Philippine Water Service Supply

This portion gives an overview of the Philippine water service industry. It narrates
the current situation, the market, the different agencies involved in the industry,
and the steps to take regarding future involvement, all aimed at providing insights
for entrepreneurs and investors interested in the large-scale water business.
I.

The Philippine Water Supply Situation

Lacking a systemized monitoring system, measurement of the actual access and

coverage of water supply services in the country remains a problem. Various
agencies (LWUA, DILG, and the NSO) compile varying statistics, rough estimates
stating that around 80% of the population is covered by potable water service,
broken down as far as can be ascertained as follows:
Water Coverage of the Philippine Population by Providers, %
Provision
Agency
%
Water Districts
17
Big Private Operators
8
Self-Provision
9
Nat'l Gov't, NGO's, LGU's, Coops
46
80
"Unserved"
Supplied from unimproved water sources or with
roof water
Small Scale Infrastructure Providers

15
5
20

There are three levels of service of water systems in the Philippines. Level 1 water
systems are stand-alone water points (e.g., handpumps, shallow wells, rainwater
collectors). Level 2 water systems are the communal faucet systems; piped water
from communal water points (e.g., borewell, spring system). Lastly, the Level 3
water systems are the extensive distribution networks of piped water connecting
individual households commonly in urban areas. The table below shows the access
of Filipinos to such different levels.
Access to Formal Levels of
Service
Level 1
Level 2
Level 3
Total

%
25
10
45
80

Unserved

20

These numbers have either remained the same or worsened since the year 2000
indicating that investments in the water sector have barely kept up with the
demands of the Philippine market.
The water providers are typified as follows:
1. Water districts. While headed by autonomous boards, these are
government-funded and hence government-controlled municipal entities.
Financing and technical support for water districts are administered by the
governments Local Water Utilities Administration.
2. Large-scale private operators. These are corporations operating in Metro
Manila and a few smaller cities. In the former, MWSI and MWCI are the
concessionaires of MWSS and are pledged to extend and improve the latters
coverage to more of the metropolis as part of the governments thrust to
privatize basic services.
3. Local Government Units. Water supply is one of the many basic services
devolved into LGUs, and some have availed of the LWUA program to acquire
water district-run systems. However, as many LGUs have negligible incomes
from local fees and taxes, and despite the allotment from the national
government of their share of the national internal revenue, surplus funds for
major infrastructure such as water supply are otherwise rare. Most of the
water systems which upkeep has fallen into LGU responsibility were therefore
funded and built either by the national government or more rarely, charitable
NGOs.
4. Community based organizations such as the Barangay Water
Services Associations (BWSAs), Rural Water Supply Associations
(RWSAs) and Cooperatives. Many operate systems built wholly or partially
with government funds. Although they are supposed to be autonomous from
government, most also rely on LGUs for the O&M expenses of their systems.
5. NGOs. Some NGOs have international funding for direct water project
implementation while others involve themselves in government-funded
projects.
6. Small-scale independent providers (SSIPs). They range from real estate
operators, homeowners associations, and individual entrepreneurs. Studies
indicate that they may be providing water to up to 30 percent of the
populations of Metro Manila and Cebu.
II.

Institutional Framework

The problem with water works in the Philippines is that it is regulated by

many different government agencies with overlapping duties, powers and
responsibilities. Around 30 national agencies are involved in planning, regulating
and implementing the delivery of water and sanitation services and the care of the
country water resources. Listed below are among the most important of the
institutional framework.
Institution

Enabling Law

Mandate/Function

National
DENR: Forest Mgt. Bureau
(FMB) and Environmental
Mgt. Bureau (EMB)

EO 192

National Power Corporation

(NPC)

RA
6395
Charter);
EO 224

Philippine
National
Company (PNOC)

EO 223

Oil

Primarily
responsible
for
management,
conservation,
development of watersheds,
maintaining water quality
(NPC

National
Irrigation
Administration (NIA)

RA 3601

Department
(DOE)

