sanitation Assocations (RWSAs) are responsible for development by adopting a Water Suipply and the rural systems. By end-1988, some 290 WDs and SanitationMaster Plan which provides a well- more than 200 RWSAs had been esblished. integrated, but overly ambitious package of policies, programs and projects to be implemented in two Sector F-maoif g stages, from 1988 to 1993 and from 1994 to the year 2000. Initiation of LWiUKs part of the program was 1.6 SectordevelopmentInMetropolitanManUa delayed due to _ magement and staff conflicts, but is financed through funds selfgenerated by MWSS the recent approval of a new LWUA Adminsatr government equity contributions, and forig or local ensures that implementaton wil now proceed. loans. LWUA, which is a fmancial intermediary for the remaining cities, is also funded through Sec d C govenmment contnbutions and loans, and on.lends these funds to WDs for stem deelopment The 1.8 Despite the progress made, a nber of municipalities served by the WDs nonnally nake some issues and constraints stil impede sector development equity contribution to self fance part of the cost of and performance, including problems related to development, while the financially weaker WDs funding, planning, the sector instiuons, and receive some goverment grants The RWSAs also operating efflciency. receive government equity contributions and benefit from grants provided through bilater asisnce. 1.9 Bundg. The avalability of local funds The G'vernmes general poliy is to develop systems for system financing has been generally inadequate on the basis of a community's financl ability and Governent countepart funds have not been available -33. when needed, largely due to economic crime and operations to the 12 regions, as DOH and DPWiH have competing demands, but also as a result of utrealistic already done, In order to better serve the provincial planning and budgetin. Furthermore, funds which population and improve collections. Flurthermore. shcould have been generated by the WDs, LWIJA and since LWUA is moving progressively to serve the MWSS have not mateialied because of inadequate smaller municipalities, which may not have sufficient tariffs, high levels of unaccounted-for water (para custonmes to pay for adequate accounting,engineering 1.16), debt revauation both in dollar and in pesos, and managem-ent~, it may need to mrate larger and poor collection efficiency. districts or :ven provincia water systems, allowing economies of scale and cross-subsidization which 1.10 BIlin-f and Poor biling and would ensur the proviion of water servies to all collection efficiency need to be addressed. Excessive muciatesn each region. Fuinally LWUA (and to accounts receivable and Mlegal connections reduce a lesse extent MWSS) nmangement and labor need sector revenes and result. mn higher tariffs for the to improve their relationship to prevent operational population paying their bills LWUA has a serious disruptions like those which slowed and impaired problem due to the poor collecton performance of the LWUA operations fr'om 1987 to 1989. WDs; its collection efficiency declined fr-om 76% of bfilings in 1981 to 51% in 1987, and has been as low 1.14 Institutional development in the WDs as 25% to 30% for RWSA-operated sysems. MWSS arid the RWSAs in the regions has been limited, has improved its collecton rate, but fiurther efforts are causig institutonal, operational and financial needed to reduce its accounts receivable, which are problems, particularly in the smaller and poorer approaching six months of billing, particularly fot RWSAs. Since the provision of servces in the rural other government agencies (para 4.12). areas relies mainy on commuinity participation, the success of such programs will largely depend on 1.11 Pang.Development in the sector moiiigcommunity support for the development tends to be adverely effected by optimistic planning and maintenance of water suPPlY and santation and goals. Historical informoation on imlmnain facfilites. capacity and expenditure rates is overlooked in the planning process, as is the availabilit of local 1.15 Groundwater Use, Excessive use of countepat fuds. The lack of pragmatic plans is a groundwater in the Manila Metropolitan Region is constaint to sector development since invesatment depleting the aquifer and resulting in intrusion of plans must often be reduced during project salinity in thte areas near Manila Baty. However, there impemetaton,cauing loans and budgets to be is little that can done until MWSS can provide undertlie.similry, water demand projections are additional water, end shortages and ensur a more often unrealistc, resultin in overivtitment, low relable supply. Curmtaiig the use of groundwater for water sales, underutilized capacity and finawcia existing industria uses, when the cannot be deficifts Consequentiy, under the proposed project~ supplied by MWSS, would have a negative impact on emphasis has been given to inmpoing water demand industrial production and employment. The larest forecast and fnancial planning, and estblishing usern of groudwater in depleted zones hav been improved mnonitoring and management information identified by MWSS, and adequate transmiz 'on and systems durin mlmetto (pam. 5.13). distribution facilties would be provided under the proposed project to supply them reliably and reduce excessive water abstraction in thee zones. If these 1.12 AnttuinalAraements. The overall problems persist after adequat supply capacities are orgnization of the sector is basically sound, with one provided by, 1994, it would be necessary to enact majo exception. NWRC coordinates water resources legislation establishing more rigorous controls on development, but no institution exists to coordinate water use and allowing MWSS to charge for the use sewerage and sanitaton activities. Therefore sewage of underground water, to reduce its excessive use and disposal, sanitation and pollution control receive less contribute to the financing of expanded water supplY attention tha WLtr supply. failites in the MSA. 1.13 Sevealoganztoa changes are also 1.16 Onerationa ffceny The water supply needed within LWUAL First. it should decentralize its agencies curently receive no reveue for a large -4 - portion of the water distribute. MWSS, for example, 1.19 Project iplementation has normally has had non-revenue water (NRW) of almost 60%, but been slow, with delays of two wr more years, largely is now canying out a large-scale program to gradually due to macroeconomic problems related to th: reduce NRW to below 40% by 1994 (see paras. 2414 countr8s difficult econoWlc and political situation and 2.15j. LWUA has also begun to focus on NRW culminating in the 1986 revolution. These problems problems in the WDs, which wfll require leak resulted in high inflation, large currency devaluations, detection programs as well as the implementation of shortages of countepart funds, business failures by measures to prevent such problems, including contrac.ors, a major reorganizadon of sector unproved specifications for pipe materis and meters, istitutions and changes in sector management and and rigorous inspection of pipeie instlation. key staff In all instiutions. 1.20 Recognizing these consDa, the Bank. Previous Bk Ig under its S. ecial Action P.rogram, attempted to faciitate implementation by, ariong other things, 1.17 Except for a loan in 1964 for increasing disbursement percentages, establshing developmaent of the Metropolitan Manila water supply special accounts, and working with the project entties system, the BankWs involvement in the sector to amend project scope. These measures, combined essentally started in 1977 with the First Provincisi with actions taken by the implementing agencies to Cities Water Supply Project (Loan 1415PH, US$23 adjust to the new crc nces, helped ameliorate million, Project Performance Audit Report No. 6422) the situation somewbas Howtver, changes in the to improve water supply to five provincial towns. scope of some projects meant that about US$60 'nce then, five additional loans have been made milion equivalent (about 20% of tme Bank loans p Aviding for (a) expanon of water supply and ounding) coutd not be utfied before loan closing sewerage in Metropolitan Manila (Loan 1615-PK and had to be cancelled. Some institutional US$35.5 milion in 1978 (Project Completion Report achievements were also diminished, due to No. 7153); Loan 1814-PH, US$63.0 mMion in 1980, discontinuity in top management positions and uneven and Loan 2676-PH, US$69.09 million in 1986); (b) professional interesL water supply in provincial towns (Loan 1710/Credit 920-PH, US$38.0 milion in 1979); and (c) a national program of rural water supply and sanitation (Loan Sector Ste 2206-PH US$35.5 million in 1982). 1.21 The Banles role in the sector is to assist 1.18 The above-mentioned projects have the Govennment in implementing its sectoral program substantially met or are expected to meet their through the provision of needed financial resources physical and institutional objectives, although they and in gradually soving the sector issues and have suffered construction delays and fallen somewhat constraints mentioned above. The Bankes past short of their financial goals. Instiutionally, the involvement in the sector has been instrumemal in projects have been important in helping to establish helping the Government to develop a well-conceived and set satisfactory orgazation structnes and insutonal framewok and policies for the sector. in byiaws, implement exesie training programs, the uture, given existing levels of service, Bank improve the technology used, establish biling and assistance will focus on the provison of serice to the accounting nems, and provide the capacity to urban poor as well as continued improvement in implement inestments reulting in a lare expansion institutional capabilities, partculary in planning and of water and sewerage services (pares. 1.1 and 1.2). system operation and maintenance. 2. WATER DEMAND The Project Area 8.1 persons (about 1.4 households) per connection. However, a census of about 360,000 households in 54 2.1 The proposed project would assist MwSS zones in the NCR indkates that the population to increase its water supply production capacity to already served is larger than estimated, averaging senre 37 municipalities in the MWSS Service Area about 9 persons per connection (1.5 households). This (MSA.) and a total population of almost 9 milon (see value wa used for the water demand in this report, Map). This ipcludes Metro Manila proper, also reducing itie estimates of the population to be served referred to as the National Capital Rcgion (NCR), and the reported per capita consumption. which is the countr/s most developed and fastest- growing area as well as its cultural, economic and PERCENTAGE SERVED WITH WATER BY MWSS political center. The NCR includes the cities of Manila, cPECNTG AS W^IT R Caloocan, Pasay and Quezon City and another 13.5 - _ _ _ _ municipalities, and has about 13% of the countrys s _ _ _ _ _ population and more than half of its large industries. m _ _ - _ f 1_ - - - _ However, 2.5 milion persons live in blighted areas with minimum servi. es and poor housing. 2.? The MSA area of about 150,000 ha I - … includes the NCR, Cavite City, another five municipalities in Cavite Province and 14 municipalities in Rizal Province. MWSS setves the entire metropolitan region, independently of local governments and city borders. This is an advanced organization for a metropolis, which allows the provision of equal levels of service, water quality and water charges across all municipalities, facilitating the . _ _ __ _ _ *_. planning and strengthening of aU water and sewerage Figure 2.1 services. Water supply and sanitation facilites now available in the MSA are descnbed in Annex 1. 2.5 The population per connection is epected to dedine slowly over time, as housing Population becomes less crowded, each house gains a separate connection, md population growth slows down. This 2.3 The MSA population increased by more would increase the number of connections but not than two milion persons between 1980 and 1989, at the watc contumption which is based on per capita an average annual growth rate of 4.1%. Detailed estimates. The population served by domestic house population estimates for each municipality based on connections is expected to increase from 58% in 1988 forecasts by the National Statisdes Office were to 75% by 1994 and 85% b7 the year 2000. The total prepared by MWSS, and assume that MSA's growth lopulation with water supply, including commercial rate would decrease to 2.3% p.a. during the period connections and about 1,400 public faucets, is 1990 to 2000, although several of the smaller expected to reach 82% by 1994 and 90% by the year municipalities would experience increases of up to 2000. Figure 2.1 shows actual values up to 1988 and 10% p.a. By the year 2000, the MSA population is the Bank forecast up to the year 2010 (the same expected to reach 11.6 million, growing to 13 million applies to other figures in this report). by 2010, with 85% of the total in the NCR. Waer Demnd Levels of Service 2.6 During 1984-86, per capita water 2.4 In the past, the population served by house consumption in the MSA fell considerably, with total connections in the MSA was estimated on the basis of consumpion dedlining from about 250 liters per -6 - capita per day (lcd) to about 200 lcd and domestc groundwater tu, the MWSS supply as &. result of saline consumption declining from 160 lcd to 135 lcd. This intrusion in the aquifer and lower groundwater levels reflected the economic downturn of the period as well due to overexploitation. These estimates appear as the effect of water rationiing and shortages, the overoptimistc, howevt'r, in view of continuing inadequate distribution systemn, and the lower water consumer concerns about the quality of MWSS's consumption of the additional, lower-income service and the higher cost of MWSS water. The low population connected in those years. Extensive areas water distribution pressures and unrelibility of the still have no distribution network and the quality of MWSS supply would continue in the next few years service in many areas Is inadequate, withi low water until the project is in operation. Furthermore the cost pressures and rationing or intermittent supply. of pumping underground water is only about P 2 per ton (excluding treatment cost, which is not needed by 2.7 Domestic -Demnand. About 20% of thie most industria user), as compared to MWSSs population suffers from water rationing and charges to industria customers. averging P 9 per interm2ittent supply. However, assuming the ton (including sewerge and environmental charges). continuation of economic growth (at about 6% p.a.), Although groundwater exploitation has undoubtedly higher per capita income and billing of part of the depleted resources in some areas, particularly adjacent non-revenue water (NRW), domestic water to Manila Bay, the overall water resources in other consumptaon is expected to return to 160 ',d by 1994, areas are still substantial. Considering these and with the total water consumption reachig about 250 other factors that affect MWSS demand, the estiamates lcd by 2005 (Figure 2.2). of water demand used for the proposed project are lower than those used In the project feasibility report 1 (see Annex 2). LITERS SOLD PER CAPITA PER DAYI CPO am" - I e2.10 Commercial and industrial connectons are eped toincreseatabout 1.5962%and 0.5% - - - - - - - - I~~~mnvew ot the availability of underground water, the I - -- ~~~~~~~lower water quality requirements for some - ~~~~~~~~~~applications and the poor servce provided to the -- - ~~~indastria zone, which is at the end of M ss' f ~~~~~~~~~~~distributton system However, the water sold per II ~~~~~~~~~connection is expeed to inrasemrapidly (by about I:: ~~~~~~3% p.a. for commercia and 8% p.a. for industrial connections), because of GNP growth and the diminishing underground supply in some areas. Under o ammic 0 "ft ~~~these assumptions, the water sod to commercia and industria consumers is expected to inmase from .j53 Figure 2.2 MW in 1988 to 400 MID by 1992 and 445 MD by 1994. Annex 2 provides detailed forecasts (Tables 5 2.8 Under the above-mentioned assumptions, and 6). As a proportion of total demand, commercial domestic water demand wil increase from 617 million water demand is expected to decrease fr-om 32% to liters per day (MID) in 1988 to 913 MWD by 1992 24% of total demand betweena 1988 and 1994 because and 1,119 MU) by 1994. Annex 2 provides the of the rapid increase in domestic water demand. assumptions used for this projection (Table 1) and Industral water demand is expected to remain at yearly forecasts (Tables 2, 3 and 4). about 4.5% of total demand. These estmates depend, of course, on MWSSs pricing policies (which now 2.9 jgustrWa -and Commercia Demand. Total cross-subsidize low-income consumers), the reliability commercial an rid Idutria usage of water is currently of MWSS's service and the cost of extracting and/or estimated at about 900 MW, only 36% of which is treating underground water. supplied by MWSS. Previous estimiates of MWSS demand have projected large increases i water sales, 2.11 Bulacan Water Sunl.On request of assuming that industral consumers would switch from the Provincial Governor of the Bulacan Province - 7 - MWSS agreed to provide up to 1.1 cums of treated some improvements have been made, but NRW stll water in buk to several municipalities neigboring remains above 55%. MSA, in return from water taken from the Angat nver, which provides 96% of MWSSs water supply and is located in this province. The pricing of bulk water NON- REVENUE WATEi supply is being studied by MWSS (para 3.9). - - an _1 U?, New Water Connections I_ 2.12 Under the above assumptions, the total i _ _ _ ._ _ number of connections is expected to increase - - - - substantially during the period 1989-92 (Figure 2.3). _ The targets for new connections would be almost e _ _ _ _ _ _ _ _ _ _ twice those achieved in 1988, but below the number = of connections installed in 1986 and 1987. NEW WATER CONNECTIONS c w.-.. - lWSEf AL, MAt M e . a e) I . _ . -ol -4 - | ] } ] I | lllti Figure 2.4 2.15 NRW significantly affects water sales by - g L - - -1 -1 1 1 1 1 1 1 1reducing effective deley capacity of the system. With the final objective of reducing NRW below 3096, --J I -S 1 1\-l I - Ll I IIIMWSS is undertaking a comprehensive leak detection irj | ll/ | | 1 1 \1 lland distnbution system rehabilitation program. i -t - - - - - - - <5- | I?Financing for this program is being provided by two ADB loans totalling US$65.7 million. Results from eight rehabilitated areas show that, with these - -L I 1 1 1 1 1 1 1 1111 imprvements, NRW can be reduced to lesr than 30%. These acttiaes, in conjunction with other measures now being taken by MWSS, are expected to "M me fA I= "M an =M no am M an reduce NRW tO 55% in 1989, and below 40% by 1994 _ ____________________ (pare4. 2.13 To ensure the reliability of MWSSs s I future financial projecdons (which depend on water TOTAL WATER 9OLD (VOLUME BILLED) sales) and thus the reliability of its planning and I '-' - _ _ I budgeting activides, MWSS intends to review and -.o. periodically update the water demand forecast using the computer modeprepared for the project Annual updates would be provided to the Bank (para. 5.13). 1 a a - Non-Revenue Water 2.14 Non-revenue water LNRW) has been a -El major problem for MWSS. During the last ten yean, | .0 NRW has been above 45%, and in 1985, when the La Mesa treatment plant entered into operation and g ea M M *^ | normal pressures were restored, NRW peaked to about I_I 66% of the water produced. As shown in Figure 2.4, Figure 2.5 Forecasted Demand and Supply consumption by that time will have grown to about 1,560 MU) and the maximum daily water production 2.16 Water demand in Manfla is highly needed wfll be about Z,800 MLD. The proposed seasor.d. While regression analysis of total and per project would expand MWSS!s water production capita water sold shows that water sates would reach capacity by 1,300 MID in 1993, with the potentW of about 38 million cu m per month by the yew 1993, supplying an additional 1,277 MLD by the year 2002. the exister - f rationirg in the past whica pent up Groundwater sources providing water to some distant demand a& de higher GNP growth rates expected in districts will be expanded 520, but will supply only the future suggest that sales of 48 milion cu m per 133 MLD by 1994. month can be expected by 1994 (Annex 2, Table 3). The actual and forecasted water sales to domestic, 2.18 The zal forecasted demand and supply commercial and indusrial consumers between 1984 of water from MWSS are shown in Figure 2.6, which and 2006 are shown in Figure 2.5. indicates tiat, even if NRW is reduced below the targeted levels, the proposed mvestment in the Angat Dam would still be needed. Moreover, MWSS should Procuction Cwdcy also be able to supply the maximum daily demand, which peaks during the period January-June. The 2.17 MWSS!s total water production daily peak is generally esdmated as 10% to 20% capacity is about 2,590 M1D (2,500 MLD from the higher than the annual average demand. Using a peak Angat Dam, treated at the Balara and La Mesa factor of only 1.1 for maximum daily demand, the treatment plants, acd 90 MLD from deep wells). Of capacity of the project will be fully used about ;even its actual total production of about 869 million cu m years after project completion, which previous Bank in 1988, MWSS supplied about 359 milion cu m (the studies have shown as economically optimal for water remaining is NRW). The projectons of fu demand treatment and transmission facilities. If NRW is not (Annex 2, Tables 2 and 3) indicate that MWWSs water aeduced to less than 30pi by the yect 2001, the production capacity would be exhausted by 1994, capach provided by the project would be even if NRW were to be reduced to 38%. Total water exhausted much earlier. 3.0 - 1SX4 INSW 1"a 1S920 ff=9 1S994 I0 2a2 00 YWA o SOLO e P1$D a PŁ X CPACITY Figure 2.6 3. THE PROJECT P ect0 RatiSefor Bnk 3.1 The proposed project is an important part of the Governmentes plan to upgrade and expand 3.3 In accordance with Bank strategy, the water services in the Metro Manila area and to proposed project supports Government efforts to provide an adeqWe base for the countrys further improve the living conditions of the urban poor, commercal, industrial and social devdopment The promote economic and soci development by project was identified in 1987, and the feasibility eliminatig major water shortages, and improve studies were completed in June 1988. In February environmental conditions by providing safe water to 1989 the Government requested the Bank to cofinance in the MSA. The project would strengthen MWSS, the project with the Asian Development Bank (ADB) through the implementadon of a four-year and in June 1989 an agreement in principle was institutional devdopment program (pas. 3.10-3.11), reached between the Government and the Overseas with particdular emphasis on improved planning and Economic Cooperaton Fund of Japan (OECF) for financial performance as well as better operation and OECF to participate in cofinancing. maintenance of water production and distribution facilities. The cofinancing with ADB and OECF would 32 MWSS had inialy internded to expand also be important to ensure the achievement of its production capacity by undertaking the Manila common instutonal and development objectives by Water Supply m Project, comprising construction of a MWSS. dam on the Kaliwa River, transmission mains and treatment facilities, costing about US$1.0 bilion (in Pmject Objecdives 1988 prices). However, budgetary constaints prompted it to postpone that project and to look for 3.4 The main objective of the project would lower-cost solutons to improve water supply serices be to provide water supply for the expected water in the Manila area The alternative adopted optl1z5s demand until the year 2000. The project has been use of water resources available from the Angat designed to: (a) increase MWSSs water production Reservoir in two stages: first, by reallocating water capacity, (b) provide 15 cums of safe water to serve more effectively among the various beneficiaries, an addito population of about 3.0 mMion persons; (c) (water supply, power generaton and irrigation) inc ease service coverage of the population in MSA to resulting in a 15 cums increase in MWSSs share for 75% by 1994, particularly in poor neighborhoods; (d) water supply, from 22 cums to 37 cums. In the improve the efficiency of MWSSs operations; and (e) second stage, which is expected to be operative by strengthen MWSSs finances as well as its planning the year 2000, Angat resources will be enhanced by 9 and management information systems. cuns through an interbasin transfer from the Umiray River, with the additional water allocated to power Projc De t= j generation and MWSS. The capacity to convey this water is included in the power plant, the tunnel and 3.5 The project is part of an overall aqueduct to be constructed under the proposed investnent program for which the Government has projecL The optmization of the Angat Reservoir secured financing from different sources. The project resources under the project provides opdmal shaig includes construction of raw water transmission, water of water for potable water supply, power generion, treatment and distnbution facilities for an additional and Iigation, and is the least-cost alternative for supply of 15 cums, including enginering, and consists MWVISS. of the following. - 10- water levels in the researvir are low and evaporation PartA Transmission and Bulk Water SUPD1V. and leakage losses high comprising construction of (i) tunnel No3 (about 6km, 4.6 m diameter); (0i 3.8 The 15 cums of raw water will be aqueduct No.5 in three sections, 5A, SB directed party to the underutlized La Mesa I and SC (about 16 kin, 3.6 m diameter); treatment plant (about 4.6 cums) and pardy to the (ii) the second La Mesa by-pass (about 2.5 new La Mesa It plant (about 10.4 cums). A new km, 3.6 m diameter); and (lv) water mains reservoir of 260,000 cu m will be constmcted at (about 35 km) to provide treated water Bagbag and connected with the La Mesa plants by a (1.1 cums) in bulk to eight municipalities treated water aqueduct (about 0.5 km, 3.6 m in Bulacan Province. diameter). The distibution system will be expanded by about 120 km of prmary lines and 300 km of Part B: Water Source. Treatment and Distrbution secondary lines, including construction of tkee new Facjites, comprsing construction of. (i) and rehabilitation of two pumping smtions; and 100 modification of the Angat power station; km of teriuy lines, including about 345,000 service (ii) the La Mesa II treatment plant (10.4 connections. The metering of flows in the entire cums); (di) a water reservoir (260,000 cu distibution system wil be improved and monitored m); (iv) expansion of the pimary and centrally through a telemetering system. This will also secondary distnbution system by about 420 provide for automatic water analyses and monitoring km; (v) expansion of the terdary of key water quality parameters. distibuon system by about 100 km, including provision of about 345,000 3.9 The bulk water supplied to Bulacan service connections; and (n) telemetering. Province (about 90 NMD or 2% of MWSSs production capacity in 1992) will solve critical water shortages in eight municpalities bordering the MSA, and will be Part C: Consultants' Services. Provision of provided in return for the water taken by MWSS from enineenng consultancy services for the the Angat River, which is located in Bulacan Province. project The municipalities' Water Districts (WDs) wil continue operations of existing systems and, jointly 3.6 Cofinancinz Arranrements. Part A of the with LWUA, wil arrange for expansions, which are project would be financed by the Bank, except for currendy being designed. The quantity of water to be secton SA of aqueduct 5, which wiUl be financed supplied would be finalized on the basis of locally. Parts B and C would be cofinanced by ADB, agreements between MWSS, LWUA and the WDs in except for items B (il) and (iv), including respective the involved municipalites. Agreements have been consultancy services of Part C, which would be concluded for two WDs' (Meyeauayan, Obando) and financed by OECF. discussions will foUow shortly for the remaining siL Particularly important for reaching agreements is the 3.7 A detailed project description is presented price of bulk water, which should be much lower dtan in Annex 3. A summary description is as follows: The the MWSS average price, since it should exclude the Angat auxiliary power station wil be expanded by an cost of distrbution, billig and coUection and assume additional turbogenerator, including construction of a low level of NRW (about 10%) in bulk transmission extension of the powerhouse and modification of the mains. MWSS has agreed to provide the study of the penstock of the main turbines. This wil allow for price of this bulk supply for Bank revie vby December release of 15 cums of water to the Ipo reservoir, about 1989. 7.5 km downstream Tunnel No.3, foUowed by aqueduct No.5, wiU transfer raw water from Ipo dam 3.10 MWSSs Development Pro During to the La Mesa and Balara treatment plants and the the project period, MWSS would continue to develop Novaliches reservoir. The second La Mesa by pass wfll its institutional capabilities. MWSS's Admnistrator and connect all aqueducts with the Balara treatment plant Board of Directors have given high priority to and alow for complete elimnation of the Novaliches streamlining the corporation's procedures and reservoir from the system during dry penods when increasing the efficiency of operations, planninm and financial management. For this purpose, MWSS has - 11 - prepared a Development Program which oudines the station, 12% for the second La Mesa by-pass and the main thrusts of such improvements. MWSS has also Bulacan bulk water supply, 25% for telemetering and established a Management Group to periodicaUy 5% for materials and equipment. Estimated price review and update the Program. The Development mncreases over the project period amount to about Program, approved by the Admhiisttor in August 22% of base costs plus physical contingencies. Price 1989, is satisfactory to the Bank and is provided in inaeases for foreign costs are estimated at 5.3% for Annex 8. 