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WATER PUBLIC-PRIVATEPARTNERSHIP

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1. Water is life. Water is vital!2. Yet, the Philippines lags behind in providing

potable water to its people.3. Our government and NGOs have planned

to improve water availability by providingfunding and/or water supply componentstowards providing potable water to thepeople.

4. Yet, the government and NGOs have failed todrastically improve access to safe, potablewater for the people.

5. Why the slow development of the Level 3water systems?

6. The Solution: PPP for Water Utilities7. BWSI initiates proposed WPPP.

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“They both listened silently to the water, which tothem was not just water, but the voice of life, the

voice of Being, the voice of perpetual Becoming.”― Hermann Hesse, Siddhartha

The Philippines is endowedwith a

because of its geographicalsetting

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Yet we have all at onetime in our lives, andeven until now, takenour precious resourcefor granted

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• 85% or 84 Million haveaccess to FORMALLEVELS of waterservice

• But only 47% or 46.5Million have access toLEVEL 3 type ofwater service

LEVEL 1 - Point Source – Well orspring but with people havingto fetch water

LEVEL 2 – Communal faucets, pumps

LEVEL 3 – Completewaterworks system withindividual connections to

households and commercialestablishments

*

* - Defined byNEDA as of 1995

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AMONG THESERVICELEVELSDEFINED, A

ISCONSIDEREDTHE

Access to Formal Levels of Service:84.8%

InformalAccess:

20%

Level 3:47.2%

Level 2:10.7%

Level 1:26.8%

Self-provisionthroughprivatewells,tanked orvendedwatersupply orpipedsupplyprovidedby SSIPs

WaterDistricts:

21%

PrivateOperat

ors:5.2%

LGUs& CBOs:

21%

LGUs & CBOs:37.5%

10Water District (WD); Private Operators (PO); Local Gov’t Unit (LGU); Community Based Org (CBO), Small Scale Independent Providers (SSIP) Source: NSCB ,Philippine Progress based on MDG Indicators, 2010 NEDA, Philippine Water Supply Sector Roadmap, 2010

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Promotes Safe and HealthyEnvironment

Provides an improvedquality of life for the people

Essential element for progress/countryside development/

investment12

IN TRUTH, THERE HASBEEN NO LACK OFFUNDING OPTIONSFOR WATERINFRASTRUCTUREPROJECTS IN THEPHILIPPINES.

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National Government Budget Priority Development Assistance Fund (PDAF)

Foreign Agency Support

• Asian Development Bank (ADB)• German Development Bank (KfW)• Japanese International Cooperation

Agency (JICA)• United States Agency for

International Development (USAID)• MDG Achievement Fund

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IncomeClassification

Total Number ofMunicipalities

w/ Level 3Water System Percentage

6th 17 4 23.53%

5th 238 90 37.28%

4th 351 179 51.00%

3rd 251 151 60.16%

2nd 178 110 61.80%

1st 322 224 69.57%

TOTAL 1,357 758 55.86%

Source: NSCB List of Municipalities, 2013LWUA Philippine Water District Directory, 2011

There are still 599 MunicipalitiesWithout a Level 3 Water system

ABANDONED WELLS FUNDED BY FOREIGNAGENCIES / PDAF

• San Jacinto, Pangasinan• Laoac, Pangasinan• Alfonso Castaneda, Nueva

Vizcaya• Llanera, Nueva Ecija• Capas, Tarlac• Dapdap, Tarlac• Sta. Ana, Pampanga• Magalang, Pampanga• Guiguinto, Bulacan• Balagtas, Bulacan

Rehabilitatedby BWSI andnowsustainablewater systems

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I. Fragmented Regulation &Management

II. Lack of expertise ofimplementing bodies

III. Low Cost-Recovery Level

• Over 30 governmentagencies anddepartments are dealingwithwater supply irrigation flood controlwatershed

management andother water-related

projects

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No proper coordinationand integration

• Overlap of work• Conflicting

projects• Unclear direction

of the wholesector

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• The GOCC mandated by law topromote and oversee thedevelopment of water supplysystems in provincial citiesand municipalities outside ofMetropolitan Manila.

• The Law that created LWUA(Presidential Decree No. 198,also known as “The ProvincialWater Utilities Act of 1973) alsoprovided for the establishment ofWATER DISTRICTS inprovincial cities andmunicipalities.

• What is a WATER DISTRICT:

A water district is a localcorporate entity thatoperates and maintains awater supply system inprovincial city ormunicipality. A WD is runby a five-man Board ofDirectors through aGeneral Manager.

As of 2005/6 – Members 586

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In 2009, LWUA announcedit would spend Php868Million to activate 94 non-operational water districts.

To date, the number ofnon-operational waterdistricts even increased to271.

• Management integrity issues prevent the sustainable operationsof Level 3 water systems.

