Manila Water - Water For The Poor

Mayors Asia-Pacific Environmental Summit 2006
(MAPES)
May 9-12, 2006
Melbourne, Australia
Manila Water Companys Tubig Para Sa Barangay:

Provision of Water Supply Through Use of Small-Piped
Networks and Community Involvement
Virgilio C. Rivera, Jr.

Group Director
Regulation and Corporate Development
Manila Water Company
Table of Contents
Overview of the MWSS Privatization ...................................................................3

Business Strategy ................................................................................................3
Financial Performance .........................................................................................7
Successful 2003 Price Review.............................................................................8
Successful Initial Public Offering of MWC Shares ...............................................8
Manila Water Companys Tubig Para Sa Barangay (TPSB): Provision of Water
Through Use of Small-Piped Networks and Community Involvement..................9
Profile of the Poor in Metro Manila....................................................................9
Public Sector (MWSS) Initiatives to Serve the Urban Poor.............................10
Reaching Out to the Poor through the Tubig Para Sa Barangay...................11
Organizing Communities: Manila Waters Strategy and Experience...............12
Providing Water through a Menu of Options ...................................................13
Assessing the Programs Performance..............................................................14
Concluding Remarks and Lessons Learned ......................................................16
Continuing Challenges.......................................................................................18
Annex: Profile on Manila Waters Community Sanitation Projects .....................19
Selected References..........................................................................................21
MAPES May 9-12, 2006, Melbourne, Australia

Prepared by Virgilio C. Rivera, Jr., Group Director, Manila Water Company
Email perry.rivera@manilawater.com
Page 2
Overview of the MWSS Privatization

In 1997, the Philippine Government privatized the Metropolitan Waterworks
and Sewerage System (MWSS), a public utility engaged in the provision of water
supply, sewerage and sanitation services for Metro Manilas nearly 10 million
population. The International Finance Corporation (IFC) played a key advisory
role in this undertaking and described the program as the biggest water
privatization in the world.
With the takeover of private companies, the MWSS privatization was expected
to result in the expansion of service coverage, improvement in the quality of
service delivery and increase in operating efficiency particularly the reduction of
Non-Revenue Water (NRW).
The privatization structure entailed auctioning two 25-year concessions through
competitive bidding, and giving the winning bidders the responsibility to
handle water treatment, distribution, bill collection, facility improvement and
overall management. Strong private sector interest was shown by the
participation of major players in the global water industry like Campanie
Generale Des Eaux, Lyonnaise Des Eaux, Anglian and United Utilities as well as
leading Philippine conglomerates like the Ayala Corporation, Metro Pacific
Corporation, Aboitiz Corporaiton, and Benpres Holdings.
The winning consortia, Manila Water Company and Maynilad Water Services,
took over the operation and maintenance of the MWSS in August 1, 1997.
Ayala Corporation and United Utilities PLC have been the principal
shareholders of Manila Water since the privatization.
Business Strategy
Manila Water has posted significant gains, notwithstanding several external
shocks in the last eight (8) years. Despite the Asian financial crisis in 1997 and
the El Nio phenomenon in 1998, the company managed to pull through and
posted significant achievements via fiscal prudence and various operating
efficiency measures.
The strategy that Manila Water implemented since 1997 has several elements,
namely:
Corporate Transformation
The company developed a new corporate philosophy,We Care, at the initial
years of the concession which was essentially geared towards enhancing
customer focus and employee empowerment. Instilling trust and confidence in
the minds and hearts of former MWSS employees was an important hallmark of
Page 3
this philosophy. In fact, the company continues to depend on these employees,

constituting about 90% of its workforce of about 1,550 personnel. As a result this
new culture, the employees of Manila Water posted significant gains in
operating efficiency and garnered prestigious awards on productivity and
quality. Furthermore, the reduction in the number of employees from 2,200 to its
present level of 1,550 was successfully implemented through a series of
voluntary early retirement programs. The same employees initially held 6% of
the companys share capital through an Employee Stock Option Plan (ESOP) 3 .
Focus on Customer Service
To sustain its customer focus, the company established eight (8) Business Areas
(BAs) each servicing the needs of about 600,000 to 700,000 households. Each BA
is further subdivided into smaller hydraulic territories called Demand
Monitoring Zones and Areas (DMZs/DMAs) which are managed by a Territory
Team. Led by a Territory Business Manager, the team is focused on managing
the areas water supply, and conducts NRW monitoring and control, as well as
customer service functions and building sustainable relationship with
community-based organizations (CBOs).
To further improve the service level, Manila Water spent nearly US$350 million
over the past eight years for the rehabilitation of key primary and secondary
mains and expansion of the capacity of its pumping stations. Coupled with
strong customer focus, these investments resulted in the following
accomplishments:
Increased billed volume from 440 million liters per day (mld) in August
1997 to 864 mld by end of 2005, an increase of nearly 100%;
Provided water supply to about 2 million people, nearly half of which

comes from low-income 4 communities;
Rehabilitated and/or replaced about 1,300 kilometers of pipe network;
Reduced NRW from 63% at the start of privatization to 35.5% by end of