1989, and 4.1% thereafter, and for local costs at 9% for 1989 to 1991, and 8% thereafter. It is cstimated 3.11 MWSSs Development Program for that exchange rate adjusmnts would, on average, water supplv sets the following objectives to be maintain purchasing power parity during the project achieved by end-1992: (a) increase to 70% the implementation period. population served by house connections; (b) reduce non-revenue water to less than 46%; (c) prevent 3.15 The estimated cost r e Bank-financed further leakage by improved speciftcatio!ls for meters, components included in Part A of the project (except pipelines and pressure-reducing valves; (d) improve fo. aqueduct SA), including physical and price staff efficiency, (e) provide training to about one third contingencies but excluding interest during of aU staff; (f) improve billing and collection; (g) construction, is P 1,348 million (US$61.3 million). improve the tariff stmcture to make tariffs more This includes taxes estimated at about US$1.4 milion affordable to the urban poor; (h) maintain a equivalent and a foreign exchange component of satisfactory financial condition; (i) provide more US$27.1 million, 44.2% of the total. For Part B of the uniform water pressures throughout the MSA; Cj) project, the estimated cost of the ADB-financed improve the Management Information System by component, including physical and price contingencies including delinquency reports, pending connections but excluding interest during construction, is P 2,485 and other financial indicators; and (c) inprove mfllion (US$108.7 milion). This includes taxes opeation and maintenance of the water system. For estimated at about US$3.4 million equivalent and a sewerage and drainage. MWSS intends to: (a) foreign exchange component of US$68.3 million, improve services; (b) reduce pollution in the MSA; 62.8% of the total. The estimated cost of the OECF- and (c) assist the population living in areas wnthout financed component, including physical and price sewerage services to gain access to adequate condngencies but excluding interest during altenative sanitation. Further discussion of MWSSs construction, is P 2,050 million (US$92.2 million). insdtudonal objecs is presented in Chapter 4. This includes taxes estimated at about US$2.5 mfllion equivlent and a foreign exchange component of Project Cost US$50.7 million, 55% of the total. The project cost summary is shown in Table 3.1 and detafled project 3.12 The project is in an advanced stage of cost estimates in Annex 4. preparaion, and cost estimates for the raw water transmission component are based on bid prices. FnanI P Estimates for most of the remaining components are based on preliminary designs and the costs of recentd- 3.16 The proposed Bank loan of US$40 awarded contracts for similar works. million would finance 13.7% of the project cost (14.1% excluding taxes), or about 11.1% of the total 3.13 Tlhe estimated cost of the project, financing requirement of US$361.9 million (Table including physical and price contingencies but 3.2). The ADB loan would finance US$130 milion of excluding interest during construction, is P 6,523 project costs or 35.9% of the total financing million (US$291.4 million), of which P 3,416 million requirement. The effectiveness of the Bank loan is (US$151.7 million) or 52% of the total represents conditional upon the effectiveness of the ADB loan. foreign exchange. The project cost includes taxes and Assurances were obtained during negotiations that the duties esdmated at about US$7.6 million equivalent. Government would provide equity contributions to The base cost is expressed in December 1988 prices. capitalize MWSS, for the equivalent of US$80 milion equivalent or 22.1% of the total financing 3.14 Physical contingencies average 8%, requirements MThis is expected to be funded by an including 8% for civil works, 10% for the power OECF loan, appraised in June 1989, cofinancing the - 12. projecL The remaining financing would be provided local currncy financin which is justified in view of by bonds (US$S55.2 million, 15.394), MWSs u intenal the low foreign exchange requilements of this cash generaion (US$34.5 millon. 9.5%), and local component (about 44%) and the high proportion of loans or equity contibutions (US$22.2 milion, 6.1%). low-income beneficiaries. The proposed ADB loan and OECF funds would finance the foreign exchange as 3.17 The proposed Dank loan would finance well as some local cost rquirements of Part B of the 65% of expenditures related to Part A of the project project (distribution and treatrnent works) and (construction of the transmion, by-pass and bulk project-related engineering. ADB would also finance water supply works, except for aqueduct SA, for which the interest during construction. The finncing plan is the contract has already been approved for local shown in Table 3.2. Further details are presented in financing). This would include US$12.9 milion of Table 2 of Annex 10. TABIE 3.1 TOTAL PROJECT CMST - ---- MnLLION PESOS ---- x OF ---- MIoLION US$ --- I WORuS DMBS Foreign Local Foreign Total COST Local Foreign Total 1BRD-FINANCED WORKS 580.7 477.1 1057.8 21.31 27.65 22.72 50.37 45.12 ADB-IINA3CED WK5 655.5 1136.1 1791.5 36.12 31.21 54.10 65.31 63.42 OECF-FINANCED WOSW 706.2 896.1 1602.3 32.31 33.63 42.67 76.30 55.92 LOCALLY-FIt CED WOW 407.5 97.1 504.6 10.22 19.40 4.63 24.03 19.22 -----------------------------------------------------------------__----------__-----_-----_-_-____------ BSIC COST, IPIM r =C. 198 2349.8 2606.4 4956.2 100.02 1U.9 124.1 236.0 52.62 PHYSICAL CONTIGUCIECS 185.4 209.1 394.5 8.02 8.4 9.3 17.6 53.02 PRICE coOTnGziCs 571.1 600.7 1171.7 23.6Z 19.4 18.4 37.8 51.32 ------------------------------------------------------------------___---------__----------------------- TOTAL am 13 3106.3 3416.1 6522.5 1U.62 139.7 151.7 291.4 52.4X TALME 3.2 PROJECTr FIANCING PLAN TOTAL TOTAL X OF ------- MILLION PESOS -------- HILLION MILLION TOTOL PZSOS US4 1989 1990 1991 1992 1993 1994 -------------------------------------------------------------------__--------__----------------------------- pR-ACOST 11 6522.5 291.4 80.5X 546.4 1742.8 1907.2 8.7 639.0 248.2 (A) I1RD-Ftn ced Works 1348.4 61.3 16.92 191.3 426.9 463.2 210.8 56.2 0.0 (B) ADD-Financed Works 2464.7 108.7 30.02 9.4 465.3 707.5 622.1 432.2 248.2 (C) OECF-FLnaned Work 2050.4 92.2 25.51 183.2 609.3 648.9 326.7 282.3 0.0 (D) Loally-Financed 638.9 29.2 6.12 162.7 241.3 67.5 79.1 68.3 0.0 13S CAPIDALI 1659.2 70.5 19.52 27.5 120.4 260.4 367.5 426.3 457.0 World Bank 212.3 8.9 2.5X 2.4 9.0 27.1 43.1 58.2 72.4 ADS 576.0 24.2 6.72 3.5 25.1 71.3 120.8 162.9 192.5 PBII/U 870.9 37.3 10.32 21.6 86.4 162.0 203.7 205.2 192.1 TOTAL To JDu FIAD 6181.7 31.9 100.02 574.1 1863.2 2167.6 1604.2 16.3 705.2 World BDak Loan 920.3 40.0 11.12 63.0 106.9 187.0 213.4 252.7 97.4 Asian Delopmnt ank Loan 2991.8 130.0 35.92 12.7 481.1 764.7 730.4 566.5 416.5 Goverment Elty (OEC? Loan) 1794.7 60.0 22.12 96.0 528.7 563.1 237.1 244.9 124.8 Loal Dank 1200.0 55.2 15.32 240.0 480.0 360.0 120.0 0.0 0.0 Intezul Cash Oeneration 01.0 34.5 9.52 0.0 0.0 247.9 305.3 181.3 66.5 Other Locl Fund 473.8 22.2 6.12 162.5 266.5 44.9 0.0 0.0 0.0 TOTAL .IAnI3CI 8181.7 361.9 100.01 574.1 1861.2 2167.6 1606.2 1265.3 705.2 1) Includes taxes equivalent to about US$7.6 mlllion. Due to rounding, the last digLts in totals may not add up " shou In the tables. - 13 - 3.20 The constuction phase of the project, P iojedea including bidding, evaluation of bids and supervision of construction, will be the responsibty of the 3.18 The project would be implemented Project Management Office (PMO) established under from 1989 to 1994 (Annex 5). Overal project the Deputy Adminstator for Construction planning and supevision of construction wold be Management PMO is headed by a Project Director, carried out by MWSS staff, who have acquired who is the Deputy Administator for Construction considerable experience through several previous M_ent. assisted by three Project Managers and projects. Consutant assistance wiU also be provided, their staff, who are sepaaely responsible for (a) the particularly for aU preliminary and a majority of power plant and tumnel; (b) aquec6ucts, treatment detailed designs as wel as consruction supenn. plant and reservoir; and (c) the distrbution system, Civfl works and instalation of equipment wm be teemeteringsecond La Mesa by-pass and the Bulacan carried out by contractors. The contracts for the system The Project Managers for (a) and (b) above tmnel and the aqueduct were awarded in May/June have already been appointed. The third Project 1989. Based on the awarded contracts and the agreed Manager will assume his duties in February 1990 schedule, the completion of the power station, tunnel, upon completion of designs for the distribution system aqueduct and parn of the distribution system is and bulk water supply. The PMO will closely scheduled for February 1992. The inital water coordinate with EA on engineering aspects during supplied by this system would be treated using projectinplementadon. available capacity (about 4.6 cums) at the existing La Mesa I treatment plant The remaining 10.4 cums 321 Coordination of the design and would be treated at the La Mesa II treatment plant, to construction of the Bulacan bulk system will be be completed In December 1992 together with the La provided by a Joint Committee, established in July Mesa by-pass and about 30% of the distrbution 1989 and comprsing rePresentatives of MWSS, LWUA system. The Bulacan bulk system will be completed i and Bulacan Province (including the WDs of the early 1993 and the remaining part of the distribuion benefited municipalities). It wi also make system, mainly secondary and terdary pipelines, as rommendations on actions to be taken to well as the telemetering in December 1994. The successfully implement this component. implementation schedule is realistic given the advanced status of engineering and contracting, 3.22 Ld Acouision and Compensation. Improvements introduced in MWSSs contacting and Land acquisition is minor since the land is either awards procedures, fmd its experience with already in MWSS's possession or under the right-of. implementing foeign-assisted projects. MWSS wiM way owned by MWSS, and wiUl be completed in 1989. closly monitor the progress of implementaton to During modification of the power station and avoid delays which might affect the somewhat rapid installation of the new turbine in 1991, power Implementation schedule envisioned. generation from Angat Dam wil be suspended for two to three months. MWSS has agreed to compensate the 3.19 MWSSs Engineering Area (, under National Power Corporation (NPQ for tis revenue the Deputy Admitator for Engineering, is loss, and the estimated amount of compensation is responsible for all mattmers related to project plannig included in the project cost NPC wiU also lose some and design. For prdiminary and detafled designs of peaking and average energy generation capacity after the power plant, the treatment works, primary and the project is in opeation, since the hydraulic head secondary istrnbution network, and the teemetering for 15 cums will be reduced by about 30 m. The system as wel as for the preiminay designs of the compensation to NPC for such losses which may result terdtay distribution network, EA is assisted by the from the proJect is a complex issue due to the project consultants (para 3.23). Detafled designs of interaction of weather variations, MWSSs forecasted the terdazy network and aU designs of the second La water demand, NPCs overall peaking generation Mesa by-pass and the Bulacan bulk supply wmi be requirements, etc. This requires preparation of a study undertak by EA's staff. Al designs will be completed bY a third party, independent of NPC and MWSS, by December 1990. which would sere as a common basis for negotiations on compensaton. A tentative esdmate of such annual * 14- cost is included in the financial and economic awarded In accordance with Govemment procedures evaluation of the project Assurances were obtained reqirig that bids 30% below the aerage be from the Govenmment and MWSS that an agreement automaticaly disqualified, which is not acceptable to between NPC and MWSS for compensadon of power the Bank. This contract wil be financed localy. losses, will be concluded by December 31, 1990 and, Procurement of the remainrig civil works, equipment additionally, an understanding was reached with the and materials wDi be divided into about five contracts Government that whfle these matters are studied and (US$19.5 milion) whih will be awarded folowing resolved, project constion will proceed as ICB or local competiive bidding (LCB) in accordance scheduled. with procedures satisfactory to the Bank. Technical Ass_stane 3.25 Procurement under ICB will include civil works for the second La Mesa by-pass as well as pipe 3.23 Technical assistance required for materials, including accessories for the Bulacan designs and construction supenision comprises about component (US$6 miSlion), and part of the equipment 230 person-months of foreign consultant services and and materials for the second La Mesa by-pass (US$3 about 1,650 person-months of local consudtants. In million). The remaiig civfl works contracts, under May 1989 a joint venture of local and foreign US$2 million each and together totalling about consultants was awarded the contract for completion US$3.8 milion, as well as minor equipment and of a major part of the detailed design. Contracts for materials, under US$0.1 milion each and about the remainig designs and construction supervWion US$0.9 million in aggregate, wiUl be procured through are planned to be concluded before December 1989. LCB. Although LCB procedures are generally These consulting services will be financed by ADB and acceptable to the Bank, a review of recent legislation OECF loans. In addition, ADB plans to provide MWSS identified some potential issues which are being a technical assistance grant (US$300,000) for dicussed with the Govenmment and are expected to be institutional deveiopment and training of MWSS stff resolved prior to scheduled LCB under the project in financial management and in various aspect of the Prior Bank review would be required for civl works management and operation of a water supply project contracts costing over US$2 million and goods (e.g., tunneling technology, aqueduct and pipe laying, contracts over US$0.5 million. In total, these represent water quality control, training of trainers, etc.). ADB about 90% of the value of all contracts, which is is also appraising a technical assistance gant adequate. Details on procurement of Bank-financed (US$990,000) for preparation of a feasibility study for components are shown in the Table 3.3. the proposed Umiiay-Angat transbasin water conveyance system (about 9 cums). This grant has 3.26 Procurement of other components. The been approved in principle by the Japanese procurement of components fianced by ADB and Govemment to be financed by ADB's Japanese Special OECF, including consultancy semvices, wil proceed in Fund. accordance with guidelines and arrangements satisfactory to the financing agencies. The Bank has reviewed terms of reference for consultancy services for the supervision of Bank-financed constuction and found them satisfactory. 3.24 Procurement of Bank-financed comnonents. To accelerate project start-up, MWSS applied advanced contracting for the tunnel and aqueduct following international competitive bidding 3.27 The proceeds of the Bank loan would be ([CB). The Bank reviewed relevant documents and disbursed for eligible expenditur under Part A of the procedures employed for advertisement, d and (ue prequalification, bidding and evaluation of bids for project as follows: (a) civfl works at 70%; and (b) these contracts and found contract awards for the equipment and materials at 100% of foreign unmnel and sections SB and SC of aqueduct No.5 penditures, 100% of local expenditures (ex-factory), (US$41.8 million) acceptable. The contract for and 65% of local expenditures for other items section SA of aqueduct No.5 (US$13 million) wa procured locally. 3.28 A Speci Account of US$3 mfllion Project Servision would be established to facilitate Bank disbursements. Retroactive financing up to US$4 million (10% of the 3.30 Project supervisifrn by ADB, OECF and proposed loan) is recommended for project the Bank wil be coordinated through a Supervision expenditures incurred after May 1 1989. This would plan, which would be agreed during the Project accelerate project t. rt-up and the elmination of Launching mission, scheduled for November 1989. water rationing - .A.iSA MWSS is aware that Bank supervision of the project would requre about procurement action tarwa in expectation of retoactive 60 staff-weeks, of which about 30 would be needed financig is at Its own risk and does not commit the during the first wo years for project start-up, Bank in any way to approve a loan for the project procurement, and specifications review. During the fist two yearm, in addition to general engineering and 3.29 The project is expected to be financial staff, speciaists would be needed to review completed by December 31, 1994 and the loan to be desis of the Bulacan bulk water supply and the closed by December 31, 1995. Disbursement of the second La Mesa by-pass, specifications for water Bank loan is expected to take six years, faster tban meters, implementation of leak detection and control, the country disbursement profie, but considered water tariffs, water demand, and corporate plamiing. reasonable since contracts for the main components to Superviion in subsequent years would focus on be financed have already been awarded and should be financial, management and construction completed in Februany 1992. The estimated administration requirements. disbursement schedule is shown in Annex 7. TABLE 3.3 PROCURENIR OF BANK-FNANCED COMPONENTS MnLLION U8s) 1) Poject C _mu.t iCI LCB OT0 TOTAL Civil Works 46.90 3.76 50.66 (31.60) (2.50) (34.10) Materials & Equipmet 9.00 0.84 9.84 (5.40) (0.50) (5.90) Engineering 0.65 0.65 (0.00) (0.00) Lava Acquisition 0.16 0.16 (0.00) (0.00) ---------------------------------------------------------------__------------ SUBTOTAL 5.90 4.60 0.81 61.31 IB!D 1IEABI (37.00) (3.00) (0.00) (0.o0) 11 Fires in parentbeses are amounts ficaned by the Bank. 4. THE BORROWER The Bower and Eeudting Agency efficiency during 1987V88 and even reduced its staff by some 320 persons during this period, fiirther 4.1 The Borrower and executing agency for the improvements will be necessazy. At end-1988, MWSS proposed project will be MWSS, which is a had 8,790 staff about 25% of whom were involved government-owned, autonomous public utility in engineering, construction supervision, system responsible for the provision of water, sewerage and rehabilitation and leak detection. The remnainder were drainage services to the Cy of Manila and another 36 operational staff, largely working in water supply or municipalites in and around MAanila. MWSS is general admkniaon. headed by a Board of Trustees which formulates policy, determines staffing levels and remuneration, considers and approves budgets, approves large OPATIONAL STAFF PER CONNECTION coitracts, appoints MWSSs Deputy Admin , and recommends tariff adjustments for the Presldents _ /\_ approval. MWSS is attached to and supervised by the Department of Public Works and Highways, whose Secretary is Chairman of the MWSS Board. Day-to- / day management of the corporation is caried out by - - - - MWSS!s Admiistmator, who is appointed by the I President The Administator is supported by a Senior Deputy Adminisator and six Deputy Admi ors . - - _ for Adnministrtion, Construction, Customer Services, Engizeeaing, Finance and Operations (see Cltart 1). 7 - - - - To promote specalization and decentalization of operations, six MWSS Branch OfFices have been established, with each office responsible for meter Figure 4.1 reading, billing and collection, general cutomer services, and the reduction of NRW. 4.4 Durng 1986-87, MWSS!s staff efficiency, as indicated by the ratio of operational staff per 4.2 Although the performance of MWSS's thousand water conneedons,sharply deteriorated, and management during 1986-87 was uneven, reforms increased from 10.1 to 12.7 (Figure 4.1). Recent introduced since then have improved overall management efforts have been able to reduce this management appreciably. MWSS has particularly rato to about 11.0, but this is stll much higher than benefitted from improvements introduced under the the ratio of 4 staff per thousand connections achieved Reform Program for Government Corporations (pardy in very efficient water utilities. Although the MWSS assisted under Loan 2956-PH) and the appointment of staff/connection ratio is not expected to be as low qualified professionals for MWSS's top management (given the lower cost of labor in the Philippines and and Board of Directors. high unemployment levels), the staff/connecdon ratio should be reduced to decrease the cost of water to the Personnel and Traing population. MWSS aims at increasing its efficiency and reach 9 stff per thousand connections by 1992, 4.3 MWSS's staff are generally competent and by reducing new recruitment and staff increases, while motvated, and many of the tedhnical staff have been increasing the number of new connections by about in their positions for several years, providing valuable 6% p.a. (see Annex 11, Monitoring Indicators). continuity and in-depth knowledge of the system Staff levels are, however, too high in relation to the 4.5 MWSSS Human Resources Development number of connections and services provided Division (HRDD) has one of the most successfu staff Although MWSS has been increasing its staff traIning programs in the Region. HRDD is currentiy - 17 - carnying out a very extensive program, designed for all Cumren*y, about 80% of the meters are 1/2 inch and staff levels, from laborers to top management, and the rest are larger. However, with about 70% of even induding contractors staff. The program for MWSS's domestic consumers using less dtan 40 tons 1989 includes 128 different training actvites for of water per month per connection (see Figure 4.2) about 3,200 persons (one third of the total staff). and 95% of them using less dtan 100 tons per month HRDD has also prepared a Five-Year Plan for 1990-94 per conecdon, smaller meters would be more (available in the project file), with four major appropriate. Consequendy, the suitabflity of many of components: (a) management development, which the meters is being studied by a consutant appointed indudes about 70 training activities per year in by the Bank. plannmg, supervision, team building, use of computers, budgeting and accounting, etc.; (b) technical and skllS development, including about 20 WATER CONSUWMTION HISTOGRAM training activities per year in pipe laying, leak (amtic .M detection, preventive maintenance, plant operations, I r water treatment, meter repairs, etc.; (c) overseas w - - I training forabout20 staffa year in various technical - - - courses of 2 to 20 months' duration; and (d)a i a… reciprocal training and exchange program with the Metropolitan Waterworks Authority in Thailand. Operations and Maintenance -- 4.6 MWSS operation and maintenance practices require improvement. In the past, maintenance of the distnbution system, about half of __ which is about 30 years old, received low priorit, and Figure 4.2 efforts were focused on the expansion programs. The Bank-assisted Metropolitan Manila Water Distrbution 4.8 Standards for Pipes and installations Project (Loan 2676-PH) highlighted the problem o* have also been changed to prevent future leakage by leakage in the system and the need to give priority to replacing easily-corroded galvanized pipe with PVC maintenance and rehabilitation of the existing pipe, and measures have also been introduced to help infastructure. An accelerated progra i was therefore prevent metertamperi and illegal connections. The prepared and is now being implemented to rehabilitation program is expected to be completed in rehabilitate the distribution systems in more than 90% 1993. To complement the distribution works, the La of the MWSS service zones and thus reduce NRW to Mesa I and Balara treatment plants are expected to be less than 40% by 1994 and to 30% by the year 2000 rehabilitated with assistance from the Govenmment of (para. 2.14 and F.,-ure 2.4). Japan. Assurances were obtained at negotiations that MWSS would study and improve its specifications for 4.7 Results from the rehabilitaion projects water meters by December 31, 1990 and in indicate that about 80% of NRW is due to leakage, accordance with its Development Program it would with the remaining 20% attrbuted to metering errors take all measures to reduce NRW to below 49% in ana to unregistered or illegal connections. Extensive 1991, 46% in 1992, 43% in 1993 and 40% in 1994. surveys have detected less dtan 2% illegal connecto Moreover, MWSS is aiming to reduce NRW to about (other than in Pasay, a low-income area where the three percentage points below these levels. survey detected 15% illegal connections). Further investigations indicate that part of the NRW problem 4.9 There is also a need to upgrade may result from the use of inaccurate and, more consumer services to reduce to less than ten days the important, overly large water meters since many of time required for normal house connections and to the meters used are too large to register the low flows improve connection monitoring by: (a) issuing used by most consumers (particularly under low monthly reports on the number of connections pressures or when domestic strage tanks are used). requested and completed; (b) monitoring to ensure that connections cosed for nonpayment are not were also obtained from MWISS that strting reopened; and (c) caryig out specW monitoring and lDecember 31, 1990, its overall accounts receivable auditing of the water used by large commercial and will not exceed four monts of billing. industial consumers. Assunces were obtaned at negotiations that MWSS woud upgrade its customer services and connection monitoring by December 31, 1990. ACCOUNT RECEIVABLE (DAYS OF BILLIN) Mr. 1 L ~AUW = ACCU3 4.10 Under the projec, remote metering of Z - the main pipelines will be instled to facilitate _ - - control of the extensive distibution system. -3 - Assurances were obtained at negotiations that by X . - December 31, 1993 MWSS will improve Its ' - - i- operational systems by, (a) establishing a central I - - - control operating room, including remote metering - - devices; (b) making operational the computer - - _ - simulation of the trnsmission and distrbution - - - networks; and (c) installing pressure-reducing valves -Y in zones with excessive pressures. Bli and Co.eto 4.11 Billing is computeried, but the Piue 4.3 program requires seveal improvements, including a more timely production of statistics. This would be Ac t and Auding achieved in 1990 with the use of a larger computer. 4.13 MWSSs accounting procedures are 4.12 Gross accounts receivable are about generally satisfactory. MWSS is in the process of six monthse sales, which is ecessive (Figure 4.3). changing its systms to a larger computer. The MWSS is now starting to use successfuly the computized accounting requires improvements Governments inter-agency dearing office for the mainly to provide: (a) more timely reports; (b) better settlement of these overdue accounts In addition, management sunmiares; and (c) in-line infonnation agreement has been reached with the Commission on to all deputy adminisators. Under the Reform Audit (COA) to eliminate accounts receivable pending Program for Govenment Corporations (Loan 2956- for many years, which are dearly uncollectible. Since PH), consultants in late 1989 wffl review the about 30% of accounts receivable are due from computer accounting programs used by 10 major govenmtent agencies, assurances were ovtained during govemment copnrations (including MWSS) to negotiations that to reduce MWSS's accounts improve or replace existing programs, set compatible receivable for water and sewerage services, the informaton for aU government agencies, and provide Government wil: (a) include adequate amounti in the better informadon to, management Financial budgetary appropriadons of nadonat government statements up to and including 1988 have been agencies and the operang budgets of government satisfactority audited by COA. Assuaces were corportions for the payment of their water and obtained during negodations that MWSSs financial sewerage bills; (b) ensure the settlement by December statements, project expenditures, Special Account and 31, 1990 of a s dbstanl pordon (60%) of the past Statements of Expenditure would continue to be due accounts receivable of MWSS frtm local audited by independent audits acceptable to the govenment units and goverment corporations; and Bank and that the Auditors Report would be sent to tc) ensure that by December 31, 1990, and thereafter, the Bank not later ham six months after the end of the accounts receivable of MWSS from national each financial year. government agencies wil not exceed the aggregate amount of four months of their billing. Assurances 5. FINANCIAL ANALYSIS Past and Current Fiucial Pera decreasing to about P 1 billion (US$50 million) ps. 5.1 MWSSs finial performance has been in recent years (Figure 5.2). satisfactory. Its net ';ome steadily improved from p 54 million in 19-/8 to P 346 milion in 1984 and I VESTMENT PROGRAM P 538 million in 1938. Similarly, its rate of return on NVM revalued net fixed assets in operation increased from 4% in 1980 to 9% in 1986, reflecting large increases .s- in current charges per ton of water, from P 0.66 in 4 1978, to P 2.1 in 1984 and P 4.0 in 1986. . IW>SS S RATES OF RETURN I - ' *1 _ S _ __I_ _ __/_ __ea_ _ _ _ _ _ _ _ _ _ _ _ _ _ __R - ___ _ F iguire 5.2 a~~~~~~~~~~~~~~~~~~~~~~a t v ~~-4.----.. . SA MWSWssfinancial radossimilarlyindicate a satisfactory performance: the workmg rato is about a___________________________ .39%6, the operatirg ratio is about 5% I/ (endnotes Figure 5.1 appear at the end of the chaper) and the debt/equity ratio is 46%. Cash flow, however, has been a problem due to large debt service increases in recent 5.2 Even tring the recession and turbulence years (about 95% of MWSs debt is with the ADB of the period 1986-87, MWSS was able to achieve and the Bank). In 1988 MWSS's total debt was P 4.6 rates of return of about 8% p.a. on its revalued fied billion. MWSS's debt serice ratio has been below 1.2 assets in operation (Figure 5.1). Furthermore, while in some years and is exected to be below 1.0 in there were few tariff increases during 1986-88, MWSS 1989, requiring equity contributions (including the was able to maintain a satisfactory financial position waiving of franchise and income taxes). This is by increasing Its efficiency and sales. Thus, between patay due to the revaluation of loans in strong 1985 and 1988 MWSS increased its customers by 30% currencies, which increased MWSS's debt balance and and the volume of water sold by 1796. payments in dollars by about 40. This was compounded by a 100% devaluation of the peso vis- 5.3 Investment levels throughout this period a-vis the dollar. Therefore, during 1983-88, whe have fluctuated, fist incraig from a modest p 90 local consumer prices doubled, MWSS's debt service milion in 1978 to P 2.6 biUlion in 1984, then, under obligaions more than tdpled, forcing MWSS to monetary controls applied by the Government, allocate more than half of its revenues for debt service payments. -20 - Water and Sewe=age Tariffs problems are provided in Annex 9. The new tarf also reduced the tninimum price from P 18.6 to P 16.0 per 5.5 MWSS's tariffs are progressive, with prices month per connection (bene&-,'ng low consumers, increasing as water use increases. This not only mainly the urban poor), whlk .nc, easing the price for discourages wasteful use of water and encouamges encessive consumption. MWt- Corporate Planning conservation but also cross-subsidizes-low.income Department is considering additional improvements, users and facilitates their access to safe water. Tariff partiuarly to reduce the number of rates and to levels are adequate, and water rates for larse apply the same unit charges to all residential consumers are higher than the estimated marginal consumption above 60 tons per month (which exceeds cost of P 3.3 per ton. To compensate for debt the actual water used by 90% of MWSSs residential revaluation, MWSS has introduced an automatic consumers, Figure 4.2). compensation for exchange rate adjustments (CERA) which increases automatically if the foreign debt 5-8 Sewerage charges levied on customers service per ton of water sold increases in relation to with house connections are 50% of the water charges, the reference values for 1984. Because the volume of which is reasonable. The remaining population pay water sold increased considerably during the last thre evironmental charges equivalent to about 10% of the years, CERA increases have been modest; the CERA cost of water consumption. These charges are used to surcharge is currently equivalent to 10% of the operate, maintain and contnbute to the expansion of average water tariff. The average .ter rate in 1988, the sewerage system, clean septic tanks and including the CERA, was about P 4.4 per ton, with implement other environmental protection measures. domestic consumers paying charges about 20% lower Including all charges, MWSS's revenues average P 5.3 than the average, and commercial and industrial per ton. consumers paying 32% and 76% more, respectively, than the average. In addition, there are minor charges for meter maintenance (equivalent to 0.7% of MWS's Overa Finrcial Pln and Iwestme revenues). Program 5.6 As a result of the tariff structure, in 5.9 AlthoughtheproposedprojectisMWSSs December 1988 domestic consumers accounted for largest and most important investment in the medium about 86% of MWSSs customers, used about 62% of term, it represents only one third of MWSSs expected the water, but paid only about 48% of MWSS's invents during 1989-94. As shown in Table 5.1, revenues. Commercial consumers comprised about about P 2.7 billion (16% of total investments) are for 13% of the customers, but used about 22% of the ongoing projects (mainly the tws rehabilitation water and provided 28% of the revenues. The few projects). MWSSs total capital expendixures, including (0.6%) industrial consumers used about 7% of the investments, as well as woridng capital and debt water and provided about 12% of the revenues. sevice, are high, averaging P 4 bllion per year Government services comprised 0.8% of the accounts, (Figure 5.3). Most of the new projects are relatively used about 10% of the water and provided 12% of small, the largest being METROSS II, which would the revenues. improve swerage and sanitatiato services, and represents 14% of planned investment (Table 5.1). 