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Republic of the Philippines Metro Manila Flood Management Project

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Republic of the Philippines Metro Manila Flood Management Project PD 0023-PHL September 27, 2017 PROJECT DOCUMENT OF THE ASIAN INFRASTRUCTURE INVESTMENT BANK Republic of the Philippines Metro Manila Flood Management Project This document has a restricted distribution and may be used by recipients only in performance of their official duties. Its contents may not otherwise be disclosed without AIIB authorization. CURRENCY EQUIVALENTS (As of September 1, 2017) Currency Unit - Philippine Peso (PhP) PhP 1.00 = US$0.019 PhP51.16 = US$1.00 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AIIB Asia Infrastructure Investment KSA Key Shelter Agencies Bank LGU Local Government Units ASEAN Association of South East LLDA Laguna Lake Development Asian Nations Authority COA Commission on Audits MDB Multilateral Development CSCAND Collective Strengthening on Bank Community Awareness on MIS Management Information National Disasters System CSOs Civil Society Organizations MM Metro Manila DDR Due Diligence Report MMDA Metro Manila Development DENR Department of Environment Authority and Natural Resources MoA Memorandum of Agreement DPWH Department of Public Works NAMRIA National Mapping and and Highways Resource Information ERR Economic rate of return Authority ESIA Environmental and Social NCR National Capital Region Impact Assessment NEDA National Economic and ESMF Environmental and Social Development Authority Management Framework NHA National Housing Authority ESMP Environmental and Social NPV Net present value Management Plan O&M Operation and maintenance FCMC Flood Control Management OP/BP Operational Policy/Bank Cluster Procedures (World Bank) FCSMO Flood Control and Sewerage PAGASA Philippine Atmospheric, Management Office Geophysical and Astronomical GDP Gross Domestic Product Services Administration GNI Gross National Income PAP Project Affected Person GoP Government of the Philippines PMO Project Management Office HOA Homeowners Associations PY Project Year HUDCC Housing and Urban RAP Resettlement Action Plan Development Coordinating RPF Resettlement Policy Council Framework IBRD International Bank for SHFC Social Housing Finance Reconstruction and Corporation Development SUDS Sustainable Urban Drainage IEC Information, Education and Systems Communication WB World Bank IMP Integrity Management Program WRI World Risk Index ISF Informal Settler Families ii CONTENTS OF THE PROJECT DOCUMENT 1. PROJECT SUMMARY SHEET ................................................................................. 1 2. STRATEGIC CONTEXT ............................................................................................ 3 A. Country Context ...................................................................................................... 3 B. Sectoral and Institutional Context ........................................................................... 4 3. THE PROJECT ............................................................................................................ 6 A. Rationale ................................................................................................................. 6 B. Objective ................................................................................................................. 7 C. Project Description and Components...................................................................... 8 D. Cost and Financing ............................................................................................... 11 E. Implementation Arrangements.............................................................................. 11 4. PROJECT ASSESSMENT ........................................................................................ 14 A. Technical ............................................................................................................... 14 B. Economic and Financial ........................................................................................ 15 C. Fiduciary and Governance .................................................................................... 17 D. Environmental and Social ..................................................................................... 19 E. Risks and Mitigation measures ............................................................................. 24 ANNEXES ....................................................................................................................... 26 Annex 1: Results Framework and Monitoring.............................................................. 26 Annex 2: Detailed Project Description ......................................................................... 31 Annex 3: Economic and Financial Analysis ................................................................. 