Feasibility Studies for Japanese Companies to Acquire Infrastructure Orders)

FY 2018

Projects to Promote Overseas Sales of Quality Infrastructure Systems (Feasibility Studies for Japanese Companies to Acquire Infrastructure Orders)

Feasibility Study for Exportation of Water Intake and Water Treatment Equipment and Facilities to Water Concession Businesses on the Regional Cities in the Philippines

Study Report

February 2019

Ministry of Economy, Trade and Industry

Consigned to: Chodai Co., Ltd.

Preface

This report summarizes the results of the “FY 2018 Projects to Promote Overseas Sales of Quality Infrastructure (Feasibility Studies for Japanese Companies to Acquire Infrastructure Orders: Feasibility Study for Participation in Bulk Water Concession Businesses and Deployment of Water Intake and Purification Facilities in Regional Cities in the Philippines),” a FY 2018 Ministry of Economy, Trade and Industry project accepted by Chodai Co., Ltd.

The purpose of this study, the “Feasibility Study for Participation in Bulk Water Concession Businesses and Deployment of Water Intake and Purification Facilities in Regional Cities in the Philippines,” is to facilitate greater participation by Japanese companies in water businesses in the Philippines, where there is enormous market potential, and particularly in bulk water concession businesses, which are consistent with the policy of exporting quality infrastructure. In specific terms, this study analyzes the possibility of Japanese companies investing and participating in private companies operating the bulk water concession businesses of the regional government on the island of Mindanao, which has been supported by the Japanese government, as well as the use of Japanese companies’ products and technology, and the use of financing, leasing, trade insurance and other financial services provided by Japanese government-backed and private financial institutions.

We hope that this report will help in realizing the above project and will be of reference to Japanese stakeholders and other interested parties.

February 2019 Chodai Co., Ltd.

Project Location Maps

Source: Created by the study team

Abbreviations Table Abbreviations Official Name (Explanation) A&D Alienable and Disposable Alienable and Disposable area AEP Annual Energy Production Annual Energy Production Special purpose company operating a AGEC Asiga Green Energy Corporation small hydropower generation project on the Asiga River Agusan Greenfield Resources and Agrotech Special purpose company operating a rice AGRAC Corporation milling business in Agusan ANECO Agusan del Norte Electric Cooperative Agusan del Norte Electric Cooperative APD Avalanche Photodiode Necessary power (MWh) Autonomous Region in Muslim ARMM Autonomous Region in Muslim Mindanao Mindanao BOD Biochemical Oxygen Demand Biochemical Oxygen Demand Cordillera Autonomous Region in CAR Cordillera Autonomous Region in Muslim Mindanao Muslim Mindanao Special purpose company operating an CARC Cabadbaran Aquatech Resources Corporation eel farming business Community Based Forest Management CBFMA Community Based Forest Management Agreement Agreement Caraga Farmers Environment Developers Multi- Caraga Farmers Environment Developers CFEDMPC Purpose Cooperative Multi-Purpose Cooperative CMS Condition Monitoring System Condition Monitoring System COD Chemical Oxygen Demand Chemical Oxygen Demand DBP Development Bank of the Philippines Development Bank of the Philippines Department of Environment and Natural DENR Department of Environment and Natural Resources Resources DIP Ductile Iron Pipe Ductile Iron Pipe DOE Department of Energy Department of Energy Department of Public Works and DPWH Department of Public Works and Highways Highways DTI Department of Trade and Industry Department of Trade and Industry ECA Environmentally Critical Area Environmentally Critical Area ECC Environmental Compliance Certificates Environmental Compliance Certificates JICA Environmental Development EDP Environmental Development Project Project EIA Environmental Impact Assessment Environmental Impact Assessment EIS Environmental Impact Statement Environmental Impact Statement

Abbreviations Official Name (Explanation) EMB Environmental Management Bureau Environmental Management Bureau EPCC Equi-Parco Construction Company Equi-Parco Construction Company FCD Ferrum Casting Ductile Ductile Iron Pipe FMB Forest Management Bureau Forest Management Bureau Fiberglass Reinforced Plastic Mortar FRPM Pipes Fiberglass Reinforced Plastic Mortar Pipes Pipes FS Feasibility Study Feasibility Study GDP Gross Domestic Product Gross Domestic Product GRDP Gross Regional Domestic Product Gross Regional Domestic Product The Overseas Human Resources and Industry The Overseas Human Resources and HIDA Development Association Industry Development Association IEE Initial Environmental Examination Initial Environmental Examination Integrated Forest Management IFMA Integrated Forest Management Agreement Agreement IMF International Monetary Fund International Monetary Fund IPP Investments Priorities Plan Investments Priorities Plan Japan-Bangsamoro Initiatives for Reconstruction and Concentrated implementation of an J-BIRD Development economic cooperation project JBIC Japan Bank for International Cooperation Japan Bank for International Cooperation JCM Joint Crediting Mechanism Joint Crediting Mechanism JICA Japan International Cooperation Agency Japan International Cooperation Agency JIS Japanese Industrial Standards Japanese Industrial Standards LCC Life Cycle Costs Life Cycle Costs LES Large-Eddy Simulation Large-Eddy Simulation MBAS Methylen Blue Active Substances Anionic surfactant MinDa Mindanao Development Authority Mindanao Development Authority MPN Most Probable Number Most Probable Number NCR National Capital Region National Capital Region National Integrated Protected Areas NIPAS National Integrated Protected Areas System System NPCC National Pollution Control Commission National Pollution Control Commission NPI New/Proposed Industry New/Proposed Industry OEI Old or Existing Industry Old or Existing Industry O&M Operation & Maintenance Operation & Maintenance OSS One Stop Shop Service One Stop Shop Service PCU Platinum Cobalt Units Chromaticity PEISS Philippine Environmental Impact Statement System Environmental Impact Statement System

Abbreviations Official Name (Explanation) pH Potential of Hydrogen Concentration of hydrogen ions PLC Programmable Logic Controller Programmable Logic Controller PPP Public-Private Partnership Public-Private Partnership PSA Philippine Statistics Authority Philippine Statistics Authority RANS Reynolds-averaged Navier–Stokes Reynolds-averaged Navier–Stokes model SCADA Supervisory Control And Data Acquisition Supervisory and monitoring system Socialized Forest Management SFMA Socialized Forest Management Agreement Agreement SPC Special Purpose Company Special Purpose Company SS Suspended Solid Suspended Solid Special purpose company operating the TASC Taguibo Aquatech Solutions Corporation Taguibo River Bulk Water Concession Business Special purpose company operating the TAZC Taguibo Agro-Parco Holding Corporation Taguibo Agro-Industrial Park Business THRC Twinpeak Hydro Resources Corporation Twinpeak Hydro Resources Corporation TLA Timber License Agreement Timber License Agreement TransCo National Transmission Corporation Power transmission company TSS Total Suspended Solids Total Suspended Solids United States Agency for International USAID United States Agency for International Development Development VAT Value-Added Tax Value-Added Tax VFD Valuable Frequency Drive Control unit Special purpose company operating a WGEC Wawa Green Energy Corporation small hydropower generation project on the Wawa River REGION Region Administrative unit

Contents

Chapter 1 Study Overview （1） Study Objective ...... 1-1 （2） Study Items ...... 1-1 （3） Study Structure ...... 1-3 （4） Study Schedule ...... 1-4 （5） Study Target ...... 1-5 （6） Study Report ...... 1-6

Chapter 2 Current Status of the Project Region （1） Summary of Current Status ...... 2-1 （2） Project Background and Necessity ...... 2-21 （3） Partner Country Central and Local Government Policy Trends ...... 2-23 （4） Overview of the Water Concession Business ...... 2-24

Chapter 3 Infrastructure System Concept Design （1） Examintion of water intake system ...... 3-1 （2） Examintion of water purification facility ...... 3-7 （3） Examintion of pipelinne equipment ...... 3-31

Chapter 4 Study of Environmental and Social Aspects （1） Current State Analysis of Environmental and Social Aspects ...... 4-1 （2） Impact of Project Implementation on Social and Environmental Aspects ...... 4-4 （3） Summary of legal rgulation related to consideration of the environment and and Society in the conterpart country ...... 4-9 （4） Matters to be Achived b the Country Concerned (the executing agency and related agency) for the Realization of this Project ...... 4-16

Chapter 5 Calculations of Project Scale （1） Implemenation Costs of Water Intake Facilities ...... 5-1 （2） Implementation Costs of Water Treatment Facilities ...... 5-2 （3） Implementation Costs of Pipeline Equipment ...... 5-8

Chapter 6 Project Implementation System and Schedule

（1） Project Implementation System ...... 6-1 （2） Project Schedule 6-2

Chapter 7 Financial Prospects and Proposals and Prospective Policy Support （1） Basic Philosophy Regarding Financing ...... 7-1 （2） Considerations on Exporting Infrastructure Systems ...... 7-1 （3） Utilization of Governmental Aid and Other Forms of Support ...... 7-2

Chapter 8 Survey of Energy savings and Environmental Improvements （1） Energy Conservation Effects of the Implementation Infrastructure ...... 8-1

Chapter 9 Confirmation of Advantages of Japanese Companies and Predicted Benefits for Japan （1） Advantages of Japanese Companies ...... 9-1 （2） Anticipated Benefits for Japan ...... 9-2

Chapter 10 Remaining Issues for Project Implementation （1） Summary ...... 10-1

Figures

Fig. 1-3-1: Study Structure ...... 1-3 Fig. 1-4-1: Study Schedule ...... 1-4 Fig. 1-5-1: Study Target Position Diagram ...... 1-5 Fig. 2-1-1: Administrative Structure of the Philippines ...... 2-1 Fig. 2-1-2: Regions of the Philippines ...... 2-3 Fig. 2-1-3: Philippines Population Pyramid ...... 2-5 Fig. 2-1-4: Regions of Mindanao ...... 2-7 Fig. 2-1-5: Philippine Climate Divisions ...... 2-10 Fig. 2-1-6: Mindanao Island’ Per Capita GRDP by Region ...... 2-12 Fig. 2-1-7: Philippine Poverty rate Map ...... 2-14 Fig. 2-1-8: Private Sector-Led Region Development Concept ...... 2-15 Fig. 2-1-9: Private Sector-Led Region Development Project Map ...... 2-16 Fig. 2-1-10: Asiga Small Hydro Power Plant Project ...... 2-17 Fig. 2-1-11: Taguibo River Small Hydro Power Plant Project ...... 2-17 Fig. 2-1-12: Biomass Power Project Study ...... 2-18 Fig. 2-1-13: Bulk Water Project (Intake Weir) ...... 2-18 Fig. 2-1-14: Bulk Water Project (Treatment Plant) ...... 2-18 Fig. 2-1-15: Rice Processing Plant ...... 2-19 Fig. 2-1-16: Rice Cultivation Business ...... 2-19 Fig. 2-1-17: Eel Farm ...... 2-20 Fig. 2-1-18: Renewable Shrimp Farm ...... 2-20 Fig. 2-4-1: Island of Mindanao ...... 2-24 Fig. 3-1-1: Existing Plan (Water Intake Weir) ...... 3-1 Fig. 3-1-2: Geological Overview ...... 3-2 Fig. 3-1-3: Topographical and Geological Overview ...... 3-3 Fig. 3-1-4: Picture of the status of the left bank outcrop ...... 3-3 Fig. 3-1-5: Shear Fracture Slip Line in Foundation Rock with Downstream Stratum ...... 3-5 Fig. 3-1-6: Vertical well ...... 3-6 Fig. 3-1-7: Horizontal Boring ...... 3-6 Fig. 3-1-8: Radial Drainage Well (conceptual illustration) ...... 3-6 Fig. 3-2-1: Dendritic piping ...... 3-7 Fig. 3-2-2: Annular piping ...... 3-7 Fig. 3-2-3: Pipe network piping ...... 3-7 Fig. 3-2-4: Water purification facility...... 3-9 Fig. 3-2-5: Facility installation plan ...... 3-9 Fig. 3-2-6: Water pump deployment image ...... 3-6 Fig. 3-2-7: ump-pressurized image map ...... 3-7

Fig. 3-2-8: Water flow image by gravity system ...... 3-11 Fig. 3-2-9: Water supply Pump (image illustration) ...... 3-15 Fig. 3-2-10: Pump performance curve ...... 3-16 Fig. 3-2-11: Rapid Filtering Treatment Flow ...... 3-22 Fig. 3-2-12: In-line stirring system ...... 3-22 Fig. 3-2-13: Membrane filtration method treatment flow ...... 3-25 Fig. 3-2-14: Basic flow of pressurized membrane l¥filtration system ...... 3-25 Fig. 3-2-15: Basic flow of immersion type membrane filtration system ...... 3-26 Fig. 3-2-16: Overall layout (rapid filtration system) ...... 3-28 Fig. 3-2-17: Overall installation plan (membrane filtration system) ...... 3-28 Fig. 3-3-1: Pipeline profile for B River intake ...... 3-33 Fig. 3-3-2: Pipeline profile for A river intake ...... 3-33 Fig. 3-3-3: Pipeline profile for Water intake in confluence part ...... 3-34 Fig. 3-3-4: Allocation of planned water supply ...... 3-34 Fig. 3-3-5: Total Diagram of pipeline ...... 3-36 Fig. 6-1-1: Project Implementation System ...... 6-2 Fig. 6-2-1: Project Schedule ...... 6-3 Fig. 8-1-1: Illustration of the use of energy-efficient operation controllers ...... 8-1

Tables

Table 2-1-1: Regions of the Philippines ...... 2-1 Table 2-1-2: Basic Economic Indicators in the Philippines ...... 2-4 Table 2-1-3: Regions of Mindanao ...... 2-6 Table 2-1-4: GRDP bsy Area ...... 2-7 Table 2-1-5: Provinces and Highly Urbanized Cities of North Mindanao ...... 2-8 Table 2-1-6: land Use of the North Mindanao Region ...... 2-10 Table 2-1-7: Mindanao Island’s GRDP by Region ...... 2-11 Table 2-1-8: GRDP of the North Mindanao Region by Industry ...... 2-12 Table 2-1-9: Main Universities in Misamis Oriental Province ...... 2-13 Table 3-2-1: Arrangement system of water pipes ...... 3-8 Table 3-2-2: Comparison table for water pump installation plan ...... 3-11 Table 3-2-3: Result of piping pressure loss calculation ...... 3-13 Table 3-2-4: List of local ground height ...... 3-13 Table 3-2-5: Water quality Analysis Results ...... 3-17 Table 3-2-6: Actual turbidity of raw water ...... 3-18 Table 3-2-7: Items monitored by instrumentation ...... 3-21 Table 3-2-8: Comparison of Construction Costs ...... 3-29 Table 3-3-1: Damages in Water works caused by Natural disaster in recent Japan ...... 3-31 Table 3-3-2: Comparison of pipeline installation plans ...... 3-32 Table 3-3-3: Calculation diameter of the aperture ...... 3-35 Table 3-3-4: Pipes strength Calculation Results ...... 3-35 Table 3-3-5: Summary for each plan ...... 3-36 Table 4-1: Natural Environments in the Candidate areas ...... 4-2 Table 4-2: JICA Environmental Checklist ...... 4-4 Table 4-3: Laws Related to Environment law in the Philippines, tec...... 4-9 Table 4-4: Categories within the Philippines Environmental Impact Statement System ...... 4-10 Table 4-5: Laws Related to Land and indigenous people on the Philippines, etc...... 4-11 Table 4-6: Environmental Standard Zoning Categories for Freshwater Environments ...... 4-11 Table 4-7: Water Quality Guidance: 1st standards ...... 4-12 Table 4-8: Water Quality Guidance: 2nd standards (inorganic substances) ...... 4-12 Table 4-9: Water Quality Guidance: 2nd standards (metals) ...... 4-12 Table 4-10: Water Quality Guidance: 2nd standards (organic substances) ...... 4-13 Table 4-11: Groundwater Quality Guidelines...... 4-14 Table 4-12: General Effluent Standards ...... 4-14 Table 4-13: Key Items in General Effluent Standards for Water Purification Plant ...... 4-15 Table 5-2-1: Breakdown of Construction (1) ...... 5-3 Table 5-2-2: Breakdown of Operating Cost (Construction in Stages 1) ...... 5-3 Table 5-2-3: Breakdown of Operating Cost (Construction in Stages 2) ...... 5-4

Table 5-2-4: Breakdown of Operating Cost (All in one Construction) ...... 5-5 Table 5-3-1: Phases of Pipeline Construction ...... 5-8 Table 5-3-2: Unit Cost per meter used to calculate rough operating cost...... 5-8 Table 5-3-3: Estimated Pipeline Construction Costs ...... 5-8 Table 8-1-1: C values of interior coating ...... 8-2 Table 9-2-1: Orders Anticipated for the A City Water Concession Business ...... 9-2

Chapter 1 Study Overview

(1) Study Objective

This study was commissioned by a consortium formed by Chodai Co., Ltd., Japanese trading company Okaya & Co., Ltd., and engineering company Kurimoto, Ltd., to investigate the feasibility of investment and participation by Japanese companies in the bulk water concession business in regional cities in the Philippines, as well as the use of Japanese companies’ products and technology and the use of financing, leasing, trade insurance and other financial services provided by Japanese government-backed and private financial institutions.

The target area for this study, is located in the north of the island of Mindanao. Water concession is operated by A City Water District (“ACWD”) but is not on a stable footing due to a lack of advanced hardware and other technology for water intake and purification systems, as well as chronic funding difficulties. Currently (as of February 2019), Chodai’s commercial partners in the Philippines, Equi-Parco Construction Co. (“EPCC”) and Twinpeak Hydro Resources Corporation (“THRC”) are in the process of acquiring the rights to the bulk water concession, after which Chodai plans to participate in the business, including investment.

In order to investigate the need for this project, this study looks in detail at the social and economic conditions in A as well as the neighboring cities of B, C and D and provides up-to-date information on the development of the PHIVIDEC Industrial Estate that is underway in A. It also collates current information on water concessions in other regions of a similar size in the Philippines and capital expenditure by the Philippine Local Water Utilities Administration. At the same time, it is also intended to act as a basic document for feasibility studies for future participation in water concession businesses funded through PPPs in the Philippines by providing information on the current state of such businesses.

(2) Study Items

In order to assess the viability of this project, the following seven issues have been examined. The results of the examination of these seven key issues have been collated into this report.

1) 1) Summary of the current state of the planned project region 2) 2) Infrastructure system conceptual design 3) Calculations of Project Scale 4) Construction of the Project Implementation System and Schedule 5) Financial Prospects and Proposals and Prospective Policy Support 6) Environmental and Social Impact Survey and Prospects for Energy Saving 7) Confirmation of Advantages of Japanese Companies and Predicted Benefits for Japan

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(3) Study Structure

This study has been carried out under the following structure.

Project Manager General Manager, Business

Planning Div. Chodai Co., Ltd. Okaya & Co., Ltd.

Financing Arrangement Study for the Water Treatment General Manager, Finance & Legal Facility Div. Iron & Steel Dept. No. 2, Okaya &

Project Scheme Review Study for Water Infrastructure Business Planning Div. Mr. Masayuki Oura JFE Engineering Corporation

Kurimoto, Ltd. Economic & Financial Analysis Business Planning Div. Ms. Makiko Iijima Study for the Water Pipeline Iron Pipes Div., Kurimoto, Ltd. Messrs. Michiura,

Legal System International Business Planning Outsourcing Div.

Compliance with Philippine Law, Funding from Local Financial Environmental Impact Study Institutions Social Environmental Div. Mr. Tetsuo Matsui Local Data Collection Green Asia Engineering, Ltd. Environmental Standards Social Environmental Div. Mr. Yasuko Tomidokoro Translation

Rubicon Solutions Inc.

Topo and Geo Survey Data Collection Survey Vehicles Twinpeak Hydro Resources Business Planning Div. Mr. Yuzuru Kamagata Corporation (THRC)

Fig. 1-3-1: Study Structure Source: Created by the study team

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(4) Study Schedule

Details of Study Oct. Nov. Dec. Jan. Feb.

Study (1) Project Background and Necessity

Items (2) Partner Country Central and Local Government Policy Trends

(3) Infrastructure system conceptual design

(4) Calculations of Project Scale

(5) Construction of Project Implementation System

(6) Examine Project Schedule

(7) Financing Proposal

(8) Utilization of Governmental Aid and Other Forms of Support

(9) Environmental and Social Impact Study

(10) Confirmation of Advantages of Japanese Companies and Predicted Benefits for Japan

(11) Prospects for Energy Saving

Compiling of the Report

Field 1st Survey (data collection, site visits)

Survey 2nd Survey (local presentation, confirmation of site)

3rd Survey (local presentation of final report) ▲ Start Completion ▲

Fig. 1-4-1: Study Schedule Source: Created by the study team

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(5) Study Target

The map below indicates the target area for this study.

