Philippines water sanitation policy

Water supply is the process of providing water in a systematic way through installed pumps and pipe lines. Before water is provided to a specific area, it undegoes a process called sanitation to ensure that the quality of water received is safe for human consumption. The Philippines’ water supply system dates back to 1946 after the country achieved its independence. Government agencies, local institutions, non-government organizations, and other corporations are primarily in charge in the operation and administration of water supply and sanitation in the country.

Political Aspects

From the Philippines’ independence in 1946 until 1955 most water supply systems were operated by local authorities. From 1955 to 1971, control of urban water supply was passed to the national government. In order to improve service delivery, the sector has been repeatedly subjected to extensive reforms which created numerous institutions and responsibilities. However, comprehensive water resources management was only introduced in 2004.

Pre-Marcos Administration
The Manila Waterworks Authority, founded in 1878, became part of the National Waterworks and Sewerage Authority (NAWASA) when it was founded in 1955.

Marcos Administration (1965-1986)
1971. NAWASA was transformed into the Metropolitan Waterworks and Sewerage System (MWSS) in 1971 under the government of Ferdinand Marcos. MWSS was made responsible for service provision in Metro Manila, whereas other municipal and provincial water and sewerage systems in about 1,500 cities and towns were transferred back to local governments.

1973. A new management model for urban water supply was introduced in 1973: LGUs were encouraged to form utilities called Water Districts which would operate with a certain degree of autonomy from LGUs. They would receive technical assistance and financial support from the newly created Local Water Utilities Administration (LWUA).

1976. In 1976, the National Water Resources Board (NWRB) was created through the National Water Code of the Philippines to coordinate policies concerning water resources.

1980. The Rural Waterworks Development Corporation (RWDC) was founded in 1980. It is responsible for water supply in areas where neither MWSS nor LWUA carries out the service or assists the LGUs, respectively. The RWDC was expected to create rural water supply associations in order to construct, operate, and maintain their own water supply systems in communities with fewer than 20,000 inhabitants. Aside from the RWDC, 1980 was also the beginning of the United Nations’ International Drinking Water Supply and Sanitation Decade (1980–1989). The Integrated Water Supply Program (1980–2000) was initiated by the national government. Its main objective was to increase water coverage to 70% of the Filipino population by 1987 and 90% by 1992. Consequently, the development of the sector was supported with great effort: Between 1978 and 1990, more than US$120 million was invested in 11 rural water supply projects. Nevertheless, toward the end of the decade only 4,400 functioning rural water systems, about 5% of the 96,200 potential systems, existed in the country. Many of the recently constructed systems failed shortly after completion, partly due to poor construction and service. The Asian Development Bank (ADB) found that insufficient community participation may have led to inadequate operation and maintenance.

Aquino Administration (1986-1992)
1987. In 1987, the Local Water Utilities Administration took over the work of Rural Waterworks Development Corporation (RWDS) which had been created only seven years earlier. The Rural Water Supply and Sanitation Master Plan of 1988 provided for the installation of 81,900 rural water supply systems by 1991. The Department of Public Works and Highways (DPWH) was expected to construct and rehabilitate Level I water wells, rainwater collectors, and springs. Every barangay should receive at least one additional potable water source. In addition, the Department of Local Government and Community Development (DLGCD) was given the task of training local water user associations in the operation and maintenance of water facilities.

1991. Under the Local Government Code of 1991, certain infrastructure functions were devolved to LGUs. Barangays, municipalities, provinces, and cities were authorized to finance, operate, and maintain their own water supply systems.

1992. According to the Medium-Term Philippine Development Plan of 1983–1998, 80% of the rural population was provided with Level I water supply services at the end of Aquino’s term of office in 1992. 61% had direct service connections in Metro Manila and 47% in other urban areas of the country were covered by Level II and III water systems.

Ramos Administration (1992-1998)
The planning, preparation, and implementation of the privatization of the Metropolitan Waterworks and Sewerage System (MWSS) happened under the Ramos administration.

