Significant barriers limit private sector financing available for the sewerage and
sanitation sectors in Metro Manila and in other areas of the Pasig River - Laguna de Bay -
Manila Bay watershed. In Metro Manila, the problem is caused by the short remaining lifespan
of the concession agreements (due to expire in 2022) which limits investment in the sector
because of cost recovery restrictions. Already, the concessionaires are being forced to borrow
money at sub-optimal conditions. Two alternatives exist to solve this problem - either extending
the concession agreements (a proposal currently under consideration by the MWSS-RO), and/or
finding suitable sources of guarantees that could extend the concessionaires’ borrowing past the
end date of their concession. The financial mechanism component of this project is designed to
pilot such a scheme within one of the concession areas as a demonstration of how the
concessionaires could scale up investment outside of their concession agreement requirements.
22.
concessionaires, the project will also test similar guarantee mechanisms that would attract other
private investment in the sector in areas outside the MWSS area of responsibility. One such
mechanism will be tested in an LGU within the LLDA area, and the Replication Strategy for the
project will show how promotion of this model will be conducted throughout the rest of the Pasig
River - Laguna de Bay - Manila Bay watershed.
In addition to testing financial mechanisms that promote additional investments by the