Fig. 1-5-1: Study Target Position Diagram Source: Created by study team using DPWH GIS Web Apps

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(6) Study Report

The local presentation of the final report is outlined below.

1. Date: February 19, 2019 2. Location: EPCC Head Office 3. Attending: EPCC, THRC, Chodai 4. Findings of the report (1) Overall Schedule ・ The construction schedule was presented, including procurement and installation of equipment and civil engineering, as well as a plan for gradual expansion in view of water demand and costs. (2) Water intake facility ・ Proposed water intake using smaller intake weir and collection well than in original design ・ The original design for the water intake facility (intake weir) was excessive and costly ・ It was also unacceptable for reasons of safety ・ Intake weirs of the type proposed have been built in neighboring cities ・ The collection well is proprietary Japanese technology and allows water to be drawn in efficiently from underground sources (3) Water purification facility ・ A rapid filtration system was proposed, which has been used in neighboring cities and enables lower installation costs and lower LCC. ・ It was proposed to use a purification system provided by a Japanese company. (4) Pipeline equipment ・ It was proposed that the systems should use earthquake-resistant connecting pipes, which have been successfully used in Japan, as both the Philippines and Japan are prone to natural disasters.

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Chapter 2 Current Status of the Project Region

(1) Summary of Current Status

1) Administrative Structure of the Philippines The Philippines are largely divided into three island groups: Luzon, which includes Manila's National Capital Region (NCR); the Visayas (central city: Cebu); and Mindanao (central city: Davao). The country is further divided administratively into 15 standard regions, plus Manila's National Capital Region (NCR), the Autonomous Region in Muslim Mindanao (ARMM), and the Cordillera Administrative Region (CAR), for a total of 18 regions altogether. Beneath these regions, the country is organized into provinces, much like Japan’s prefectures, then cities, then municipalities, and finally barangays, the smallest autonomous administrative unit in the Philippines. Some cities are also designated as "Highly Urbanized Cities" or "Independent Component Cities" which are administratively independent from any province. The target of this study, the area is located in the region of North Mindanao, and is part of the Mindanao area.

Fig. 2-1-1: Administrative Structure of the Philippines Source: Created by study team based on the Council of Local Authorities for International Relations (CLAIR) 1998 paper "The Philippines' Regional Autonomy"

Table 2-1-1: Regions of the Philippines Area Region Area Region Luzon NCR National Capital Mindanao REGION Zamboanga Peninsula Region CAR Cordillera Autonomous REGION North Mindanao Region in Muslim

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Mindanao REGION I Ilocos REGION XI Davao REGION II Cagayan Valley REGION XII SOCCSKSARGEN REGION Central Luzon REGION Caraga Region XIII REGION -A Calabarzon ARMM Autonomous Region in Muslim Mindanao REGION -B Mimaropa REGION Bicol Visayas REGION West Visayas REGION Central Visayas REGION East Visayas NIR Negros Island Region

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North Mindanao

Fig. 2-1-2: Regions of the Philippines Source: Created by study team using DPWH GIS Web Apps

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2) Economic Trends in the Philippines a) Basic Economic Indicators in the Philippines The growth rate of the gross domestic product (GDP) in the Philippines was 7.2% in 2013, 6.1% in 2014, and 5.8% in 2015, figures which are indicative of stable growth. Although the consumer price index inflation rate in 2015 was 1.4%, slightly below the target range of 2–4%, the basic economic indicators generally reflect favorable economic conditions, making the Philippines one of the more stable national economies in Southeast Asia.

Table 2-1-2: Basic Economic Indicators in the Philippines Category Unit 2010 2011 2012 2013 2014 2015 2016 2017 Real GDP growth % 7.6 3.6 6.8 7.2 6.1 6.1 6.9 6.7 rate Total nominal GDP Billion USD 200 210 250 272 285 293 305 313 Per capita nominal GDP USD 2,159 2,363 2,594 2,767 2,850 2,863 2,924 2,976 Consumer price index % 3.8 4.6 3.2 3.0 4.1 1.4 2.2 2.9 inflation Unemployment rate % 7.4 7.0 7.0 7.1 6.8 6.3 5.5 5.7 Outstanding foreign Billion USD 73.6 75.6 79.9 78.5 77.7 77.5 74.8 73.1 debt Outstanding foreign debt % 36.9 33.7 31.9 28.9 27.3 26.5 24.5 23.4 / GDP Source: Real GDP growth rates, consumer price index inflation, unemployment rates: Philippine Statistics Authority (PSA) Total nominal GDP, per capita nominal GDP: International Monetary Fund (IMF) Outstanding foreign debt: Bangko Sentral ng Pilipinas (BSP) (Philippines Central Bank)

b) Population Trends in the Philippines The population of the Philippines is 100,980,000 (according to the 2015 national census), making it the 12th largest country in the world by population after Mexico. According to UN calculations, by 2050, the Philippine population is expected to grow by over 50% to around 157,000,000, which would make it the world's 10th largest country, surpassing Japan. The population distribution forms an almost perfect pyramid, with the population increasing continuously with younger demographics, meaning that the Philippines can be expected to enjoy a population bonus period over the next 40 years that should make for easy economic growth.

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Fig. 2-1-3: Philippine Population Pyramid (2015 Estimates) Source: U.N. World Population Prospects 2012 Revision

c) Philippine Government Bond Ratings Thanks to the Philippines' strong growth, the Big Three credit rating agencies, Moody's, Standard & Poor's, and Fitch, all raised its government bond rating in 2013. Later, Moody's went on to raise it by a further level, while Standard and Poor’s and Fitch changed their outlook from "Stable" to "Positive,” leading to anticipation that the Philippines' rating will be raised again in the near future.

d) Philippine Investment Promotion Measures The Board of Investments (BOI) offers a range of incentives for companies that invest in fields specified by the annual IPP. The newest prioritized investment fields across the 2014–2016 IPPs are ① Manufacturing, ② Agriculture and Fishing, ③ Service, ④ Economic Low-Cost Housing, ⑤ Hospitals, ⑥ Energy, ⑦ Infrastructure and Distribution, and ⑧ Public-Private Partnership (PPP) projects.

e) Promotion of Public-Private Partnership (PPP) Projects In the current harsh administrative budget environment of the Philippines, the government is fundamentally looking to advance infrastructure projects using public-private partnerships (PPPs). In 2010 the BOT Center, formerly under the oversight of the Department of Trade and Industry (DTI), was repositioned as the PPP Center under the administrative control of the National Economic and Development Authority (NEDA). The PPP Center provides assistance, advice, monitoring, database construction and more to each agency to ensure that projects run smoothly. There are currently 12 PPP projects for endeavors such as roads, schools, modernization of hospitals, automatic toll collection systems, airports, LRT and waterworks, that were signed as a result of the agency of the newly established PPP Center as of May 2016.

f) The Japanese Government’s Philippine Aid Policies In order to strengthen Japan’s “strategic partnership” with the Philippines, the Japanese government provides as a basic policy economic aid for the realization of “inclusive growth,” as detailed in the “Philippines Development Plan 2011-2016.” This goal hinges on three important points: sustainable economic

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growth through investment promotion, overcoming vulnerabilities and stabilizing lifestyles, and bringing peace and development to Mindanao.

Philippine Aid Policy Key Areas (1) Sustainable Economic Growth through Investment Promotion To promote both domestic and overseas investment for the purpose of achieving sustainable economic growth, the investment environment will need to be improved, and to that end measures such as developing transportation and transportation networks, mainly in the capital’s metropolitan area, developing infrastructure for energy and water environments, improving administration capabilities, ensuring maritime safety, and supporting the development of industrial human resources will be undertaken.

(2) Overcoming Vulnerabilities and Stabilizing Lifestyles In order to counteract areas of weakness associated with risks that have a disproportionate effect upon the poor, such as natural disasters, climate change and infectious diseases, and to improve and stabilize the quality of life and production bases, infrastructure for responding to disasters and environmental issues will be improved (including at the soft level), medical and other safety nets will be strengthened, and support to improve agricultural productivity and to help in the processing and distribution of agricultural goods will be provided.

(3) Bringing Peace and Development to Mindanao In order to secure peace and offer a way out of the poverty plaguing Mindanao (an area affected by military conflict) via promotion of the peace process through development, aid will be provided in order to strengthen governance, eliminate poverty through improved access to social services, and assist in regional development through the improvement of infrastructure and promotion of industry.

3) Current State of Mindanao Island a) The Regions of Mindanao The island of Mindanao is made up of a total of six regions The target of this study, the province of Oriental Misamis, is located in the North Mindanao region in the northern part of Mindanao island, with Cagayan de Oro (a highly urbanized city) as its central city. Each region’s major metropolises (central cities, highly urbanized cities, and independent component cities) are shown in the table below.

Table 2-1-3: Regions of Mindanao Region Major metropolises REGION ○Pagadian (Central City) Zamboanga Peninsula ○Zamboanga (Highly Urbanized City) REGION ○Cagayan de Oro (Central City / Highly Urbanized City) North Mindanao ○Iligan (Highly Urbanized City) REGION XI ○Davao (Central City / Highly Urbanized City) Davao REGION XII ○Koronadal (Central City) SOCCSKSARGEN ○General Santos (Highly Urbanized City) REGION XIII ○Butuan (Central City / Highly Urbanized City) Caraga Region ARMM ○Cotabato (Central City / Independent Component City) Autonomous Region in Muslim *Under SOCCSKSARGEN government. Mindanao

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Fig. 2-1-4: Regions of Mindanao Source: Created by study team using DPWH GIS Web Apps

b) Economic State of Mindanao The population of Mindanao as of 2014 was 23.748 million, making up 24 percent of the population of the entire nation of the Philippines. At the same time, however, Mindanao’s Gross Regional Domestic Product (GRDP) was a mere 1,874,849 million PHP, equivalent to just 15 percent of the national figure. The per capita GRDP of Mindanao is lower than that of Luzon and the Visayas, at only 78,948 PHP.

Table 2-1-4: GRDP by Area (2014) Pop. Area GRDP Area Per capita GRDP (PHP) (thousands) (million PHP) Luzon 56,927 9,174,515 161,162 Visayas 19,205 1,593,373 82,966 Mindanao 23,748 1,874,849 78,948 All of the Philippines 99,880 12,642,737 126,579 Source: Philippine Statistics Authority c) Conflict in Mindanao On the island of Mindanao, Islam was brought over from the Malay Archipelago to the south during the 14th century, and the island was controlled by the Islamic Kingdom of Sulu and the Kingdom of Maguindanao (in the region now known as Cotabato Province). Afterwards, under the dominion of Spain from the 16th century

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to the 19th century, the population's conversion to Christianity advanced, although Islam continued to maintain sway in the south. The indigenous population, including Muslims, are known as the "Moro," and have continued to fight against the Philippine government for their autonomy and independence of the area called Bangsamoro (meaning "the land of Moro") on Mindanao. As a result of this 40-year conflict, Mindanao remains the poorest region in the Philippines despite its fertile land, abundant mineral resources and beautiful nature, and its development (with the exception of some areas such as Davao, Cagayan de Oro, and General Santos City) has fallen behind accordingly. d) Japanese Governmental Aid for the Signing of a Peace Agreement in Mindanao A comprehensive peace agreement was signed between the Philippine government and the Moro Islamic Liberation Front (MILF) in March of 2014, which created a new autonomous Bangsamoro local government. It is anticipated that this accord will allow Mindanao’s rich material resources to be exploited, leading to rapid economic growth. Mindanao could well be the next “final frontier” of the region, after Myanmar, which is already exhibiting signs of rapid development. Since 2006, the Japanese government has been promoting the Mindanao peace process through highly focused economic collaboration projects (such as J–BIRD: Japan–Bangsamoro Initiatives for Reconstruction and Development), including human security and grassroots financial aid for conflict-torn areas. It has played a large part in the reconstruction and development of Mindanao Island.

4) Current State of the North Mindanao Region a) Population, Provinces, Climate and Land Usage of the North Mindanao Region ① Population of the North Mindanao Region As of 2014, the North Mindanao region's population was 4,689,302.

② Provinces of the North Mindanao Region The North Mindanao region consists of five provinces and one Highly Urbanized City (Cagayan de Oro), with Cagayan de Oro also acting as the region’s administrative capital. The provinces and Highly Urbanized City making up the North Mindanao region, and the central cities of each province, are shown in the table below.

Table 2-1-5: Provinces and Highly Urbanized Cities of Northern Mindanao Region Provinces and Highly Urbanized Cities Provincial capital REGION X Misamis Oriental Cagaya de Oro North Mindanao Cagayan de Oro (Highly Urbanized City) [central city of North Mindanao Region] Misamis Occidental Oroquieta Camiguin Mambajao Lanao del Norte Tubod Bukidnon Malaybalay

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b) Climate of the North Mindanao Region The Philippines essentially features a tropical monsoon climate throughout the year, with little variance in temperature. It can be broadly divided into the following 4 types. Type I: Two pronounced seasons. Dry from November to April and wet during the rest of the year. Type II: No dry season, with a very pronounced rainfall from November to April. Wet and humid throughout the year. Type III: Seasons not very pronounced. Relatively dry from November to April and wet during the rest of the year. Type IV: Rainfall more or less evenly distributed throughout the year. The North Mindanao region falls into Types II, III and IV, but the area that is the target of this study is mostly Type IV, with rainfall more or less evenly distributed throughout the year.

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Fig. 2-1-5: Philippine Climate Divisions Source: Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) c) Topography and Land Usage of the North Mindanao Region The area of the North Mindanao region is 20,496 km2, which is divided into 1,083,319 hectares of forest area and 935,298 hectares of land that has been designated Alienable and Disposable (A&D).

Table 2-1-6: Land Usage of the North Mindanao Region (Unit: hectares) Alienable and Province Forest area Total Disposable area Misamis Oriental 114,599 236,971 351,570 Misamis Occidental 98,988 106,534 205,522 Camiguin 5,464 23,723 29,187 Lanao del Norte 194,742 187,737 382,479 Bukidnon 669,526 380,333 1,049,859 Total 1,083,319 935,298 2,018,617 Source: Department of Environment and Natural Resources (DENR) d) Per Capita GRDP of the North Mindanao Region The North Mindanao region's per capita GRDP is 105,242 pesos. Although this is the second highest after Davao, the largest city on the island of Mindanao, it is only around 80% of the figure for the Philippines as a

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whole, which indicates the island’s relative lack of development compared to the rest of the country.

Table 2-1-7: Mindanao Island’s GRDP by Region GRDP Region Pop. (thousands) Per capita GRDP (PHP) (million PHP) All of the Philippines 99880.3 12,642,736 126,579 All of Mindanao 23,748 1,874,849 78,948 Region IX: Zamboanga Peninsula 3,668 257,060 70,074 Region X: North Mindanao 4,659 485,705 104,242 Region XI: Davao 4,830 519,069 107,479 Region XII: SOCCSKSARGEN 4,524 351,357 77,662 REGION XIII: Caraga 2,591 155,296 59,941 Autonomous Region in Muslim Mindanao 3,476 106,362 30,602 Source: Philippine Statistics Authority

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140,000 126,579 120,000 104,242 107,479 100,000 78,948 77,662 80,000 70,074 59,941 60,000

40,000 30,602 (thousand PHP)

20,000

Fig. 2-1-6: Mindanao Island's Per Capita GRDP By Region (2014) Source: Philippine Statistics Authority e) GRDP of the North Mindanao Region by Industry Breaking down the North Mindanao region's GRDP by industry, we can see that the largest single industry is agriculture and forestry at 20.6%, with primary industries (agriculture, hunting, forestry and fisheries) accounting for 23.7%. With primary industries accounting for 11.3% of the Philippines’ GDP, North Mindanao’s figure represents a value more than twice the national average.

Table 2-1-8: GRDP of the North Mindanao Region by Industry Production output Type Category Percentage (thousand PHP) Primary sector (agriculture, hunting, forestry, Agriculture and forestry 136,751,143 21.8 fisheries) Fisheries 14,001,023 2.2 Secondary sector (manufacturing) Mining and excavation 2,054,823 0.3 Manufacturing 100,208,839 16.0 Construction 61,719,648 9.9 Electricity, gas, water 40,546,778 6.5 Tertiary sector (service) Transport, storage, 37,800,812 6.0 communications Automobile and bicycle 106,005,166 16.9 sale and repair Financial intermediation 26,595,825 4.2 Real estate and rentals 34,621,259 5.5 Public service, defense, 18,498,784 3.0 Necessary social security Other services 47,671,622 7.6 Total 626,475,724 100 Source: Philippine Statistics Authority (PSA) 2017

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f) Infrastructure Status of the North Mindanao Region ①Distribution Infrastructure Status (Harbors / Roads) 11 of Mindanao’s 13 agro-industrial special economic zones lie in the regions of North Mindanao (major city: Cagayan de Oro), Davao (major city: Davao) and Soccsksargen (major city: General Santos), each of which has a per capita GRDP equivalent to or higher than that of Mindanao's average. Each region has public harbors handling container volumes of 160,000 TEU to 210,000 TEU per year, and they are almost all maintained with four-lane national roads between the industrial parks and the harbors.

②Electricity The island of Mindanao is one of the Philippines’ least developed regions, with an electrification rate of 71%, the lowest in the country. The Philippines Department of Energy’s (DOE) “Energy Development Plan 2009 to 2030” estimates that Mindanao’s total peak electricity demand in will be 3,494 MW in 2030, whereas supply capacity in 2012 was only 1,851 MW, around 53% of forecast demand, implying the need for an additional 1,600 MW of power development. Mindanao’s main source of electricity is hydroelectric generation, but, with peak demand outstripping existing capacity, there are planned power stoppages and the supply of electricity remains tight. g) Safety of the North Mindanao Region The population of the North Mindanao region is 86% Christian (72% Catholic and 14% Protestant), and there are no religious conflicts. h) Educational Standards of the North Mindanao Region In the North Mindanao region, Misamis Oriental has two state universities and eight private, for a total of ten universities altogether. Further, as English is the language of common use, communication is easily possible with all citizens, regardless of education level.

Table 2-1-9: Main Universities in Misamis Oriental Province University name Type Location Cagayan de Oro University Private Cagayan de Oro Southern Philippines College Private Cagayan de Oro University of Science and Technology of State Cagayan de Oro Southern Philippines Mindanao State University State Naawan

i) Poverty of the North Mindanao Region As of 2012, the poverty rate for the Philippines (based on population) was 25.2%. Mindanao is one of the poorest areas in all of the Philippines, with the poverty rate for the North Mindanao region ranging from 15% to 60%, and between 15% and 30% in Misamis Oriental.

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Northern North Mindanao

Fig. 2-1-7: Philippine Poverty Rate Map (2012) Source: Created by the study team based on Philippine National Statistical Coordination Board data

j) Regional Development on Mindanao Driven by Japanese and Philippine Private Enterprise ① Public-Private Partnership Regional Promotion Model As the result of the findings of a study into the possibilities of PPP projects conducted by Toyo University in 2011, Chodai, together with its local partner corporations EPCC and THRC, undertook a number of private enterprise-led regional development projects in Butuan City and the province of Agusan del Norte, which lie at the heart of the northern part of the island of Mindanao, through the forging of cooperative agreements between Japanese and Philippine corporations, before doing so in the region that is the subject of this study. These projects have centered on the development of fundamental infrastructure which is deficient in the area, such as electricity supply and waterworks, as well as the construction of development schemes based on agricultural management and aqua-cultural regeneration technology to

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improve productivity and provide additional value to these primary industries lying at the heart of the region’s economic foundation. The final step in this plan is to develop an agro-industrial park to take advantage of the fundamental infrastructure that has been put in place and the commodities produced by primary industry, and provide additional value to these elements. It is hoped that this will become a model for private and public cooperation to promote regional industry and create additional employment. Chodai, together with its local partner corporations EPCC and THRC, is heavily involved in private enterprise-led local development projects in the region, beginning with the aforementioned Taguibo Agro-Industrial Park, and also including small hydropower plants, a bulk water concession project, and other ventures in agriculture and aquaculture. The below figures indicate the overall conceptual framework for private enterprise-led regional development in Butuan City and the province of Agusan del Norte, as well as the details of the specific projects developed under this framework, with particular reference to the involvement of Chodai and its local partner corporations.

Fig. 2-1-8: Private Sector-Led Regional Development Concept

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Fig. 2-1-9: Private Sector-Led Regional Development Project Map

② Japanese Government Support for Private Enterprise-Operated Projects METI, JICA, and JBIC have provided support for small hydropower generation, biomass power generation, bulk water (water concession), and shrimp farming regeneration projects in the Caraga region of Mindanao through such measures as two-step loans and FS support schemes. Examples of past support provided are shown below.

