Philippines - Manila Metropolitan Water Supply Project

I RETURN TO 1 _ RESTRICTED R!EPORTS DESN6i\Fll 1E ( Q0py Report No. TO-400c Irvl I rIl I' _L ___ I~~~ _. -._ . _ L._ T'is reponr was prepared 'or use within T*ne Banl ana Iits afiliated organizatU-ns. They do not accept responsibility for its accuraicy or completeness. The report may nor ve pubiisned nor may it be quoted,as representing their views. INTERNAT1:ONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOFMENT ASSOCIATION A TIT711 A TWIA T e%T-' "TTL APP~ LRAJ.SA~ LiJr F TriEr MANILA METROPOLITAN WATER SUPPLYC PROJECT IN Tnn,T, ,T T ar.- _n r iTr vY *f l TtVI DepartmeunDLoTe hr ic alCpe' aritisO Department of Technical Operations  r RTtDDr'reNCv y r%T'rTV1& T ErNT'C u.s. $1.o0 J 3.90 F 1, 000, 000 = U.S. $255, 500 Abbreviations cu mn - m3 = cubic meter 1 cubic meter = 264 U. S. gallons m d = cubic meters per day m cd = cubic meters per capita per day 3 Mm d = million cubic meters per day lcd = litr pe aia e a gcd = gallons ner capita ner day mgd = million gallons per day lbs. /sq. in. = pounds per square inch kg. /cm = kilograms per square centimeter Both Metric and English (U. S. ) systems of measurement are used in the operations of tne Maniia Water System. This report contains reference to both systems, using the one employed in the records from which the data is taken, and where f.easible. showing the equivalent in the other system.  APPRAISAL OF THE MiNILA METROPOLITAN WATER SUPPLY PROJECT tPtDTvT Tr OFL rIMJa' P)UTT TIPPLTTQ rl ,' CT 71 /-T, ' r%1rMT 10T Paragraphs SUNi;ffi.RY AND CONCLUSIONS . . . .. . . . . . . . . . . i - viii Ie INTRODUCTION . . . . . . .. . .. . . . . . o c a. o e - 5 II. THRE NATIOATL WhT,RlTORKS AND S;,PRA72 AUTHORITY O e ~~~~~~~~ ~~~~~~0 a-19 A. Organization and Mana-enent . . . . . 20 - 36 B. lianila ivietropolitan Area . a * 37 - 39 C. The Prese-int WJater Supply Facilities .h - 46 D. Service Connections & Meter.3 . . . 0 47 - 49 E. IFire Hydrants & Fire Proteetiri . . . 50 F. UInaccount,ed-for Water . ... . .. 1 - 54 G. W!Tater Use Data . . . . . . . . . 55 - 62 H. WSater Quality & Public Health Aspects . D . . * . . . a . . . . 63 - 66 I. -later Rates . . . . . . . . . . . 67 - 70 J. Financia-L Aspects . . . . . . . . . . 71 - 81 IV. TIE PROJECT . . , . . . . . . . . . . . . . . . . . 82 103 A. The Project . . . . . . . . . . . . . 83 - 94 B. 93ummary of Project Costs . . . . . 95 - 99 C. Design Construction & Procurement . . 100 - 103  V. F1NANCI[ING PIAN AND PROJECTbONS . . . . . . . . . .14 - 116 A. Financing ]'lan . . . . . . 104- 110 B. Generated ]\inds and Water Rates. . 111 - 113 C. Financial Projections. . . . . . . 114 - 116 VI. JUSTIFICATION OF THE PROJECT . . . . . . . . . . .117 - 128 VII. CONCLUSIOMS. . . . . . . . . . . . . . . . . . . .129 - 133 ANNEXES 1. Organization Chart (Present) 2A. Resume of Consultants' Major Recommendations on Management & Organization 2B. Improvements in NWSA Operations after July 1, 1963 3. Proposed Organization Chart 4. Population Growth 5. Chronology of Manila Water System Development 6. Technical Information on Present Manila Metropolitan Water System 7. Proiections of' Water Sulpply, Production & Consumption 8. Relation of Supply Works to Dermand 9. Present Wslater Rates 10. Comparative Balance Sheets, Wlater and Sewerage 11 Connnare.tiv Prnfif. 2nd1 Tns5 Statemnt +Pnt- Water and Sewerage 12. Estimated B.-lance Sheets for Water Operations 1960 - 1963 13. Ft.im.ated Income Statmren-ns for Water Operations 1960 - 196-3 14. Construction Cost Schedule 16. Pro Forma Income Statements 17 Sorces- --- ----.n+ of - l1ns a 13. Pro Forma Balance Sheets 19. AssQii.p1;+inns forn Finnn,cinl Pv-ni~rojectlons c M ADPS 1. Present & Proposed Supply Works 2). 'Presentl &1 Proposed Itake- St-.-ctures r- A A.& I U V LI LJU. US A VUL4I 3. Present & Proposed Treatment Facilities L4. Pre3entu &L P-roposed DK istribLu -ion tr1-ans & kw g Statlo  APPRAISAL OF THE MANILA METROPOLITAN WATER SUPPLY PROJECT REPUBLIC OF THE PHILIPPINES SuMOIv Y _ID CGIECLUSIONS i. The Republic of the Philippines has requested an IBRD loan to cover part of tne costs of major improvements to the water system for Manila and suburbs. The loan would be made to the National Watenrorks and Sewerage Authority (NWSA), an autonomous agency, which has responsi- bility for water supply in the Manila metropolitan area and in many other areas of the Philippines. ii; The present metropolitan water system serves the cities of Hlanila, Quezon, Pasay, and Caloocan, and 16 surrounding municipalities. An estimated 2.L5 million people or about 88% of the total population of this area take water from the system, the balance using private wells, rivers, etc. iii. The syrstem has been expanded by various additions since it became a metropolitan