Upload
others
View
1
Download
0
Embed Size (px)
Citation preview
FY 2018 Study on Business Opportunity of High-quality
Infrastructure to Overseas
(Feasibility Study for the Sewerage System Development Project in
the Philippines)
Final Report
February 2019
Ministy of Economy, Trade and Industry
Outsourcing Contractors:
Deloitte Tohmatsu Financial Advisory LLC
General Incorporated Association,
Global Water Recycling and Reuse System Association, Japan
Original Engineering Consultants Co., Ltd.
Table of Contents
Introduction .............................................................................................................................. 6
(1) Background and Objective of Study ................................................................................... 6
(2) Outline of the Study ....................................................................................................... 16
1. Reexamination of Existing Pre-F/S ....................................................................................... 22
(1) Overview of Existing Pre- F/S ......................................................................................... 24
(2) Results of Existing Pre-F/S ............................................................................................. 25
(3) Results of Reexamination of Existing Pre-F/S .................................................................. 25
(4) Countermeasures ............................................................................................................ 27
(5) Other Issues ................................................................................................................... 28
2.Basic Design of Water Treatment System ............................................................................ 30
(1) Review of Water Treatment Processes .............................................................................. 30
(2) Facility Capacity to Ensure A-SRT .................................................................................. 37
(3) Facility Capacity of Final Sedimentation Tank .................................................................. 38
(4) Flocculent Equipment (for phosphorus removal) ............................................................... 39
(5) Filtration Process............................................................................................................ 41
(6) Sludge Treatment Facility ............................................................................................... 42
(7) Effective Use of Filtered Water ........................................................................................ 43
(8) Water Treatment Facility ................................................................................................. 44
(9) Dealing with Effluents Containing Heavy Metals .............................................................. 54
3.Review of Project Implementation Scheme and Project Feasibility ........................................ 57
(1) PPP Application Status in Water Supply/Sanitation Sector in the Philippines ....................... 57
(2) Feasibility When Implemented as a Public Utility ............................................................. 58
(3) Review of Project Schemes ............................................................................................. 60
(4) VfM When Project Implemented as PPP .......................................................................... 62
(5) Feasibility Evaluation When Implemented as PPP Project ................................................. 65
(6) Feasibility Evaluation When Implemented as JV with Baguio City Water District ............... 66
(7) Sharing of Feasibility Review Results with Related Organizations ..................................... 68
4.Review of Benefits to Baguio City and the Philippines ......................................................... 69
(1) Review of Benefits to Baguio City ................................................................................... 69
(2) Expected Benefits to the Philippines as a Whole ............................................................... 72
5.Review of Financing .......................................................................................................... 75
(1) Overview of NSSMP ...................................................................................................... 75
(2) Expected Fund Sources for This Project ........................................................................... 77
(3) Interview Survey of Domestic and Overseas Financial Institutions ..................................... 81
(4) Review of Financing ....................................................................................................... 83
6. Review of Future Policy ....................................................................................................... 84
(1) Sharing Results of This Feasibility Study with Local Public Institutions (Baguio City, DPWH,
PPP Center)......................................................................................................................... 84
(2) Steps After This Study .................................................................................................... 85
(3) Challenges Towards Project Achievement ........................................................................ 86
(4) Future Schedule ............................................................................................................. 88
Abbreviation Table
Symbol English Term
A-SRT Aerobic Solids Retention Time
BDO Banco Deoro
BOD Biochemical Oxygen Demand
BOT Build Operate Transfer
BPI Bank of the Philippine Islands
CAS Conventional Activated Sludge
CBD Central Business District
CDIA Cities Development Initiative for Asia
CEPMO City Environment and Parks Management Office
CLUP 2013-2023 Comprehensive Land Use Plan of Baguio City
COD Chemical Oxygen Demand
CODCr Chemical Oxygen Demand by potassium dichromate
DBP Development Bank of the Philippines
DENR Department of Environment and Natural Resource
DOF Department of Finance
DPS Department of Public Services
DPWH Department of Public Works and Highways
EIRR Economic Internal Rate of Return
E/S Engineering Services
FIRR Financial Internal Rate of Return
NPV Net Present Value
HUC Highly Urbanized Cities
IRA Internal Revenue Allotment
JICA Japan International Cooperation Agency
JV Joint Venture
Kj-N Kjeldahl Nitrogen
LCC Life Cycle Cost
LGU Local Government Unit
LOI Letter of Intent
MBBR Moving Bed Bio-film Reactor
MLSS Mixed Liquor Suspended Solids
NCR National Capital Region
NEDA The National Economic and Development Authority
NO3-N Nitrate Nitrogen
NSSMP National Sewerage and Septage Management Program
OD Oxidation Ditch
PAC PolyAluminum Chloride
PDMF Project Development and Monitoring Facility
PO4-P Phosphate Phosphorus
PPP Public-Private Partnership
PWRF Philippine Water Revolving Fund
SBR Sequence Batch Reactor
SS Suspended Solid
T-N Total Nitrogen
T-P Total Phosphorus
UN United Nations
UPS Uninterruptible Power Supply
USAID United States Agency for International Development
VfM Value for Money
WD Water District
6
Introduction
(1) Background and Objective of Study
The National Sewerage and Septage Management Program (NSSMP) in the Philippines was was
approved by the Administrative Board of the National Economic and Development Authority
(NEDA) in 2012. It sought to promote and develop sewerage infrastructure in urban areas beyond
Metro Manilla. Under this program, the central government introduced an implementation support
system where 40% of total development costs for sewerage infrastructure of local government units
(LGUs) would be subsidized by the national government, subject to standard appraisal procedures
headed by the Department of Public Works and Highways (DPWH). The said 40% subsidy cover
was eventually increased to 50% with the intent to attract more interested LGUs to apply for the
support facility.. However, as of February 2019, only one local government unit has officially
applied for the NSSMP support facility (Zamboanga City. In order to remedy this situation, the
DPWH established a policy of striving to increase the application of this system through the
expansion of local governments receiving the subsidy by means of infrastructure development.
Instead of restricting the subsidy facility only to highly urbanized cities (HUCs), the facility was
also made available to component cities (cities not regarded as highly urbanized) as well as first
class municipalities.
One of the reasons that sewerage infrastructure development has not progressed at the same pace
as what the Philippines requires is due to the limited basic infrastructure in urban localities outside
Metro Manila. However, the government of the Philippines is aware that delays in the provision of
sewerage services would not only lead to environmental degradation, but also have an adverse
impact on the tourism industry as well as agriculture, forestry, fisheries and other such industries.
Improving sewerage and septage conditions in the Philippines was manifested in the much
publicized closure of the popular resort island of Boracay in April 2018 by no less than President
Rodrigo Duterte at a cabinet meeting. The president at that time decided to close down the island
due to utter failures in sewerage management in the locality and due to sewerage management
violations of several establishments in the island. Furthermore, announcements that effluent
standards were not being upheld in 82 of 351 resort hotels in Bohol (another similar holiday
destination) also made news Therefore, it is expected that development of sewerage infrastructure
facilities will be strongly promoted in the future.
Another known tourist destination – Baguio City is proposed as the target location for this project.
It is one of a very few local governments in the Philippines which themselves provide public
sewerage services. This essentially indicates that the infrastructure for project implementation is set
in place. It is envisaged that formulating and implementing sewerage projects as a Public-Private
Partnership (PPP) will enable promotion as a business development model that can be utilized
various other cities in the Philippines.
