The Philippine government has signed a €212.7-million (about P14.9 billion) loan agreement with the World Bank to fund water supply and sanitation projects in Bohol, Siargao, and Jolo, according to a document released by the multilateral lender.

"The objectives of the project are to increase access to safely managed water supply and sanitation services and improve the performance of water service providers in selected areas of the Philippines," the World Bank said in the loan agreement document dated Oct. 6.

The financing will support the first phase of the Philippines Accelerated Water and Sanitation Project in Selected Areas. Finance Secretary Frederick D. Go signed the agreement on Oct. 6, while World Bank Division Director Zafer Mustafaoğlu signed on Sept. 23. The three project areas span island provinces in the central and southern Philippines — Bohol in the Visayas, Siargao in Surigao del Norte, and Jolo in the Sulu island group in the country's southwest.

In Bohol, the project will fund the development of water supply infrastructure and watershed protection measures in the Loboc Cluster. These include a bulk water supply system sourced from the Loboc River, rehabilitation and expansion of water distribution networks, and improvements to water, sanitation, and hygiene (WASH) facilities in public schools, daycare centers, health centers, and other institutions.

In Surigao del Norte, the project will support the construction of water supply infrastructure in selected municipalities on Siargao Island. It will also finance fecal sludge management facilities, septage collection and transport equipment, and upgrades to WASH facilities in public schools and public spaces across the island.

In Sulu, the project will bankroll water supply systems in Jolo and in barangays in Indanan and Patikul, alongside WASH facilities in public schools and institutions in Jolo.

Across all three sites, the emphasis on WASH facilities in schools and other public institutions ties the loan directly to frontline services that rely on functioning water and sanitation systems.

Beyond infrastructure, the project will back institutional reforms and capacity-building for local governments and water service providers in Bohol, Siargao, and Jolo to improve the management and sustainability of climate-resilient water and sanitation services. These efforts include strengthening governance, financial planning, tariff setting, and infrastructure maintenance, along with initiatives to promote gender inclusion. The pairing of construction spending with governance and tariff reform reflects the project's stated aim of keeping services sustainable once the infrastructure is in place.

Under the agreement, the Department of Public Works and Highways (DPWH) will implement infrastructure investments and provide technical assistance, while the Department of the Interior and Local Government (DILG) will oversee institutional reforms and capacity-building activities.

The loan carries a variable interest rate based on a reference rate plus a variable spread, a front-end fee equivalent to 0.25% of the loan amount, and an annual commitment charge of 0.25% on the undisbursed balance. Because the rate floats against its reference benchmark, the government's cost of servicing the debt will vary over the life of the loan.

Principal repayments will begin on April 15, 2037 and continue until April 15, 2055, according to the agreement. The loan's closing date is set for Dec. 31, 2031 — leaving a gap of more than five years between the loan's closing and the start of principal repayment.

The agreement also requires the DPWH and the DILG to adopt a project operations manual acceptable to the World Bank before the loan can become effective. Until that manual is adopted, the loan cannot take effect, making it the immediate procedural milestone to watch for the project.

The project forms part of the World Bank's multiphase Water Security and Resilience in the East Asia and Pacific Region Program, which aims to improve water security and resilience to climate risks across the region.

— With a report from Justine Irish D. Tabile, BusinessWorld

Source: BusinessWorld