Keynote Address
of LWUA Chairman Francisco D Dumpit

Chairman Francisco D Dumpit has been a member of the LWUA Board of Trustees since 1988, serving in various capacities as a member, vice chairman and chairman. With such length of service, he is very familiar with the agency. Chairman Dumpit graduated from the Philippine Military Academy, Class of 1957, with a Bachelor of Science degree. He is a registered civil engineer, obtaining his Bachelor of Science degree in Civil Engineering in 1969 from the St. Louis University in Baguio City.He also holds a degree in Master National Security Administration from the National Defense College of the Philippines, where he graduated in 1982 with honors. He retired from military service in April 1988 as Commander, 51st Engineer Brigade, Philippine Army.

In observance of World Water Day, the LWUA-Water District (WD) Forum is convened today to serve as a venue for discussing and addressing pressing issues of mutual concern to the Local Water Utilities Administration (LWUA) and the water districts (WDs) nationwide and to honor the WDs that performed very well during the past year.

Dialogues and consultations

We chose to come here to welcome this event, to consolidate our ranks and to afford us the chance to participate in dialogues and consultations that will lead to the formation of policies and programs that will be long enduring. This significant event aims to further unite the LWUA and the WDs who have been consistently and collectively regarded as the pillars of the water supply industry. Pillars because they have been persistently supporting the government's thrust towards socio-economic stability. We are indeed lighthearted to see through the success of WDs and it pains us to witness their difficulties.

In order to effect honest, good and meaningful cooperation and collaboration, the LWUA would like to make its commitment to the WDs firmer in dialogues and consultations through forum, a hallmark of this administration. Forum like this will serve to maintain the crucial improvement of relation, understanding and trust between the LWUA and the entire spectrum of WDs. Look around you and one can find inspirational people in this gathering. Definitely, there are still a lot of problems to be encountered but we are comforted by the fact that no problem is great if we put our hearts, minds and efforts together.

LWUA-WD concept, a social water institution

And so, the threshold question is "What is the LWUA-WD concept really all about?" The concessionaires are the reasons for the existence of WDs. The WDs are the reasons for the existence of LWUA. For three (3) decades, the LWUA-WD partnership has withstood the test of time as an irreplaceable concept in the water supply development. Today, our LWUA-WD concept is strong. With your dedication, patience and understanding, it will be stronger. The LWUA-WD concept is the most important step in addressing the challenge of providing our people access to safe and sufficient drinking water. But let us also be responsive to the needs of time.

The need to strengthen our society has compelled the government to put primacy on reforms. Much still needs to be done and undone. There are still a lot of system processes and procedures that need to be established, amended and revised or fine-tuned to perfection. We should remain steadfast in our strong resolve to pursue and implement much needed reforms to strengthen the LWUA-WD concept as a social water institution.

Funding of water supply development projects

In the present situation, capital funds are concentrated in WDs that are best off financially and can ably repay. Other WDs that are highly leverage but show characteristics of significant operational improvements are primed with capital funds coming from concessionary sources, but still they need more. In the meantime, the rest of the WDs remain funds starved. These are WDs that cannot initially be fully financially sustaining. They need most capital funds but are rarely considered as market. With public funds or concessionary loans scarce, development of this sector of the water supply industry becomes a major concern.

We recognize that we need foreign funds for water supply development of the country. However, excessive reliance on foreign funding leaves us very vulnerable to external financial disturbance resulting to drastic changes in foreign exchange rates. Shifting funding of development projects from foreign denominations to peso, therefore, is in order. Pooling of public funds and forming a public-private partnership can meet the demands of the industry. There is the need to stimulate the flow of private and public funds into the water supply industry.

Executive Order No. 279, s. 2004

And now, the Executive Order (EO) No. 279, series of 2004 has become a reality and is refocusing and realigning the LWUA-WD working relationship, envisioning it to be a water institution sustained by prudent and efficient management of development funds. In EO 279, we must rediscover our oneness, our belonging and our responsibility to the LWUA-WD concept. The EO 279 ushers in a new form of financing local water utilities development projects aimed not only at reducing the dependence of the water supply industry on government or public funds but also rationalizing the allocation of scarce public funds through the pooling of resources of the LWUA-WDs, Local Government Units (LGUs) and private sector. The EO stimulates the flow of both public and private funds into the water supply industry of the country. Through time, as the reforms outlined in the EO are instituted, we hope to see a progressive shift of fund source for the water supply development from public to private sources and from foreign dependent sources to local capital funds.

Credit worthiness of WDs

To rationalize the application of funds for water supply development, initially, the WDs will be classified into categories as Credit Worthy (CW), Semicredit Worthy (SCW) and Precredit Worthy (PCW) WDs. Those proven self-reliant and viable WDs are graduated to CW. Having gained investor confidence, they have a wider option in sourcing their funds from private financial institutions (PFls) as well as government financial institutions (GFls). As an early start of this funding innovation, the LWUA entered into a Memorandum of Agreement (MOA) with the Development Bank of the Philippines (DBP) to create a credit facility to finance water supply development projects of CW WDs. Among the incentives given to these WDs is that they have the freedom of choice in the manner of implementing their projects, i.e., directly under their supervision or they have the choice of hiring outside services if their in-house capabilities are lacking.

On the other hand, as WDs graduate, LWUA is not only gratified to see its years of efforts come to realization, but also is now free to refocus its resources on the more numerous SCW and PCW WDs. These water utilities need close guidance and at the same time need concessional debt financing for their development projects. Though they are initially not financially self-sustaining, eventually, when primed with concessional funds, they can develop into CW WDs. These concessional funds could come from GFls, PFls, international donors, LWUA and financial and operational support of LGUs within their jurisdictions. Pooling of these resources can be brokered by LWUA.

Water District concept, the most viable form of water utility

Though the entry of private investments in the water supply industry may require the formation of public-private partnerships, still the Water District concept has been the most viable form of water utility in the country on a sustainable basis as has been proven for the past thirty (30) years. Studies of different management models of water utilities still point to the Water District model as the most successful form in the Philippines and in Asia. An article sourced from the Private Business, Private Owners magazine edited by foreign writers entitled "The Philippine Water Districts", reads: "From the point of view of utility performance, the water district is undisputedly the best performing part of the Filipino water and sanitation landscape. Indeed, even in the wider Asian context, the water districts stand out by virtue of their above average performance. Not only did the financial and technical performance of water districts improve on most counts, but they also outperform water utilities elsewhere in Asia".

Besides reforms, other possibilities

Besides reforms as contained in EO 279 and pending senate bills further amending PD 198, to our minds, what more could be done to sustain the LWUA-WD concept and its operations? Perhaps we could venture on other possibilities like, as follows: (1) Work out with LGUs that a certain percentage of their Internal Revenue Allotment (IRA) be allotted and released for water supply development projects of WDs as soft loans or grants; (2) Work out with concerned lawmakers that a certain percentage of their Countrywide Development Fund (CDF) be set aside for water supply development projects since the beneficiaries are their constituents themselves; (3) Work out for the release of approved GAA funds with Special Allotment Release Order (SARO) amounting to P250M be released; and (4) That financially stable WDs be encouraged to make meaningful advance payments on their loan amortization to LWUA to generate much needed funds for implementation of already lined-up water supply development projects.

In closing, let us join hands to meet the challenge of reforms in the water supply industry with our hearts, with our minds and with our will for a lasting LWUA-WD concept and partnership.

Thank you and good morning.