7
I. Overview of Project Target Area (Baguio City)
Baguio City in the center of the Luzon Island is located
approximately 250km north of the Metropolitan Manila Area
(Metro Manila). It has a population of about 350,000 (2015
census), an area of approx. 57.5 km2, and is catagorized as a
Highly Urbanized City (HUC) geographically situated in the
Province of Benguet, one of the provinces within the Cordillera
Administrative Region (CAR).
Due to its location at an altitude of about 1,500 meters, the
climate is cooler compared to other areas in the Philippines,
making it a popular summer destination especially for local
tourists. In 2017, Baguio City was visited by an estimated 1.5
million tourists – an increase of about 17.5% compared to the
previous year. The breakdown is as follows: 90% Philippine
nationals, with foreign tourists mainly consisting of Americans,
Koreans and Japanese. Furthermore, there are approximately 150 lodging and accommodations
facilities in the city, making tourism one of the key industries in the city.
On the other hand, since Baguio City is located in a steep mountainous area, there is a limit to
the amount of land that can be utilized for sewerage and septage facility use. According to the
Baguio City Comprehensive Land Use Plan 2013-2023 (CLUP), approximately 56% of the land in
Baguio City is designated as residential zones, and approximately 5% is designated as commercial
zones, implying that the development area has already reached the limit in terms of expansion,
making the land issue a bottleneck when attempting to implement projects with sizeable land area
in this city.
Fig. 2 Current Status of Land Usage in Baguio City
Source: Prepared by Study Team based on the Baguio City Comprehensive Land Use Plan 2013-
2023
There has been a report that Baguio City will be the next location to be designated as an
Ecotourism Zone by the Department of Environment and Natural Resources (DENR) after Boracay,
Palawan and Bohol due to the necessity to facilitate rebuilding from a massive earthquake that
occurred in the 1990s as well as the concentration of air pollution in the central part of the city as a
Fig. 1 Location of Baguio City
Source: Prepared by Study Team
Baguio City
Manila
8
result of the cone shaped topography1. According to this report, the importance of the role that the
environment plays in the tourism industry in Baguio City is positioned at the same level as the
international tourist destinations such as Boracay and Palawan, although no mention was made
regarding measures to deal with the decline in water quality.
Fig. 3 Scenes of Baguio City
Source: Baguio City
In addition, there is a robust agricultural industry in the region, and Baguio City is a center point
for highland crops harvested in and around the city. According to the Philippine Statistics Authority,
the gross domestic product growth rate in the Cordillera Administrative Region (a region with a
population of 1.72 million) was pegged at 12.1% in 2017 compared to the previous year, far
surpassing the national average growth rate of 6.7%, one of the highest growth rates in the entire
nation. The main industries consist of manufacturing at 52.1%, followed by the service sector
(39.6%) and agriculture, forestry and fisheries (8.3%). The main industry of Benguet province (a
province with approximately 446,000 inhabitants and where Baguio City is geographically situated)
is in mining gold, copper, and coal among others. However, agriculture has been strategically
positioned as a key industry from a long time ago. Due to its elevation and viability for growing
high value crops, an assortment of vegetables are produced in this area – giving the area the moniker
“The Salad Bowl of the Philippines”. In addition, it has also been called “Strawberry Country” in
recent years. Relevant persons in Baguio City are aware that improvement of the environment
through development of the sewerage system will make a substantial contribution to further
invigorating agriculture as another key industry in this city.
II. Overview of Water Supply in Project Target Region (Baguio City)
A) Overview of Sewerage System
The sewerage system infrastructure in Baguio City was developed through grant aids from
Japan between 1980 and 1990. The planned treatment capacity of the sewage treatment plant
that was developed in Baguio City in 1986 was 8,600 m3/day, with a service provision area
that consisted of the city center (with an approximate 10,000 households / business
establishments). In addition, the total length of sewer pipes is spanned approximately 57 km,
developed also through Japanese grant aid. Operations of the sewerage treatment facilities was
directly undertaken by the City Government of Baguio through a specialized office under the
City Environment and Parks Management Office (CEPMO).
1 GMA News Online (Dec. 9, 2018 “Baguio next ecotourism zone to be rehabilitated – DENR”)
9
Fig. 4 Current Status of Sewage Treatment in Baguio City (Pink portion is sewerage service
area)
Source: Baguio City CEPMO (City Environment and Parks Management)
Through time, , measures need to be taken to deal with the aging sewerage infrastructure in
Baguio City and the increase in treatment demand brought about by the continuous population
and economic growth of the locality. While the population of the city was somewhere between
100 and 200 thousand in the mid-1980s when operation of the sewage treatment facility began,
the population has grown to 350 thousand by 2015.
By 2010, the treatment facility On the other hand, approximately 12,000 m3/day of sewage
was being treated by year 2010, a figure roughly 30% more than the designed capacity of the
the existing sewerage treatment facility. This figure however dropped to 8,000 m3/day in 2013
due to the aging sewerage system of Baguio City.
Fig. 5 Population Growth in Baguio City
Source: Baguio City
119,009
183,142
226,883
252,386
301,926 318,676
345,366
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
1980 1985 1990 1995 2000 2005 2010 2015
10
Fig. 6 Transition in Sewage Treatment Volume in Baguio City
Source: CDIA Pre-F/S
Furthermore, it has been recommended in the NSSMP that while the local government is
charged with developing the sewerage system, maintenance of the facilities would be better
off transferred to the Water District (WD) which also provides water supply services in the
particular franchise area. Thus, the Study Team also looked into formulating a project scheme
that takes into consideration the possibility of transfer of sewerage system operation to the WD.
Baguio City will be collecting two usage fees/charges related to the sewerage system. The
first is a sewerage charge that entities using sewerage service are due to pay, consisting of 30%
of the basic charge for water supply collected. The second charge is an Environmental Charge,
with 20% of the basic charge for water supply collected from all parties who have water supply
connections, regardless of whether or not sewerage services are being provided.
B) Overview of Water Supply
The Baguio City Water District has jurisdiction of water supply in Baguio City. The WD
was established in 1975 and took over the task of water supply operations from the Department
of Public Services (DPS).
As of 2012, the Baguio City Water District supplies 8.61 million m3/year, covering nearly
the entire city. Water is supplied 24 hours/day in the Central Business District (CBD), and 6
hours/day in other areas2. Water consumption by households is the highest at 71%, followed
by commercial facilities which comprise 22% of total water consumption. Government
agencies (both national and city) consume 5% of total water consumption in Baguio City.
2 From CDIA Pre-F/S
11
Source: Prepared by Study Team from CDIA Pre-F/S
Fig. 8 Baguio City Water District Supply Area (Yellow is 100% supply area)
Source: Pre-F/S
The future water supply plan calls for water supply to the entire population to be achieved
by 2020, with the supply volume increasing to 50,000 m3/day in 2022, approximately 1.2 times
the volume in 2013.
Fig. 7 Transition in Water Consumption and Customer Breakdown (For 2012)
(㎥/year)
12
Fig. 9 Water Supply Population Forecast
Source: Prepared by Study Team based on the materials from Baguio City Water District
The Non-Revenue Water (NRW) rate as of 2013 was 31.4%. This figure has however
decreased to 24.8% in 2017. Plans call for the NRW rate to be further reduced to 20% by the
year 20203.