5.7 In July 1989, MWSSs Board of Trustees Since some of these projects have lower priority, approved an improved tariff strcture. Under the MWSS can advance or delay them, providing flexibility prenous tariff stmuture, some tariff levels covered a to balance its cash flow. MWSS's gross iternal cash wide range of consumption, resuting in relatively geneiation during 1989-94 would be about 61% of its high unit charges for the lowest consumers within a investments, and its net iternal cash generaton range and comparativdely low charges for those with (after debt service) woud be 26% of its total the highest consumption. For domestic consumers, for investments, which is satisfactory. example, a change in their water consumption from 24.9 tons to 25.0 tons per month increased eir monthly payment by 53% (from P 30 to P 46). Detais of the previous tariff structure and the improved tariff structure correctng this and other -21. TAMi 5.1 - MWSS FDNNNG PLAN (19894) (LUliOD Porn) TOTAL S 1989 1990 1991 1992 19 1M 4 Incoee before depreciatlon 12544 72.72 1258 1563 1819 2154 2587 3164 Other Incoae (+) or Expenaes -1959 -11.32 108 -286 -349 -389 -475 -568 ss E aL SOUR 1055 61.o 126 1277 1 17 2112 2596 IXNUSt Amortization 3496 20.32 352 370 391 520 827 1036 Operational Interest 2988 17.32 763 318 385 537 516 470 ________________________________________________________________________ TOTAL DEBT SERV1CE 6484 37.6S 11ll 668 776 1057 1342 1506 WORKING CAPITAL 4EEDS (4) -283 -1.62 174 -244 193 -l50 -105 -150 OTBER ASSETS (4) OR LIABNZEDS 126 0.72 7 42 32 24 12 9 CASH INCREASE (+) OR DECREASE -218 -1.32 -1385 -27 145 216 401 431 OBT X1SNAL 1O RCES QH FUDS 4476 25.92 1455 819 324 "1 462 800 cArnA DITU ionr PIUJCT vam 2702 15.7X 1398 799 157 210 216 122 MM PROUECT WMBS: 1199 68.9X 1165 2515 3175 2419 1726 898 ANGAT WATER SUPPLY 6523 37.82 547 1743 1907 1239 839 248 NAnila VS 311B. II (3WSRP II) 1407 8.22 503 356 385 163 0 0 Manila VSIII (NIP III) 228 1.32 88 100 10 10 10 10 FrInge Areas VS (7*A51) 201 1.22 13 53 55 74 7 0 RiSal Proauce WS (1t91SP) 264 1.5S 14 40 66 106 39 0 Rob. Balara & Trin. (RBTPIRC 635 3.72 0 225 410 0 0 0 NoEAss 11 2441 14.12 0 0 S42 828 831 440 Other Voks 200 1.22 0 0 0 0 0 200 Tatezet Capitali4 2662 15.42 401 30 444 43 S 565 Other Assets (General) 0 0.02 0 0 0 0 0 0 TOTAL CAPTAL tDTUUZ 17262 100.02 2964 3616 3776 296 2362 1584 M TO 11E113Am: 12766 74.12 1509 297 343 243 1899 78 Foreign Borrowing: 7377 42.7Z 913 1103 1526 1711 1530 594 IBMD-Angat ProJect 920 5.32 63 107 187 213 253 97 ADU-Angat ProJect 2992 17.32 10 481 764 730 586 421 Other Foreign Loans 3464 20.12 840 S15 575 768 691 76 Local Borrowlng 1600 9.32 280 5S0 470 270 0 0 PB-Un Bonds 1200 7.02 240 480 360 120 0 0 Otber LoclLoans 400 2.31 40 100 110 150 0 0 10NAL DmINO 897 52.02 2193 1663 196 19U 1 1530 594 EQUITY (TRAfER OOCF'S LOAN) 1795 10.42 96 529 563 237 245 125 OTHER GOVER. EQUITY 13S0 8.02 220 361 483 124 125 66 FOREIGN GRANTS (Blara Rh,b) 635 3.72 0 225 410 0 0 0 TO=ED 11 22786 74.11 1509 2797 343 234 899 75 contnbutions to government corporations. This is more dificult for corporations like MWSS where there CAPITAL EXPENDITURES are issues of povery and basic needs, and a massive, .. tCl* etZll" SCU>}TWILconcentrated investment. Because of this, and given MWSSs low debt service ratio, the Goveimment has agreed to provide equity contributions for the proposed project as a way to capitaize MWSS. Govemnment__s equity contributions would total about P 3.2 bilUion, including. (a) P 1.8 bilion (S$80 _miUion) expected to be finded by an OECF loan being negotiated with the Government; (b) waiving until . _ 0 0 _ g _ _ a 1991 the payment by MWSS of franchise taxes (equivaent to about 2% of gross revenues) and Q C/K. _ ///9 _ _ eSt. _ {/Xtz g income taxes (about 35% of net income); and (c) , providing other cash contributions (P 0.6 biltion) ___________________________________ Qparticularly for sewerage (METROSS 11). The Figre 5.3 rehabilitation of the Balara treatment plant is contingent on the securing of a foreign grant, presently being arranged by MWSS. On the above 5.10 The proposed overall financing plan for basis (Figure 5.4), MWSS's financial plan is viable. MWSS!s total investments assumes that in addition to However, cash resources would be constrained, ongoing loans and those proposed for the project, particuly during 1990-91. MWSS would take additional loans to finance about 60% to 70% of its new inestments. Since local long- - term financing is not available, MWSS assumes that | Ł Ss AVERAGE WATER RATES most fiancing would be a combination of foreign I . 7 V loans (25 years term, 5 years grace) and a few local ____ loans or bonds (7-year terms, 18% interest). - Compensation for power losses due to the reduction | _ _____ in peak generating capacity and additional generating | costs estimated at P 52 milion ror maximum capacity of 15 cums is included in the financial projections. | _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _1 I 't [ - , I 1 1 -tp1_1 FINANCING PLAN | . - 1 .0, I l I I *l . ,. | . | . g . U. U. I IgIre e5.5 I 3 ffi1 1M/g m |M/ 1g7/, 1Mg 1 5.12 MWSSs financial projections (Anne 10) *.0 oo ",, ,,, ,, , ,,, ,, | show that an 8% finaneial rate of return could be I_ zaitz zzB gsnamtained by keeping the present average tarff in ___________________________ I constant prices (Figure 5.5), and implementing the Figure 5.4 proposed efficiency improvements in staing and NRW (see Annex 11, Monitoring Indicators). This rate of 5.11 Durig the last three years the return is based on net fixed assets in operation, Government has been reducing budgetary revalued either by detailed valuation or using the -23 - consumer price index during interim valuations. MWSS in this task by helping it to develop MWSS should also maintain a satisfactory financial computerized models for its MIS, long-term planing performance as measured by its return onfixed assets and water demand, all of which are now in operation. and maximize internal cash generation for its Given the magnitude of its imvestments and debt development program. A minimum debt service ratio service obligations, these systems should be further of 1.2 should also be achieved to ensure payment of improved to accurately forecast MWSS's finances. In its debt service obligations. 2/ Assurances were addition, improvements are required in assessing obtained at negotiations that MWSS will (a) achieve water demand, which is critical to the corporation's an annual rate of return on its revalued net fixed physical planning and financial viability. The MWSS aets in operation of not less than 8% per year, (b) Planning Department is planning to carry out surveys maintain a debt sewrice ratio of not less than 1.2; and of consumers to establish more accurately the lc) carry out annuaby, and provide to the Bank for population served as well as an analysis of the comments by October 30 of each year, a review of the relatively high cost of water connections which may adequacy of its water supply and sewerage charges. discourage low-income users or result in illegal Sensiivity analysis shows that the main financial connections. Assurances were obtained during variables are the NRW and the revaluation of the debt negotiations that MWSS will provide the Bank, in service. Even if aly half of the reduction in NRW April and October of each year, copies of the resuted in additional water sales, the decrease of following reports: (a) financial projections, and NRW from 60% to 40% would increase MWSs net monitoing indicators; (b) the Management income by almost 80%. Infonnation System on water and sewerage serices, revenues and operational costs; (c) project costs; and (d) status of project contracts. The April report would Moitoring and Evaluation also include updated data for MWSS's long-term investment plans and water demand. MWSS woud 5.13 MWSS has considerably improved its also prepare and provide to the Bank a project planning and management information systems (MS) completion report, not later than six months after durmg the last two yeas The Bank has assisted project completion. IL The working ratio is the ratio of the ope-viting expease enchudin depreciation divided by operatin reveues. The opating raio is the ratio of the total operating expenmes dided by tot opertonal revenues. 2/ The debt service ratio is the ratio of gross internal ash generatio to total debt. .cave (amortization and principal). Since part of MWSS's interest eendu ar financed (eg., under ADDs klm), the revenues of MWSS are sable tmugh the yeat, and equic butos or cash resves are not comsdred in this ratioi, the 1.2 debt sevice ratio is adeqi -e 6. ECONOMIC AND SOCIAL ANALYSIS Priect Benefits surveyed and evaluated all possible water sources for the MSA and ther cost. Various altematives to the 6.1 The proposed project would provide proposed projcct were initially considered in order to urgently needed water to the Metrpolitan Manila avoid decreasing NPCs hydroelectric generation area, which has about half of the counts industia capabil-ty at a time when oil prices were expected to base, its commercial center and a population of about rise; however, lower oil prices and a subsequent study 9 mfllion people. which indicated that the loss of generation capacity would be less than originally believed allowed serious 6.2 The project would improve water services consideration of the approach finally adopted. in the area, so that by the time of project completion in 1994, about 5 mfilion persons who are already 6.S The Angat Water Supply Optimization served would be free of water rationing and low Project would also postpone for many years the pressures. The project would also expand the water Manila Water Supply Im Project, the long-term distribution system to areas now without water solution for the supply of water to the MSA, which networks, where many of the poorest part of the requires the construction of a large dam, transmission population reside. By improving the reliability of mains and tunnels, and treatment facilities at a total water services to industrial and commeri cost of about US$1.0 biUlion in 1988 prices. consumers, it would allow them to gradually phase Hydrologic studies demonstrated that, by modifying out their current dependence on deep wells and the op rating rules of the Angat Dam, MWSSs excessive pumping of undergound water, which is pnmary water source, and by allowing use of the depleting the aquifer and allowmng saline intrusion. Dam's full design capacity (down to elevation 160 m), This would restore the use of water resources widtin MWSS could optimize the use of about 15 cums of the natural recharge capacity of the aquifer. In water, except during the severest droughts, at a tocal addition to this environmental benefit and the obvious cost, including distribution systems, equivalent to one improvements to sanitation permitted by an increased third of the Manila HII Project. The Angat Project water supply, the normal water pressures retored by woud not affect exsting ingation use, but Wi the project should decrease the potential health nsk reduce the peak and average power generation from posed by sewage infiltration into tLe water supply Angat Dam. system. The project thus represents a critical input to the continued resumption of economic and social 6.6 Several altematives for optimization of development in the Philippines. the Dam's capacity were studied. The final selection was between two alternadves: (a) continuing the 6.3 In additon, the project would maximze release of water from the present turbines (therefore benefits from existing headwor investments at the without power losses) and pumping water from a Angat Dam and postpone very large investments in downstream location to MWSSs treatment plant; and other water sources. And, by insdtudonal (b) building a new turbine at a higher elevadon. The improvements and the implementaton of MWSSss latter altenative was selected, since its present value Development Program, it would strengthen one of the in terms of net revenues is 5% higher than that of the largest corporations in the country, which would former alternative. The aqueduct and tunnels also influence other water utilites in the Philippines, follow the least-cost route, which is paralle to the which tend to follow MWSSs lead. four existing aqueducts, using land already owned by MWSS. The project would allow opdmization of the Last-Cost Soi La Mesa I treatment plant's unused capacity of about 5 cums. 6.4 The least-cost solution to Mania's water 6.7 Additional analysis was caried out to supply problem was extnively investied during determine the correct staging of tunel and pipeine project preparation. Studies were carried out which constrction, particularly for the additional 9 cums -25- which will be supplied to Angat from the Umniray (Annex 6, Table 1). On this basis, the ERR for the Basin to meet future demand. The timing of this project is estimated at 15% (Annex 6, Table 2). investment obviously depends on expected levels of water demand. The feasibflity study for the project 6.10 Sensitivity analysis indicates that the forecasts that the Umiray supply would be needed by ERR would stll be an acceptable 14% if project 1995. However, the revised estimate of water demand construction takes two additional years. The ERR made by Bank staff indicates that the Umiray water would be 13% with a 10% increase in costs combined wfl not be needed until the year 2000. with a 10% decrease in benefits. The reduction of incremental water sales by 30% for ten years reduce 6.8 Even under the lower estimated demand the ERR to 13% (Table 6.1). used for the proposed project, staging the construction of the aqueduct is not the least-cost soludon, because 6.11 The above rates of return underestimate of the need to purhase additional land and gain right total project benefits, however, by excluding many of way over an area of about 15 m by 20 km. Important benefits which are difficult to quantify. Therefore, it was decided to construct the tunnel and These include improvement of the livig standards of pipelines for the final capacity of 24 cums. Moreover, the population already connected, the increased since the full capacity would not be needed economic rents in new land areas supplied with immediately, there would be an opportunity to repair water, the consumer surplus, and the health and Aqueduct No. 1, which has been showing signs of general welfare benefits brought about by a safe and detenoration, including a decline in cepacity from 8 reliable water supply. These benefits were etimated to 6 cums, even with higher pressures. Without in Annex 6, Table 3, and indicate, although extenaive mamtenance, this aqueduct may fail. Such admittedly not very precisdy, that the project's repairs are not feasible now, because they require that benefits esdmated from water sales comprise only a the aqueduct be out of operation, reducing the already minor fraction of the total benefits and the projects rationed water supply by 35% for several months. ERR CTable 6.1). Thus, immediate constuction of the aqueduct and tunnel for the total capacity is preferable, so that Aqueduct No. 1 can be shut down in 1992 for repair. Marginal Cost The Bulacan bulk water supply would provide water by gavity, and is also the least-cost altemative for the 6.12 The long-term marginal cost of water municipalities contiguous to MSA (Annex 6, paras. 2 was calculated at discount rates varying between 5% to 4). and 12% (Annex 6, Table 2). The marginal costs per ton of water vary between P 1.9 and P 3.3, which is Economic Rate of Retun lower than MWSSs present average charges. The uarginal cost coincides with the average domestic 6.9 The Economic Rate of Retun (ERR) for tariff and about 30% lower than MWSSs average the total project was calculated, taking into account tarlft which is reasonable given MWSS's financial (a) as a proxy for benefits, the taiff revenues from requirements. MWSSs incremental water sales. This is appropriate because Angat/Umiray would be the only additional 6.13 The existing financial tariff is higher water sources during the next few years. Revenues than the marginal cost for this project, because of were estimated uing existing charges for water as of MWSSs cash requirements for debt service and the December 31, 1988; and (b) as costs, the capital costs need to contibute to a rapid expansion of water relating to the project as well as other investments in services. Moreover, present prices reflect the rehabilitation of the distnbution system and leak inefliciency in the use of water and of other facilities, detection. These investments are essential to avoid which would be improved during project water wastage, particularly when pressures and water im Average rates for commercial and supply are normalized upon project completion. The industrial consumers as well as for large domestic economic analysis also includes the annual cost for consumers are well above the average marginal cost. energy losses due to peak generation or lower These tariffs are justfiable to discourage excessive or hydraulic head. Investment costs were shadow priced wasteful consumption by the largest consumers for the economic cost of labor and foreign exchange (commercial, industrial and 20% of the domestic -26- TABLE 6.1 ECONOMIC RATE OP RETURN Base Project Bene- Project Case Cost fits Cost 10X 10 +102 8igher Lower Benfits lOx Bae Case (Existing Tariffs) 15X 142 142 132 Benefits Redued 301 for ton yar 132 112 Including Coena. for Peak Capacity 152 141 Base Case plus Health & Flre Protect. 142 132 Project deleyed for two Yers 14X 132 Base Case plus Conaiur Surplus 24X 212 Base Case plus Land Benefits 232 19X lncluding Health, Land ad Consur Surplus Benefits 34X 28X consumers use 80% of the water sold), allowig capita income. Furftermore, in these cases there is postponement of construction of the cosdy Manila usually more dtan one income-ener per family. Water Supply m Project for about 12 years. Industrial trffs should, however, be lowered when MWSS water supply is normalized. POPULATION SERVED BY WATER CONECrIONS 6.14 MWSSs present water rates are - C - affordable. The average tariff is about US$0.22 per - - _ - ton, which is in the low range for capital cities in i X - _ developing countties. A major MWSS concem has - been to maintain cross-subsidies which allow the low- ' - - - income population to benefit from water services. The critical test of affordabiliy is the low-income - population. In this case, using the minimum wage of - - - - P 79 per day recently approved for the MSA, the - - - - average charge for a family of six persons, using 10 tons per nonth (55 lcd) would be only P 16 per month (US$0.80). Even including environmental charges and the CERA, this i less than 1% of their Figure 6.1 monthly income. Although most of the low-income population does not have sewerage services, even if sewerage charges are added, the total bill would still Ipact an the Urba Poor be less tham 1.5% of monthly income. This is much lower chan the 4% and 7% considered affordable for 6.15 The project would provide water to water and far water and sewerage services, unserved areas of the city and increase coverage by respectively. Although there are individuals earning house connections from 58% in 1988 to 75% by 1994. less than the minimum wage, this is expected to be The total additional population to be provided with reduced over time, with gradual increases in per water by house connections for the first time would be large, increasing from 2.3 million in 1994 to 4.3 -27- million by the year 2000. This is mainly due to the rehabilitating sewers and constructing an ocean proJect, but icludes benefits which can not be outfall. Design of a second sewerage project to further identified sepaately for other complementary expand sewage collection and disposal facflities investment It is estimated that about 45% of the (METROSS 11) has been completed, and is expected to population in Metro Manfla is poor. As shown in start construction in 1990 (with ADB financing). Figure 6.1. almost 70% of the addidonal population Programs to improve sanitation in existing seved as a result of project investments wil be the neighbbohoods are also being carried out successfully urban poor, an additional 3.7 million of whom would under several olher municipal programs (PROGRESS be served by the year 2000 (Annex 6, Table 4). MWSS and Municipal Development) or housing rehabiliation is also expanding the number of public faucets to projects under the National Housing Authority. serve the population which has neither house connetions nor weUs. The provision of water by 6.19 MWSS sericing of private septic tanks was house connections would also have considerable discontinued for about one year because of problems impact on freeing the urban poor, particularly women, in finding suitable disposal sites for the sludge, which from the arduous task of carying water from public have to be approved by the Department of faucets. For an average household family of 6 persons Environment and Natural Resources. This problem las using 30 lcd, this requires the transport of 65 tons of been solved and MWSS has now reactivated the water per year. This is normally carried in small 20 program using private contractors. It is planned that liter containers, over a distance of several blocks. each tank would be cleaned at least once every five years, which is within norma requirements. Project Rislp 6.16 The project would provide reliable water sup4y to most of the population in MSA. It 6.20 There are no unusual project risks. The would also have a major postive environmental major risk, ie., delayed implementaton of the various benefit by reducing the currently high level of components, which would postpone overall project groundwater use, ths helping in restoration of the completion by one or more years, is mitigated by natural regime and preventing excessive depletion and MWSSs experience with similar works and because salinity intrusions, already experienced in the coast the raw water system, the critical component of the areas. The augmented supply will also ensure that project, has already been contracted. When this the entire network is contnuously under pressure, component is completed, any other completed works thereby eliminating the serious health hazard of would produce immnediate benefits by using the sewage infltration in the distribution network existing facilities. It is estimated that even with a two-year delay in consaruction, the economic rate of 6.17 The impact of the additional sewage and return would stil be 14%. A more likely problem is "grey water reslting from the expanded water supply that improvements in the distibution system for cities will be alleviated mainly by septic tanks, which are in Bulacan would not be completed by 1993 since required by law for aU houses, and pardy by the these works are still being prepared for loan existing sewerage system which has been designed to processing. However, this component uses only 2% of accommodate such augmented quantites of sewage. the water production capacity, and bulk water supply Combined drains are also expected to cope waih the would first be extended to two major municipalities in additional sewage, since they are sized for very large Bulacan which already have most of the distibution flows during the monsoon period. Although several system required and a very serious water shortage. creeks and the Pasig River would be further polluted, The other municipalities would be supplied only by this does not affect any beneficial users of water for 1993, giving adequate time to expand their small agriculture or water supply. distibution systems. Faflure to reduce NRW would increase the cost of water and reduce the populaton 6.18 MWSS is making a significant effort to benefited. However, the results achieved in the areas improve saniation, within its financial means. A first already rehabilitated indicate that the proposed NRW sewerage project (MElTROSS I, paras. 1.17 and 1.18) targets are achievable. is being completed successfuly, expanding and 7. AGREEMENTS REACHED AND RECOMMENDATION 7.1 The effectiveness of the Bank loan is 7.3 Assurances were obtained at nefotiations conditional on the effectiveness of the ADB loan (para that UWSS would_ 3.16). (a) reach an agreement with NPC for compensation of power losses not later than 7.2 Assurances were obtained from the December 31, 1990 (para 3.22); Government at negotiations that: tb) improve its specflcations for water meters (a) an agreement between NPC and MWSS for and pursue all measures to reduce NRW compensation of power losses vill be (param 4.8); concluded not later than December 31, 1990; while compensation to NPC is studied and (c) upgrade its customer serices and connection resolved, project construction wfll proceed as monitoring by December 31, 1990 (para scheduled (para 3.22); 4.9); (b) adequate amounts would be included in the (d) improve its operational systems by December 1990 budget for payment to MWSS of the 31, 1993 (para. 4.10); accounts receivable of aU government endties. Adequate amounts for the payment of water (e) reduce by December 31, 1990 and thereafter and sewerage services would be budgeted maintain its accounts receivable below four thereafter by government corporations and months of biling (para 4.12); national agencies, and the receivables from these agencies would not exceed four months (M achieve an annual rate of return of at least of billing after December 31, 1990 (para 8% per year (para. 5.12); 4.12); and (g) maintain a debt service ratio not lower than (c) equity contnbutions for US$80 million 1.2 (para. S.12); equivalent would be provided to capitalize MWSS (para. 3.16). (h) review annually the adequacy of its water supply and sewerage charges (para 5.12); and (i) prepare periodicaUly updated reports on water demand, monitoring indicators, long- term plans and financial projections (para. 5.13). 7.4 Subject to the above condition and a&uances, the proposed project would consatute a suitable basis for a Bank loan of USS40 mion equalent to MWSS. The loan would have a tern of 20 years, inluding a grace period of 5 years, and cany the sandard variable interest rate The loan would be guraneed by the Rqblic of the PhIlIp - 29 - ANNEX 1 - Page 1 PHEUPPN ANGAT WATER SUPPLY OPIUMIATION PROECT EXISTING WATER SUPPLY AND SANITATION SYSTEMS WATER SUPPLY 3. Ground water is extmacted both inside and 1. MWSSsservice area (MSA) of about 150,000 outside the areas serviced by MWSSs central ha includes five cities and 32 municipalities with 1988 dttbuton sysm (CDS). Insitde CDS there are population of 87 mfllion. The estimated average daiy about 2,250 private deep wels, extacdng some 780 water supply at the end of 1988 is about 3,310 MLD MID, and about 100 MWSS deep wells, extracing servg about 7.6 million (87% of total). About 2,400 about 90 MLD. Outside CDS about 20,000 shalow 'LD (72%) is surface water drawn from outside the wells are esdmated to extract some 40 MID. The MSA and about 910 MLD (28%) is ground water groud water has been excessively exloited with hie extacted within MSA area of which private wells water level being about 50 m to 100 m below sea account for about 820 MLD (90%) and MWSS wells level and in the eatiy eighdes dedining 4 m to 8 m for 90 MID (10%). Out of total water supply of 3,310 annuaily reslting in saline water intrusion, along the MID, MWSS provides 2,490 MID (75%) from both coast in particular. MWSS has planned gradually to srface and groumd water sources, and private wels substitute private wells wfith water supplied by provide 820 MID (25%). MWSS serves a population distribuon system. However, the reduced level of of about 6.5 million of which about 5.0 milion s provided by MWSS during the last two years (58%) trugh house connections, about 0.7 million have counteracted these plans. (8%) through public faucets. and about 0.7 million (8%) are serwed by MWSS ndirectdy through water vendors. Prvate wells served a population of about TZa X of Water 1.1 miion (13% of total populadon) as weU as substantial part of indusay and commerce. 