1. DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT DEVELOPMENT BANK OF THE PHILIPPINES THE (LGU-UWSP) Project Brief 1/26/04 3:27 PM brief-matl-jan04

2. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT PROJECT PRINCIPLES PARTICIPATION CRITERIA LOAN FEATURES PARTICIPATING LGUs PROJECT BACKGROUND Sequence of Presentation

3. DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT DEVELOPMENT BANK OF THE PHILIPPINES

4. DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT DEVELOPMENT BANK OF THE PHILIPPINES Consistent with the intent of the 1991 Local Government Code, Local Government Units are now responsible for planning, financing and implementing both urban and rural water supply. Water Sector Major Policy

5. DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT DEVELOPMENT BANK OF THE PHILIPPINES LGUs are responsible for the implementation of Levels I, II and III; LWUA is responsible for commercially viable water districts; MWSS is responsible for Metro Manila and adjacent cities and municipalities; DPWH and DOH is responsible for providing technical assistance to LGUs; and DILG is responsible for assisting LGUs on institutional development and project identification. Delineation of Responsibilities

6. DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT DEVELOPMENT BANK OF THE PHILIPPINES DBP: Borrower of the loan, on-lends the same to LGUs. Responsible for construction supervision through the CSC, fund management and credit evaluation DILG: Marketing of Project to LGUs, ensuring a rolling pipeline of LGU-applicants. Assistance in project preparation particularly the submission of ECC, RDC endorsement and other government clearances and approvals. DOF: Monitoring lessons learned as input to future policy formulation in the sector MOA: DOF-DILG-DBP

7. DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT DEVELOPMENT BANK OF THE PHILIPPINES

8. DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT Level III - PIPED WATER SYSTEM (HOUSEHOLD CONNECTIONS) Level I - point source (shallow well and deep well hand pumps and spring development) Level II - communal faucets or public tap stands As differentiated from: Type of Project

9. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT Local Government Units Water Districts Private Operators Target Market of the Project

10. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT 1,602 364 TOTAL LGUs TARGET LGUs Target LGUs

11. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT Investments shall be provided based on consumer demand (based on what consumers want and are willing to pay) Management and operation of the water system shall be according to commercial principles Tariffs shall be based on full cost recovery Project Principles

12. DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT DEVELOPMENT BANK OF THE PHILIPPINES

13. DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT Credit / Loan Technical Assistance WORLD BANK LOAN AGREEMENT DBP LGU Funds Source and Use

14. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT DBP SUB-LOAN AGREEMENT LGU Design-Build-Lease of System DBL Document DESIGN & CONST. CONTRACT LEASE AGREEMENT OPERATOR

15. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT Bids for the design, construction and operation of water supply system are invited only from pre-qualified bidders. The tariff levels are set in the agreement between the LGU and the operator. SAFEGUARDS AND BENEFITS Design-Build-Lease of System

16. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT The LGU owns the assets, with the operator leasing them for the period of lease agreement. SAFEGUARDS AND BENEFITS Before commencing operation of the completed system, the operator must provide performance guarantees to the LGU. Design-Build-Lease of System

17. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT DBP AMORTIZATIONLEASE FEE SUB-LOAN AGREEMENT LGU Design-Build-Lease of System DBL Document DESIGN & CONST. CONTRACT LEASE AGREEMENT OPERATOR

18. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT DBP LGU OPERATOR Design-Build-Lease of System LEASE FEE P100 K AMORTIZATION P90 K EQUITY RECOVERY P10 K

19. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT The loan shall be based on the total project cost with at least 10% equity participation, provided, the loan amortization shall not exceed 20% of the total income of the LGU, net of other borrowings PROJECT FINANCING AMOUNT OF LOAN Features of the Loan to LGUs The FS cost is 3% of the total construction cost. The LGUs counterpart during FS preparation is in the form of time and services of the members of the Project Management Unit FEASIBILITY STUDY

20. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT TOTAL PROJECT COST COMPONENTS Feasibility Study Contract Price Physical Contingency Price Contingency Construction Supervision Cost Bank Charges (Interest During Construction, Commitment Fee & Front-end fee) Features of the Loan to LGUs

21. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT TERM OF THE LOAN The maximum term of the loan shall be fifteen (15) years inclusive of three (3) years grace period on principal repayment INTEREST RATE 9% per annum reviewable yearly but not to exceed 15% p.a. Features of the Loan to LGUs

22. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT PRE-CONTRACT STAGE LOAN PROCESSING FEASIBILITY STUDY BIDDING CONSTRUCTION OF WATER SYSTEM OPERATION & MANAGEMENT Project Phases

23. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT PRE-CONTRACT STAGE project presentation, submission of documents by LGU, financial assessment LOAN PROCESSING loan amount based on borrowing capacity to cover for FS preparation and construction of water system FEASIBILITY STUDY deployment of consultants, brgy meetings, technical option, WTC, preliminary design, BOQ & cost estimates Project Phases

24. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT BIDDING publication, pre-qualification, bidding proper, PBAC resolution of award CONSTRUCTION OF WATER SYSTEM Notice of award, mobilization, confirmation of water sources, detailed engineering, construction of water system (source facilities, transmission, distribution lines, etc.) OPERATION & MANAGEMENT lease agreement Project Phases

25. DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT DEVELOPMENT BANK OF THE PHILIPPINES

26. DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT 6. Quezon, Isabela 7. San Mateo, Isabela 8. Lantapan, Bukidnon 9. Kalilangan, Bukidnon 1. Magdalena, Laguna 2. Aurora, Isabela 3. Cabatuan, Isabela 4. Luna, Isabela 5. Mallig, Isabela DBP Approved & Implemented Projects

27. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT 1. Tabuk, Kalinga 2. Calamba, Misamis Occidental 3. Lopez Jaena, Misamis Occidental 1. Castilla, Sorsogon 2. Sinacaban, Misamis Occidental On-going Construction For Construction

28. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT 1. Aurora, Isabela 2. Cabatuan, Isabela 3. Luna, Isabela 4. Mallig, Isabela For Re-bidding of Operator 5. Quezon, Isabela 6. San Mateo, Isabela 7. Magdalena, Laguna 1. San Mariano, Isabela 2. Carranglan, Nueva Ecija 3. Claveria, Misamis Oriental For Bidding

29. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT Pipeline (For FS Completion) 1. Maria Aurora, Aurora 2. Sto. Niño, Cagayan 3. Bolinao, Pangasinan 4. Infanta, Pangasinan 5. Sigma, Capiz 6. Sta. Cruz, Davao del Sur

30. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT Pipeline (For FS Preparation) 1. Burgos, Pangasinan 2. Burgos, Ilocos Norte 3. Prieto Diaz, Sorsogon 4. Bagamanoc, Catanduanes 5. Talugtog, Nueva Ecija 6. Palapag, Northern Samar 7. Maripipi, Biliran 8. Villareal, Western Samar 9. Motiong, Samar

31. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT MAGDALENA, LAGUNA WATER SYSTEM Inauguration of Magdalena Water System

32. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT LUNA, ISABELA WATER SYSTEM

33. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT QUEZON, ISABELA WATER SYSTEM

34. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT 2. SB Resolution signifying participation in the project 3. SB Resolution authorizing the Mayor and Treasurer to sign loan documents 4. Audited Financial Statements for the last 3 years (2000 to 2002) 5. Bio-data of the Mayor and Treasurer 6. Customer Information Report (DBP Form) 1. Letter of Intent signed by the Mayor Checklist of Requirements 7. Certificate of existing loans (term, Outstanding balance, amortization)

35. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT

36. DEVELOPMENT BANK OF THE PHILIPPINES DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT 2. Processing and approval of FS loan by DBP-PMO 3. Creation of Project Management Unit by the LGU 4. Sub-loan Agreement Briefing and kick-off meeting with Feasibility Study Consultant 5. Start of FS Preparation 1. Submission of Requirements by the LGU Action Plan 6. Submission of Letter to DBM for transfer of IRA (last quarter 2003)