Fig. 10 Transition in Non Revenue Water (NRW) Rate
Source: Prepared by Study Team based on the materials from Baguio City Water District
III. Actions to Upgrade/Develop Baguio City Sewerage Infrastructure
Baguio City implemented a Pre-Feasibility Study (Pre-F/S) between 2015 and 2016 in
cooperation with the Cities Development Initiative for Asia (CDIA) based on the idea of utilizing
the above NSSMP subsidy. Short-, medium- and long term sewerage related infrastructure
development goals were set and planned thought his Pre F/S. The short-term (within 5 years) and
3 From Pre-F/S
Supply to entire population in 2020
13
medium-term (5 – 10 years) infrastructure development policy goals for this pre-F/S are described
below. These include updating/expansion of the current sewage treatment facilities,
updating/extension of sewer lines and other related works (Total short-term project cost: 2.9 billion
yen, medium-term: 5 billion yen).
Fig. 11 Baguio City Sewerage Services Goals in Pre-F/S
Source: Prepared by Study Team based on the Pre-F/S
Table 12 Approximate Sewerage Related Infrastructure Development Budget in Pre-F/S (2015
prices)
Note: Converted at 1 Peso = 2.1 Yen
Source: Prepared by Study Team based on the Pre-F/S
■Current Situation
Treatment capacity of BSTP
8,600m3/day
The average daily inflow of sewage to the BSTP in 2010 was 12,434 m3/day . This is well beyond the 8,000 m3/day which is the treatment capacity of the BSTP.
Total length of sewer line
57 km
Total length of sewer line leading to the BTSP. Due to the BSTP’s limited capacity, the number of new connections is around 200 connections per year.
Sewerage connection rate
15 %
Sewerage service is provided in 65 /128 barangays either fully or partially. The total number of registered users is 9,820 (15 per cent of the population).
25% in 2020 100 % in 203550% in 2025
15,000m3/day32,000m3/day
+ DEWATS39,000m3/day
67 km
+ 15km replacement
117km 257km
Short-term Mid-term Long-term
*BSTP: The Baguio Sewage Treatment Plant
■Goals
14
Table 13 Main Projects in Sewerage Upgrade Program
Note: Converted at 1 Peso = 2.1 Yen
Source: Prepared by Study Team based on the Pre-F/S
Initially, Baguio City envisaged that the project could be implemented by tapping into the NSSMP
subsidy (previously set at up to 40% of total project costs) based on the results of the CDIA Pre-
F/S, but an application for a subsidy was not made because it was difficult to raise capital to finance
the project from other sources to counterpart for the NSSMP subsidy. This led Baguio City LGU
to explore ways to compensate for counterpart funds, including venturing into Public-Private
Partnerships (PPPs).
IV. Actions by Baguio City Towards Sewerage Infrastructure Updating/Development
The significance of Japanese corporations participating in the Baguio City Sewerage Project is
organized in this section.
A) Baguio City – A Showcase for Public Sewerage Projects in the Philippines
As stated earlier, although the central government in the Philippines has ventured into promoting
the development of sewerage infrastructure beyond Metro Manila, At present, still many HUCs have
had limited to virtually non-existent sewerage infrastructure. Local governments around the country
have been kown to have low level of planning / implementation capabilities in the sewerage field.
In light of this, , if sewerage infrastructure updating / expansion succeeds in Baguio City, the city
will become a project model that can be used as an example to be spread throughout the country.
There are 334 cities with a population of 300 thousand or more that are of the same size or larger
than Baguio City outside Metro Manila (as of 2015). This means that the success of this project will
serve as a large opportunity for further business development. Although the project that is being
examined in this study is relatively small in scale since it involves the rehabilitation and expansion
of existing facilities, if sewerage projects are newly implemented in other HUCs, it would amount
to a market scale of approximately 100 billion yen for development of the sewage treatment
4 Excluding National Capital Region (NCR)
(Unit: Million Yen)
Phase Project Overview Approximate Project Cost Short-Term (within 5 years) Treatment Capacity Expansion of Current Treatment Facility (→ 15,000 m3/day) 616
Development of New Small-Scale Treatment Facility (3,000 m3/day) 287
Development of Sludge Treatment Facility 25
Replacement of Sewer Pipe (Approx. 15 km in central area) 1,195
New Sewer Pipe (Approx. 10 km) 798Medium-Term (5 – 10 years) Development of New Treatment Facility (7,000 m3/day) 1,806
Rebuilding of Current Treatment Facility (→ 25,000 m3/day) 840Development of New Small-Scale Treatment Facilities (multiple locations) 578
New Sewer Pipe (Approx. 10 km) 1,554
15
facilities alone.
In addition, according to the United Nations (UN), urbanization in the Philippines amounted to
44.3% in 2015, but it is estimated that the urban population in the Philippines will exceed the rural
population by the year 2040. It is therefore expectd that the need for sewerage services and
infrastructure will continue to increase with the sustained progression towards urbanization in the
country.
It is also expected that the market scale will expand further with the the necessity of providing
sewerage services in tourist destinations aside from HUCs.
B) Environment That Can Utilize Advanced Technology/Knowhow of Japanese
Corporations
As Baguio City is situated in a mountainous region with an altitude of 1,500 meters, the
topography makes it difficult to secure a large site. This means that there is very limited land sizeable
enough for updating or expanding the existing sewerage facilities. A very viable option is to expand
the capacity of the current site through the use of advanced technologies. Baguio City has received
unsolicited proposals a number of times for sewerage projects, but has not adopted any of these as
proposed undertakings required that the sewerage services currently being provided would be
interrupted. The utilization of technology from Japan should the expansion of facilities possible,
while to provide the existing services.
C) Importance of Preparations for Reorganization of Sewerage Services in the Future
As stated earlier, the NSSMP guidelines indicate that the viability of WDs being responsible for
maintenance of sewerage facilities in the future. With Metro Manila concessionaires Manila Water
Company, Inc. and Maynilad Water Services Inc. providing both water distribution and sewerage
and septage services, there is a high level of possibility that the WD in Baguio City can become an
entity in charge of sewerage service in the future. Water charges in the Philippines are high
compared to the income level (Per capita GDP of approximately US$3,000) (Reference: Basic
charge for households classified as Residential A in Baguio City [up to 10 m3] is approximately
¥780 [12A] – up to approximately ¥56,000 [18A]), the above water supply business concessionaires
in Metro Manila are able to earn a profit every fiscal year. Even if there is not a high level of
feasibility of the sewerage service as a stand-alone business, early participation in both the water
supply and sewerage service businesses in anticipation of integration of the two service operations
will enable the businesses to absorb future demand, which will contribute to further business
development.
16
(2) Outline of the Study
The outline of this feasibility study is described as follows.
This feasibility study will be implemented in the following five steps: “Reexamination of Existing
Pre-F/S”, “Basic Design of Water Treatment System”, “and Review of Project Implementation
Scheme and Project Feasibility”, “Study of Benefits to Baguio City and the Philippines” and “Study
of Financing”. When the study is conducted, recommendations will be made on the adoption of the
appropriate infrastructure, facilities and operation methods from the perspectives of “Securing a
Competitive Edge for Japanese Corporations”, “Compliance with Environmental Standards”,
“Overcoming Various Restrictions” and “Economic Effect on the Locale”.