4. Water from the Angat reservoir for MWSS is released through the auxiliary power staion at the base of the dam and is dishrged to the Angat river Wate Somces to be impounded in the Ipo reservoir, about 7.5 km downs_tem From lpo reservoir water is diverted into 2. MWSSs surface water originates from the the 6.4 km long tunnels No. 1 and 2, with capacities following sources: (i) the Angat reservoir, w&Ich &6 m3/s and 20.0 m3/s, respectively, which convey it provides an annual average of 22 m3/sec; (ii) the to the headwortc at Bicti and by the following 17 km catchment area between the Angat and Ipo dams, aqueducts 1, 2 3 and 4, with capacities 5.3 m3/s, 5.3 which provides about 4 m3/sec; and (iii) the Sat m3/s, 9.0 m3/s and 14.1 m3/s, respeively, to La diversion weir, which provides about 4 m3/sec to the Mesa treatment plant. and, through the Novaliches Novaliches resevoir. This is a major buffer reserir rvoir, to Balara treatment plants, 7 km south of with a capacity of about 40 million m3 providing a Novaliches resevoir. resene of about 17 days of MhWSSs average needs. Sources (ii) and (iii) are highly seasonal and normally dry up for sever months. In those periods the Angat source provides about 29 m3/sec. in dry periods the Novaliches reservor has a very low water level and the operations depend almost entirdy on the Angat source. - 30 - ANNEX 1 - Page 2 Treatment of War distrbution system, of which 1,436 km was laid since 1981, ranges from 50 mm to 2,800 mm in diameter 5. There are three existng water treatment plants with more dtan 75S being 150 mm or smaller. The serving Manila: the Balara No. 1 and No. 2 plant, distnbution system contains 16 smaller reservoirs with and the La Mesa plant, completed in March 1982. a combined capacity of 658 MLD or just over 21% of Balara No.1, with design capacities of 5.4 m3/sec, and the rated capacity of the three treatment plants, and Balara No.2, with a capacity of 13.1 m3/sec, obtain 15 pumping (booster) stations with a rated total their raw water supply from the Novaliches eoir output of 2,400 MLD. The delivery heads vary from and via a by-pass &rom aqueducts 1 & 2. They are 19 m to So m. A number of these pumping stations traditional sand fiter plts, No. 1 having simple were shut down when the supply from La Mesa was sedimentation basins while Balara No. 2 has forced introduced to the system as the additional head circulation with horizontal mechanical mixe. available made them redundant Under the project Accelerators instaled in connection with plant Balara about six wil be rehabilitated and made operative. No. 1 is only partially in operation. Raw water for the La Mesa treatment plant (rated capacity of 17.4 m3/s), is supplied from aqueduct No. 4. The plant has OpeatiO d Maintenance dual media sand fiters and vertical mechanical mixers In die flocculation tanks. The output of the two Balara 7. Most of the systems are operated well, plants is cumently about 1 m3/s short of rated although the optimal operations are hampered by capacity due to operating and maintenance constraints failures of measuring equipment and mechanical parts and the La Mesa plant is restricted to a flow of about of the plants. The lack of a comprehensive model for 11.S m3/s due to constraints imposed by the the hydraulically very complex water transmission upstream tranDsmission system which is delivrenng system between lpo and Novaliches and La Mesa and about 5 m3/sec less than rated capacity. Both plants the lack of flow meters in the system limits MWSSs are pe g below their qualitative and possfhilities of having Ml insight into its operational quantitative capacities due to mechanical ailments and options. All three treatment plants suffer from failures poor mainenance. of mechanical parts as wel as measuring instnrments. Staffing levels are ample but possibly due to the Distijbutjon System and Reservoirs mechanical degradation the general maintenance level appears to have slipped. The poor state of mechanical 6. The teated water from Balara trament plants repair does not appear to stem from lack of is delivered in the supply area through the San juan knowledge by the operator but to the low priority reservoi the Pasig reservoir and the Balara pumping given to maintenance by MWSS's centralized fiancial station. Treated water from La Mesa treatment plant and maintenance management While much effort is is supplied direcdy to the system through the Bagbag going into the new activities, it appears that the reservoir floating on the system. The main distriution general record level as to the performance by the sytem is divided into two supply zones due to the distribution system has deteriorated with some records difference in the elevation of balancing reservoirs and not having been maintained for the last four to five the hydrauic gradients of about 20 meters at the years. The absence of these records makes the daily upstream ends. The top water level INWL) of San operation crude and deprives the planners of pertinent Juan reseroir is at 57.4 m while that of Bagbag informadon. This refers to as-made drawings and their resevoir is 71.0 m. Consequently, the two systms up-dating, reports on bursts and major repais of are iterconnected only at their downstream ends pipes, flow and psure records, etc. Also, MWSSs where the hydraulic gradients have equalied. At the practice of referring to each metered domestic present time the operating prese in both connection as one household does not reflect the real dbutidon zones is being controlled to minimize situation as there are many cases of one meter leakage, and at the end of the dry season to preserve branching off to several dwellings on the meter the water level in the Novaiches reservoir. This is holder's plot, not least in the fringe areas where hoses done by reducing the maximum operatg levels in are also used between dwell This difference in San Juan and Bagbag resrvois and by throttling of teminology makes handling and correlation of data valves in both the primary and secondary distibution difficult and holds potential for systematic errors. systems. Dimensions in the approxmately 3,000 km - 31 - ANNEX I - Page 3 SEWERAGE AND SANITATION Sewage Dispo6x Geneta 10. The raw sewerage from the pumping station at Tondo is dischaged untreated to Manila Bay about & The sewerage system in Metropolitan Manila 2.7 kn off-shore at a depth of 11 m through the consists of separate systems in the City of Manfla and outfl completed in late 1983. To monitor the in Makati and communal septic tanks in Quezon City performance of the quality of Manila Bay, a together these schemes are serving about 0.8 mIllion monitoring program was undertaken; albeit as it or 9% of the Metropoltan population. Of the started late and data collected were inadequate the remaining 6.9 mIllion people, 2.4 mIllion or 29% of mitoring has been extended another two years to the total population have individual septic tanks with 1991. In additdon MWSS is responsible for the soak-away drains or are connected to open canals, desludging of septic tanks. To service the estimated creeks and rives and another 2.3 mSion discharge 620,000 individual septic tanks in its service area the " waste water direcdy to street guttens or MWSS had In 1980 embarked on a program aimed nearest surface drain leaving about 2.2 million people at desludging 60,000 tanks annually. About 18,000 with public/communal latrines or without any tanks were desludged before the program was organized sanitation. Most of the latter live in blighted suspended late 1985 when the Department of the areas. Over half of the non-sewered plots hdve water Envirment and Natural Resources (DENR) sealed latrines, often pour-flush, discharging to disapproved the sludge dumping site. Presenty, only individual septic tanks or pits. Most of the industries about 50 septic tanks are being desludged monthly by are located outside the sewered areas treating their MWSS. It plans to reactivate the program using waste on site and diedaging into rivers and storm contractors, who will, as part of the contract, have to water dmains. provide adequate dumping sites, which should be approved by DENR. The first contract for desludging of 34,000 tanks was awarded in July 1989. Netwodrks Pumping Statios and T .ansi-- II. Sewerage from Makati is dbds ged thugh a 42' diameter main sewer to an activated sludge treatment plant with a rated capacity of 19,000 m3/d 9. Within MWSSs entire service area only the and the treated effluence is lead to a contriutory to City of Manila has a large water borne system Pas lUver. consisting of 280 km of main sewers with diameters asig between 150 mm and 1425 mm collecting sewerage through the northern and the southern interceptors to the Tondo pumping station (capacity of 5 m3/s), and which discharges the untreated sewage dtrugh an 12. To finance the operation and maintnce 1800 mm outfall pipe 2.7 km into the Manila Bay at of its sewerage and sanitation program MWSS bius an a depth of 11 m. The collection network is a gravity water consmers a 10% ehnvironeal charge and system, with two and four pumping stations on the te conners a seweragentem and northern and southern interceptors and one pumping those connected to a ewerage nsytem an additional station in the port area, lifting the sewage between 40% sewerage charge on the water consumed. 1.5 m and 2.8 m. MWSS is also responsible for 114 km of sewers with diameters of 200 mm to 600 mm 13. The responsibility for dealing with waste in Quezon City dischaging into 41 communal septic water dischares in open drains is shaed between the tanks. In Makati a high-income residental and Department of Public Works and Highways (DPWH), commeria area of 650 ha, the private developer and the Metro Manila Commision (MMC). MWSS is constructed a separate sewerage system which the responsible for the sewerage system and plans organization is stil opeating. gradually to take over the stems constructed by estate developers. A number of improvement programs, such as ZIP, PROGRESS, and MMINUTR are either on-going or planned to be implemented by MWSS, MMCM MPWH and the Natona Housing Corporation tNHA). The coordinton of these - 32 - ANNEX 1 - Page 4 agencies is organized trough a shared Program plants and 80 establIments dicaged untreated Mnagement Ofiee Wihn MMC. wastes. Since treatment of industial wastes are dealt with on site by the individual establishment control, WATER POLLUTION enforcement of compliane with standards is a maJor problem. Domestic pollution creates vual and smell 14. Al wateways in Mnila e heavily poluted. datiriot of the envinment near the river or About 70-80% of water pollution is caused by channels, but no economic losses, stace there are no domestic water since only about 12-15% of the fiuther benefical uses of the water from the Pasis population bas satisfoy treatment facilities and the River or the creek in the MSA, and these waters can rest depends on septic banks which were not be diaged safey to the ocean maintained during the last year because of problems in finding a suitable disposal site for the This P Bvious Forezgimanced Ptojects problem has been resolved and MWSS has restrted the mainitenance of septic tank, using prvate 15. Since 1974 ADB and the Bank have been contractos. About 20-30% of the pollutioniginates involved in different water supply and seweage from indusy namely tanneries, textile mlls, food projects implemented by MWSS, which are listed in processing industries, ditlleries, chemical plants and Table 1. metal plants In 1986 the National Pollution Control Comnion surveyed 218 industrial establishments in Mania and f(urvd that 138 had waste water treatment - 33 - ANNEX I - Page 5 Table 1 Water Supply and Sanita Impeed by MWSS with ADB ad IBRD Asstan toan Date of Amount Total No. Approval Loan Project mill $ mill $ World Ba.n1s_ 1 Water Supply and Sanitation 1615-PH FY 78 88.0 394 in Metro Manila * 2 Manila Severage and 1814-PH FY 81 63.0 177.4 Sanitation Project * 3 Urban III 1821-PH FY 81 7.0 120.0 4 Manila Water Distribution 2676-PH FY 87 69.0 96.3 Project Asian Develonment Bak. 1 Manila Water Supply Project 190-PHI 28.Aug.74 51.3 2 Second Manila Water Supply 351-PHI 07.Sep.78 49 394 Project * 3 Manila Sewerage Project * 457-PHI 24.Jan.80 42.8 177.4 4 Water Supply Sector 545-PHI 25.Nov.81 46.0 5 Manila Water Supply 645-PHI 27.Oct.83 39.3 64.5 Rehabilitation Project 6 Second Manila Water Supply 26.4 63.3 Rehabilitation Project Technical Assistance 6 Manila Water Supply 87-PHI 05.May.73 0.5 7 Bulacan Bulk Water Supply 433-PHI 81 0.2 Scheme 8 Water Supply and Sanitation 779-PHI 20.Jun.86 0.1 Sector Project 9 Angat Water Supply 1039- 21.Sep.88 0.1 Optimization Project PHI 11 * Indicate projects financed by both Banks. - 34 - ANNEX 2 - Page 1 PHIUPPINES ANGAT WATEPR SUPPLY OPTIMIATION PROJECr WATER DEM-AND The Projec Ar Population 1. The proposed project ould assist MWSS 3. The MSA population increased by more to increase its water supply production capacity to than two million persons between 1980 and 1989, at serve the Metopolitan Manila area. Metro Manila, an average annual growth rate of 4.196 Average also referred to as the National Capital Region (NCR), growth rates are decreasing rapidly and were about is the countr/s most developed and fistest-growing 2.9% between 1985 and 1988. Detailed population area as well as its cultural, economic and political estimates for each municipality based on forecasts by center. The NCR, which includes the cities of Manila, the National Statistic Office were prepared by MWSS, Caloocan, Pasay and Quezon City and another 13 and assume that MSA's growth rate would decrease to municipalities, has about 13% of the countr/s 2.3% p.a. by the year 2000. If higher population population and more than half of its large industres. growth rates were to continue, the water demand, economic rate of returm, and MWSSs finances would 2. MWSSs Sevice Area (MSA) includes a be better. Within the MSA several of the smaller total population of almost 9 million, 16% more than municipalities would experience increases of up to the NCR (See Map). The MSA area of about 150,000 10% p.a. By the year 2000, the MSA populadon is ha includes the NCR, Cavite City, another five expected to reach 11.6 million, growing to 13 milion municipalities in the province of Cavite and 14 by 2010, with 85% of the total in the NCR, about 6% municipalites in Rizal Province. MWSS serves the in the municipalities in Cavite and the remainder in entire metropolitan region, independently of local Rizal. A lape part of the current population (about governments and city borders. 2.5 million) live in blighted areas with minimum services and peoa housing. Levels of Sevice 4. In the past, the population served by POPULAT ION & POPULAT ION SEIRVEO D3Y MWSS house connections in the MSA was estimated on the -0 I - - - -basis of 8.1 persons (about 1.3 households) per -0 _ _- connecton. However, a census of about 360,000 -0 - _ _ - households in 54 zones in the NCR indicates that the * 6.0 - - population already served by connectons is larger - - - - _ than estimated, averaging more than 9 persons per i * - - - _ _ connection (one and a half households). This reduces § _< == = ~~~~~~~~the additdonal population to be sirwed and past per capita consumption. For the water demand used in the appraisal the number of persons per connection is assumed to be 9.0. a e ,.c FAimle Figure 1 - 35 - ANNEX 2 - Page 2 Water Demand PERCENTAGE SERVED WITH WATER BY MWSS 7. There have been numerous studies of water demand for Manla, including sophistcated PR _ _ _ _ _ ft _ _ _analysis of income elasticity of different groups of consumers, prce elasticity the effect of gross national product, etc. However, all of them have been excessively optimistic in forecasting the water demand, which did not materialize, even for the year when the study was completed. Although there was a major increase in water demand as a resut of the Manila ii and Water Distnbution Projects, the increase in water sales stabilized at a rate of about 5.5% p.a. (Figure 3). as ID ts t fis' Ra 2X D 2X u2 1 a la 21ID A malor consideration in these projections has been the assumption of a rapid shift from groundwater to MWSS's supply. In 1983 the estimated extraction by Figure 2 2,300 large wells was about 660 MLD, while another 20,000 smaller wells were extracting about 40 MLD. This over exploitation of the aquifer, resulted in lower S. The populaton per connection is expected groundwater lev.s and sal intrusion, particularly to decline slowly over time, as housing becomes less near Manila Bay. crowded, ezch house has a separate connection, and population growth slows. This would increase the number of connections, but not the water consumption which is based on per capita estimates. WATER PROtUCED AND SOID The population served by domestic house connectons - is expected to icrease from 58% in 1988 to 75% by - - 1994 and 85% by the year 2000. The total population m - with water supply, including commercial connections I - - - and about 1,400 public faucets, is expected to reach I - -r 82% by 1994 and 90% by the year 2000 (Figure 2). e . - - - - _ 6. Although only about 10% ofthe popuation is connected to sewerage sevice, the mandatory i _ regulation of one septc tank per house geady S - reduces water pollution problems. About 90% of the population has sanitary toilets, most of them with a n - water seal. Figure 3 - 36 - ANNEX 2 - Page 3 TABLE 1 MAIN ASSUMFIIONS FOR WATER DEMAND --ACTUAL - T BIICRU --- ?AWT U0 O i ------ 1985 1988 1985-88 1989- 1991- 1993- 1995- 1997- 2002- 2007- 1990 1992 1994 1996 2001 2006 2010 Population Under HISS - Killion 8.005 8.712 2.86X 9.228 9.685 10.171 10.639 11.749 12.764 13.507 S Population Served by Domestic Connections 46.1X 53.71 5.21 59.0X 66.02 72.02 75.0S 82.0 86.0X 90.02 Resultiag Total Population Served by All Connections 56.01 65.61 5.4X 70.6X 77.32 82.82 85.32 91.3X 94.41 97.91 X Ron-Revenue Water 61.5 59.61 -1.1X 52.0X 45.OX 38.02 33.0X 30.0X 28.0X 26.02 Peak Water Demand Factor 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1985 1988 la5-88 1989- 99- 1993- 1995- 1997- 2002- 2007- 1990 1992 1994 1996 2001 2006 2010 Domestic Volume Sold per person 148.0 134.8 -3.1X 2.01 3.01 3.01 2.01 2.0X 1.01 1.01 Number of Public Faucets 1.12 1.33 6.01 1.5X 1.O -1.02 -1.OX -1.52 -2.02 -2.0X Number of Commercial Connectin 26.47 40.42 15.12 1.52 1.51 2.01 2.0X 2.01 1.51 1.51 Volume Sold per Cmercial Coon. 327.3 225.8 -11.61 2.02 2.02 3.0X 2.0X 3.0X 2.51 2.51 Number of Industrial Connections 1.69 6.07 53.32 O.5X 0.52 0.5X 0.52 0.5X 1.5X 1.51 Volume Sold per Industrial Conn. 688.1 363.2 -19.21 5.0X 8.02 8.01 8.02 10.01 10.0X 8.01 8. If all commercial and industrial water WATER SOLD CVOLUME BILLED) consumption were to be supplied by MWSS, its sales -e __ _ _ - .- - - would increase by 50%. lowever, as seew in Figure 4, this demand has not mateialized. The demand for - MWSs water depends on the alternative cost of a. _ underground water, the speed of expansion of the : - - network, the expansion of sewerage facilities, the - - - - construction of better housing, the schedule for - - - - connectingmedium-income subdivisions, the reduction * - in NRW, etc. The appraisal re-estimated the water . - demand based on detafled monthly data and trends on 4 - water demand for the last five years. The appralsal assumptions for water demand are presented in Table 1 below and the resulting demand is detafled in c + ema 1=0 q Tors Tables 2 to 6. The appraisal forecast is considerably Fig= 4 lower than the Peasibility Report (see Table 7). -37- ANNEX 2 - Page 4 WATER SOLD PER CAPITA/DAY LITERS SOLD PER CAPITA PER DAY IH~~~~~~~~~~~~~~~~~~ IIKS "" _W w# n I. I em US~~~~~~~~~~~~~~~~~~mrou Bu 'em tel~~~~~~~~~~~~~ I I I a oe * r. e neC . WL Figure 5 Fimure 6 9. Domstic Demand. During 1984-86, per 11. Industrial and Commercial Demand. capita water consumption in the MSA fell Total commercial and industrial usage of water is considerably, with total consumption declining from currently esdmated at about 900 MLD, only 36% of about 250 liters per capita per day (lcd) to about 200 which is supplied by MWSS. Previous estimates of lcd and domestic consumption declining from 160 lcd MWSS demand have projected large increases in water to 135 lcd (Figure S). This reflected the economic sales, because industrial consumers would switch from downturn of the period as well as the effects of water groundwater to the MWSS supply as a result of saline rationing and shortages, the inadequate distibution intusion in the aquifer and lower groundwater levels systemn, and the lower water consumption of the due to overexploitation. These estimates appear additional, lower-income population connected in ovepmistic, however, in view of continuing those years. consumer concerns about the quality of MWSS's service and the higher cost of MWSS's water. The 10. About 20% of the population is suffering low water distnbution pressures and unreliability of water rationing and intemittent supply. However, the MWSS supply are not expected to improve in the with the resumption of economic growth (at about next few years due to the tight supply forecasted. 6% p.a), higher per capita income, billing of part of Furthermore, the cost of pumping underground water the NRW, and the additional water made available by (without treatment, as needed by most industrial the reduction in non-revenue water, and by the users) is only about P 2 per ton compared to the P 9 proposed project, domestic water consumption is per ton (including sewerage and environmental expected to return to 160 lcd by 1994, with the total charges) currently paid by MWSS!s indusa water consumption reaching about 250 lcd by 2005 customers. And, although groundwater exploitation (Figure 6, Tables 2 and 4). Under the above has undoubtedly depleted resources in some areas, mentioned assumptions domestic water demand will partiarly adjacent to Manila Bay, the overall water increase from 617 MLD in 1988 to 913 MUD by 1992 resources in other areas is stil substantial. and 1119 NLD by 1994. Detailed forecasts are presented in Tables 2, 3 and 4. - 38 - ANNEX 2 - Page 5 increase in domestic water demand. Industra water COAERC IAL & I NDUS. CONNECT I ONS demd is expcted to reman at about 4.S% of total X - .- - demand. These estimates depend, of course, on MWSSWs pricng policies (which now crosswsubsidize - e _8˘ l low-income consumers), the reliability of MWSS's service and the cost of extracting and/or treating f imunderground water. Non-Revemue Water _ _ _ 14. Non-revenue water (NRW) has been 4,.J1s" a major problem for MWSS (Figure 8). If NRW is not X 4-a a * OK-" _ reduced water sales wil be significantly affected, D~~o eU. ,Z $because the effectve delivery capacity of the system will be reduced. During the last ten years, NRW has Figure 7 never been lower than 45%, and when the La Mesa treatment plant entered into operation in 1985 and normal pressures were restored, NRW peaked to about 12. The number of industial and commercial 66% of the water produced. consumers declined during the last four years, and its sudden increase in late 1988 (Figure 7) is only the result of reclassifying as commercia or industrial X NONREVENUE WATER connections some domestic consumers which have - small commercial or industria activities in the same _ - - house. The consumption of these consumers is smaLl - and reduced drastically the average consumption per w - - connection for ties categories. Therfore the demand in the Feaslt Study appear overoptimistic, I. - _L and the estimatae of industial and commercial water - - - _ demand used for the appraisad and agreed wi MWSS - - - - are much lower. -. 13. Commercial and industrial connections are expected to increase at about 1.59-2% and 0.5%, respectively, less than the increase in popation, in view of the avaiability of underground water, the Fige 8 lower water quality requirements for some applications and the poor service provided to the 15. With the objective of reducing industrial zone, which is at the end of MWSS?s graduaUy the NRW to less than 30%, MWSS is now distnbution sYstem However, the water sold per undertaking a comprehensive leak detection and connection is expected to increase rapidly (by about rehabilitation program, employing 1,800 persons 3% for commercia and 8% for industridal spcifically for this purpose Financing for the connections), because of GNP grow, and dimnhing program is being provided by two ADB rehabilitation underground supply in some areas. Under these loans. However, as shown in Figure 8, the major assumptions the water sold to commerci and improvements being made have not yet been reflected industrial consumers is expected to increase from 353 in the overal NRW, which remains at about 60%. MLD in 1988 to 400 MID by 1992 and 445 MLD by Recent results from eight rehabilitated areas shows 1994. Detafled forecasts for commercial and industrial that NRW was reduced from 70% to less than 30%, demand are preseted in Tables 5 and 6. As a while water billing (including new consumers) proportion of total demand, commercial water demand increased by almost 206 in these zones is expected to decrease from 32% to 24% of total demand between 1988 and 1994 because of the rapid - 39 - ANNEX 2 * Page 6 16. The continuing NRW problem has also more than one month's salay for low income families. been approached by measures to curtail illegal Therefore, MWSS should consider to extend the penod connections. However, extensive surveys have of payment for connection charge from one to five detected less than 2% illegal connections (other than years, and even give free the house connections (as in Pasay, a low-income area where the stuvey detected done in 1987) for low-income population. 15% illegal connections). Results from the rehabilitaton projects indicate that about 80% of TOTAL WATER CONNECT IONS NRW is due to leakage, with the remaiing 20% _ atmbuted to metering errors and to unregistered or illegal connections. Results from areas where - distrbution systems have been rehabilited indicate - - - that NRW can be reduced to less than 30%. Further investigations indicate that part of the NRW problem may result from the use of inaccurate and, more I important, overly large water meters. As a result of these activities, NRW decline to 55% by mid-1989. MWSS is aiming to reduce NRW to 43%-46% by 1992 and 37%40 by 1994 (Figure 9). Faster deJines have proen unrealistic in other Bank projecs. d X NON-REVENUE WATER Fiu 10 g - - - - -. - - --* - ~~~~~NEW WATER CONNECTIONS onenw aer I 17. WMWS has been quite successful in _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ increasing the number of connections and the Figure I1I population served incemased rapidly between 1984 and 1987 as a result mainly of the Mania il project. However, slower trends have been observed recently, which has required! to focus the attention of AMSSs I& Under the above assumptions and management on how to continue a high-rate of invesment programs, the total number of connections incras in water conmections. To ensur that the n expected to inaease subsutanily during the period lower fincme population would be connected, WMW 1989-1992 (Figure 11). Although the target for new should review the connection charges (now averaging connections would be almost twice the number of P ZO000 to P 4,000 per connection). Although these connections achieved in 1988, these are feasible, as charges are not large in absolute terms, they represent indicated by, the achievement in 1986-8. - 40 - ANNEX 2 - Page 7 Forecastd Deumad and Supply TOTAL WATER SOLD CVOLLME BILLED) 19. Water demand in Manila is highly seasonal. While regression analysis of total and per capita water sold shows that water sales would reach about 38 milion cu m per month by the Year 1993, the existence of rationing in the past which pent up demand and the higher GNP growth rates expected in the future sugest that saes of 48 million cu m Per month can be expected by 1994 CTable 2). The actual a., 11 1 elSt 1 "S 3" "and forecasted water sales to domesdc, commercial and industial consumers between 1984 and 2010 are .-- E ca Xshown in Figure 12, and Tables 4 to S. inrt -~ -Iinm Figure 12 INCREASE IN TOTAL WATER SOLD I - 1 I- - l l l l l l BulamanWateDemand 1 -V The population and water demand for the8 8 t- municipalities in the Bulacan Provnce that would - - - - - receive bulk supplyfrom Angat is shown in Table 8. - - - - - - - - 1 - M - The water demand is based on the FeasbilbyStudy | - - | - | | | | |3|.|. and Final Desin prepared by the cnsultants, and - . i ---1 forecasts the demand for the year 1995. This seem I | over estimated, particularly the per capita | . 'm _- ii.. am "a lam consumption, and the capaciy of the municipalitdes to reduce non-revenue water to 20% by the year 1995. It is liely that this water demand wil Figue 13 materialize only by the year 2000. This would not affect MWSS, which can utilize any water which is 20. The overall increase in water sold by not used by Bulacan. The water sales to Bulacan MWSS is expected to be faster than in the past would require a price agreement between MWSS and (Figure 13) because of (a) a dynamic effort to the Proice which woudd affect the demand. Because increase the percentage of population connected; (b) of this incertude, the overall demand projectons are higher per capita income; (c) better pressures and based on the demand of MSA alone; the water used distribution systems; (d) elimination of intermittent by Bulacan would and or expand such demand, which supply; (e) detecton of megal connections and billing is consrvative for financial and economic analysis. for this water, however, the demand of water by illegal users may be curtailed considerably when they have to pay MWSS!s rates; and (f) better meters. The increase in water sales because of (e) and (f) wfll increase MWWSs revenues, but since that water is already used, it would not require additional supply. When the percentage of population reach high levels (above 90%) the increase in MWSSs water sales is expected to be lower, although stil higher than the annual increase in population served (Figure 13). Total forecasted demand and supply are shown in the main report, Figure 2.6. - 41 - ANNEX 2 - Page 8 propoed project would expand MWSSs water 21. Water demand forecasted in previous projects production capacity by 1,300 MLD in 1993, with the and in the Feasibility Study are compared in Figure potential of supplying an additional 1,277 MD (from 14 with the estimates used for the appraisal. The line Umiray) by the year 2002. Groundwater sources for the appras estimate (identified as ActuaNow in providing water to some distant districts, wiEl be Figure 14), shows the actual water sales until 1988 expanded 5296, but would supply only 133 MID by (and part of i39), to titclltate the comparison of 1994. previous forecasts and ongoing trends. If such much higher demand matiized the project benefits would 22. The total foreased demand of water be even higher, and MWSS's finaneial situation would from MWSS, and MWSS's water production capacity be excelent, are shown in Figue 2.6 in the main text, which indicates that, even if NRW is reduced below the targeted levels, the proposed investment in the Angat Pla&ution Capacty Project would still be justified (ie. the peak water demand in any year after 1994 is much higher than 21.1 MWSSs total water production existg capacity, although NRW is assumed to be eapacity is about 2,590 ML%, (2,500 MUD from the reduced to 30% in the year 2000. Moreover, MWSS Angat Dam and the treatment plants at Balara and La should also be able to supply the maximum daily Mesa &rnd 90 MID from deep wells). Of its actual demand which peaks during the period January-June. total production of about 869 milion cu m in 1988, The daily peak is generally estimated as 10% to 20% MWSS supplied about 359 mMion cu m (the higher than the annual average demand. Using a peak remaining is NRW). The projections of future demand factor of only 1.1 for maximum daily demand, the Crables 2 and 3) indicate that MWSSs water capacity of the project will be fuly used about seven production capacity would be exhausted by 1994, years after project completion, which previous Bank even if NRW were w be reduced below 38%. Total studies have shown is economicaUy optimal for bulk water consumption by that time would increase to water supply projects. If NRW is not reduced to less about 1,564 MLD and the maximum dafly water than 30% by that time, the additional capacit production needed wl be about 2,800 BMD. The provided by the project would be exhausted much earlier. COMPARATIVE ESTIMATES FOR WATER SOLD 2c4 uP TO 1988 C INCLUDED) 2.4 - - - 1 - 1 1 - - 1 / 2.3 - - - - - 2.2 - - - - 2.1 - - -- - - - 2.0 /- - - - 1.9 -- 1.09 - 0.9 198 1998 1988 1987 1998t 1S89t 199 1#91 192 1993t 1994 n8AR O VtwL? ecW AC) t8RO8s 8 x AtGG eŁ F1guze14 - 42 - AMU 2 - Page 9 MmD ANwG WAU SUPPLY OPIIATnoNPRaoBCr ta S - =UL _ U DC, _M, ) Yea. 1-_gu' X _eso- 6."_- _ -- ----EW - * X ttal T. ---1 - --- -ater 1auio Isati "me. lamers. Oique as IIpVW Tow.) ~AL- DEmm- Ut... pow leaves" 3mov p.ul.- VM. wit.h 1*00 me.'w.- ln.*."* tic/ per Ninth ft MeS tie. 3156 133166. Em of te.. --.------ ---*---- --- -oa -- tal p- esp----- aogKun Vate Pta) D m- C. iea- Setal ateb M_et Semi 0... 5.4 " 512 MIllIe 1000 tIe .. sia 6.1 8.1 pt d tie te 19 t.4 s 49.51 .n.. "A. 16".5 104.4 1.0 169.9 56.12 65.0 54.62 S 6 1965 6.005 so.0 46.5 ".4 15.5 104.6 14.5 3021. 4.31 0.61 127 57.6 4.51 6.5s 767 19" 0.235 1.61 51.2 a.9 195.5 100.6 14.5 510.0 2.61 42.91 201 51.7 2.61 45.61 9W 196 *.46 U5." 54.5 25.1 11.5 101.4 16.5 556.5 *.$2 ".69 16 52.5 6.31 "1.OX S5 19w 6.712 5.2 S .5 51.2 225.9 112.7 16.6 555.1 5.51 4.6 196 52.2 5.51 59.41 079 169 S."? 6.11 40.6 4.1 244.5 112.5 17.4 374.5 5.42 ".. 194 51.2 5.41 55.61 647 1990 9.22 70.61 652.6 44.1 2".6 116.5 16.5 405.6 7.61 4.61 195 51.5 7.S1 52.01 641 199 9.454 7.91 704.9 5.2 299.4 120.6 19.6 459.6 9.02 66.11 197 52.0 9.0S 49.51 654 19 9.6 7.51 75.s 54.4 54.1 14.9 21.4 480.2 9.2S 49.51 199 52.7 9.*1 45.02 673 199 9.925 0.01 610.9 51.6 570.4 10.9 1.1 514.5 9.2S 70.6U 203 55.9 9.21 41.51 6 1694 3.171 .6 S66.4 52.7 406. 157. 24.9 570.6 6.9 71.51 207 55.0 C.9 56.01 9o I9P 10.402 04.01 902. 54.6 439.9 145.1 14.9 409.9 6.1 72.1 210 18.4 4.91 55.51 946 l9o- 10.6" 65.1 99.5 26.0 466.4 146.0 29.1 6. 6.01 72.1 113 57. 6.01 5M O 96O 1s 7 10.52 6.52 975.0 55.4 497.5 15. 