RA 7638 (DoE Act)

of

Energy

National Water Resources

Board (NWRB)

PD
1067
Code)

Joint Executive-Legislative
Water Crisis Commission

RA 8041 (National
Water Crisis Act)

Department
(DOH)

IRR of NEDA Board

Res. No. 4

of

Health

Department
of
Public
Works
and
Highways
(DPWH)
National Economic and
Development
Authority
(NEDA)
National Commission on
Indigenous People (NCIP)

Local

(Water

Same as above

EO 230

RA 8371 (IPRA)

the
and
and

Authority to take water from any

public stream, river, creek, lake, or
waterfall
for
power
generation;
complete jurisdiction and control over
watersheds surrounding the reservoirs
of plants and/or projects
Jurisdiction,
control,
management,
protection,
development
and
rehabilitation of watershed reserves
Improve, construct and administer all
national irrigation systems of the
country
Allocate
reforestation,
watershed
management,
health
and/or
environment enhancement fund
Coordinate
and
regulate
water
resources
management
and
development, and water uses
Address the water crisis including
supply,
distribution
finance,
privatization
of
state-run
water
facilities, protection and conservation
of watersheds and the waste and
pilferage of water
Set quality standards for water testing,
treatment
and
surveillance
and
sanitary practices
Set
technical
standards
for
engineering surveys, design and
construction of Level I water systems
Policy making and infrastructure,
coordination of activities and various
sectors
Formulates and implements policies
for the protection of indigenous
people, e.g., ancestral domain in
critical watersheds

Local Government
(LGUs)

Units

RA
7160
(Local
Government Code)

Local
Water
Utilities
Administration (LWUA)

PD 198 (Provincial
Water Utilities Act)

Metropolitan Works and

Sewerage System (MWSS)

RA 6234

Implement community-based forestry

projects, manage communal forests,
and enforce forestry laws
Own and operate water supply
distribution systems for domestic,
industrial, municipal and agricultural
uses
Responsible for water supply in Metro
Manila

Due to the fragmented geography of the country and of its water supply, different
LGU units have also been tasked with the functions in relation to the water supply
and sanitation.
Tier/Level of LGU
Barangays

Municipalities and
Cities

Provinces

III.

Roles and Function on Water and Sanitation Management

General sanitation and maintenance of water supply systems
Barangay Capt., Councilman and Zone Chairman deputized as
peace officers to effect arrest of violators to enforce pollution
control laws
Infrastructure facilities funded by municipal funds including
water supply systems, drainage and sewerage
Research services and facilities related to agriculture and
fisheries including water utilization or conservation projects
Services or facilities related to general hygiene and sanitation
Enforcement of pollution control and laws to protect the
environment subject to DENR supervision, control, and review
Infrastructure funded by provincial funds for inter-municipal
water works, drainage, sewerage and similar facilities

The Waterless Problem

Despite these institutions and the seemingly abundant water resources in the
Philippines, a portion of the population still does not get access to potable water.
The Philippine standard for access to potable water is a clean supply of at least 50
liters per capita daily (lcpd) available from water points no more than 250m from
the users residence. Others in the water sector would also add affordability (e.g.,
no more than 2-5% of the household income should go to water) and reliability
standards (e.g., compliant for 90-95% of the year).
Waterless communities may be typified as follows:
1. Those supplied from unprotected or poor-quality sources. Many water sources
in the country, perhaps as much as two out three, are bacteriologically
contaminated due to inadequate sanitation facilities. In addition, 12-25% of
wells yield iron-laden water.

2. Communities which have outrun local water sources. Densely-populated islets

are an example. In a few rural villages, heavy groundwater use for irrigation
has rendered its shallower handpump wells dry during the dry season.
3. Communities and households unable to access sufficient potable water due
to:
a. Governance issues
b. Rights-of-way issues
c. Poverty
d. Supply distribution equitability issues
4. Households that are too scattered or remote from each other for communal
water systems, and are presently using unimproved household systems.
5. Communities which already have basic point-source systems but aspire for
household connections and therefore declare themselves waterless.
IV.