2005;
Improved water availability (i.e., customers receiving 24-hour water

supply) from 26% of those connected to the Central Distribution Network
to over 95% as of end 2005;
Reduced unit operating cost by 25% (real terms) and increased

productivity by at least 60%;
The employee share under the ESOP has since gone down to 2.7% of share capital after the listing of the
company shares through initial public offering in March 2005.
4
These are households with income of less than $3~$4 per day.
Page 4
Increased capacity of sewerage treatment plants, which enabled the

company to double sewerage connections and clean more than 55,000
septic tanks; and
Consistently exceeded water quality standards 5 imposed by the

Philippine Department of Health.
Selected Operating Indicators

1997
1998
1999
2000
2001
2002
2003
2004
2005
3,000
3,100
3,600
3,800
3,900
4,300
4,700
5,100
5,300
Staff per 1,000 connections 7
6.3
5.11
4.75
3.8
3.6
3.2
2.9
2.8
2.6
Unit Operating Cost 8
9.35
7.83
6.99
6.13
5.73
5.74
7.92
7.58
6.98
23
55
59
60
62
63
62
62
60
Served population 6
Average consumption 9
Bias for the Urban Poor

To ensure the sustainability of its concession, Manila Water has focused on
extending water supply services to low-income and informal communities in its
service area through its flagship program, Tubig para sa Barangay (TPSB) or
Water for the Poor project. People living in low-income communities usually
get their water from unreliable sources and pay a steep price, in some cases
more than Php 200 ($3-5) per cubic meter from water vendors. The program has
enabled the socially-disadvantaged sectors of the society to obtain piped water
connections at affordable rates, reducing the cost per cubic meter of water by as
much as 97%. Since 1997, over 530 projects under the said program have been
completed in key cities and municipalities under the companys service area
benefiting about 140,000 households or 850,000 people. Through TPSB, the
company has minimized illegal connections, leaks, and controlled the incidence
of water-borne disease outbreaks due to water contamination.
More
importantly, the program has improved the quality of life of the poor, enhanced
community involvement and forged excellent partnerships with CBOs.
These are consistent with standards set by the World Health Organization.
In thousands. Since Metro Manila is densely populated with over 12 million people, Manila Water used a
multiplier of 9.2 people per household connection to estimate the equivalent population served. This
multiplier was used by SOGREAH, a French engineering consulting firm, in 1996 as basis for the MWSS
privatization study.
7
Per household connections. Prior to privatization (1995), MWSS employed more than 8 staff per 1,000
household connections.
8
Per cubic meter of billed water in constant 2005 prices. Excludes interest expense, depreciation and
amortization. Prior to privatization, MWSS operating cost hovered around Php 11-12 per cubic meter.
9
Monthly average consumption in cubic meters.
6

Page 5
Tariff and Regulatory Support

The company effectively managed regulatory risks and challenges including the
resolution of a dispute through international arbitration and the successful
outcome of the rate rebasing or price review in 2003.
While the company continues to face foreign exchange risks 10 , it is now in a
much better position to address these potential shocks through an automatic,
revenue-neutral tariff adjustment mechanism.
The regulator approved the new business plan submitted by Manila Water
through an appropriate two-tier tariff adjustment. While the companys tariff
rates have gone up from Php 4.02 per cubic meter at the start of the concession
in August 1997 to about Php 18.55 per cubic meter by end of 2005, this still
compares favorably with estimated rates of Php 20-21 had the privatization of
the MWSS not taken place. Adjusting by the prevailing exchange rate of Php 55
per US dollar, the rates of Manila Water at US$0.21 per cubic meter 11 for
residential customers would still be one of the lowest in South East Asia.
Creditor Support
Coupled with favorable performance and operating efficiency gains, Manila
Water was also successful in getting the support of its local and foreign creditors
which now include the German Development Bank (GED), the World Bank and
the International Finance Corporation (IFC). The Company increased its
cumulative borrowings from US$25 million in 1999 to over US$200 million in
2005 to support and finance its capital investment program.
Environment Sustainability and Social Development
The company continues to look for ways to provide better sewerage and
sanitation services to its customers. It has completed the construction of 26 lowcost, on-site package sewage treatment plants as well as aggressively rolled-out
sanitation services (i.e., cleaning of septic tanks and proper disposal of sludge)
as part of its compliance with its service obligations. Its sanitation program is
supported by the Asian Development Bank and the World Bank.
As part of its Sustainable Development Program, the Company has also initiated
several programs to improve livelihood in poor communities through microfinance and capacity-building mechanisms, improvement of water and
sanitation conditions of public schools, hospitals, wet markets and other
institutions and establishments, and the protection of watersheds which
provide 95% of Manilas raw water supply.
10
Revenues of the company are based on local currency while all its borrowings and debt service are
currently denominated in foreign currencies.
11
The average household consumes about 30 cubic meters which is equivalent to a monthly bill of Php326
or $6.34
Page 6
Consistent with the companys initiatives in Sustainable Development, Manila

