Report No: AUS3946

.

Republic of the Philippines

Expanded Small Water Utilities Improvement and Financing Phase 2Activity Completion Summary

.December 1, 2015

.GWASE

EAST ASIA AND PACIFIC

.

Standard Disclaimer:

This volume is a product of the staff of the International Bank for Reconstruction and Development/ The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries.

Copyright Statement:

The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development/ The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly.

For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone 978-750-8400, fax 978-750-4470, http://www.copyright.com/.

All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail pubrights@worldbank.org.

Activity Completion SummaryPhilippines: Expanded Small Water Utilities Improvement and Financing Phase 2

(P132305)

1. Program Development Framework

The Philippines has surpassed the Millennium Development Goal for safe water supply, with 92% of households now having access to improved water services. However the challenge for reaching the “last mile” – poor households in usually remote areas, remains formidable. Thus the next goal of achieving universal coverage by 2025 will require concerted effort in enabling policy reforms, capacity building and improved governance of utilities, and bigger and accelerated investments.

The Water and Sanitation Program (WSP) of the World Bank has been in the forefront of on-going initiatives of the government on policy reform and institutional strengthening, and market making for private sector participation in the sector; with a particular focus on initiatives that contribute to improving access of poor communities to safe water supply and improved sanitation services. The Expanded Small Water Utilities Improvement and Financing (ESWIF) technical assistance (TA) has provided a comprehensive set of support activities to the Government in pursuing institutional reforms in regulations, service delivery, and private sector participation in the financing and operations of water supply systems. It built on lessons and recommendations from a previous TA.1

The TA results framework is illustrated in Figure 1. The outcome falls under the Engagement Area 2 (Empowerment of the Poor and Vulnerable) of the Bank’s Country Partnership Strategy for Fiscal Year 2015-2018, and is part of WSP’s current 5-year business plan (FY11-15) under the business area “Creating Sustainable Services through Domestic Private Sector Participation”. The TA also supported one of the priorities of the Government’s Philippines Development Plan for 2011 – 2016 which is to accelerate infrastructure development, where one area of focus is to address equity, efficiency and access issues as well as health impact of water and sanitation.

Figure 1. Results Framework of the Program

Outcome: Increased household access to safe drinking water

Objective: To develop and implement new sector approaches that promote systematic acceleration of water services in unserved areas

Intermediate Outcome: Government to scale up improved water supply to poor people through public and private providers

5. Public investment flows- value o government and donor investments

growing year on year

5. Enabling program to strengthen engagement of private sector in

public development efforts4. Financial operations

improved

3. Technical operations improved

2. Private sector sales increased

1. Private investments increased

Indicators:

1 The ESWIF Phase 1 of WSP provided technical assistance to small utilities to improve performance, tested use of market-based financing and contributed to the reforms in the regulatory framework, particularly getting the small utilities under the regulatory mantle of the National Water and Resources Board (NWRB). Specific outputs included: census of 300 water providers in Cebu and Camarines Norte, TA to 11 small utilities and setting up the Accredited Technical Service Provider Program (ATSP) at NWRB.

1

The key contribution of ESWIF2 to the development objectives of the sector was to develop new approaches to promote systematic expansion of water service provision in unserved areas, particularly:

Practical measures for more effective economic regulation, including identifying the water service providers and understanding respective business models, and developing ‘light-handed’ regulations as a means to cover more ground with small disaggregated utilities;

Sustainable capacity building program especially for small utilities, available on demand and utilizing private service providers; and

Access to credit and public private partnership (PPP) trials.

Figure 2 shows the summary of these interventions and how they contributed to desired outcomes of the TA.

2. Task Descriptions

2.1 Component 1: Fostering More Effective Economic Regulations

2.1.1 Developing Light-Handed Regulation

Based on current estimates, there are more than 4,700 water utilities in the Philippines, of which only 20% are regulated. Several studies, including those previously done by the Bank in the Philippines, point to weak regulation as one of the key reasons for poor performance in the sector.