Steps to be Taken

Everybody agrees that the state has the main responsibility in seeing to the delivery
of basic services such as water and sanitation to the people. By law and sector
consensus, LGUs are the primary planning and implementing authority on water
supply and sanitation in their respective jurisdictions. The Philippine Water and
Sanitation Sector Roadmap is identifying LWUA as the lead technical and financial
support agency for the LGUs. A bill increasing LWUA capitalization by an order of
magnitude is already under legislation.
However, vesting such a function in a single agency is seen by some to be
impracticable:
a. LWUA, for example, would have to increase its capability by the same
magnitude in a short period of time
b. It would also have to learn other business models. Its water district
concept seems to work only in urban areas of a certain minimum scale
where users have regular employment and hence incomes and would be
willing to pay tariffs for the convenience of a house connection. In rural
areas where peoples incomes are agricultural and hence low and
irregular, and population densities are low, no water district is known to
have survived.
c. Of LWUAs hundreds of water districts, only fourteen are financially in the
black.
d. Even in service areas saturated by water district pipe networks, coverage
is low (an average of about 40%) is increasing by only a couple of
percentage points a year.
e. LWUA is not known for low-cost appropriate technology approaches. Some
LGUs actually avoid availing of LWUA financial and technical assistance
because of the latters high indicative project prices, which result in the
aforementioned manifold increases in tariffs that can be political suicide
(to be fair, some are on the other hand in favor of privatizing potable
water because it would depoliticize this basic service).

V.

Getting Involved

If a private water supply provider desires to supply a service area of a Water

District, a Certificate of Public Conveyance (CPC) and water rights/permit must first
be obtained from the NWRB. Once an entity is given approval by the NWRB, it
obtains independence in the sense that it is now free to operate subject only to the
regulatory and monitoring powers of the NWRB. This is made possible by the
Philippine policy on non-exclusivity of water service providers virtually anybody
can set up their own private water service provision.
On the other hand, an LGU can establish a Water District in its territory through
coordination with the LWUA. LWUA was established primarily as a specialized
lending institution for the development and promotion of provincial water supply
and wastewater disposal systems. It lends out capital improvement loans only to
duly-organized water districts. In addition, LWUA was further mandated to prescribe
minimum standards and regulations, furnish technical assistance and personnel
training, monitor, and evaluate local water standards, among others.
Essentially, LWUA's relationship with the water districts is that of a lender and a
borrower based on a supervised credit scheme. In pursuit of this, LWUA provides
regular management advisory assistance to the water districts. LWUA advisors
regularly visit water districts to advise their officers and staff on the rudiments of
effective water utility management and operation as well as to monitor and
continually evaluate their performance. The advisors also see to it that the water
districts follow the utility rules and regulations formulated by LWUA and the
guidelines issued periodically. LWUA likewise introduces and installs a uniform
Commercial Practices System for all water districts. Moreover, LWUA extends
training assistance to water district board and management officials and employees
on such aspects as policy-making, utility management and system operation and
maintenance. Correlated to this supervised credit scheme, LWUA also extends
technical assistance to the water districts in the preparation of project feasibility
studies and detailed designs and supervision of their water system construction
projects.

Sources:
Engr. Mario Macatangay, LWUA (personal communication, February 5, 2015)
National Economic and Development Authority. (2010). Philippine Water Supply
Sector Roadmap (2nd ed., pp. 5-27). Pasig City, Philippines: National Economic and
Development Association.
Water Dialogues. (2009). The Philippine Water Situation. Retrieved February 6,
2015.
Jamora, L. H. (2008). Development and Regulation of Water Utilities: The Philippine
LWUA Experience. In Local Water Utilities Administration. Retrieved February 6,
2015.
Managing the Country's Water Resource for Present and Future Generations. (2010).
In National Water Resources Board. Retrieved February 6, 2015.