Water released a Sustainability Report in 2004, the first by a Philippine company
that adheres to guidelines issued by the Global Reporting Initiatives (GRI) on
Corporate Social Responsibility (CSR). Manila Waters Sustainability Report
benchmarked the companys performance against international best practices in
environmental and social performance, as well as corporate governance.
Financial Performance
The financial performance of the company improved steadily in the last five
years, from a net loss in 1997 to Php 2,011 million net income in 2005. The
cumulative net losses of about Php 100 million in 1997 and 1998 were due
largely to the impact of the El Nio phenomenon and the Asian financial crisis 12
in 1997 to 1998 which resulted in higher debt service related to loans (about
US$200 million) absorbed by the company from MWSS.
Total annual revenues 13 consistently increased from Php 960 million in 1998 to
Php 5,763 million in 2005, buoyed by billed volume and NRW gains. Through
fiscal discipline, total operating expenses were controlled since 1997.
Selected Operating and Financial Indicators
1997
1998
1999
2000
2001
2002
2003
2004
2005
455
594
645
706
758
751
767
825
864
50.9%
54.4%
50.4%
51.2%
53.0%
53.5%
50.7%
43.4%
35.5%
Average Tariff 15
4.02
4.02
4.37
4.55
6.31
9.37
13.38
13.99
18.55
Revenues
416
960
1,295
1,401
1,565
2,523
3,496
4,205
5,763
EBITDA
(37)
(57)
186
225
304
1,132
1,895
2,029
2,955
Net Income
(38)
(67)
100
123
176
553
1,158
1,335
2,011
In million Php unless

otherwise indicated
Billed Volume 14
NRW (%) end of year
(5 mos.)
Sources: 1997 to 2005 data: Manila Water Company Audited Financial Statements, Internal Operations Reports and
Reports submitted to MWSS Regulatory Office.
12
The Asian financial crisis resulted in marked depreciation of the Peso from Php 26 per US dollar in June
1997 to over Php 50 in 1998. As of the writing of this report, the value of the local currency is about Php
51-52 to the US dollar.
13
Based on billed volumes. Manila Water collects 95% of its billings on average.
14
End of year billed volume expressed in million liters per day
15
Average all-in tariff per cubic meter at year-end for non-sewered, residential customer. Commercial and
Industrial customers pay (i.e., cross subsidy for residential customers) higher rates under MWSS
increasing block tariff structure.
Page 7
Successful 2003 Price Review

In 2002, the MWSS and its Regulatory Office conducted a price review or Rate
Rebasing exercise 16 . Manila Water prepared a new business plan which was
reviewed by the team of consultants engaged by the regulator.
The regulator completed its year long review which resulted in a rate
adjustment of over 70%, the implementation of which was staggered between
2003 and 2005. As a result, the tariff rate for non-sewered customer has gone up
from Php 9.37 per cubic meter (~US$0.17) by the end-2002 to Php 13.38
(~US$0.24) in 2003. In January 1, 2005, the rates further went up to Php 18.55 per
cubic meter (~US$0.34), reflecting the balance of the rate rebasing adjustment.
While the adjustments are quite substantial, the water bills of the average
residential customers remain below 3% of their monthly income.
The successful rate rebasing of the company could be attributed to the following
factors:
Efficiency gains and improvement in service over the past 8 years;
Linking prices to services. Comprehensive business and capital

investment plan worth US$ 1 billion over the period 2003 to 2022 to
address expansion of water coverage and sanitation services with
particular focus on the urban poor;
Professional relationship with the MWSS and introduction of key

performance indicators and business efficiency measures to monitor the
operators performance; and
Strong support of communities and local government units.
Successful Initial Public Offering of MWC Shares

On March 18, 2005, Manila Water was listed at the Philippine Stock Exchange as
part of the companys Initial Public Offering (IPO). The listing followed a global
IPO of Manila Water shares, which raised for the company net proceeds of
approximately Php3,378.2 million (about US$62 million). Manila Water will use
the net proceeds for capital expenditures, concession fee payments and other
general corporate purposes, including expansion of water supply and sewerage
services within its East Zone concession area as well as in new areas of
opportunity.
16
Rate rebasing is a process that allows the regulator and operator to adjust (up or down) tariff rates and
update plans in light of changes in demand, technological advances, input prices. This process is done
every 5 years.
Page 8
The listing enabled the company to achieve the following:
Broaden the ownership base of the company with over 12,000

shareholders;
Provided its employees, majority (90%) of which are former employees of

the public utility (MWSS), an opportunity to realize capital gains;
Achieved a major milestone for the countrys public-private partnerships

in infrastructure; and
Raised the level of corporate governance.
Manila Water Companys Tubig Para Sa Barangay

