Philippines - Manila Second Manila Sewerage Project

Report No. PID940 Project Name Philippines-Manila Second Sewerage(@#) Project Region East Asia and Pacific Sector Water Supply and Sanitation Project ID PHPE4611 Borrower Metropolitan Waterworks and Sewerage System Implementing Agency Metropolitan Waterworks and Sewerage System Date PID Prepared June 5, 1998 Project Appraisal July 1995 Project Board Date May 21, 1996 1. Country/Sector Background. Metro Manila (MM) forms the National Capital Region and consists of seventeen municipalities each managed by a separate council. From 1997, the water supply and sewerage services are provided by two concessionaires (Manila Water Company, the East Concession, and Maynilad Water Supply, the West Concession) under 25 year agreements. The Metropolitan Waterworks and Sewerage System (MWSS), a government corporation established in 1971 retains ownership of all existing assets and those to be financed by concessionaires. Drainage services are provided by municipalities. Canals controlling floods and the main drainage system are maintained by the Department of Public Works and Highways (DPWH). Some of wastewater generated in MM households is collected by localized separate sewerage systems. About 17t of wastewater is discharged untreated through an outfall into the Manila Bay and only about 1 is treated. The majority of residential wastewater (80%) is discharged through about one million septic tanks into the municipal drainage and waterways emptying into Manila Bay. The septic tanks are not desludged and the effluent flows into the water bodies essentially untreated causing heavy pollution. In terms of biochemical oxygen demand (BOD) such pollution is estimated at about 1,000 tons per day. About 80% of this pollution originates equally from households and industrial wastewater and 20% from solid waste dumped in surface drains and rivers. With periodic desludging the existing septic tanks would remove at least 30% of pollution generated by municipal wastewater. A septage management program developed under this project will create land-based treatment facility adequate for regular desludging of MM septic tanks. The plan proposes in the first phase (1998-2000): (a) providing a septage treatment plant with the capacity of 200 m3/day; and (b) desludging about 300,000 tanks. In the follow-up phases (2001-2010) the plan proposes construction of several septage treatment plants with an aggregate capacity of over 3,000 m3/d. The septage treatment plants will be designed on the basis of laboratory experiments and data on characteristic and spatial distribution of septage determined during desludging of about 300,000 tanks. The septage collected before the treatment plants are completed will be disposed of at a sea dumping  site 2,300 m deep and about 115 km from MM designated by the Philippines Coast Guard. The request for sea disposal was reviewed and a permit provided by Environmental Management Bureau (EMB) in consultations with PCG. 2. Objectives The proposed project is intended to help the Government improve the quality of sanitation services in order to: (a) reduce the pollution of MM waterways and Manila Bay; (b) reduce the health hazards associated with human exposure to sewage; and (c) establish the conditions needed for gradual low-cost improvement of sewerage services in MM. 3. Project Benefits The primary benefits from the project will come from relatively quick reduction of pollution and improved environmental conditions thereby reducing human exposure to sewage and protecting public health in MM. Further, it will permit realization of the benefits from existing investment in sewerage in MM and improve sanitation service quality and coverage. 4. Project Risks There are no unusual risks associated with the project. The heavy traffic in MM could result in delayed arrivals of septage trucks at the loading stations. This will be minimized by allowing adequate journey times for septage transfer. The other risk pertains to possible lack of cooperation between the two concessionaires. This risk is minimized by eliminating joint or interdependent actions. 5. Description The project includes the rehabilitation of existing separate sewerage networks and the Ayala treatment plant, and implementation of the first phase (1998- 2000) of the septage management plan. The facilities include: (a) construction of a septage treatment plant and three barge loading stations for the shipment of septage; (b) rehabilitation of the central and Ayala sewerage systems, including new sewer house connections; and (c) laboratory instruments, equipment, tools, spare parts and specialized vehicles for improved sewer maintenance. The implementation support will include: (a) construction supervision and monitoring of septage collection and septage treatment plant operation: and (b) preparation of designs and documents for the next stage of sewerage system and septage management expansion. The project is estimated to cost Peso 2,205 million (US$63.0 million), of which Peso 902 million (US$25.8 million) is foreign exchange. 