52 Annex 4. Sovereign Credit Fact Sheet- Philippines ...................................................... 57 ii 1. PROJECT SUMMARY SHEET Republic of the Philippines Metro Manila Flood Management Project Project No. 0023-PHL Client Borrower(s) Republic of the Philippines Implementation Agency 1. Department of Public Works and Highways 2. Metro Manila Development Authority (supported by National Housing Authority and Social Housing Finance Corporation) Sector(s) Water Subsector(s) Flood Management Project Objectives / Brief Project The Project objective is to improve flood Description management in selected areas of Metro Manila. This will be achieved through the following activities: (i) modernizing of drainage areas, involving construction of new pumping stations or rehabilitation of existing ones and associated drainage infrastructure; (ii) strengthening of solid waste collection and disposal; and (iii) supporting participatory housing and resettlement, involving land acquisition, housing construction, rental support and livelihood assistance. Project Implementation Period Start Date: October 1, 2017 (Start Date and End Date) End Date: May 31, 2024 Expected Loan Closing Date November 30, 2024 Project cost and Total Project Cost: $500M Financing Plan Financing Plan: AIIB: US$207,603,205 WB: US$207,603,205 GoP: US$84,793,590 AIIB Loan US$207,603,205 (Size and Terms) 25-year term; level repayments, including a grace period of 14 years, in accordance with the Bank’s standard pricing. Co-financing WB: US$207,603,205, an IBRD loan (If any) (Co-financier(s), Size and 25-year term; level repayments, including a grace Terms) period of 14 years. Environmental A and Social Category Project Risk (Low/Medium/High) High 1 Conditions for Effectiveness and 1. Cross-Effectiveness of the IBRD’s Loan Disbursement Agreement. (If any) 2. Effectiveness of the Project Co-Lenders’ Agreement Key Covenants 1. The Borrower shall establish and maintain a Project Steering Committee and a Technical Steering Committee. 2. The Borrower shall establish and maintain Project Management Offices (PMOs) in DPWH and MMDA. 3. The Borrower shall ensure that the implementation of all Project activities complies with Safeguard Documents, Project Operations Manual, Prohibited Practices and IBRD’s Anti-Corruption Guidelines. 4. The Borrower shall maintain and operate throughout the Project implementation period a Grievance Redress Mechanism. Policy Assurance The Vice President, Policy and Strategy confirms an overall assurance that the Bank is in compliance with the policies applicable to the Project. President Jin Liqun Vice-President, CIO D. J. Pandian Director General, Investment Supee Teravaninthorn Operations Manager, Investment Operations Ke Fang Project Team Leader Ghufran Shafi, Senior Investment Operations Specialist Project Team Members Alexander I. Ugut, Principal Risk Specialist Bin Wang, Senior Policy & Strategy Officer Chongwu Sun, Senior Environment Specialist Jang Ping Thia, Senior Economist Jessana A. Yanuario, Finance Officer Kishor Uprety, Senior Counsel Somnath Basu, Senior Social Development Specialist Xiaowei Guo, Senior Procurement Specialist Yige Zhang, Project Assistant 2 2. STRATEGIC CONTEXT A. Country Context 1. The Republic of the Philippines is the second most populous country in the Association of South East Asian Nations (ASEAN) with a gross domestic product (GDP) of US$305 billion and a population of 103.3 million. Its growth over the past decade has allowed it to emerge as a confident middle-income country and one of the most vibrant economies in the Asia and Pacific region. The economy, on average, has grown 6.2 percent per year in 2010-2015, in line with the major economies in the region. Real GDP grew by 5.9 and 6.8 percent in 2015 and 2016, respectively, driven by household consumption, private construction, and exports of goods and services. The robust economic growth has been characterized by strong macroeconomic fundamentals, which has led to low and stable inflation, a healthy current account surplus and a falling debt burden. 2. After years of stagnation, the officially measured poverty rate declined by three percentage points in 2013 over 2012, dropping to 24.6 percent. However, in the first half of 2014, poverty increased by one percentage point.1 Despite this slight increase, attributed in part to Typhoon Yolanda, 2 the poverty rate dropped below 24 percent by the end of 2015. Moreover, increases in income are becoming slightly more progressive, as the real income of the bottom 30 percent of the population has been rising steadily faster than that of higher income classes. The per capita income of the bottom 30 percent grew over 20 percent in 2012-2015, while the average income of all households grew by 15.3 percent. 3. The International Monetary Fund is optimistic about the outlook
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