Fig. 14 Work Flow of This Feasibility Study
Source: Prepared by Study Team
Fig. 15 Key Points for This Feasibility Study
Source: Prepared by Study Team
Furthermore, during this feasibility study, the possibility of participation in activities that have
Step 1:Review of Exiting Pre F/S
Step 2:Basic Design of Water Treatment System
Step 3:Studies on Project Schemes and Feasibility
Step 4:Studies on Benefits for Baguio City and the Philippines
Step 5:Studies on Way of Financing
• Review of preF/S• Onsite survey
• Basic design of water treatment system which utilizes Japanese companies’ know-how under the conditions of Baguio City
• Preliminary calculation of cost
• Feasibility studies based on assumed cost and revenue
• Sounding toward local enterprises in order to formulate project schemes
• Preliminary calculation of benefits for Baguio City and the Philippines by implementing the project
• Examination of way of financing for private entities for PPP project part
• Setting of a timeline and actions
• Holding a debriefing session
• Necessity of increasing treatment capacity of existing sewage treatment facility where there is no additional space.
• Necessity of building additional treatment facilities while maintaining current treatment capacity.
• Necessity of indicating technical capabilities and cost competitive edge (LCC) so that Japanese corporation is selected.
• Necessity of creating horizontal development business scheme that utilizes above competitive edge.
• Necessity of complying with effluent standards which are becoming stricter.
• Necessity of adopting local materials, equipment and manpower as much as possible
• Necessity of attempting to maximize beneficial effect on agriculture and tourism industry.
Securing a Competitive Edge for Japanese
Corporations
Compliance with Environmental
Standards
Overcoming Various Restrictions
Economic Effect on the Locale
17
been proposed in the Pre-F/S including expansion of the existing sewage treatment facility (short-
term project) and upgrading / rehabilitation (medium-term project) + facility maintenance will be
verified.
Fig. 16 Existing Sewage Treatment Facility Expansion/Upgrading/Rehabilitation Plan
(Short-term Case in the Pre-F/S)
Source: Prepared by Study Team from CEPMO and based on the materials from Baguio City
I. Reexamination of Existing Pre- F/S
As stated in “III. Actions to Upgrade/Development Baguio City Sewerage Infrastructure in (1)
Background and Objective of Study in the Introduction”, the current status of sewage treatment in
Baguio City, sewerage infrastructure development plans and approximate cost for infrastructure
development were determined and calculated in the Pre-F/S. The Pre-F/S stipulates that the
treatment capacity of the current treatment facility will have to be expanded from 8,600 m3/day to
15,000 m3/day in the short-term plan (within 5 years). Therefore, the facility capacity needs to be
expanded by at least 6,400 m3/day. In addition, in order to satisfy the current treatment capacity of
8,600 m3/day, the existing 8,600 m3/day facilities need to be rehabilitated for one line (2,150 m3/day)
or two lines (4,300 m3/day) after the expansion is completed. At this time, the operation capacity of
the sewage treatment facility will have the capacity described below, enabling to satisfying the
current capacity of 8,600 m3/day.
A) New facility treatment capacity + Existing 3 lines operated (each line repaired) = 6,400 m3/day
+ 6,450 m3/day = 12,850 m3/day > 8,600 m3/day OK
B) New facility treatment capacity + Existing 2 lines operated (two lines repaired) = 6,400 m3/day
18
+ 4,300 m3/day = 10,700 m3/day > 8,600 m3/day OK
Furthermore, the medium-term plan (5 – 10 years) stipulates that the current treatment facility
will have to be rebuilt (increasing capacity from 15,000 m3/day to 25,000 m3/day). This indicates
that improvement and rehabilitation of the existing facility will be completed during the short-term
plan, that rebuilding during the implementation of the medium-term plan is illogical, and that
expansion of capacity by 10,000 m3/day or new facilities need to be considered for the medium-
term plan.
Therefore, during this feasibility study, the relevance of the items described in the Pre-F/S will
be analyzed by means of the field survey and other work, and the work methods, cost unit price and
other details to be adopted will be reviewed.
II. Basic Design of Water Treatment System
The following review will be conducted in order to implement the Basic Design of Water
Treatment System. During this review process, in addition to the treatment capacity, the ripple
effects on Baguio City (e.g. whether or not procurement can be performed in the city will also be
considered), initial investment, maintainability, operating costs, maintenance costs, energy saving
effect, LCC and other details will be taken into consideration.
A) Review of Water Treatment System
The ease of operation, maintainability, energy saving effect and other details will be reviewed for
the following content.
(a) Sequence Batch Reactor (SBR) Process: Inflow method, aeration method (oxygen supply
method) and nitrification control
(b) Advanced Treatment OD Process: Aeration method (oxygen supply method) and nitrification
control
B) Reconsideration of Facility Capacity to Secure A-SRT
Since a certain level of A-SRT is required in order to remove the nitrogen (A-SRT > 5.4d with a
design water temperature of 20C), the capacity of the OD tank at the existing facility (8,600
m3/day) will be reviewed.
C) Reconsideration of Final Sedimentation Tank Capacity
The relevance of the capacity of the existing Final Sedimentation Tank (retention time) and the
surface loading capacity will be reviewed.
D) Flocculation Facility (For phosphorous removal)
The ease of procurement, price and other details for the type of flocculants (polymer type, ferrous
type, aluminum type) will be reviewed.
E) Filtration Process
When flocculants are used to remove phosphorous, the Suspended Solids (SS) generally need to
be reduced since the sewage to be treated contains 3 – 4% of phosphorous. The following filtration
19
processes will be considered as the process used to reduce the level of SS.
(a) Filtration Processes: Sand filtration, fiber filtration, membrane filtration
F) Sludge Treatment Facility
The increase in the volume of water treated will require additional dehydrators. The number of
dehydrators required will be reviewed, taking into consideration 24 hour operation and other factors.
In addition, since the excess sludge from the final sedimentation tank can be directly dehydrated, it
may be possible to eliminate the sludge concentration tank, so this matter will also be taken into
consideration.
G) Effective Usage of Filtered Water
Introduction of a filtration process to remove phosphorous is being under consideration, which
will allow to maintainance of water quality suitable for reuse. Therefore, effective usage for other
locations in addition to within this facility will be considered.
H) Water Treatment Facility
The results of the field survey and items A) to G) will be used to set the preconditions for basic
design and estimate the capacity of the water treatment facility.
I) Handling of Waste Water Containing Heavy Metals
It was clarified in the field survey that the inflowing sewage contains heavy metals, and these
heavy metals need to be separately treated, but this will be excluded from the sewage treatment
facility plans that are being made this time. However, proposals will be made on examples of how
to deal with waste water that contains heavy metals.
III. Review of Project Implementation Scheme and Project Feasibility
Based on the specification settings for the infrastructure facility and the approximate cost
stipulated from the results of section I. and II., a review will be conducted on what type of
infrastructure can be developed and maintained by a consortium of Japanese corporations. As stated
in section “(2) Outline of the Study in the Introduction”, it is expected that the core projects will be
the expansion of the existing sewage treatment facility (short-term project) and upgrading /
rehabilitation (medium-term project).
20
Fig. 17 Project Implementation Scheme and Feasibility Review Process
Source: Prepared by Study Team
After the above work is performed, several project implementation schemes that are feasible will
be set. Furthermore, as it is presumed that the costs related to infrastructure development cannot be
adequately recovered with sewerage related charges alone, it will be difficult for a private sector
company to cover the demand risk. Therefore, although adoption of the PPP availability payment
type will be kept in mind for this feasibility study, the self-supporting type will be also considered
to provide comparison materials in order to review how the development of the related infrastructure
and maintenance can be performed over a certain period of time. Moreover, the Generic Preferred
Risks Allocation Matrix (GPRAM) utilized by the Philippine PPP Center will be used as the base
for the method to allocate the risk when implementing a PPP project in the Philippines, and the
adoption of GPRAM will adequately be reviewed, taking into consideration the characteristics of
sewerage services and the fact that there is a tendency to transfer too much of the risk and obligations
to the private sector.