4 52.0 45.9 6.11 72.52 21 56.6 6.1S 32.42 1015 4 11.070 67.72 1011.6 56.7 52.1 14.5 35.2 7.7 5.91 72.51 225 59.9 S.9 S1.1 10s "99 11.192 6.9 109.4 57.7 5.5 17.4 5.7 749.6 5.92 71.31 227 4.1 5.92 51.21 1119 .000 11.518 90.11 10".1 2.9 591.4 5*.5 42.6 01.5 $.9X 72.51 251 1.4 5.92 50.61 1175 201 11.749 91.5s 1*.2 40.0 420.0 190.5 44.6 S57.5 S.12 72.51 225 4.3 S 50.01 12 20 21.945 91.91 1157.4 2.4 46.5 196.7 51.5 69.5 4.41 71.1 19 .5 4.42 19.6 1275 1005 12.145 92.2 11#7.4 50.0 470.1 0.7 56. 7 95s.5 4.1 71n. 142 ".S 4.12 29.21 15s1 2004 11.54 93.22 111.3 30.7 S9.? 215.1 42. 972.1 4.12 71.2 145 ".S 4.1S 26. 154 2005 11.554 9.6 149.7 51.4 710.2 22. 66.6 1011.5 4.2 n.12 250 47.5 4.21 26.41 1414 1006 112.7 94.41 16.9 52.1 744.5 2.6 75.4 1054.7 4.21 70.81 154 6.4 .21 26.01 144 07 2.94 95.352 1514.6 51.7 M.7 241.2 61.4 1097.5 4.01 70.52 157 9.4 4.OX ".S 14 200 1.10 96.12 1J47.9 55.4 OO1.7 251.0 66.0 1141.6 4.OX 70.21 260 70.6 .OX n.0 s 154 1S00 15.51 97.0 1".5620 5.1 95.7 162.1 9.0 117.6 4.0 69.9 15 n.6 4.OX 1.s5 16 2010 15.567 91.91 141.4. 54.6 60.4 272.7 102.6 1255.9 4.02 49.41 269 72.7 4.0 14.02 1670 --- - - - - - - - --------- .---- ---- ------ - 13aiad the tleoe 9 @-lZtpf" in salso ft , 11c will be v" vt blk wtIb. - 43- AINKKE 2 - Page 10 ANGAT WATER SUPPLY OF11MJARAMON PROJECr t~ua - w i AN =" or am om&i n=xc m m tear - WLWS 66W - 2~~~~~- - --- -ae ---- 1 CPA ----a- ea Pa Million Lltesa per fla - MD.) milioen ane tie --Millin UtsewaI47- or PRaie- or loes Wute Needed Deficit te eii Damas- Crmie- aiU&- Total Per Cxwmd- La Ma& isaat & total CAPAC tic ciaL trial MDt . ~water lhAray MA. MD. NW. 1964 460.5 290.7 40.6 792.1 24.2 56.61 162 70 1755 162 0 200? -162 195 502.9 267.2 39.6 629.7 25.2 61.51 2156 61 20I5 2154 0 2571 -216 1966 535.5 276.1 596 51.4 25.9 65.61 2476 as 2395 2476 0 2726 -248 1967 596.6 276.6 46 921.9 26.0 61.02 236S 77 2311 2366 25 2600 -211 1966 617.1 30.9 45.4 970. 29.6 59.62 2401 67 2511 2398 -iS 2641 -243 1969 669..350.5 47.6 1025. 31.t2 55.62 2320 97 2332 2429 11 2551 -122 1990 736.53 3L19 .2 50.2 1105 .7 33.6 52.02 2304 107 2332 24139 136 2534 -95 199 620.2 330.5 54.2 1204 .9 54.6 46.31 2340 117 2152 2449 110 2574 -124 1992 912.7 541.2 56.4 1312.4 40.0 45.02 m i 236 13 52 1500 3765 1379 2625 1141 199 1014.7 356.6 63.2 1436.6 43.07 451.51 2436 133 2352 13300 5765 1510 2701 1064 1994 1116.7 376. 7 66.3 1563.7 A7.6 is.02 2522 135 2332 1300 3765 1243 2774 99 1995 LUIS.$ 592.0 73.6 1671.0 50.6 3S3.5 2591 133 2532 1300 3765 1175 285 916 1996 1279.6 406.7 79. 1765.9 53.9 33.02 2636 133 2332 130 5765 1130 269 6a6 1997 1363.0 426.4 67.6 1679.0 57.2 32.41 2760 133 2552 1340 5765 966 5056 708 1998 1444.5 450.1 96. 1990.6 60.6 31.62 291 133 "32 1i00 3765 646 3211 554 1999 1550.0 472.9 106.0 2109.0 "4. 51.22 5065 133 2552 1300 576 700 5372 394 2000 1613.9 495.5 116.5 227.7 67.9 10.62 5210 135 2532 1300 576 556 5551 233 2001 1696.6 522.0 128.3 2546.6 71.4 30.01 3355 153 2552 1300 5765 410 3691 75 2002 1770.6 944.4 141.1 2454.1 744.7 29.62 3469 153 2332 2074 4539 1050 3636 701 2005 1635.6 566. 155.2 2557.4 77.8 29.22 3612 153 2532 2074 4339 927 3975 546 200 1696.1 547.6 170.3 2656.0 61.0 26.61 3730 153 232 2074 4539 609 4103 454 2005 1975.1 613.0 167.6 277.9 64.4 26.42 5674 153 2332 2074 4559 665 4262 276 2006 2045.2 637.7 206.6 2689.6 67.9 26.02 "I15 153 2532 2074 4539 526 4415 124 2007 2119.7 663.5 223.1 3006. 91.4 27.51 4147 133 2352 2074 44559 592 4541 -22 200 2190.5 688.4 240.3 3119.2 95. 27.02 4273 135 2352 20744 4539 I"6 4700 -161 2009 2275.6 716.2 260.5 525.2 99. 26.51 4426 133 2532 2074 4539 112 4870 -531 2010 2557.7 7467.1 201.1 53685.9 105.0 26.02 4576 133 2532 2074 4559 -37 5035 -494 - 44 - ANNE 2 - Page 11 PNE"APPHES ANAT WAIU SUPPLY OPTIMATION PROJBEC 4* - _-- - _- Yeer Popw- Co_...- banal V.1... Volime LIter. brains P09w-2 Popu- Number Person* Perso. Xbopu- Total lation tic In*""* S.d4 gold per per latio latlon Of S"ved Servd ltium Popol- lIdr 1000 In oomo- Son per ver.. Conse- with lwth Publte Pr blie with tic amS 11 (Sod of til. MIS. Coned SOerved tim Cinm. Ome Veudets Publie faet. Publitc Servid DOt llion Plrid) To mouth per ds MtllUon Coc. '1000 Peugt Milion fucet. Mlion ---_ -_-__ -_-----------_-_--__I-- --------_-_-_------_-------------_---_-_----------_-_- -_------- 1t8 7.759 342.39 168.55 4S.69 159 9.00 3.08 30.71 1.04 486 0.51 6.s5 3.39 1su S. 00' 410.13 67.54 163.55 40.51 146 9.00 3.89 46.12 1.12 486 0.54 6.8s 3.92 196 8.23S 472.91 62.78 195.47 36.85 1ss 9.o 4.26 51.72 1.19 486 0.53 7.02 4.54 1987 *.468 506.67 33.76 218.48 37.14 1" 9.00 4.56 5S.91 1.25 486 0.61 7.22 5.01 1988 8.712 520.01 13.34 225.$3 $7.01 1s5 9.00 4.68 3S.72 1.33 486 0.65 7.42 5.33 1989 8.967 561.51 41.49 244.30 37.65 138 9.00 5.05 56.41 1.35 48 0.66 7.32 s .71 1990 9.226 604.96 43.47 266.76 38.40 140 9.00 5.44 59.02 L.37 466 0.67 7.22 6.11 199 9.44 6*6.51 51.53 299.S7 39.55 144 9.00 5.91 62.S 1.3s 486 0.67 7.12 6.58 1992 9.685 710.20 53.69 334.07 40.74 149 9.00 6.39 66.02 1.40 486 0.68 7.02 7.07 193 9.925 760.91 50.71 370.37 41.96 153 9.00 6.85 69.02 1.38 486 0.67 6.82 7.52 1994 10.171 13.70 32.79 408.32 43.22 156 9.00 7.32 72.02 1.37 486 0.7 6.52 7.99 199S 10.402 849.53 35.64 439.93 44.0 161 9.00 7.65 73.S5 1.56 4 0.66 6.32 8.30 1996 10.639 886.36 37.05 468.39 44.97 14 9.00 7.98 75.02 1.34 486 0.65 6.12 8.63 1997 10.452 921.23 34.65 497.49 45.66 168 9.00 S.29 76.42 1.32 486 0.64 5.92 S.9 1998 11.070 956.92 35.68 527.18 46.76 171 9.00 8.6 77.82 1.SO 486 0.6S 5.72 9.25 1999 11.292 99.66 36.75 55.46 47.72 174 9.00 6.94 79.22 1.28 46 0.62 S.52 9.57 2000 11.518 1031.50 37.63 591.41 48.67 176 9.00 9.28 80.62 1.26 46 0.1 5. 31 9.90 2001 11.749 1070.45 36.95 619.97 49.16 1SO 9.00 9.63 62.02 1.24 48 0.61 5.12 10.24 2002 11.945 1098.95 26.50 646.27 49.65 161 9.00 9.89 82.63 1.22 48 O.3 5.02 10.48 2003 12.145 1128.11 29.16 670.06 50.15 185 9.00 10.15 83. 1.20 466 0.5s 4.6 10.73 2004 12.S48 1157.93 29.82 694.70 50.6" 18 9.00 10.41 84.41 1.17 466 0.57 4X.6 10.99 2005 12.554 1186.44 50.51 720.17 51.15 l87 9.00 10.70 85.22 1.15 46 0.56 4.42 11.25 2006 12.784 1219.6 31.20 746.50 51.67 169 9.00 10.98 6.02 1.13 4"6 0.55 4.32 11.52 2007 12.946 1251.41 31.76 773.68 52.16 191 9.00 11.26 87.O 1.10 4"6 0.54 4.1 11.60 2006 13.130 1283.85 32.4* 801.73 52.70 19 9.00 11.55 88.0S 1.08 48 0.53 4.OX 12.00 2009 13.318 1316.96 33.11 630.66 53.23 194 9.00 11.85 89.02 1.06 486 0.51 3.92 12.37 2010 13.507 1350.75 33.79 660.56 53.76 196 9.00 12.16 98.0I 1.04 486 0.50 3.72 12.66 11 Iude. the proposed 9 mnicipalities in Polean Pxevine, aiiich vUl be prvid4d with bulk water. - 45 - AhtE 2 - Page 12 PHIUPPPE ANGAT WAT13R SUPPLY OPTIMIZATION PROJECT TAM 5 - _M . D VA= - Yer Pepu- Cone- rohl Vol Volume p Per eon Popu- X Popu- C_r- lation tima incete 8.1A Sold Per per lotton lation clal on under 1000 in connee- Ton per Total Con.- Serve served Total )IISS (god of tion Hill. Cornea- Popu- tio 1000 Water COmI NsILou Period) 1000 Ton tio lotion 8014 1984 7.759 27.252 106.40 338.2 39 9 0.245 3.32 36.71 1985 8.005 26.473 -0.779 104.84 327.3 38 9 0.238 3.1S 34.6X 1986 8.233 26.704 0.231 100.79 318.0 35 9 0.240 3.02 32.4X 1987 8.468 26.113 -0.591 101.76 321.6 55 9 0.235 2.s9 30.22 19s6 8.712 40.420 14.307 112.70 225.8 37 9 0.364 4.22 31.7X 1989 8.967 41.026 0.606 112.55 230.5 55 9 0.569 4.12 30.12 19"0 9.228 41.642 0.615 116.52 234.9 35 9 0.375 4.12 28.92 1991 9.454 42.266 0.625 120.63 239.6 35 9 0.380 4.02 27.42 1992 9.685 42.900 0.634 124.89 244.4 36 9 0.586 4.02 26.02 193 9.925 43.75s 0.858 130.89 251.7 57 9 0.394 4.02 25.0x 1994 10.171 44.633 0.87S 137.51 259.3 37 9 0.402 3.92 24.1X 1"S 10.402 45.526 0.893 143.07 264.5 s8 9 0.410 5.92 23.52 1996 10.639 46.437 0.911 148.85 269.8 39 9 0.418 3.92 23.02 1997 10.852 47.365 0.929 156.38 277.9 40 9 0.426 3.92 22.82 1998 11.070 48.315 0.947 164.29 286.2 41 9 0.435 3.92 22.6X 1999 11.292 49.279 0.96 172.61 294.8 42 9 0.444 3.9x 22.42 2000 11.518 50.265 0.986 181.34 503.6 43 9 0.452 A.9X 22.22 2001 11.749 51.270 1.005 190.52 312.7 4s 9 0.461 3.92 22.21 2002 11.945 52.039 0.769 198.69 320.5 46 9 0.468 3.92 22.2X 2003 12.145 52.819 0.78 206.71 S28.6 47 9 0.475 3A.9X 22.12 2004 12.348 53.612 0.792 215.06 356.8 48 9 0.483 A.9 22.12 2005 12.554 54.416 0.804 223.74 345.2 49 9 0.490 A.9x 22.12 2006 12.764 55.232 0.816 232.78 353.8 50 9 0.497 A.9 22.12 2007 12.946 56.061 0.828 242.17 562.7 52 9 0.505 3.92 22.1X 2008 15.130 56.902 0.841 251.95 571.7 55 9 0.512 3.92 22.1X 2009 13.318 57.75 0.854 262.1S 51.0 S4 9 0.520 3.9X 22.1X 2010 13.507 56.621 0.866 272.71 590.6 56 9 0.524 3.9X 22.12 - - ----- - ------ - ---- - ---______- - - - -- ----------------------____-______---___ - 46 - ANNEX 2 - Page 13 ANGAT WATER SUPPLY OPTI1ATION PROJECT TAM2 6 - 11008S 1AL VA=T SUPLT ----------------------______*___ I---------- -__--.________________________________________ Yeax Popu- COoAnc- Annual Voluse Voluw Lpod Parsen- Popu- I Popu- Indus- 1Ulten tions Inresase Sold S.ld Per per latlin lotion trial an Under 1000 in conmee- Ton per Total Conaec- Served *sowed on Total mus8 tlon MllllnCennec- Popu- tlic Vater IND M11ilOn 1000 Ton tlen Lation Mllion Sold l194 7.759 1.801 14.95 677.1 5.5 4.5 0.01 0.12 5.22 19S 8.005 1.685 -0.116 14.46 686.1 5.2 4.5 0.01 0.12 4.82 1986 8.233 1.608 -0.077 14.52 725.8 5.1 4.5 0.01 0.12 4.72 1987 8.466 1.552 -0.056 16.27 865.2 5.5 4.5 0.01 O.12 4.8X 1988 8.712 6.074 4.522 16.62 363.2 5.5 4.5 0.03 0.3X 4.72 1989 8.967 6.104 0.030 17.45 238.8 5.4 4.5 0.03 0.32 4.72 199o 9.228 6.135 0.031 18.32 249.5 5.5 4.5 0.03 0.32 4.5X 1991 9.454 6.166 0.031 19.79 268.1 5.8 4.5 0.03 0.32 4.5X 1992 9.685 6.196 0.031 21.37 288.1 6.1 4.5 0.03 0.32 4.42 199 9.925 6.227 0.031 23.08 309.6 6.4 4.5 0.03 0.32 4.42 1994 10.171 6.259 0.031 24.93 $32.7 6.6 4.5 0.03 0.32 4.42 1995 10.402 6.290 0.031 26.92 357.6 7.2 4.5 0.03 0.32 4.42 1996 10.639 6.321 0.031 29.07 384.3 7.6 4.5 0.03 0.32 4.52 1997 10.852 6.353 0.032 31.98 420.6 8.2 4.5 0.03 0.32 4.72 1998 11.070 6.385 0.032 35.18 460.3 8.8 4.5 0.03 0.3X 4.82 1999 11.292 6.417 0.032 38.70 503.8 9.5 4.5 0.03 0.3Z 5.02 2000 11.518 6.449 0.032 42.57 551.5 10.2 4.5 0.03 0.32 5.22 2001 11.749 6.481 0.032 46.83 603.6 11.0 4.5 0.03 0.22 5.52 2002 11.945 6.578 0.097 51.51 657.4 11.9 4.5 0.03 0.22 5.7X 2003 12.145 6.677 0.099 56.66 712.4 12.9 4.5 0.03 0.22 6.12 2004 12.348 6.777 0.100 62.32 772.1 13.9 4.5 0.03 0.2X 6.42 2005 12.554 6.879 0.102 68.56 836.7 15.1 4.5 0.03 0.2X 6.82 2006 12.764 6.982 0.103 75.41 906.8 16.3 4.5 0.03 0.22 7.22 2007 12.446 7.086 0.105 81.45 964.9 17.4 4.5 0.03 0.22 7.42 2008 13.130 7.1" 0.106 87.9 1026.7 18.4 4.5 0.03 0.22 7.72 2009 13.318 7.301 0.108 95.00 1092.4 19.7 4.5 0.03 0.22 8.0X 2010 13.507 7.410 0.110 102.60 1162.4 21.0 4.5 0.03 0.22 8.32 _________________________________ ----------------------------------------------------_ - 47 - ANNM 2 - Page 14 ANGAT WAR SUPPLY OPIDMI7A7ION PROJBCr tiA~ 7 - GMwARTi iMrsT ow NOAsrM V4XIR SM MD Test ---DUUSflC -- -C AL-- --U U---- ::-_ ! L 1 O1 6 - - -l-l- K1U - --AD oI-06AL Actual Actual Actual Actu Actual SA.3 ASSNU a tls 008 a * thU am's S tbls 0O I this KC'0 2D's AD's this 0008'. An'. 00I's US fore- po-t 1e- _npt Faer- peortt *or- Report 2676-PU als 11I .t.e- Rept 1I86 is east Cat Cat cat (21") (1169) e t MD I 1964 46 461 291 29 41 41 792 506S 1983 303 s03 S67 287 40 40 830 925 61 ss 1 36 33 276 276 40 40 51 1125 65.6a 1967 3S9 S6 279 260 43 45 922 994 1301 61.02 72 7.62 1968 617 77 30 s 3 43 so 970 1193 1461 la0 9.62 35.02 222 22.92 196 669 662 30 397 48 114 1025 1392 1600 1244 55.82 50.02 367 35.86 1990 736 9a8 319 435 S0 148 1106 1591 1714 1401 52.02 *6.05 46 43.9 1991 20 1095 S3 513 54 1 62 l205 1791 176 15? 48.52 42.0X 586 48.62 1992 91s 1202 341 572 so 216 1S12 1990 1S4 1609 43.02 4O.02 40.02 677 51.6" 19 s 015 1312 S39 603 63 238 1437 2156 192 2031 41.52 36.02 s6.02 70 50.12 199 1119 1435 S77 60 66 261 1564 2356 2146 38.02 33.02 33.01 792 50.61 199s 120s 1476 392 715 74 26 1671 2473 35.52 30.02 30.O0 802 4s.02 1996 1280 15S2 407 785 79 311 176 2629 W3.02 29.0x 29.0X 6S 48.9 1997 1363 15s73 4142 8 a" 338 1679 2759 32.42 28.02 26.O aft 46.62 1998 1A4 1627 650 921 96 369 l19 2917 31.62 27.02 26.02 926 46.52 1999 15ss 1673 473 995 106 S9 2109 3060 31.22 26.02 26.o0 931 45.12 2000 1616 1727 495 1081 116 420 222 s3228 30.62 25.02 28.02 1000 44.92 200 109 1782 s22 1174 126 40 2349 340 30.02 MC.I 28.02 1057 45.02 20 1771 1840 544 1275 141 481 2456 3539 29.62 23.02 28.0x 1140 46,4* 2003 16s6 189 S66 1385 155 515 2557 3799 29.22 25.0X 26.02 1241 46.51 2004 19s 1960 58 10 170 551 2656 4015 26.62 25.02 28.02 1359 51.22 2005 1973 2023 613 1634 16o 369 277 4246 28.42 25.02 26.02 1473s 5.1X 100 204S 2069 68 1774 20W 61 2s0 4494 28.02 25.02 28.0o 1604 55.52 2007 2120 2156 663 1927 223 675 3006 4756 27.52 23.02 28.02 1752 38.32 2008 2191 2225 60 209 W- 722 3119 3041 27.0X 25ox 26.0x 1922 61.02 2009 2276 2297 718 2274 260 773 3254 534S 26.3s 23.02 2s.0x 2089 64.22 2010 235 2371 747 2470 261 827 3386 5607 26.02 23.02 26.0x 2261 67.42 1965- --1967-91-- -199-2000- summm~~~~~~~~~~~~ ~~~~ R -_ - 3 - - ---- - - - mmmvR muz.srs Actual Shls OCCD T his DoCe Fez- Raept Yor- _t cat eat 2 awl Inoras la Dhmestic _A 2.92 8.22 13.22 7.62 S.2X 1 nZ.1 Zamr*a la 0 -cis l hommaw -1.52 4.32 16.32 4.60 6.62 2 na1l Inaws ta Itadutrla1 Ommd 6.12 5.02 41.52 6.92 9.72 I s1 lteasa In Total Dommad 5.4 6.92 15.9X 7.12 0.62 _____ __ -__ ____ _____ _____ ____ _____ _____ ____ _____ ___._ ____ - 48 - ANNEX 2 - Page 15 PHUPPINE ANGAT WATER SUPPLY OPTIMZATION PRCJrT TABLE 8 - BULACAN WATER DEMAND EXISTING WATER SERVICES IN 1987 Municilpality Popula-Popla- X tlon tion Served Served 1000 1000 ------.-------------------------------- Ialagzaa 40.0 4.8 12.12 3004lue 64.0 18.9 29.6X Dulacanl 47.4 5.6 11.82 --3edpltnto 39.1 0.0 0.02 Maid..les 126.2 14.2 11.2Z Natlla 58.2 6.8 11.7X )Eeycwauaya 112.8 9.0 8.0X OboeMo 50.5 5.5 10.9X TOTAL 558.1 64.8 12.12 PROJECED WATER SERVICES IN 1995 mhumclplUty Popula- Poputs- X Liters --Cubic Xeter per Day - tun tin Served per Water Average Maix- Ilt- Supply Serve Capita sold Waer mm SAS O 1000 1000 Ifay Dma Demand Supply Anat -ala -t - - 55.0 41.5 75.2X 127 5248 6560 7826 2825 5003 Dooau.e 80.1 60.9 76.12 143 8706 10885 13026 3408 9618 ulacan 59.9 44.9 75.0x 161 7256 9070 10709 3205 7504 0uiluinto 56.1 24.6 44.0X 145 3517 4396 5090 5090 I6lalso 162.0 92.8 57.3X 202 18776 23470 27494 10084 17410 Ibrila. 84.0 38.2 45.5X2 60 13755 17194 19628 570 19058 mayeayan 161.1 88.4 54.92 189 16696 20870 25915 2201 21714 Obando 63.7 40.7 63.9X 108 4415 5519 6599 687 5912 --------------------------------------------------------------------__-------__---------- TOTAL 721.8 432.0 59.8S 181 78370 97962 114287 22978 91309 11 Used on the Detailed Design for Bulaen Central Water Supply Project by C. Lottl & Associati and DCCD Iglerl Corporation (1988) - 49 - ANNEX 3 - Page 1 PHElIPPES ANGAT WATER SUPLY OPTIIZATIION PROJECT PROJECT DESCRIPTON 1. The project includes construction of rat 2. It wDlI start at the existing intake structwe at the wat transmssion, water treatment and disribution Ipo dam and end at BictL The design flow of the facities for an additional supply of 15 cums (1,300 tunel is 24 cums for nomal water levels of 101 m at MID), and consist of two major parts and related the Ipo dam and 915 m at BictL The tunnel s engineerig consuting services: cicular with diameter 4.6 m and 43 m without and with linin, respectivly, and its length is 6.2 km. Part arion end Bulk Water SunolY. comprising construction of (i) tunnel No. 5. Agueduct No. S wi start at the end of 3; (;i) aqueduct No. 5; (HI) second La tmel No 3. and will un in paralel with the exlstng Mesa by-pass; and (iv) water mains to aqueduct No 4. Near the Novaliches reseoir it will provide treated water in bulk to eight have three oudets: one, with a capacity of 10.4 cums, towns in Bulacan Province, and will connect with the new La Mesa II treatment plant, the second, with a capacity of 4.6 cums, will connect part: Power Station. and Distfbtion with the existng La Mesa I treatment plant and the Egsiljes. comprising constrction ofŁ (i) third wil oveflow in the Novaiches revoir. The modification of the power staton; (i) La aqueduct has a diameter of 3.6 m, is 16.1 km long, Mesa 1 treatment plant; (iii) exansion of including four tunnd segments totaling 3.2 km, and the distribution systm; (v) watr its desin capacity is 24 cums. resrir; and (v) telemetering. 6. Secod La Mesa By-Pass wil connect 2. A detailed description of thee components Bicti-Novallches Aqueducts Nos 2 & 3 to Novaliches- is presnted below. Balara Aqueducts Nos 1,2 & 3. The by-pass has a diameter of 3.6 m and is 2.5 km long. It wil provide 3. Modification of the Power Stadon The raw water to the Balara treatment plant during dry release of the addiional water for MWSS from the periods when the water level at the Novaliches Angat reservoir wil be made by modifiaton of resmvoir is low. penstocs in the power generating plant and installation of a new turbine in the auxIliary 7. La Mesa Treatment Plant will have a powerhouse. This wIll consist of tapping the 3.0 m rated capacity of 10.4 cums ar 900 MID. It wil diameter penstock of the main turbine unit No. 2 of include rapid mixing flocculation, sedimenttion, the main power station and istaion of a new pipe rapid filtration and disinfection. The plant units wil of 2.3 m diameter, about 80 m long, which will be arnged to allow for direct filtraton when the raw connect to a new auxiliay turbine unit No. S. ThIs water quaity wi permit such an operation. wDI discrge water in the Angat river upstream of the Ipo dam. A new structure, with an overhead & Trated Water Resevoir and Aaueduct taveling crane, will be erected next to the existig Mo 6. From La Mesa n tratm plant water wil auxiliary power plant to house the new auxiy gravitatethrough the aqueduct No6. (3.6 m diameter, turbine. The modification is designed for an annual 500 m long) in the balancing reservoir of 260,000 cu avage of 24 auns, to accommodate planned m sorage capaity. The resevoir will reguate water expansion by 9 cums from the Umiray river. presure in the distriution system and would be utilied as an emergency stoage in case of emergency 4. Itnn No. 3 wil be constucted at about diupdon in operation of the traument plant 60 m distance along the route of existg unel No. - 50 - ANNEX 3 - Page 2 9. Disbution Systm The distnrbution 12. Origialy, the water source was ground sym wfill be reifrced by (i) installaion of about water proposed to be extracted from a well fild 119 km of mai with diamet equal or greater than located along the lower reaches of the Agat river and 300 mnu, 300 km of pipes ranging from 250 mm to pumped to the balncing resevoirs in each 100 mmA and 100 km of smaller pipes ranging from mtuicipality dtrough tranmssio mains. The 75 mm to 50 mm diameter; (ii) construction of dtree alternative of the siuface water soure from the Angat and upgrading of two pumping stations with total reservoir, which could provide supply to the capacity of 485,000 cu n/day; and (l) installation of municialities by gravity, was not considered since 345,000 connections. water rits for aU available water quantity have been granted to MWSS. On request of the Provicial Govenor MWSS agreed to provide the treated water 10. Bulk 6AMlvto Bulacan The bulk in bulk to balancing reservoirs in the muniipales water supplied to the Bulakan Province (about 2% of from its system instead from the proposed well field. MWWs production capacity in 1992) will solve This proved to be the least-cost water source for the critcal water shortges in eight municipalities towns, having lower capital a w as operating coss neighboring the MSA, and wil be provided in return for the water taken by MWSS from the Angat River, whch is located in the Bulakan Province. 13. TdLemeterif System will collect information on water flows, water pressure, and water 11. The system wMI consist of installation of qualit from about 220 moioring points in the mains with diameters ranging from 300 mm to 1,200 dstibution system dtough either radio frequency or mm and total length of 35 km. to supply about 1.1 cable transmission. The information will be enralized cums to existing resevotis in eight municipalities of in a Central Operating Center provided with the Province with teated water from MWSS's system. computers to sort, format, store, display and print out The operation and maintenc of distribution the data as required by MWSS. Tne teemetering Systems in the ilved municipalties will be the system wil indude: (i) supply and islion of 205 reobility of the respectve Water Disticts (WDs). flow, presure, and water level measuring instrumens; A substatal extenson and improvement of the (ii) provision of 15 water quat analyzers to monitor dbution systems wM be undetaken by the WDs pH, tursidity, and residual chlorine; (i{) provision of misted by he lcal Water Utilities Adminitration 98 frequency shift keying modem; (lh) supply and (LWUA) cncuntdy with the Angat project Detailed installation of 53 km of nsn cables; (iv) desigs for expansion of the eight systems is under consrci of 150 data acuuisition and radio prep1 a n units; (v) consructon of a tramission tower; and (vi) provision of a m system at data base station - 51 - ANNEX 4 -Page I PHIPPINO ANGAT WATER SUPPLY OPTlMIZATlON PROJECT PROJECT COSTS ESTIMATES AND FINANCING PLAN TABLE - TTAL PROJECr COST -VIJIJZO mm606 - X Of - LIO 8$ x Local 4lgm Tat"l OM Loal Foreign letal I=RD-FZEANCED 9O038 580.7 477.1 1057.8 21.31 27.65 22.72 50.37 45.11 ADB-PIRANCED VORKS 655.5 1136.1 1791.5 36.11 31.21 54.10 85.31 63.42 oNCF-F1nACED 1RR3S 706.2 896.1 1602.3 32.3X 33.63 42.67 76.30 55.9X LOCALLY-1INANCED WCRKS 407.5 97.1 504.6 10.2Z 19.40 4.63 24.03 19.2Z BASIC COST, PRICES 0F DEC. 1988 2349.8 2606.4 4956.2 100.02 111.9 124.1 236.0 52.61 PYSICAL COUTnIGucIES 185.4 209.1 394.5 8.01 8.4 9.3 17.6 53.0X PRIcE CTINGENCS 571.1 600.7 1171.7 23.61 19.4 18.4 37.8 51.3Z ------------------------------------------------------------------__---------__-------------------__-- TOTAL OM 11 3106.3 3416.1 6522.5 13.6 139.7 151.7 291.4 52.41 11 IXnludes tae equvalent to about $7.6 mllion. Due to rounding the lat 4igit in totels cy appear different than the sm of digits. TABLE 2 - PROJECT FINCING PLAN lTom TOTAL. I or ,U3UM mfos =~ ~~~~~~ L =mum = == urnS0 15S$ 1999 119 1 199 S 193 1994 :JNT conT 6522.5 291.4 80.52 546.6 1742.8 1907.2 123.7 839.0 248.2 (A) IDRD-Finmnd Vsks 1348.4 61.3 16.9X 191.3 426.9 463.2 210.8 56.2 0.0 (B) ADS-Ylnanced Worka 2484.7 108.7 30.0X 9.4 465.3 707.5 622.1 432.2 248.2 (C) OEC1-linaced Vork 2050.4 92.2 25.51 183.2 609.3 648.9 326.7 282.3 0.0 (D) Lecally-FLnnced 638.9 29.2 8.11 162.7 241.3 87.5 79.1 68.3 0.0 - CAFITALID 1659.2 70.5 19.52 27.5 120.4 260.4 367.5 426.3 457.0 Iorld Bakc 212.3 8.9 2.51 2.4 9.0 27.1 43.1 58.2 72.4 ADB 576.0 24.2 6.72 3.5 25.1 71.3 120.8 162.9 192.5 PNB3UB 870.9 37.3 10.31 21.6 86.4 162.0 203.7 205.2 192.1 ________________________________________________________________________ OL to MK IIDA 8181.7 361.9 100.02 574.1 1863.2 2167.6 1606.2 1265.3 705.2 FINID BY IBRD LOAN 920.3 40.0 11.12 63.0 106.9 187.0 213.4 252.7 97.4 ADS LOAW 2991.8 130.0 35.9Z 12.7 481.1 764.7 730.4 586.5 416.5 OCI LOAN (1Q01M TO 101M88) 1794.7 80.0 22.1X 96.0 526.7 563.1 237.1 244.9 124.8 !l-IUD JOII 1200.0 55.2 15.32 240.0 480.0 360.0 120.0 0.0 0.0 3IL3* CASE GENERTION 801.0 34.5 9.52 0.0 0.0 247.9 305.3 181.3 66.5 LOCAL FUNDS (SQUlSTY, LOWS) 473.8 22.2 6.1X 162.5 266.5 44.9 0.0 0.0 0.0 TOTAL lIEAMo 8181.7 361.9 100.02 574.1 3363.2 2117.6 106.2 1265.3 705.2 1] Due to wounding the l"t digit in totals my appear different then the am of digits. Af WAYNK UPLY O1MUS&TION PROJC !AL3 3 - PROJUC COST OONO UN BY IINaNOU BY?X RD 13 3 CF - KUL us -FapeimL 3 NU&M 18$* -WB am owtin- -srinS Lee" wSs 1 m1 e am l _ es Ibsal swnAos 16 low 10 1 1on 19t A-1 - .f3 15. 146.69 307.64 29.0x 7.57 7.08 14.65 6.43 46.33 3.37 6.15 5.13 0.00 0.00 Civil vIbd 96.6 40.5 139.1 13.153 4.69 1.93 6.62 6.0X 29.1 1.52 2.78 2.32 0.00 0.00 Squipme 60.4 106.2 168.6 15.94X 2.67 $.15 6.03 5.O0 64.21 1.65 5.37 2.61 0.00 0.00 A-2 - A=MC!3 93 AND es-C 240.74 18.44 425.18 40.19X 11.46 6.76 20.25 6.53 43.41 4.46 6.50 7.09 0.00 0.00 Civilu Ust 153.$ 54.5 207.6 19.65X 7.S0 2.60 9.90 0.OX 26.23 2.28 4.16 S." 0.00 0.00 3qu14 st 07.4 129.9 217.3 20.551 4.16 6.19 10.35 5.03 59.63 2.36 4.35 3.62 0.00 0.00 A-3 - AW.A^ GUIM 8S16 65.0 87.0 170.0 16.073 S.95 4.14 3.10 12.03 51.23 0.00 2.02 2.43 2.02 1.62 (t) CIvil Vex** 39.0 21.0 60.0 5.67X 1.66 1.00 2.36 12.01 35.03 0.00 0.n 0.6 0.71 0.57 (b) Bpdlmeot & atetrlule 44.0 66.0 110.0 10.403 2.10 3.14 5.24 S2.03 60.0X 0.00 1.31 1.57 I.31 1.05 A-4 - 3OOND LA WU BY-PASS 63.0 57.0 140.0 13.23X S.95 2.71 6.67 12.03 40.7X 0.00 0.00 2.00 4.67 0.00 (a) Civil ackrs $7.0 16.0 75.0 7.09X 2.7n 0.66 3.57 12.03 24.03 0.00 0.00 1.07 2.50 0.00 (b) UqmpSm.ot & Nateruls 26.0 39.0 65.0 6.143 1.24 1.66 3.10 12.03 6O.OX 0.00 0.00 0.9 2.17 0.00 A-$ - 9IllRU 112.0 0.0 12.0 1.I$n 0.S7 0.00 0.37 0.03 0.03 0.17 0.19 0.09 0.07 0.06 (a) StudI a DI Pos 6.0 0.0 6.0 0.571 0.9 0.00 0.29 0.0 O.O 0.17 0.11 0.00 0.00 0.00 (b) smastenot. AA1ia1tr.tlen 6.0 0.0 6.0 0.571 0.29 0.00 0.29 0.03 O.OX 0.00 0.07 0.09 0.07 0.06 A-6 - 3''I1 01 WAY (bulk Supply) 3.0 0.0 3.. 0.28X 0.14 0.00 0.14 5.03 0.03 0.07 0.07 0.00 0.00 0.00 3883C M0ST, PMew a on36. 1966 560.7 477.1 1057.8 1OO.OOX 27.65 22.72 50.37 45.1X 6.27 16.94 16.75 6.76 1.60 P C OOU !1 30U1iy ME'a 47.6 38.6 S6.4 6.17X 2.16 1.73 3.91 6.21 44.33 0.52 1.19 1.32 0.80 0.19 13en C!1nnC138 123.6 80.4 204.2 19.30X 4.39 2.64 7.03 37.$X 0.32 1.64 2.77 1.52 0.46 TWA8. 1a 756.1 516.2 1346.4 127.47X 34.20 27.11 1.31 44.23 9.11 19.97 20.61 9.09 2.36 11 Zalues taws eqiv*lest to about $1.4 dillis. Due to eam"a the lat dIit In totels ay appea diffemat then the am of dliits. IEXLXPPXNIS wNa ITrn SUPPLY OITXIIAIZUYON flOTCY TADLI 4 - PRWOCT COST B NaNCID By ADS 13 -ginujgin Swam - 2 - a.uain VS - P&OFI"t 2 ML2Im US _ la Xwa- - u4ai- Sisal Vous5F Total OUa too" V.SI Toes& GONA 196 it" 1991 19 15 1994 S1 - PO= Sm (MMI.Castion) 59.3 278.2 S57.5 16.82 2.03 1S.25 16.07 10.02 82.42 0.00 1.69 7.09 1.09 0.00 0.00 (a) CL'I 9o0ks 27.2 44.7 71.9 4.02 1.29 2.15 5.42 WO.2 *2.2S 0.00 i.4o 1.76 0.21 0.00 0.00 (b) 8l ttLe G NbhmLtc Zq. 32.2 235.5 205.6 14.82 1.53 11.12 12.65 10.02 87.n 0.00 6.45 S.51 0.8n 0.00 0.00 32 - LA USI It - D3U34T PLANT 117.0 167.5 264.9 15.92 5.60 7.97 13.57 0.42 58.72 0.00 5.79 5."9 4.09 0.00 0.00 (a) Cival 90*n 88.0 49.4 137.4 7.72 4.19 2.35 6.54 6.02 5.02 0.00 0.96 2.66 2.04 0.00 0.00 (b) loctrtLe a Ihuaonlo sq. 29.6 117.9 147.5 6.22 1.41 5.61 7.02 5.02 79.9S 0.00 2.01 2.81 1.40 0.00 0.00 as - 2!.D0 52161UT103 I OUUZCONS 270.0 480.7 750.6 41.91 12.0U 22.89 55.74 6.1t 64.02 0.00 5.50 6.45 *.5 6.58 6.79 L (a) CivIl Wors 179.5 90.2 269.7 15.12 6.55 4.50 12.84 8.02 $5.52 0.00 1.9I 2.51 5.06 5.06 2.44 (b) _waent 90.5 $90.4 460.9 26.62 4.51 16.59 22.90 5.05 61.22 0.00 3.44 4.12 5.50 5.50 4.#5 34 - TULJUUTUS 57.6 151.0 168.6 10.52 1.7197. i .9" 25.02 60.12 0.00 0.00 0.00 5.50 $.66 0.00 (a) CIvil 9s0* 5.8 15.1 18.9 1.1S 0.16 0.72 0.90 25.02 60.1 0.00 0.00 0.00 0.45 0.45 0.00 (b) 3quP1ment 5S.6 15.9 109.7 9.52 1.61 0.47 6.08 25.02 6O.1 0.00 0.00 0.00 4.85 5.25 0.00 as - fiUZUG 71.4 56.9 130.4 7.52 5.40 2.61 0.21 0.02 45.22 0.43 1.50 1.75 1.20 0.76 0.46 (a) Po.ab1lty Studies 5.9 0.0 5.9 0.21 0.19 0.00 0.19 0.02 O.O 0.15 0.00 0.00 0.00 0.00 0.00 (b) Prt.& isazl DCain 17.1 15.6 52.0 1.62 0.6l 0.74 1.55 0.02 47.72 0.06 0.39 0.45 0.51 0.20 0.12 (c) CbnsugotctLem Supovoi.an 50.4 45.5 95.6 5.22 2.40 2.06 4.47 0.02 46.22 0.22 1.12 1.29 0."9 0.56 0.36 36 - OlUa am. PIO6 L4SS D93.Cotmm. 99.5 0.0 99.5 5.62 4.74 0.00 4.74 10.02 O.O 0.00 0.00 4.74 0.00 0.00 0.00 |SASC COST, 131038 CF DEC. 198S 655.5 1156.1 1791.5 100.0S 51.21 54.10 65.51 65.42 0.45 1t.01 25.70 20.20 15.04 7.27 ISSZCL COATIUOZWCI88 52.7 111.4 164.1 9.22 2.n1 4.60 7.17 9.22 67.62 0.00 1.S5 1.95 2.24 1.44 0.41 PRSC8 COTZUiIZBECS 215.1 531.9 529.1 29.52 6.o9 9.54 16.23 57.52 0.02 1.35 4.14 4.n2 3.46 2.25 101*L COST 13 925.5 1561.5 2484.7 158.72 40.42 66.50 10.72 S2I 0.45 21.77 51.76 2*.82 17.96 9.94 11 Inelud a tax.s equIvalent to bebut 83.4 dll10n. Due to roundLng the last d4lt in totals wy app.ar diferent than the Sb of digits. 0 IUZLIPPZU3S AwAy WATR _ PMLY 0 PTXMIZ03 nuCT TABLE 5 - PROflO! 008! C'pPNM8InANcN BY 0101 13 - 3M atL- Im - 1a heal r r0S total _06 hea huaIm ttal s*. 199 1"0 199 1"2 199 194 Cl - !3Z*ZD VATBR URSVW. AQ02B. 541.9 286.9 630.9 59.42 16.26 13.76 30.04 6.5S 45.62 6.91 12.62 10.51 0.00 0.00 0.00 Civil WOrks 214.9 109.2 324.0 20.22 10.23 5.20 15.43 8.02 33.72 2.55 6.46 5.40 0.00 0.00 0.00 8quipment and Katerlals 127.1 179.8 306.6 19.12 6.05 8.56 14.61 5.02 58.62 S.36 6.14 5.11 0.00 0.00 0.00 U' Cl - mm DISRIUUTISM 1YSTE1 356.6 577.7 934.3 58.52 16.98 27.51 44.49 6.12 61.8X 0.00 11.12 15.35 11.12 S.90 0.00 (a) CMIv Motk. 230.6 102.4 33S.0 20.82 10.98 4.88 15. 6 8.0X 50.72 0.00 S.96 4.76 5.96 5.17 0.00 (b) 9qu"pment 126.0 475.5 601.5 57.5S 6.00 22.62 28.63 5.0X 79.12 0.00 7.16 8.59 7.16 5.75 0.00 CS - SOZIUEGIM 7.7 29.4 37.1 2.35 0.57 1.40 1.77 0.02 79.32 1.06 0.71 0.00 0.00 0.00 0.00 BASIC C00S, PRuCS OF DUC. 1988 706.2 896.1 1602.3 100.02 53.63 42.67 76.50 55.92 7.97 24.45 2.86 11.12 8.90 0.00 P1Y8ICAL OOTINMGENCZES 48.3 52.7 101.0 6.32 2.19 2.57 4.55 6.35 52.02 0.45 1.50 1.50 0." 0.54 0.00 MlICK COnUIUGECZZS 165.3 161.9 347.2 21.72 5.68 5.66 11.54 49.92 0.30 2.55 2.79 2.29 2.29 0.00 !MO4L 06T 11 919.7 1150.7 2R56.4 126.02 41.49 30.70 92.19 55.02 8.72 26.50 29.15 14.06 11.75 0.00 13 Inoludes tame e quivalent to about 2.5 million. Du, to rounding the last digit in totals may 00 ED IN6&T WATUR suPmT OPTZXZATZON 1ROW3CT TABLU 6 - PCwC COST coUoNUT focaLLY IZNANCD 1] D O-45118 s - I OB - NUj.f VS. -Is lea S - -m 8835 C inta- C vm Legal P.sim Tota GM eaL Vem*e total smaAw _ 1ow 190 199 199 19 1to D1 - A($UUCT SA 126.4 97.1 223.9 44.42 6.04 4.63 10.66 6.55 43.42 0.00 2.67 3.20 2.67 2.13 0.00 (a) C111 lW.ks 80.8 28.7 109.5 21.72 3.65 1.37 5.21 8.02 26.22 0.00 1.30 1.56 1.30 1.04 0.00 (b) lqul.bat & NaterLals 46.0 68.4 114.5 22.72 2.19 3.26 5.45 5.02 59.82 0.00 1.36 1.64 1.36 1.09 0.00 D2 - LAUD A0LSTZ0S 11.9 0.0 11.9 2.3S 0.56 0.00 0.56 10.02 0.Ox 0.34 0.23 0.0 0.00 0.00 0.00 D3 - O0UALL CONSTRUCIO AMs. 268.8 0.0 268.8 53.32 12.80 0.00 12.80 10.02 0.02 6.40 6.40 0.00 0.00 0.00 0.00 ___________________________________________________________________________._______________.__________________,_________________________________,___________-- BASIC 0OST, PCES or DEC. 1948 407.5 97.1 504.6 100.02 19.40 4.63 24.03 19.2S 6.74 9.29 3.20 2.67 2.13 0.00 PYSMICAL aOaTaZUCZBS 36.8 6.2 43.0 8.52 1.71 0.27 1.99 8.5 13.72 0.67 0.84 0.21 0.17 0.14 0.00 PRICE OUIIUOICIECZS 66.9 24.4 91.3 18.12 2.47 0.73 3.20 22.92 0.33 1.16 0.53 0.57 0.57 0.00 ____________________________________________________________________________________________________________.___________________________________.___________ ,00 1 511.2 127.7 635.9 126.61 23. 5.62 2.21 19.31 7.75 11.2" S.9 S."1 2.99 0.90 13 twlWes tes eqtdwleut to about 00.3 elILLon. PEZLZPPZNUS IEGA! WA!3M suPPL OP!1X251!ZON PRO.TC! !SLUR 7 - PO!L PROUBCOST INCLUDZNG 00N!XNG33XN3 IN SUN C3YU03 -4nLU 6-s - . , - utLI_ v - 2 ILM 5 tdoa3 Vm ba U Z..1 1..5 ba 9 90 1f 1 196 19 9 DD-viU UUKS 752.1 596.3 1345.4 20.72 34.2 27.1 61.2 44.22 191.5 426.9 4S.2 210.5 56.2 0.0 I AS-VZSEZ BS 921.3 1561.5 2464.7 55.21 40.42 69.X 108.7 62.82 9.4 465.5 707.5 622.1 *42.2 248.2 w-nmU D wow 919.7 1130.7 2050.4 Sl.*2 41.5 50.7 92.2 55.02 155.2 609.5 645.9 326.7 262.5 0.0 CALLT-nhmAu- wo 511.2 127.7 668.9 9.62 25.6 5.6 29.2 19.2t 162.7 241.3 $7.5 79.1 6.5 0.0 iw.L NUi am 13 310.3 5416.1 06.5 16.2 19".7 151.7 291. 5.42 546.6 1742.5 190.2 125.7 06.0 245.2 11 VW to commilas the lat 441t in total my appeat difoeat then the am of d4iits. 00 90 Cy PBZLIPPI8S ANGAT VAT R BSPPLY OWp!nZTION JCJCT TABLE 8 - PROXJBCT COOT COMPONENTS FINANCED BY IBiD INCLUDING CONTINGENCIES IN EACH CATEGORY A--m.L2 ES08 --- X oW -- mum 8$ - ----- LLG IEIOS - VS3AD VoreWi. Leo" hvogm Tota WT Loca" V.zeigu Total 1989 19 19 1991 1992 1993 A-1 - TURNEL *3 195.90 175.91 371.81 35.1X 9.06 8.14 17.20 47.3X 77.97 153.97 139.86 0.00 0.00 1 Ctivt Irks 122.79 48.89 171.68 16.2X 5.68 2.26 7.94 28.5X 35.9 41. 