Friday, October 31, 2008 DBP tapped for water program
STATE-owned Development Bank of the Philippines (DBP) has been tapped as fund administrator of the Philippine Water Revolving Fund (PWRF), an innovative lending program for water supply and sanitation projects.
The project was launched Tuesday at the DBP headquarters in Makati City.
A joint undertaking by the governments of Japan, the Philippines and the United States (US), the PWRF aims to mobilize private capital, augment public resources for much-needed investments in water supply and sanitation projects and bring potable water to 90 percent of the country's population by 2015.
Finance Secretary Margarito Teves said the PWRF was designed to leverage Official Development Assistance (ODA) funds with private sector resources for water financing and use existing government funds like municipal development funds as stand-by credit to give confidence to private financing institutions to extend financing to the local water supply sector.
The PWRF is capitalized by a loan from the Japan International Cooperation Agency (JICA) to DBP which will leverage funds from private banks, with partial credit guarantees from the USAID Development Credit Authority and the Local Government Unit Guarantee Corporation (LGUGC).
The PWRF will initially provide funds for about $100 million worth of water and sanitation projects for both public and private water service providers.
Teves added that approximately P820 million worth of loans by water districts to private banks have been processed under the PWRF.
"It signifies a big step forward, both in terms of opening new investment options for private financing institutions and providing sustainable alternative sources of financing for water districts and local government units," he said.
The PWRF is in response to Executive Order 279 of President Gloria Arroyo that calls for reforms in the financing policies for the water supply and sewerage sector and water service providers.
The financial structure of the PWRF allows the loan's terms and conditions to become affordable to water service providers and for participating financial institutions to enjoy market rates.
The PWRF will also explore the development of other mechanisms with broader private sector participation such as loan securitization.
The Department of Finance spearheaded the development of the PWRF with support from USAID and JICA under the "Clean Water for People Initiative."
It is a joint program of the US and Japanese governments aimed to help countries like the Philippines achieve their Millennium Development Goals in water supply and sanitation.
Key partners in the development of the PWRF include the National Economic Development Authority, Municipal Development Fund Office, LGUGC, and the Bankers Association of the Philippines.