The National Water Resources Board (NWRB) is one of a number of government agencies mandated with economic regulation of water utilities, particularly small private water utilities, including community-based organizations like Barangay Water Service Associations or Homeowners Associations. NWRB is unable to enforce regulations to the majority of its constituents because of serious resource constraints, as well as the inability of the small utilities to comply with regulatory requirements, including voluminous data and complex tariff adjustment formula.

In this regard, this TA helped NWRB conceptualize and develop a ‘light-handed’ economic regulatory framework. The recommendations include the classification of utilities into two categories for tariff setting purposes and into three categories for service regulation. The categorization of utilities into non-profit and for profit will enable NWRB to simplify the tariff setting and adjustment formula as well as the data requirements. Moreover, risk-reward considerations were rationalized, for example allowing market-based returns for for-profit utilities. Secondly, the service categorization allows setting realistic service standards and benchmarking of comparable utilities to be more useful. Also, the validity of the license to operate is extended from five to ten years to encourage long-term investments; but at the same time sanctions, ranging from fines to step-in rights of NWRB, for poor performance will be imposed.

NWRB accepted the proposed regulatory framework in September 2014. However, the new policy has not been effected yet pending the finalization of the implementing rules and regulations (IRR). The TA prepared the framework of the IRR but NWRB opted to wait for the completion of the processing of the database from the Listahang Tubig (see next section) to have better information on their clientele before finalizing the IRR.

2

Figure 2. Summary of Activities and Contribution to Desired Outcome

Inputs

Situation:

• Eight (8%) of Filipino HHs, mostly poor, still do not have access to improved drinking water sources

• More than 4700 water utilities, 78% of which are unregulated

• Fifty-eight per cent (58%) of water utilities are small, serving less than 5000 connections, and with low capacity for viable and quality service

• Public investment is not enough to meet the demand supply gap

OutputsActivities/ Client and Partners Outcome Indicators

Recommendations to improve the effectiveness of economic regulations by NWRB and identification of water service providers operating nationally

Development of a sustainable capacity building program, targeting small utilities; available on demand and affordable

Study on light-handed economic regulations

Listahang Tubig Survey

Accredited Technical Assistance Provider Program• Trained accredited

experts• Accreditation

system and training materials

• Revolving fund

National Government Agencies: NWRB, NEDA, DILG, LWUALocal Government UnitsUSAID

NWRB

ATSPs

USAID

Private investments: Private sector investments in the sector, both through private and public channel increased

Private sector sales: Domestic private sector volume of sales fro existing and new domestic private suppliers in the market increased

Assumption:The building blocks to reforms and capacity development, such as the TA on regulations and PPP knowledge products contribute to desired outcomes. However, at the end of this TA, only the ATSP Program and the PPP project facilitation have concrete outcomes.

External Factors:• Changes in political scenario/ leadership• Economic conditions

Development of a wholesale lending facility to address funding needs of small utilities and promotion of PPP arrangements as a means to leverage additional resources for the needed investments in the sector

Design and operating manual for a wholesale lending facility under the RIGP Facility

PPP Knowledge Products (PPP Case Studies, PPP Learning Note and PPP Project Development Tools)Facilitation of PPP business cases

DBP

PPP CenterBaggao LGUPPP Technical Working Group: PPPC, LWUA, DILG, NWRB and PAWD

Technical Operations: Water service providers are improving their technical operations

Financial Operations: Water service providers are improving their financial operations

Enabling Program: Capacity of public institutions to engage with private sector strengthened

Public Investment Flows: Value of government and donor investment or counterpart costs, influenced by SS-DPSP growing year-on-year

Legend:- - - will contribute to outcome---- resulted to outcomes

3

2.1.2 Listahang Tubig – Census of Water Service Providers

The TA developed jointly with NWRB a national database of water service providers in the country, referred to as Listahang Tubig. Until now, there was no consolidated inventory of water service providers in the Philippines and no accurate information on coverage and quality of service. With Listahang Tubig, benchmarking can now be implemented given the data on the performance of the water service providers.