operation in 1919. The rapid growth of the area since Worldi War II has imposed a water demand requirement on the system with which it has been unable to cope. iv. In early 1063, studies by consultants, jointly financed by the Bank and NBSA, were completed and reports submitted on the organization and management of NWSA and on the technical aspects of a construction program which would cover Manilars immediate water needs. The proposed project is based on these studies. The oroject would require about three years to construct and is designed tc overcome problems of water source, treatment. and distri-bution and to afford an adenuate water supply until about 1972. Construction of additional facilities would be required at about that time. v. The nroiect would orovi-de an adeauate auantitv of oure water at improved pressures throughout the distribution system and would contribute substantiall1y to the public hen1thj fire protectionj hounsing, and to small and large industries. vi. In order to improve management, NWSA has agreed to adopt the recomm.endations oi the consultan As a result, oh anges have been made in NWSA's Charter and a contract has been signed with an experienced forei ~advirsor. no wiLlL assist l.ViA Y .in +he a Jpplc t of the '.J recommendations.  - ii - vii. The proposed Bank loan of US$2,0.2 million (P78.8 million) would cover approxima-tely 42% of the estimated project cost of F188.0 million (US$48.2 million) and 31% of the total requirements for funds, amounting to P251.2 million (US$64.4 million) during the construction period 1964 - 1966. According to the outlined financing plan developed by NWSA and the Government, definite arrangements have so far been made to cover P56 million of the balance of F172.4 million. This amount will be raised through local bond issues. In addition earnings from NWSA's operations are expected to provide P23.C0 million taking into account a rate increase of 40% in July 1964 followred by a second rate increase as soon as imprcved water service is realized. The Government and NIWSA are considering various possibilities of covering the remaining gap of P93.4 million including borrowing in the international markcet. However, the Government has undertaken to make available, when needed, the funds required to carry out the project. The Bank loan would cover the cost of all items of supply, equipment, and fabricated materials submitted for international bid.ding. Interest charges on the Bank loan during construction are also included as are the costs for engineering and management services. viii. With the contractual arrangements outlined in paragraph 132, the project provides a suitable basis for a Bank loan of US$20.2 million to the National Waterworks and Sewerage Authority, for a period of twenty.-five years including a five-year grace period.  I. INTIRODUCTION 1. In July of 1961, a request was received from the Philippine Government for a loan to cover major improvements to the water system serving Manila and its suburbs. Based on information obtained during a visit by Bank staff, the government was informed that in view of the need for the project and its economic justification, the Bank would be willing, in principle, to consider a loan but with certain reservations. The reservations related to the generaLly poor management record of the National Wal;erworks and Sewerage Authority (Nu4A), the agency responsible for the Manila Werater Supply operations, and to the ability of this agency to reorganizne and improve. Reservationas also existed on the engineering studies and the incLusion in the project of works which might better be deferred or eliminated. 2. Because the reservations of the Bank could be resolved only through an extensive study of the management, and a complete re-study of the engineering work, followed by action on the recommendations by the govern-ment and NWSA, the Bank proposed as a first step that a consultant be emoloved to make studies on orpanization and management. on an interirn construction program which would cover the immediate water needs of metro- onlit.-in 1T4nilj anrd ton otline +.hep studi nies r r ri for -a lnng-rqnng - opment Dlan. The Bank expressed it;s willingness to share the cost of such 3.. The goverrnmt agreed to thiIs approach and inv+itations were sent to seven engineering firms in various countries requesting each to submit al nropos- o-,i tn + studies l- be underte After a -v-t nA evalu, + ion of the proposals by INSA and the Bank,, the firm of Metcalf and Eddy, Ltd. Of BCIostluon and TLorontuo, was selecte;l a-id a j oint1- con-tract- signedl by thle Government of the Philippines, NTWSA and the Bank in June, 1962. 4. The final report on organiziticn and management was received from tIe c';nsultLas Tin )Le, 1963, 4he4