1995. The Water Crisis Act was passed in 1995, providing the legal framework for the privatization of MWSS. Private participation was implemented through a concession contract in which the concessionaires were assigned the task of operating and managing the facilities while MWSS preserved the ownership of the infrastructure. In order to facilitate benchmark comparisons, the service area of Metro Manila was divided in two zones.

1996. The plan to privatize Metropolitan Waterworks and Sewerage System (MWSS) emerged from the inability of the public utility to expand coverage to the growing population. By 1996, MWSS only provided water supply for an average pf 16 hours each day to two-thirds of its coverage population. According to the ADB, the share of non-revenue water (NRW), water which is not billed (e.g., due to leakage and illegal connections), was over 60% — an extremely high percentage compared to other developing countries.

1997. In 1997, the Maynilad Water Services, Inc. was awarded the concession contract for the West Zone, while the Manila Water Company, Inc. was awarded the East Zone of Metro Manila. The concession contracts, which are expected to last for 25 years, included targets concerning coverage, service quality, and economic efficiency. The objective was to increase water coverage in Metro Manila to 96% by 2006. The companies were expected to be regulated by the newly created MWSS Regulatory Office, financed by the concessionaires. After the concession came into force, public opposition soon emerged due to repeated tariff increases. However, it is worth mentioning that tariffs decreased after privatization in 1997, and did not reach the pre-privatization level until 2001 or 2002. Private concessionaires suffered from a severe drought and the Asian financial crisis of 1997.

Estrada Administration (1998-2001)
According to the Medium-Term Philippine Development Plan (MTPDP) of 1998 up to 2004, the Estrada administration’s main objectives concerning water were to (i) create an independent regulatory agency, (ii) develop a pricing mechanism that considers cost recovery, (iii) strengthen the implementation of watershed rules, and (iv) encourage private participation in water resources administration.

Arroyo Administration (2001-2010)
Because of the rapid currency devaluation, MWSS’ dollar-denominated debt service doubled. Consequently, tariffs continued to rise and targets concerning coverage and NRW were adjusted downward with the agreement of the regulatory agency. Maynilad went bankrupt in 2003 and was turned over to MWSS in 2005. On the other hand, Manila Water had begun to make profits by 1999 and performed well financially and in reducing NRW.

2001-2004. Arroyo continued to support private participation schemes and began to pursue Economies of scale in the sector. Furthermore, her MTPDP for 2001 up to 2004 called for the creation of a single regulatory agency for all water supply and sanitation systems. After this attempt failed, Economic regulation for LGUs and water districts were assigned to NWRB.
2004. In 2004, the Philippines Clear Water Act was passed to improve water quality and prevent pollution through comprehensive and integrated water management. The act was the first attempt of the Philippine government in consolidating different laws concerning water resources management as well as water supply and sanitation. The main objective of the act was to improve sanitation and wastewater treatment in the country.

2006. In December 2006, an 84%-stake in Maynilad was competitively awarded by MWSS to an all-Filipino partnership with a construction company DM Consunji Holdings, Inc. (DMCI) and a telecommunications/real estate company Metro Pacific Investments Corporation (MPIC) for a sales price of US$503.9 million. The concession was hailed by the financial industry, receiving AsiaMoney’s Country Deal of the Year 2007 and CFO Asia’s one of 10 best deals in Asia.
2008. On August 27, 2008, Prospero Pichay was appointed chairman of the board of the Local Waterworks and Utilities Administration (LWUA), replacing acting chair Proceso Domingo. At the same time its domestic and foreign borrowing authority was proposed to be extended to $900 million, upon the approval of Department of Finance and the Central Bank, the Bangko Sentral ng Pilipinas.

Aquino Administration (2010-2016)
2013. The Bottom-Up Budgeting (BUB) Project was implemented by the administration, in its 2013 National Budget, to fund projects that would help the country attain its Millennium Development Goals of inclusive growth and poverty reduction. In promoting good governance in the local level, by having local governments listen to their constituents in terms of budgeting processes, the National Budget was guided to respond to the urgent needs of the people as identified at the grassroots level.

