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THE (LGU-UWSP)

THE (LGU-UWSP). LGU-URBAN WATER AND . SANITATION PROJECT. Project Brief. 1/26/04 3:27 PM brief-matl-jan04. Sequence of Presentation. PROJECT BACKGROUND. PROJECT PRINCIPLES. LOAN FEATURES. PARTICIPATING LGUs. PARTICIPATION CRITERIA. Project. BACKGROUND. Water Sector Major Policy.

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THE (LGU-UWSP)

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  1. THE(LGU-UWSP) LGU-URBAN WATER AND SANITATION PROJECT Project Brief 1/26/04 3:27 PM brief-matl-jan04

  2. Sequence of Presentation • PROJECT BACKGROUND • PROJECT PRINCIPLES • LOAN FEATURES • PARTICIPATING LGUs • PARTICIPATION CRITERIA

  3. Project BACKGROUND

  4. Water Sector Major Policy Consistent with the intent of the 1991 Local Government Code, Local Government Units are now responsible for planning, financing and implementing both urban and rural water supply.

  5. Delineation of Responsibilities LGUs are responsible for the implementation of Levels I, II and III; LWUAis responsible for commercially viable water districts; MWSS is responsible for Metro Manila and adjacent cities and municipalities; DPWH and DOHis responsible for providing technical assistance to LGUs; and DILGis responsible for assisting LGUs on institutional development and project identification.

  6. MOA: DOF-DILG-DBP DBP: Borrower of the loan, on-lends the same to LGUs. Responsible for construction supervision through the CSC, fund management and credit evaluation DILG: Marketing of Project to LGUs, ensuring a rolling pipeline of LGU-applicants. Assistance in project preparation particularly the submission of ECC, RDC endorsement and other government clearances and approvals. DOF: Monitoring lessons learned as input to future policy formulation in the sector

  7. Project PRINCIPLES

  8. Type of Project • Level III - PIPED WATER SYSTEM (HOUSEHOLD CONNECTIONS) As differentiated from: • Level I - point source (shallow well and deep well hand pumps and spring development) • Level II - communal faucets or public tap stands

  9. Target Market of the Project • Local Government Units • Private Operators • Water Districts

  10. TOTAL LGUs TARGET LGUs 1,602 364 Target LGUs

  11. Project Principles • Investments shall be provided based on consumer demand (based on what consumers want and are willing to pay) • Tariffs shall be based on full cost recovery • Management and operation of the water system shall be according to commercial principles

  12. Loan FEATURES

  13. WORLD BANK DBP LOAN AGREEMENT LGU Funds Source and Use • Credit / Loan • Technical Assistance

  14. DBP OPERATOR DBL Document • DESIGN & CONST. CONTRACT • LEASE AGREEMENT SUB-LOAN AGREEMENT LGU Design-Build-Lease of System

  15. Design-Build-Lease of System SAFEGUARDS AND BENEFITS • Bids for the design, construction and operation of water supply system are invited only from pre-qualified bidders. • The tariff levels are set in the agreement between the LGU and the operator.

  16. Design-Build-Lease of System SAFEGUARDS AND BENEFITS • The LGU owns the assets, with the operator leasing them for the period of lease agreement. • Before commencing operation of the completed system, the operator must provide performance guarantees to the LGU.

  17. LGU DBP OPERATOR DBL Document • DESIGN & CONST. CONTRACT • LEASE AGREEMENT SUB-LOAN AGREEMENT AMORTIZATION LEASE FEE Design-Build-Lease of System

  18. LGU DBP OPERATOR LEASE FEE EQUITY RECOVERY P90 K P10 K P100 K AMORTIZATION Design-Build-Lease of System

  19. Features of the Loan to LGUs AMOUNT OF LOAN FEASIBILITY STUDY • The FS cost is 3% of the total construction cost. The LGU’s counterpart during FS preparation is in the form of time and services of the members of the Project Management Unit PROJECT FINANCING • The loan shall be based on the total project cost with at least 10% equity participation, provided, the loan amortization shall not exceed 20% of the total income of the LGU, net of other borrowings

  20. Features of the Loan to LGUs TOTAL PROJECT COST COMPONENTS • Feasibility Study • Contract Price • Physical Contingency • Price Contingency • Construction Supervision Cost • Bank Charges (Interest During Construction, Commitment Fee & Front-end fee)

  21. TERM OF THE LOAN • The maximum term of the loan shall be fifteen (15) years inclusive of three (3) years grace period on principal repayment Features of the Loan to LGUs • INTEREST RATE • 9% per annum reviewable yearly but not to exceed 15% p.a.