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• Cost of investment for water infrastructure ishigh which makes it difficult for waterproviders especially the LGUs and WDs torecover expenses at a shorter period of time.

• Tariff levels are not sufficient toSustain operating expenses,Plan expansion of coverage areas andFund new capital developments

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• BWSI, as a private entity, has establishedwaterworks systems in some poormunicipalities* but they are still losingoperations.

• Despite our efforts improve operations,we realized on a purely private equity,turn around time is long and may notbe sustained.* 3rd to 6th Income – class Municipalities

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• “In practice, the most successful financing modelsthat are emerging for long-term water PPP projects indeveloping countries are basically HYBRIDSCHEMEs”

• “Colombia was the first to depart from the standardconcession approach, using the mixed ownershipcompanies approach or providing public grantsto private concessionaires to accelerate investment.Many of these hybrid PPPs had positive results.”

• “…grant money and patient capital will benecessary to launch many of the proposedinitiatives and attract further commercialcapital for the proposed scale-up strategies.”

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Level 3Municipal

Water System

B W S I

L G U

GrantorPrivateEquity

A collaboration of resources between BWSI, the LGU and interestedPrivate Equity / Donors and local or international Grantors

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Target:200 Municipalities from the 3rd to

the 6th Income class levels in10 Years

Service Quality: Potable water,24/7, at a minimum pressure

of 16 psi

Affordable Tariff Levels:P15-19/cum for first 10 years

Legacy Commitment: Asustainable and “built to last”

Level 3 water system

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• Raise Php2 Billion from Individuals or Institutions thatare interested to partner on the following modalities tobe established:

Php1.0 BILLIONPrivate Equity Fund

Company – to beincorporated as

Water Private Equity,Inc. (WPEI)

Php1.0 BILLIONNon–Stock, Non-ProfitFoundation fromGrants & Donations –to be entrusted to anorganization calledthe Water Foundation(WF)

• Target of 200 preferred 3rd to 6th Class Municipalitiesbased on a project model of Php10 Million each

WaterSupply

SourcingDistribution

Operations &Maintenance

Meter Reading,Billing &

Collection

• A Management company (tentatively called WFMC) willbe established to act as an oversight to administer thetwo institutional models

• BWSI will be the supervising institution in managingthe WFMC

Php1.0 BILLIONPrivate Equity Fund

Company – to beincorporated as

Water Private Equity,Inc. (WPEI)

Php1.0 BILLIONNon–Stock, Non-ProfitFoundation fromGrants & Donations –to be entrusted to anorganization calledthe Water Foundation(WF)

WPPP FundManagement

Company(WFMC)

• Lian, Batangas• Lobo, Batangas• Guinayangan, Quezon• Polillo, Quezon• San Narciso, Quezon• Maragondon, Cavite• Noveleta, Cavite• Sibonga, Cebu• Panitan, Capiz

• Alitagtag, Batangas• Cuenca, Batangas• Dao, Capiz• Catmon, Cebu• Oslob, Cebu• Jovellar, Albay• Manito, Albay• Leganes, Iloilo• Naawan, Misamis Oriental• San Enrique, Negros Occidental

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• Balete, Batangas• San Nicolas, Batangas• Santa Teresita, Batangas• Alcantara, Cebu• Alcoy, Cebu• Batad, Iloilo• Mina, Iloilo• Gen. Emilio Aguinaldo, Cavite• Gitagum, Misamis Oriental• Lalonglong, Misamis Oriental

• Pura, Tarlac• Baler, Aurora• Barotac Viejo, Iloilo• Ajuy, Iloilo• Sta. Cruz, Ilocos Sur• Sta. Maria, Ilocos Sur• Lagawe, Ifugao• Calaca, Batangas• Piddig, Ilocos Norte• Sto Domingo, Ilocos Sur

Set up of a complete Waterworks System inBgys. Baliti and Panipuan in San Fernando Pampanga.

PROOF OF CONCEPTWPPP SOLUTION

ROTARY INTERNATIONAL 3H* GRANT WATERWORKS

* Health, Hunger and Humanity (3-H) Grants

1. Rotary International 3H Grant $165,500.002. Co-sponsors - Other Rotary Clubs:

1. Rotary Club of Makati $10,000.002. Rotary District 2820 Itako, Japan 9,500.00 19,500.00

Total Grant $185,000.00OR

Php9,000,000.003. Others (for land and building) $20,000.00

Grant Specifics

4. BSWSI – Designed, Built and Operated the Water system

2007 2008 2009

No. of billed Customers 1,080 1,115 1,150Price per Cu.M (average) 16.00 16.00 16.00

