The Department of Budget and Management (DBM), through the endorsement of Department of Finance (DoF) Undersecretary Jeremias N. Paul, has recently released P300 million as seed capital to the Local Water Utilities Administration (LWUA) for special credit programs for the preparation of water supply and sanitation projects and water supply system efficiency improvement projects aimed at upgrading the creditworthiness of water districts.

This was announced today by LWUA Acting Administrator Daniel I. Landingin who said the fund was released to LWUA on December 28, 2007 after his request for a seed capital amounting to P500 million was relayed to DBM Secretary Rolando G. Andaya through DBM Undersecretary Mario Relampagos a day earlier. He thanked DOF Undersecretary Paul for his support which resulted in the immediate release of the requested fund.

Landingin said the seed fund will address the need to build a "robust pipeline of well-prepared and bankable projects" ready for financing by appropriate providers, including private and government financial institutions, LWUA or even the domestic capital market. " Although there is a huge investment requirement for water supply and sanitation projects, the effective demand for financing has not been growing apace," Landingin said saying that this is due to water utilities have been under-investing for the lack of funds for preparing projects of quality acceptable to the financing community.This seed fund will therefore provide concessionary credits to water utilities in need of feasibility studies and detailed engineering design for water supply or sanitation projects that would meet the requirements and quality standards of financing institution before these could be funded for construction or implementation, Landingin said.

Landingin said the seed fund will also help promote the national government's policy of encouraging water utilities to graduate to higher levels of credit-worthiness to enable them to access market-based sources for long-tem capital investments. Part of the funds will be used for efficiency improvement projects of water districts which are short-gestating, high-impact projects aimed at improving the technical and financial performance, capability, overall operation and management of water service providers, he added.

Furthermore, part of the funds will be used as soft loans or grants for water supply development projects for Basilan and the Autonomous Region of Muslim Minadanao (ARMM) in response to Section 4 of President Arroyo's Administrative Order No. 192 ordering a humanitarian offensive in the said areas, specifically for provision of water facilities in towns where less than 50 percent of the population have access to running water.

Landingin said that the fund will be ring-fenced or used exclusively for intended projects and not for LWUA operations in general and that proceeds will also go back to the fund for re-investment in similar projects.
c January 3, 2008