  22. Project Phases • PRE-CONTRACT STAGE • LOAN PROCESSING • FEASIBILITY STUDY • BIDDING • CONSTRUCTION OF WATER SYSTEM • OPERATION & MANAGEMENT

  23. Project Phases PRE-CONTRACT STAGE • project presentation, submission of documents by LGU, financial assessment LOAN PROCESSING • loan amount based on borrowing capacity to cover for FS preparation and construction of water system FEASIBILITY STUDY • deployment of consultants, brgy meetings, technical option, WTC, preliminary design, BOQ & cost estimates

  24. Project Phases BIDDING • publication, pre-qualification, bidding proper, PBAC resolution of award CONSTRUCTION OF WATER SYSTEM • Notice of award, mobilization, confirmation of water sources, detailed engineering, construction of water system (source facilities, transmission, distribution lines, etc.) OPERATION & MANAGEMENT • lease agreement

  25. Participating LGUs

  26. DBP Approved & Implemented Projects 1. Magdalena, Laguna 2. Aurora, Isabela 3. Cabatuan, Isabela 4. Luna, Isabela 5. Mallig, Isabela 6. Quezon, Isabela 7. San Mateo, Isabela 8. Lantapan, Bukidnon 9. Kalilangan, Bukidnon

  27. For Construction On-going Construction 1. Tabuk, Kalinga 2. Calamba, Misamis Occidental 3. Lopez Jaena, Misamis Occidental 1. Castilla, Sorsogon 2. Sinacaban, Misamis Occidental

  28. 1. San Mariano, Isabela 2. Carranglan, Nueva Ecija 3. Claveria, Misamis Oriental For Bidding For Re-bidding of Operator 1. Aurora, Isabela 2. Cabatuan, Isabela 3. Luna, Isabela 4. Mallig, Isabela 5. Quezon, Isabela 6. San Mateo, Isabela 7. Magdalena, Laguna

  29. Pipeline (For FS Completion) 1. Maria Aurora, Aurora 2. Sto. Niño, Cagayan 3. Bolinao, Pangasinan 4. Infanta, Pangasinan 5. Sigma, Capiz 6. Sta. Cruz, Davao del Sur

  30. Pipeline (For FS Preparation) 1. Burgos, Pangasinan 2. Burgos, Ilocos Norte 3. Prieto Diaz, Sorsogon 4. Bagamanoc, Catanduanes 5. Talugtog, Nueva Ecija 6. Palapag, Northern Samar 7. Maripipi, Biliran 8. Villareal, Western Samar 9. Motiong, Samar

  31. DEVELOPMENT BANK OF THE PHILIPPINES Inauguration of Magdalena Water System MAGDALENA, LAGUNA WATER SYSTEM DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT

  32. DEVELOPMENT BANK OF THE PHILIPPINES LUNA, ISABELA WATER SYSTEM DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT

  33. DEVELOPMENT BANK OF THE PHILIPPINES QUEZON, ISABELA WATER SYSTEM DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT

  34. Checklist of Requirements 1. Letter of Intent signed by the Mayor 2. SB Resolution signifying participation in the project 3. SB Resolution authorizing the Mayor and Treasurer to sign loan documents 4. Audited Financial Statements for the last 3 years (2000 to 2002) 5. Bio-data of the Mayor and Treasurer 6. Customer Information Report (DBP Form) 7. Certificate of existing loans (term, Outstanding balance, amortization)

  35. Thank You!

  36. Action Plan 1. Submission of Requirements by the LGU 2. Processing and approval of FS loan by DBP-PMO 3. Creation of Project Management Unit by the LGU 4. Sub-loan Agreement Briefing and kick-off meeting with Feasibility Study Consultant 5. Start of FS Preparation 6. Submission of Letter to DBM for transfer of IRA (last quarter 2003)

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