(TPSB): Provision of Water Through Use of Small-Piped
Networks and Community Involvement
Profile of the Poor 17 in Metro Manila
The profile of the poor in Metro Manila presented below draws heavily from the
work of Dr. Celia M. Reyes of the Philippine Institute for Development Studies
(2002) and the World Bank (2001). The findings that are relevant to the subject of
this paper are presented below:
Poverty incidence in the Philippines has declined to 31.8% of the total

number of families 18 in 1997 from 44.2% in 1985. However, the Asian
financial crisis coupled with the El Nino in 1997-1998 has reversed the
downward trend and has caused poverty incidence to increase to 33.7%
in 2000.
The actual number of poor families has gone up from 4.36 million in
1985 to 5.14 million in 2000 due to the increase in population.
17 The official estimate of poverty incidence is based on a comparison of income with a poverty threshold
defined by the National Statistical and Coordination Board (NSCB). The poverty threshold is the income
needed to meet basic food and non-food needs. The food threshold or subsistence threshold is the income
needed to meet basic food needs.
18
An alternative way of presenting poverty data is in terms of the proportion of the population who are
poor. The poverty incidence based on individuals is larger than the poverty incidence using families as the
unit since poor families tend to have larger family sizes. In 2000, the average family size of poor families
is 6.0 while it is 4.67 for non-poor families. The proportion of the population who are poor has steadily
declined from 49.2% in 1985 to 36.9% in 1997. However, the crisis in 1997-1998 caused the poverty
incidence to go up to 39.5% in 2000, effectively wiping the gains in poverty reduction over the last six
years.

Page 9
About 12 out of 100 individuals in the NCR can be considered poor. In

the National Capital Region (NCR) or Metro Manila, the annual per
capita income poverty thresholds has increased from Php4,527 in 1985 to
Php17,713. The incidence of poverty among individuals residing in Metro
Manila has gone down from 27.1% in 1985 to 11.5% in 2000.
The poor spend the most on low-quality vended water. Almost a tenth
of Metro Manila residents, many of them poor, get their water from
vendors. The Filipino poor who rely on vended water as their main
water source devote 9% of their household expenditure to buy water.
This is the highest share among all categories and sources, and this
population segment should be considered top priority for targeted
interventions.
Public Sector (MWSS) Initiatives to Serve the Urban Poor

Prior to its privatization, the MWSS provided public or community faucets in
strategic locations to serve the poor. It was estimated that the MWSS constructed
about 200 public faucets, with each public faucet serving at least 50 families.
In coordination with various local government units within its franchise area,
MWSS subsequently improved its service through Water Improvement Program
for Depressed Area (WIPDA) which has the following key features:
Each WIPDA project is provided with a mother meter and each

household is given an individual water service connection with a private
meter 19 .
The location of every WIPDA project is determined by the Sector or

Business Area concerned in coordination with the local government units
and community organizations.
Consumption is based on monthly water meter readings based on public

faucet rate.
The programs of the MWSS to reach the poor unfortunately could not keep up
with the increase in the number of poor families.
It is believed that the rest of the urban poor who are not connected to a public
faucet get their water supply through an illegal connection (i.e., water consumed
but not billed by the MWSS) or through water vendors at exorbitant prices.
Illegal connections in Metro Manila proliferated primarily due to:
Decades of low tariff regime and under-investment in the maintenance

and upgrade of facilities which prevented the MWSS from expanding its
service; and
19
Private meters are paid for/owned by customers. They are not registered in the customer billing database
of MWSS.
Page 10
MWSS policy of requiring a certificate of land title or copy of lease

contract from an applicant before a new connection is provided. In effect,
this policy marginalized the poor who had no choice but to get water
supply through illegal connections and/or water re-sellers.
Reaching Out to the Poor through the Tubig Para Sa Barangay

Manila Water initially adopted MWSS programs (i.e., public faucet and
WIPDA) for the poor. It later expanded the focus of the programs to simply
address the problem of illegal connections. Through the companys Barangay 20
Sweep, the employees of the company were organized into teams and assigned
an area which should be checked for illegal taps. Later on, the evaluation
included customer service issues like billing and collections.
In 1999, the company developed a strategy that will provide better water supply
to the poor and address the problem of illegal connections. The strategy was
eventually formalized and implemented through the companys Tubig Para Sa
Barangay (TPSB) or Water for the Poor program. The objectives of TPSB are
as follow:
Help build communities and improve the quality of life of informal and
low-income communities;
Improve access to potable water through appropriate water service

connections;
Eliminate illegal connections, leaks, etc.;
Improve water quality;
Easy access for the meter reader thus further improving collection
efficiency; and
Forged sustainable relationship with community-based organizations

(CBOs).
The TPSB program was introduced in areas that have any of the following
characteristics:
a large number of clustered low-income families with some form of

community organization;
a high rate of illegal water connections;
no existing piped water supply;
with very poor water quality; and/or
where roadway is wide enough to lay a tertiary mainline.
The program was implemented through the following measures:
20
review the physical and socio-economic conditions of the area
Barangay is the smallest political unit in the Philippines.