2014. Another program of the administration, through the Department of Interior and Local Government, is the Sagana at Ligtas na Tubig Para sa Lahat (SALINTUBIG) program that aims to provide clean and potable water supply to almost 455 waterless municipalities in the Philippines. As of 2014, 253 projects and 118 more are ongoing all over the country.

2015. The BUB project proved to be a success as the Department of Interior and Local Government, spearheaded by Secretary Mar Roxas, was able to build a potable water system supporting 385 households in Mati City, Davao Oriental. At the same time, a health station was constructed that is posed to benefit 2,375 households through the BUB project by the Department of Health. With a budget of P410 Million, for BUB projects in Davao Oriental, government projects are geared towards a safer and healthier future for all.

General policies concerning the water and sanitation sector are formulated by the National Economic and Development Authority (NEDA) in its MTPDP. Since the 1990s, private sector participation and decentralization are the main objectives of water policies. The MTPDP of 2004 up to 2010 aimed at extending the coverage of potable water to 92%–96% by 2010 through public and private investments, with priority given to 400 barangays with poor water supply coverage.

The Department of Public Works and Highways provides technical assistance in rural water supply systems. National standards for drinking water quality, as well as standards concerning sanitation and sewerage collection, are set by the Department of Health. The Philippine Department of Environment and Natural Resources (DENR) is the lead ministry for implementing water sector legislation, whereas the Department of Finance takes the lead in financing water policies at the national level. The National Water Resources Board (NWRB) under the DENR is responsible for water resources management.

The responsibilities are defined by the 1976 National Water Code and the 2004 Clean Water Act, which consolidated laws on water supply and sanitation and water resources management.

1976 National Water Code (PD 1067)
Regarded as Presidential Decree No. 1067, dated December 31, 1976, the 1976 National Water Code was an effort of then President Ferdinand E. Marcos that aimed to strengthen water legislations in the face of the increasing scarcity of water and its changing water patterns. The Water Code was an intended solution to revise and consolidate regulations made on the ownership, appropriation, utilization, exploitation, development, conservation and protection of water resources in the country. Founded on the principle that “All waters belong to the State,” the National Water Resources Council was then created and tasked to control and regulate the use and development of water resources in behalf of the government.

Regulations were made through the acquisition of water permits, given to persons not limited to government-owned and controlled corporations, for water appropriation and usage. Specifications were included on the maximum amount of water diverted or withdrawn, the maximum rate of diversion or withdrawal and the times during the year when water may be diverted or withdrawn. Instances may also arise where water permits are revoked on cases of non-use, violation of the conditions imposed by the Council, unauthorized sale of water, pollution and public acts detrimental to public health and safety.

Philippine Clean Water Act of 2004 (RA 9275)
Republic Act 9275 provides for a comprehensive water quality management policy amidst economic growth. The policy provides for the consistent protection, preservation and revival of the quality of Philippine waters with frameworks patterned through the pursuit of sustainable development. Importantly provided for by this act are Water Quality Management Systems and Institutional Mechanisms.

Water Quality Management Systems involve area designations by the Department of Environment and Natural Resources (DENR), national sewage and septage management programs and allocation of special funds to support and maintain water quality. Areas that have similar hydrogeological conditions, which affect the physiochemical, biological and bacteriological reactions and diffusions of pollutants in the water bodies, are declared as Water Quality Management Areas. The management area is governed by a DENR representative as chair and board members composed of representatives from local government units (LGUs), relevant national government agencies, registered non-governmental organizations, water utility sectors and the business sector. On the other hand, water bodies with specific pollutants that have exceeded the guidelines for water quality are identified as Non-attainment Areas. LGUs are tasked to prepare and implement contingency plans, such as relocations, for the protection of the health and welfare of the residents, while the government improves the affected quality of water within the potentially affected areas.