The data set is presented in two sections in the website (listahangtubig.cloudapp.net):

Listahang Tubig Website: Public Page– Directory of Participating Water Utilities– Key Performance Indicators

Listahang Tubig Website: Users– Dashboard General Reports– Key Performance Indicators – Volume Extracted– Sources of Water– Count and Status of Encoding– Other Reports – Water Utility Data Inquiry

The survey got responses from 88% of the cities and municipalities in the country, the remaining 12% are mostly from the hard to reach island municipalities of the Autonomous Region in Muslim Mindanao and those hardest hit by Typhoon Yolanda from Region VIII. Listahang Tubig listed 22,844 service providers with services ranging from point source, communal taps, household connections and water kiosks. About 4,721 provide piped household connections. Types of service providers are also varied, including water districts, LGU-run utilities, community-based organizations and cooperatives. The results of the comparison of key performance indicators among the different types of utilities remain consistent with the 2004 benchmarking survey of WSP, in that the best performing are water districts (public autonomous corporate entities).

The results of the Listahang Tubig have been disseminated to national government agencies, water utilities, LGUs and private sector water supply developers, particularly: the National Economic and Development Authority, Philippine Institute for Development Studies, Department of the Interior and Local Government, PPP Center, Local Water Utilities Administration, Philippine Development Forum Sub-working Group for Water Supply and Sanitation, Sarangani Province, Baggao Municipality, Philippine Association of Water Districts (PAWD) and its regional associations such as the Mindanao Association of Water Districts and the Southern Tagalog Association of Water Districts, and the National Water and Sanitation Association of the Philippines (NAWASA), an association of small water utilities.

Lessons Learned/ Next Steps

It was not easy mounting the Listahang Tubig survey. Although the TA Team was successful in leveraging support from the national and local government agencies, such as the Local Water Utilities Administration and the Department of Interior and Local Government, as well as with USAID; still it was difficult to get the full cooperation of local partners, especially the local government units. Hence in the

4

updates of the database, the national government should consider in investing in independent enumerators. It is also important to note that most LGUs concern is on water resource assessment, in particular, identifying viable bulk water sources.

Notwithstanding the challenges, the Listahang Tubig provides fundamental information for evidence-based policy formulation, regulatory reforms, planning and financing purposes. It is also useful for advocacy or calls for action especially for local government units to expand coverage or to improve management systems to ensure cost effectiveness and sustainability of operations. For example, in Saranggani Province where the results of the survey showing low coverage and poor quality of service were presented to the Governor, the Governor asked for support by WSP to assist him in organizing a provincial water council and strengthening the capacity of the provincial water unit, the technical secretariat to the council, to provide technical assistance to municipalities to build service capacity and improve governance and accountability of thereof.

The Listahang Tubig will also be a critical input to the implementation of the Unified Financing Framework for the Water and Sanitation Sector (the Framework was developed with the Bank’s support), particularly in targeting the government support and identifying the market for commercial lending.

NWRB has committed to i) disseminate the information generated by Listahang Tubig and make available the report on key performance indicators of water utilities through the Listahang Tubig Website. It also committed to sustain the registration of unregulated water utilities.

The light-handed regulatory reform initiative is an interim measure to improve effectiveness of economic regulations, especially among small utilities, until legislated structural reforms are passed. This effort is also being supported by WSP, in cooperation with other donor programs, in particular providing comments to the Water Regulatory Commission bill and supporting the consultations of the government sponsors of the bill with stakeholders.

The implementation of light handed reform requires an enabling policy issuance and implementing rules and regulations by the NWRB. While it has committed to prepare these documents after the completion of the Listahang Tubig, NWRB management may delay the adoption and finalization of the IRR in view of the expressed need of the staff for capacity building to operationalize and enforce the new guidelines, for example enforcing step in rights in case of failure in service delivery. As an interim step, the Bank Team will encourage NWRB to implement the reforms that are administratively easy to operationalize, such as the revised guidelines for licensing and tariff setting.