Page 11
waive the policy of requiring a certificate of land title or copy of lease

contract before an applicant is given a water connection;
provided a flexible non-interest bearing installment repayment plan for

connection charges 21 ;
offer a menu of options 22 to the poor to connect to the companys water

system;
organize community participation through CBOs; and
adopt decentralized organization set-up which is characterized by the

deployment and empowerment of a dedicated company staff (i.e.,
territory teams) whose primary responsibilities are to address customers
needs, eliminate illegal connections, reduce NRW, expand service
coverage, improve customer service and help organize communities or
peoples organizations.
Organizing Communities: Manila Waters Strategy and

Experience
The cooperation and active involvement of the community is a critical factor to
ensure the success of the provision of water supply through TPSB. The
community is usually organized through a cooperative, a neighborhood
association, a homeowners association or CBOs which is the most popular form
of community organization.
Soliciting the communitys support usually takes a long process and would take
much of the time of Manila Water staff assigned in the area. Whenever it is
convenient, the company would also work closely with NGOs who will help
organize the community. The ultimate objective of the exercise is to increase the
capacity of the community and its residents to manage and operate the water
distribution system within their respective areas. The major activities in
organizing the community are:
social preparation: information

consultation/meeting;
dissemination
and
community
assist the CBOs in organizing a water committee, in defining the roles of

the committee, and in training the committee members on their watersupply related tasks;
21
Per contract, connection charge was Php3,000 at the start of the concession in 1997 but has since nearly
doubled due to inflation. The connection charge for typical single connection which is 25 linear meters
(lm) from the nearest tapping point is 5,500 pesos or about US$100. In excess of 25 lm, Manila Water is
allowed to charge all prudently and efficiently incurred costs. Furthermore, the company offers flexible
financing schemes to enable the households to afford the connection charges.
22
Manila Water had to develop several options to address, among others, the capacity to pay of the lowincome customers, in particular the connection charge to the nearest tapping point in the network.
Page 12
help set out the collection system and in defining the policies and
procedures to be followed in collecting installment payments for
connection charge, if any, and monthly water bills;
help in the design of secondary and tertiary lines as well as assist in the
supervision and monitoring of waterline installation;
conduct seminars and workshops on

the operation of a water
distribution system and basic customer service activities (e.g., meter
reading, simplified bookkeeping, etc.);
help the CBO in resource mobilization; and
assess and evaluate

community.
the impact of the new water supply on the
Manila Waters experience shows that Local Government Units (LGU) also play
a critical role in building sustainable relationships with communities. The cost of
the reticulation (i.e., network of secondary and tertiary lines) system is usually
shared among the members of the PO. The design of the water distribution
system depends on a number of factors as discussed above but one of the critical
determinants is the willingness to connect and capacity to pay of the
community. Because of financial constraints, some CBOs may tap alternative
sources of financing such as funds from LGUs or multilateral financial
institutions (MFIs) in order to pay for connection charges and/or finance their
reticulation system within the community.
Providing Water through a Menu of Options

The TPSB program helped address illegal connections and improve access to
water supply through a menu of options which the company offers to
communities or customers. A brief description of the options or schemes for
water service connections is provided below.
Scheme 1: Standard New Service Connections

A water service connection is directly provided to each previously un-served
household or family. Each household is required to pay connection charge
before a connection is made. The new connection is then registered as an official
water service connection by the company. Under this scheme, the transaction is
purely between the household and the company. There is very little
involvement of the community organization.
Scheme 2: Clustered New Service Connections

Under this scheme, the connections are grouped into meter arrays and installed
near the water main. This arrangement is quite similar to metering system
adopted by the local electric utilities. Each customer or household will have a
dedicated water meter. The cost of pipe network after the meter is the
Page 13
responsibility of each household. Community involvement is solicited before the

program is implemented.
Scheme 3 Bulk Supply with Clustered Private Meters

The company installs a mother meter for each cluster of private meters.
Bulk service connection entails a mother or bulk meter right outside the
community. The bulk meter is used to measure the entire water consumption of
the community comprised of about 200 to 300 households. Each household is
connected to the reticulation system through a service pipe and provided with a
private water meter to measure consumption. A community usually engages the
services of a small-scale provider who manages the network and customer
service after the mother meter. The costs of the reticulation system and the
private meters are shouldered by the community usually through installment
repayment plan agreed with the company. In some cases, several households
still opt to share a single connection/water meter to further cut down on costs
related to piped water supply as well as save on monthly water bill.
Scheme 4 Bulk Supply with Direct Individual Private Meters

This scheme is similar to Scheme 3 but the difference is that private meters are
installed within or near the property line of the household instead of being
installed in cluster arrangement near the mainline or in front of the street block.
A small-scale water provider or CBO is also involved in this scheme.
Scheme 5 Bulk Supply with Street Metering

This scheme is modified or improved version of the bulk metering described
above but on a smaller scale. A bulk meter is installed on every street block
consisting of about 15 to 40 households. The company advances the cost and
supervises the installation of pipes and private meters to each household.
Prior to installation of pipes and meters, the community or the CBO is
encouraged to form a water committee composed of street leaders whose
primary task is to liaise among the company, the CBO and individual
households. They perform simple customer service tasks like meter reading or
disconnecting service connections, monitoring street block for illegal
connections or pilferage and leaks, collecting bills and remitting payments to the
company.
Assessing the Programs Performance

This section discusses the TPSB program through the use of small-piped
networks and community involvement by addressing the following questions:
How many projects have been implemented?

