Post on 24-Dec-2015
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Mobilizing local Financial Resources for Water and Sanitation
Finance High Level Panel
5th World Water Forum
March 17, 2009
Kazushi Hashimoto
Japan International
Cooperation Agency (JICA)
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What is required to attract private funding for water and sanitation?
1. The right management
2. The effective monitoring of the performance
3. A workable financing mechanism
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Two success stories in managing water supply (Asia-Pacific)
• Cambodia - Phnom Penh Water Supply Authority (public sector)
• Philippines - Manila Water Company (private sector)
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Phnom Penh Water Supply Authority (PPWSA)
Cambodia
Prize winner of 2004 ADB’s Water Award,
2005 JICA Award, 2005 World Bank Award, 2006 Ramon Magsaysay Award
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19931993 20062006 IndicatorsIndicators
Performance Change (PPWSA)Performance Change (PPWSA)
2222
65,00065,000
25%25%
10hr/d10hr/d
0.2 bar0.2 bar
26,88126,881
72%72%
48%48%
150%150%
SubsidizedSubsidized
Staff/1,000 connectionsStaff/1,000 connections
Water productionWater production m3/d m3/d
Service coverageService coverage
Service hoursService hours
Water pressureWater pressure
Number of connectionsNumber of connections
NRWNRW
Collection rateCollection rate
Running cost/revenueRunning cost/revenue
Financial statusFinancial status
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235,000235,000
90%90%
24hr/d24hr/d
2.5 bars2.5 bars
147,000147,000
8%8%
99.99. 77 %%
22%22%
IndependentIndependent
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Private concessionaire of the Manila East Area
Winner of 2005 ADB’s Water
Award and 2007 IFC ‘Client
Leadership’ Award
Manila Water Company
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Manila Water Company
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Manila Water Company
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What are the common factors in the management of PPWSA and Manila
Water?• Reduction in water losses due to a
comprehensive Non Revenue Water reduction program
• Thereby, increasing both water resources and financial resources
• Thereby, increasing investment for new connections
• Their method of water management is similar to that of Japanese utilities (NRW of Tokyo Waterworks is 3.6%)
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How to monitor the performance of water projects and water utilities?
• In Japan, 137 Performance Indicators (PIs) were set for the Guidelines for the Management and Assessment of Drinking Water Supply Services (JWWA Q-100) in 2005.
• This Guideline is referred to in the ISO24512 ・2007 Guidelines for the management of drinking water utilities and for the assessment of drinking water services.
• PIs can be utilized to monitor and regulate the performance of both public and private operators.
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Mobilization of local financial resources (public and private) for water projects
• In the Philippines, JICA and USAID provided technical and financial support in establishing the Philippines Water Revolving Fund (PWRF) as a mechanism to mobilize the resources of local private banks for water and sanitation projects carried out by the local municipalities through the capacity development of both the central government and the municipalities.
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What is the challenge in mobilizing local financial resources for water?
• Water utilities in local municipalities are not normally creditworthy borrowers from the viewpoint of private banks. Therefore, credit risk enhancement by local guarantee agency, backed by USAID’s co-guarantee is required.
• The maturity of the loans from private banks is not long enough to finance water projects, even if a guarantee is provided. Therefore, it should be blended using ODA loans with a longer maturity.
• Ring-fenced Revolving Account is established to ensure sustainability of funds.
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DBP
administers the Philippine Water Revolving Fund
credit enhancement and lending
reflows
DBP/ MDFO
provides Stand-By Credit Line to cover liquidity risk of the PFI loan (if 20 year
tenure)
The Stand-by Credit Line will be used to refinance the PFI loan if it is decided not to extend the tenure beyond the original seven years.
Creditworthy Water Service Providers
LGUGC
provides partial credit Risk
guarantees for the PFI loan
PFIs/MFIs
co-lends through PWRF/DBP to Water
Service Providers
GRPprovides a sovereign guarantee for a JICA
Loan
USAID/DCA
co-guarantees LGUGC
JICA
lends to DBP
PWRF Special (Revolving) Account
for re-lending, stand-by credit line or additional credit enhancement
Lenders
Credit enhancers
Borrowers
Co-Financing
PrincipalRepayment
Financial Structure of the Philippine Water Revolving Fund (PWRF)
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New move in Japan
Team Water Japan,Water Security Council of Japan
• Team Water Japan has the will to support water security activities around the world.
• Water Security Council of Japan will serve as the catalyst for coordinating Japanese expertise and resources towards achieving water security, in Japan and worldwide.
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New move in Japan
ODA Reform – Creation of new JICA (Japan International Cooperation Agency)
• JICA will implement Japan’s ODA program comprehensively, Including ODA Loans, Grant and Technical Assistance (T/A).
• JICA is fully equipped to support developing countries’ investment in water while strengthening their capacity in managing water.
• JICA’s support is world-wide.