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PROJECT Development Facility

Request for PIPELINE ENTRY AND PDF Block B Approval




Financing Plan (US$)

GEF Allocation

Project (estimated)

5,000,000

Project Co-financing



180,000,000



PDF A*




PDF B**

350,000

PDF C



PDF Co-financing





Total PDF Financing:

350,000



Agency’s Project ID: PO79661

GEFSEC Project ID:

Country: Philippines

Project Title: Implementation of the Manila Bay Coastal Strategy: Manila Third Sewerage Project (MTSP) Component

Related Program: World Bank/Global Environment Facility Pollution Reduction Investment Fund for Large Marine Ecosystems of East Asia.

GEF Agency: World Bank

Other Executing Agency(ies):
PDF B Duration: 12 months

GEF Focal Area:  International Waters

GEF Operational Program: OP10: Contaminant-based program

GEF Strategic Priorities: IW1 - catalyzing policy reforms and pollution reduction measures; and IW3 - demonstrating, testing, and replicating innovative ways to reduce land-based pollution.

Estimated Starting Date (PDF-B): June 2005


This proposal has been prepared in accordance with GEF policies and procedures.


Steve Gorman

IA/ExA Coordinator



Mara Warwick / Luiz Tavares

Project Contact Person



Date:

Tel: 202 473 2986 / 202 473 0597
Email: mwarwick@worldbank.org

ltavares@worldbank.org



This proposal has been prepared in accordance with GEF policies and procedures.






Steve Gorman

WB GEF Executive Coordinator



Robin Broadfield

Project Contact Person



Date: May 1013, 2005

Tel: 1 202 473 4355
Email: rbroadfield@worldbank.org



Estimated WP Entry Date:  May 2006


Record of endorsement on behalf of the Government:

Name:

Date:




Endorsement Letter from PH-OFP (DENR) is pending; it will be submitted separately for PDF-B Request submission.




Name:

Date:



























PART I - Project Concept
A - Summary
1. Strategic Framework

East Asia’s rapid economic growth has been accompanied by significant environmental degradation. Land-based pollution of the region’s seas, coasts, estuaries and rivers is one of its most severe environmental problems and is degrading the region’s large marine ecosystems. To help the littoral states address this problem, the GEF and World Bank, in collaboration with other partners such as the GEF/UNDP/IMO Partnership for Environmental Management of the Seas of East Asia (PEMSEA), have agreed to establish a Pollution Reduction Investment Program for the Large Marine Ecosystems of East Asia (the Program ), the objective of which is to scale-up investment in land-based water pollution reduction in the region’s coastal areas and major river basins. The Program comprises an investment component that will co-finance World Bank pollution reduction investment projects and a revolving fund(s) component that will provide reimbursable financial incentives to private pollution reduction investors/managers. The Manila Third Sewerage Project (MTSP) described herein is the second World Bank project proposed for GEF co-financing from the Program’s investment component.

The strategic linkage of the MTSP with the planned GEF alternative scenario on the Implementation of the Manila Bay Coastal Strategy (IMBCS) is a first step towards the large and much needed investment package for the recovery and sustainability of Manila Bay.

Manila Bay is one of 35 pollution hotpots identified in the Transboundary Diagnostic Analysis for the South China Sea (UNEP, East Asian Seas Regional Coordinating Unit, 2000). The accelerated degradation of the Bay has significant negative impacts on the country’s socio-economic activities and is considered a major source of transboundary pollution. In response to these challenges, the Manila Bay Coastal Strategy (MBCS) was prepared in 2001, with the support of the PEMSEA, and adopted by national and local stakeholders. The MBCS is a strategic framework and action program for bay-wide cooperation in the restoration of the productive capacity of the bay, as well as for addressing issues of transboundary concern in the South China Sea. The proposed project forms a significant step in the implementation of the MBCS and is fully consistent with it.