②-1 Surveys “Feasibility Study for the Expansion of Facilities for the Bulk Water Concession in Butuan City, Mindanao, Philippines” (2017 Ministry of Economy, Trade & Industry) Feasibility Study for Installation of Water Infrastructure in Taguibo Industrial Park on Mindanao, Philippines (2016 Ministry of Economy, Trade and Industry) "Subcontracting the Philippines' Mindanao Island Taguibo River Small Hydro Power Project Excavation and Formation Survey" (2016 JBIC Survey) Energy Supply/Demand Mitigation Infrastructure System Promotion Project "Philippines: Mindanao Island Biomass Fuel Export and Power Generation Project Survey" (2015 Ministry of Economy, Trade and Industry Survey) Small and Mid-Sized Enterprise International Deployment Support Project: "Survey-Turned-Proposal to Rejuvenate Shrimp Farming Industry Using the Philippine Food Chain and Natural Soil Microbial Diversification Material (Lu-ALL)" (2014 JICA Survey) Collaboration Preparation Survey "Agusan del Sur Wawa River Small Hydro Power Project Collaboration Preparation Survey (PPP Infrastructure Project)" (2014 JICA Survey) Infrastructure System Export Promotion Survey Project "The Philippines – Agusan del Sur's Wawa River Small Hydroelectric Power Project Survey" (2012 Ministry of Economy, Trade and Industry Survey)

②-2 HR Training Planning, Designing and Training on Operation and Maintenance Technology for Philippine Small Hydroelectric

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Power Projects (The Overseas Human Resources and Industry Development Association, 2012)

②-3 Financing Two-Step Loan for the Asiga River Small Hydro Power Project (JBIC Financing) Two-Step Loan for the Taguibo River Bulk Water Project (JICA Financing)

③ Electric Power (Renewable Energy) and Water Projects Initiated by Private Enterprise (Primarily Chodai and its Local Partner Corporations) Asiga River Small Hydro Power Plant Project A small hydropower generation project on the Asiga River (8 MW). The project is operated by Asiga Green Energy Corporation (AGEC), a special-purpose company created with funding from Japanese and Philippine private enterprise, including Chodai, Equi-Parco Construction Company and Twinpeak Hydro Resources Corporation. The powerhouse features a generator manufactured by Japan’s Voith Fuji Hydro KK. Construction has been carried out with funding via a two-step loan from the Japan Bank for International Fig. 2-1-10: Asiga Small Hydro Power Plant Project Cooperation (JBIC), for completion in 2018. Now in Source: Chodai Co., Ltd. (photo taken in January 2019) operation.

Taguibo River Small Hydro Power Plant Project A small hydropower generation project on the Taguibo River (4 MW). A pre-feasibility study was carried out by the Chodai Group in 2015 with funding from JBIC. Construction on the project is planned to begin in 2017.

Fig. 2-1-11: Taguibo River Small Hydro Power Plant Planned Location Source: Chodai Co., Ltd.

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Biomass Power Project A project involving the recycling of unused rice husks produced by rice processing mills in Butuan City and the provinces of Agusan del Norte and Agusan del Sur, and using them as biomass fuel to generate electricity (2 MW). A pre-feasibility study was carried out by the joint venture including the Chodai Group in 2015, with funding from the Japanese Ministry of Economy, Trade and Industry.

Chosen for JCM financing by the Ministry of the Environment in FY 2018. Scheduled to start operation in Fig. 2-1-12: Biomass Power Project Study 2021. Source: Chodai Co., Ltd.

Bulk Water (Water Concession) Project A concession business run by Taguibo Aquatech Solutions Corporation (TASC), a special-purpose company created with funding from Japanese and Philippine private enterprise, including the Chodai Group, Equi-Parco Construction Company and Twinpeak Hydro Resources Corporation, which takes water from the Taguibo River, treats it, and provides it to the 350,000 citizens of Butuan City. The contract period is 25 years, with an option to extend the project by a further 25 years. Fig. 2-1-13: Bulk Water Project (Intake Weir) This project makes use of pipes manufactured by Kurimoto, Ltd. and valves manufactured by Maezawa Industries, Inc. Partial operation was begun in 2017, expanding to full operation in 2018. Currently 30,000 m3 of water is provided per day. The contract stipulates that this figure is to eventually rise to 80,000 m3 per day. The addition of treatment facilities to handle the extra volume of water provided is also detailed in the project contract. After a feasibility study with the support of the Ministry of Economy, Trade and Industry in FY 2017, a financing Fig. 2-1-14: Bulk Water Project (Treatment Plant) contract was signed to increase capacity by 50,000 m3 per Source: Chodai Co., Ltd. (photo taken in June 2017) day. JFE Engineering Corporation will be in charge of the design and engineering for the new water treatment plant. With Okaya & Co., Ltd. being responsible for

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procurement, this has helped to increase the involvement of Japanese companies and with infrastructure exports.

④ Primary Industry Promotion Projects Implemented by Private Enterprise (Primarily Chodai and its Local Partners) Management of a Rice-Processing Mill Construction of a rice-processing mill within the Taguibo Agro-Industrial Park is complete. Agusan Greenfield Resources and Agrotech Corporation (AGRAC), a special-purpose company created with funding from corporations including Equi-Parco Construction Company, Twinpeak Hydro Resources Corporation, and Green Asia Engineering KK (GAE), operates the concern. A memorandum of understanding has also been signed by the Chodai Group indicating a Fig. 2-1-15: Rice-Processing Plant commitment to invest in AGRAC, and the paperwork for Source: Chodai Co., Ltd. the investment is currently in progress. The mill uses rice huskers manufactured by Satake, and mills 20,000 tons of rice a year. The mill has been in full operation since 2017.

Agricultural Management (Rice Cultivation) AGRAC has been using the food chain promotion material and the conventional soil microbial diversification promotion material "Lu-ALL," developed by small Japanese company CTC, in Butuan test fields since 2013. In addition, they are also conducting test cultivations introducing new water management technology to increase rice yields. In a rice cultivation contest held by the Philippine Rice Crop Research Institute, they succeeded in obtaining a

7.8 ton per hectare harvest without fertilizer or hybridization compared to the average Philippine Fig. 2-1-16: Rice Cultivation Business Using harvest amount of 3.7 ton per hectare, setting a new Lu-ALL record for the Agusan branch in 2014. Source: Photographs taken by the study team

Fisheries (Eel Aquaculture) Construction of a seven-hectare eel farm and

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processing plant in Agusan is complete. Cabadbaran Aquatech Resources Corporation (CARC), a special purpose company created with funding from corporations including Twinpeak Hydro Resources Corporation, Equi-Parco Construction Company, and Green Asia Engineering KK, operates the concern. A memorandum of understanding has also been signed by the Chodai Group indicating a commitment to invest in CARC, and the paperwork for the investment is currently in progress. Fig. 2-1-17: Eel Farm This eel farming business uses young eels caught on Source: Chodai Co., Ltd. (photo taken in January the island of Mindanao and incorporates the latest in 2016) Japanese eel-farming technology. This venture is the first overseas eel-farming project to receive official accreditation from JAS, and produces 200 tons per year.

Fisheries (Shrimp Aquaculture) In 2015, CTC, with support from JICA, agreed to work with the Chodai Group, Green Asia Engineering, and CARC to conduct a feasibility study on the prospect of building a renewable shrimp farm within Butuan and Agusan del Norte that made use of Lu-ALL, and went on to conduct tests of growing shrimp using Lu-ALL. The results showed that farms that did not use Lu-ALL produced shrimp that weighed an average of 10 grams, while shrimp produced on the Lu-ALL farm averaged 60 grams. Not only that, the number of shrimp that weigh 40 Fig. 2-1-18: Renewable Shrimp Farm grams or more, which fetch high market prices, made up Source: Chodai Co., Ltd. 80 percent of the yield, proving how effective Lu-ALL can be for such businesses.

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(2) Project Background and Necessity

Chodai has, together with its business partners EPCC and THRC, been engaged for some time in regional development through private enterprise-led PPPs in and around the city of Butuan, the hub of northeastern Mindanao’s Caraga region. In specific terms, each business proposal by the consortium is carried out with financial support from Japanese governmental agencies such as METI, JICA, JBIC and the Ministry of the Environment. Projects carried out to this point include renewable energy projects such as small hydro power plants, a biomass power plant, a wind power plant, a solar power plant, a bulk water concession project for the 350,000 citizens of Butuan City, and agricultural and aqua-cultural projects featuring farming management techniques and renewable fish farming techniques designed to increase yield and produce additional value. In addition, the consortium has invested in local development via private enterprise-led PPPs such as through the development of a 140-hectare agricultural and aqua-cultural industrial park designed to create local employment at the same time as encourage participation from Japanese companies to take advantage of the power, water and primary industry resources whose value has been increased within this industrial area. Further, in order to encourage the construction of a value chain for these goods, projects for the development and strengthening of surrounding infrastructure, including roads and harbors, have also been proposed and developed.

These projects were initially begun thanks to the findings of a study into the possibilities of PPP projects in the area conducted by Toyo University in 2011. By the end of 2011, development had begun on the Asiga River Small Hydro Power Plant project. Facilities for this project were completed in 2018, and it is now in operation. Following on from the Asiga River Small Hydro Power Plant project, other renewable energy projects, agricultural and aqua-cultural projects, bulk water concession and industrial park development projects have all been carried out as examples of private enterprise-led local development businesses.

In each of these projects, high-quality technology and parts developed by Japanese corporations have been utilized, and aid and financing from Japanese government agencies encouraging the export of high quality infrastructure have also been used. In concrete terms, the Asiga Small Hydro Power Plant project employs highly-reliable water turbines developed by Voith Fuji Hydro KK, the bulk water concession project uses disaster-resistant pipes (Kurimoto, Ltd.), fittings (Cosmo Koki Co., Ltd.) and valves (Maezawa Industries, Inc.), while the farming initiatives use soil and water enhancing materials (CTC) and the rice milling project uses rice mills (Satake) that have all been developed by Japanese companies.

The bulk water concession project is now operating the Taguibo River Bulk Water Concession Business. This is based on a concession contract signed between the Butuan City Water District and Taguibo Aquatech Solutions Corporation (TASC), a special purpose company developed for this business funded primarily by

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EPCC and THRC. It is the first concession project (PPP project) to be successfully developed between a private enterprise and a Philippine public water works.

Water treatment facilities capable of processing approximately 30,000 m3 of water per day are now in place and supply has already been begun. The plan was to expand capacity to 80,000 m3 per day to meet future demand, but, as current demand has already reached well over 20,000 m3 per day, far in excess of initial estimates, indicating that there is rapidly increasing demand for water in the area, the initial plan has been moved forward, and it has become necessary to expand the capacity of the facilities by 50,000 m3 per day as soon as possible. To expand this capacity, Chodai, Okaya & Co. and JFE Engineering carried out a feasibility study under the auspices of the Ministry of Economy, Trade and Industry’s “FY 2017 Projects to Promote Overseas Sales of Quality Energy Infrastructure Systems (Feasibility Study for Japanese Companies to Acquire Infrastructure Orders): Feasibility Study for the Implementation of Facilities for a Bulk Water Concession Business in the Philippines.” After the feasibility study, Okaya & Co. and JFE Engineering provided TASC, the operator of the water concession, with a proposal, as a result of which TASC ordered equipment to treat 50,000 m3 of water per day and on July 5th, 2018 TASC, Okaya & Co. and JFE Engineering signed a procurement contract, witnessed by the Ministry of Economy, Trade and Industry. The equipment is now being installed on-site and related works are underway.

The target area for this study, target area is located in the north of the island of Mindanao,. The water concession is operated by ACWD, but there is no stable and high-quality water supply, due to a lack of advanced hardware and other technology for water intake and purification systems, as well as chronic funding difficulties. EPCC, which already has a track record in water concession businesses for regional administrations in the Philippines, has made a proposal to ACWD for a privately operated business and is currently in the process of acquiring the rights to the bulk water concession. Once the concession has been acquired, Chodai plans to participate in the business, including investment, and also expects Japanese companies that have expressed an interest in investing and participating in it to do so.

This study is designed to investigate the possibilities of using the knowhow and products of Japanese companies and Japanese investment to come up with solutions to the following four issues, based on past experience of water concessions: (1) water intake methods, (2) use of water treatment facilities, (3) reduction of on-site power usage, and (4) the introduction of superior funding schemes.

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(3) Partner Country Central and Local Government Policy Trends

With the establishment of the ASEAN (Association of South East Asian Nations) Economic Community at the end of 2015, the framework was strengthened for collaborative economic development in the region, leading to expectations for further economic growth among ASEAN nations. In the same year, then President Aquino expressed a strong commitment to participate in the proposed Trans-Pacific Partnership, with the various governmental ministries working with the Tariff Commission to investigate the possibility of entering the TPP within two years. The Duterte administration also, which began on June 30th, 2016, has announced its policies of “continuing and maintaining the current economic strategy” and “promoting the development of infrastructure through PPP projects,” suggesting that no major economic policy changes are in order and that private enterprise-led infrastructure development can be expected to play a still more significant role. The island of Mindanao in the Philippines features abundant human resources with high levels of education and English ability (as English is essentially treated as an official language). However, the area is plagued by a lack of employment opportunities and institutionalized poverty caused by long periods of military conflict. As a result of committed and continuous aid provided by the Japanese government, however, a peace agreement was signed between the warring factions in March of 2014, with development underway for the initiation of an autonomous government. It is anticipated, therefore, that with the help of ODA provided by Japan, infrastructural investment and regional development in Mindanao will progress rapidly, with the entire area considered to be Asia’s next “final frontier” after the already rapidly developing Myanmar. It is also expected that the election of Rodrigo Duterte as President of the Philippines after he spent seven terms and 21 years as mayor of Davao City, the third-largest city in the nation, located in the south of Mindanao, will have beneficial effects for the development of the island of Mindanao as a whole.

A further positive movement for regional development on Mindanao is the election of Ronnie Lagnada, former COO of Chodai’s business partner EPCC, as Mayor of Butuan City, the central metropolis in the Caraga region of northeastern Mindanao, following a resounding victory over the incumbent in the election held in May 2016. His deputy mayor and all 13 city councilors elected with him all share his vision for the future of the region. Lagnada himself was involved as a central figure in the aforementioned private enterprise-led PPP regional development projects, and has expressed a strong desire to strengthen ties with surrounding local body governments, the central government of the Philippines, and international agencies in order to promote further regional development through the implementation of full-scale PPP projects.

Since his election as Mayor of Butuan (on June 30th) he has already taken the initiative to develop the economy of the Caraga region as a whole through cooperative efforts with surrounding local bodies. When Prime Minister Abe visited the Philippines in January of 2017, Lagnada met with him as a representative of the four major cities of eastern Mindanao (Butuan, Davao, Cagayan de Oro and General Santos) and expressed his commitment to further economic development of the island through cooperative agreements with the Japanese central and local body government and Japanese corporations.

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(4) Overview of the Bulk Water Concession Business

EPCC has made a proposal for this project to ACWD and is now in the process of acquiring the concession.

The project’s water sources are the A and B rivers, and it will have a maximum intake of 124,000 m3 per day. The existing water intake and treatment facilities are inadequate, and the plan is to introduce new facilities at each of three construction sites in stages.

In addition to A, the project is intended to supply B, C and D, gradually bringing water supply to a wide area.

Fig. 2-4-1: Island of Mindanao

To upgrade the water intake and treatment facilities, it will be more economical to carry out a gradual expansion rather than constructing the whole project at once, in terms of ease of construction, expandability, and ease of procurement. It will therefore be done in the following three stages.

Stage 1: Water supply to A Install capacity for 50,000 m3 per day to supply A Stage 2: Water supply from A to wider area 1: Aim to install capacity for an additional 50,000 m3 per day to supply two cities, including B in addition to A, supplying a total of 100,000 m3 of water per day. Stage 3: Water supply to wider area 2: Aim to install capacity for an additional 25,000 m3 per day to supply three cities, including C in addition to the existing two, supplying a total of 125,000 m3 of water per day.

The concept, structure and construction of the new infrastructure system is discussed in Chapter 3: Infrastructure System Conceptual Design.

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Chapter 3: Infrastructure System Conceptual Design

(1) Examination of water intake system

1) Arrangement of original plans A plan for river water intake by the intake weir was revealed by hearing for this study. However, it was found that the plan was overdesigned compared to the size of the business, and that the construction cost was also large. In this study, the present design is arranged by referring to the water supply concession business for the local government which precedes in the neighboring local city, and the facility design examination and proposal of the proper scale are made.

Figure 3-1-1 Existing Plan (Water Intake Weir: Dike Height 30 m)

The dam dimensions in the existing plan are as follows:  Dam Type: Masonry Gravity Dam  Dam height: H=32.0m  Dike peak length: B≒170.0m  Dike Volume: V≒50,000 ㎥ * Calculation Formula 1 V 2 6 Abbreviations: m: Downstream Slope (1:0.8) H: Dike height (= 32.0 m) a: Bottom width (≒ 100 m) B: crest length (= 170 m)

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2) Geological outline Before the field investigation, the historical literature was collected and the geological situation of the target site was grasped and confirmed. The survey results of the “MINES AND GEOSCIENCE BUREAU,” a government agency, are published in the geological map of the Philippines. The geological outline of the area subject to investigation is shown in the following Figure:

The area subject to investigation

Mindanao Island

Legend

Sedimentary rocks from quaternary Paleozoic to Mesozoic sedimentary rocks. Neogene to quaternary sedimentary Quaternary volcanic rocks rocks (felsic volcanic rocks in granite, rhyolite, etc.)

Figure 3-1-2 Geological Overview Source: “ Republic of the Philippines” “Figure 7-2.Geological Map of the Philippines”

Based on the above Figure, it was confirmed that the geology around B River consists of sedimentary rocks from quaternary volcanic rocks (felsic volcanic rocks in granite, rhyolite, etc.) and neogene to quaternary sedimentary rocks, and Paleozoic to Mesozoic sedimentary rocks.

3) Topography overview of the planned water intake facility construction As shown in the following figure, the area where the intake weir is planned to be constructed is the sedimentation side of meandering, having relatively gentle topography. As shown in picture from the field survey, the left bank is the erosion surface of meandering, so it is a steep cliff form from the river bed.

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Left bank Right bank December 6, 2018 Q≒2m3/s flow

Top of dam Sedimentary Coconut palm farm rocks

Terrace sediment, Cliff cone sediment

Riverbed sediment

Figure 3-1-3 Topographical and Geological Overview

Aspect of Shale - mudstone

Aspect of conglomerate containing volcanic gravel

Aspect of sandstone

Aspect of conglomerate Aspect of Shale, mudstone

Figure 3-1-4 Picture of the status of the left bank outcrop

3)-1 Geological overview The outcrop of the cliff-like terrain on the left bank side is made up of sedimentary rocks forming alternating layers. The stratigraphy of the outcrop is composed of soil particles whose deepest parts close to the foundation of the dam are shale - mudstone with small grain sizes of silt and clay components. Next layers are the conglomerate layer of which the silt content of the gravel is consolidated, and the sandstone layer of which sand content is solidified. The upper sandstone layer is a conglomerate containing a slightly larger gravel (volcanic gravel), but if it is a tuff breccia, it becomes a volcanic rock with a volcanic eruption. The thickness of these layers is relatively thin and about 30 to 50 cm per layer. The slope of the stratum is inclined from the upstream side to the downstream side.

4) Characteristic of a river channel The river channel morphology has characteristics of meandering rivers. In other words, the mean bed slope is assumed to be a stable gradient determined by the particle size distribution of the bed material. In

3-3 addition, the shape of the meandering and rapids and deep pools corresponding to the river bed slope are formed. In addition, housings are built and people live in the river. To prevent flooding, the residence height is set to a position several meters higher than that of the water route, and if positioned low, a high floor dwelling should be able to prevent flooding. Therefore, river water is used for cleaning, and open spaces in rivers are used in various ways such as commuting, commuting to school, and drying facilities, including the water route. (The utilization as drinking water has not been confirmed.)

5) Characteristics of the planned site for construction of water intake facilities This is assumed to be the initial ground height when the flat part of the high elevation part of the planned site, or the initial ground height when the topography is raised before the start of drilling meandering, and the highest part is the elevation measured by Google earth on both right and left banks of EL. is about 270 m. On the other hand, the bed part is about EL. 50 m. Therefore, the height of the flat ground of the river bed and the right bank is about 220 m, and the height of the top surface of the mountain and the height of the river bed are similar, but because it is the erosion side of the meandering, the shape of the valley forms a steep cliff. The foundation ground in the outcrop is a relatively new sedimentary rock from the Neogene to the Quaternary. Within the range of the outcrop, it is not affected by crustal deformation such as fold and fault, and the horizon which was used to be horizontal is slightly inclined to the downstream (north-south direction in the dam site). (These sedimentary rocks seem to have been formed by solidifying sediment deposited horizontally under large water surfaces such as sea areas, such as sea or lake, and gravel.) Since it is solidified in the new age, it is estimated that the strength was comparatively small even if the degree of solidification was low and the sidewalk along river was excavated by manpower as confirmed by the field investigation.