In addition, as stated in “IV. Actions by Baguio City Towards Sewerage Infrastructure
Updating/Development under (1) Background and Objective of Study in the Introduction”, although
sewerage services are currently being directly operated by the city, it is quite possible that the Water
District will be placed in charge of this role in the future from the perspective that this is the policy
of the central government. This may lead to enhanced operational efficiency. Consequently, when
the review of the project scheme is performed, the possibility that the Water District to serve as a
business partner from a long-term perspective will be kept in mind when considering short/medium-
term contract policy.
Furthermore, when the PPP scheme is formulated, the various laws and regulations related to PPP
(revised BOT law, JV guidelines, foreign investment regulations, etc.) will be taken into
consideration during the review process. In particular, for projects that are implemented under the
revised IRR of the BOT law, a Philippine capital ratio of 60% or more needs to be secured. Therefore,
during this feasibility study, cooperation candidates will be narrowed down while conducting an
opinion exchange with local influential firms. After this is performed, a review will be conducted
to determine whether or not VfM can be achieved based on the premise that the private business
will need to secure a certain level of profit in order to select the most effective method while having
discussions with the local cooperation candidates. Subsequently, discussions will be held with
Setting of Infrastructure Development/Maintenance Scope by Japanese Corporations
• The scope of the infrastructure developed/maintained by Japanese Corporations will be set by taking into consideration the specifications of the infrastructure developed and local circumstances (review of related infrastructures based on the results for treatment facility).
Setting of Project Patterns (2 – 3 patterns)
• Setting of self-supporting type, availability payment type, etc.
• Project term, various guarantees and other details will be stipulated, taking into consideration local circumstances.
Calculation of VfM, Review of Feasibility
• The VfM for Baguio City as a result of project implementation will be calculated. The feasibility of the operator will be considered at this time.
• Interviews of local companies and other organizations will be implemented to facilitate formulation of the project scheme.
Discussions with Related Organizations
• Confirmation concerning costs to be borne by Baguio City
• Discussion with DPWH (confirmation of the possibility of providing NSSMP subsidy, project scale, etc.).
• Discussions with local companies on potential of cooperation.
21
Baguio City, DPWH and other related parties, and the feasibility for project implementation and
challenges will be summarized.
IV. Review of Benefits to Baguio City and the Philippines
The benefits provided to Baguio City and the Philippines as a result of implementation of this
project will be reviewed. Since it was calculated that the Economic Internal Rate of Return (EIRR)
when this entire project is implemented as stipulated in the Pre-F/S would exceed 30%, it has
already been recognized that this project will have a large impact on Baguio City. Therefore,
although it is probably not necessary to recalculate the EIRR, the effect of this project on agriculture
and tourism will be reviewed in this study since these industries are considered to be key industries
in Baguio City.
V. Review of Financing
When the NSSMP subsidy (up to 50% of development cost) is applied to the infrastructure project
that is being reviewed with this feasibility study, the private business will need to procure 50% of
the funds to pay for infrastructure development (please pay attention to the fact that in the revised
BOT law, burden of the development costs on the public agency side is limited to less than 50% of
the entire infrastructure development costs.). Therefore, fund procurement methods for the above
50% will be reviewed.
Specifically, it is expected that funds can be procured from commercial banks, loans made by
public institutions and other funds, and that investments will be made by private businesses, which
will be reviewed along with the project scheme. During this review, interview surveys will be
conducted with a focus on local and other financial institutions in the Philippines based on the
overview of the project scheme results, and information on the amount of funds to be procured,
financing conditions and other details will be collected and organized.
VI. Review of Future Strategy
Based on the results of I. – V., the project scheme proposal will be compiled, and a report meeting
will be implemented for Baguio City and the DPWH.
22
1. Reexamination of Existing Pre-F/S
In this chapter, the relevance of the items described in the Pre-F/S will be analyzed by means of the
field survey and other information, and the results of the review of the methods, cost unit price and
other conditions to be adopted will be described. The field surveys were conducted with the schedule
described below.
First Field Survey: July 30 – August 3, 2018 (5 days)
Second Field Survey: September 25 – 29, 2018 (5 days)
Third Field Survey: October 21 – 25, 2018 (5 days)
Fourth Field Survey: January 28 – February 2, 2019 (6 days)
Table 18 Survey Schedule
# Item 2018 2019
Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb.
1 Reexamination of Existing Pre-F/S
2 Basic Design of Water Treatment System
3 Review of Project Implementation Scheme
and Project Feasibility
4 Review of Benefits to Baguio/Philippines
5 Review of Financing
6 Review of Future Strategy
Field Survey
Source: Prepared by Study Team
★ ★ ★ ★
23
Fig. 19 Photos of Field Survey (Survey of Existing Facilities in Baguio City)
Source: Study Team
Source: Study Team
Fig. 20 Photos of Field Survey (Meeting with the Mayor of Baguio)
24
(1) Overview of Existing Pre- F/S
As stated in “III. Review of Project Implementation Scheme and Project Feasibility under (2)
Outline of the Study in the Introduction”, a Pre-F/S was implemented between 2015 and 2016 for
sewerage management in Baguio City with the cooperation of CDIA by means of the ADB fund.
An overview of the treatment process reviewed in the Pre-F/S is shown in the table below.
However, as effluent water standards of the Philippine government became stricter after the Pre-F/S
was conducted5, it is currently necessary to remove phosphorous / nitrogen and other such pollutants
which was not foreseen initially in the Pre F/S.
Table 21 Overview of Existing Pre-F/S Treatment Process Review
CAS* OD Process SBR MBBR*
Overview of
Treatment
Process
Process where
water is treated
with following
flow: primary
sedimentation tank
⇒biological
reactor⇒final
sedimentation
tank.
Inflowing sewage
↓
Primary
sedimentation tank
↓
Biological reactor
↓
Final
sedimentation tank
↓
Treated water
Process that does
not have primary
sedimentation
tank, and uses
endless channel to
perform biological
reaction.
Inflowing sewage
↓
Biological reactor
(Endless channel)
↓
Final
sedimentation tank
↓
Treated water
Process where
water is treated
with single
reaction tank.
Inflowing sewage
↓
Biological reactor
↓
Treated water
Process where
water is treated in
a biological
reactor filled with
carriers.
Inflowing sewage
↓
Biological reactor
(filled with carriers )
↓
Final
sedimentation tank
↓
Treated water
Rough
development cost
for 5,000 m3/day
treatment plant (M
USD)
3.11 3.29 2.88 2.23
Rough annual
O&M cost
(M USD)
0.337 0.362 0.314 0.258
25 year project 1.18 1.01 1.28 0.95
5 Water Quality Guidelines and General Effluent Standards of 2016
25
cost (1 m3)(PHP)
Track Record
Adopted in Metro
Manila.
Adopted in
Baguio City and
other areas in the
Philippines.
Adopted by
private sector
development in
the Philippines,
but mainly less
than 5,000
m3/day.
Not adopted in the
Philippines, but
may be chance to
consider due to
track record in
Europe.
Main Risks
Low risk since
technology is
established and
has track record in
the Philippines.
Weak with
respect to load
fluctuation.
Low technical
risk since adopted
at existing facility
in Baguio.
