Reforms, Objectives and Policies
- Improve investor confidence in the water sector.
- Rationalize allocation of limited financial resources using classification and graduation.
- Allow WSPs freedom to choose financing sources.
- Increase LGUs, Government Financial Institutions (GFIs), and Private Financial Institutions (PFIs) participation.
- Stimulate improved service and financial self-sustainability.
- Encourage self-sufficiency initiatives like amalgamation, private sector participation, and resource pooling.
- Grant incentives for improvement and graduation.
- Educate consumers to treat water as an economic good.
Definition of Key Terms
- Amalgamation: Consolidation or joint operation of WSPs resulting in a WD.
- Classification: Categorization of WSPs into creditworthiness levels for financing allocation.
- Cost Recovery Tariff: Tariff covering capital, operating expenses, debt servicing, and minimal reserves.
- Creditworthy WSPs: Financially self-sustaining, capable of accessing GFIs/PFIs financing.
- Government Financial Institutions (GFIs): DBP, LBP, and government-owned financial institutions.
- Graduation: WSPs' progress towards higher creditworthiness through financial and operational improvements.
- Private Financial Institutions (PFIs): Private banks offering credit facilities.
- Various creditworthiness levels defined with associated timeframes for achieving status.
- Technical Assistance includes studies, design, supervision, operation support, and rehabilitation.
- Water Service Providers: Includes WDs, LGU-run utilities, rural and barangay water associations.
LWUA Responsibilities and Organizational Rationalization
- Review and rationalize LWUA’s organizational structure, operations, and objectives.
- Establish Water Development Group (WDG), Water Development Financier (WDF), and Technical Assistance Group (TAG).
Water Development Group (WDG)
- Continue institutional development and classification of WSPs based on financial and operational criteria.
- Develop graduation plans with initiatives on cost recovery tariffs, amalgamation/private participation, governance, and resource coordination.
- Monitor implementation and evaluate graduation plans.
- Prepare and submit quarterly reports to Oversight Committee and DOF.
Water Development Financier (WDF)
- Enhance LWUA lending functions, evaluating financial assistance applications.
- Reorient lending based on sound development banking principles.
- Strengthen loan collection and segregation of loan portfolios.
- Develop lending policies in coordination with MFC and GFIs.
Technical Assistance Group (TAG)
- Provide technical assistance continuing LWUA’s existing projects.
- Extend project-related technical support competitively to GFIs, PFIs, creditworthy, and semi-creditworthy WSPs.
- Provide assistance within value thresholds to non-creditworthy and pre-creditworthy WSPs.
Oversight Committee (OC) Role
- Coordinate and oversee EO 279 reform implementation.
- Review WSP classification criteria and classification prepared by LWUA.
- Conduct audits if necessary.
- Review LWUA Charter, classification, graduation, waiver processes, and compliance timelines.
- Determine incentives for GFIs and PFIs lending to WSPs.
- Functions to be continued by DOF.
Attachment and Staffing of LWUA
- LWUA attached to the Department of Finance (DOF) upon presidential approval of reforms.
- NG representatives at least at Director level included in LWUA Board.
Expenses for Oversight Committee
- Members and technical secretariat entitled to honoraria and expense reimbursement subject to fund availability and rules.
LGU Responsibilities
- LGUs encouraged to provide water and sewerage services through investments or loans to WSPs.
- Financially and operationally responsible for WSPs except WDs and RWSAs within their jurisdiction.
Financing Policies
- Creditworthy WSPs access commercial financing from GFIs/PFIs; LWUA streamlines waiver procedures.
- Creditworthy WDs eligible for LWUA financing if other funds unavailable, conditional on graduation initiatives.
- Semi-creditworthy WDs eligible for concessional financing and assistance, aimed at eventual eligibility for GFIs/PFIs loans.
- Pre-creditworthy WDs eligible for donor grants and deep concessional financing.
- Non-creditworthy WDs eligible for LWUA financing; LGUs encouraged to support financially and operationally.
- LWUA allocates concessional loan/grant funds prioritizing WDs with viability potential.
- WSPs can access financing from GFIs, PFIs, MFC, and LGUs consistent with IRR.
Role of Financial Institutions
- Classification determines financing eligibility but is not a guarantee of financing.
Repealing Clause and Effectivity
- Inconsistent circulars or resolutions repealed or modified.
- IRR effective 15 days after publication in Official Gazette or major newspaper.