6) About the Intake Weir Style The gravitational concrete dam of Masonlee is adopted for the intake weir. This type secures stability by receiving water pressure from a reservoir and transmitting its stress to bedrock. Therefore, shear strength becomes an important design element when examining gradient and dam type of the upper downstream surface of dam due to shear strength of foundation rock. The sedimentary rocks confirmed at the outcrop of the dam site, as described in the characteristics section, are likely to become bedrock, and the sedimentary rocks observed in the outcrop should be confirmed by the boring survey. However, the sedimentary rocks observed in the outcrop are low in solidification, and there are concerns as to mudstone having a factor that may cause slaking, and solidity of matrix (fine grained, glassy or non-crystalline packing that fills the gap between gravel pieces constituting rocks) and gravel pieces in conglomerate. Since the stratum surface of the sedimentary rocks is inclined to the downstream side and is so-called downstream stratum, shear destruction along the geological plane is a concern as shown in the following Figure. This is because the shear strength of the stratified surface is thought to be further lowered, in addition to the inclusion of the weak point that the rock mass is unconsolidated to semi-consolidated.

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Water storage position

The gravitational concrete dam Dam base surface

Downstream stratum in dam base

Example of shear slip line to be stabilized at a lower downstream surface of a weak downstream. Figure 3-1-5 Shear Fracture Slip Line in Foundation Rock with Downstream Stratum

Therefore, it should be considered based on future geological survey results, but in the present stage, the type of gravity concrete dam is considered to be difficult to adopt from the viewpoint of strength based on bedrock geological composition.

7) Examination of water intake system As mentioned above, it is difficult to say that the introduction of water intake facilities in the current plan is appropriate because of the constraints associated with the topographical conditions. On the other hand, EPCC-THRC, the business operator, has constructed a water intake weir with an intake capacity of 80,000 m3/day in the neighboring local cities, and operates stable water supply management concessions. Based on these performances and local conditions, we would like to examine and propose a system consisting of 80,000 m3/day of 125,000 m3/day from water intake from the river and 45,000 m3/day from water intake from underground by a radial drainage well.

A radial drainage well is a shallow well that has its origin in the Manchurian well and is combined with a vertical pit (vertical well) and horizontal boring. It is efficiently and stably uptake negative pressure groundwater or flowing water. It is a unique technology in Japan and has not been introduced in the Philippines, although it has been in China, Southeast Asia, and USA. In the introduction of this water intake facility, the construction management engineer is dispatched from Japan to the site and the technology management is carried out. Therefore, it is not limited to introduction of infrastructure systems such as facilities, and technology transfer such as construction know-how to local companies is expected, which is hereby proposed with the examination of facilities.

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Figure 3-1-6 Vertical Well Figure 3-1-7 Horizontal Boring

Sectional view of water collecting pipes

Plan view of water collecting pipes

Figure 3-1-8 Radial Drainage Well (Conceptual Illustration) Photo courtesy: Nagaoka Co., Ltd.

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(2) Examination of water purification facility

1) Distributing main pipe In the plan of the water distribution main pipe, the dendritic piping system which is the most economically inexpensive and relatively simple construction plan is planned, based on the fact that the target area is a relatively narrow topography and the branch pipe is planned to be maintained in a public sector.

Dendritic piping

Figure 3-2-1 Dendritic Piping

Annular piping

Figure 3-2-2 Annular Piping

Pipe network piping

Figure 3-2-3 Pipe Network Piping

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Table 3-2-1 Arrangement system of water pipes type Arrangement system Advantage Disadvantage Dendritic ・ A piping system through which ・ Flow rate calculation is simple ・ In caases of an accident on the piping a main pipe is passed through upstream side, water outage the center of the water supply occurs on the entire area and branche pipes are downstream side dendrically branched ・Water supply is less at ・Used when the water supply maximum demand section is elongate ・ Stagnant water at the end may cause degradation of water quality Annular ・ A piping system in which a ・The water pressure is averaged ・Slightly less economical piping distribution main pipe is ・Water outage is minimal in annularly arranged around a cases of accidents and water supply section and constructions connected by branch pipes Pipe ・Combination of dendritic piping ・Most rational water distribution ・Flow rate calculation is slightly network and annular piping method complex piping ・Suitable for all types of terrains ・ No restrictions on terrain, etc. ・ Maintenance is advantageous

2) Water purification facility plan 1.1 Outline of Water Purification Plan This plan includes river water and underwater intake from the B River and the Tagloan River, and the easiness of expansibility and maintenance for about 40 km infrastructure such as water purification facility and water distribution facilities. Especially, as for intake facilities and water purifying facility, not only low-tech systems mainly composed of civil engineering structures with large volume but also compact facilities utilizing excellent technology and products were taken into consideration while considering geological conditions, and infrastructure system considering whole LCC was designed.

There is no existing water purification facility, and in this plan, the new water purification facility is planned to be upgraded to one of three candidate sites in a stepwise manner. Water intake is estimated to be up to 124,000 m3/day from the target river water to be developed, and 20,000 m3 of concession is currently proposed for TCWD. However, based on the future water demand of the local site, it is necessary to efficiently plan facility scale expansion such as (1) 50,000 m3/day (25,000 x 2 systems) + (2) 50,000 m3/day (25,000 x 2 systems) + (3) 25,000 m3/day (1 system) = 125,000 m3/day (whole). In addition, since construction may be done at one time if the increase in water demand in this area is faster than expected, the estimated cost will also be compared with the case where a one-time construction and a step-wise improvement are made.

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Figure 3-2-4 Water purification facility (each system)

1.2 Planning Conditions (1) Water source The 3 water intake candidate sites are as follows: Candidate Site 1 : B River upstream (relatively clear, river flow is small) Candidate Site 2 : A River upstream (somewhat cloudy and water flow is high. There is a mineral mining field on the upstream side) Candidate Site 3 : Where B River merges

Intake weir

B River

Water purification plant 1

Water purification plant 2

Water purification plant 3

A River

Figure 3-2-5 Facility Installation Plan

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Though the raw water quality is the best for the candidate site 1, it is necessary to confirm whether water intake of 125,000 m3/day is possible in the future. (The site has been reserved.)

Though candidate site 2 has much water flow and water intake is not a problem, the raw water quality is slightly cloudy, and the increase in chemical costs is a concern once in operation. Since there is a mineral mining field on the upstream side and it cannot be adopted as an intake source, sufficient investigation on raw water quality is necessary. (Site has been reserved.)

The candidate site 3 takes water as much as possible from the B River with a relatively good water quality at the confluence point, and can ingest the shortage water from the A River. Therefore, it is the most probable candidate when it is proven that the water flow of the candidate site 1 is insufficient. (Site is not reserved, and site selection and purchase negotiation are required.)

For any of the candidate points, the investigation revealed that C City which is the final supply point is found to be the highest altitude. Therefore, it is necessary to adopt the pump pressurization type instead of the gravity system, and installation of the water pump facility is examined in the water purification plant.

Figure 3-2-6 Water Pump Deployment Image

Figure 3-2-7 Pump-pressurized image map

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Figure 3-2-8 Water flow image by gravity system

In the case of the candidate site 3 which is the minimum of the pipeline construction cost, the following two plans can be considered on the installation method of the water supply pump considering the difference in the ground height.

[Plan A] 72,700 m3/day 125,000 m3/day 44,800 m3/day A B Water Water C water water supply purification supply water supply supply area plant pump area area

[Plan B Draft]

125,000 m3/day 44,800 m3/day 72,700 m3/day Reservoir, water First A B C water water supply Second water supply purification water Water plant supply supply area area area Pump pumping Station station

Table 3-2-2 Comparison Table for Water Pump Installation Plan Item (Plan A) (Plan B) Water supply facility The facility is one place, but the pump Two facilities are installed, but the capacity is increased to deliver the water pump can be selected according entire extension at once. to the capacity, so the economic design becomes possible.

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Assessment result 〇 Operational stability When an accident occurs on the By installing a reservoir in front of the upstream side, water outage occurs to second water pump station, water the entire downstream side. outage becomes more manageable.

Assessment result 〇 Initial cost The construction cost is reduced Water supply facility is in two places, because the water supply facility is one and construction cost including civil place. engineering cost increases although equipment cost is reduced. Assessment result 〇 Running cost The optimum operation of the pump is By providing a reservoir in front of the difficult, and electricity cost increases, second water supply pump station, because pressure is applied and water operation corresponding to the actual is pumped to the end. water demand becomes possible and optimum operation becomes easy. Assessment result 〇 Comprehensive 〇 assessment result

This time, it is examined in the Plan B which has comparatively degree of freedom in operation and can reduce running cost.

The piping pressure loss will be carried out using the following formula of William Hazen. As for the piping, it was decided to calculate the efflux coefficient using C=150 instead of C=130, because the mortar powder painting tube was adopted considering the economical efficiency.

William Hazen formula

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Results of piping pressure loss calculation are shown in the following table.

Table 3-2-3 Results of Piping Pressure Loss Calculation Water purification plant A to B B to C to A H (m) 3.85 5.24 13.6 C 150 150 150 D (m) 1.2 0.9 0.7 Q (m3/min) 86.8 50.5 31.1 L (m) 4,700 4,300 8,000

On the other hand, the ground height is as follows:

Table 3-2-4 List of local ground height Water purification plant A B C EL. (m) +7.0 +11.0 +6.5 +26.0

The total lifting of the first water supply pump and the second water supply pump is selected as follows considering the loss of the bent and valves, etc., by about 20% for the piping pressure loss.

[First water pump] Total lifting = Actual lifting + Pressure Loss × 1.2 + Residual Pressure = (+11.0-7.0 m) + (3.85 m+5.24m) * 1.2+15 m = 29.9 m -> 30 m

[2nd water pump] Total lifting = Actual lifting + Pressure Loss × 1.2 + Residual Pressure = (+26.0-6.5 m) +13.6 m * 1.2+15 m = 50.82 m -> 50 m

For the total water supply Q = 125,000m3/day this time, Phase1 plans to increase to 2/5 Q = 50,000m3/day, Phase 2 to 2/5 Q = 50,000m3/day, and Phase 3 to 1/5 Q = 25,000m3/day.

Examples of the number of pumps installed in the first water supply pump station are shown below. Considering the operation control performance, the allocation of pump capacity is less than 2 to 6 units.

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Number of Pumps Installed (without spare equipment) Pump capacity (small) Pump capacity (medium) Pump capacity (large) Phase 1 1/5 Q x 2 units Phase 2 2/5 Q x 1 additional unit Phase 3 1/5 Q x 1 additional unit Total 1/5 Q x 3 units 2/5 Q x 1 unit

Pump installation number (half or more, with spare equipment) Pump capacity (small) Pump capacity (medium) Pump capacity (large) Phase 1 1/5 Q x 2 units 2/5 Q x 1 unit (*) Phase 2 2/5 Q x 1 additional unit Phase 3 2/5 Q x 1 additional unit Total 1/5 Q x 2 units 2/5 Q x 3 units *At first, only Phase1 can install a (small) pump with a spare equipment, but in order to reduce the number of pump installations, an additional 2/5 Q (medium) pump is installed.

Number of pumps installed (total volume or more, with spare equipment) Pump capacity (small) Pump capacity (medium) Pump capacity (large) Phase 1 1/5 Q x 2 units 2/5 Q x1 unit Phase 2 4/5 Q x 1 additional unit Phase 3 2/5 Q x 1 additional unit Total 1/5 Q x 2 units 2/5 Q x 2 units 4/5 Q x 1 additional unit

The difference between spare equipment for the total amount or more and more than half is whether to add additional 4/5 Q unit instead of a 2/5 Q unit. Therefore, it is also possible to go with a plan for adding a 4/5 Q unit for now and decide at the time of Phase 2 whether to add a 2/5 Q pump or a 4/5 Q pump, depending on the actual supply and demand.

In this time, the operating expenses shall be calculated for a pump at least half the amount and a spare equipment. For the pump system, a volute pump with a horizontal shaft with suction at both ends shall be used for having excellent suction performance and high efficiency, wide use range, and high performance in water and sewage and industrial water.

First Water Pump Station

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(Small) pump 25,000 m3/day (1,042 m3/h) x 30 m x 150 Kw 2 units (Medium) pump 50,000 m3/day (2,083 m3/h) x 30 m x 250 Kw 3 units

For the second water pump station, necessary water supply quantity is about 2/5 Q. The plan is that a (small) pump is installed so as to correspond to the initial fine supply and demand capacity, and a (medium) pump is to be added when expanding the facility.

Second Water Pump Station (Small) pump 25,000 m3/day (1042 m3/h) x 50 m x 250 Kw 2 units (Medium) pump 50 K m3/day (2083 m3/h) x 50 m x 355 Kw 1 unit

Pump capacity (small) Pump capacity (medium) Pump capacity (large) Phase 1 1/5 Q x 2 units Phase 2 2/5 Q x 1 unit Phase 3 Total 1/5 Q x 2 units 2/5 Q x 1 unit

Figure 3-2-9 Water Supply Pump (Image of Installation)

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Figure 3-2-10 Pump Performance Curve

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(2) Raw water quality The water source is the river surface water in the mountainous area, except when toxic metals such as arsenic, mercury, cadmium, etc. are detected due to the influence from the candidate site 2 to the upstream side. Therefore, since pollution by living drainage and industrial drainage like rivers in urban areas is not assumed, and suspended substances and colloidal substances derived from soil are mainly to be removed, the rapid filtration system (flocculation sedimentation + rapid sand filter) and membrane filtration system based on the turbidity are usually used to treat sufficiently.

In this study, as long-term existing data was not found on the local site, sampling was carried out on the three candidate sites and one existing well during field investigation for water quality analysis. Although the final analysis results are not yet available and only some data became available, the results obtained so far are shown below.

Table 3-2-5 Water Quality Analysis Results (Sampled on January 17, 2019) Candidate Site 1 Candidate Site Candidate Site Existing well (No.1) (No.2) (No.3) (No.4) pH 8.25 7.89 8.41 7.78 Chromaticity (CU) 5 5 5 5 Odor Earthy odor No problem. Earthy odor No problem. BOD (mg/l) Less than 1 1 1 5 COD (mg/l) 5 3 7 8 Alkalinity 119 102 113 383 (as CaCO3) Conductivity 130 175 230 2.6 (μS/cm) Turbidity (NTU) 7.12 1.94 4.38 0.78 Acidity 4.77 5.37 3.88 14.9 (as CaCO3)

The pH of each candidate site is slightly high but is within the range of 6.5 to 8.5 (reference value). As for odor, soil odor was detected in candidate sites 1 and 3, but the extent of it is assumed to be removable by ordinary water purification treatment. The degree of alkalinity is slightly high (about 100 mg/l), but there is no particular problem although consumption of flocculants may slightly increase. Conductivity is the candidate site 3 was slightly high (230 μS/cm), but that of candidate sites 1 and 2 was within the range of common water supply (100 to 200 μS/cm). Turbidity was less than 10 NTU and acidity was low.

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Although it is a one-time sampling analysis result, the three candidate sites are general river surface water as confirmed by visual observation, and the turbidity in the usual time is estimated to be less than 100 NTU.

Although it is necessary to confirm the long-term variation in water quality in the future, it is a monsoon zone of tropical rainforest climates and turbidity of a relatively clear river water usually shifts to about 10-20 NTU, and sometimes exceeds 1000 NTU instantaneously during heavy rainfall. In the case of extremely high turbidity, it is necessary to consider taking measures such as stopping water intake, but in the Philippines, operation is usually carried out without stopping water intake as much as possible. Therefore, a facility design which can cope with high turbidity is necessary.

As a reference, the results of turbidity in the water quality items of raw water flowing into water purification plants of neighboring cities of Mindanao Island are shown below in order to show long-term trends concerning river surface water in general mountainous areas.

Table 3-2-6 Actual turbidity of raw water Month Average Raw Water Turbidity April 7.87 NTU May 10.86 NTU

June 14.44 NTU

July 16.18 NTU

August 13.44 NTU

September 11.13 NTU

October 28.38 NTU Average 14.6 NTU

Highest Turbidity : 1833 NTU (October 15, 2017) Lowest Turbidity : 1.76 NTU (October 14, 2017) (Data from April to October, 2017)

The pH value of raw water is about 7.5 to 8.0. For other water quality items, there is no particular problem.

(3) Quality of purified water The target quality of purified water is based on the Philippine National Standards for Drinking Water. Turbidity shall be 5 NTU or less considering the treatment of high turbidity raw water in heavy rain. However, for the raw water quality in the usual time, facilities capable of handling 2 NTU or less which is

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the water quality standard of Japan shall be examined.

(4) Planned water purification plant site

As the extension pipe for water intake may be shortened, a planned water purification plant site shall be secured near a candidate water intake site. The plan shall have the following efficiently positioned for securing sites for the future: 50,000 m3/day during Phase 1 (25,000 m3/day x 2 systems), depending on the future plan, 50,000 m3/day during Phase 2 (25,000 m3/day x 2 systems), and 25,000 m3/day x 1 system during Phase 3

(5) Water treatment In the water purification treatment for river surface water such as this water source, a rapid filtration system called a conventional method or a membrane filtration system is selected. In the selection, the following are considered: the treatment ability (including for the water quality of corresponding raw water and management target), reliability and simplicity of maintenance, and economical efficiency (including construction cost, operational cost, and maintenance cost). In this F/S, two cases of rapid filtration system (flocculation sedimentation + rapid sand filter) and membrane filtration system are examined. The conditions to be considered for the examination of each system are shown below.

1) Option 1: Rapid Sand Filtration The system selection emphasizes on the maintainability. - To reduce power cost by performing processing by gravity system without the use of power as much as possible. - To reduce the maintenance of equipment by simplifying a constitution using a stirring machine, a pump, etc.

2) Option 2: Membrane Filtration A stable treatment system capable of compact installation and not affected by raw water quality. - To reduce construction cost by compact installation by effectively utilizing a concrete skeleton of an existing primary treatment facility. - The membrane module is made from Japan and is a product that has proven results in the water purification plant in Japan.

(6) Clean water reservoir In the guideline for design of water facilities in Japan, the residence time of clean water reservoir is regulated to be over 1 hour.

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Currently, there is no existing facility, and a new clean water reservoir shall be constructed to send water. It is necessary to consider whether or not to work all at once or step-by-step manner, but overall, a capacity required is 125,000 m3/d÷24h/d=5,208 m3. In addition, in the case of gradual improvement, it is better to use more than one clean water reservoir, and the manner in which reservoir is added may be 1+1, 1+1+2, 1+1+2+1.

(7) Chemical feeding A chemical feeder requires installation of flocculant feeder and an alkali agent feeder for adjusting the raw water pH. (1) Flocculant feeder Generally, PAC (poly aluminum chloride) is used for flocculants and is poured at a feeding rate of less than 10 mg/L as shown in Table 2. A cationic PolyDADMAC or polyacrylamide is used as a part of the polymer. In this plan, the amount of PAC fed shall be 10-100 mg/L for the rapid filtration system and 5-50 mg/L for the membrane filtration system, considering the effects of high turbidity. Regarding polymer, 0.1 to 0.5 mg/L shall be used, which is a general feeding quantity in a rapid filtration system.

(2) Alkaline agent feeder A sodium caustic soda (NaOH) feeder is not required, as the raw water pH value is slightly high (7.5 to 8.0) and the pH adjustment by the alkali is not necessary.

(3) Disinfectant feeder In water treatment facilities, a disinfection facility is usually installed in terms of safety of water quality. In the Philippines, a disinfection facility is sometimes found on the downstream side of the water distribution network. As a result of the field investigation, the case of feeding liquid chlorine was confirmed, but a disinfection facility should be reexamined after detailed examination of the pipe network plan.

(8) Waste water treatment In the Philippines, there are many cases in which waste water treatment is not carried out for sedimentation basin sludge produced during water treatment process and drainage for rapid filtration basin, which are directly released into a river. Based on discussions with the local side, the waste disposal facilities shall not be installed in the same manner even during the extension.

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(9) Electrical instrumentation facility In this plan, secondary electrical instrumentation facilities of the newly constructed water treatment facility of 50,000 m3/day are examined. Facilities pertaining to extension and reconstruction of receiving and transforming facilities, private power generation facilities, and existing operation monitoring systems, etc. with the enhancement of water purifying capacity of the whole water purification plant shall be items carried out during the implementation design. As for instrumentation facilities, continuous monitoring of flow rate and water quality is effective for efficient management of water treatment system. The following items are examined as the minimum monitoring items in this plan.

Table 3-2-7 Items monitored by Instrumentation Item to be monitored Purpose Raw water Inflow Display, Integration Management, Flocculant Volume Control Turbidity Display, Alarm pH Display, Alarm Filtered water Filtration flow rate Display, Integrating, Constant Flow Control, Alarm (for membrane filtration system) Turbidity Display, Alarm

pH Display, Alarm

3) Conceptual design

2.1 Design Conditions The design conditions of water treatment facility are as follows: Planned water quantity : 50,000 m3/day (Phase 1) Planned water quality : (Raw water) 20 NTU average (500 NTU max) (Treated water) 5 NTU Treatment method: Rapid filtration method (option 1) or membrane filtration method (option 2)

2.2 Capacity of water treatment facility 2.2.1 Rapid Filtering Method (option 1) (1) Planned water quantity Planned water supply : 50,000 m3/day

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Planned water purifier : 52,500 m3/day (2,500 m3/day for rapid sand filter) Planned water intake : 52,500 m3/day

(2) Treatment Flow This treatment facility shall undergo a general water treatment process, consisting of the following facilities: flocculant feeding, coagulation, flocculation basin, sedimentation and rapid filtration.