Manila Bay is one of 35 pollution hotpots identified in the Transboundary Diagnostic Analysis for the South China Sea, (UNEP, East Asian Seas Regional Coordinating Unit, 2000).(TDA) in the sub-region interacting with the South China Sea. The accelerated degradation of the Bay has significant negative impacts on the country’s socio-economic activities and is considered a major source of transboundary pollution. In response to these challenges, tThe Strategic Action Plan (SAP) for the South China Sea (SCS) underscores the point that domestic, industrial and agricultural activities are major sources of pollution of the LME’s aquatic environment, impinging on both freshwater and coastal systems of the countries that share the sea. The SAP calls for the development of regional water quality objectives and implementation of the mitigation measures to halt or slow the current rate of environmental degradation.
The Philippines is signatory to the Putrajaya Declaration and remains committed to achieve the targets identified in the World Summit for Sustainable Development (WSSD) Plan of Implementation, including enhancement of regional cooperation in ocean governance, and development and implementation of national coastal and ocean strategies. The formulation of the Manila Bay Coastal Strategy (MBCS) )was prepared in 2001, with the support of the GEF/UNDP/IMO PEMSEA Regional Programme, and adopted by national and local stakeholders with the signing of the Manila Bay Declaration. The MBCS , is a strategic framework and action programme for bay-wide cooperation in the restoration of the productive capacity of the bay, as well as for addressing issues of transboundary concern in the South China Sea.under the GEF/UNDP/IMO Regional Programme on Partnerships in Environmental Management for the Seas of East Asia (PEMSEA), led to the forging of the Manila Bay Declaration as an integral response for bay-wide cooperation in the restoration of the productive capacity of the bay and addressing issues of transboundary concern with respect to the South China Sea. The proposed project forms a significant step in the implementation of the MBCS and is fully consistent with it.
National level initiatives, most recently articulated with the enactment of the Philippines Clean Water Act of 2004, accord high priority to the pursuit of economic growth in a manner that is consistent with the protection, preservation and revival of the quality of its fresh, brackish and marine waters. The Act calls for the implementation of wastewater charge systems, and the establishment of a national program on sewerage and septage management. Establishing priority sewerage and septage projects for Local Government Units (LGUs) underpins the national program. The Act’s Implementing Rules and Regulations (IRR) is expected to be finalized in May 2005, formally setting the law into full implementation.
Interfacing the MTSP with the IMBCS through the proposedis project provides a mechanism for the institutionalization of a strategic partnership among the key institutional players in the management of Manila Bay, Pasig River and Laguna Lake. These bodies of water interact hydrologically hydraulically and ecologically and exhibit a serious state of degradation, principally caused by untreated domestic wastewater and industrial effluents. The synergy of partnership among the institutions that manage these bodies of water, principally the Department of Environment and Natural Resources (DENR), Pasig River Rehabilitation Commission (PRRC) and Laguna Lake Development Authority (LLDA), will be harnessed and better targeted to address the causes of land-based pollution and overcome barriers to increased investments. The long-term objective of attaining designated water quality standards within these bodies of water will only occur when and if the required investments in environmental infrastructure can be obtained.
2. Project Rationale

About 90% and 15% of the population in Manila Metropolis (MM) is served with water and sewerage services, respectively; wastewater from only 8% is fully treated. The law mandates that each house be provided with a septic tank to remove solids. Regular service for septage removal started only recently. Less than 10% of the septic tanks have been serviced since their construction and have no effect on removal of pollution. Industrial and commercial wastewater is generally discharged with little or no treatment and. aAll MM waterways are heavily contaminated. About 65-75% of pollution is residential sewage, while the rest originates in industries and solid wastes dumped into drainage systems or directly into rivers and coastal areas.


The Manila Waterworks and Sewerage Systems (MWSS) is responsible for the services in MM, and has made several attempts to systematically develop the sewerage. In 1960, 1979, and 1996 it completed master plans to identify solutions for collection and treatment of residential wastewater. But, except for some small parts and rehabilitations of existing facilities, the plans were not implemented due to prohibitive costs.
In the late 1990s MWSS privatized its operations in MM to two concessionaires: the western part to Maynilad Water Services Inc. (MWSI) and the eastern part to Manila Water Company Inc. (MWCI). Expansion of the services in the concessions is defined in terms of 5-year targets. In order to interpret their sewerage targets, the concessionaires amended the respective master plans for each operational area. MWCI’s plan for the eastern concession is partially completed; it proposes to pilot the construction of small-scale self-standing systems for the combined collection of sewage and stormwater runoff in clearly defined densely populated areas. This plan forms the current MTSP project supported by the Bank. MWSI’s plan for the western concession will be completed in December 2005, and will be the subject of a new Bank project in FY06: Private Sector Support to MWSS Financial Rehabilitation.
One of the strategic interventions of the the proposedis project GEF alternative scenario for the IMBCS relates to the systematic identification of hotspot areas, where priority investments in sanitation and sewerage will be made under the MTSP and follow-on Bank investments. Therse are also areas within the three bodies of water that may have already reached non-attainment status because of uncontrolled discharges of sewage and septage. The major findings and activities of the proposed IMBCS project would serve as integral inputs into the Concession Agreements and performance criteria of the MWSS’ MWSS, MWCI and MWSI, which are scheduled to be renegotiated in 2008.
Similarly, tThe proposed IMBCS project is also likewise expected to further define the scope of the planned new Bank project on Private Sector support to MWSS Financial Rehabilitation and respond to the considerable underinvestment in sewerage and sanitation within and outside of Metro Manila. The scope for increasing private sector exposure in the area is extremely significant, with an estimated Php 250 billion (US$ 5 billion) investment required in physical infrastructure over ten 10 years. The opportunity to demonstrate the technological viability of the joint sewage-septage treatment facility within the MM and with potential replication within the Manila Bay region, in partnership with the private sector are deemed excellent avenues for GEF support.

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