Impossible to
expand functions
with existing
facility due to site
limitations.
Flocculants need
to be added to
remove
phosphorous.
Technically
advanced and
complicated, risk
that treatment not
successful
(technical/cost).
Need adjustment
tank before
reaction tank to
level sewage.
Possibility that
effluent standard
may not be
satisfied.
No track record
in the Philippines.
Due to features
of biotreatment,
risk that expected
effect not obtained
(commercial risk).
Not suited to
removal of
nitrogen /
phosphorous
Source: CDIA Pre-F/S
Note: CAS: Conventional Activated Sludge, MBBR: Moving Bed Bio-film Reactor
(2) Results of Existing Pre-F/S
In the existing Pre-F/S, short-term / medium-term / long-term goals were set for development of
sewerage related infrastructure, and a short-term plan (within 5 years) was formulated to expand
treatment capacity of the existing facility from 8,600 m3/day to 15,000 m3/day. In addition, as the
removal of phosphorous / nitrogen needs to be taken into consideration, MBBR was identified as
the optimum process.
(3) Results of Reexamination of Existing Pre-F/S
In the existing Pre-F/S, the conclusion was made that an SBR or MBBR for which the installed
area is small was appropriate as the treatment process for the expanded facility as nitrogen or
phosphorous limits in the final effluent of sewage treatment plant were out of scope.
However, during this reexamination, the removal of nitrogen and phosphorous had to be
considered when selecting the appropriate treatment process. Therefore, an advanced treatment OD
process that is an oxidation ditch process enabling removal of nitrogen and a sequence batch reactor
(SBR) process that can remove both nitrogen and phosphorous by using a specific
operation/management method have been deemed viable candidates.
Regarding the existing facility, it would be appropriate to modify the OD process currently being
26
used into an advanced treatment OD process considering the maintainability and construction costs,
and as for the facility newly constructed or upgraded, it would be appropriate to improve treatment
performance by using the SBR or the advanced treatment OD process.
The settings for the treatment facility scale and treatment process review content are described
below.
I. Change in Environmental Standards
Due to the fact that the Balili River into which treated water discharges from the existing
treatment plant is upstream from the point where water for the city water supply is taken, the Class
A Water Quality Guidelines and General Effluent Standards of the Philippine government are
applied. The water quality guidelines are described below.
Table 22 Effluent Water Quality Standards
CLASS
Water Quality Item A C C (1990)
BOD mg/L 20 50 50
COD* mg /L 60 100 100
Nitrate-Nitrogen mg /L 14 14 ━
Phosphorous mg /L 1 1 ━
Coliform Count
(Fecal Coliform) MPN/100mL 3,000 (4) 10,000(400) ━
Source: Water Quality Guidelines and General Effluent Standards of 2016 (DENR)
* COD: Chemical Oxygen Demand
II. Residential Population
The growth of resident population is expected to slow down in the future. However, it is predicted
that improvement of the living environment brought about by development of the sewerage system
will result in a continuing increase in the population. In the previous Pre-F/S, it was predicted that
while the population would increase, there would be a slowdown in the population growth rate, and
since this is deemed in line with actual conditions, the actually planned design values were adopted.
The actual and predicted resident population are described in the table below.
27
Table 23 Predicted Future Residential Population
(Unit: Persons, %)
Year
Area
Actual Predicted
2010 2015 Annual
Growth 2025 2035
Annual
Growth
Ambalanga 19,640 24,000 4.50 33,000 44,000 3.00
Balili 13,116 138,000 1.00 152,000 168,000 1.00
Bued 79,150 94,000 3.50 115,000 140,000 2.00
Galiano 84,050 91,000 1.60 101,000 111,000 1.00
Total 195,956 347,000 2.04 401,000 463,000 1.45
Source: Pre-F/S
III. Sewage Volume Primary Unit
The actual water supply volume is adopted as the sewage volume primary unit, which is 120
L/person/day.
IV. Future Sewage Volume
The sewage volume primary unit is multiplied by the projected future population in order to
predict the sewage volume in the future described in the table below.
Table 24 Predicted Future Sewage Volume (2035)
Year
Area Population
(Persons)
Primary Unit
(L/person/day)
Future Sewage Vol.*
(m3/day)
Ambalanga 44,000 120 5,500
Balili 168,000 120 21,000
Bued 140,000 120 17,000
Galiano 111,000 120 14,000
* Future sewage volume is rounded up to 500 or 1,000
Source: Prepared by Study Team
(4) Countermeasures
I. Treatment Processes That Can Handle Demand
In consideration of compliance with effluent standards, the available space at the treatment plant
and maintainability, the following two treatment processes were selected as the candidates to
upgrade the functions of the facility.
28
Fig. 25 Overview of Treatment Processes
Treatment Name Treatment Process
Advanced
treatment OD
process
Advanced treatment that provides anaerobic zones and aerobic zones in the
appropriate ratio in an OD process biological reactor (without endless channel).
SBR process
Anaerobic – aerobic condition is created during the treatment process in order
to achieve advanced treatment effect.
II. Facility Introduction Method
The current sewage inflow volume is approximately 8,000 m3/day, so it is not possible to stop the
existing OD process (8,600 m3/day). Therefore, the new advanced treatment OD process or SBR
process facility will be installed on the site currently being used within the existing treatment plant
as a sludge sun-drying facility, but since the current sludge treatment cannot be stopped, the
judgment has been made that treatment capacity needs to be upgraded with the following procedure.
A) Secure another site as a temporary sludge treatment facility.
B) Build new treatment facility on current sludge drying facility site.
C) Modify existing OD process. (When existing facility is used, its service life will need to be
reconsidered.)
(5) Other Issues
This feasibility study revealed that there are the following problems that need to be addressed in
addition to upgrading of the functions of the treatment plant at the sewage treatment facility in Baguio
City.
I. Sewer Culverts
The sewage inflow volume has decreased in recent years, and it was clarified that collected
sewage is being directly discharged into the public water area due to damage to the sewer culverts.
Therefore, the judgment was made that the sewer culverts needs to be rehabilitated or repaired, but
there is not a local contractor with the technology to rehabilitate or repair the sewer culverts.
Consequently, the judgment can be made that sewer culverts should be rebuilt, rehabilitated or
Reaction Sedimentation Effluent Discharged
Sludge
Inflow
Reaction Tank
Final Sedimentation
Tank
Excess Sludge
Treated Water
Reaction Tank Effluent
Returned
Sludge Influent
29
repaired with a method that minimizes the Life Cycle Cost (LCC), keeping in mind the possibility
of needed replacement of some sewer culverts.
II. Handling of Breakdowns (Pumping Station)
The pumping station at the treatment plant had broken down, and it was confirmed that it has
been out of service for six months since the necessary parts were not available. Therefore, a system
and a supply chain need to be urgently established to provide repair services for the machinery that
has broken down.
III. Handling of Poor Quality Sewage
Heavy metals are mixed in with the inflowing sewage, and the Biochemical Oxygen Demand
(BOD) load was higher than the design value. This leads to the judgment that guidance needs to be
provided from administrative agencies since it is caused by poor quality wastewater from factories,
hospitals and restaurants. In addition, it would be appropriate as a countermeasure that a facility
that has functions to reduce BOD load be installed at the sewage treatment plant.
IV. Septic Tank Sludge
It was found that sludge recovered from septic tanks were being directly disposed into the sewage
treatment plant. A septic tank sludge treatment facility is currently being constructed, but such
methods of disposal needs to be immediately improved.