Figure 3-2-11 Rapid Filtering Treatment Flow

(3) Coagulation facility In the flocculation treatment, the flocculant (PAC or polymer) is fed, and the fine suspended substance in the raw water and colloidal particles are coagulated in the shape of the flock by rapidly stirring. The method for rapidly stirring includes an in-line stirring system utilizing energy of water flow, a jump stirring method using energy of the difference, and a machine stirring system using an agitator. In this plan, the mechanical stirring system is not selected from the viewpoint of power cost reduction, and in-line stirring system using water flow is selected. In the structure of in-line stirring, a mixer (Channel Mixer) is immersed in an open channel and turbulent flow is generated in the mixer to perform rapid mixing with the flocculant.

Channel Mixer

Figure 3-2-12 In-line stirring system (4) Flocculation basin In the flocculation treatment, fine flocculation formed by the coagulation treatment are gently stirred to grow in large flocculation, so that it easily sediment.

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In the main agitation method, there are agitation system using the energy of water flow and machine agitation system using the stirrer. In this plan, the mechanical stirring system is not selected from the viewpoint of power cost reduction, as well as the flocculation treatment, and the stirring system using water flow is selected. In the structure of agitation by water flow, there are horizontal baffled channel type and vertical baffled channel type. Although the existing 30,000 m3/day facility uses the horizontal baffled channel type, the horizontal baffled channel type is generally lower in agitation strength than vertical baffled channel type and requires a large installation area. Therefore, the vertical baffled channel type is selected in this plan.

< Design Elements > ・Residence time: 20 minutes (20 to 40 minutes in the Japan Water Facility Design Guidelines) ・Agitation: Vertical baffled channel type ・Number of basins: 2 < Reasons for Selection > ・Reduction of power cost by adopting agitating method using water flow without power ・Vertical baffled channel type has a higher stirring strength

(5) Sedimentation Basin In the sedimentation treatment, the flocculation formed in the flocculation basin is separated and removed by the gravity sedimentation. Inclined settling devices such as inclined tubes and inclined plates are installed to enhance the efficiency of sedimentation separation. Thus, the sedimentation area increases, and the capacity of the sedimentation basin is reduced. There is no major difference between inclined tubes and inclined plates in removal performance. However, in the case of inclined plates, (1) many parts are required and the initial cost and running cost are high, and (2) there is a concern of falling of a sloping plate during cleaning or an earthquake due to flocculation sedimentation compared to the downward support type inclined tube, as its installation method is hanging and special care is required in maintenance. Therefore, in this plan, a slope type sedimentation basin is selected.

< Design Elements > ・Residence time: 48 minutes ・Sedimentation system: Inclined tube type ・Surface load factor: 8.0 mm/min (7-14 mm/min in the Japan Water Facility Design Guidelines) ・Mud removing method: Periodic sludge removal by manual valve operation

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・Number of basins: 2 < Reasons for Selection > ・An inclined sedimentation equipment should be installed to improve sedimentation efficiency. ・In consideration of maintenance and cost, inclined tube type is selected. (6) Rapid Sand Filter In rapid filtration, the micro-flocculation which was not removed in the sedimentation basin is supplemented with a sand layer surface. The filter material composition includes single layer filtration of sand alone and multilayer filtration with a combination of anthracite, sand, etc. Since the multilayer filtration has high filtration efficiency, high filtration rate and improved filtration duration in comparison with monolayer filtration, a double layer filtration of the anthracite and sand is adopted in this plan. Since the cleaning system is a double layer filtration, the reverse flow cleaning + air cleaning system by water purification is adopted considering the necessity of efficiently removing the turbid substance confined inside the layer. In the backflow cleaning by water treatment, there are a pump system for directly backwashing using mainly a cleaning pump, an elevated water tank system for storing water treated in an elevated water tank utilizing the height difference from the elevated water tank, and a self-reflux cleaning system for backwashing by using filtered water of other basins or partitions during filtration. This self-reflux cleaning system needs to increase the water depth of the filtration basin compared with other systems, but the equipment cost and power cost are reduced because the backwashing pump are unnecessary. Therefore, in this plan, a rapid sand filter of a self-reflux cleaning system is selected.

< Design Elements > ・Filter medium (double layer filtration): Anthracite layer thickness: 0.2 m, sand layer thickness: 0.5 m (Thickness of the entire layers is 0.6 to 0.8 min in the Japan Water Facility Design Guidelines) ・Filtration rate: 150 to 170 m/day ・Cleaning method: Self-reflux cleaning ・Cleaning system: Backflow cleaning + air cleaning by filtered water ・Backwash flow: 0.7 m/min (0.6 to 0.9 m/min in the Japan Water Facility Design Guidelines) ・Air flow rate : 0.8 m/minute ・Number of basins: 10 < Reason > ・This paper selects a self-reflux cleaning type filter basin which eliminates the need for backwashing pumps and reduces power cost.

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2.2.2 Membrane Filtration Method (option 2) (1) Planned water quantity Planned water supply : 50,000 m3/day Planned water purifier : 52,500 m3/day (2,500 m3/day of membrane module cleaning discharge) Planned water intake : 55,500 m3/day (expected to be 5,500 m3/day from membrane dipping tank)

(2) Treatment Flow This treatment facility is a facility for obtaining purified water by direct membrane filtration of raw water, comprising a membrane filtration system, a filtration pump, a cleaning pump, and a blower.

Figure 3-2-13 Membrane filtration method treatment flow

(3) Selection of membrane filtration method The membrane filtration methods include a pressurized membrane filtration system which uses a membrane module stored in a casing, and an immersion type membrane filtration system which performs suction filtration by immersing a membrane module in a water tank without storing in a casing.

A basic flow of the pressurized membrane filtration system and the immersion type membrane filtration system are shown in FIG. 3-2-14.

Figure 3-2-14 Basic flow of pressurized membrane filtration system

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Figure 3-2-15 Basic flow of immersion type membrane filtration system

In general, pressurized membrane filtration is better than

The features of the immersion type membrane filtration system are shown below: (1) Stable treatment even with highly turbid raw water Since the immersion type membrane module is not stored in the casing and directly installed in the water tank, the turbidity is easily discharged in cleaning, and provides a high cleaning effect. Stable filtration treatment is possible even in highly turbid raw water. (2) High accumulation of membrane modules is possible Since there is no casing, a high accumulation arrangement with narrow space between membrane modules as well as compact installation is possible. (3) Reduction of power costs Since filtration is possible with low operating pressure, energy saving can be attained.

In this plan, the immersion type membrane filtration system is selected and sample designed in consideration of the facts that the water source is river surface water and stable operation is possible even for highly turbid raw water during rainfall and the power cost is reduced.

(4) Membrane filtration system Membrane filtration is made by passing water through a membrane as a filter material and using pores on the membrane surface to supplement and separate particles based on the sieving principle. There are various membrane modules depending on the pore size and the membrane material manufacturers choose and practical applications have been made. In this plan, a product which has proven results in the water purification plant in Japan is selected.

< Membrane module specifications > ・Model: Immersion type precision filtration membrane ・Membrane material: PVDF (Poly Vinylidene Di Fluoride); material excellent in physical and chemical strength ・Pore size: 0.05 µ m ・Membrane area: 2,400 m2/base

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・Quantity: 30 bases

< Operating Conditions > ・Filtration flux: 0.8 to 1.0 m3/m2/day ・Pretreatment: A flocculant (PAC) is not needed or a small amount only ・Physical cleaning: Backflow cleaning + air blow with treated water ・Chemical cleaning: Once a year with sulfuric acid and sodium hypochlorite solution

(5) Ancillary equipment Main ancillary equipment constituting the membrane filtration system is shown below: (1) Filtration facility ・Membrane immersion tank For the existing sedimentation tank, the baffled channel wall is remodeled and divided into 6 basins and reused as an immersion tank. When the effective depth is insufficient, the sidewall is raised to ensure the necessary water depth. ・Filtration pump Suction filtration is carried out, and the treated water is supplied to the existing water treatment basin. Filtration flow rate is controlled and energy is saved by adopting VFD control.

(2) Physical cleaning facility Physical cleaning is carried out once every 30 minutes. ・Backwash pump Backwash is performed by installing it in the existing water treatment basin and supplying cleaning water to a membrane filtration equipment. ・Air blower Air is supplied from the lower part of the membrane module and vibrating the membrane module with bubbles. Dirt adhering to the membrane surface is thus removed.

(3) Chemical cleaning equipment Chemical cleaning is periodically performed using acid or alkali, since membrane modules are gradually blocked by the accumulation of dirt which cannot be removed by daily physical cleaning. This plan assumes cleaning using sulfuric acid and sodium hypochlorite solution once a year. ・Chemical cleaning tank Dirt on the membrane surface is removed by installing a concrete-made acid immersion tank, an alkali immersion tank and a rinse water tank. The membrane module is transferred from the immersion tank and immersed in these chemical solutions. Standard concentrations of these chemicals are 0.5% (5,000 mg/L) for sulfuric acid solution and 0.3% (3,000 mg/L) for sodium hypochlorite solution. Waste liquid after chemical cleaning shall be neutralized and released into the river once pH is around 7 and residual chlorine is 0 .

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・Hoist crane It is used when transferring the membrane module from the immersion tank to the chemical cleaning tank when chemical cleaning is performed. The membrane module is used in the replacement work of the membrane module, since periodical replacement is required due to aging deterioration.

2.3 Assessment and Selection of Treatment Methods 2.3.1 Comparison between rapid filtration system and membrane filtration method Figure 14 shows the overall layout of a rapid filtration system sized 50,000 m3/day and the membrane filtration system.

100 m

30 m

Figure 3-2-16 Overall layout (rapid filtration system)

60 m

25 m

Figure 3-2-17 Overall installation plan (membrane filtration system)

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As for the quality of treated water, rapid filtration is less than 2 NTU and membrane filtration method is 0.1 NTU, but there is no problem in particular with either method, as the water quality standard is 5 NTU or less in the present Philippines. As for the installation area, rapid filtration requires about 3,000 m2 and the membrane filtration system requires about 1,500 m2 which is nearly half, making the membrane filtration facility construction less costly. On the other hand, since the membrane filtration is not only expensive but also requires a pump for filtration, the equipment cost becomes higher than that of the rapid filtration, so that the total construction cost can be suppressed by rapid filtration. The comparison of construction costs is shown below:

Table 3-2-8 Comparison of Construction Costs Rapid filtration (1,000 Membrane filtration equipment (50,000 (1,000 Item facility (50,000 m3/day) yen) m3/day) yen) 1. Mai equipment Water receiving well (72 m3) Channel mixer Flocculation Immersion type Flocculation tank (729 Membrane filtration sedimentation 90,000 PVDF, 0.05 μm, 510,000 m3) Sedimentation tank unit facility 2400 m2/unit×30 (1663 m3) Inclined tube

Filter pump, Gravity type filtration Pump, backwashing Rapid sand filter area 35 m2×10 bath 240,000 supplementary pump, blower, 120,000 Self-cleaning system devices valves Air blower PAC feeder Aluminum feeder Chemical feeder 30,000 Chemical feeders PAC feeder 12,000 Polymer feeder

(Examined Disinfection facility Disinfection facility (Examined separately) separately) 2. Equipment 30% of 108,000 192,600 installation work 30% of equipment costs equipment costs

3. Piping work 60,000 180,000 (within facility) Power receiving 63 kw Power receiving 316 kw facility facility 4. Electrical works 80,000 350,000 Control board Control board SCADA SCADA (Machine Work Meter) 608,000 1,364,600 5. Construction works Housing site 100 m×30m 150,000 60 m×25m 75,000 Civil engineering 703,800 tank 85 m×23m×4m 56 m×8.4m×4m 169,344 Machine foundation 5 m×10m 10,000 20 m*10m 40,000 Control tower 20,000 20,000 (Civil engineering work 883,800 total) 304,344 Total construction 1,491,800 1,668,944 cost

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The membrane filtration system enables high quality treated water, and as a very compact facility, further expansion of facilities in future is advantageous. However, maintenance costs such as construction cost and operational cost for plant machinery and electric facility as well as maintenance cost will be very expensive. In the future, the popularization and improvement of membrane filtration technology are promoted, and when the life-lengthening and the lowering of the replacement cost of the membrane are advanced, it may be reexamined including the reduction of the expansion area and the reconsideration to the multi-purpose. At present, the land required is sufficiently ensured, so this time, the rapid filtration system is chosen.

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(3) Examination of pipeline equipment

1) Pipeline facility 1.1 Pipeline plan overview The pipeline facility involves taking water from the two target rivers (B River and A River) and sending treated water to the water supply area. As a principle, pipeline facilities are buried in the ground and incremental expansion is not desirable. In addition, the ratio of pipeline facilities to the total assets that are maintained in water works is high, and that the effect on the overall planning is large. Based on the characteristics of such facilities, introduction of excellent technology and products emphasizing the initial cost and LCC including future prediction is favorable.

1.2 Conditions for Pipeline Planning (1) Selection of equipment to be used The pipelines are basically buried in the ground as described above. Therefore, after laying it once, it is difficult to replace it except for special cases such as an occurrence of a major accident. Renewal of facilities is usually assessed after reaching the service life. Considering the peculiarity of this pipeline, it is the most economical from the LCC aspect too to select products that are strong against disasters and are safe a long period of time. In a long history of Japan's water works, the use of lifeline consisting of materials that are strong against disasters are actively promoted. Earthquakes and heavy rains that caused water outage and other damages in recent Japan are shown in the following table:

Table -3-3-1 Damages in Water Works Caused by Natural Disasters in Recent Japan Occurrence of damage Damaged Areas, etc. Remarks March 11, 2011 Eastern Japan Earthquake (Great East Japan Earthquake) July - September 2014 Kochi, Nagano, Hiroshima, Rainy season, typhoon, and Hokkaido, other landslide September 2015 Ibaraki, Tochigi, Fukushima, Miyagi Heavy rain April 14 and 16, 2016 Kumamoto Earthquake (Kumamoto Earthquake) August 2016 Hokkaido, Iwate, other Typhoon (Typhoon No. 10) October 21, 2016 Tottori Earthquake (Tottori Chubu Earthquake) July 2017 Fukuoka, Oita Heavy rain June 18, 2018 Osaka Earthquake (Northern Osaka Earthquake) July 2018 Hiroshima, Okayama, Ehime, other Heavy rain September 6, 2018 Hokkaido Earthquake (Iburi Eastern Earthquake)

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Due to having these disaster experiences, strengthening of disaster preparedness is being prioritized. In December 2018, a cabinet decision was made to determine “the three-year emergency measures for disaster prevention and disaster reduction,” and in the 2019 budget bill, measures were taken to promote earthquake-resistant pipelines. The Philippines also suffer often from natural disasters like Japan. The Philippines were severely damaged by heavy rains associated with typhoons (larger typhoons due to global warming are another concern) and earthquake disasters (Mindanao Earthquake in August 1976 and earthquakes off of the Negros Island in February 2012). Field exploration of the planned area revealed that the projected pipeline route is in the vicinity of the river and the coastal road. That means that natural disasters similar to those occurring in recent Japan (mentioned above) may very well occur, and pipeline facilities may be damaged. Therefore, it is indispensable to prepare for a landslide, etc. associated with earthquakes and heavy rains in the plan, and it is desirable to use earthquake-resistant joint pipes which are unique technologies of Japan. As a result, long-term stable water supply management can be expected in the future.

(2) Plan for pipeline installation The pipeline can be installed all at once or in several stages. Installation in several stages would require pipeline corresponding to the stage of water treatment facility expansion. However, it is not realistic to purchase privately-owned lands, and it is to be buried under public roads, restricting the width of roads occupied by the pipelines. For these reasons, pipelines that can be laid by step-wise installation would be limited to two lines. Therefore, the two plans to be examined are as follows:

Plan A: Installation of a pipeline with a water supply capacity of 125,000 m3/day Plan B: Installation of 2 pipelines that can supply 1/2 of the planned water supply (62,500 m3/day)

The two plans are compared and examined to select the optimum.

Table -3-3-2 Comparison of pipeline installation plans Plan A Plan B Width occupied Although the diameter to be laid is large, the Although the diameter to be laid is small, the width to be occupied is small because only 1 occupation width is large for having 2 pipeline. pipelines. Assessment result ○ In a case of changing the Since the pipe of aperture decided by the In the case of a changing the plan, a flexible plan planned flow rate is laid, change of plan response is possible by changing the aperture of would be difficult. the second pipeline. Assessment result ○ Impact of construction on Since it is completed in a single installation Impact on its surroundings is large for installing nearby environment work, impact is minimum. two times. Assessment result ○ Economical efficiency The initial cost is lower than that for 2 The initial cost is higher than that of 1 pipeline.

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pipelines. Assessment result ○

Comprehensive ○ assessment result In the plan, Plan A shall be used for having a small occupied width and excellent initial cost.

(3) Extension of line and difference in height As a result of the field survey, the extension of water intake sites (water treatment plant) and each water supply point to each water supply point is as shown in the following figure.

・When water is taken from the B River C B

A B

Figure -3-3-1 Pipeline Profile for B River Intake

・When water is taken from the A River C B

A B

Figure -3-3-2 Pipeline profile for A River Intake

・When water is taken from the confluence part

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A B

Figure -3-3-3 Pipeline Profile for Water Intake in Confluence Part

As a result of the field survey, it was found that the final supply area, C City (C), was the highest in both cases. This result indicates that water supply in natural flow due to only position energy is impossible. Therefore, it is necessary to consider installation of pump facilities in this plan.

(4) Planned water supply In this plan, the facility plans to supply 125,000 m3/day water supply, considering the future demand for water.

B A C

The amount of water divided in each city scheduled for water supply was allocated as the following figure, as the result of allocating the planned water supply based on population ratio.

Figure -3-3-4 Allocation of planned water supply

1.3 Conceptual Design (1) Determination of the aperture Based on the conditions set forth in the preceding paragraph, the aperture of the pipeline used in this plan shall be calculated by the formula.

D= (4 Q/π/v)

D: Aperture (m) Q: Flow Rate (m3/s) v: Flow rate (= 1.5 m/s)

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Table -3-3-3 Calculated diameter of the aperture Computational Aperture to be calculation section Flow volume Flow rate aperture used Intake point - 1.45 m3/s 1.109 m 1200 mm A (125,000 m3/day) A - 0.84 m3/s 1.5 m/s 0.844 m 900 mm B (72,700 m3/day) B~ 0.52 m3/s 0.664 m 700 mm C (44,800 m3/day)

(2) Strength calculation of tubes Japan Water Supply Association Standard (JWWA G 113.114 This method is based on the ductile cast iron pipe thickness calculation formula, and is calculated using the following calculation formula. This equation considers hydrostatic pressure, water hammer pressure, earth pressure and road surface load simultaneously, and estimates safety factor of 2.5 for hydrostatic pressure, water hammer pressure, earth pressure, and road surface load. In addition, the calculation tube thickness is estimated to be 2 mm and casting tolerance 10% (at least 1 mm). 1.25 Ps+Pd+ (1.25 ・ Ps+Pd) 2+8.4 (Kf ･ Wf+Kt ･ Wt) ・ S t= x D 2 S

T= (t + 2) x 1.1 ( t + 2 ≧ 10 mm ) T= (t + 2) + 1 ( t + 2 < 10 mm )

t: Net pipe thickness (mm) T: design pipe thickness (mm) provided, however, that the net tube thickness added the corrosion allowance and the casting tolerance, Ps: static water pressure (MPa) Pd: Water impact pressure (MPa) Kf: Coefficient determined by loading load distribution Wf: Earth pressure due to cover (kN/m2) Kt: Coefficient determined by load distribution due to road surface load Wt: Earth pressure due to road surface load (kN/m2) S: Tensile strength of ductile iron tubes (420 N/mm2) D: Nominal diameter of the pipe (cm)

The results show that the design water pressure is 0.4 MPa (Ps=0.2MPa,Pd=0.2MPa) and the cover is 1.2 m. Table -3-3-4 Pipe Strength Calculation Results aperture designed water pressure design tube thickness T adoption tube species 1200 mm 10.55 mm three kinds of tubes (T=15.0) 900 mm 0.4 MPa 8.74 mm S (T=13.0) tube 700 mm 7.50 mm S (T=11.0) tube

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(3) Overall image of pipeline facilities

A B C

Figure -3-3-5 Total Diagram of a Pipeline

Table -3-3-5 Summary for Each Plan Pipeline Pipeline Pipeline Name of Plan extension Diversion extension Diversion extension Diversion water intake name L1 name L2 name L3 name point (φ1200) (φ900) (φ700) Plan 1 B 5.07 km A 4.3 km B 8.0 km C

Plan 2 A 7.55 km A 4.3 km B 8.0 km C

Plan 3 Confluence 4.7 km A 4.3 km B 8.0 km C part

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Chapter 4: Study of Environmental and Social Aspects (1) Current State Analysis of Environmental and Social Aspects 1) Current State Analysis a) Summary of the Project Region The infrastructure and systems being considered for introduction in this project are scheduled for construction on the A River in A City, and its tributary, the B River watershed. The water intake facilities and water purification plant (“water purification plant, etc.”) are to be built at one site from candidate area (1), on the A River, candidate area (2), on the B River, or candidate area (3), at the confluence of the two. A water pipe is to be laid as far as the existing pipeline within A City, to supply the purified water. Other than forests, A City includes farm land for the main crops of maize and coconut, residential land, and industrial land. Other than riparian forest, each of the candidate areas has farm land and residential land in its surrounding area, but has no virgin forest etc.

