Financing Sanitation Projects

Defining Sanitation Safe management of human excreta. Sanitation MDG target looks at improved sanitation facilities Improved facility prevents contact with human excreta: –Flush or pour-flush to latrine pit, septic tank or piped sewer –Ventilated improved pit (VIP) latrine –Pit latrine with slab –Composting toilet Having (access to) a toilet is important, but what happens after defecation is even more important 66% of SE Asians have a toilet. Only 4% connect to piped sewer Sanitation - important Millennium Development Goal

800 million East Asians lack adequate sanitation Some dirty realities 190,000 deaths each year from diarrheal disease, mostly children Millions suffer indignity and deprivation associated with the need to defecate in public Many more millions, their neighbors, suffer the unpleasant outcomes Marginalized poor are burdened most by invisible costs of inadequate sanitation Reaching the Sanitation MDG is unlikely to benefit the worst-affected

Strategic investments needed to close sanitation gap In the past Emphasis on building infrastructure rather than delivering sustainable improvements to sanitation services Poor arrangements for operation and maintenance resulting in disrepair Very little community involvement In the future Promote self-financing of sanitation facilities by households Use public finance to stimulate demand for improved sanitation, subsidize large scale public infrastructure to make it bankable Involve private sector and stimulate innovative local solutions

Are sanitation projects bankable? Micro-financing of household toilet and on-site disposal is especially feasible with households in dense urban areas Communal discharge and treatment solutions can be feasible if users pay cost-recovering fees Rehabilitation of defunct wastewater treatment plants is feasible if user fee is charged to those connected to sewer Government subsidies may be needed to cover some capital costs User fees are key!

Sewer System & WWT Plant, Nuwara Eliya, Sri Lanka Project Profile 6 kilometers of sewer lines Anaerobic Baffled Reactor Tank Mechanized treatment system Total estimated Cost - $250, Homes $250,000infrastructure cost 60%subsidy amount $100,000Amount to borrow $10,000Annual depreciation payment (10 years) $10,000Annual interest payment $20,000Total annual payment $71Cost per home per year $9Operation cost per year $0.22Dollars Per Day Pro forma: 5% rule: Pay no more then 5% of annual income on WATSAN: Annual income = $3750 Annual water bill = $75 Annual sewer bill = $80 5% of $3750 = $ TOTAL WATSAN = $155/yr Is Project feasible? √

WTP and Sewer For Public Market, San Fernando, PH Project Profile Treatment plant for 80 Cu. Meters/day Two lift stations 850 meters low-pressure pipeline Total estimated Cost - $110,000 Pro forma: Willingness to Pay & Sustainability: Supported by Social Marketing Strong support of Mayor Good technology Positive balance sheet projections Is Project feasible? √ Expenses $29,268Annual Amortization $9,756Operating Expense $39,024Annual Expense Revenues $25,447Market fee increase $12,804Comfort room fees $2,012Connection fees $40,263Annual revenue

Septage Management Program Dumaguete City, Philippines Project Profile Desludging for 22,000 homes Project owned by city to be turned over to water district Fee based on water consumption (2 pesos per cubic meter) Fee will be collected as add on to water bill Pro forma: Sustainability: Project widely supported by community Annual fee of $4.91 (average) less then one day’s wage – very affordable Project supported by IEC campaign Is Project feasible? √ Costs $414,634Infrastructure cost $80,000Annual Operating Cost 26,829Annualized capital cost $107,300Annual cost to be recovered Revenue $4.91Annual septage fee per house 22,000Number of houses $108,200Total Revenue

Help translate DFI interest into action Member survey - determine interest in water/sanitation financing Regional workshop – water/sanitation champions Regional workshop - risk mitigation for water/sanitation financing Development of toolkit on risk mitigation Support development of water sector loan products Facilitate co-financing and credit guarantees ADFIAP / ECO-Asia MOU

THANK YOU! Niels van Dijk Deputy Chief of Party ECO-Asia T ext113 E