64.6 0.0 0.0 Equipsent 73.11 127.02 200.13 18.9X 3.38 5.88 9.26 63.51 42.1 82.8 75.2 0.0 0.0 ' A-2 - AEDUCB *s AND *S-C 296.83 218.33 515.19 48.7X 13.73 10.10 23.83 42.42 107.97 213.39 193.83 0.00 0.00 CLVll Works 190.97 65.83 256.80 24.3X 8.83 3.03 11.88 25.6X 53.7 106.4 96.7 0.0 0.0 Equipmeat 105.86 152.52 258.38 24.41 4.90 7.06 11.95 59.02 54.3 107.0 97.2 0.0 0.0 A-3 - BLACUA WATER SYSTEM 119.44 120.95 240.39 22.72 5.27 5.33 10.60 50.3X 0.0 53.3 69.7 63.0 34.4 (a) Civil Works 56.12 29.19 85.32 8.1X 2.47 1.29 3.76 34.21 0.0 18.9 24.7 22.4 19.3 (b) Equlpment & Materials 63.32 91.75 155.07 14.7Z 2.79 4.03 6.84 59.22 0.0 34.4 45.0 40.6 35.1 A-4 - SWND IA MESA SY-PASS 122.27 81.12 203.38 19.22 5.33 3.54 8.87 39.92 0.0 0.0 57.6 145.8 0.0 (a) CIvil Works 83.97 25.62 109.58 10.42 3.66 1.12 4.78 23.42 0.0 0.0 31.0 78.5 0.0 (b) Equaplent & Materials 38.30 55.50 93.80 8.92 1.67 2.42 4.09 59.2X 0.0 0.0 26.6 67.2 0.0 A-5 - IINDERING 14.20 0.00 14.20 1.3X 0.65 0.00 0.65 0.02 3.8 4.4 2.2 2.0 1.7 (a) Studles 6 Desiens 6.50 0.00 6.50 0.62 0.31 0.00 0.31 0.0 3.8 2.7 0.0 0.0 0.0 (b) Construct. Administratio 7.71 0.00 7.71 0.72 0.34 0.00 0.34 0.02 0.0 1.7 2.2 2.0 1.7 A-6 - RGIT CO WAY (Bulk Supply 3.44 0.00 3.44 0.3X 0.16 0.00 0.16 O.OX 1.6 1.8 0.0 0.0 0.0 TO. P~ER=C Cost 11 752.08 596.32 1348.40 127.3X 34.20 27.11 *1.31 44.22 191.35 426.38 443.21 210.80 56.17 11 Due to roundiue the lat diLt In totals may appear different than the sum of digits. 0Q 91UP13 AAt 51T3 SWPLT pT1A2TIN NmCI INPLEUEU?TA Ib SCUIDULI 3 2 34 5 6 FS"01112 6?9011*123 as 011 233?9WI7I123436?8111 I m a i- s 3 vim S AM t a c I tVA Ce) Tuwut 60. 3 1 _ e ." ___(4.__ . (b) A*q.ut S Part I 5.3 km (3.4) 205 cir) _ZMAt 5 * s W km ISA 2 "CS_" a *pW t I Port a 3.? e O3.A" m __2t 2 * _UETS Pt 6.1 * 0.4. 2 21 *_ 3 LA mm3 22.24 3333 (3.63) 1VA --------------- 3-WAC S 3 5311 35 km (0. to 1.1 IO --a)---- - to) Civil be Ir -b) Iu wnt 1W6 4 * 160T 51 VAT cw V _) Ł - Pa STATIO 24 cm a per _eud I P53M_ (e) Civit Sets 72 ... 433 _in.P 93 -6 (C) nactrkc A Wdite fq. wa s n5 -se w 4*-LA m s SI*""T.PUI KM O.4 cv.aper.em 063 C) CMivt Wets TV3 15SS " O (3) fiectrIc 4 _m le Eq. us SONO 49 *_ DS o S r'. 3Pi3 a h m 2mm. 60 eu a O_O. 5AiA ()Clvi I Work. in24"O (b) EWqa t 30? 2m an IOU . 109 8S* DISItU(Ttt 1113 320Wu (3) Sqa1l_t 1032 _." 1S *.m.n-n.s 33 Srn-.rJ- _7 _I 131 9 TEWtTEII Syte (C) CIvilt . 19 SU 3_ 5 - 1695 (b) EgJdUI low7l ..3X six59 ansuIon9 so(-b ue Dpmt.i lls (a) sthd0 a -eeI31te 43 in0 S *_ XS-_ sn _ n _ t 43) ~ptst""Oo C31trStIm 31r-r- "31....-.--. 333 inn.. 111.u SR19 Cc) ceuutntba atale,tre Vs- _m_ -.n _ _ _ s e_ts0 r e- ree -teos.On .- P II955516 Comp.tI., Vow Lena 160 -1 A * _ Sll4 a a tS1t6l 0 * l; * I WTlIAIU. 'A - 59 - ANNEX 6 - Page 1 PlHIlIPPoF ANGAT WATER SUPPLY PROJECT ECONOMIC AND SOCiAL ANALYSIS 1. Least Cost Soludon. The analysis 15 cs by 2002, the economic costs is null until that of the least cost solution is in the Feasibility Study time, and the present value of the Angat supply wil (avaXilale in the Project File), and is explained in be even lower. paras. 6.4 to 6.8. 4. The operational expenses of the well 2. Bulacan Bulk Water System The supply of field are estimated at P 16.1 mfllion per year. MWSS s water to Bulacan municipalities is mainly in return for incremental expenses, based on the operational cost at MWSS takng to another province practicaly aU the La Mesa treatment Plant wil be about P 13.2 million water available from Angat River. Nevertheless, studies (P 2.1 for chemicals, P 7.6 million for staff and P 3.5 have been undertaken and exploratory weUs started to for maintenance; supply will be by gravity. Therefore, provide water to these municipalides from a weU field operadonal costs are also lower (18%). north of the cities. MWSS could compensate the Province by paying the cost of constructing altemative 5. Economic Costs. Por the economic water source (the wells). However as shown in Table analysis the project expenditures were separated in 1, this altemative is more expensive both in economic local and foreign, and aU costs are expressed in and financial terms. The construction costs in constant prices as of December 1988 prices. In local miUion 1988 pesos of the ground water is estimated expenditures the percentage of unskldled labor was in Table 1 as folows: estimated for each project component (see Table 1). The shadow price for unskilled labor was estimated at 60% of its nominal cost. Taxes, estimated at 596 of Table 1 - Cost of Well Field the project cost, were excluded from the cost of the local and foreig components. To reflect the cost of (a) Well Field 151.5 foreign exchange a general conversion factor of 0.9 (b) Ground Reservoir 0.9 was used for all foreign costs, Table 2 (the shadow (c) Main Pumping Station 9.1 exchange rate was estimated at 20% in the Feasibilit Sub-total 161.4 Study). (d) Transmission Mains 169.6 6. The projectes operational expenses Total 331.0 are easily estimated since the project duplicates the existing capacity and supply from Angat. Howeter, 3. The water supply from MWSS or from well there are economies of scale in MWSSs general require a similar transmission pipeline distributing the personnel and administrative cost. Therefore, the water in bulk to each town, with an esdmated cost of project operational expenses were estimated as the P 170 million. In addition there is the incremental increment from 1989 in the overall MWSS's costs of water supply and treatment from Angpt. Thi operational expenses (in constant 1988 prices), as cost can be estimated in proportion of the water used estimated in the financial projections (Annex 10) and by the Bulacan Municipalities (1.1 cums of 15 cum). forecasted afer 1996 at the same unit price per meter This cost in constant prices of December 1988 is of water produced.. estimated at P 72.7 milion (P 13.5 million for the power station, P 30 milion for the raw transmission 7. 5mpenrion. MWSS would compensate to and P 29.2 for the water treatment). Therefore the NPC for the cost of the alternative generation of peak total construction cost for the supply from is P 242.7 power (gas), and for the lower power generated million, 27% lower than the wells altemative. through turbine no. 5, which has an hydraulic head Moreover, since MWSS would only use the additional 30 m lower than present turbines. These cost are - 60 - ANNEX 6 * Page 2 estmated at P 56 million pa. in 1988 prices for the Study. If the water sold forecasted in the Feasibility maximum flow of 15 cums. However, due to the Study were to materialize the economic rates of return expected reduction in NRW the water used and power would be much higher, not only because of higher generation reduction would raise gradually to reach revenues, particularly in the early years, but also the maximum by the year 2000. In addition, there is because the earlier use of the capacity provided by the the potential need to build a new plant for peak Angat and Umiray systems. generaton. This requres a complex stdy, to analyze not only the MWSS's water demand, but the cYclic Economic Rata of Return (ERR) weather variations and flows in the Angat Dam. Angat is not a reliable source for peak power (was only used 10. Water Revenues. The economie rate one week at capacity during 1987) and may have to of retum is calculated based on existing prices and be replaced, regardless of the project, by a reliable all- wilness to pay already demonstrated by existing year power generation plant The economic cost of tariffs. The benefits are estimated for each group of this replacement would also be proportional to the consumers at their average prices per ton (or cubic water used. As a part of the economic analysis a meter) of water as of December 1988 (P 3.3 for sensitivity analysis was made C(able 3), assuming a domestic, P 5.84 for commercial and p 7.61 for cost for peak generation capacity of US$40 milion industrial consumers). The CERA surcharge of about (for 15 cums). To allow for construction of the new 10% is also added (this surcharge is likely to double facilities, this cost is assumed two years before the in cun-ent pr.ses within the next ten years, but reduction in peak generation capacity. It is also because of incertitude in future exchange rates it was assumed that since there are continuous investments kept constant, which is consenrative). in power generating capacity, there is no need for a lump investment as a resut of the project. 11. Although the life of each individual asset is quite different (100 years for tunnels and & Other Investments. It is not possible to aqueducts, 20 years for power station, 35 years fot separate the benefits of the ongoing rehabilitation pipelines, 15 years for pumping stations, 5 years for projects and the proposed project. This is because the meters, etc), the analysis was simplified by assuming improvement in distrbution and number of an average economic life of 35 years for the project connections would also be due to those projects, and, (after construction) and no residual value. This is even more, because ff leakage is not reduced the conservative since the Umiray Basin investments amount of water that could be sold by the project would only be completed after the year 2000. would be less than half the water production. Therefore, the Inwestment cost in these projects, based 12. Economic Rate of Retun. The on the financial projections and expressed in constant economic rate of retum, based on existng tariffs is prices, is included as 'other investments (Annex 6, 15% CTable 3). Sensitivity analysis shows that even if Table 3). Since the tumnel and aqueducts are sized for the total investments are increased by 10% and the the final additional capacity of 2' cs, the project benefits reduced 10% the ERR wil sill be 13%, benefits are extended until this capacity is used. This which is satsfactory. However, the existing tari not requies to add the cost of the development of the only underestimate the price that consumers will be Umiray Basin, to convey 9 cs to the project (estimated willing to pay, the dfference being the consumer at P 1408 million in 1988 prices). Normally the cost surplus estimated in para. 14. This ERR excludes the of house connections has to be added to the benefits of improvement in services to existing investments in networks and mains. Howeve, since consumers (continuous service, adequate pressures, MWSS recovers the costs of the house connections reliability of service) and many other benefits which trough direct chaes (other an tariffs), these costs are difficult to quant reliably. Some of these and revenues balances out ir. each year and do not benefits are roughly estimated below. need to be included in the tables. 13. Sickness Cost Only a small 9. Water Demand. The water demand is percentage of deaths, mainly for infants, could be exmely citical for the economic anaysis. The water attributed to water diseases and their a cost is very demand used is the appraisal forecast (Annex 2) is difficult to quantify in economic terms. However, there much lower than the estimated in the Peasibilit e other costs that can be roughly estimated, in - 61 - ANNEX 6 - Page 3 paricular loss of productive work because of water- 15. Consumer Surolus. Consumers are borne sickness and the cost of treatment for such willing to pay for water a price somewhat higher that diseases. These costs were estimated in the Feasibility the tariffs applied by MWSS. In particular very high Study based on the income loss (at minimum wages), prices are accepted for the minimum water the average number of days loss, the morbidity rates, consumption (because it is needed to be alive). the labor participation, the medical expenses, etc. However, the willingness to pay diminish rapidly for Because of low wages (about $3 per day) and low higher water consmptions. The wilingness to pay for cost of medical treatment, this analysis show rather low water consumption (about 30 lped) is small benefits. Moreover, water is only one of the demonstrated by the price of water purchased from factors contributing to these diseases (others include water vendors. These prices vary witiin the MSA the adequacy of sanitation, proper personal hygiene, depending on the distance to MWSSs pipelines and cleaning of vegetables and fruits, etc). Therefore only the scarcity and pollution of underground sources. 1096 of these costs (for the additional population Normal prices are P 0.30 per 20 liter can (P15 per served) were expected to be recovered by the safe ton, about five times MWSSs average water pnce for water provided by the project. This provide a domestic consumers). Prices 50% higher are used in maximum benefit of P 82.7 million per year, to be some remote areas. The price also depend on if the achieved gradualy from the project completion until consumer carry the water itself or if water is the maximum water sales are achieved (Table 4). delivered at home by the water vendor. In this case the price per 20 liters can be P 0.60 or higher. 14. FfryPjgjgo. The extension of water Carying the water is heavy work particularly for large distnbution will improve fire prevention savigs in famlies, and usually done by women. If a straight lives (not evaluated) and reducing damages to demand line is assumed between the pnce of P 15 per structures. This benefit could be estimated as the ton for about 3 tons of consumption per month and reduction in the insurance rates for such properties, the average price of P 3.30 for 36.8 tons per month, but that information was not available. Therefore, this the consmer surplus (the price willing to be paid benefit was very conservatively estimated as an annu above the average tarif) will be 1.9 times the price perentage (0.75%) of the cost of providing such fire shown by the water tariff, and the total benefits hydrants. Under these assumptions this benefit is also should be estimated for the domestic consumers at a minor (P 16.9 mfllion per year). The result of both tarff almost three times the present tariff. the sickness cost avoided and the fire prevention increase only marginally the rate of return to 16% 16. However, the water demand and C(able 4). wilingness to pay are Ikely to be an exponential rather than a linear curve. An exponental demand curve can be assumed between the average price (Y1, P 3.30 per ton) and average consumption Gl, 36.8 DEMAND CURVE & CONSUMER SURPLUS tons per connection), and the price paid to water W' " ___ " l l vendors (Yo, P 15 per ton) and the water purchased . a = __ ___(o, for a minimum consumption per family). This is - an equation of the form Y=Ceb' that was fitted between these values. The integration of this curve (neglecting the benefits in the area MY1-Yo)*Xo) - . _ s ; _ provides the area A = OXo-X1)/ln(Y1/Yo). Ths ma the total consmer benefts, including its 'l _ - _ consumer surplus and Is K times larger than the . = i , benefits (Xl*Yl) measured by the traditonal rate of return using the average tariff. K can then be e. . | --- . . . . - - . . . _ expressed as: K - MYl-Yo)JYlAntYVYo) = (I-Yo/Y1)/ln(Y1Yo) igure* 1 17. The application of this equation to the project results in a K of 2.3 (lower than the 2.9 - 62 - ANNEX 6 * Page 4 estimated from a lineal demand). This indicates a rapidexpansion of its water services. Moreover, the willingness to p of 2.3*P 3.3= P 7.6 per ton. Using present tariff reflects the NRW problem, and that only this value as a proxy for the consmer suplus of the about 40% of the water produced is billed. domestic consumers and maintaining the existing average tariffs for other consumers, the economic rate Populat and Urbm Poor Served of return increases to 24%. Consumer surpluses for industial and commercial users are more difficult to 21. Water production per capita estimate and have been neglected. averages 500 lcd, mainly because of the excessive levels of NRW. The additional supply of 15 cums can 18. Another benefit is the increase in value of provide water to about 3 million persons at 430 lpcd, lands which are provided with water supply and ia and if NRw is reduced, as planned, to 30% about 4.3 therefore suitable for urbanization and high-density milion persons would benefit from the project In occupancy rather than agriculturl use. From existing 1988 MWSS pmwided water connections to 58% of records in areas with and without MWSL's water the total MSA serving maily medium and high supply, the Feasibility Study estimated that actual income consumers, although there are some low- differences in prices range fom P 133 for residena income persons served in areas like Tondo and other land, to P 258 and P 276 respectivdy for land used blighted are. The total population served is shown for commercia and industrial purposes The additional in Table 5, as well as the incremental population area to be served was also estimated, excluding open served from 1989. Since the project is the only spaces, as 15,580 ha. It is estimated that this land additional wurce of water, practically all the appreciation benefit will be achieved gradually over additional population to be served by MWSS would four years after the project completion. Moreover, benefit from the project invetment and there are many other factors affecting the price of complementary works. The total population with land, even if the comparison is between areas with or house connections to be seved by MWSS is expected without water services, particuarly the demand and to increase from 5.1 million in 1988 to 7.7 million in supply of urban land. Therefore only 30% of these 1994 and 9.8 million in 2000. The incremental benefits are attrbuted to the project The ERR population served by the project and the impact of the including the esdmated land benefits increases to 23% rehabitation projects (which are closdy related to the (Table 4). project) will reach 2.3 milion in 1994 and 4.3 milion in 2000, which is satisfactory. Adtioral population 19. Taking in consideration all the above would also benefits after the year 2000 from the benefits the ERR increases to 34% However, some capacity provided by the project to convey the water overlap may exist between the fire and health benefits from the Umiray system. and the consumer surplus, depe ding on the consumer educatin But the quantified benefits for 22. As the population served by house health and fire protection are so small, that they cownections increases, most of the additional increase the overall ERR by less than 1%. population will be urban poor (when the population served is dose to 100% all the urban poor will be served). The population with incomes below the Marginal Cost poverty threshold are classified as urban poor. The poverty threshold in 1985 prices is estimated at 20. The marginl cost was eswmated using the P3,282 per family per month in Metro Manila (from long-term average marginal cost method. The "A Monograph on the Estimation of the 1985 Poverty margina cost for the project is esdmated at P 3.30 and Subsistence Thresholds and Incidences). The per ton for a discount rate of 12% (Table 3). About percentage of urban poor in MSA is estimated by the 74% of this cost is fixed (invent) while the Government at about 45%, of which almost one remaining 26% reflects the variable cost of operation. milion are assumed to have water connections in The marginal cost coincides with the aveage domestic 1989. The total and additional urban poor are tariff and is about 30% lower than MWSSs average estied in Table 5. The incremental urban poor tariff. The financial aiff is hig than the marginal sved are expeteWd to reach 2.6 million in 1994 (69% cost for this project, beAUSe of MWSSs cash of the incremental population served) and 3.7 million requhrements for debt service and to contrbute to the in 2000 (62% of tha increment population seved). - 63 - ANNEX 6 - Page S PfIIPPIN ANGAT WATER SUPPLY OPrIM7AION PROJECT TABLE 2 - ECONOMIC COST OF PROJBCT COSTSP PwJI fUNDDRNS nCUrI NCL TICX, KL= n 8io3 19_8 LCAL PCnT PDITUEU RM ------------------------------------_ _-_--______________________________---- TU-UIL OT EQVP- CONSUL- COE- TOTAL TOTAL TOTAL TOAL & CIVIL MECT TANTS SAITZO liAU- UN- TAXES ECONO- AQUEDUflCT IS CIAL SKILLD nIIC I Unskilled COST LABOR (6Z) COST 11 Labor 35.02 35.O 30.0X O.O 0.02 COST 1989.0 57.9 49.4 63.2 148.7 1.5 320.8 56.5 0.0 298.2 1990.0 126.0 .09.2 211.3 159.5 1.5 707.4 180.7 0.0 635.1 1991.0 129.5 241.2 210.4 21.4 99.5 702.1 192.9 0.0 624.9 1992.0 60.1 150.1 122.4 15.0 0.0 347.5 110.3 0.0 303.4 1993.0 16.2 98.9 78.4 10.0 0.0 203.4 63.8 0.0 177.9 1994.0 0.0 34.1 17.2 5.4 0.0 56.7 17.1 0.0 49.9 SUBTOTAL LOCAL EPENDInTURES 2338.0 621.3 0.0 2089.5 11 VUsng a sbadoV price of 602 for the cost of the skilled labor. _____________________________________________________________________________________ EICEM PRMICT DIU uli.L 190) TUNNEL OTBER EQUIP- CONSUL- COOlWE- TOTAL TOTAL TOTAL TOTAL & CIVIL laEw? TANTS SATION PINAS- TAMXS 10050- E0030- AQUEDUCT WXOW6 CIAL an 31C I3C cmS F0M33IG COST 11 COST COmP. FoREIGN LOCAL 6.0 ox CO. & *FOREI 1989.0 21.9 25.1 96.1 20.6 0.0 163.7 9.3 172.6 470.8 1990.0 47.1 116.4 552.7 26.5 0.0 742.8 42.0 783.2 1418.4 1991.0 47.3 136.5 556.4 17.1 0.0 757.2 42.9 798.5 1423.4 1992.0 19.8 83.0 394.9 11.8 0.0 509.5 28.8 537.2 840.7 1993.0 5.7 53.9 270.0 7.7 0.0 337.3 19.1 355.7 533.6 1994.0 0.0 17.1 74.2 4.7 0.0 96.0 5.4 101.3 151.1 ____________________________________________________________________________________ SUBTOTAL 1033IG0 WZNDITURES 2606.4 147.5 2748.5 4837.9 TOTAL PROJECT COST 4944.4 4837.9 ----------------------------------------o-----e-------o-----fa-__-----r------__-0.9-- 1] Uslag a* g enerlerwer ton factor of 0.9 - 64 - ANNEX 6 - Page 6 PHKIPPINES ANGAT WATER SUPPLY OPTIMIZATION PROJECT TABLE 3 - E:ONOMIC RATE OF RETURN AND MARGINAL COST --------PROJECT EDIITUES- ------ ---ICREMENTAL VATR SOLD -**- VATE OTNU an MILLION TONS PER YEAR 51 REVENUES REVE- BEEEIM S VW PROJECT OTHER POE WER- TOTAL ------- NMES INVEST- INVEST- ECONO- TIONAL EXPEN- Doms- CoGmer- Indus- Total Million 1IS 11 tKENT 21 NIC COSTS 41 DITURES tic cial trial Pesos (Base LOSS 31 61 73 Case) ___________ -_-_-_-_-------------------------------------------------------------------------------------_-_------- 1989 470.8 1032.0 1502.8 -1502.8 1990 1418.4 630.3 24.5 2073.1 24.5 4.0 0.9 29.3 121.6 -1951.5 1991 1423.4 330.3 51.8 1805.5 55.1 8.1 2.3 65.5 271.4 -1534.1 1992 840.7 129.6 2.9 85.9 1059.1 89.8 12.3 3.9 106.0 438.0 -621.1 1993 533.6 0.0 5.5 110.6 649.7 126.1 18.3 5.6 150.1 622.6 -27.0 1994 151.1 0.0 8.1 136.1 295.4 164.0 25.0 7.5 16.5 818.4 523.0 1995 200.0 10.9 162.1 373.0 195.6 30.5 9.5 235.6 985.5 612.5 1996 200.0 13.0 187.3 400.3 224.1 36.3 11.6 272.0 1144.0 743.7 '1997 200.0 18.5 266.6 485.1 253.2 43.8 14.5 311.6 1322.3 837.3 1998 376.0 24.1 347.4 747.4 282.9 51.7 17.7 352.4 1507.7 760.3 1999 376.0 30.0 432.1 838.0 314.2 60.1 21.2 395.5 1704.1 866.1 2000 552.0 36.1 520.9 1109.0 34?.1 68.8 25.1 441.0 1912.2 803.2 2001 552.0 41.6 600.1 1193.7 375.7 78.0 29.4 483.0 2110.5 916.8 2002 352.0 47.0 677.3 1076.3 402.0 86.1 34.1 522.2 2297.6 1221.4 2003 100.0 51.9 748.8 900.8 425.8 94.2 39.2 559.2 2478.7 1578.0 2004 100.0 -599.4 823.2 323.8 450.4 102.5 44.9 597.8 2669.1 2345.4 2005 100.0 -594.1 900.6 406.5 475.9 111.2 51.1 638.2 2869.5 2463.0 2006 100.0 -588.5 981.2 492.7 502.2 120.2 58.0 680.4 3080.5 2587.8 2007 100.0 -583.1 1058.5 575.3 529.4 129.6 64.0 723.0 3290.1 2714.7 2008 100.0 -577.6 1138.4 660.8 557.4 139.4 70.5 767.3 3509.2 2848.4 2009 -571.8 1221.2 649.4 586.4 149.6 77.5 813.5 3738.5 3089.2 2010-2028 -565.9 1306.9 649.4 586.4 149.6 77.5 813.5 3738.5 3089.2 ---------------------------------------------------------------__------------__----------------------------------- Present Value at O Discount 4838 5530 -11147 28772 26709 14591 3464 1674 19729 89231 0 62523 B ECCMIC ATE OP RTURN (URR) IS: 15.1l MARCTPAL COST ANALYSIS SENSITIVIT! ANALYSIS OM ECONOMIC Economic -------------------------------------------------------- RAUE OF RETURN Rate of Return -----PRESINT VALUES F ----- -AGIKL COST-- Benefits reduced by 10X 13.72 Discount Ivest- Total 2 Inest volume Invest- Total Benefits Reduced by 30X for 10 Yers 12.92 Rate mnt Expenses on Sold Mot Cost Invetment Cost Increased by 102 14.12 It Psoss N Pesos Total Mill.Ton PITon PJTon Investment Cost Increaed by 102 52 7987 14462 552 7585 1.1 1.9 ad Benefits Reduced by 10 12.82 82 7050 10861 652 4387 1.6 2.5 102 6542 9333 702 3179 2.1 2.9 121 6106 8208 742 2375 2.6 5.5 11 In 1988 prices, Including the cost of the two rehabilitation projects, physical contigencies, adjusted for the shadow prices of labor and foreign expenditures and excluding taes. Details in Annex 6, Table 1. 21 Includes all lnstments In rebilitation require to reduce non-revue water, After 1996 includes the Investments required to use 9 cau m per scoand from Umiray Basin. 31 Based oan the differene in powr generated, becuse of a 30 t lower hydralic head (P 42 million) and loss of peak generation (P 14 million). Peak generation at Angat is unreliable and vas avallable oaly one wek In 1987. Therefore, additional peak capacity may have to be provided by IPC regardless of the project. Moreover, this loss would increase gradually until the 15 cums are used. Under these circumstanes the compenation for loss of peak capacity additional 9 eu m from Reiray will create ecenoiLe gain of about 500 GWN at the sam prie, is estimated at P60 million per year (19' 41 :stimated as the increment In cJstant prices In the operation cost of water supply, as forecasted In the financial projectios. The average iemental cst of P2/Ton Prducd Ln 1996 (P 2.7 per volume sold) is used thereafter. 51 Difference with water sales in 1989 based tn demand show In Annex 2. The full production cpeeity is used aw and al neastments to lncrease capacity or commections are included. 61 Revenes are estimted In ons tant prices, based in the tariff on December 1988. Average rates are P3S30 for dmstic, P$ 5.84 for coeroclal and PS 7.61 for industril water les. 1O2 added for CERA. 71 Connection costs a compensated by connections fees and are not included. - 65 - ANNEX 6 - Page 7 ANGAT WATER SUPPLY OPIMZTION PROJECIr TABLE 4 - ECONOMIC RA1E OF RETURN INCLUDING INDIRECr BENEFIIS YEAt ESTIMATE PET ESTIMATE IIET IIICIEUS iBT FIRE NET TOTAL BASE CAB campS. DEw. COISU BEN its. IN BE.& WALTS SMMF. "ITS ASS8M TO BUILD INCLUD. SURPLUS INCLID. LAD INMlUD. UEFITSINCLUD. ALL TWO YEAT PEAM COt8S. 8CO11ESUR 333- LMD FXRE MEEE- YERS PLANT FOM PEAM SUPS ITS BENFITS & SHELTH WIFM CONSTRUC 13 PLANT 21 31 41 DELAY 31 1989 -1502.8 0.0 -1502.8 -1502.8 -1502.0 -1502.8 -901.7 1990 -1951.5 104.9 -1846.6 -1951.5 -1951.5 -1846.6 -1253.7 1991 43.1 -1577.2 236.3 -1297.6 -1534.1 -1534.1 -1297.6 -1104.0 1992 44.5 -665.6 385.1 -236.0 -621.1 -621.1 -236.0 -793.4 1993 33.8 -60.9 540.9 513.8 2003.2 1976.2 19.9 -7.1 2537.0 -508.9 1994 88.8 434.2 703.7 1226.6 2003.2 2526.2 29.9 552.9 3259.7 -15.0 1995 90.5 522.0 839.3 1451.8 2003.2 2615.8 39.8 652.4 3494.9 -491.7 1996 94.9 648.8 961.4 1705.0 2003.2 2746.9 59.6 803.4 3768.0 -59.2 1997 99.5 737.6 1086.2 1923.5 837.3 69.7 907.0 19"3.2 855.8 1998 88.8 671.5 1213.6 1973.9 760.3 89.6 849.9 2063.5 764.4 1999 86.5 779.6 1347.8 2213.9 866.1 99.6 965.7 2313.5 896.1 2000 80.1 723.2 1489.1 2292.4 603.2 99.6 902.8 2392.0 839.4 2001 0.0 916.8 1611.7 2528.4 916.8 99.6 1016.4 2628.0 958.4 2002 0.0 1221.4 1724.5 2945.8 1221.4 99.6 1321.0 3045.4 1268.3 2003 1578.0 1626.6 3404.6 1578.0 99.6 1677.6 3504.2 1629.9 2004 2345.4 1932.i 4277.6 2345.4 99.6 2445.0 4377.2 1745.9 2005 2463.0 2041.5 4504.5 2463.0 99.6 2562.6 4604.1 1868.9 2006 2587.8 2154.5 4742.2 2587.8 99.6 2687.4 4641.8 19" .3 2007 2714.7 2271.1 4965.8 2714.7 99.6 2814.3 5085.4 2131.6 2008 2848.4 2391.4 5239.8 2848.4 99.6 2948.0 5339.4 2270.6 2009 3089.2 2515.6 5604.8 3089.2 "9.6 3188.8 5704.4 2517.4 2010-2028 3089.2 2515.6 5604.8 3089.2 "9.6 3188.8 5704.4 2431.6 ECONOMIC RATE OF NEURN (ERM): If Benefits Reduced OX anmd Investment Inrerased 101 Base Case (no lndirect benefits) 15.11 12.8X Includiag Payment for Peak Capacity 14.6X 14.3Z Two Years Delay In Project Completion 41 14.3X 13.6X Base Case plus Estimated Consumer Surplus 24.3Z 20.91 UBse Case Plus Estimated Land Benefits 23.3Z 19.1X Bass Case Plus Estimated Ebalth and Fire Benefits 15.6Z 13.2S Including All Above Benefits 33.61 28.S3 13 Assuming that the replacement of peak generation capacity would cost WS$40 milllon for full capacity of 15 cums. The economic cost would be iln proportion to the incremental v-ter used. To allow for construction, the cost is asumed two years earlier. GLven the continuous investments In power generation, it is assume that no lump iavstments vould be needed because of losses of capacity in this project. 23 Based on average residentill demand of 38.6 towe/moath at P3.30 per ton, compared wlth water from water vendors at PO.3 per 20 liters (P15 per ton). The consumer surplus for residential users will be r1-1513.3)ILn(3.3S15)-2.3 the present tariff. 31 Asauming that about 301 of the incree In value of 1and In the project area to be served (21,469 ha, 34X of NSA) is due to the availability of water. Observed price lncreases varled from P132 to P232 per sq a. After the projet completion these benefits are distributed ln four years. 43 Based on the Feasibility Study (P99.6 million mai) reached gradually by the year 2000. 51 The lnvestment is assumed to be 3OX lover during the flrst three yers and added to the last three years, etendlng the construction by two extra years. It is then assumed that the inltial benefits are postponed two years and rech only 705 of the forecasted values until 1995. - 66 - ANNEX 6 - Page 8 PHILIPPINS ANGAT WATER SUPPLY OPIMITON PROJECT TABLE 5- POPULATION AND URBAN POOR SERVED BY HOUSE CONNECnIONS q-- - TOTAL POPUJL.SERV8D BY HMSS UEUUUD POOR SVE rD 11 YEaR lation Under Total X lrunr- Popula- u Iuce- X Poor MUSS Popul. Popul. mantel tLon mental on Million with Served Popula- Poor Inar. Persons Coinec- by tion Kill. Served Popul. tions Cornnc.snie 1989 Persons Served 1984 7.759 3.337 43.0Z 1985 8.005 3.937 49.21 1986 8.233 4.504 54.7X 1987 8.468 4.802 56.7X 1988 8.712 5.071 58.2X 0.715 1989 8.967 5.450 60.82 0.967 1990 9.228 5.847 63.4X 0.397 1.141 0.174 442 1991 9.454 6.317 66.8X 0.866 1.495 0.528 61X 1992 9.685 6.806 70.3X 1.356 1.867 0.900 661 1993 9.925 7.270 73.32 1.820 2.208 1.241 681 1994 10.171 7.753 76.21 2.303 2.566 1.599 69X 1995 10.402 8.084 77.7X 2.634 2.779 1.812 692 1996 10.639 8.426 79.11 2.975 2.893 1.926 6SX 1997 10.852 8.746 80.62 3.296 3.103 2.136 651 1998 11.070 9.076 82.0X 3.626 3.320 2.353 651 1999 11.292 9.415 83.42 3.965 3.544 2.577 652 2000 11.518 9.765 84.81 4.315 3.660 2.693 62X 2001 11.749 10.125 86.22 4.674 3.898 2.931 631 2002 11.945 10.389 87.0X 4.938 4.058 3.091 632 2003 12.145 10.658 87.6S 5.208 4.100 3.133 602 2004 12.348 10.934 88.62 5.484 4.267 3.300 602 2005 12.554 11.217 89.32 5.766 4.438 3.471 601 2006 12.t64 11.505 90.12 6.055 4.485 3.518 S8X 2007 12.946 11.799 91.12 6.349 4.679 3.712 S82 2008 13.130 12.099 92.12 6.649 4.877 3.911 592 2009 13.318 12.405 93.12 6.955 5.081 4.114 592 2010 13.507 12.718 94.22 7.267 5.289 4.322 59X -----a-ed-o----------t---le--l,-o--urban--poverty-o--50-----Metro-Manila. 11 BUsed oan an estimated level of urban peverty of 50X in Metro Manll-. - 67 - ANNEX 7 PHUIPPINES ANGAT WATER SUPPLY OPTRIMIZATION PROJECr ESTIMATED SCHEDULE OF LOAN DISBURSEMENTS / --- US$ million --- Bank's Year and Dishur- Cumulative DISBURSEWENT PROFILE OF Fisegal Semester sements 1] Disbur- Year Ending sements Cot˘ntry Project 1990 31-Dec-89 3.0 3.0 1.0% 7.5% 30-Jun-qo 2.2 5.2 4.0% 13.0% 1991 31-Dec-90 2.8 8.0 8.0% 20.0% 30-Jun-91 4.0 12.0 12.0% 30.0% 1992 31-Dec-91 4.4 16.4 16.0% 41.0% 30-Jun-92 4.0 20.4 21.0% 51.0% 1993 31-Dec-92 5.2 25.6 29.0% 64.0% 30-Jun-93 4.8 30.4 39.0% 76.0% 1994 31-Dec-93 5.6 36.0 54.0% 90.0% 30-Jun-94 2.4 38.4 65.0% 96.0% 1995 31-Dec-94 1.6 40.0 76.0* 100.0% 30-Jun-95 0.0 40.0 85.0% 100.0% DI SBURSEMENT PROFILE ea-- Im-I I - -Hs U0 - a areote e ta mm a bmwy Inelude0 "WI for t S al Ao It Includes the initial disbursement for the Special Account - 68 - ANNEX 8 - Page 1 ANGAT WATER SUPPLY OPflMIZATION PROJECT MWSS'S DEVELOPMENT PROGRAM INTRODUCTION next three years, either from the water saved as a result of the two Rehabilitation Projects (MWSRP I 1. Under the leadership of President Corazon C. and MWStP 11) and from the Angat Water Supply Aquio, the MWSS Management with the support of Optimition Project, MWSS expects to provide house the Board of Trustees has been caying out plans and connecdons to most of the houses requesting water programs to increase the supply of water, improve the connections within the distibution system, and would provision of water and sewerage services and uplift extend the water pipelines to new areas as weLL e living conditions of the 8.3 million popiuation within its service area. A major part of this pregram 4. This will considerably expand the population is the completion by 1994 of the Angat Water Supply served, and share the benefits of water supply among Optimization Project (AWSOP). This proect will inreasg number of people within the MWSS sernice provide an additonal supply of about 15 cuLm. of area. The percentag of population benefitting from water per second, or 1.3 million cum. of water per about 360,000 new house service connections is day and wfll serve about 3.0 million people more by expected to increase to 65% by 1990, 70% by 1992 1994. and 7S% by 1994. 