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b) State of the Natural Environment, etc. According to the DENR (Department of Environment and Natural Resources) website for Region 10, there are no protected areas, key biodiversity areas, or critical habitats within A City. Photo 4-3 - Photo 4-8 show conditions in the candidate areas for the water purification plant, etc. Table 4-1 Natural Environments in the Candidate Areas Candidate Surrounding environment area Candidate The planned construction site for the water purification plant, etc. is already developed, and area (1) has construction materials plant facilities for concrete etc. on the site. There is stone quarrying etc. upstream of the water intake candidate position. There is riparian forest along the opposite bank of the A River. Candidate The planned construction site for the water purification plant, etc. is situated in riparian area (2) forest between the barangay and the B River. Local people appear to be using nearby areas for laundry, raising pigs and other livestock, and other purposes. Candidate The planned construction site for the water purification plant, etc. is situated at the area (3) confluence between the A River and the B River, and is dominated by herbaceous vegetation. Photo 4-1 Neurothemis ramburii dragonfly, confirmed near candidate area (2)

Source: Photographed by the survey team c) Social Environment Situation There are scattered homes and farms around the candidate areas. Acquisition of the land is complete at candidate area (1), but not at areas (2) and (3). At candidate area (2), people living nearby use the water for purposes of daily life, such as laundry. Photo 4-2 Residents using the B River near candidate area (2)

Source: Photographed by the survey team

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Photo 4-3 Candidate area (1)

Photo 4-4 The A River adjacent to candidate area (1)

Upstream

Photo 4-5 Candidate area (2)

Photo 4-6 The B River adjacent to candidate area (2)

Upstream

Photo 4-7 Candidate area (3)

B River Upstream

Photo 4-8 The confluence of the A River and the B River adjacent to candidate area (3)

A River Upstream B River Upstream

Source: Photographed by the survey team

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(2) Impact of Project Implementation on Social and Environmental Aspects 1) Impacted environmental items This survey was implemented at an extremely early stage of project implementation. The main purpose of “Environmental and Social Consideration” in the project formation survey is to clearly identify, in a broad sense, matters which should be investigated in the next stage, from the environmental and social perspectives, in order to move the project forward. A field survey, interviews with various agencies, and document acquisition, were performed about this survey project. The field survey was followed by consideration of the content, scale, and other aspects of the project, and identification of environmental and social impacts. As this project consists of the introducing water intake facilities and water purification plant, and laying water pipe, the JICA environmental checklist was followed to study the main impacts on the natural and social environment associated with water mains (Table 4-2). The results are as shown below.

Table 4-2 JICA Environmental Checklist (14. Water Mains) Classification Specific environmental and social Environmental Yes:Y consideration Main matters to check item No:N (Reasons for Yes/No, basis, mitigation, etc.) (a) Has the Environment Impact Assessment (a)N (a),(b),(c),(d) (EIA) Report etc. been prepared? (b)N The EIA for the project has not been (b) Has the EIA Report etc. been approved by (c)N implemented. the government of the country concerned? (d)N Based on the scale of the project, if an (1) EIA and (c) Are there any incidental conditions for EIA becomes necessary, it will be 1 Approval and authori and 1 Approval environmental approval of the EIA Report etc.? If there are performed at the project approval and any incidental conditions, have those implementation stage. authorization conditions been satisfied? (d) Other than the above, has any necessary environment-related approval and authorization been obtained from local competent authorities?

zation, explanation (a) Have local stakeholders been given (a)N (a),(b) appropriate explanations, including (b)N The EIA for the project has not been (2) Explanation information disclosure, about the content and implemented, and there has been no to local impacts of the project, and do they understand explanation to local stakeholders. stakeholders it? (b) Have comments from residents etc. been reflected in project content? (a) Have multiple alternative proposals been (a)Y (a) (3) considered for the project plan (including The three candidate areas for the water Examination of environmental and social items in the intake location were studied concerning alternative deliberations)? their feasibility, economy, and proposals environmental and social aspects. 2 Anti-pollution measures 2 Anti-pollution (a) Is there any atmospheric chlorine pollution (a)N (a),(b) from storage equipment for disinfectant (b)Y Managed venting and other measures chlorine, or from injection equipment? will be implemented to strictly comply (b) Is chlorine in the working environment in with occupational safety standards etc. (1) Air quality compliance with occupational safety while preventing the atmospheric standards etc. for the country concerned? release of harmful gases. Specific mitigation measures, such as monitoring, will be considered at the EIA implementation stage.

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Classification Specific environmental and social Environmental Yes:Y consideration Main matters to check item No:N (Reasons for Yes/No, basis, mitigation, etc.) (a) Are parameters such as SS, BOD, COD, (a)Y (a) and pH in waste water generated by facility At the facility design stage, facilities operation in compliance with the General will be designed that satisfy General (2) Water Effluent Regulations of the country Effluent Regulations in the country quality concerned? concerned. Specific mitigation measures, such as monitoring, will be considered at the EIA implementation stage. (a) Are waste materials such as sludge (a)Y (a) generated by facility operation treated and Waste materials generated by the disposed of appropriately, according to project facility operation will be treated regulations in the country concerned? and disposed of appropriately, (3) Waste according to regulations in the country materials concerned. Specific mitigation measures, such as monitoring, will be considered at the EIA implementation stage. (a) Are noise and vibration from pumping (a)Y (a) facilities etc. in compliance with standards At the facility design stage, design etc. for the country concerned? facilities that satisfy noise and (4) Noise and vibration standards in the country vibration concerned. Specific mitigation measures, such as monitoring, will be considered at the EIA implementation stage. (a) If large volumes of groundwater are (a)? (a) pumped up, is there any risk of ground If large volumes of groundwater are to (5) Ground subsidence? be pumped up by this project, detailed subsidence preliminary surveys of the ground and the abundance of groundwater will be performed. (a) Is the site within a protected area (a)N (a) (1) Protected stipulated in the law of the country concerned, The areas concerned are not specified areas or in international treaties etc.? Does the as protected areas. project impact any protected area? (a) Does the site include virgin forest, tropical (a)N (a),(b),(c),(d) natural forest, ecologically important habitat (b)N The site does not include virgin forest, (coral reefs, mangrove swamps, tidelands)? (c)Y tropical natural forest, or ecologically (b) Does the site include habitat of any rare (D)? important habitat. It also does not species deemed to require protection under include habitat of any rare species

3 Natural Environment the law of the country concerned, or under deemed to require protection under law international treaties etc.? or international treaties etc. (c) If there is concern over major impact on If, at the project implementation stage, (2) Ecosystems ecosystems, have measures been taken to there is concern over major impact on and biotas reduce the impact on ecosystems? ecosystems, measures will be (d) Does the intake of water (surface water, considered to reduce the impact on groundwater) by the project impact rivers or ecosystems. other aquatic environments? Have measures The EIA will examine whether the been taken to reduce the impact on aquatic intake of water (surface water, organisms etc.? groundwater) by the project has any impact on rivers or other aquatic environments. (a) Does the intake of water (surface water, (a)? (a) groundwater) by the project adversely impact The question of whether the intake of (3) the flow of surface water or groundwater? water (surface water, groundwater) by Hydrometeor the project adversely impacts the flow of surface water or groundwater will be examined in the EIA.

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Classification Specific environmental and social Environmental Yes:Y consideration Main matters to check item No:N (Reasons for Yes/No, basis, mitigation, etc.) (a) Will the implementation of the project (a)? (a),(b),(c),(d),(e),(f),(g),(h), involve any involuntary resettlement? If so, (b)? (i),(j) will efforts be made to minimize the impact of (c)? At the stage of detailed deliberations on resettlement? (d)? the site locations of water intake (b) Will the resettled residents be provided (e)? facilities and water pipes, a plan will be with appropriate explanation, before their (f)? formulated to minimize the impact of resettlement, of compensation and measures (g)? resettlement, if any involuntary to rebuild their lives? (h)? resettlement will occur. Briefing (c) Will a survey be conducted for (i)? meetings etc. will be held to help resettlement, and a plan formulated that (j)? resettling people to move smoothly. includes compensation at replacement cost, and recovery of living infrastructure after relocation? (d) Will compensation be paid in advance of resettlement? (1) (e) Are compensation policies formulated in Resettlement writing? (f) Does the plan give appropriate consideration to socially vulnerable people, particularly women, children, the elderly, the poor, minority people, and indigenous people?

4 Social Environment Environment Social 4 (g) Will the consent of the resettled people be obtained before resettlement? (h) Will an organization be set up for appropriate implementation of resettlement? Have adequate implementation capacity and budgetary measures been prepared? (i) Is there a plan for monitoring the impact of resettlement? (j) Has a system been established for handling complaints? (a) Will the project have any adverse impact (a)? (a)(b) on the way of life of residents? Will (b)? At the project implementation stage, mitigation of impact, if necessary, be there will be a detailed survey of considered? established use of water and bodies of (2) Way of life (b) Will the intake of water (surface water, water in areas around the water intake and livelihood groundwater) by the project impact existing facilities. If the survey finds any usage of water and bodies of water? adverse impact on the way of life of residents, mitigation of such impact will be considered. (a) Does the project threaten damage to any (a)N (a) archaeologically, historically, culturally, or There are no archaeologically, (3) Cultural religiously valuable heritage or sites etc.? historically, culturally, or religiously heritage Also, have measures stipulated by the valuable heritage or sites etc. in the domestic laws of the country concerned been project area. considered? (a) If there is any scenery which merits (a)N (a) particular care, will there be any adverse There is no scenery in the area that (4) Scenery impact on it? If so, will necessary measures merits particular care. be taken?

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Classification Specific environmental and social Environmental Yes:Y consideration Main matters to check item No:N (Reasons for Yes/No, basis, mitigation, etc.) (a) Has care been taken to reduce impact on (a)Y (a)(b) the culture and way of life of minority people (b)Y (a) Reduction of impact on the culture and indigenous people in the country and way of life of minority people and (5) Minority concerned? indigenous people in the country people, (b) Will the rights of minority people and concerned will be considered at the indigenous indigenous people to land and resources be project implementation stage. people respected? The rights of minority people and indigenous people to land and resources will be respected in a planned manner. (a) Will the laws of the country concerned that (a)Y (a),(b),(c),(d) the project should comply with concerning (b)Y The working environment, prevention working environment be observed? (c)Y of occupational accidents, safety (b) Will measures be taken in the hardware (d)Y education, etc. will be considered at the aspects of the project to consider the safety of project implementation stage. people involved in the project, including the installation of safety equipment to prevent occupational accidents, and the management of harmful substances? (6) Working (c) Will planning and implementation address environment the software aspects for people involved in the project, including the formulation of a health and safety plan and the implementation of safety education for workers and others (including road safety and public health)? (d) Will appropriate measures be devised to ensure that security personnel associated with the project do not infringe the safety of people involved in the project and of local residents? (a) Will mitigation measures be prepared (a)Y (a)(b) against pollution (noise, vibration, turbid (b)N The impact of construction works on water, dust, exhaust gases, waste materials, (c)Y the living environment (noise, etc.) during construction works? (d)Y vibration, turbid water, dust, exhaust (b) Will construction works have any adverse gases, waste materials, etc.) and on the impact on the natural environment natural environment (ecosystems), will (ecosystems)? Also, will mitigation of such be considered at the EIA (1) Impact impact be prepared? implementation stage. If standards etc. during (c) Will construction works have any adverse in the country concerned will be construction impact on the social environment? Also, will exceeded, necessary mitigation will be considered. works mitigation of such impact be prepared? (c)(d) (d) Will the construction works cause traffic The impact of construction works on 5 Other points congestion, and will mitigation of such impact the social environment will be be prepared? considered at the EIA implementation stage. If construction works cause traffic congestion, necessary mitigation will be considered. (a) Will monitoring of project operators be (a)Y (a),(b),(c),(d) planned and implemented concerning those of (b)Y Monitoring items will be identified, the above environmental items which are (c)Y and detailed plans for organizations etc. expected to be impacted? (d)Y will be considered, at the EIA (b) How are the items, methods, frequencies, implementation stage. While there are etc. of the plans concerned stipulated? no legal regulations concerning the (2) Monitoring (c) Will the monitoring scheme (organization, reporting of monitoring results, project personnel, equipment and materials, budget, operators have a responsibility to make etc. and their continuity) for monitoring public announcements, and to report project operators be established? regularly to appropriate government (d) Have the method and frequency etc. of organizations. reporting by project operators to competent authorities been stipulated?

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Classification Specific environmental and social Environmental Yes:Y consideration Main matters to check item No:N (Reasons for Yes/No, basis, mitigation, etc.) Reference to (a) Where necessary, relevant check items (a)N (a)

6 Points to Consider other from checklists related to dams and rivers No new dam or river construction is environmental must be added and assessed. planned for the project at this time. checklists (a) Where necessary, also check impact on (a)N (a) Precautions for cross-border and global-scale environmental Not applicable. using issues (where there are elements which appear environmental related to cross-border disposal of waste checklists materials, acid rain, ozone layer depletion, climate change, etc.) Note 1) If there is any severe discrepancy between the “standards of the country concerned” in the table and internationally-recognized standards, measures will be considered, as required. On items for which no regulations have yet been established in the country concerned, deliberation will be based on comparison with appropriate standards in other countries (including experience in Japan). Note 2) Environmental checklists only present standard environmental check items, and it may be necessary to add or subtract items according to the characteristics of the project and the region.

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(3) Summary of legal regulations related to consideration of the environment and society in the counterpart country 1) Environmental Standards In the Philippines, Presidential Decree No.1151 (the Philippine Environmental Policy) and Presidential Decree No.1152 (the Philippines Environmental Standards) were promulgated in 1997 to address the whole range of environmental issues. Presidential Decree No.1151 stipulated national environmental policies and goals, rights to benefit from a sound environment, the implementation of environmental impact assessments, executing agency guidelines, etc. Presidential Decree No.1152, acting on the policy principles of Presidential Decree No.1151, stipulated regulatory systems for air quality, water quality, land use, natural resources, and waste materials.

Table 4-3 Laws Related to Environment Law in the Philippines, etc. Legal Year Law name Law No. regulation enacted name Environmental 1977 Philippine Environmental Policy Presidential Decree No.1151 Standards (Philippine Environmental Policy) (Presidential Decree No.1151) Philippine Environmental Code Presidential Decree No.1152 (Philippine Environmental Code) (Presidential Decree No.1152) Air quality 1999 Philippine Clean Air Act of 1999 Republic Act No.8749 (Philippine Clean Air Act of 1999) (Republic Act No.8749) 2000 Implementing Rules and Regulations for the DENR Administrative Order No.81 Philippine Clean Air Act of 1999 (DENR Administrative Order (Implementing Rules and Regulations For No.81) RA 8749) 1993 Air Quality Standard DENR Administrative Order No.14 (Air Quality Standard) (DENR Administrative Order No.14) Water quality 2004 Clean Water Act Republic Act No.9275 (Clean Water Act) (Republic Act No.9275) 2005 Clean Water Act Implementing Rules and DENR Administrative Order No.10 Regulations (DENR Administrative Order No.10) 1990 Water Usage and Classification/ Water DENR Administrative Order No.34 Quality Criteria (DENR Administrative Order (Water Usage and Classification/ Water No.34) Quality Criteria) 2016 Water Quality Guidelines DENR Administrative Order (Water Quality Guidelines) No.2016-08 (DENR Administrative Order No. 2016-08) General Effluent Regulations DENR Administrative Order (General Effluent Regulations) No.2016-08 (DENR Administrative Order No.2016-08) Noise 1980 Noise Control Regulations NPCC Memorandum Circular No.2 (Noise Control Regulations) (NPCC Memorandum Circular No.2 Series of 1980) Regulations 1975 The Philippine Sanitation Code Presidential Decree No.856 on waste (Sanitation Code) (Presidential Decree No.856) materials 1990 Toxic Substances and Hazardous and Republic Act No.6969 Nuclear Waste Control Act (Republic Act No.6969) (Toxic Substances and Hazardous and Nuclear Waste Control Act)

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Legal Year Law name Law No. regulation enacted name 2000 Ecological Solid Waste Management Act Republic Act No.9003 (Ecological Solid Waste Management Act) (Republic Act No.9003) Environmental 1977 Philippine Environmental Impact Statement Presidential Decree No.1586 impact System (PEISS) (Presidential Decree No.1586) Assessment (Philippine Environmental Impact Statement System (PEISS)) 2003 Implementing Rules and Regulations (IRR) DENR Administrative Order No.30 for the Philippine Environmental Impact (DENR Administrative Order Statement (EIS) System No.30) Implementing Rules and Regulations (IRR) for the Philippine Environmental Impact Statement (EIS)system) 2014 Revised Guidelines for Coverage Screening EMB Memorandum Circular and Standardized Requirements No.005 (Revised Guidelines for Coverage (EMB Memorandum Circular Screening and Standardized Requirements) No.005) Source: Prepared by the survey team

2) Philippine Environmental Impact Statement System (PEISS) The Department of Environment and Natural Resources (DENR), established in 1987, has the central role in environmental management in the Philippines. The Environmental Management Bureau (EMB), an organization within the DENR, prepares policy environmental management plans, prepares orders, procedural rules, and technical guidelines etc., and enforces environmental laws through regional offices located throughout the country. The Environmental Impact Statement System is handled by the environmental impact assessment section, and office within the EMB, and regional offices are the contact points for related operations. The Philippine Environmental Impact Statement System (PEISS) was enacted by Presidential Decree No.1586 in 1997 for environmental impact assessment, and its basic policies are specified. The Environmental Impact Assessment (EIA) system was officially established in 1978, and classification of subject projects as Environmentally Critical Project (ECP) and Environmentally Critical Area (ECA) etc. was stipulated in 1981. EIAs are to perform environmental impact assessment adapted to the type and scale of the target project and the situation at the implementation location. project operators are expected to submit EIA documents such as an Environmental Impact Statement (EIS) or Initial Environmental Examination (IEE). If the project complies with standards, the DNR issues an Environmental Compliance Certificate (ECC) permitting project implementation. This project is a water supply project which does not require a dam. It plans to take water from a river or groundwater and purify it to potable grade in water purification plant within the planned project site, and to lay water pipes to supply the water as far as existing water mains in A City. According to the Revised Guidelines for Coverage Screening and Standardized Requirements (EMB MC July 2014), this is a Category B project, so it is required to submit an EIS and have an ECC issued for its implementation. Table 4-4 Categories Within the Philippine Environmental Impact Statement System (water supply projects) ECC issue is not ECC issue is required required Project Category A: Category B: Non-ECP Category D ECP EIS EIS IEE Checklist PD Water supply project When water When there is (Excluding dams) source or water only a water Water replenishment None treatment distribution stations facilities are system included Source: Revised Guidelines for Coverage Screening and Standardized Requirements (EMB MC July 2014)