2.2 Component 2: Accredited Technical Assistance Providers

This component built on the previous assistance of the Bank to accredit technical assistance providers for water operators. The program affords even the small water service providers access to expert advice on various aspects of water supply operations, such as business planning, operational improvements or tariff setting. The TA assisted NWRB train more technical providers, establish a standard package of consultancy services, establish a revolving fund to pay for the consultancy services, and promote the services to water operators.

5

Initial outcomes of the technical assistance from advisory services are encouraging. The implementation of this TA component has exceeded all of its targets (see Figure 3). Also, 33% of the assisted water utilities applied for license to operate from the NWRB.

Figure 3. ATSP Targets and Accomplishments

Furthermore, among water utilities assisted, 43,779 persons have been given access to improved water supply, of which 19,130 are poor. While the water utilities assisted are small (less than 5,000 connections) and have limited access to financing, they were able to add 9,974 new connections, corresponding to a 3% increase in service coverage.

NWRB institutionalized the accreditation and matchmaking program between firms and individuals that can provide technical and managerial expertise and consulting services to the small utility clients to focus on improving two key outcomes: 1) the financial and operational performance of water utilities; and 2) water utility compliance with regulatory standards. NWRB allocated budget for the program, hence more utilities are expected to be assisted beyond the TA period.

The main client for the development and institutionalization of the ATSP program was NWRB. Other partners included: USAID, which contributed to the revolving fund and the PPP Center, which endorsed ATSP services to implementing agencies, such as local government units that prepared PPP business cases.

The team prepared a learning note to document the experience and the initial lessons learned to help in scaling up the program and in institutionalizing it as a sustainable capacity building measure 2. The final product has been disseminated to water districts, local government units, PPP Center, Philippine Association of Water Districts and the Department of Interior and Local Government. Outside of the Philippines the learning note was disseminated among: Cambodia water stakeholders, International Water Association’s Water and Development Congress in Jordan, and Global Water Practice during the Water Week in Washington DC.

Lessons Learned/ Next Steps

Developing the Accredited Technical Service Provider component addressed two needs: to build the planning and operating capacity of utilities and to improve the quality of submissions of regulatory

2 ATSP Learning Note: Sustainable Capacity Building for Small Water Utilities. Improving Small Water Utilities and Financing Technical Assistance: Lessons from the Philippines. The World Bank Water and Sanitation Program. September 2015.

6

requirements to ease NWRB’s evaluation of applications. The accreditation system and training ensured quality technical assistance delivered in a timely manner and responsive to needs.

Important lessons learned from the program are: i) the private sector can support the regulator to become more efficient and effective; ii) building a market for business development services is more sustainable and cost efficient at scale than direct technical assistance to utilities; iii) however, the current technical assistance provided by ATSP is not sufficient to facilitate financing, hence the need to look at other types of assistance to improve creditworthiness of small utilities; iv) NWRB commitment is key to scaling up the program; v) the current needs and the growing demand for water supply services present a market opportunity to scale the initiative; and vi) consultant selection is critical but also very challenging.

NWRB plans to scale the program to more than 500 small water utilities—roughly 25% of the nationwide total—over the next 4 years. Recommendations to achieving scale include: i) targeting the 455 waterless municipalities3 for high impact; ii) strengthening the revolving fund so more small utilities can pay upfront the services; iii) gaining geographic coverage by training consultants in the regions to be accessible to clients outside Metro-Manila; iv) expanding accreditation topics for experts to reflect new financing opportunities for water utilities such as PPP arrangements; and v) tracking and sharing the impact of the program with participating and target water utilities to maintain and grow participation.