30
2.Basic Design of Water Treatment System
This section describes the basic design of water treatment system. During the review process, in
addition to the treatment performance, the ripple effects on Baguio City, initial investment,
maintainability, operating costs, maintenance costs, energy saving effect, LCC and other
considerations. Also, regarding the water treatment processes, as a result of re-examination of the
existing pre-F/S in the previous section, the study was carried out for the following two cases.
Case Ⅰ: Sequence Batch Reactor (SBR) Process (new construction: 9,000 m3/day) + Advanced
Treatment OD Process (expansion or upgrading: 12,000 m3/day)
Case II: Advanced Treatment OD Process (new construction: 9,000 m3/day) + Advanced
Treatment OD Process (expansion or upgrading: 12,000 m3/day)
In addition, heavy metals are contained in the sludge of the existing treatment plant, so for the sludge
treatment facility, dehydrators shall be out of scope and concentration and storage were reviewed.
(1) Review of Water Treatment Processes
I. SBR
A) Details of Review
The SBR process is a sewage treatment approach in which a single reaction tank has the functions
of oth breaction tank and final sedimentation tank, and the activated sludge reaction and liquid
mixture deposition, discharge of supernatant water, and the process of removal of the deposited
sludge are carried out repeatedly. Compared with other treatment processes, this treatment process
is easily affected by fluctuations in quantities of water inflowed, so a flow equalization tank is
needed to levelize the quantity of inflow to the reaction tank.
In this section, the results of the study to determine whether it is possible to install the facility
required to extend the capacity up to 9000 m³ per day by SBR are discussed.
■ Continuous Inflow Type and Intermittent Inflow Type
The potential for introduction of the continuous inflow type SBR in which the sewage
continuously flows into the reaction tank, and the intermittent inflow type SBR in which the sewage
flows into the reaction tank only during the reaction process (mainly aeration) were reviewed.
■ Aeration Method
31
Table 26 Aeration Methods
(a) Fine Bubble Injection (b) Aeration Device +
Agitator
(c) Mechanical Agitation by
Submersible Mixer
Schematic
Diagram
Process and
Principle
The batch tank liquid
mixture is circulated with a
pump, and by finely
dividing the air with the
energy, the oxygen transfer
efficiency is increased.
During mixing and injection
and during transfer within
the tank, shear forces are
produced at gas‐liquid
interfaces by the flow rate
of the gas and liquid and by
friction, so the oxygen is
transferred and the gas-
liquid are renewed, and in
addition the surrounding
liquid is drawn in and
agitated.
Oxygen is supplied by an
aeration tube (flexible tube),
and for anaerobic operation
agitation is carried out using
a separate submersible
agitator.
Note that slits are provided
in the flexible tube, so with
this structure blockage does
not occur even with ON-OFF
operation.
Agitation of the batch tank
liquid mixture is carried out
mechanically, and at the
same time the injected air is
broken down to increase the
oxygen transfer efficiency
and power transmission
efficiency.
The two functions of
agitation and aeration are
concentrically integrated in
the submersible
aerator/mixer, which is
installed on the bottom of the
batch tank.
Equipment
Configuration
1. Blower
2. Circulation pump
3. Fine bubble injection
device
1. Blower
2. Aeration device
3. Agitator
1. Blower
2. Submersible mixer
Blower
Circulating Pump
Overall Configuration
Overall Configuration
Blower
Agitator Detailed Sectional View Detailed Sectional View
of Aeration Parts
Air
Air
Overall Configuration
Liquid Gas
Nozzle
Liquid Nozzle
Aerator
Blower
Mechanical Submersible
Mixer
Agitator
Cylinder
Diffuser
Flexible Tube
32
Source: Guidelines and Commentary on Planning and Design of Sewage Treatment Facilities – Sequel
2009 Edition
■ Nitrification Control
A review was carried out into the stable operation of the advanced treatment facility and the
energy saving by the application of nitrification control to the SBR process.
B) Results of Review
■ Continuous Inflow Type and Intermittent Inflow Type
In order to deal with advanced treatment of sewage (removal of nitrogen), the intermittent flow
type SBR is adopted to enable nitrogen removal, with inflow of sewage only during the reaction
process, by setting the anaerobic- aerobic state.
■ Aeration Method
(a) Fine Bubble Injection
The equipment configuration is simple. The water energy is produced by circulation using a
submersible pump, for which maintenance is simple, and pumps are general-purpose items
which has the advantage of ease of procurement of consumable parts.. Nitrogen can be
removed by stopping the blower and carrying out agitation using the circulation pump only.
(b) Aeration Device + Agitator
The equipment configuration is simple. The water energy is produced by a submersible
mixer only, making maintenance easy. The submersible mixer is a general-purpose item which
has the advantage of ease of procurement of consumable parts. Nitrogen can be removed by
stopping the blower and carrying out agitation using the mixer only.
The service life of the aeration device is about 5 years, so replacement is necessary.
(c) Mechanical Agitation by Submersible Mixer
The two functions of agitation and aeration are done and concentrically integrated in the
submersible aerator/mixer. This type of equipment is considered uncommon. During inspection
of the submersible mixer, it is necessary to raise this heavy equipment out of the water, so it is
necessary to consider maintainability. Nitrogen can be removed by stopping the blower and
carrying out agitation by the mixer only.
It is necessary to send the submersible mixer back to the factory for overhaul.
The aeration method has a simple configuration of equipment and maintenance is easy. Also it
33
is judged that it is advantageous in terms of maintenance cost, so it is desirable to adopt the fine
bubble injection method.
■ Nitrification Control
Nitrification control is carried out to control ammonia concentration in the sewage. This is
measured at the point of inflow and at intermediate points, and appropriate suppression is applied
to the quantity of air in accordance with the concentration of ammonia at the outlet of the reaction
tank in accordance with the target. (Energy efficient control is achieved by reducing the excess
air of the blower as much as possible). This nitrification control can be applied to a plug flow
type (extruder) reactor, in which there are inflow and intermediate points. With the SBR process,
operation is single tank intermittent operation and not plug flow, so it is envisaged that the
ammonia concentration will be the same value at the inflow point and at intermediate points, so
it is judged that it is not possible to apply to the nitrification control.
II. Review of Advanced Treatment OD Process (including control of ammonia)
A) Details of Review
The OD process is a sewage treatment process in which no primary sedimentation tank is
provided, and an endless channel having a mechanical type aeration device is used as a reaction
tank in order to carry out the activated sludge treatment at low load. Solid-liquid separation is carried
out in the final sedimentation tank. On the other hand, the site area for an oxidation ditch tank of
this facility is too narrow, so it is necessary that the water depth be 3 m deeper than normal which
is the same as the existing facility. In addition, it is necessary to form appropriate anaerobic and
aerobic zones within the tank for advanced treatment.
In this section, the method of aeration, ammonia control, facility capacity, etc., was reviewed
taking into consideration the functions and conditions as described previously.
■ Aeration Method
In addition to supplying the necessary oxygen for the process, the aeration device mixes and
agitates the activated sludge and the inflow water within the reaction tank, applies the flow rate
to the liquid mixture for circulation within the reaction tank, and ensures that the activated sludge
is not deposited. As stated previously, in this facility, it is necessary to have a water depth 3m
deeper than normal. It is also necessary to appropriately form anaerobic and aerobic zones within
the tank.
During this review, selection was carried out from among the three methods in the following
table, taking into consideration the above functions and conditions.
