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Explanation on the screening process (For Items 1 to 7, refer to the Workflow above)

2.   The Project considered WDs that were categorized by LWUA as Small WDs.  This reduced eligible WDs to 270 (Luzon 148, Visayas 70 and Mindanao 52).  Database of small WDs is shown in Table-1.

4.   The Project also considered only those WDs that had Loan Arrears due to LWUA.  This reduced the 201 WDs to a total of 97 (Luzon-41, Visayas-31 and Mindanao-25).  The WDs without arrears are shown in Table-3.

(1)  Item 5: Exclusion of some WDs considering LWUA first request

A total of 23 WDs were requested by LWUA to exclude from the selection of 60 WDs due to various reasons at the initial stage of selection process.  Table-4 shows the WDs with problems.  Some of them were already considered in the selection process (WDs with ODA assistance and without arrears), resulted in the exclusion of 17 WDs (Luzon-5, Visayas-5 and Mindanao-7).

(2)  Item 5: Considerations on the second request from LWUA (only references since they are reflected in the selection process)

During selection process before item 6 process, a request list of WDs was given to the project for consideration and whenever possible these WDs were edited to check for compliance.  All requests and reasons for exclusion of some WDs were honored with the reasons indicated according to selection criteria as shown in the selection flow chart.

Note: “Yes” means that screening has already been made and excluded.  The above table itself is not used in the selection process, only reference information to the request by LWUA. 

 

6.  In order to reduce the 80 WDs down to a total selection of about 60 WDs the following two (2) criteria were applied:

The reverse was applied to several WDs with arrears to LWUA which would reach a sum of five years of total current billing revenues.  It was determined that at this point there was virtually no way for the budgeted improvements to be carried out in this project to produce a “turn around” to solvency for the WD.  For example: a WD with 1,000 connections would have arrears of over 12,000 pesos per connection or a total delinquency of 12,000,000 or more pesos.  When this figure was combined with regular ongoing loan commitments, it was determined to be unreasonable to expect a successful outcome.  The drain from repaying the arrears without considering existing loans would take (over a 12 year repayment period at 12% interest) a monthly payment of 155,000+ pesos per month or 75% of existing monthly revenues.  With a general rule to limit monthly debt repayment to a maximum of 25% and more ideally 18% of total revenues even an optimistic level of improvement would fall short of being practical.  In this criterion, four (4) WDs were dropped.

For the replacement of the above three WDs, the following study was made.  One of the candidates WD, the Kiblawan WD was found that only 44,000 pesos of arrears have been reported by LWUA Loans Department.  Indications are that the actual arrears far exceed this amount by up to 4 times the stated figure.   As they are several months in arrears, some verification deemed to be necessary, but that needed to wait until a physical visit would be paid to that WD.  On the basis of this information this WD was considered.

LWUA initially regarded Ipil-Titay WD in Zamboanga del Sur as danger area to visit.  They fully qualified until an engineer had removed them due to security problems.  It was confirmed by LWUA that the area is safe to visit and then they could be re-instated.

The financial data (Loan Balance) of Glan WD in Sarangani was not available in earlier study stage (in the process 4).  This was only discovered when a study was made by the LWUA Loans Department.   It was confirmed that arrears exist as of September 2005 and figures also exceed the minimum qualifications.  Thus this WD was included in the subject WDs.

Results for 60 WDs are: Luzon 27 WDs; Visayas 19 WDs; Mindanao 14 WDs.  References in the above process (LWUA requests) are attached herewith.  Final list is attached in Table-7.

	Table 1 - Database of Small Water Districts (Tables 1/4, 2/4, 3/4, 4/4)
	Table 2 - List of WDs with ODA Project
	Table 3 - List of WDs without LWUA Arrears
	Table 4 - List of WDs without LWUA Arrears
	Table 5 - List of WDs with Problems of Socio-technical, Managerial & Security
	Table 6 - List of WDs for Replacement
	Table 7 - List of Subject 60 WDs

 

Table-1 Database of Small Water Districts (1/4)

 

Table-1   Database of Small Water Districts (2/4)

 

Table-1   Database of Small Water Districts (3/4)

 

Table-1   Database of Small Water Districts (4/4)

Data Sources: LWUA, June 2005 (some data were obtained from MIS of each WD as of December 2004)

 

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Table-2   List of WDs with ODA Project

 

Area	JICA	JBIC	DANIDA	ADB	Kfw
Luzon	0	2	0	4	31
Visayas	3	0	2	4	11
Mindanao	0	0	0	2	10

 

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Table-3   List of WDs without LWUA Arrears

Remarks: Exclude Luzon-70, Visayas-19 & Mindanao-15.  Arrear of Glan WD (ID: 3M-025) was confirmed later by Loans Department of LWUA that was considered for Subject 60 WDs in process item 7.

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Table-4   List of WDs with Problems of Socio-technical, Managerial & Security

Remarks: Ipil-Titay WD in Mindanao is recovered in process item 7.  (Excluded: Luzon-5 WDs, Visayas-5 WDs & Mindanao-7 WDs)

 

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Table-5   List of WDs with Extreme Per Connection Arrears

Remarks: Kiblawan WD in Mindanao is recovered in process item 7.  (Excluded: Luzon-9 WDs, Visayas-7 WDs & Mindanao-4 WDs)

 

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Table-6   List of WDs for Replacement

Remarks: Financial data of Kiblawan WD was deemed necessary ( Loans Department of LWUA ) to confirm in the field.

 

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Table-7   List of Subject 60 WDs

Remarks: Number of Subject 60 WDs are classified into the areas of Luzon-27 WDs, Visayas-19 WDs & Mindanao-14 WDs.