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3) Laws related to land acquisition The National Integrated Protected Areas System (NIPAS Act) was enacted in the Philippines in 1992, to protect local natural resources, biodiversity, and assets of historic or cultural value. This act designates NIPAS areas in which development actions are prohibited. Therefore, land acquisition, and the question of whether the planned project site is designated as a NIPAS area, are extremely important factors for smooth project implementation. Three candidate areas have been picked for the water intake facilities and water purification plant of this project. The results of the field survey indicate that none of the candidate areas include any protected areas, key biodiversity areas, or critical habitat. Also, no residential areas inhabited by indigenous people were found. At the project implementation stage, the existence of any NIPAS area designation will be checked when acquiring land, and areas inhabited by indigenous people will be investigated in detail. Table 4-5 Laws Related to Land and Indigenous People in the Philippines, etc. Legal Year Law name Law No. regulation enacted name Indigenous 1992 National Integrated Protected Areas Republic Act No.7586 people System Act (Republic Act No.7586) (National Integrated Protected Areas System Act) 1993 Rules and Regulations for the Administrative Order No.2 Identification, Delineation and Recognition (DENR Administrative Order No.2) of Ancestral Land and Domain Claims (Rules and Regulations for the Identification, Delineation and Recognition of Ancestral Land and Domain Claims) 1997 The Rules and Regulations Implementing Republic Act No.8371 Republic Act (Republic Act No.8371) (The Rules and Regulations Implementing Republic Act) Source: Prepared by the survey team 4) Water quality standards a) Environmental standard zoning categories related to water quality The environmental standard zoning of bodies of water in the Philippines, addressing rivers, lakes, and coastal area, is progressing, taking into account the purpose of use of water resources and the state of water quality contamination. Table 4-6 shows categories of environmental standard zoning for freshwater environments. According to the Environmental Management Bureau website, the environmental standard zoning category of the A River, which is scheduled for water intake and waste water discharge in this project, is designated Class A, as of 2018. On the other hand, the B River has no environmental standard zoning. Table 4-6 Environmental Standard Zoning Categories for Freshwater Environments Environmental Purpose of water use standard zoning category Class AA Mains water class 1: Mainly water resources which are compliant with the Philippine National Standards for Drinking Water (PNSDW) with only disinfection and sterilization by the specified methods, and which are in watersheds that are uninhabited or protected areas. Class A Mains water class 2: Water sources which require conventional treatment (coagulation, sedimentation, filtration, and sterilization) in order to comply with the Philippine National Standards for Drinking Water (PNSDW)

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Class B Recreational water class 1: Mainly used for bathing, swimming, and other recreational uses Class C 1) Marine production for the purpose of reproduction and growth of fish and other marine produce resources 2) Recreational water class 2 (boating, angling, etc.) 3) Agriculture, irrigation, livestock Class D Navigable bodies of water Source: DENR Administrative Order No.2016-18

b) Water Quality Guidelines (rivers) The Water Quality Guidelines stipulated on the basis of the Philippine Clean Water Act of 2004 are stated in Table 4-7 - Table 4-10. Table 4-7 Water Quality Guidelines: 1st Standards Item Unit Environmental standard zoning category AA A B C D BOD mg/L 1 3 5 7 15 Chloride mg/L 250 250 250 350 400 Color TCU 5 50 50 75 150 Dissolved Oxygen(a) (Minimum) mg/L 5 5 5 5 2 Fecal Coliform MPN/100mL <1.1 <1.1 100 200 400 Nitrate as NO3-N mg/L 7 7 7 7 15 pH(Range) 6.5-8.5 6.5-8.5 6.5-8.5 6.5-9.0 6.0-9.0 Phosphate mg/L <0.003 0.5 0.5 0.5 5 Temperature(b) °C 26-30 26-30 26-30 25-31 25-32 Total Suspended Solids mg/L 25 50 65 80 110 Reference) MPN/100mL: Most Probable Number per 100 milliliter n/a : Not Applicable TCU : True color Unit (a) : sample shall be taken from 9:00AM to 4:00PM (b) : The natural background temperature as determined by EMB shall prevail if the temperature is lower or higher than the WQG;provided that the maximum increase is only up to 10 percent and that it will not cause any risk to human health and the environment. Source: DENR Administrative Order No.2016-18 Table 4-8 Water Quality Guidelines: 2nd Standards (inorganic substances) Environmental standard zoning category Item Unit AA A B C D

Ammonia as NH3-N mg/L 0.05 0.05 0.05 0.05 0.75 Boron mg/L 0.5 0.5 0.5 0.75 3 Fluoride mg/L 1 1 1 1 2 Selenium mg/L 0.01 0.01 0.01 0.02 0.04 Sulfate mg/L 250 250 250 275 500 Source: DENR Administrative Order No.2016-18 Table 4-9 Water Quality Guidelines: 2nd Standards (metals) (c) Environmental standard zoning category Item Unit AA A B C D Arsenic mg/L 0.01 0.01 0.01 0.02 0.04 Barium mg/L 0.7 0.7 0.7 3 4 Cadmium mg/L 0.003 0.003 0.003 0.005 0.01 Chromium as Hexavalent Chromium(Cr6+) mg/L 0.01 0.01 0.01 0.01 0.02 Copper as Dissolved Copper mg/L 0.02 0.02 0.02 0.02 0.04 Iron mg/L 1 1 1 1.5 7.5 Lead mg/L 0.01 0.01 0.01 0.05 0.1 Manganese mg/L 0.2 0.2 0.2 0.2 2 Mercury mg/L 0.001 0.001 0.001 0.002 0.004

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Nickel mg/L 0.02 0.02 0.04 0.2 1 Zinc mg/L 2 2 2 2 4 Reference) (c): Unless otherwise specified, the above parameters are expressed as total metals. Source: DENR Administrative Order No.2016-18

Table 4-10 Water Quality Guidelines: 2nd Standards (organic substances) Item Unit Environmental standard zoning category AA A B C D Benzo(a)pyrene μg/L 0.7 0.7 0.7 1.5 3 BTEX Benzene mg/L 0.01 0.01 0.01 0.05 0.5 Toluene mg/L 0.7 0.7 1 4 5 Ethylbenzene mg/L 0.3 0.3 0.3 1.5 2 Xylenes mg/L 0.5 0.5 0.5 1.5 1.8 Cyanide as Free Cyanide mg/L 0.07 0.07 0.07 0.1 0.2 Organophosphate as Malathion μg/L 1 1 1 3 6 Oil and Grease mg/L <1 1 1 2 5 Polychlorinated Biphenyls(d) μg/L <0.1 <0.1 0.2 0.5 1 Phenol & Phenolic Substances(e) mg/L <0.001 <0.001 <0.001 0.05 0.5 Surfactants(MBAS) mg/L <0.025 0.2 0.3 1.5 3 Trichloroethylene mg/L 0.07 0.07 0.07 0.9 2 Total Organochlorine Pesticides(f) μg/L n/a n/a 50 50 50 Aldrin μg/L 0.03 0.03 n/a n/a n/a Chlordane μg/L 0.2 0.2 n/a n/a n/a Dichlorodiphenyltrichloroethane(DDT) μg/L 1 1 n/a n/a n/a Dieldrin μg/L 0.03 0.03 n/a n/a n/a Endrin μg/L 0.6 0.6 n/a n/a n/a Heptachlor μg/L 0.03 0.03 n/a n/a n/a Lindane μg/L 2 2 n/a n/a n/a Methoxychlor μg/L 50 50 n/a n/a n/a Toxaphene μg/L 4 4 n/a n/a n/a Reference) CAS : Chemical Abstracts Service IUPAC : International Union of Pure and Applied Chemistry MBAS : Methylene Blue Active Substances μg/L : microgram per liter (d) : Polychlorinated Biphenyls (PCBs) include the nine Aroclors and 19 individual PCB congeners described below: Compound CAS# IUPAC# Compound CAS# IUPAC# Aroclor 1016 12674-11-2 2,2’,5,5’-Tetrachlorobiphenyl 35693-99-3 52 Aroclor 1221 11104-28-2 2,3’,4,4’-Tetrachlorobiphenyl 32598-10-0 66 Aroclor 1232 11141-16-5 2,2’,3,4,5’-Pentachlorobiphenyl 38380-02-8 87 Aroclor 1242 53469-21-9 2,2’,4,5,5’-Pentachlorobiphenyl 37680-73-2 101 Aroclor 1248 12672-29-6 2,3,3’,4’,6-Pentachlorobiphenyl 38380-03-9 110 Aroclor 1254 11097-69-1 2,2’,3,4,4’,5’-Hexachlorobiphenyl 35065-28-2 138 Aroclor 1260 11096-82-5 2,2’,3,4,5,5’-Hexachlorobiphenyl 52712-04-6 141 Aroclor 1262 37324-23-5 2,2’,3,5,5’,6-Hexachlorobiphenyl 52663-63-5 151 Aroclor 1268 11100-14-4 2,2’,4,4’,5,5’-Hexachlorobiphenyl 35065-27-1 153 2-Chlorobiphenyl 2051-60-7 1 2,2’,3,3’,4,4’,5-Heptachlorobiphenyl 35065-30-6 170 2,3-Dichlorobiphenyl 16605-91-7 5 2,2’,3,4,4’,5,5’-Heptachlorobiphenyl 35065-29-3 180 2,2’,5-Trichlorobiphenyl 37680-65-2 18 2,2’,3,4,4’,5’,6-Heptachlorobiphenyl 52663-69-1 183 2,4’,5-Trichlorobiphenyl 16606-02-3 31 2,2’,3,4’,5,5’,6-Heptachlorobiphenyl 52663-68-0 187 2,2’,3,5’-Tetrachlorobiphenyl 41464-39-5 44 2,2’,3,3’,4,4’,5,5’,6-Nonachlorobiphenyl 40186-72-9 206 (e) : Phenols include 2-chlorophenol,2,4-sichlorophenol,and 2,4,6-trichlorophenol. (f) : When monitoring for Class AA and A waters, the individual organochlorine pesticides shall be monitored. For Class B, C, and D; Total Organochlorine Pesticides shall be monitored. Source: DENR Administrative Order No.2016-18

4-13 c) Groundwater Quality Guidelines This shows standards to be maintained for groundwater, according to its purpose of use. Groundwater Quality Guidelines are stated in Table 4-11. Table 4-11 Groundwater Quality Guidelines Purpose of water use Groundwater standards Potable and domestic water Water Quality Guidelines Class A (excluding BOD, DO) Watersports and other recreation Water Quality Guidelines Class B (excluding BOD, DO) Irrigation, water produce, livestock Water Quality Guidelines Class C (excluding BOD, DO, TSS) Source: DENR Administrative Order No.2016-18 d) General Effluent Regulations General Effluent Standards are set for each environmental standard zoning category of water quality. General Effluent Standards are stated in Table 4-12. Particularly important items are specified for each category of industry, and the water purification plant to be built by this project is deemed to be in the category shown in Table 4-13. Table 4-12 (1) General Effluent Standards (g) Item Unit Environmental standard zoning category AA A B C D

Ammonia as NH3-N mg/L NDA 0.5 0.5 0.5 7.5 BOD mg/L NDA 20 30 50 120 Boron mg/L NDA 2 2 3 12 Chloride mg/L NDA 350 350 450 500 COD mg/L NDA 60 60 100 200 Color TCU NDA 100 100 150 300 Cyanide as Free Cyanide mg/L NDA 0.14 0.14 0.2 0.4 Fluoride mg/L NDA 2 2 2 4 Nitrate as NO3-N mg/L NDA 14 14 14 30 pH(Range) NDA 6.0-9.0 6.0-9.0 6.0-9.5 5.5-9.5 Phosphate mg/L NDA 1 1 1 10 Selenium mg/L NDA 0.02 0.02 0.04 0.08 Sulfate mg/L NDA 500 500 550 1,000 Surfactants(MBAS) mg/L NDA 2 3 15 30 Temperature(h) °C change NDA 3 3 3 3 Total Suspended Solids mg/L NDA 70 85 100 150

Arsenic mg/L NDA 0.02 0.02 0.04 0.08 Barium mg/L NDA 1.5 1.5 6 8 Cadmium mg/L NDA 0.006 0.006 0.01 0.02 Chromium as Hexavalent Chromium(Cr6+) mg/L NDA 0.02 0.02 0.02 0.04 Copper as Dissolved Copper mg/L NDA 0.04 0.04 0.04 0.08 Iron mg/L NDA 5 5 7.5 35 Lead mg/L NDA 0.02 0.02 0.1 0.2 Manganese mg/L NDA 2 2 2 20 Mercury mg/L NDA 0.002 0.002 0.004 0.008 Nickel mg/L NDA 0.1 0.2 1 5 Zinc mg/L NDA 4 4 4 8

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Table 4-12 (2) General Effluent Standards Unit Environmental standard zoning category Item AA A B C D

Benzo(a)pyrene μg/L NDA 1.5 1.5 3 6 BTEX Benzene mg/L NDA 0.1 0.1 0.5 5 Toluene mg/L NDA 3.5 5 20 25 Ethylbenzene mg/L NDA 1.5 1.5 7.5 10 Xylenes mg/L NDA 5 5 15 18 Malathion(Organophosphate) μg/L NDA 1 1 3 6 Oil and Grease mg/L NDA 5 5 5 15 Polychlorinated Biphenyls(i) μg/L NDA <0.1 <0.1 <0.1 <0.1 Phenol & Phenolic Substances(j) mg/L NDA 0.01 0.01 0.5 5 Trichloroethylene mg/L NDA 0.7 0.7 9 20 Total Organochlorine Pesticides(k) μg/L NDA <0.419 50 50 50 Aldrin μg/L NDA <0.02 <0.02 <0.02 <0.02 Chlordane μg/L NDA <0.02 <0.02 <0.02 <0.02 DDT μg/L NDA <0.04 <0.04 <0.04 <0.04 Dieldrin μg/L NDA <0.02 <0.02 <0.02 <0.02 Endrin μg/L NDA <0.02 <0.02 <0.02 <0.02 Heptachlor μg/L NDA <0.02 <0.02 <0.02 <0.02 Lindane μg/L NDA <0.02 <0.02 <0.02 <0.02 Methoxychlor μg/L NDA <0.03 <0.03 <0.03 <0.03 Toxaphene μg/L NDA <0.03 <0.03 <0.03 <0.03

Fecal Coliform MPN/100mL NDA 4 200 400 800 Total Coliform MPN/100mL NDA 3,000 3,000 10,000 15000 Reference) NDA : No Discharge Allowed (g) : GES values are maximum allowable limit. (h) : GES values for temperature refer to the temperature difference of the background value and discharge point. Specific sampling locations shall be established based on the EMB Ambient Water and Effluent Quality Monitoring Manual. Sampling locations for temperature monitoring, established and approved by EMB, prior to this Order shall remain valid. (i) : PCBs include the nine Aroclors and 19 individual PCB congeners described in Section 6.1 of this Order. (j) : Phenols include 2-chlorophenol,2,4-sichlorophenol,and 2,4,6-trichlorophenol. (k) : When monitoring for Class A waters, the individual organochlorine pesticides shall be monitored. For Class B,C, and D; Total organochlorine Pesticides shall be monitored. Source: DENR Administrative Order No.2016-18

Table 4-13 Key Items in General Effluent Standards for Water Purification Plant Industry category Key items Water collection, treatment and supply pH, Total Suspended Solids, (except those intended to prevent pollution) Chloride, Fluoride, Iron Source: DENR Administrative Order No.2016-18

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(4) Matters to be Achieved by the Country Concerned (the executing agency and other related agencies) for the Realization of this Project This project is still at the synoptic survey stage. On the environmental aspects of the project, the EIA which is required for the ECC application, which is a necessity for project implementation, has not been performed yet. To advance the project, the project operators must take the following actions on environmental aspects, in addition to EIA implementation.

 Rapid EIA implementation and EIS preparation for this project, according to the Philippines PEISS Act and regulations.  Approval of the EIS by the DENR-EMB (Environmental Management Bureau), and ECC acquisition.

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Chapter 5 Calculations of Project Scale

(1) Implementation Costs of Water Intake Facilities

1) Intake Weir As discussed in Chapter 3, it would be difficult to adopt the intake weir under current plans because of geographical limitations and overdesign. However, EPCC and THRC, which operate the bulk water concessions in neighboring cities, have built intake weirs with an intake capacity of 80,000 m3/day. The calculations used to consider implementation costs are based on the construction of these weirs.

2) Radial collection wells Calculations are based on projects in Japan, as this is the first in the Philippines. The intake capacity of the radial collection wells was assumed to be 10,000-20,000 m3 per day per well, and it was assumed that four wells would be built for the planned intake volume of 42,500 m3 per day.

The table below shows the costs of implementing the water intake facilities under the original and revised designs.

Comparison of Implementation Costs Unit: thousand JPY Equipment Original design Revised Intake weir (holding approx. 102,000 m3) 6,000,000 Intake weir (holding approx. 305,000 m3) 286,000 Radial collection wells (4 wells; 10,000-20,000 1,079,000 m3/day/well) Total 6,000,000 1,365,000 Change from original design 4,635,000 Note: Cost comparisons do not include costs of geographical and other basic surveys

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(2) Implementation Costs of Water Treatment Facilities

1) Comparison of all-in-one and staged construction We consider the implementation of water treatment facilities all together and in stages. We compare three scenarios, as shown below, for all-in-one implementation and implementation in stages, as, even if construction is carried out all at once, it is better to add to machinery in stages, as machinery deteriorates over time.

Phase/Element Water supply In stages (1) In stages (2) All-in-one required Phase 1 50,000 m³ / day Machinery + Machinery + Machinery + construction construction construction Phase 2 + 50,000 m³ / Machinery + Machinery + Machinery only day construction construction (remaining) Phase 3 + 25,000 m³ / Machinery + Machinery only Machinery only day construction

The implementation schedule assumes that a construction period of around two years can be provided before the facility begins operation, largely as shown below. The timing of Phase 2 would need to be considered in light of the actual volume of supply and demand, but it is assumed that additional facilities are added roughly every three years, because at least two years are needed to allow adequate time for construction. For transfer pumps, it is assumed that the pump wells are built in Phase 1 and the pumps themselves are added in stages in each phase.

Implementation Schedule

The breakdown of construction in stages (1) is as follows.

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Table 5-2-1: Breakdown of construction (1) Specifications Phase 1 Phase 2 Phase 3 Total Pumping plant 1 (Small) pumps 1,042m3/h×30m×150kw 2 0 0 2 (Medium) pumps 2,083m3/h×30m×250kw 1 1 1 3 Electrical (250kw） equipment (550kw） (250kw） Pump wells Capacity (260 m3) 1 0 0 1 Distribution reservoir Capacity (2,100 m3) 1 0 0 1 Pumping plant 2 0 (Small) pumps 1,042m3/h×50m×250kw 2 0 0 2 (Medium) pumps 2,083m3/h×50m×355kw 0 1 0 1 Electrical equipment (500kw） (400kw） Pump wells Capacity (105 m3) 1 0 0 1 Water purification facility 5 lines1 Machinery 25,000 m3/day/line 2 lines 2 lines 1 line line 5 lines1 Civil engineering 〃 2 lines 2 lines 1 line line

The results of the operating cost breakdown for construction in stages (1) are shown below.

Table 5-2-2: Breakdown of operating costs (construction in stages 1) Unit: thousand JPY Phase Total Specifications Phase 1 Phase 2 3 Pumping plant 1 (Small) 0 24,000 pumps 1,042m3/h×30m×150kw 12,000 12,000 (Medium) 54,000 pumps 2,083m3/h×30m×250kw 18,000 18,000 18,000 Laying pipes 21,000 21,000 12,600 54,600 Electrical 30,000 130,000 equipment 33kv 70,000 30,000 Pump wells Capacity (260 m3) 39,000 0 0 39,000 Subtotal 160,000 81,000 60,600 301,600

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Phase Total Specifications Phase 1 Phase 2 3 Distribution 0 210,000 reservoir Capacity (2,100 m3) 210,000 0 Pumping plant 2 (Small) 0 33,000 pumps 1,042m3/h×50m×250kw 33,000 0 (Medium) 0 23,000 pumps 2,083m3/h×50m×355kw 0 23,000 Laying pipes 23,100 16,100 0 39,200 Electrical 100,000 equipment 33kv 60,000 40,000 Pump wells Capacity (105 m3) 15,000 0 0 15,000 Subtotal 131,100 79,100 0 210,200 Water purification

facility Machinery 25,000 m3/day/line 608,000 608,000 304,000 1,520,000 Civil 518,280 2,265,880 engineering 〃 883,800 863,800 Subtotal 1,491,800 1,471,800 822,280 3,785,880 Total 1,992,900 1,631,900 882,880 4,507,680

The results of the operating cost breakdown for construction in stages (2) are shown below.

Table 5-2-3: Breakdown of operating costs (construction in stages 2) Unit: thousand JPY Specifications Phase 1 Phase 2 Phase 3 Total Pumping plant 1 (Small) pumps 1,042m3/h×30m×150kw 12,000 12,000 0 24,000 (Medium) 54,000 pumps 2,083m3/h×30m×250kw 18,000 18,000 18,000 Laying pipes 21,000 21,000 12,600 54,600 Electrical 130,000 equipment 70,000 30,000 30,000 Pump wells Capacity (260 m3) 39,000 0 0 39,000 Subtotal 160,000 81,000 60,600 301,600 Distribution 0 210,000 reservoir Capacity (2,100 m3) 210,000 0

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Specifications Phase 1 Phase 2 Phase 3 Total Pumping plant 2 (Small) pumps 1,042m3/h×50m×250kw 33,000 0 0 33,000 (Medium) 0 23,000 pumps 2,083m3/h×50m×355kw 0 23,000 Laying pipes 23,100 16,100 0 39,200 Electrical 100,000 equipment 60,000 40,000 Pump wells Capacity (105 m3) 15,000 0 0 15,000 Subtotal 131,100 79,100 0 210,200 Water purification facility Machinery 25,000 m3/day/line 608,000 608,000 304,000 1,520,000 Civil 2,049,930 engineering 〃 883,800 1,166,130 Subtotal 1,491,800 1,774,130 304,000 3,569,930 Total 1,992,900 1,934,230 364,600 4,291,730

The results of the operating cost breakdown for all-in-one construction (all construction work carried out at one time) are shown below.

