BORDA Bremen Overseas Research and Development Association Philippine PPP Program: Its Prospects for ISA Projects in Municipality of Bauang Province of La Union

Presented By Engr. Jonas Emmanuel L. Maronilla Managing Director, Basic Needs Services Phils. Inc. Country Representative, BORDA BORDA Bremen Overseas Research Presentation Outlineand Development Association

• PPP Program/agenda • Legal Framework & Institutional Set Up • Completed, on-going and pipeline PPP Projects including sanitation • PPP financing for ISA in Bauang, L.U. • Financing scheme • User fee options • Repayment to private investor BORDA Bremen Overseas Research What is PPP? and Development Association

• Contractual arrangement between government and private sector to deliver public infrastructure and/or public services

• BORDA Bremen Overseas Research and Development Association The Philippine PPP Program

Inclusive Growth

Private Accelerate Sector as Infrastructure Partner in Development Development

PPP Center as Champion for PPP BORDA Bremen Overseas Research and Development Association Roles of Private Sector

Serves as State’s Development Partner

Private Sector

Can finance, design, Offers efficiency construct & operate gains in facility, in exchange technology & can collect user fee innovation BORDA Bremen Overseas Research Eligible PPP Projectsand Development Association Economic Social Infrastructure Others Infrastructure • Highways & Roads • Agriculture • ICT Systems & Facilities

• Railroad & Railways • Canals, dams, irrigation • Industrial & Tourism Estates • Ports • Education Facilities • Markets, warehouses, slaughterhouses • Airports • Health Facililies • Housing & Government Buildings • Transport System • Prison Facilities • Climate Change • Mitigation/ adaptation Infrastructure • Water Supply • Land Reclamation • Solid Waste Management BORDA Bremen Overseas Research Sample PPP Projectsand Development Association Completed On-going Pipeline implementation • Muntinlupa- • Mactan-Cebu • Southwest Integrated Expressway International Airport’s Transport System • NAIA Expressway new passenger • LRT Line 1 Cavite • Automated Fare terminal MRT-7 Extension, the Cavite Collection System • Metro Laguna Expressway, Stage 3 South Integrated Transport System, and the NLEX- SLEX Connector Road. • School buildings • Computerization of the and infrastructure Civil Registry System of project, erecting the Philippine Statistics 9,266 classrooms Authority in Ilocos, Central • Regional airports in Luzon, and Davao, Iloilo, Calabarzon Laguindingan in Cagayan de Oro, Bacolod, and New Bohol Panglao BORDA Bremen Overseas Research Samples of Pipelineand Development PPP Association Projects on Water & Sanitation • Bulacan Bulk Water System worth PhP____ • Baggao Water Supply Project worth P84.22 million • Cagayan de Oro Septage Management Project worth P128 million • Quezon City Waste-to-Energy-Project worth P 16.56 billion • Pampanga Bulk Water Supply Project costing P 16.7 billion, • Cebu City Solid Waste Management Project (no cost estimate available) BORDA Bremen Overseas Research and Development Association Integrated Sanitation Approach (ISA)

• BNS cooperates with cities/municipalities for piloting system solutions for Integrated Sanitation Approaches under the umbrella of SDGs and the New Urban Agenda. BORDA Bremen Overseas Research Drivers Towards andLocal Development Association Septage Management in Bauang,L.U.

• Problems on sludge disposal characterized by improper desludging and disposal of sludge, • Lack of access to and poorly designed, constructed, and maintained septic tanks, • Illegal sludge disposal by private enterprises • Lack of financial and technical capability of the LGU to design, construct and operate septage treatment facility • LGU expressed its interest in implementing and prioritizing a Systematic Septage Treatment Project as part of the Integrated Sanitation Approach BORDA Bremen Overseas Research Background and Development Association • Land area of 7,160 hectares or 4.8% of the entire province • 91.5% of land area are A&D; 8.4% public forest lands; mostly grasslands • Population of 72,391 with 15,669 households (YR_); 21% urban; 79% rural population • 32.56% of HHs source water supply from deepwells; 22.88% have water connections; 24.31% use bottled water; 20.22% from dug wells, shallow wells, protected & unprotected springs, etc. BORDA Bremen Overseas Research Precursors to the STFand Development Association • Approval of the Sangguniang Bayan of Bauang for the financing and construction of a Systematic Septage Treatment Plant at Brgy. Payocpoc through a private sector financing arrangement. • LGU opens it to all interested public and private entities, investors, organizations with technical and financial capacities and willingness to finance and invest in the project. • Private proponent was the first to express its interest & willingness • Signing of memorandum of agreement covering the contractual & financing arrangements for the STF consistent with applicable Philippine laws & regulations BORDA Bremen Overseas Research and Development Association

• LGU obtained the approval of the Sangguniang Bayan of the Municipality of Bauang for the financing and construction of a Systematic Septage Treatment Plant through an appropriate financing arrangement. • LGU welcomes all interested public and private entities, investors, organizations with technical and financial capacities and willingness to finance and invest in the project. • Scales-up MLGU’s investments in sanitation sector of Municipality BORDA Bremen Overseas Research Project Scope and Development Association

Target: Entire Municipality (39 barangays) Population: 72,391 (15,669 households) Capacity for Septage/ fecal Sludge: approximately (2x)10 cubic meters per day Location: Barangay Payocpoc, Mun. of Bauang Total Land Area: 7,160 hectares BORDA Bremen Overseas Research and Development Association Recommended Treatment Facility