Page 14
How many people have benefited from the program?
What other benefits can be derived from the program?
The success of Manila Waters Tubig para sa Barangay (TPSB) project can be
attributed to the fact that the company is well-organized, results-oriented,
focused, flexible and functions as a cohesive unit.
Early on, it has decentralized its operations into smaller, more manageable
district metering zones and areas which are managed by Territory Teams. This
has enabled the company to provide better access to piped water supply for
low-income communities. Through the various schemes to provide water
supply, it allowed the company to reach out to its customers particularly the unserved poor and informal communities.
Since its inception in 1998, the company has implemented over 530 TPSB
programs which benefited over 850,000 people. This represents about 40% of the
two (2) million people estimated to have been served by the company since the
program started in 1998 through 2005. The table below shows the number
projects implemented and estimated beneficiaries of the program.
Tubig Para Sa Barangay Performance Indicators
Cumulative figures
2000
2001
2002
2003
2004
2005
Number of TPSB projects
91
146
248
358
477
535
Beneficiaries 23 - 000 people

*insignificant
300
380
500
588
700
850
In addition, the TPSB program allowed the beneficiaries to avail of water supply
at a lower cost. These people used to buy water through vendors who charge
them at least Php 200 pesos (about US$2-3) per cubic meter 24 . Based on MWSS
socialized tariff structure, the companys customers under its TPSB program pay
only less than Php 12 pesos (or about US$0.14) per cubic meter 25 which is less
than 10% of the price of vended water.
The TPSB program has also resulted in positive externalities. There is
heightened health consciousness among communities. Now, some residents
have built their own septic tanks after being connected to a piped water supply.
Manila Water is also in the process of introducing communal septic tanks for
those who cannot afford to build their own septic tank. Although difficult to
quantify, the company believes that the program has reduced the incidence of
water-borne diseases due to contaminated water and has significantly improved
the quality of life of these under-privileged, low-income people.
23
Based on actual field reports of territory managers of Manila Water, water service connections to lowincome areas are normally shared by multiple families or households. MWSS provided public faucets and
supply projects for the poor. However, the beneficiaries of these projects were not recorded or quantified.
24
Based on field surveys of Manila Water staff.
25
Based on billing statistics of Manila Water, households under TPSB program consume about 20~30
cubic meter per month.
Page 15
The program has also enabled the company to mitigate the problem of illegal
connections although the problem still persists.
Finally, the TPSB program gave the company the flexibility to expeditiously
expand service coverage and effectively address the problem of non-revenue
water, particularly physical leaks and pilferage. Now these communities are as
vigilant as the operator in arresting water pilferage.
Concluding Remarks and Lessons Learned

On Corporate Transformation and Continuing Challenges
Manila Water faced significant challenges and external shocks since 1997.
However, the company still recorded marked gains in service delivery
particularly to the urban poor.
The profitability of the company has significantly improved through successful
corporate transformation, business expansion, fiscal discipline and effective
management of regulatory risks resulting in the implementation of appropriate
tariff adjustments and improvement in profitability. The company is in a solid
position to further expand service to its growing customer base.
Moving forward, Manila Water remains focused and confident that it will
address the new challenges of expanding the network to meet the needs of a
growing population, rising customer expectations on service level and new
regulatory targets on efficiency, and expanding its business in the Asian region.
On Service Provision and Working with CBOs through Small Piped

Networks
Given the varying characteristics of informal communities, it is very difficult to
prescribe a uniform scheme (one-size-fits-all) that is applicable to all lowincome communities.
Schemes 4 and 5 described above, however, are the most popular models
because they are appropriate in light of the socio-economic characteristics of the
community, and allow the households to share the cost of connection charges
which is a major factor in providing piped water supply.
The provision of better service to the urban poor remains one of the key
programs of Manila Water. Since 1998, when the company embarked on its
Tubig Para Sa Barangay program, it gained substantial experience and
developed effective practices in serving the poor. Outlined below are practices
and lessons learned that the reader may find useful.
Page 16
Community-based organizations and local government units should be

actively involved from concept to implementation to ensure success.
Experience shows that Manila Water was more effective in providing
service to communities that are well-organized.
The operator must play catalyst role in soliciting support of CBOs prior to
implementation of the program. Over the past few years, the
management and staff of Manila Water have developed skills in
organizing communities.
Active community participation (a) enhances sense of ownership; (b)

encourages the people to police their own ranks against pilferage; (c)
improves collection efficiency; and (d) increases transparency; and (e)
expedites public consultations.
The design of the program should be based on the capacity (e.g., level of
income, how well the community is organized, etc.) and the needs of the
community being targeted. Thus, there is no single model that will be
effective for all types of communities and operating environments.
The regulatory framework should be proactive, pragmatic and pro-poor.

