DBP’s Water Financing Project: An Integral Part of Local Economic Development

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DBP bulkwater 2The scarcity of water is becoming a global problem that needs to be addressed. This problem was recognized by the Development Bank of the Philippines (DBP) and it co-financed the Php 1.073 billion “35 million liters per day (MLD) Cebu Bulk Water Project-Sustaining Local Economic Development” together with the Cebu Manila Water Development Inc. (CMWDI), a joint investment company between Manila Water Consortium (MWC) and the Provincial Government of Cebu (PGC).

This project was conceived to answer the growing demand for water in Metro Cebu as it continues to become a progressive province. This project is expected to augment the Metro Cebu Water District’s (MCWD) water supply and provide clean and potable water to an estimated 187, 380 service connections equivalent to a population of about 1,583, 636 until year 2027. The project will offer MCWD an alternative source of water to groundwater given the cases of saltwater intrusion discovered in the study conducted in 2004. The bulk water supply project will augment MCWD’s existing water source to serve the increasing number of population and commercial and industrial activities where the end result is sustained local economic development.

At the same time, the project will help minimize ground water extraction to protect the environment. The tourism industry as well as other industries which are sources of livelihood to so many people that provides revenue for different stakeholders will continue to bloom and grow.

This project is a new model for public-private partnership (PPP) for bulk water supply initiatives for local economic development. CMWDI is 51% owned by MWC, a private company, and 49% owned by the PCG, a government entity. The project follows a design-build-finance-operation scheme wherein the off-taker for the 35 MLD bulk water is MWCD, a government-owned and controlled corporation, under a water purchase agreement.

The project is funded by an Official Development Assistance (ODA) fund, the Philippine Water Revolving Fund (PWRF), under its mode 4 mechanism or the Private Sector Participation via Direct Equity. DBP is conduit bank of the JICA-funded Environmental Development Project which covers among others, the PWRF which on-lends fund to eligible borrowers. DBP funded about 75% of the PhP 1.073 Billion investment while the CMWDI infused an equity portion amounting to PhP 273 million.

The ‘35 MLD Cebu Bulk Water Project-Sustaining Local Economic Development Project’ won the 2015 ADFIAP Outstanding Development Project Award, under Local Economic Development category.

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