6. Financing The proposed Bank loan of US$48 million will finance about 76% of the total project costs of 100% of the foreign exchange requirements and 60% of local costs. The remaining US$15.0 million or 24% of the total project cost will be financed by the concessionaires from their internal cash generation. Retroactive financing equal to US$300,000 is recommended for expenses incurred prior to the loan approval on the basis of advanced contracting approved by the Bank. 7. Implementation The project will be implemented by MWSS through the concessionaires and carried out by contractors. The MWSS established the Project Management Office (PMO) which will administer the project in cooperation with the concessionaires. The concessionaires will advise PMO on proposed procurement - 2 -  and supervise the contracts with own staff and with consultants' assistance. The bulk of the implementation is expected between September 1998 and December 2001. Collection and evaluation of data on desludging about 300,000 septic tanks, on quality of septage and on barging operation will be managed by concessionaires assisted by consultants. Barging from Napindan and Estero de Vitas, and sea disposal are expected to operate from September 1998 and from Paranque from November 2002; the septage treatment plant (200 m3/d) is expected to start operations from October 2001. The rehabilitation and upgrading of the central system and Ayala sewerage networks and the Ayala treatment plant are expected to start in October 1998 and January 1999, respectively and be completed in December 2002. Designs for expansion of sewerage system and septage/wastewater treatment plants are expected to be carried out from January 1998 through December 2002. Civil works for the septage treatment plant, laboratory instruments, equipment, and specialized vehicles will be procured on the basis of International Competitive Bidding (ICB). Locally manufactured goods will be granted a preference of 159 or the amount of custom duties whichever is lower. National Competitive Bidding (NCB) would be used to procure some materials and equipment. Consultants will be selected in accordance with the Guidelines for the use of consultants by World Bank Borrowers published in January 1997 and will use the Bank's Standard Form of Contract for Consultant Services. 8. Sustainability The facilities would be managed by experienced international private operators with incentives to increase efficiency and minimize costs. Meeting performance targets for sanitation and sewerage coverage included in Concession Agreements signed between MWSS and the concessionaires require investments to be sustained to avoid significant penalties. 9. Lessons Learned from Past Operations in the Country and Sector The Bank has supported MWSS with four loans for water supply and one for sewerage and sanitation. All water supply projects and the sewerage and sanitation project have been completed. The completion reports found the projects to have substantially achieved all physical objectives. The performance audit which evaluated the sewerage and sanitation project confirmed the success of the project. It also identified unintended detrimental environmental effects outside the project area and noted that inadequately funded maintenance could affect the life and efficiency of the facilities constructed under the project. 10. Environmental Aspects The project will have positive impacts by: (a) reducing the level of human exposure to raw wastewater, with public health benefits; (b) reducing organic pollution of MM waterways and Manila Bay, and protecting groundwater from contamination. Potential negative impacts include: (a) traffic and noise during construction; (b) increased levels of noise and odor during septage collection, operation of the pilot treatment plant and shipping; (c) possible accidental discharge of septage; and (d) changes in marine environment during disposal of septage into the sea. Mitigating actions to limit these and possibly other negative impacts are identified in the Environmental Assessment (EIA) and Supplementary Reports and will be implemented during project execution. Public consultations will be held as appropriate. No relocation of population is required by the project. 11. Program Objectives Categories - 3-  The project does not aim at reduction of poverty. However, its key objective is improvement of environment which will benefit MM's poor, who have the greatest exposure to polluted inner-city waterways. 12.Contact Point: The InfoShop The World Bank 1818 H Street, N.W. Washington, D.C. 20433 Telephone No. (202)458 5454 Fax No. (202) 522 1500 Note: This is information on an evolving project. Certain activities and/or components may not be included in the final project. Processed by the InfoShop week ending June 12, 1998. - 4 -