Table 5-2-4: Breakdown of operating costs (all-in-one construction) Unit: thousand JPY Specifications Phase 1 Phase 2 Phase 3 Total Pumping plant 1 (Small) pumps 1,042m3/h×30m×150kw 12,000 12,000 0 24,000 (Medium) 54,000 pumps 2,083m3/h×30m×250kw 18,000 18,000 18,000 Laying pipes 21,000 21,000 12,600 54,600 Electrical 130,000 equipment 33kV 70,000 30,000 30,000 Pump wells Capacity (260 m3) 39,000 0 0 39,000 Subtotal 160,000 81,000 60,600 301,600 Distribution 0 210,000 reservoir Capacity (2,100 m3) 210,000 0 Pumping plant 2 (Small) pumps 1,042m3/h×50m×250kw 33,000 0 0 33,000

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Specifications Phase 1 Phase 2 Phase 3 Total (Medium) 0 23,000 pumps 2,083m3/h×50m×355kw 0 23,000 Laying pipes 23,100 16,100 0 39,200 Electrical 100,000 equipment 33kV 60,000 40,000 Pump wells Capacity (105 m3) 15,000 0 0 15,000 Subtotal 131,100 79,100 0 210,200 Water purification facility Machinery 25,000 m3/day/line 608,000 608,000 304,000 1,520,000 Civil 1,961,550 engineering 〃 1,961,550 Subtotal 2,569,550 608,000 304,000 3,481,550 Total 3,070,650 768,100 364,600 4,203,350

The comparison shows that carrying out all of the construction works for the water purification facility at once would save around JPY 300 million in total operating costs, compared to construction in stages, but the upfront and initial costs in Phase 1 would be around JPY 1,070 million higher. In this case, construction in stages (2) is the optimal choice, as the additional construction is easier and total operating costs are lower than with construction in stages (1). Total operating costs are around JPY 4,300 million on that basis.

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2) Calculation of rough operating costs

Electric load (KW) Equipment Phase 1 Phase 2 Phase 3 Pumping plant 1 225 450 563 Pumping plant 2 225 450 450 Water purification facility 60 120 150 (Total) 510 1020 1163

Electricity costs (JPY/year) Assumed JPY 20/kwh. Phase 1 Phase 2 Phase 3 Electric load (KW) 510 1,020 1,163 Annual electricity usage (Kwh/year) 4,467,600 8,935,200 10,187,880 Annual electricity costs (JPY/year) 89,352,000 178,704,000 203,757,600

Volume of chemicals used (kg/year) Chemicals Phase 1 Phase 2 Phase 3 20mg/L PAC dosage 383,250 766,500 958,125 0.1mg/L Polymers dosage 1,916 3,833 4,791

Chemical costs (JPY/year) Chemicals Phase 1 Phase 2 Phase 3 PAC JPY 150/kg 57,487,500 114,975,000 143,718,750 Polymers JPY 1,000/kg 1,916,250 3,832,500 4,790,625 (Total) 59,403,750 118,807,500 148,509,375

Operating costs (chemicals + electricity) Operating costs Phase 1 Phase 2 Phase 3 Annual electricity costs (JPY/year) 89,352,000 178,704,000 203,757,600 Annual chemical costs (JPY/year) 59,403,750 118,807,500 148,509,375 (Total) 148,755,750 297,511,500 352,266,975 (JPY/m3) 8.15 8.15 7.72

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(3) Implementation Costs of Pipeline Equipment

１Pipeline Equipment 1.1 Approach to calculation of costs It is assumed that pipelines are laid in step with the progress of the plan, according to the phases in the table below. No account has been taken of differences in the intake site.

Table 5-3-1: Phases of Pipeline Construction Phase Starting point End point Phase 1 Intake site (purification plant) A diversion channel Phase 2 A diversion channel C diversion channel

Calculation of rough operating costs for pipelines takes the phases of each plan (Plans 1 to 3) into account.

1.2 Calculation of rough operating costs Estimates of pipeline construction costs for each plan are shown in the table below. However, construction costs for pipelines are based only on the route and length of the pipeline. As the only changes in this plan are the route and length of the pipeline to A, the site of the first diversion channel, the cheapest of the three options is Plan 3 (around JPY 497 million), which has the shortest route to the intake site and A. To estimate construction costs, material and construction costs are based on unit costs per meter.

Table 5-3-2: Unit costs per meter used to calculate rough operating costs Diameter Material costs Construction costs φ７００ JPY 141,100 /m JPY 79,500 /m φ９００ JPY 208,400 /m JPY 90,200 /m φ１２００ JPY 301,900 /m JPY 107,800 /m

Table 5-3-3: Estimated Pipeline Construction Costs Unit: thousand JPY Construction Material costs Subtotal Total costs Phase 1 1,530,633 546,546 2,077,179 Plan 1 5,125,959 Phase 2 2,024,920 1,023,860 3,048,780 Phase 1 2,279,345 813,890 3,093,235 Plan 2 6,142,015 Phase 2 2,024,920 1,023,860 3,048,780 Phase 1 1,418,930 506,660 1,925,590 Plan 3 4,974,370 Phase 2 2,024,920 1,023,860 3,048,780

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Chapter 6 Project Implementation System and Schedule

(1) Project Implementation System

Initially based in the Caraga Region of northeastern Mindanao island, the water concession business is managed by an SPC consisting of EPCC, THRC, Chodai, and private individual investors. Chodai has taken on the following four tasks for the project: ①management participation; ②provision of civil engineering expertise; ③coordination and networking with Japanese government agencies and Japanese corporations; and ④arrangement of financing. Additionally, as a shareholder of the project, it is also arranging for the purchase of pipe materials, water treatment facilities, and other equipment from Japanese manufacturers.

Similar to the water concession business based in the Caraga Region, the A City Water District is currently in the process of acquiring the necessary business rights, and also expects investment and participation from Japanese companies in addition to EPCC, THRC, and Chodai. To that end, it is looking to swiftly carry out any technical explanations and other arrangements required to introduce the necessary Japanese equipment and technology.

As part of this project, the introduction of water intake and water purification facilities will be carried out under a privately-run business scheme. However, many municipalities such as A City, B City, and C City lack the proper water supply pipelines, meaning that the construction of new water distribution pipes will be necessary. In addition to the public nature of the construction work, it is extremely difficult for a private enterprise to prepare and manage such projects due to their sheer scale and costs. As such, we intend to introduce and operate water intake and purification facilities through the private enterprise, and will utilize the support and assistance of the Japanese government for help in establishing the necessary water pipelines to the municipalities.

Based on the above, we plan to establish the following business framework in order to proceed with the project.

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Fig. 6-1-1: Project Implementation System

(2) Project Schedule

For this study, we plan to actively proceed with the introduction of ①water intake facilities; ②water purification facilities; and ③pipelines as per the detailed schedule below.

After the introduction of the water intake facility, the intake weir will draw in 80,000 m3 per day, which is equivalent to about 64% of the total planned intake water volume of 125,000 m3 per day, and the remaining 36%, or 45,000 m3 per day, will be drawn in by radial collection wells. In the first year of the project, we will set up the intake weir, the water purification plant, and the water distribution pipeline, and will begin supplying 50,000 m3 of water per day by the third year. At the same time, we will upgrade and expand the facility’s capacity in order to supply a total of 100,000 m3 per day from the fourth year, and 125,000 m3 per day from the fifth year.

Please note that this schedule does not include the detailed design period required for implementation of this project.

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Year 1 Year 2 Year 3 Year 4 Year 5

Category / Timeframe 1234123412341234123 4

Water intake facility

1. Intake weir (80,000 m3 per day) 24 months

2. Horizontal radial collection well (two wells) (22,500 m3 per day) 9 months

3. Horizontal radial collection well (two wells) (22,500 m3 per day) 9 months

Water purification facility

1. 50,000 m³ / day 24 months

2. 50,000 m³ / day 24 months

3. 25,000 m³ / day 24 months

Pipeline facility

Water purification facility - B diversion channel (80,200 m3 / day) 21 months

B diversion channel - C diversion channel (44,800 m3 / day) 20 months ▼50,000 m³ / day ▼100,000 m³ / day ▼125,000 m³ / day Fig. 6-2-1: Project Schedule

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Chapter 7 Financial Prospects and Proposals and Prospective Policy Support (1) Basic Philosophy Regarding Financing

The A City water supply business that is the focus of this study is a government service that greatly serves the public interest, and is a long-term privately-run concession business that will ①draw in water from rivers and underground sources; ②create water purification facilities; ③store water in reservoirs; and ④distribute water to local municipalities. This project will require new water intake, purification, and distribution facilities, which are expected to cost upwards of 10.63 billion yen. On the other hand, this project is capable of generating stable income over a long- term basis, so it is better to receive a long-term financing arrangement. As a way to mitigate risk, it is preferable to utilize financing based on more flexible public funding rather than private funds, which are usually short-term in nature. Ideally, we will seek to use such long-term, stable, and fixed public funding to the greatest extent possible.

Two of the main business partners for the concession business, EPCC and THRC, are already managing a water concession business aimed at local municipalities in the Caraga Region. In order to finance the project in a prompt manner, a two-step loan contract was signed with the DBP through the agency of JICA. Additionally, a financing contract with the DBP was signed in February of 2018 in order to proceed with the planned expansion of the water purification facilities. After obtaining the business rights, we plan to establish an SPC that is responsible for managing the project and will consist of EPCC, THRC, Chodai, and other Japanese corporate investors. Upon the conclusion of this survey, we will review the investment ratios, amounts, timing, and other factors, and will also consider raising funds from local financial institutions in addition to the utilization of public funding.

(2) Considerations on Exporting Infrastructure Systems

1) Review of the Current Plan In the initial plan for this project, it was decided to construct an intake weir for the water intake facility. However, after surveying the local area, we determined it was an excessive design given the circumstances of the situation, which would lead to much higher project costs. Therefore, as part of the survey, we are considering the use of intake weirs to collect water from rivers, as well as radial collection wells to collect water from rivers and underground sources. Radial collection wells are a unique technology owned by Japanese companies that can efficiently draw in river and underground water. They are currently being utilized throughout China and Southeast Asia, but have not yet been introduced to the Philippines. For the water purification facilities, we are proceeding with the design and installation of a Japanese-made water purification plant in order to expand the facilities and upgrade the water purification capacity for the Caraga Region water concession business as mentioned above. Since the pipelines needed for water distribution in the Philippines have frequently been subjected to natural disasters such as earthquakes and typhoons in recent years, it is thought that the introduction of Japanese-made

7-1 pipes will be extremely effective due to their superior earthquake resistance. Some of these products have already been introduced as part of the above-mentioned water concession project in the Caraga Region. In addition to the fact that a robust business using Japanese equipment is already present, we believe that the introduction of new technology can lead to even more efficient business operations, thereby demonstrating the effectiveness of utilizing Japanese infrastructure systems.

(3) Utilization of Governmental Aid and Other Forms of Support

The purpose of this project is to secure access to safe and secure water resources in areas with unstable water supplies, and is one of the UN’s Sustainable Development Goals, otherwise known as SDGs. Although this water supply project is run by private enterprise, it strongly serves the public interest by distributing water to local municipalities and other such endeavors. In regards to the privately-run water supply business to A City, the water distribution from A City to the local municipalities will be managed by the Philippine Local Water Utilities Administration (LWUA). However, a local hearing found that it would be difficult to procure funds through the LWUA for the introduction of water distribution facilities (pipeline facilities), despite the public nature of the project. As a result, we are looking into the possibility of utilizing Official Development Assistance (ODA) from the Japanese government in order to proceed with the installation of the water distribution facilities.

This project is expected to help reduce greenhouse gas emissions through the use of energy-saving equipment. In January 2017, a bilateral credit system (JCM) was agreed upon and concluded between Japan and the Philippines, and such financing is currently being used to create micro-hydro power generation facilities in the cities surrounding the target location of this project in order to generate more local supplies of electricity. Going forward, we will consider introducing facilities and systems that will contribute to the reduction of greenhouse gas emissions through more detailed energy conservation research and design, and will consider using the above scheme as part of our efforts.

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Chapter 8 Survey of Energy Savings and Environmental Improvements

(1) Energy Conservation Effects of the Implementation of Infrastructure

1) Study of the Implementation of Energy-Conserving Infrastructure

1.1 Water intake facility Radial collection wells will help to save energy by allowing water to be drawn in a stable manner from underground sources with lower turbidity, thus limiting the volume of chemicals used in the purification facility and reducing the operating time of agitators and other power mechanisms.

1.2 Water purification facility This project involves the transfer of water by pumping rather than gravity, because of the topography of the site, and this accounts for the majority of electricity costs. As well as selecting the most efficient pumps, the detailed design will consider the use of energy-efficient operation controllers to control the inverters and the number of units operating.

Fig. 8-1-1: Illustration of the use of energy-efficient operation controllers

1.3 Pipeline equipment When water is supplied via pipelines, the most energy-efficient method is natural gravitational flow using

8-1 geographical contours. However, the location of this project does not allow water to be supplied by natural gravitational flow, as the area is comparatively flat and the destination of the pipeline is at the highest point. Consequently, a water pumping facility is essential, and the electrical energy required for pumping needs to be minimized in order to save energy. To minimize the power required to operate the pumps, the lifting height of the pumps used needs to be low. For that reason, it is necessary to select a pipe material that minimizes the loss of head, which acts as a resistance to the transfer of water. To minimize the loss of head, it is important to select the interior coating of the ductile iron pipes planned in the concept design. The two types of interior coating commonly used today are the following: (1) Cement mortar lining (2) Epoxy resin powder coating An index of the level of head loss is the flow velocity coefficient C used in the Hazen-Williams equation. The higher the figure for C, the lower the resistance of the water and the more easily it flows. A comparison of the C values of the aforementioned interior coatings is given in the table below.

Table 8-1-1: C values of interior coatings Type of interior coating C value used in calculations (only for straight pipe sections) Cement mortar lining 130 Epoxy resin powder coating 150

This shows that epoxy resin powder coating has lower resistance, and consequently this plan uses pipes coated internally with epoxy resin powder for reasons of energy efficiency.

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Chapter 9 Confirmation of Advantages of Japanese Companies and Predicted Benefits for Japan

(1) Advantages of Japanese Companies

1) Advantages of Japanese Companies in the Field of Water Supply Water supply services have been operated in Japan for an extremely long time by local government bodies, with private enterprise developing specialized technical expertise in individual areas contributing to the smooth operation of the projects as a whole. A number of technologies have been developed in such areas as water treatment quality, leak prevention, and desalination. However, Japanese companies have very little experience at all when it comes to actually operating a privately-run water supply business. In other words, Japanese companies currently lack a competitive edge in a global sense in terms of business operation knowhow taking into account issues of long-term costs, and in terms of facility procurement selection knowledge. On the other hand, Japanese companies have a long history going all the way back to the end of the war of developing extremely high-quality water supply systems, and of developing a range of facilities for the improvement of water treatment quality as technology has progressed over time. In recent years, they have also increased their overseas presence in the water supply field, including by providing expertise for water systems in developing nations. From these perspectives, while progress achieved and prevailing conditions differ from project to project, the technical knowhow accumulated by Japanese companies in the field will continue to provide them with greater and greater competitive advantages, particularly in the Asian market. EPCC and THRC, two of the operators of this survey, have managed to conduct a stable business through the use of quality and cost-effective pipes and water purification equipment as part of their work with the Caraga Region water supply business. However, there are also some technically insufficient studies being conducted, such as planning the introduction of an overdesigned large-scale intake weir when creating the water intake facility. For the intake facility, there is great interest in the survey team’s proposed suggestion to the business partners to use radial collection wells to efficiently draw in underground river water. Although this proprietary equipment is owned by Japanese companies and has a track record of being used in the United States, China, and in Southeast Asia, it has yet to be used within the Philippines. The survey team conducted a hearing which found that the business partners are not only looking to introduce the equipment as part of the overall plan, but also would like to consider a technology transfer featuring specific technical guidance. Based on these developments, we believe that the introduction of such proprietary Japanese technology to this project in addition to the existing Japanese equipment and technologies already in use will prove extremely effective in efficiently managing the project’s business operations.

2) Issues Requiring Examination in the A City Water Concession Business This survey was able to propose the introduction of a water intake facility, which is the first of its kind in the Philippines. However, the overall business plan features many areas in need of further technical review, especially the overdesign of the initial water intake facility. Additionally, the design details for each facility will require geological surveys such as boring surveys and radiolocation, as well as topographical surveys for the

9-1 pipeline design. Going forward, we believe it is important to conduct more basic surveys in order to acquire additional data that will help create more accurate and precise facilities.

(2) Anticipated Benefits for Japan

1) Procuring equipment for the A City Water Concession Business The orders that can be expected for this project are listed below. Additionally, not all of the construction can be carried out in Japan due to foreign capital regulations, and in many cases it is sourced to local contractors. For this project, EPCC, who is an investor to the business entity, is also a local contractor, and possesses experience constructing intake weirs and water purification plants. In regards to the radial collection wells that are being considered for this survey, the difficulty level of digging the wells themselves is not that hard, but we have confirmed with the manufacturers that it is necessary for Japanese engineers to supervise the construction and offer guidance in regards to the horizontal boring mechanism that makes up the water intake system. In such cases, Japanese companies will only provide technical guidance while the actual construction is implemented by the local contractor EPCC, so we believe that there is little room for Japanese companies to participate in the construction phase of the project.

Table 9-2-1: Orders Anticipated for the A City Water Concession Business Category Details Intake facilities (sourced Detailed design and intake parts sourced from Japan in Japan) Construction management and technical instruction for digging the well (dispatch of Japanese engineers) Intake facilities (sourced Parts which can be locally sourced in the Philippines based on the above detailed in the Philippines) design Purification facilities Detailed design and purification parts sourced from Japan (sourced in Japan) Purification facilities Parts which can be locally sourced in the Philippines based on the above detailed (sourced in the design Philippines) Pipeline facilities Detailed design and pipeline parts sourced from Japan (sourced in Japan) Pipeline facilities Parts which can be locally sourced in the Philippines based on the above detailed (sourced in the design Philippines) Construction Provision of comprehensive construction management services from Japan, management services including the dispatch of engineers to oversee quality control, output management, process supervision, and other necessary tasks.

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2) Fostering of a Relationship of Trust and Future Business Expansion It is expected that this project will be funded by EPCC, THRC, and other Japanese companies which are investors of the current water supply business based in the Caraga Region. The initial water supply project based in the Caraga Region is the first private enterprise operation conducted in the country's local municipalities, and it aims to use the knowhow and results obtained to help expand the business to the target area detailed as part of this survey. Going forward, there is great potential in the water supply business within the Philippines, so the continued building of relationships in the field is expected to help increase the possibility of participation by Japanese companies and the introduction of Japanese infrastructure systems in the future.

3) Potential for O&M orders, as well as their scale and accompanying schedule As part of the water intake facilities proposed in this survey, the radial collection well is proprietary Japanese technology, and the casing used for the horizontal boring is manufactured in Japan. The radial collection well’s casing can become clogged after being used for a number of years, but we believe that it can be treated by washing out the inside of the casing, or by installing a screen mesh to trap debris. Although the water purification equipment is a rapid filtration system, the membrane module does not need replacement within the system. Meanwhile, we also considering the introduction of a control device to help save energy, and there is the possibility of providing even more efficient operational support through the use of remote monitoring and other such methods. In either case, more detailed surveys and planning will be needed in order to proceed going forward.

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Chapter 10: Remaining Issues for Project Implementation (1) Summary

This study has revealed that plans for facility construction and implementation for the operation of this bulk water concession project have been put in place using low-quality, high-cost materials and knowhow provided by Philippine corporations. In terms of the management of a stable bulk water concession provision project, this will result in an increase in initial costs, and will exert a significant influence on the project’s profitability. By conducting a full-scale review of the original plan, this study has succeeded in offering a new fundamental proposal for the construction and implementation of the project’s facilities which will lower both initial costs and operational costs. The new proposal involves the introduction of Japanese personnel, parts and finances, via the adoption of Japanese infrastructural systems in the form of ground-breaking Japanese technology for water intake, financing from Japanese governmental agencies, and construction management and oversight, including the possibility of technology transfer. Moving forward, it will be necessary to conduct more detailed research and develop more comprehensive plans for facility construction and implementation. In addition to this, the examination and subsequent adoption of financial arrangements allowing for higher levels of profitability will be put in place in order to enable the proposal of a plan for the management of the bulk water concession project as a highly profitable and stable privately-operated enterprise.