Funds administered by the DENR, and other concerned agencies, are on special accounts in the National Treasury to be utilized in financing containment and clean-up operations in water pollution cases; restorations of ecosystems and rehabilitation of affected areas; research, enforcement and monitoring activities; technical assistance to implementing agencies; grants as rewards and incentives; and other disbursements made solely for the prevention, control of water pollution and administration of the management areas in the amounts authorized by the Department.

Wastewater charges are also established to provide strong economic inducement for polluters to modify their production or management processes or to invest in pollution control technology in order to reduce the amount of water pollutants generated in their discharge of wastewater into water bodies. Owners, or operators of facilities, that discharge regulated waste are then required to secure discharge permits.

Government Agencies and Institutions
Local Waterworks and Utilities Administration (LWUA)
The LWUA is a specialized lending institution that promotes and oversees the development of provincial waterworks. It is also entrusted with setting water quality and service standards for water districts. Furthermore, it provides technical assistance and is sometimes involved in the districts through board members.

P.D. 198 (May 25, 1973), the Provincial Water Utilities Act of 1973 created LWUA and the water districts. The decree authorized the formation, on local option basis, of autonomous water districts to develop the local water supply systems and the establishment of a national-level agency to cater to the needs of these water districts. According to the LWUA website, to date, it has established 584 water districts covering about 691 cities and towns outside Metro Manila. It has completed a total of 1,431 water supply projects while extending P 17 billion in loans to the districts of which P11 million has been availed to the benefit of some 12 million Filipinos with improved water.

National Water and Resources Board (NWRB)
The National Water and Resources Board (NWRB) is the forefont government agency which handles the Philippines water sectors’ policies, regulations and quasi-judicial functions. It acts accordingly with the principles of the Integrated Water Resource Management (IWRM) as it ensures the efficiency, conservation, utilization, development and protection of the state’s water supply. Its functions and responsibilities.

Rural Waterworks Development Corporation (RWDC)
Executive Order No. 577 which was passed last January 12, 1980, aims to provide full coverage of water supply services in the country. In line with this, RWDC was established to bring and administer water supply in areas with less than 20,000 as population. RWDC works together with LWUA in determining areas under their jurisdiction.

Department of Interior and Local Government
Concerning local government-managed systems, the Department of Interior and Local Government (DILG) defines and enforces quality and performance standards. However, in both cases, local governments retain the responsibilities for planning, financing, and regulating water supply.

Philippine Center for Water and Sanitation
The Philippine Center for Water and Sanitation (PCWS) provides technical assistance to local governments, communities, and non-profits on low-cost water supply and sanitation options. It also engages in action research with households. It leads the Philippines water sanitation and health (WASH) coalition of non-profit organizations and local governments. It was created in 1990 under the name of International Training Network (ITN) and adopted its current name in 1998.

Financing and External Cooperation
Outside the privatized services in Metro Manila, one source of finance for water supply is government grants channeled through the Local Water Utilities Administration (LWUA) and the Municipal Development Funds Office (MDFO). But these are far from sufficient to meet investment needs, which is why loan financing is necessary. Some LGUs obtain loans from public banks such as the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (LBP), and also from corporations in other countries, such as the World Bank, and JICA from Japan.(see below).

External development agencies that work on water supply and sanitation in the Philippines include the ADB, GTZ, JICA, USAID and the World Bank

Asian Development Bank (ADB)
The Asian Development Bank (ADB) has assisted the government in increasing sanitized water supply to different sectors in the Philippines. Through the MWSS New Water Source Development Project, approved in 2003 and ended in October 2008, ADB has contributed a total of US$3.26 million, whereas MWSS provided US$1.71 million. The joint-project sought to develop up to 3 water source projects for Metro Manila and to improve the financial management as well as the accounting and fiscal control systems of MWSS. In 2008 as well, studies for two water source projects were completed emphasizing environmental and social impacts amidst water quality improvements.

The following report shows information about past performances which can be utilized in assessing present and future water supply and sanitation efforts in the Philippines. In 2013, ADB made preparations for loans for financing: the Water District Development Sector Project, the Urban Water and Sanitation Sector Project, the Angat Water Transmission Improvement Project, and future technical assistances and other lending activities to be discussed with specific Government agencies involved.