2.3 Component 3: Access to Credit Trials

This component adopted two strategies to enable small water utilities leverage investments: 1) technical assistance for project preparation to access financing through the World Bank-supported Regional Infrastructure for Growth Project (RIGP is a relending program that includes a component for financing needs of small water service providers); and 2) public private partnership (PPP) arrangements for water service provision.

2.3.1 RIGP Lending Facility

The wholesale lending facility targeting small water providers did not get implemented given the decision in June 2014 to first re-program the RIGP loan for the reconstruction and rehabilitation projects of local governments affected by Typhoon Yolanda and the Bohol earthquake, and to cancel the loan altogether in 2015. Prior to the reprograming of the loan, the TA prepared the operating guidelines for the whole sale lending component, but these were not utilized having been overtaken by events.

After the decision to re-program the loan, the TA drafted a paper that documents the rationale and design assumptions in incorporating a wholesale lending window in the RIGP for local banks to relend to small water providers, the challenges in the market and enabling conditions to overcome those challenges. It also covered an assessment of alternative approaches to promote market-based lending to small utilities by formal financing institutions. The conclusions are meant to inform future strategic interventions of the World Bank in increasing access of small utilities to financing from formal financial intermediaries to support expansion or improvement of services.

3 National Government identified about 455 municipalities with less than 50% of the population with access to safe water supply services)

7

2.3.2 Promoting PPP Arrangements

a) PPP Learning Note

For the PPP strategy, this TA developed and published a learning note on PPP arrangements for water service provision4. The learning note included eight case studies of various PPP water supply projects, ranging from huge concessions such as the ones in Metro-Manila to a barangay-based contract. The case studies also included study tours participated in by DILG, PPPC and at least 6 LGUs interested in PPP projects. The key findings in the learning note are: i) there were significant improvements in the performance, service expansion and management efficiency under the PPP arrangement, ii) foundations for success are laid by achieving value for money and reaching a win-win arrangement, and iii) PPPs can thrive in diverse geographies as long as the service is focused on meeting the demand for which consumers are willing to pay.

The PPP Learning Note has been widely disseminated domestically and internationally: domestic private financing institutions, private developers, LGUs and WDs, PPPC, DILG, NEDA, PAWD, NWRB, LWUA and USAID (currently also supporting PPP Water Projects); World Water Week in Stockholm, Water Week in Washington DC, and featured in Weekly Bulletin of East Asia and the Pacific Events and Reports.

b) PPP Project Facilitation

Seeing the potential of PPP arrangements, the Bank decided to work with PPP Center (Philippines national agency mandated to facilitate the implementation of the country’s PPP Program and Projects) and other donor programs with related objectives to scale up PPP arrangements for water service provision, and to do so systematically and efficiently. In this regard, the following scope of the TA was agreed with the PPP Center: i) development of knowledge products, ii) standardization of the project development process, and iii) facilitation of transactions through advisory assistance led by the PPP Center.

The Bank through accredited technical service providers assisted four LGUs and one water district prepare business cases for PPP projects – for bulk water supply, water concessions and septage management. Among those assisted, one LGU, the Municipality of Baggao has pursued the implementation of a new piped water supply project under a concession agreement. The project is presently at tender stage. The Bank assistance for this project ties up with the productization sub-component (see below).

c) PPP Productization

As recommended by the PPP learning note, the team adopted the productization approach to standardize PPP project development with the view of facilitating the process especially for LGUs or water districts without prior experience with PPP arrangements.

4 PPP Learning Note: Beyond One Size Fits All: Lesson learned from eight water utility PPP in the Philippines. The World Bank Water and Sanitation Program. August 2014. http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2015/08/04/090224b08304cc58/2_0/Rendered/PDF/Beyond0one0siz0s0in0the0Philippines.pdf

8

The main client for the promotion of PPP arrangements is PPP Center of the Philippines, and the following LGUs and Water District in the development of business cases: Baggao Municipality, San Mariano Municipality, Davao del Sur Province and General Santos City Water District and Sarangani Province. Other cooperating partners include: NWRB, DILG, LWUA and PAWD.