The partnership between the operator and the Regulator should be
strengthened with the view of developing programs acceptable and
appropriate for the poor.
It is important that the program for the poor is effectively managed and
monitored from concept to implementation by the stakeholders.
Obviously, the key players would be the operator and the community
which will benefit from the project. Second best solutions are better than
looking for the ideal project that is not practical to implement.
The willingness to connect and pay of the poor improves if the program
is designed well by taking into account the socio-economic factors of the
target community and involves community participation. Experience
shows that consumption and quality of life dramatically improved
through better service delivery.
Any intervention should be based on full cost recovery subject to

socialized tariff 26 and flexible payment schemes to ensure viability and
sustainability.
Provision of water supply can only be sustained if it is a shared

responsibility among key stakeholders (i.e., operator, regulator,
customer/CBOs, financial/donor institutions).
26
Manila Water adopts MWSS tariff policy which is based on increasing block structure (i.e.,
commercial/industrial customers pay significantly higher rates compared to residential customers and
within each customer category, for example residential, high-volume consumers pay much higher rates
than customers who consume less)
Page 17
Continuing Challenges
While Manila Water has posted significant gains in serving the poor, the
company faces new challenges. These would include the following:
Balancing full cost recovery and affordability of tariff rates to ensure

sustainability. The recent increase in the tariff rates of Manila Water may
affect the ability and willingness of the poor to be connected to a piped
water supply. Compared to vended water, however, the rates of the
company remain competitive.
The company needs to continuously improve its TPSB models to ensure

that both the needs of the poor 27 and its efficiency targets are met.
The number poor communities continue to grow as can be gleaned from

the research reports cited above. The company therefore needs to
earmark more resources (i.e., financial and manpower) to address their
growing demand for better water supply and help the country meet its
Millennium Development Goals.
The success of the companys TPSB program somehow also raises the
expectations of key stakeholders (e.g., government, regulator, media and
NGOs) on its ability to provide better service to the poor.
27
Increasing preference of some customers under bulk supply arrangement to shift to standard
connection in light of unreasonable administration charges which are added on to their monthly water bills
by CBOs and small-scale water operators. For reference, current tariff rate for low income households
would be no more than Php 12 per cubic meter but some CBOs and small-scale water operators ultimately
charge their members rates in excess of Php25. There were documented cases that the CBOs charge nearly
Php40-50. Some of the factors cited by the CBOs include high NRW within their reticulation system
under its responsibility and recovery of initial investment in the network to account for the tariff
difference.
Page 18
Annex: Profile on Manila Waters Community Sanitation

Projects
Overview
When Manila Water took over the operations of the MWSS in August 1997, it
inherited limited and poorly maintained sewerage and sanitation facilities 28 .
Most of these facilities are in need of repair and rehabilitation.
The company has since developed a new strategy to meet its sewerage and
sanitation targets in light of the high cost of conventional sewerage system 29 and
the real problem of low willingness to connect and pay for sanitation services of
its customers.
Revised Sewerage and Sanitation Strategies
Aside from the huge tariff hikes to finance its sewerage expenditures, a host of
technical and socio-economic issues 30 such as unavailability of land for sewage
treatment plant (STP) sites and traffic congestion are apparent in the service
coverage area. These are among the many issues that hinder the development
and implementation of huge sewerage projects targeting large populations.
Given these many concerns, Manila Water proposed to maximize the population
coverage at an efficient cost and with the least disruption over the long term.
Sewage treatment plants (STP) will be provided to housing developments using
government land whenever possible. The roll-out of localized and decentralized
sewerage service will be aggressively supported by provision of sanitation
services (i.e., desludging or cleaning of household septic tanks using fleet
vacuum tankers).
MSSP Community Sanitation Project (MCSP)
Considering the limitations of implementing massive centralized sewer systems,
Manila Water created a Wastewater Project Development Office in 2000 to work
on the concept of providing small, localized sewage treatment plants (STP) to
selected communities. These communities were chosen based on the status of
existing sanitation systems and population to be served. Medium and high-rise
housing developments with improperly designed or maintained septic tanks
28
In summary, MWCI inherited from MWSS a complete wastewater treatment capacity of 40.1 million
liters per day (MLD) and a primary treatment capacity of 10 MLD. In addition, MWCI inherited a total
length of 187 kilometers of sewer lines for maintenance. The number of sewer connections on takeover
was around 20,000, and the estimated population coverage of the sewer services is around 3% of the total
East Zone population.
29
One estimate shows that the company must spend at least US$800 million to meet its sewerage and
sanitation coverage targets and tariff rates will have to go up by at least Php 10 on top of existing rates.
30
These issues are attributed to conventional sewerage systems.
Page 19
were prioritized for the new set of projects. The upgrade of the existing sewer
systems into package STPs for 23 identified communities is funded by the World
Bank-assisted Manila Second Sewerage Project (MSSP).
Twenty-six (26) package STPs with an estimated total capacity of about 30
million liters per day has been constructed under the MCSP. Company estimates
show that a population of at least 200,000 benefited from the MCSP. Similar to
the companys TPSB program, the implementation of these projects were also
anchored close coordination with CBOs.
The estimated cost for the MCSP projects is roughly USD$10 million which is
equivalent to around USD$250 for a family of five.
Future Projects
Manila Water will construct more sewage treatment plants and septage disposal
facilities. The approach of combined sewage-drainage collection and treatment
will be employed for feasible, new sewerage systems. This new set of projects,
along with the construction of septage treatment plants, will cost nearly Php 1.0
billion per year up to year 2010, and is being funded by the World Bank through
a local conduit development bank. Once completed, the company hopes to boost
the sewerage coverage from 10% to over 30% of households connected to the
network.