ADB Assistance to Water Supply and Sanitation Sector in the Philippines

Number Title Type Approval



($ millions)

A Loans
1 190 Manila Water Supply Aug. 28, 1974 51.30 MWSS
2 251 Provincial Cities Water Supply Dec. 16, 1975 16.80 LWUA
3 351 Second Manila Water Supply Sept. 7, 1978 49.00 MWSS
4 457 Manila Sewerage Jun. 24, 1980 42.80 MWSS
5 545 Water Supply Sector Nov. 25, 1981 46.00 LWUA
6 645 Manila Water Supply Rehabilitation Oct. 23, 1983 39.30 MWSS
7 812 Island Provinces Rural Areas Water Supply Sector Dec. 4, 1986 24.00 DPWH
8 947 Second Manila Water Supply Rehabilitation Jan. 24, 1989 26.40 MWSS
9 986 Angat Water Supply Organization Nov. 14, 1989 130.00 MWSS
10 1052 Second Island Provinces Rural Water Supply Nov. 20, 1990 24.00 DPWH

In 2013, the ADB made preparations for loans for financing: the Water District Development Sector Project, the Urban Water and Sanitation Sector Project, the Angat Water Transmission Improvement Project, and future technical assistance and other lending activities to be discussed with specific Government agencies involved.

ADB was also able to release a report on: the assessments of current conditions and constraints to developing water supply and sanitation in the country, strategies to be implemented to counter and solve these constraints, and road maps and plans on a sustainable sanitation reality for all. The Philippine Sustainable Sanitation Roadmap and Plan (PSSR), included in the report, served as a guide for water sanitation efforts as it presented the vision, goals, outcomes, outputs, activities and inputs needed to achieve an improved water quality nationwide. Approved by the subcommittee on Water Resources in 2010, the Department of Health (DOH) has agreed to spearhead the agenda by preparing a national sustainable sanitation plan based on the PSSR. The DILG has also aligned its water and sanitation strategy with the requirements of the PSSR.

German Corporation for International Cooperation (GIZ)
The German Corporation for International Cooperation (GTZ, now GIZ) supported the sector through the rural water supply and sanitation program, designed to improve the living conditions of the poor in selected rural areas of the country. The program sought to overcome the institutional confusion and to strengthen governmental organizations at the national, provincial, and municipal levels. The main program partner was the Department of Interior and Local Government (DILG). In addition, the decentralization plan of the National Water Resources Board was supported. The program, which ran from 2006 to 2009, helped to introduce low-cost options for sanitation, such as urine-diverting dry toilets and the first Philippine constructed wetland, treating wastewater from about 700 households in Bayawan.

World Bank
The World Bank supports the Philippine water supply and sanitation sector through various projects often in collaboration with the government and the Land Bank of the Philippines.

Manila Third Sewerage Project
In 2007, the World Bank approved an investment loan of US$5 million. The objectives of the project were to assist the Philippine government in reforming institutions in order to attract private investment in the wastewater sector, to improve the coordination of institutions responsible for preventing water pollution, and to promote innovative wastewater treatment techniques. The project, which ran from 2007 to 2012, provided technical assistance as well as support for institutional coordination and private sector involvement.

The project followed the Manila Second Sewerage Project, which was carried out from 1996 to 2005. After the privatization of MWSS, it was restructured in order to adapt it to the new institutional framework. The objectives were to (i) reduce the pollution of waterways in Metro Manila and its surrounding bays; (ii) reduce the health risks caused by human exposure to sewage in Metro Manila; and (iii) establish a gradual low-cost improvement of sewerage services in Metro Manila. From 1997 to 2005, the number of people with sewer connections increased from 721,000 to 1,101,000 and the population with regularly desludged septic tanks rose from only 1,600 to 288,000. The total cost of the project was US$48.06 million.