The team prepared a suite of documents5 catering to the requirements of Baggao Water Supply Concession Project, listed below, which also serves as tools for similar undertakings of LGUs. There are many LGUs, including the ‘waterless’ municipalities that are in the same situation as Baggao.

Guide to Business Case Preparation Baggao Water Supply Project Business Case Terms of Reference for Bulk Water Source

Assessment Terms of Reference for a Feasibility Study

and Transaction Advisory Services

Financial Analysis Model Economic Analysis Model Procurement and Contract Management

Toolso Pre-qualification Documento Instruction to Bidderso Concession Agreemento Contract Management Checklist

*In addition to the suite of materials for Baggao a model Terms of Reference for Feasibility Study and Transaction Advisory Service, which has more general application, was also prepared.

The materials went through a thorough review from the World Bank PPP community of practice and the PPP Center.

In addition to the preparation of knowledge products, the team also helped the PPP Center organize a Technical Working Group for PPPs, composed of PPP Center as lead, Department of Interior and Local Government, Local Water Utilities Administration, the National Water Resources Board and the Philippine Association of Water Districts. The TWG aims to advocate for PPPs, undertake capacity building and technical assistance activities that will strengthen the competencies of local governments and water districts towards the development of a robust pipeline of PPP projects in the water and sanitation sector; as well as develop policies to encourage private sector to invest in water and sanitation PPP projects.

Lessons Learned/ Next Steps

Based on the experience of PPP Center, Baggao LGU is representative of the strong interest of LGUs for PPP arrangements as well as the level of capability to implement such arrangements. The PPP products will be helpful but they need to be complemented with services from transaction advisers. This need ties up with the earlier recommendation to include PPP arrangements in the ATSP training curriculum.

There is also a need to develop other PPP products for different circumstances and arrangements. For example concession agreements for existing facilities with expansion components, or pure O&M contracts, or bulk water supply BOT arrangements.

5 Compendium of PPP Tools for a New Water Supply Project under a Concession Agreement

9

3. Rating of the TA Contribution to Development Objectives, Outcome and Indicators

The rating is on a scale of 1-10, 10 being the highest mark.

Regulatory Reform ATSP Program Access to Credit TrialsContribution to development objective: new sector approaches

8 (Effective) 9 (Very effective) 7 (Moderately effective)

Outcome: increased access to safe water supply

7 (Moderately effectiveListahang Tubig and Light Handed Regulation will guide the prioritization of investments and technical assistance to increase coverage; as well as targeting of areas where regulations can be strengthened. 7 (Moderately effective

8 (Effective) 6 (Slightly effective)Knowledge products and the streamlining of implementation guidelines will facilitate PPP project development and shorten the learning curve for implementing agencies for PPP implementation.

Indicators:1. Private

investments increased

2. Private sector sales

3. Technical operations improved

4. Financial operations improved

5. Enabling program

6. Public investment flows

3.1 Bank Performance

3.1.1 Budget and Funding

Resources Bank Budget Bank-executed Trust Fund

Other Total

Total Estimated at Concept

0.00 800,000.00 0.00 800,000.00

Total Actual 0.00 1,799,993.79 0.00 1,799,993.79

3.1.2 Timeline

Milestone Original ActualAIS Sign-off July 9, 2012 July 11, 2012Concept Review September 6, 2012 September 6, 2012

10

Management Approval of Concept

October 5, 2012 October 24, 2012

Decision Review January 30, 2015 March 17, 2015Management Endorsement of Deliverable

March 31, 2015 July 16, 2015

Deliver Output to Client/Stakeholders

April 30, 2015 August 4, 2015

Final Delivery/Completion Summary

June 15, 2015 December 15, 2015

3.1.3 Rating of Bank Performance

Effectiveness of Activity Scale: 1-10

Remarks

Strategic relevance 9 Activities are consistent with the national government priorities for the sector, and priority interventions were identified or surfaced from probing of needs and critical constraints to the expansion of the water supply services especially to poor households