Page 20
Selected References
Concession Agreement between Metropolitan Waterworks and Sewerage
System and Manila Water Company, Inc. February 21, 1997.
McIntosh, Arthur C., and Yniquez, Cesar E. eds. 1997. Second Water Utilities
Data Book, Asian and Pacific Region, Asian Development Bank.
World Bank, Philippines: Filipino Report Card on Pro-Poor Services. May 30,
2001.
Asian Development Bank. November 2001. Water Supply and Sanitation Sector
Profile: Philippines.
Reyes, Celia M., The Poverty Fight: Have We Made an Impact? September 12,
2002. Philippine Institute for Development Studies.
Technical Evaluation Main Report. Thames Water International Services Ltd.
and University of the Philippines Economic Foundation, June 2002
Manila Water Company, Inc., Audited Financial Statements, 1997 to 2005.

Page 21

Manila Water - Water For The Poor

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Manila Water - Water For The Poor

Загружено:

Авторское право:

Доступные форматы

Mayors Asia-Pacific Environmental Summit 2006

Manila Water Companys Tubig Para Sa Barangay:

Virgilio C. Rivera, Jr.

Overview of the MWSS Privatization ...................................................................3

MAPES May 9-12, 2006, Melbourne, Australia

Overview of the MWSS Privatization

this philosophy. In fact, the company continues to depend on these employees,

Provided water supply to about 2 million people, nearly half of which

Rehabilitated and/or replaced about 1,300 kilometers of pipe network;

Reduced NRW from 63% at the start of privatization to 35.5% by end of

Improved water availability (i.e., customers receiving 24-hour water

Reduced unit operating cost by 25% (real terms) and increased

Increased capacity of sewerage treatment plants, which enabled the

Consistently exceeded water quality standards 5 imposed by the

Selected Operating Indicators

Staff per 1,000 connections 7

Unit Operating Cost 8

Bias for the Urban Poor

MAPES May 9-12, 2006, Melbourne, Australia

Tariff and Regulatory Support

Consistent with the companys initiatives in Sustainable Development, Manila

In million Php unless

Successful 2003 Price Review

Efficiency gains and improvement in service over the past 8 years;

Linking prices to services. Comprehensive business and capital

Professional relationship with the MWSS and introduction of key

Strong support of communities and local government units.

Successful Initial Public Offering of MWC Shares

The listing enabled the company to achieve the following:

Broaden the ownership base of the company with over 12,000

Provided its employees, majority (90%) of which are former employees of

Achieved a major milestone for the countrys public-private partnerships

Raised the level of corporate governance.

Manila Water Companys Tubig Para Sa Barangay

Poverty incidence in the Philippines has declined to 31.8% of the total

MAPES May 9-12, 2006, Melbourne, Australia

About 12 out of 100 individuals in the NCR can be considered poor. In

Public Sector (MWSS) Initiatives to Serve the Urban Poor

Each WIPDA project is provided with a mother meter and each

The location of every WIPDA project is determined by the Sector or

Consumption is based on monthly water meter readings based on public

Decades of low tariff regime and under-investment in the maintenance

MWSS policy of requiring a certificate of land title or copy of lease

Reaching Out to the Poor through the Tubig Para Sa Barangay

Improve access to potable water through appropriate water service

Eliminate illegal connections, leaks, etc.;

Improve water quality;

Forged sustainable relationship with community-based organizations

a large number of clustered low-income families with some form of

a high rate of illegal water connections;

no existing piped water supply;

with very poor water quality; and/or

where roadway is wide enough to lay a tertiary mainline.

The program was implemented through the following measures:

review the physical and socio-economic conditions of the area

Barangay is the smallest political unit in the Philippines.

MAPES May 9-12, 2006, Melbourne, Australia

waive the policy of requiring a certificate of land title or copy of lease

provided a flexible non-interest bearing installment repayment plan for

offer a menu of options 22 to the poor to connect to the companys water

organize community participation through CBOs; and

adopt decentralized organization set-up which is characterized by the

Organizing Communities: Manila Waters Strategy and