2. Complemented by the turbo-generator, tunnel 5. There are two main water treatment plants and aqueduct capacities already built-in the AWSOP that had been opeating for many years. Balara had to be able to handle an additional nine cubic meter of been opeang at its full capacity of 1320 MID since water per second from the Umiray Basin, Angat wil 1979 while La Mesa Treatment Plant is operating double MWSS present capaciy ensuring adequate since 1984 at 58-6 of its capacity of 1500 MD. water supply to areas in Metropolitan Manila, Cavte, There are several improvements in the operations of Rizal and Bulacan under MWSS Jurisdicion which Balara which are planned to be implemented during wfll be suffcient up to year 2000. Their sevice area the next four years. Initily MWSS requested grant shall then consist of five cities and about financing from JICA to do the feasibility study for the 43 municipalities. However, this huge expanision to rehabilitation of Balara Treatment Plant in order to provide adequate water supplies by the year 2000 to increase its present capacity by 159 Esting more than 12 million people requires also a similar aqueducts and tumnels wil be checked for possible commitment and planning to develop the System, and sime formation and defects. A metenng system that improve its staff its planning activites and faciflities, will accurately measure raw and treated water going in such a way that the development and improvement ito and coming out of the water treatment plants of the institution wil surpass and precede the physical shall be implemented. The Second La Mesa By-pass development program. from Bkct-Novaliches Aqueducts to Novaliches-Balara Aqueducts will be implemented to reduce WATEt SUPPLY seepage/leakage and control evapo-transpiration within the Novaiches Reroir. 3. It is esdmated that about 84% of the population in the MWSS Service Area is seviced, of 6. There are several communities in the MWSS which 55% is served direcdy though house service service area that are on the friges or too far away to connections. A number of those served by public be connected to the central distnbution system. For faucets and indirect service connections would require these communkies, MWSS plans to expand their water direct house service connecoons sooner or later. supply using underground water or other water Since addkional water wDI be available within the resources. This includes in particular the nine - 69 - ANNEX 8 - Page 2 municipalites in the Rizal Province Water Supply simulate field conditions with flow and pressure Impromment Project. at is now undergoing readings at key point" as inputs; and (c) enhanced feasiblity study. The implementaton of this project remote sensing of the water sources, treatnent and will start in 1990 and would be completed in 1992. dibudon network wfll be realized through the This also includes the reacivaton of the Wawa Dam AWSOP. and constuction of a new meatment plant in Rodriguez (Montalban) to service the towns of 10. The installation of a Telemetering System by Rodriguez and San Mateo. 1993 is induded in the AWSOP. This will enable remote monitoring of actual water flows, pressures NON-REVENUE_WAER and levels at strategic points of the ditribution network Monitoring will be undertken at a 7. The greatest challenge to MWSS Management Monioring Center with the data trnsmitted through at present is the problem of contlling Non-Revenue radio and/or cable. With these improvements, MWSS Water (NRW). Reducing the NRW is a ptori%y, and is presy targeting to increase the revenue water two Rehabilition Projects (to be completed from 41% in 1988 to 47% in 1990 and 57% in 1993. respectively in 1991 and 1993) are being undertaken simultaneously in order to reduce NRW to about 30% SWERAGE AND SANITATION in more than 100 of the 120 zones subdividing the existng MWSS Service Area. The Rehabilation 11. The Sewerage and Sanitation Master Plan Projects are upgrading the deteriorated service pipes for Metro Manila has been completed in 1978. The and mainlines (up to 250 mm in diameter) by expansion of the sewerage system however has been locating and rVpairing leaks, replacing galvanized iron laggg behind expansion of water supply. Of the service pipes with non-corroding materials and total existing MWSS water customers of 583,000 only repairing/replacing water meters, among others. about 77,000 or 13% of houseolds in the service area are served by the existing MWSS sewerage 8 The Rehabilitation Projects will also develop an system The ongoing rehabilitation of the swer effidient metering program and reduce meter reading mains in Manila (Central) sewerage system wfll be ens. Thme, coupled with reviaized reglar finished this year. The construction of the 1800 mm maintenance actvities, are M_aneent's response to Manila Bay Ouall and the new Tondo Pumping the NRW challenge. The Rehabilitaion Projects were Station and the rehabilitaton of the seven sewer lift planned to precede the Angat Water Supply stations has been completed. However, unless Optimization Project which is expected to spread-even adequate measures are taken to properly dispose of adequate water pressure within MWWs Service Area. the additonal sewage, the benefits of water supply The lessons leamed from the Manila Water Supply will not be fully achieved and environmental Project II, which subjeeted the old and rsty degradation and health problems may increase in distribution lines to higher prese, thereby causing some areas. more leaks, has now become a useful planning guide. Rehabilitation Projects are now tightening up the 12. For this purpose, MWSS is completing the distibution system to receive additional water supply detailed engineering of the second sewerage and from AWSOP. sanion projecr METROSS n. This project which is expected to start by 1991 and to be completed in 9. MWSS is also planning to complete by 1993 1995 will provide sewerage in the southern portion of the following additional improvements in the the MWSS service area. Srding in 1989, MWSS is operating system: (a) in order to attain a more evenly also exanding its septic tank maintenance program, distibon of water pressure, MWSS is plannng to through a 10-year cycle desludging of septic tanss install pressure reducing valves in secondary mains. (free of charge) involving a total of 620,000 septic These pressue regulatig valves wfll also facilitate tanks or about 62,000 septic tanks per year. To date, implementation of water conservation measures, a tota of 186,025 household septic taks has been particularly the thrwoliag of valves during the dry surveyed by the Sewrage System Department, and a season. lGey points of the distrution sysyem wil be totl of 17,891 septic tanks have been desludged. idendfied and continuously monitored for pressure MWSS has also an ongoing program for the design changes; (b) a Computer Model wil be used to - 70 - ANNEX 8 - Page 3 and deveopment of approiate septic tanks sludge MUjLNG AND COLLECTION dispo facility. 17. The bflling and collection functions have 13. MWSS has requested the United Nation registered gradual improvement since 1986 BDlling Deveopment Project (UDP) to finanee a feasibsity efficiency have increased and colleetion efficiency hae study for the development of appropriate waste likewise increased from 88% In end 1986 to 94% in disposal faeciity. With the idustial development of end of 1988. Metro Manila, dte is seious concem about industrial pollution, which, if not contolled, wDI 18 Improvements in the billing and collection increase the pollution of gmund water, rivers and the policies and systems reduced billing time and resuted Manila Bay. MWSS will seek grant financing to study in higher collection. These improvements were this problem, estabish regulations for the discharge of accompanied by the conversion of manual meter heavy metals or othe dangous substances, and reading to the computeized ROVER meter reading rationalize fite industri location considering such and billing system, that reduced billing time from problems. 14 days to 3 days. The installation of this system would be supplemented with a program to WATER DEMAND computerize by 1992 the revenue collection and other functions at the Branch Offices. 14. MWSS requies a more accurate estimate of water demand, not only to plan its ivestments, but 19. Major billing and colection programs being even more to ense that revenues, which depend on initiated, and are expected to be substaally water sales, are adequate to meet the financial needs completed by 1993, as follows: of the System. This will involve, among others, verification of some of the key parameten of water For Blllinwr demand in the MWSS service area, most notably the percentage of population already served, the a). Acceleration of house sevice connection evauation of cut use of groundwater including actities including revision of connection assessment of the pollution and cost to users of policies to expedite such connections; underground water. b). Enhancement of the Rover System and 15. MWSS also plans to inesify the campaign Facilities to provide more effective data agaist illegal connections and device a new water control and monitoring of services; service cennection program that will reduce the time to provide water service connections to MWSS c). Increased metering and meter replacement customer,, activities to reduce billing based on average rather than actual consumption; d). Expansion of consumption studies per 16. The regular examination of the tariff, both the industry groupings, to identify substntial level and the stmcture, wil be maintained vigorously varances in metered consumption, and over the yea. The tariff level may be adjusted investigate their causes. upward over the years to partally fil up any shortfall in interal cash generation to meet its financial For Collecdon: requirements. Due to the planned improvements of NRW it is expected that tariff increases may be equal a). Continue the opening of more branches to the inflation rate. The tariff structure would and extension offices; contInue to promote water conservation, with higher unit prices for excssive water consumption, and b). Rotation Program among would remain affordable to low-income customers. supervisors/managers; Crossdsubsidy among consuming groups will be continued. c). Intensified Govenment Aans Program in coordiation with Departnent of Budget - 71 - ANNEt 8- Page 4 and Management, Department of supervisory meetns were conducted in Fmace and Bureau of Teasuy. This the past few years, the System wll direct program which includes account its galng efform ore and moretowwds reconciliations with government offices strehening specific spervisory skills and a budget "earmarkig strategy which are particulay critical to MWSS thrugh the Executive Branch, shall day-to-day operations. reduce govnmen anears to 4 month receivables level by the end of 1990. d) Developing Sklcls and Bemavioral Pans for Effective Customer Reladons and 20. The target for the future years is to fiuther Collection Techniques. As a public service improve billing efficiency. Collection efficiency wil insiution, the manner by which the day- be increased to 95% of current billing; and recovery to-day business with people is conducted of collectible arears at a level of 10% of total by each employee goes a long way towards collectiont yeary, building up public trust and confidence in the System. Such is the value of effecive customer relations that it shall be a STAFF TANING AND DEVELOPME-) continuing major concem of the System. Collection shall be trained in effecdve 21. In support of the corporate vision and collection techniques. programs, the human resource development efforts of the System with the staff support of the Human e) Upgrading of Professional/Technickl Resource Development Department (HRDD) wIll focus Expertise. If managers provide the brains on the following program thru for 1990-94. for the organization, its professional and technical staff may be said to be its a) Orgnization Commitnent and Positive backbone. The diversity of fields of Work Atiudes Building. A cridcal exrtise would reVire not oly in-house element in the move for a trng but also extral training, local transformation of the System, renewal and overseas scholarships, and training/ Of commitments to oranizatonal goals exchange progrs. To meet the projected and the building of positive work increased in computer applications in the attdes among all personnd wil be a System, traiig would focus on relevan major and continuing concem of the computer courses durig the period. Deparment. f) Trainmg Impact Evaluation. The real test b) Operational Skills Competency of effectiveness of training ultimately rests Development Because of the continuing on the amount of tansfer of knowiedge expansion of System and the concem and skills learned to the job sktuaion. For for high opaonal standards including this reason, the improvement of follow-up the reduction of non-revenue water, the and monitoring systems and conduct of taing and development of skdled research and evaluation studies surface workers to operate and maintain the concrete indicato of training effectiveness water supply and sewerage facilities shall be a majr inerest of the shall be one of the most important Department. undertakngs of the Department. g) Manpower Planning and Development. c) Managerial and Supervisry Skills While a career plamning and devdopment Development and Advancement. The program serves as a means of mapping out pivotal role of managers and manning needs for projections and supaesors to achieve organization preparmg those who have the potential to eficincy and effectiveness make them assume positions of higher responsibty, a priority concern of the Department it signifiany contributes also towards While quarerly executive and motiating personnel in the performance - 72 - ANNEX 8 - Page 5 of their tasks In the Systm HRDD forwarded to the Executive Committee. This would graduasy proceed with its C chaired by the Admmiisaor with the Personnel Skills Inventory and Deputy Adminitators as members. t decides on the Employee Data Bank, Career Succession productivity idea proposed, decides on its Tables and Imlementation of Career implemeion, or, if needed, recommends for Development Plans. approval to the Board of Trustees the actio. required for Improved productivity. LABOR-MANAG1MENT INCMNIWE PROGAM 26. The productvity incentive benefts to be derived from this program will continue to accue to 22. A system of labor-management cooperaton for all MWSS employees over and above the salary increased producdtvit and a system for sharig the standardiation program of the goverment as resuting increment monetay benefits have been mandated by the Constitution. The increased established to semre as incentve to evey employees product is shared monthly in this fashion: ideas and cooperative effort. The system Is designed (a) 70% goes to MWSS; and (b) 30% is shared by aU to incease revenues and savings, and decrease employees in proportion to their gross pay and expenses tough cooperation, group teamwork, cost attendance. Seventy percent of the employee's share consciousness and high quality of work among is paid monthly. The balance of 30% goes to a employees. reser pool, payable at during lean months. 23. To realize the program's objecdves, a Labor- Management Product Committee has been organzed in each Department, Sector, and Project Manage's Office. It is composed of the Manag as Chairman wih the Divmion Chiefs and equal number of elected representatives of labor as member This Approved: Commitee filters all the producty Ideas submitted by the employees within the DepartmenSector/Project Man 's Office and implements the same, if no action is required fom Luis V. Z Sison higher authorities. Otherwise, the Ideas are presented to the Labor-Management Productivity Screening Adminitator Committee under each Area. This Commitee iL composed of the Deputy Administrators of the area August 4. 1989 concemed as Chairman, with all the Managers and an equal number of elected representtives of labor wkihin the Area as member At present, there are 33 Labor-Management Productivity Committees and seven Area Labor-Management Productivity Screenig Committees. 24. The Area Scing Committee reviews, screens, or channels to other area saeening committee all suggestions designed to increase productvity or reduce non-revenue water waste md unnecesary expens. If the idea submitted is implementable within its level, then it is implemented within its juidicon. Afterwards, it is disseminated Origind is in Project Pile. to other areas where it may be applicable. 25. Employee ideas/suggesdons which cannot be resolved by e Aea Screening Conmittee are - 73 - ANNEX 9- Page 1 PHMJPPVMS ANGAT WATR SUPPLY CVITMAATIN PROJECT WATER AND SEWERAGE CHARGES Water ad &werage Tarff 5. An aalysis ofdhe new water tariff (approved in July 1989) for domestic, lndustrial and commercial 1. MWSS tariff include two components: the consumers is shown in Tables IA. 1B and iC, water rate and the CERA (Compeston Exchange r5pectdvey This analysis is based on the hisogram Rate Adjusment, a che increased automatically of water billing for September 1988. These tables with the revaluation of foreign debt MWSs *aiff am show the ttal consumption, the average consumption, prrsive (inceased price with increased water the total bill and the average bill (pesos per ton of usage) to discourage wastefl use of water, encourage water) for each group of consumers and compare consevation and cross subsidize low income users, them with the previous rate. MWSS has two domestic faciliating access to safe water to the urban poor. rates: one for domestic consumers which have smal The average water rate in 1988 was aboutP 4.4 per comme and industrial activities in the same ton. The aveage rate for domestic consumers was premises, and a general domestic rat- for the about 8096 of the average rate, while average renig domestic consumers. Since these two tariffs commercial and industial rates were 1.32% and 176% differ vey little (P 0.10 per ton, less than 2% of the of the average rate. avemp), and to show aU domestic consumers in the same graph, the analysis assumes tha the general 2. The results of the progressive taff e domestic tariff is applied to all domesdc consumes reflected in MWSSs billing stacs. In December 1988, domestic consumers were 86.1% of total, used 61.6% of the water sold, and paid 47.9% of MWSSs 0DISTRIBUT ION OF CONSLMPTION & REVENUES revenues Commerchl consumer were only 12.7% in " - number, but used 21.6% of the water and provided so _ _ 28% of the revenues. Industrial consumers are very - . _ few (0.6%), used 6.9% of the water and provided _ 11.6% of the revenues. Government services, which - - _ are bmed according to the kind of sevre (domesdc, - . _ _ _ commercial or indusmrial), are 0.8% of the accounts, | _ use 9.9% of the water and are 12.5% of the blling. - - 3. CERA charges vary with the ratio of the - current forei8n debt sevice per ton of water sold, to " . _ _ the debt service per ton for 1984 (the reference year). n _e r CERA srharges are equivalent now to about 10% of the aveage watertarif Figure 1 4. Seweage chares, levied on those houses that 6. The 60% lowest consumers in the domestic have sewerage connections, are 50% of the water category (normally the low-income population) use chargs, which is reasonable. The remaining less than 30% of the domestic water consumption, populationpays enonm lcharges equal to about conversely 70% of the water is used by the 30% 10% of the water consumption. These charges are larger consumers (FIgure 1). Because of the used to expand the sewerage sytem clean-up septic prgeivitY of MWSSs tariff, just 20% of the high- tanks and implement other environmental protection water cosmers (normlly the high income measurs, inuding minor dainage an flood contoL population) were billed 80% of the total domestic billig (lowest line in Figure 1). The approved tarif -. 74 - ANNEX 9 - Page 2 (paa. 8) would reduce dWy the burden for smal rapidly with consumption (fmom P 1.6 to P 6 between use (low-nme populton), which wold now pay 10 and 100 tons of water per month per connection). about P 16 for 10 tons of wat per mth, and make The Inita consumpon intals, set at a subsidized charges moem equitable. price, facilitte the use of water needed by the urban poor, but thee is no need to discriinate excessivt 7. I m ys n s tariffsjnge. The consumption presently based on 8 ranges of recently apprvedtf included manyimprovements, consumption), which should be charged at the same which are satsfctoty to the Bank, in paticular. (maximum) price. Since 85% of the domestic connectons use less than 50 tons per month, this is (a) fimed chargs were applied to wide ranges of an excessive level, equivalent to 210 lcd for a family consumption This resulted in high unit cges for of 8 persons Setting the same unit price for excessive consiptions at the lowest end of a range and low consumption would also resut in a lower maximum unit charges for higher numptdon within that price, moe comparable with the marginal cost. For range. For domestic coners, a minimum increase example, a simlar tff with a minilnum of P 15 for in consumption frm 24.9 o 2.0 tons per month 10 tons, and unit pre of P 2.0, P 2.6, P 3.2 and increased their motly pyment by 53%, from P 30 P 4.0 for the next consumption intervals of 5, 5, 10 to P 46, Figure 2. The sme problem existed at other and 10 tons respectvy, would provide the same intetvals and for small consmtion by commercial revenues as the appro . tarlff but the maximum rate and industrial establishmen. would be only P S.'0 per ton for excessive consumption above 40 tons. Another improvement would be to reduce the maximum charges for PRESENT TAR IFF - COST VS CONSWJPT IONJ industial consumption (and to a lesser extent for ! - -comercial consumption), which are P 8.15 per ton. This high price reduces the price to be paid by low income users, but encourages commercial and industrial uses to continue depleting and damaging the aquifer instead of using MWs water. This improvement would only be possible when NRW is IE ,reduced to less than 40% (reducing the average cost of water and incrasing its aviability), particularly when the water supplied by the project is available in 1992, ending water rationing, and allowing more water to be supplied for non-domestic consms. MWSS is aware of the need for these improvements and its Corporate Planning Department is analyzing Figure 2 these matts for the 1990 tariff. (b) 26% of the domestic consumer used less than 15 tons per month, but had to pay for at least 15 tons AVERAGE WATER PRICE VS. CONStMPTION per month. Low water consumption is due to low e income, but also to lack of indoor plumbing. This , resulted in high rates in pesos per ton for the lowest consumers (see Figure 3). Therefore, MWSS reduced " the minmum to 10 tons per month, (iLe., 42 lcd for 5 . _ a family of 8 persons, whichs easonable). About . __ 11% of the po uses less than 10 tons per I * t month per connection. The minimum charge per . - month under the approved tarffwas reduced to P 16 from P 18.60 Crable Lot). - Tarh enTherecendyapproved a '_ tuft pm for prohsive dwges, which increase - 75 - ANNEX 9 - Page 3 MWSS'S APPROVED WATER TARIFF TABLE 1.1 (DOMESIC) cou8naT PMR "MrST TXIFF AM AT AWDmTCOAL CUMULATrVE IMNTrVAL TARMFF ANALYSIS SU@i40RTs ___________________________________--__________________ Up to 10.0 10.0 16.00 lOom. 16.0 Aig. Cons2pt1n, Tonl/Mnth 36.82 Next 10.0 20.0 2.15 JCU.M 37.5 Avg. Bll (Pesesttbontlh) 112.12 Next 10.0 30.0 2.70 1Cu.N 64.5 M. Tarlff C ?esosTon): S.04 Next 10.0 40.0 3.25 JCu.x 97.0 Avg. Tarsff Increaset -7.82X NJxt 10.0 50.0 3.80 ICu.N 135.0 Total Revenues (HLll.Pesos) 56.56 Next 10.0 60.0 4.S3 iCu.x 178.5 Naxt 20.0 80.0 4.90 /Cu.K 276.$ NeJt 20.0 100.0 5.45 /Cu. 3S65.5 More 6.00 /Cu.N N0. OF COSUMP- AVG. CUMULATIVE AVERA4E BILL XICUA SBE UIlD CUJIUAT. CUMOLATIVE PERCENTAGE SEtVICES TIan COESUMP- - - --WATER PZR TOIS BILL AMOUNT BILLUD TICK N0. OF C0S0KP- TARIFF C0OMBO- CS TiE AMOUNT OF S8R- OF COW- OF RE- 1000 TOP PER SERVICES TION Pesos/ TSIJ PRESNTf 1000 1000 VICES SUMPTIOB VENUES Too NDUTM MtLL. TO Ton P*seJ BILL Pesos Pesos 16.243 51.220 3.15 16.24 51.2 5.07 16.00 -14.0X 259.9 260 3.2S O.3X O.5X 9.932 64.9S4 6.54 26.18 116.2 2.45 16.00 -14.01 158.9 419 5.22 0.62 0.7X 13.085 111.568 8.53 39.26 227.7 1-88 16.00 -14.02 209.4 628 7.82 1.2X l. 12 16.765 176.331 10.52 56.03 404.1 1.63 17.11 -8.0X 286.9 915 11.12 2.22 1.62 20.010 250.393 12.51 76.04 654.4 1.71 21.40 15.12 428.3 1343 15.12 3.51 2.42 10.956 153.384 14.00 86.99 807.8 1.76 24.60 32.31 269.5 1613 17.22 4.SX 2.92 42.550 638.250 15.00 129.54 1446.1 1.78 26.75 -12.62 1138.2 2751 25.72 7.8X 4.92 23.527 388.276 16.50 153.07 1834.4 1.82 29.98 -2.0X 705.4 3456 30.32 9.9X 6.12 25.984 441.669 18.50 177.05 2278.0 1.85 S4.27 12.0X 822.0 4278 3S.12 12.SX 7.62 12.716 254.320 20.00 189.77 2532.3 1.88 37.50 -18.5X 476.9 4755 37.62 1S.6X 8.42 23.130 497.180 21.50 212.90 3029.5 1.93 41.54 -9.72X 90.7 5716 42.22 16.3SX 10.1 22.634 531.558 23.48 235.53 3561.1 2.00 46.91 2.02 1061.7 6778 46.72 19.2X 12.0X 11.378 284.450 25.00 246.91 3845.5 2.04 51.00 -22.5X 580.3 7358 48.92 20.7X 13.O0 20.195 534.991 26.49 267.11 4380.5 2.08 55.03 -16.4X 1111.3 8469 52.92 23.61 15.02 19.094 543.989 28.49 286.20 4924.5 2.12 60.42 -6.22 1153.7 9623 56.72 26.5X 17.0X 11.754 352.620 30.00 297.95 5277.1 2.15 64.50 -20.42 758.1 10381 59.12 28.42 18.42 S9.454 1298.996 32.92 337.41 6576.1 2.25 74.00 -16.82 2919.8 13301 66.92 35.42 23.52 31.573 1197.180 37.92 368.98 7773.3 2.38 90.23 -11.92 2848.9 16150 73.11 41.82 28.62 24. 862 1067.051 42.92 393.8 8840.4 2.52 108.09 -6.72 2687.4 18837 78.12 47.62 33.3X 20.175 966.119 47.89 414.02 9806.5 2.65 126.97 -1.8X 2561.6 21399 82.12 52.82 37.82 15.977 845.304 52.91 429.99 10651.8 2.79 147.65 -16.72 2359.0 23758 85.22 57.32 42.01 12.605 730.262 57.93 442.60 11382.0 2.93 169.51 -12.72 2136.7 25895 87.72 61.3X 45.82 10.062 634.476 62.95 452.68 12016.5 3.06 192.86 -8.5X 1944.5 27839 89.72 64.71 49.22 8.205 557.636 67.96 460.89 12574.2 3.20 217.52 -4.52 1784.7 29624 91.42 67.7X 52.42 11.851 891.098 75.19 472.74 13465.3 3.36 252.94 -18.02 2997.6 32621 ".72 72.52 57.72 8.119 692.322 85.27 480.86 14157.6 3.58 305.23 -12.71 2478.2 35100 95.32 76.22 62.12 5.430 516.965 95.21 486.29 14674.5 3.77 359.37 -7.92 1951.4 37051 96.42 79.02 65.52 3.790 399.004 105.28 490.08 15073.5 3.96 417.17 -22.32 1581.1 38632 97.12 81.1X 68.32 2.735 315.188 115.24 492.81 15388.7 4.14 476.95 -18.8X 1304.5 39936 97.7x 82.82 70.62 1.933 242.301 125.35 494.74 15631.0 4.29 537.60 -15.92 1039.2 40976 98.11 84.1X 72.42 2.698 377.032 139.74 497.44 16008.1 4.47 623.97 -12.4X 1683.5 42659 98.62 86.22 75.42 5.3n7 1068.536 199.47 502.80 17076.6 4.92 982.29 -3.42 5262.1 4792 99.7 91.92 84.72 1.002 373.527 372.78 503.80 17450.1 5.42 2022.19 6.4X 2026.2 49947 99.92 93.92 88.32 0.657 1125.593 1713.23 504.46 18575.7 5.87 10064.89 15.22 6612.6 56560 100.02 100.02 100.02 504.458 18575.7 S6.82 3.04 112.12 -7.86 56560.1 - 76 - ANNEX 9 - Page 4 TABLE 1.2 (COMMERCIAL) COINStIOl PER HlT TSRF AWIIT AT TAIU AWLYSIS SM@UiAt _________________I________AL____ CUUATV Ciiiu_________lff.8 AMMOM CMWLATM INTMAL vg.Oot~tin,T*nWouth 195.82 up to 25.0 25.0 152.500 IComn. 152.5 Avg. Bill (CPesosilLth): 1238.61 Net 300.0 325.0 6.100 ICu.W 1982.5 Ass. Triff (PeasoITon)s 6.33 Netx 675.0 1000.0 6.100 ICu.M 6100.0 Avg. Tariff In8eases 8.26Z ast more 6.400 ICF.M Total Rovewa (Xill Pesos) 62.26 No. 0 CONSM(P- AVG. CUMBATIVE AV sILL BIllD CULAT. C tLAIE PERCENTAGE SElVICES TICS OCKSM- ---------------- WATER PER AitD? BIU ------ TrIC NO. OF ONWP- TARIFF 00M3- AMNT OF SER- OF 001- 01 RB- (1000) 1000 TON PER SEMICES TICO PeosI TIan 1000 1000 VICES SUMPTIOR VENE To 1m011T "IlL.Too T Pgeso Pesos pesos 15.967 246.3Z0 15.43 15.967 246.3 9.89 152.5 2435.0 2435.0 31.81 2.51 3.92 13.408 490.818 36.61 29.375 737.1 6.10 223.3 2994.0 5429.0 58.42 7.52 8.72 10.011 702.881 70.21 39.386 1440.0 6.10 428.3 4287.6 9716.5 7e.41 14.62 15.62 *.994 693.794 138.93 44.380 2133.8 6.10 847.4 4232.1 13948.7 88.32 21.72 22.42 4.s46 1888.523 434.54 48.726 4022.S 6.10 2650.7 11520.0 25468.7 96.92 40.92 40.92 1.539 5s20.57a 3782.05 50.265 9842.9 6.32 23905.1 36790.0 62256.7 100.02 100.0X 100.02 …---------------- -…--------------------------------------------__ --------_ ---__ -------_ -_______ ____________ 50.265 9842.91 195.82 6.33 1236.6 6225S.7 TABLE 1.3 (INDUSTRIAL) COKSUIWTP0 Pu WIOTiI TARIFF TOTAL SIL TARIFF ANALYSIS SlU)HI ADDITIOAL TOIAL PESOS PESOS __ --------- - ----------------- - ------------------------ ----- A- A Coaspiwon, ToMmilMnth 314.68 up to 25.0 25.0 170.000 ICol. 170.0 Avg. SlUL (Poseaaloth): 2402.17 Nest 300.0 325.0 6.800 1Cu.lK 2210.0 Avn. Taxiff (PesoslTo): 7.63 Next 675.0 1000.0 6.800 IC'.i.N 6800.0 Avg. Tariff Increase: 0.30X Net Nore 8.150 ICu.t Total Revenues (NIL.Pesoa) 14.76 …______ ___ ____ _ - - _ - --------------------- - -------- - ----…-…-…..- …- ----- - --------- -.. _ --…---… NO. Of CWSUHP- AVG. CMULATIVE AVEAE "ILL BILE CUMLAT. CUMLATIVE PERCETAGE SERVICES TICO CO150 _ -- -- VATER Pu AIDUOT SILL -n - TIOC NO. OF CONSU)W- TARIFF C0W0C- AMWURT OF SIR- OF CW- OF RE- (1000) 1000 TOo PU= SERICES TION Pesos TIan 0OOO 1000 VICES SItiTICK VNUS TONl %T2 mIl-.T ITon Pesos Peses Peos 1.273 19.56 15.38 1.273 19.6 11.05 170.0 216.4 216 20.72 1.0 1.52 3.043 166.40 54.68 4.316 186.0 6.80 371.8 1131.5 1348 70.22 9.6X 9.12 0.922 126.32 137.01 5.238 312.3 6.60 931.7 859.0 2207 85.22 16.2X 15.02 0.524 159.11 303.65 5.762 471.4 6.80 2064.8 1082.0 3289 93.82 24.42 22.32 0.176 122.72 697.30 5.938 594.1 6.80 4741.6 834.5 4123 96.62 30.71 27.91 0.207 1339.56 6471.30 6.145 1933.7 7.94 51391.1 10638.0 14761 100.02 100.0 100.01 …----- - …------------------------------------------------------- __----- ________ ---- …-…-------------------- 6.145 1933.69 314.68 7.63 2402.2 14761.4 TABLE 1.4 - SUMMAR RESULTS FOR THE APPROVED TARff N0. OF COlSUlP- AVG. AVERAGE SILL SILLED TARIFF PERCENTAIE OF CU253001 SERICES TICK C00SM8P- WATER PuR ADWIT INl _U _ TICK TARIF COIIIC- SERVICES COo- REVOEUES (1000) 1000 Tol PuR Pesos/ TIaC 1000 PDSSENT 501IC1 TON WI)TH Ton Pesos Pess TARIF Dc"stlc 504.46 18575.72 36.82 3.04 112.12 54560.1 -7.822 89.942 61.201 42.34X Camarc:ial 50.27 9842.91 195.82 6.33 1238.61 62258.7 8.26X 8.962 32.432 46.61S Industzlsl 6.15 1933.69 314.68 7.63 2402.17 14761.4 0.38x 1.102 6.372 11.051 Total 560.87 30352.33 547.32 4.40 238.17 13S580.1 0.01X 100.002 100.002 100.00O - 77 - WNSS'S FI N CIAL PROJECTIONS ANNEX 10 - Page 1 TABLE 1 INCOME SATEMENT ., Minion Pesos ____________________________________________________________________________________________________________________--_______________ 1986 1987 19" 1989 1990 1991 1992 1993 1994 1995 1996 -----------------------__--------------------------------------------__-------__---------------------------------------------------- Population Under IOIS-1000 8233 8468 8712 8967 9228 9454 9685 9925 10168 10417 106t3 2 with water Conecetior. 