Revenue 3,741,614.00 4,990,552.00 4,432,502.00Cost of Service (3,303,760.00) (2,981,640.00) (3,284,624.00)Gross Profit 437,854.00 2,008,912.00 1,147,878.00Other Income 231,378.00 184,564.00Income Before OperatingExpenses 669,232.00 2,008,912.00 1,332,442.00Operating Expenses (511,376.00) (1,021,170.00) (1,008,653.00)Income Before Income Tax 157,856.00 987,742.00 323,789.00

Provision for Income Tax (413,137.00) (63,112.00)

NET INCOME 157,856.00 574,605.00 260,677.00Total Depreciation Expense 836,216.00 717,068.00 660,532.00

Net Cash Flow 994,072.00 1,291,673.00 921,209.00

INCOME STATEMENTS 2007-09

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• BWSI, as a private entity, has establishedwaterworks systems in some poormunicipalities* but they are still losingoperations.

• Despite our efforts improve operations,we realized on a purely private equity,turn around time is long and may notbe sustained.* 3rd to 6th Income – class Municipalities

• Aritao, Nueva Vizcaya – 3rd class Municipality• San Jacinto, Pangasinan – 3rd class Municipality• Laoac, Pangasinan – 4th class Municipality• Alfonso Castaneda,

Nueva Vizcaya – 4th class Municipality• Maria Aurora, Aurora – 4th class Municipality

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STRUGGLING BRANCHES:

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• Balibago Waterworks System, Inc. (BWSI) was established in May 20,1958 as a privately held company by Mr. Eladio Santos, from a prominentfamily from Porac Pampanga. His vision then was to establish andoperate potable water distribution system within a 900 hectare areacomposed of Barangays Balibago in Angeles City and Dau in the town ofMabalacat Pampanga.

• It quickly established its operations in the two barangays for the nextforty years until in 1998, a dynamic group of friends by Messrs. MichaelL. Escaler and Cristino L. Panlilio purchased BWSI from the Santos familyupon realizing the organization’s vision of providing communities withpotable water systems was something the rest of the country needed.Thus began their drive to seek for other places where there is anapparently lack or outright absence of a potable water system andreplicate what they did for the first two communities they served.

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To promote growth anddevelopment in communities

by providing quality basicservices

Our Vision

Bali IrisanResources, Inc.

2. To provide high-quality water:– Deliver chlorinated water– Undertake monthly laboratory tests against micro-organisms– Replace rusty pipes to ensure clear-colored water

1. To provide an efficient waterworks system: Dependable, 24-hour water service Water pressure of at least 16 psi

3. To provide extensive water coverage within the franchise area whereeconomically feasible.

Our Mission

Bali IrisanResources, Inc.

Balibago WaterworksGroup of Companies

Bali IrisanResources, Inc.

* Wholly Owned byBalibago WaterworksSystems, Inc

*

**

** Majority ownedBy BWSI

Summary of Branch Network

1. Balibago, Angeles City (Main Branch)2. Llanera, Nueva Ecija3. Sto. Domingo, Nueva Ecija4. Zaragoza, Nueva Ecija5. Laoac, Pangasinan6. San Jacinto, Pangasinan7. Sta. Barbara, Pangasinan8. Laurel, Batangas9. Talisay, Batangas10. Garden Villas Subd., Sta.Rosa, Laguna11. Rotary International 3H Grant, San Fernando

Pampanga

1. Apalit, Pampanga2. Minalin, Pampanga3. Porac, Pampanga4. San Simon, Pampanga5. Sta. Rita, Pampanga6. Sto. Tomas, Pampanga7. Bamban, Tarlac8. Meycauayan, Bulacan

1. Arayat, Pampanga2. Magalang, Pampanga3. San Luis, Pampanga4. Sta. Ana, Pampanga5. Telabastagan, Pampanga6. Capas, Tarlac7. Dapdap, Tarlac8. Alfonso Castaneda, N. Vizcaya9. Aritao, Nueva Vizcaya10. Bagabag, Nueva Vizcaya11. Bayombong, Nueva Vizcaya12. Maria Aurora, Aurora

Bali IrisanResources, Inc.

1. Guiguinto, Bulacan2. Malis, Bulacan3. Panginay, Bulacan4. Bustos, Bulacan

1. Passi City, Iloilo2. Bingawan, Iloilo3. Corella, Bohol

Victoria, Laguna Tuba, Benguet

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Scope of Services Government Regulation As a private water service

provider, BWSI is regulated by theNational Water Regulatory Board(NWRB)

Increase in water rates must thereforebe approved by the NWRB after goingthrough public hearings.

NWRB issued a citation declaringthat BWSI is “one of the mostefficient and praiseworthy privatewaterworks companies providingLevel 3 water systems.

to turn the WPPP Concept into a

startling reality

• EXPERIENCE

• INTEGRITY• EXPERTISE

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— Albert Szent-Gyorgyi

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