Urban Water and Sanitation Project APL2
This project aimed to reach approximately 40 LGU-operated water systems, which were given technical assistance and financial support. The four components of the project were to: (i) finance civil works, equipment, and supervision for improved water supply systems in LGUs, including private sector participation where feasible; (ii) finance improved sanitation infrastructure; (iii) provide investment and assistance in micro-drainage infrastructure; and (iv) provide funds for the hiring of a construction supervision consultant and specialized consultants. The World Bank decided to contribute through a US$30 million loan to the project, while the remaining US$5.2 million are financed by local institutions. The project began in 2001 and ended in 2008.

The World Bank supports private sector participation through Design-Build-Lease contracts and Long-Term Operation and Maintenance contracts between LGUs and private operators. Therefore, the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (LBP) channel financing from the World Bank to LGUs, which engage private operators. Under the Design-Build-Lease contracts, valid for 15 years and renewable for an additional 15 years, a local private operator prepares, builds, and operates a new water supply system. A World Bank loan channeled through the DBP finances 90% of the construction cost, and the remainder is contributed through the LGU. The water tariff must cover expenses for operation and maintenance, as well as a lease fee and a return for the private operator.

Long-Term Operation and Maintenance contracts are used in LGUs which recruit a private company to construct a new water supply system and later engage water associations or user cooperatives to operate the system under the contracts, which are awarded for 15 years with the possibility of renewal for another 15 years. Similar to the Design-Build-Operate contracts, 90% of the construction cost of the water system is financed with a World Bank loan channeled through the LBP. The water user groups are required to work under commercial rules. They have full administrative, accounting and financial autonomy.

Metro Manila Wastewater Management Project (MWMP)
Last 2012, the World Bank was able to approve a budget of $275 Million for a project aimed at improving wastewater collection and treatment practices in several catchment areas of Metro Manila and help improve Manila Bay’s water quality. Entitled the Metro Manila Wastewater Management Program (MWMP), the project supports investments from the Manila Water Company, Inc (MWCI) and Maynilad Water Services, Inc in increasing collection and wastewater treatment primarily from households and establishments in the area. The project is divided into 2 components as MWCI takes charge of the east zone and Maynilad the west zone, of the metropolitan.

With a budget of $193.4 Million, investments by Maynilad include: (a) a sewage treatment plant, and the necessary sewage lines, covering North and South Pasig; and (b) the carrying out of other wastewater management investment sub-projects agreed upon by the government, Land Bank of the Philippines, World Bank and MWCI. Maynilad, with a budget of $178.3 Million, has its investments: (a) in sewage treatment plants and associated wastewater conveyance systems in Quezon City, Pasay, Alabang, Muntinlupa, Valenzuela; and (b) a septage treatment plant in the southern part of Metro Manila.

With about 2 million cubic meters of wastewater generated daily, and only 17% of this getting treated before disposal to water bodies around the metro, water pollution has destroyed most of Manila Bay and the nearby Laguna de Bay. Manila Water and Maynilad have both conceptualized a 25-year program that ensures 100% wastewater collection and treatment for Metro Manila. With the MWMP, their efforts would be supported and would aid in not just improving the current state of the surrounding environment but also contribute to a boost in recreational and tourism opportunities.

Japan International Cooperation Agency (JICA)
The Japan International Cooperation Agency (JICA), along with the international community striving to achieve the targets of United Nations’ Millennium Development Goals (MDG), has been campaigning to make a significant reduction in the number of people who still lack access to safe drinking water. Reliable water resources management, improvement of access to water supply in urban areas, reduction of non-revenue water (NRW), improvement of water/energy use, sustainable rural water supply, and promotion of improved sanitation in developing countries are the main issues that JICA prioritizes. In 2008, through the Development Bank of the Philippines, about $200 million was loaned to the Philippines to fund local governments and domestic private-sector companies for the development of water supply and sewerage facilities. Despite the establishment of funding, financing will only be granted to water utilities if the business management improves, hence JICA actively assists the water supply utilities’ capacity development through practical cooperation with financial aid. JICA not only works to improve access to safe drinking water in urban areas of developing countries, but also aids water facilities with business planning and management.

Source from Wikipedia