54.82 56.85 58.51 61.12 61.7X 67.12 70.6X 73.52 76.52 77.92 79.2X S Served by Publie Faucets 6.82 7.01 7.22 7.32 7.22 6.92 6.62 6.32 5.72 5.12 4.91 2 with Sewerage Connectione 8.5 8.12 7.72 7.72 7.7X 8.0X 8.22 8.5X 8.8X 8.92 8.92 Water Conneations-1000 301.2 534.3 566.5 608.6 652.8 704.9 759.3 810.9 864.6 901.3 939.3 Vole of Water lilled-Mil1.Tons 110.8 336.5 359.4 378.6 407.9 444.1 484.6 528.6 575.0 614.2 650.6 Volume Billed (Ipod) 189 192 193 189 190 192 194 198 202 207 211 Water Production-Million Tons 904.5 862.6 878.8 856.5 849.7 862.3 881.1 903.6 927.5 952.2 971.0 Non-Revenue Mater (Unaccounted-for 65.62 61.02 59.12 53.81 52.02 48.52 45.0X 41.52 38.02 35.52 53.01 5 of Sewerage Connections-1400 77.4 76.1 74.3 76.5 78.8 85.5 88.6 93.9 99.5 102.5 105.6 Volume of Sewerags *ill4d-Mill.Ton 59.1 60.7 61.0 62.0 64.5 68.0 72.9 78.0 83.5 88.1 91.6 Average Voter TSriff- PS/Ton 3.99 4.02 4.36 4.63 4.99 5.42 5.81 6.26 6.87 7.32 7.60 OPENATIONAL REVES Water Revenue* 1252.0 1362.6 1578.0 1763.4 2116.4 2419.6 2829.5 3329.3 3968.6 4520.9 4969.5 Mater Charges 1241.5 1351.9 1566.6 1751.5 2103.0 2405.2 2813.7 3311.7 3948.6 4498.7 4946.6 Maintenance Serviee Charges 10.4 10.7 11.5 12.1 13.4 14.3 15.5 17.5 19.9 22.2 22.7 Flat Rate Charges 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Swerage Revenues 233.7 269.9 303.9 323.7 380.5 443.2 514.0 599.9 710.2 804.8 877.9 Sewerae, Revenues 128.1 134.7 147.1 148.5 176.9 202.7 232.6 268.8 315.4 154.9 383.2 Sovircoent&l Charges 105.6 135.2 156.8 175.1 203.6 240.5 281.4 3S1.2 394.9 a4s.9 494.7 Other Other Operational Revenues 8.0 24.2 23.3 23.5 23.8 24.0 24.2 24.5 24.7 25.0 25.2 Less Franchise Tax 0.0 0.0 0.0 41.2 49.7 57.4 66.0 77.5 92.2 104.9 115.1 TOWAL 0iT V S149.7 16.7 1905.2 2969.4 24.9 2829.4 3501.5 3876.2 4611.3 5245.8 5757.3 WAITE SUPPLY: 459.0 500.2 576.9 650.9 729.4 819.6 928.2 1041.1 1165.9 1304.8 1456.1 Personnel 174.4 229.3 506.4 352.5 395.9 444.5 506.7 563.8 627.3 697.9 776.5 Powr 147.0 124.7 105.8 115.2 129.6 146.2 165.4 186.8 211.2 258.8 268.2 Chemicals 49.8 40.7 52.8 56.3 60.9 67.4 74.7 82.7 91.7 101.7 112.0 materiels 26.4 31.2 24.4 28.1 32.2 37.1 42.4 48.0 54.2 60.3 67.0 Compensation Po_r Losses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.1 9.5 14.7 19.5 Other 61.5 74.4 87.5 98.7 110.8 124.4 139.0 154.7 172.1 191.4 212.9 SEMBRAOE: 65.3 84.5 81.6 93.2 105.2 118.7 133.7 149.9 168.1 188.1 210.0 Personnel 38.5 51.1 53.4 61.8 69.7 78.7 88.3 98.8 110.5 123.5 138.1 Power 10.6 12.1 11.2 12.7 14.8 17.2 20.2 23.6 27.6 31.7 36.0 Materials end Others 16.2 21.4 17.0 18.8 20.7 22.8 25.1 27.5 30.1 32.9 35.9 Provision for Doubtful Accounts 59.5 65.3 75.0 67.5 73.6 72.2 85.8 98.4 112.8 127.8 143.1 B - S S5.8 650.0 733.5 811.7 908.2 1010.5 1147.7 1289.4 1446.8 1620.6 1809.2 Ica BEF DURECIATIO} 909.9 1006.7 1171.7 1257.7 1562.8 1818.9 2153.8 2586.8 3164.5 3625.2 3948.1 Depreciation 154.5 218.0 237.7 272.5 362.2 446.4 572.1 687.4 838.7 968.2 1071.4 90URATIM -ONK 755.4 7M8.7 934.0 905.2 1200.6 1372.3 1581.7 1899.4 2325.8 2656.9 2876.8 Interest Incoe 107.9 97.7 167.3 108.0 25.8 25.2 34.5 47.4 71.3 96.8 144.5 Other Income (t) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Operational Interest 9.0 361.0 562.0 762.8 318.2 384.7 537.1 515.5 469.6 866.6 913.9 Amortisation Deferred Charges 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Taes 0.0 0.0 0.0 0.0 311.5 374.6 423.6 522.0 639.4 613.1 725.4 NET INa91E POT F EAR 854.3 525.4 53e.9 530.4 596.6 638.3 655.5 909.3 1208.0 1274.1 1382.0 Amortization Debt Revluation Loss 0.3 0.5 0.8 4.8 26.7 80.4 176.1 323.5 470.6 457.1 NUt ISCOMSAR m Bt RAALSI 854.3 525.1 53.3 9. 592. 611.8 61.7 575.0 733.2 964.5 80S.S 924.9 Increae in Volunr of Water Sold 8.32 6.8X 5.32 7.72 8.91 9.12 9.12 8.82 6.82 5.92 X tariff Increse 0.62 8.5X 6.12 7.92 *.52 7.22 7.92 9.62 6.72 3.8Z Increase in Operating Reveues 10.91 15.02 8.62 19.42 14.52 16.72 17.42 19.02 13.8X 9.82 total Cost/Ton Produced (P$ITon) 0.8 1.0 1.1 1.3 1.5 1.7 2.0 2.2 2.5 2.7 3.0 working Ratio 39-.1 39.22 38.52 39.22 56.8X 35.72 34.8X 33.32 31.41 30.92 31.42 Operating Ratio 49.4X 52.41 51.02 52.42 51.4t 51.52 52.12 51.02 49.62 49.4X 50.02 net ncae Before Taxes on Equity 9.2X 5.4. 5.12 2.72 6.12 5.62 5.31 6.22 7.32 6.32 6.32 Average Asset's Rate Base 8121 9885 108 12225 14611 17037 19775 23741 29062 33199 35952 Rate of Return n Revalued ssets 9.32 8.02 8.72 8.12 8.22 8.12 8.02 8.02 8.02 8.02 S.02 11 Due to rounding, the let d4iit in totals may appes differeat then tF-. a of coluos. - 78 - MUSS'g FIEANCI&L PROJECTIONS ANNEX 10 - Page 2 TABLE 2 SOURCES AND APPICATIONS OF FUNDS %LLa PRSOS 1986 1987 1988 1989 1990 1991 1992 199S 1994 1995 1996 --__---------------------------------____-__------______--------__----------------------------------------------------------__ $OURCZS OY YI Incame Befor Deprctation 909.9 1006.7 1171.7 1257.7 1562.8 1818.9 2113.8 2586.8 3164.5 3625.2 3948.1 Plus Other Incom, Less Tames 107.9 97.7 167.5 108.0 -285.7 -549.4 -589.1 -474.6 -366.2 -516.5 -580.9 _________ _________ _________ _________ ________ _______--_________ _________ _________ _-______ mS =mm_ lOt. or 10 .4 151.6 5.7 117.1 1469.4 1764.7 2113.2 2596.S 3108.9 3567.5 .winm _ominum m a GRA1 188.0 564.5 16.5 516.3 89.9 1046.4 561.5 569.6 190.6 0.0 0.0 Equity (trenfer of Om' s Lem) 0.0 0.0 0.0 96.0 528.7 565.1 2)7.1 244.9 124.6 0.0 0.0 Equity M2t0R II 6 Other 0.0 0.0 0.0 179.0 0.0 51.3 124.2 124.7 66.0 0.0 0.0 Subsidte Franchise & Imam Tax 0.0 0.0 0.0 41.2 361.2 452.0 0.0 0.0 0.0 0.0 0.0 FOREIGN GRAM (elara Reab.) 0.0 0.0 0.0 0.0 224.6 410.0 0.0 0.0 0.0 0.0 0.0 rROWrNC: .-tein Yorrovins 616.1 271.9 520.3 912.8 1102.7 1526.2 1711.4 1529.7 593.7 0.0 0.0 !NaD-Angat Projoet 0.0 0.0 0.0 65.0 106.9 187.0 213.4 252.7 97.4 0.0 0.0 D-Angat Project 0.0 0.0 0.0 9.9 480.9 764.5 730.1 586.2 420.8 0.0 0.0 Otbr Foreign Loan 616.1 271.9 520.5 659.9 514.9 574.8 767.9 690.9 75.6 0.0 0.0 Local Sortroei 0.0 0.0 0.0 280.0 580.0 470.0 270.0 0.0 0-0 0.0 0.0 PMS-US oouAs 0.0 0.0 0.0 240.0 480.0 560.0 120.0 0.0 0.0 0.0 0.0 Other Local Loas 0.0 0.0 0.0 40.0 100.0 110.0 150.0 0.0 0.0 0.0 0.0 ~L _ ; 61t6.1 271.9 528.5 1192.8 2613.7 19906.2 1961.4 1529.7 59S.7 0.0 0.0 TAL SO6 D w WDM6S 1755.9 1740.8 1027.3 2374.8 4074.3 4922.1 4107.5 4011.6 330.8 3106.9 5367.3 APPLICATOIOS OF PMNDS: 3IIlC 193S0? WOWS 1144.5 782.9 818.8 1397.8 799.5 156.8 110.3 115.8 121.6 127.6 134.0 MmV PROJECT POP:t 0.0 19.8 59.0 1165.1 2515.4 5175.1 2419.4 1726.0 897.9 410.0 700.0 Angat ater Supply 0.0 0.0 4.5 546.6 1742.8 1907.2 1218.7 839.0 248.2 0.0 0.0 ManIla WS IS . SS (4ISP S) 0.0 0.0 17.1 505.1 355.7 585.5 163.2 0.0 0.0 0.0 0.0 Manila WS III (AMS III) 0.0 16.3 22.7 88.2 100.0 10.0 10.0 10.0 10.0 10.0 300.0 Fringe Ares WS (FAUSP) 0.0 0.0 2.1 13.1 52.7 54.6 73.7 7.2 0.0 0.0 0.0 Real Provine WS (UPVP) 0.0 3.5 12.5 14.2 39.6 66.0 105.6 38.6 0.0 0.0 0.0 _oehb. Salara & Tr4ai.(RPSTPIUNC 0.0 0.0 0.0 0.0 224.6 410.0 0.0 0.0 0.0 0.0 0.0 METRO" SS 0.0 0.0 0.0 0.0 0.0 542.0 028.2 831.2 439.7 0.0 0.0 Other PorE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 200.0 400.0 400.0 Intorest DuriW Conatruction 251.5 225.1 596.5 401.1 301.0 444.3 430.1 520.0 564.9 110.0 0.0 Other Assets (CGnal) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 OTL 01211*2 inIIn 1)96.8 1017.6 1274.5 2964.2 615.8 5116.2 2959.7 2561.8 158l4.5 647.6 854.0 haortisation 391.3 5 75.3 445.6 552.0 570.0 591.1 519.7 826.7 1036.4 836.9 900.6 Operational Interest 9.0 561.0 562.0 762.8 518.2 384.7 537.1 515.5 469.6 866.6 915.9 OTAL M SERNC 408.5 786.5 1007.4 1114.7 .2 7. 1856.9 12.2 1506.0 1705.4 184.6 Dt;E CiPT.AL KmCD8 80 CAS (+) 50.0 147.9 -486.6 173.6 -244.5 195.1 -149.5 -105.2 -150.5 -52.9 -359.3 CHANCES OaIIASRSSILSI*L. 10.0 19.5 71.0 7.1 42.0 51.7 24.1 12.1 9.4 7.2 5.2 TOTAL APWAIIU OF YO 13S6.3 191.2 1866.4 4259.* 4101.6 476.9 589.1 5610.9 2949.5 2305.3 2294.4 CAS 1NI* (SF) OR 838m8 -122.4 -240.4 161.4 -1384.8 -27.2 145.2 216.4 400.7 431.4 805.6 1072.9 Debt Service Ratle 13 1.6 1.1 1.0 0.9 1.3 1.2 1.2 1.1 1.5 1.7 1.9 Internal Contribution to Ineastn 59.9X 14.72 58.62 2.4X 21.92 12.42 28.21 36.55 77.72 224.11 228.6X X Capitl emped. of NWt Assets 15.52 9.72 11.71 21.92 23.02 20.62 14.02 9.02 5.02 1.92 2.21 2 Loan Financing of Capital Ilpend 44.12 26.52 40.82 40.2X 46.52 52.9X 66.92 64.82 37.52 0.02 0.02 11 Debt servce ratio i thb gross internl swre of fund, dtvided by the total debt servic (including interest capitalised). - 79 - ]MS'S FINCIAL PROJECTIONS AMNE 10 - Page 3 TABLE 3 BALANCE SFATEMENT N=L0 PESOS Wy ons D*ecebr 31 19tl6 1967 196 19#9 1990 1991 1992 1993 1994 1995 199S Fixed Assets In Operatio 11240.1 12900.0 13599.5 16692.3 19531.8 22982.8 25763.8 $3012.0 59915.7 44278.2 46885.4 Accunlated Deprciation 2102.0 2349.0 2632.0 3177.1 5325.3 4616.0 3580.4 6714.3 8090.1 9705.5 11553.4 T 1 S A1825 9138.1 19931.8 109934.5 515.2 17.5 3. 24 2. 35.6 34. 322.0 DN 17O6 32.0 296.0 3883.4 4m77.8 704.4 9U37.Q 100.8 SM.7 SW.* 5324. 09.7 Cash 1365.0 133.0 1793.2 408.3 361.1 526.3 742.7 1143.4 1374.7 2373.3 3451.2 Not Accounts Receivable 416.5 369.6 476.8 $73.4 246.2 292.2 329.2 375.9 398.8 *02.6 287.6 Cross Accoumts Receivable 704.7 723.2 904.9 869.1 815.4 913.7 1036.5 1201.6 ISMS.1 1468.8 1496.9 Allovance Doubtful Accounts 288.3 353.6 428.2 495.7 569.3 641.4 727.$ 25.7 938.4 1666.2 1209.3 Otber Account Receivable 19.5 45.0 53.5 55.7 58.4 61.4 64.4 6S.7 71.0 74.6 78.3 Inventories For Operatio 61.9 74.3 87.7 71.8 79.6 t9.1, 97.6 108.1 119.8 132.7 146.0 Inventories For Conatrction 14.6 101.6 181.5 179.4 212.0 23S.2 17.1 128.9 71.4 37.6 58.4 Prepsycents 4 Deposits 186.1 148.6 187.1 196.5 206.3 216.6 227.5 238.8 250.8 263.3 276.5 Sinking Furd-13U3 0.0 0.0 0.0 8.4 26.5 46.5 58.2 57.3 53.1 46.0 36.2 ____ ____ ___ ____ ____ ___ ____ ____ ___ ____ ____ __-____ ____ ___ ____ ____ ___ ____ ___ TAL ASM 2123.5 972.1 2M. 1293.5 1230.1 1.3 1.7 2. . 5.1 .2 DEFRRED 4R0IS 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 o0m ASS8TS 11.9 13.4 33.7 35.3 37.1 39.0 40.9 43.0 45.1 47.4 49.7 TOML ASSS2 15065.5 15316.6 17371.3 19619.8 24026.2 29007.6 S390.8 36965.3 40256.5 4329.7 46809.6 Trust Funds Payable 104.6 137.3 204.3 157.3 204.3 214.5 223.2 236.5 248.3 260.7 273.7 Accomuts Payable 842.9 736.0 1430.2 1041.8 1083.0 938.3 743.3 8S3.7 933.8 1045.0 116. 3 Inc*e Ta Payable 0.0 0.0 0.0 0.0 0.0 0.0 423.6 522.8 639.4 613.1 725.4 Contractors'S Payable 286.3 210.6 165.0 307.6 397.8 399.8 303.6 221.0 122.1 64.5 100.1 Current Matur.Long-Tern Debt 425.3 445.6 332.0 370.0 391.1 319.7 826.7 106.4 836.9 836.9 836.9 TIOTL a LXILIS ISMS.0 1549.5 2151.4 1176.7 287.2 267.4 2322.3 2.5 0.7 *980.1 3182.3 Other Liabilities 75.8 20.6 8.3 20.6 8.3 8.8 9.2 9.7 10.1 10.7 11.2 Total Long-Tom Debt (nat) 4094.1 4322.6 4578.4 5408.7 6967.9 0715.2 10202.3 11O31.6 11215.2 10339.8 10242.7 Gross Foreign Debt * 519.4 4768.2 4930.3 5498.7 649.1 7904.9 9496.2 10836.0 11234.9 10386.1 9751.2 Cre s Local Debt 0.0 0.0 0.0 280.0 860.0 1330.0 1532.9 1230.0 817.2 S54.4 491.5 3ium: Current Maturities 425.3 445.6 352.0 370.0 391.1 319.7 826.7 1036.4 636.9 900.6 0.0 3OA LALIAUS .9 56M.$ 6738.2 7306.0 9854.3 10796.3 3124.0 110.$ 14066.1 13170.6 13356.2 Appraisal Surplus 5245.2 4802.7 5213.7 6248.3 7202.0 8371.5 960S.6 11195.S 13216.2 16271.3 1990.7 Operational Surplus +) 125.0 178.l 2319.5 2649.1 3240.9 3832.6 4427.6 5160Q8 6123.3 6928.9 7853.0 Capital 2725.4 3100.0 3100.0 3416.3 43S0.8 5981.2 634.6 671S.1 69.9 6908.9 6908.9 TOTL UIITn 923.S 906.0 1lt633.l 12313.8 14973.7 12211.3 2046. 22074.5 210.4 30189.1 33433.4 TOTAL UWII AM LIO32I 135065.5 155.6 17371.3 19619.0 24033.2 29007.6 33190.8 3693.3 40256.5 4327.7 4620.6 Current R1.tio 1.3 1.3 1.3 0.7 0.6 0.7 0.7 0.7 0.9 1.2 1.4 Total Debtllqulty Ratio 48.92 49.2X 46.42 46.93 49.12 50.71 53.92 52.41 45.92 37.32 S3.61 O Days A -corts Receivable (Net) 102 e1 92 66 36 38 36 35 32 28 1S - 80 - ANNEX 11 pmiwuqs ANGAT WATR SUPPLY OPRMA7"ON PROJBCr MON1TOMING INDICATORS FOR MWSS EMIT 1986 1987 19S 1989 1990 1991 1992 1993 199 1995 1996 A _Iin ow amoraox y 2. 2 Population vith Water Co _netio 54.8X 54.82 5S.52 61.12 63.72 67.12 70.62 73.52 76.52 7.s92 79.22 En-Tear Vater Cmaeti-os-l000 501.2 538.3 564.5 608.6 652.8 704.9 79.3 810.9 8".* 901.3 99.3 Addittiol Water Coamtton-1000 02.9 5#.1 32.2 42.1 44.1 52.1 54.4 51.6 53.7 36.8 ,8.O I Population with Seerae Cogmeot 8.5S 8.1X 7.72 7.1X 7.72 8.O2 8.22 8.5X 8.82 8.92 8.9X Seewre Conection- 000 7.4 76.1 74.3 76.5 78.R 83.5 88.6 93.9 99.$ 102.5 105.6 Value bil1ed litevr per eonlde 189 192 193 189 190 192 194 198 202 207 211 Us* of Production Capacty 101.02 96.62 97.6X 95.32 94.42 95.72 65.32 67.12 68.8X 70.62 72.02 S Days Accoots leeivabl. GCros 172 159 174 155 120 120 1i7 113 106 102 95 I Gross Recelsbles an 31111;3 47.22 43.72 47.52 42.02 33.02 33.02 32.02 31.02 29.02 28.02 26.02 * Days ehcomts taovsble. It 102 S1 92 66 36 38 36 35 32 28 1i * of E1loyes 5053 6812 6636 6104 6773 6842 7042 7114 7187 7261 7336 Employe per 1000 Water comttio 10.1 12.7 11.7 11.0 10.4 9.7 9.5 8.8 8.3 *.1 7.8 2 eon-Revenue Vater 65.62 61.02 59.12 55.8X 52.02 48.52 45.02 41.52 38.02 35.52 13.02 Averase Water Tariff P$I?.. 4.0 8.0 4.4 4.6 5.0 5.4 5.8 6.3 6.9 7.3 7.6 2 Tariff Ingress 0.68 8.52 6.12 7.92 8.52 7.2X 7.92 9.62 6.72 3.82 Total Oper. Reverns PSI?.. Sold 4.8 8.9 5.3 5.5 6.1 6.4 6.8 7.3 8.0 8.5 8.8 Tariff to Earn 8.02 an UquLt 3.9 8.7 5.2 5.7 5.6 6.1 6.6 7.1 7.6 8.7 9.1 Uorkln Ratio 59.12 39.22 38.52 39.22 36.81 35.7X 34.82 33.32 31.42 30.92 31.42 Operatio Ratio 89.42 52.42 51.02 52.42 51.42 51.52 52.12 51.02 89.62 49.42 50.02 Rate of Retur on Set Fl1t Assets 9.32 8.02 8.72 8.1X 8.2X 8.12 8.02 8.02 8.02 8.02 8.0X set Ioom Before Tama on qulty 9.22 5.42 S.12 2.72 6.12 5.6X 5.5X 6.22 7.32 6.32 6.15 Return on Capit (Debt t Equity) 8.12 4.82 8.52 2.42 3.72 3.32 3.02 3.72 4.72 8.11. 8.0 lnternl Contribution to rnwastan 39.92 14.72 58.62 2.42 21.9S 12.42 28.22 36.52 77.72 224.12 228.62 2 of Irnvstmnt Winance by Equty 7.22 35.52 13.22 10.71 28.62 27.71 12.22 15.62 12.02 0.02 0.02 Debt Servic ratio 1.6 1.1 1.0 0.9 1.3 1.2 1.2 1.1 1.3 1.7 1.9 Total Debtlquity Ratio 48.92 49.22 46.42 46.91 49.12 S0.72 53.92 52.4 45.92 n3.52 30.62 current Ratio 1.3 1.3 1.3 0.7 0.6 0 7 0.7 0.7 0.9 1.2 1.4 s..8 IN Cas 1969 mICe kw*rse Water Tariff P/SI?. 5.03 4.77 8.77 4.65 85.8 4.54 .53 8.30 4.57 4.51 4.34 Rea Tariff Inrease -5S.12 0.1S -3.12 -1.02 -0.42 -1.22 -0.12 1.52 -1.22 -3.92 Total Ot r. Revues P$/TTo, Sold 6.1 5.8 5.8 5.5 5.6 3.4 5.3 5.3 S.3 3.3 5.0 RBvenuslTon Sold for 6X on Equlty 4.9 5.6 5.7 5.7 5.1 5.1 5.1 5.1 5.1 5.3 5.2 902220*L WIEOIC*L UIC*TM SEZOI 1986199 VARIAR2. OR MRICATO N231323 AVURA3 W*Xna. VAR6Z1AL OR MICATCR mIUMin AVIAG2 86111M C"h 381.1 1022.1 2378.3 Debt Service Ratio 0.9 1.2 1.7 Water tariff PSJTon (4onst.prices) 4.50 4.55 4.63 Return or Capital 2.48 3.62 8.72 vorking ratio 30.92 54.62 39.2 Day. Accounts Receivebl-Cro 102 119 153 Rate of leturn on en .lzed Assets 8.02 8.02 8.22 Total Dobtllquity Ratio 37.52 48.01 ss.92 ------------------ ---------------- _- --- _------------- ----------------- ----------------- _----------------- - 81 - ANNEX2 - Page 1 PHPPINE ANGAT WATER SUPPLY OPTIDMTION PR(JBCT ASSUMPTIONS FOR FINANCIAL PROJECIONS 1. Inflaton It is estmated that the annual water sales would be reduced, operational cost would (January-December) increase in consumer prices wll increase and the project capacity will be exhausted be about 996 between 1989 and 1991, and 896 before the year 2000. thereafter. Foreign price increases are estmated at 5.3% p.a. for 1989 and 1990, and 4.1% thereafter. 4. R evenuesT he water revenues are based on The exchange rate for April 1989 was P 21 per US existing tariffs, and the forecasted impact of CERA (an dollar. It is expected that exchange adjustments may automatic adjustment for the increase in the ratio of be used to maintain on the average 'purchasing power debt service to water sales, which presendy represents parity' with international prices. In order to ensure about 10% of the tariff). Sewerage charges ate 50% compatibility, the above assumptions are used for all of the water tariff for the population connected to the tables in dtis report. ADB's project cost and financial sewerage system (which is about 1096 of the total, but tables use the same foreign inflation and a constant includes many large users). The remaiing population exchange rate of P 21 per US dollar. ADWs cost pays an environmental tax equivalent to 10% of the escalation for local costs assume an inflation of 1096 water binmg. In addition there are minor charges for in 1989 and 1990, 8% in 1991 and 1992, and 10% maintenance fees for water meters and some fixed thereafter. OECM's tables use a local price escalation cnarga (water hydrants). Water vendors, which of 6% paL and foreign price escalation of 0% p.a. operate public faucets, are included within the commer cusomers. 2. Financial Proiections. The water demand, project costJ financial projections and economic 5. 'The water sales for Bulacan, esdmated analysis use Lotus programs developed by the at 1.1 cums are only tentative and would depend on appraisal team. Only the main financial statements MWSS's price for such bulk supply and ageements (rable 1 * Income, Table 2 -Flow of Funds, Table 3 - with the Province and municipalities. Agreements have Balance, and Table 4 - Financial Plan are presented in been reached with the first two WDs (Meycauayan Annex 10 (Financial Statements and Projections)). and Obando) and construction of their water supply Additional tables, avaflable in the project file, proide would start in 1990. Particularly important for the details for the assumptions and intermediate results agreement with the other six WDs is the price of regarding demand, fixed assets and revaluation, debt water, which may be about half MWSSs averae service, operational expenses, tarfli and rvenues, etc. price, because it excludes the cost of distnbution, The main assumptions are explained below. billing and collection, and because NRW in a bulk water system should be below 10%. MWSS wil send 3. Water Demand. MWSSs water demand is to the Bank a study for the price of this bulk water by difficult to forecast, since there is water rationing, December 31, 1989. Since these sales would be a combined with a large expansion of the distribution minor part of MWSSs water sales, and because of the network and house connections in low-income areas above mentioned incerttude, they are not included in (which use less water per capita). Industrial the overal water demand projections. When dty consumption is also uncertain, because it is not materialie, they would increase the financial and possible to forecast until when it wDI be economical economic benefits of the project. for large industrial and commercial users to continue using large volumes of underground water. Annex 2 6. Oerational ExDenses. Detailed infonmation provides full details for the water demand. A major on the projection of each of MWSSs expenses and risk for the finances of MWSS is the NRW. If the debt service is available in the Project File. This forecasted reductions in NRW do not materialize, includes a detailed forecast of number of employees - 82 - ANNEX 12 - Page 2 which is assumed to increase less than 1% p.a., to & DoubtfUl Debts. In the past MWSS has had achieve a ratio of 9 and 8 operational staff per water problems in collecting bfls (paricularly from connectons by 1992 and 1994 respecdvey. The cost Governent Agencies). A provision for doubtful debts of chemicals and power is increased in proportion to of 4% has been used until 1988. In accordance with the water produced and wfith expected real increases COA this should be reduced, and is expected to reach in the cost of electricit. Materials, maintenance and 3% by 1990 and 2.5% after 1992. other expenses are increased with 50% to 70% of the increase in the number of connections. Separate 9. Depreciation. MWSSs average depreciation projections are shown for sewerage servicese rate is low (1.8% to 2%) but it is expected to increase expenditures, which represent less than 10% of the gradually to 2.3% with the new assets entering in total expenses. The cost of house connections is paid operation. The depreciation is relativey low because by consumers, but MWSS is reconnidering this policy there are several fuly depreciated assets, the value of because even when paymet facilities are given (one land is considerable, and some of the largest assets year), these charges discourage low income consumers (tunnels and aqueducts) have a long useful life (50 from connecting to the system and may promote years) and low depreciation rates. illegal connections. 10. Investment Pro MWSSs investment 7. Compensation to NPC. After the project program includes many subprojects of which Angat enters in opemtion, MWSS would have to compensate Optimization is the largest, but only one third of the to the National Power Corporation (P for the totaL The completion of ongoing subprojects wil alternative operational cost of peak generation and the rpsent about 16% of the invements between reduction in the average power generated at Angat 1989-94, and is a main pririy, as well as the DamL This compensation wil be negotiated between completion of the Manila WS Rehabilitaton 11 Project NPC and MWSS and wil be based on the volume of (82% of the investment). The priority of other water used. It is esdtmated that this compensaton subprojes is low. In pardcular, inestments in the would be about P 54 milion per year for 15 cums. Manila m Water Supply project should be kept at a MWSSs cost would be proportional to the volume of nominal value, since this capacity would only be water used above the existing capacity (2,592 MLD). needed when the water supply from AngatUmiray is After Umiray enters in operation, MWSS wil generate exhausted, twelve to fifteen years from now. addidonal power, to be sold to NPC. The financial projections do not include a payment for the cost of 11. The priority of the other subprojects is building a new peak generation plant. This require a estimated to oe as follows: (a) Balk.a RehabiLtaton complex study and is subject to negodation between and Tainig (to be grant-financed by Japan); (b) MWSS and NPC. Moreover, since Angat Dam has METROSS II Sewerage project (being discussed with proven unreiable for peak generation (it was able to ADB); (c) treatent of the Laguna de Bay water (this provide peak generation at capacity during only one would use a large pumping capacity which is unused week in 1987), NPC may require replacement of this by the National rigatdon Authority for nine months capacity regardless of the projectL Sensitvity analysis per year although the treatment of this water is to this cost was included in the economic analysis, expenve, it could supply the east part of manila assuming that the cost of a reiable plant to replace which is the farthest zone from the existing treatment the peak power that could be realistcaly generated plants, and combined with an annual regulation of by Angat would be about US$40 million for 15 cums. Angat may result in a substantial increase in the This cost is allocated propordonaly to the water used, water supply; td) Pringe Areas and Rizal Provinces and is assumed to be paid two years before the Development, (to provide underground water supply capacity is used, to allow *t constuction of the new to areas distant from the distrutn system). Other generation capacity. Given the contimuous ime than for on-going works, whose completion is priority, in power generadon required by NPC it is also MWSS can accommodate the schedule of these other assumed that no lump investm'ents in peak generation investments to match its cash sources. It is assumed capacity woudd be needed because of the gradual that about 60% to 70% of these inements would be losses of capacity resultdg from the Angat project financed by foreig loans. - 83 - ANNEX 12 - Page 3 12. Balance Accounts receivable are fSe years' grace. Disrsements in each year are assumed reduced from about six monfts bllig in considered a separate loan and amortized separately 1988, to four months of billing by end-1990. This interest is paid at the end of each year and a assumes the implemenaion of MWSS's Inteaed siking fund (paying 8% interest) is requied to Program for Revenue Improvement (IPRI), which ensue the payment of this loan. vances by the inludes 48 tasks ained at reducing accounts Bureau of Treauy, to pay MWSS foregn debt receivables from private and government accounts. obligations are assumed to be setded in 1989, if COA has authorzed to write-off many uncollectible needed they would earn inest at 17% per year. accounts receivable, which have been overdue for several years (about P 20 million). Inventories for 15. MWSS would also receive about P 3.2 operation, which include pipes and valves for bilionofgovemmentequityconuonsasfogows: (a) maintenance, and chemicals for water treatment, are transfer as equity to MWSS about US$80 mllion from assumed at about one year of the cost of materials a loan beig appraied by OECF; (b) exemption of and supplies. Inventories for construction are assumed payments of franchise tax (2% of gross revenues) and at about one month of the investments. Taxes payable income taxes (35% on net income) between 1989-91; are the amounts accrued on that year. Because of the and (c) provision of other equity contributions (P 179 delay between construction, billing and payments, mfflion budgeted for 1989) for other projects, contractorse payable are assumed at four months of particularly for sewerage. The financial plan includes the investments. Accounts payable, which are about about P 400 mIlion (2.3% of the financial plan two years of direct operating expenses, are expected requirements for 1989-94) of other local fumds, which to be reduced from about P 1430 mfllion in 1988 to could be pially financed by PNBAWB, a faster about P 740 milion by 1992. recovery of the accounts receble, additional equity contributions or by reducing some of the other less- 13. Asset MWSS is using priority investments. satisfactozy revaluation methods to update the value of its fixed assets. This is done annually based on the 16. Debt Remluation. Most of MWSS's debt increases in consumer prices and/or variation in is with ADB and the Bank During the period 1985- exchange rates. COA has now agreed that a fonnal 88 these debts were revaued up to 40% in dollars, inventoy and valuation should be carried out in which combined with the devaluation of the peso 1989/90, to get a more precise valuation of MWSS's increased subsantlly MWSSs debt service. Although assets. After this valuation is completed, the value of it is impossile to forecast the revaluation or the fixed assets would continue to be indexed with depreciation of the dolar versus the currency pooling conmer prices until the next fonnal revaluation. used by ADB and the Bank, it is expected that any changes would be gradual and would not materially 14. Financial PL The overall financing plan affect the financial projections. Foreign debt is (Table 3.2) includs the proposed Bank loan of US$40 revalued with the eped changes in the peso to million on standard conditions, and the US$130 maintain purchasing power pary (para 1). million loan frow ADD cofiancing the Angat Project (which finances the interest during construction). Agreement has been reached that given MWSSs high debt service, the Govemment would provide the equivalent of US$80 millon as equity contributions. This amount is expected to be funded by an OECP loan cofnancin8g the project. This loan has been agreed in priniple and is expected to be concluded later in 1989. In addition MWSS would receive dibursements from several ongoing loans for water and sewerage projects. MWSS has negotiated with the PhiLippine National Bank (PNB) and the Union Bank (UB) a loan of P 1,200 million to be disbursed between 1989 and 1990. This loan has an interest of 18 Kp.a. and is repayable with five-year terms, after - 84 - ANNEX 13 . Page 1 PHIUPP ANGAT WATER SUPPLY OMZTION PRDJECT DOCUMENTS AVAILABLE IN PROJECT FIES Name of Document Prepared by Date 1. Angat Water Supply Opdmization Project DCCD, Engineering and Jun.88 Feasibilty Study (Stage 2). Development Corporation of the Final Report and Appendices Phflippines in Coop with National Hydraulic Research Center 2. Angat Water Supply Optimization Project1 AWSOP Enginetimg Group Apr.89 (AWSOP) ragineering Area Smmary, Engineering Report 3. AWSOP, Report on Preiinay Design of SINOTECH Eng. Consultant Inc., Auliary Power Plant, No. 5. Taipei, Taiwan 4. AWSOP, Report on Review of Peasibilit and Snowy Mountain Engineering Sep.88 Prelminary Design StLdies to the ADB, Corporation Contra CAS/A/88-258 S. AWSOP, Memorandum of Understanding, ADB/MWSS Mar.89 MOU, for the Fact-finding Mission of the Proposed AWSOP MWSS 6. AWSOP. Review of Hydraulical Aspects Mogens Dyhr-Nielsen, Danish May.88 Hydraulic lIstitute 7. AWSOP, Optimmation of the Existing Balara Ken Waterhouse, Montgomery Jun.88 and La Mesa Water Filtration Plants Hosing Stone Pty. Ld. & Umiray-Angat River Transbasin Project, MWSS, Planning and Programming Feb.89 Project Profile Dept. 9. Manila Water Supply m Water Demand and Electrowatt Engineering Services, Jan.88 Tariff Study Renardet Engineering Volume 1, Report Technoshpere Consultant Group Volume 2, Appendices Philippine Technical Consultants FF.. Cruz & Co 10. Water Supply, Sewerage and Santation Dept Local Gvt, DoH, NEDA and Apr.88 Master Plan of the Phflippines 1988 - 2000 DPWH - 85 - ANNEX 13 - Page 2 11. Bulacan Central Water Supply Project. C. Lotti & Assoc. SpA, Aug.88 Detailed Design. Inception Report Vol. 1 DCCD Eng. Corp., Developm. of Enviroental TCGI Engineers 12. Metropolitan Waterworks and Sewerage MWSS Sep.80 System, Plans and Progam 13. Proposed Second Manila Sewerage Project, Mr. Senon of J.1 Montgomery Dec.87 Project Report 14. Health Monitoring Component of the MWSS CoJlege of Public Health, May 87 Sanitation Project (1981-1985), Final Report University of the Philippines, (only parts on Sanitation Survey and Manila Bacteria Analysis of Drining Water). 15. MMSSP, IBRD Loan 1814-PH Actual Physical MWSS Apr.89 Construction by Projects per Schedule 2 16. Accomplishment Report MWSS, Sewerage System Dept., () for CY 1987 Operadon and Maintenance Div., Feb.88 (i) for CY 1988 Sewage Pumping Section Feb.89 (iii) Actvities for the Month of Feb.89, Mar.89 17. Metro Manila Sewerage and Sanitation Franciso A. -ellano, Chief, 1985 Project-Wasrewater Management for Metro Applied Research and Development Mania, Artidle n "Asian Envvonment Div., MWSS. 1& Summary of Sewer Mains and Households Sewerage System Dept., MWSS Served. 19. Organizational and Funcdona Charts and MWSS, Sewerage System Dept. Jan.89 Stffing Position 20. Map. Community Imhoff/Septic Tanks under MWSS MWSS 21. Table. Summary of MWSS Eliting MWSS Feb.89 Watermain Based on 1:2000 map 22. Map. Serviced eas, Water, by years 1974, MWSS 1978, 1988 23. Map. Prinary Water Supply Sysm Locadon Hydraulic Surveys and Analysis 1984 of Gauging Points Division, MWSS 24. Map. Existing Central Wastewater System and Sewea and Sanitation Master 1979 Pump/ift Stations Catchment Basins, Fig.51 Plan, Montgomery, DCD, Kampsax KRug, VDKIC METROPOLITAN VATERUORKS AND SEIERAGE SYSTEM (WSS) ORGAHIZATIOH CHART oard of TBoard Secretariat COA (EXT. Adminl WV G. COORPRTE COUSE8 | 0' CORPLAN Dep'u"ty AMunsrtrMSan o~trCne D.A. Engineering D.A. Construc.ion D.A. Operation |O.A. Customer's Services| D.A. Finane D.A Adinistration Chief Engineeting Angat Project Sources & Treatment Worth Sector Finance & Budget Persornet Plan. & Programming MMSPI Project Distribution S Maint. South Sector Accounting Human Resources Design WUSRP I Project General Maintenance East Sector Treasury Health & Safety Procurement MWSRP It Project Sewerage System West Sector I Legrt I Other Projects Cavite Sector General Services B19 Accounts Procurement Public Informatlen MAP SECTION IBRD >~~~~~~~~~~~~~~~~ -~ - > eBA * §E AN<<|GAT SN - OM5i 10 15 NAIENZUETANV TP1 S e ;A H SJr oa CALUMPIT| PULITA g A MTO , NA WTR UPY PIIZT ~~~~~ML UZON e ALOO 0)==WNL - ) v SI A t SUNT8GWPO L G U N A