Septage Management process Flow BORDA Bremen Overseas Research and Development Association STF Financing Option BORDA Bremen Overseas Research Build Operate Transfer Schemeand Development Association Private Investor Municipality of Bauang Land -3,000 sqm PhP3.0M • Pass ordinance for RPU-based & right of way tariffs Capital investment • Prepare the Concept Design and • STF construction • 12.0M Technical Specifications • Acquisition of • 4.0M • Maintain peace and order in the desludging trucks STF site Total CAPEX PhP19.0M • Monitor the implementation of the PROJECT during its construction Exercises fiduciary rights and • Operate & maintain the STF privileges accorded by the terms & conditions of the contract, e.g., • Reportorial obligations by the • Charge & collect user fees/tariffs MLGU from users • Facility inspections • Remit to the Private Investor the net • Others income at the end of the contract period BORDA Bremen Overseas Research Project Cost Summaryand Development Association

• CAPEX: – Land: 3,000 sqm. PhP 3.0 M – Facility 12.0 M – Desludging trucks (2 units, each with 3.5 cu.m capacity) 4.0 M Total CAPEX PhP19.0 M • OPEX* PhP 3.5 M/yr. (Truck collection & facility) *To be sourced from user fee revenues BORDA Bremen Overseas Research and Development Association BORDA Bremen Overseas Research USER FEE SCHEMEand Development Association Option 1. All RPUs, Uniform rate, Collection Through RPT 1st Year of 80% RPU User Fee No. of RPU Collection Assumption Classification (PhP) 100% (PhP) collection (PhP) Residential 16,194 600.00 9,716,400 7,773,120 Commercial 975 600.00 585,000 468,000 Industrial 60 600.00 36,000 28,800 Agricultural 14,479 600.00 8,687,400 6,949,920 Government 803 600.00 481,800 385,440 Religious 87 600.00 52,200 41,760 Educational 259 600.00 155,400 124,320 Others 2,065 600.00 1,239,000 991,200 TOTAL 34,922 20,953,500 16,762,560

80% Projected Collection: PhP16,762,560 BORDA Bremen Overseas Research and Development Association If User Fee is imposed on all RPUs: • The table shows that the potential 100% collection for all RPUs will amount to Php20,953,500 • but the projection for 80% collection is Php 16,762,560.

Php 16,762,560: 80% collection from RPU - 6,048,000: Desludging truck collection payment PhP 10,714,560 Savings BORDA Bremen Overseas Research and Development Association Option 2: If Uniform User Fee is imposed ONLY on Taxable Properties 1st Year of RPU User Fee 80% Assumption No. of RPU Collection Classification (PhP) collection (PhP) 100% (PhP) Residential 16,194 600.00 9,716,400 7,773,120.00 Commercial 975 600.00 585,000 468,000.00 Industrial 60 600.00 36,000 28,800.00 GOCCs 99 600.00 59,400 47,520.00 Water 2 600.00 1,200 960.00 Cultural 1 600.00 600 480.00 Others 2062 600.00 1,237,200 989,760.00 TOTAL 19,393 11,635,800 9,308,640 80% Projected Collection 9,308,640 The table shows that when the user fee is only applicable to taxable properties except agricultural units, the assumption of 80% collection will result to revenue of PhP 9,308,640.00 which is sufficient for the payment of desluding fee per manifest. Under this option, net revenue/savings is only Php3.26M which is less than half of the net revenue under Option 1 (All RPUs) BORDA Bremen Overseas Research and Development Association Non-Uniform User Fee based on RPU Classifications RPU Classification Septage Fee/Year Residential 600.00 Commercial 1,000.00 Industrial 2,000.00 Special 800.00 Government Office 800.00 Religious 600.00 Educational 1,500.00 Cemetery 600.00 BORDA Bremen Overseas Research USER FEE SCHEMEand Development Association Option 3. All RPUs, Non-uniform rate, Collection Through RPT 1st Year of 80% RPU User Fee No. of RPU Collection Assumption Classification (PhP) 100% (PhP) collection (PhP) Residential 16,194 600.00 9,716,400 7,773,120 Commercial 975 1,000.00 975,000 780,000 Industrial 60 2,000.00 120,000 96,000 Agricultural 14,479 600.00 8,687,400 6,949,920 Government 803 800.00 642,400 513,920 Religious 87 600.00 52,200 41,760 Educational 259 1,500.00 388,500 310,800 Others 2,065 600.00 1,239,000 991,200 TOTAL 34,922 21,820,900 17,456,720 80% Projected Collection: Php17,456,720 (higher by 0.06% vs, net revenue using uniform user fee) BORDA Bremen Overseas Research and Development Association

• The 3 options above shows the different scenarios on the user fee collection based on Real Property Tax/RPUs, showing that :

• Option 1(all RPUs, uniform rate) net revenue of PhP10.7M is realized (214,000usd)

• Option no. 2 (Only taxable RPUs, uniform user fee) results to net revenue of Php3.26M (65,200usd)

• Option no. 3 (All RPUs, non-uniform user fee gives PhP 11.41M (228,200usd) net revenues, which is 0.06% more than Option 1. BORDA Bremen Overseas Research and Development Association Possible Repayment Scheme to Private Investor • Payment for desludging fees: – 3 trips per day – 288 days operation per year – PhP3,500 (70usd) for commercial and household desludging fee – Total: PhP 6.048M (120,960usd)/year (2 trucks) Recoupment period: ___ years of CAPEX BORDA Bremen Overseas Research and Development Association