Embassy of the United States in Manila

The U.S. Agency for International Development (USAID) is working with the Philippines’ Local Water Utilities Administration (LWUA) to develop the lending facility as part of the Philippine government’s implementation of water sector reforms. Its use will improve the credit-worthiness of water districts.

USAID’s Environmental Cooperation-Asia (ECO-Asia) Program, which focuses on improving water and sanitation services and environmental enforcement and compliance, is partnering with LWUA on the proposal. The key strategy is the LWUA Efficiency Improvement Program, which recommends that water districts first become operationally and financially efficient before they take on a major capital expenditure program. By prioritizing improvements in efficiency over large capital expenditures, less creditworthy water districts can begin to position themselves for long-term financing expansion initiatives.

Details of the proposed lending facility are being presented today to key stakeholders, including the LWUA Board of Trustees, led by Chairman Proceso T. Domingo; members of the Oversight Committee for Presidential Executive Order 279 (EO 279) on water sector reform; representatives of the Philippine Association of Water Districts; representatives of other government agencies; and the donor community.

During the presentation, water sector stakeholders will discuss, raise issues concerning, and suggest enhancements to the proposed new lending window. The event aims to solicit provisionary approval from the LWUA Board of Trustees for the project’s technical working group to proceed in refining and piloting the lending facility with selected water districts until the Board approves a resolution creating and endorsing the new lending product.

“The March 21 presentation is an important event as it will signal to our member-water districts that LWUA is proactive in seriously addressing both their technical and financial requirements as mandated by law,” said LWUA Board of Trustees Chairman Domingo.

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U.S. Embassy News Release March 21, 2007 United States Assists Local Water Districts to Finance Improvements Thanks to a partnership with the American people, water districts nationwide may soon have access to a new lending facility so they can improve their operations and water service delivery to local communities. The U.S. Agency for International Development (USAID) is working with the Philippines’ Local Water Utilities Administration (LWUA) to develop the lending facility as part of the Philippine government’s implementation of water sector reforms. Its use will improve the credit-worthiness of water districts. USAID’s Environmental Cooperation-Asia (ECO-Asia) Program, which focuses on improving water and sanitation services and environmental enforcement and compliance, is partnering with LWUA on the proposal. The key strategy is the LWUA Efficiency Improvement Program, which recommends that water districts first become operationally and financially efficient before they take on a major capital expenditure program. By prioritizing improvements in efficiency over large capital expenditures, less creditworthy water districts can begin to position themselves for long-term financing expansion initiatives. Details of the proposed lending facility are being presented today to key stakeholders, including the LWUA Board of Trustees, led by Chairman Proceso T. Domingo; members of the Oversight Committee for Presidential Executive Order 279 (EO 279) on water sector reform; representatives of the Philippine Association of Water Districts; representatives of other government agencies; and the donor community. During the presentation, water sector stakeholders will discuss, raise issues concerning, and suggest enhancements to the proposed new lending window. The event aims to solicit provisionary approval from the LWUA Board of Trustees for the project’s technical working group to proceed in refining and piloting the lending facility with selected water districts until the Board approves a resolution creating and endorsing the new lending product. “The March 21 presentation is an important event as it will signal to our member-water districts that LWUA is proactive in seriously addressing both their technical and financial requirements as mandated by law,” said LWUA Board of Trustees Chairman Domingo. LWUA, which was established by the Philippine Government in 1973 to provide specialized lending and technical assistance to the water sector outside Metro Manila, in the past focused on providing loans to creditworthy water districts so that its credit exposure could be maintained at adequate levels. Now, LWUA creditworthy water districts, which include many smaller water districts serving lower income areas of the country, have traditionally limited access to LWUA financing. Under the new EO 279, water districts are classified into four groups: creditworthy, semi-creditworthy, pre-creditworthy, and non-creditworthy. EO 279 stipulates that creditworthy water districts are to seek financing from government financing institutions and eventually from private banks. LWUA is mandated to refocus its lending and technical assistance on the three less creditworthy groups by establishing financing products specifically targeted to each group’s specific needs. “We are working with LWUA to develop new lending strategies and products catering to the semi-credit worthy and pre-credit worthy water districts,” said Engineer Jay Tecson, a Water Specialist from USAID’s ECO-Asia Program. “The Laguna Water District in Luzon and Misamis Occidental Water District in Mindanao will test out these new lending strategies and products. We hope our assistance will help LWUA meet the challenge of shifting its lending toward the less creditworthy water districts while at the same time maintaining or even improving upon current loan collection rates. It is also hoped that lessons learned from this effort will benefit water utilities throughout Asia, particularly in the area of water supply financing.” Another project, the Philippine Water Revolving Fund (PWRF) Program, hopes to establish a lending facility that targets creditworthy utilities. The PWRF, a joint effort of USAID, the Japan Bank for International Cooperation (JBIC), and other stakeholders, is designed to bring private sector financing to water and sanitation projects of creditworthy water utilities, as called for by EO 279. ECO-Asia, a program funded by the American people, is operating in seven countries in the South and Southeast Asian region. Detailed information about ECO-Asia is available at www.usaid.eco-asia.org. # # #
	Last Update :: 03/21/2007
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United States Assists Local Water Districts to Finance Improvements