Technical quality 8 A well-defined scope of the concept design or analysis of policy reforms and knowledge products, a consultative approach with main client and key stakeholders, and conscientious peer review has ensured quality outputs

Client engagement 8 Ownership and buy in from clients encouraged cooperation and contribution of resources for the activities

Timeliness 7 Some delays experienced were due to competing attention on the part of clients or the usual lengthy process in decision making

Overall usefulness (for KPs) 8 The PPP knowledge products have been used in demonstration cases while the ATSP experiences are showcased by NWRB not only in the Philippines but even globally, starting with Cambodia water stakeholders.

3.2 Overall Bank Performance:

The TTL gives the TA an “8 or Effective” rating taking into account the following attributes of the TA:

Responsive to government priorities- The activities of the TA respond to the priorities of the government for the sector espoused in the Philippine Development Plan and the Water Sector

11

Roadmap. The activities contribute to improved regulations, utility reforms and capacity development, and increasing investments by leveraging private resources. Some of the activities such as those related to regulatory reforms or financing are critical building blocks to long term reforms that would compel or motivate expansion and improvements in quality of services.

Innovative and practicable- The TA highlighted the role of small utilities in addressing gaps in the services especially to poor communities and the benefits of providing systematic support thereto. The approaches of the TA are both innovative and practicable. They enable and facilitate utility initiatives for development, and compliance with regulations. They engage private sector participation in capacity building as well as direct investments. They also were designed to work within existing legal bases and institutional set up.

Proof of concept- Demonstration cases show that the ideas can work and can be scaled. For example, the ATSP program has proven its effectiveness on several counts: capacity building of utilities improves performance, service provision through the private sector is more cost effective compared to project-based training programs, on demand technical assistance is more responsive to utility needs. The PPP-related activity has at least one example of potentially enabling one LGU to leap frog from no organized water system to a piped service under a PPP concession arrangement.

Strong ownership of main clients and buy-in of other partners- The TA team fostered very strong rapport with the main government clients and key partners including other government agencies, LGUs, donors and private sector. This helped with establishing clarity of objectives and outcomes, and buy in in the approaches and directions of the activities. The main clients worked on institutionalizing the reforms or approaches through policy issuances, incorporation in internal work programs and allocating resources therefor.

The TA resources were augmented with funds, staff time and effort and materials from clients and partners.

Documentation and dissemination- The documentation through learning notes and other knowledge products went through in depth review to ensure robust content and readability. The materials were also widely disseminated domestically and globally. The materials were used for advocacy as well as for capacity building.

As expected in any program implementation the TA team had to contend with factors not within its control such as changes in leadership, shift in attention or competition with other issues of main clients that caused delays or setbacks in the reform glide path. Nonetheless, the TA team persevered and was agile in making adjustments or finding solutions to implementation constraints.

3.4 List of Reports

All the outputs listed below are annexed to this Report.

1. Proposed Economic Regulatory Framework for the National Water Resources Board2. Listahang Tubig Final Report

12

3. ATSP Program: Paving the Way for Improved Compliance to Regulation and Water Service Provision

4. ATSP Brochures and Video5. ATSP Learning Note: Sustainable Capacity Building for Small Water Utilities6. Lessons on Credit Financing for Water Supply Projects in the Philippines7. Capacity Building in Public Private Partnerships for Local Water Projects 8. PPP Knowledge Products:

a. PPP Case Studies (8): Consultant Findings Brief for Sta. Cruz Municipality (Davao Sur), Boracay Island Water Company, Laguna Water, Norzagaray Water District, Tabuk Water Corporation (Kalinga) , Malasiqui Municipality (Pangasinan), Metro-Manila Concessionaires, Barangay Alfonso (Quezon, Palawan)

b. PPP Learning Note: Beyond One Size Fits All: Lesson learned from eight water utility PPP in the Philippines

c. Compendium of PPP Tools for a New Water Supply Project under a Concession Agreement

13