34
Table 27 Aeration Methods in the OD Process
(a) Vertical Shaft Type (b) Propeller Type (+ aerator) (c) Axial Flow Pump Type
Schematic
Diagram
Method
and
Principle
This is a method in which
the rotational power of the
drive unit is transferred to an
impeller on the reaction tank
water surface, to carry out
surface aeration.
Water flow is generated by
the pumping action of the
aerator, and as a result of a
dividing wall to one side of
the aerator, in one area the
water is pumped up and in
the other area it is driven into
the water channel.
The flow has a spiral
shaped turbulent flow
pattern, flowing while
constantly combing up the
bottom surface.
This is a method in which the
mixing and agitation and the
air supply for aeration within
the ditch can be separately
controlled.
Agitation is supplied by
generating a water current by
the rotation of a submersible
propeller, and the air for
aeration is supplied by a
blower to an aerator.
The oxygen transfer
efficiency can be increased by
adopting membrane rubber for
the aerator.
This is a method in which
the mixing and agitation and
the air supply for aeration
within the ditch can be
separately controlled.
Agitation is provided by
generating a water current by
the rotation of the impeller
directly connected to a drive
unit, and air for aeration is
supplied by a blower to an
aeration pipe directly below
an impeller.
The air injected from the
aeration pipe is sheared by the
water flow forming fine
bubbles, so a high oxygen
transfer efficiency can be
obtained.
Equipment
Configuration
1. Vertical shaft aerator
1. Submersible propeller
agitator
2. Aerator
3. Blower
4. Submersible propeller
agitator lifting device
5. Aerator lifting device
1. Draft tube aerator
2. Blower
Source: Prepared by Study Team
■ Nitrification Control
A review was carried out into the stable operation of the advanced treatment facility and the
energy saving by the application of nitrification control to the OD process. In addition,
introduction of nitrification control by installation of instruments for performing nitrification
Vertical Shaft Teype Aerator
Draft Tube Aerator
Buffle Wall
Blower Blower
Aerator
Water Current
Water Current
Water Current
35
control at an appropriate location within the OD tank was reviewed.
Nitrification control is proposed with the objectives of stabilizing the treated water quality
(NH4-N concentration), reducing the electrical power consumption as a result of reduction in air
flow rate, and reducing the maintenance work. Specifically, a nitrification control flow rate
calculation is carried out using NH4-N sensors installed at two locations – on the upstream side
of the aeration tank and at an intermediate location. The concept of FF control in which the
required air flow rate is predicted from the upstream side NH4-N sensor measurement value, and
the concept of FB control in which the air flow rate is corrected based on the difference between
the predicted NH4-N concentration and the NH4-N sensor measurement value are used. Note that
with the nitrification control airflow rate only, there is a possibility that the upper limit value or
lower limit value of the DO concentration will be exceeded as a result of fluctuations in the inflow
NH4-N. Based on operational experience, etc., the upper side DO control air flow rate and the
lower side DO control air flow rate are simultaneously calculated with the DO concentration
upper limit value taken to be the upper side DO setting value and the lower limit value taken to
be the lower side DO setting value, and compared with the nitrification control air flow rate in
order to select the ideal air flow rate. In the “Breakthrough by Dynamic Approach in Sewage
High Technology (B-DASH) Project” led by the Ministry of Land, Infrastructure, Transport and
Tourism, verification of this nitrification control method was carried out in a sewage treatment
plant using the circulating denitrification. Compared with the target value of NH4-N in the treated
water of 1.0 mg-N/L, the measured value (average) was 0.33 mg-N/L, and the airflow rate
reduction effect was 16.9% compared with conventional DO constant control.
B) Results of Review
■ Aeration Method
For the following reasons, (c) the axial flow pump method will be adopted.
(a) Vertical Shaft Type
The water flow and oxygen can be supplied by vertical shaft rotor only, so this type is energy
efficient. The amount of oxygen can be controlled by the rate of rotation of the rotor, and the
water flow rate can also be adjusted simultaneously at this time. The surface aeration method,
however, cannot be applied to this scheme because of the large water depth.
(b) Propeller Type
The water depth can be increased, and anaerobic and aerobic zones can also be formed.
Adjustment of the oxygen quantity can be carried out by adjusting the blower air flow rate.
However, the equipment configuration consisting of the submersible propeller, aerator, and
36
blower is too complicated, so the maintenance cost is relatively large. Also the power required
to start a blower is increased due to the large water depth.
(c) Axial Flow Pump Type
The water depth can be increased, and anaerobic and aerobic zones can also be formed.
Adjustment of the oxygen quantity can be carried out by adjusting the blower air flow rate.
The water depth into which the air is blown is shallow, so the power required to start a blower
can be reduced.
Fig. 28 Schematic Diagram of the Axial Flow Pump Type (DTA: Draft Tube Aerator)
Source: Prepared by Study Team
■ Review of Nitrification Control
With the advanced treatment OD process, the sewage is aerated with a blower and an aeration
zone is formed, by mock plug flow (extruder). It is considered that it is possible to promote
nitrification with the equipment, so by applying the above nitrification control, it will be possible
to reduce the air flow rate and the electrical power consumption, while controlling the NH4-N
concentration of the treated water to be less than the target value. However, the advanced
treatment OD process differs from the standard activated sludge process and other processes in
that the reaction tank structure, sewage flow rate, retention time, aeration method, water quality
within the reaction tank, etc. Therefore it is necessary to verify in advance its effectiveness with
the actual loading.
37
Fig. 29 Method of Nitrification Control in the OD Process
Source: Extracted from “Guidelines for Introduction of Efficient Nitrification Operation Control Technologies using
ICT (Draft)” (National Institute for Land and Infrastructure Management), and prepared by Study Team
(2) Facility Capacity to Ensure A-SRT
I. Details of Review
As a process of advanced treatment, a review was carried out into the OD aeration capacity for
38
biological nitrogen removal process under the following conditions.
(a) BOD-SS load: Inflow BOD load per unit of Mixed Liquor Suspended Solids (MLSS) within
the OD tank
(b) BOD capacity load: Inflow BOD load per unit volume within the OD tank
(c) Aerobic Solid Retention Time (A-SRT): The retention time required for
retaining the nitrifying bacteria within the system
II. Results of Review
In this process, the nitrogen removal method is biological (anaerobic, aerobic) in nature. The
inflow total nitrogen (T-N) is oxidized by the nitrifying bacteria in the aerobic zone of the OD tank,
and reduced by the denitrifying bacteria in the anaerobic zone and removed as nitrogen. The
nitrifying bacteria are aerobic bacteria, so it is necessary to reliably ensure the aerobic capacity. The
aerobic capacity is designed to enable each of the following conditions to be met.
(a) BOD-SS load: 0.06 kg-BOD/kg-SS or less
(b) BOD-capacity load: 0.2 kg-BOD/m3.day or less
(c) Aerobic solid retention time (A-SRT): 40.7e(-0.101T) or more (T is the water temperature:
20℃)
(3) Facility Capacity of Final Sedimentation Tank
I. Details of Review
The final sedimentation tank capacity was reviewed assuming the following II as the water
treatment process.
Case I: SBR (new construction: 9,000 m3/day) + Advanced Treatment OD Process (expansion
or upgrading: 12,000 m3/day)
Case II: Advanced Treatment OD Process (new construction: 9,000 m3/day) + Advanced
Treatment OD Process (expansion or upgrading: 12,000 m3/day)
As preconditions for the review, water surface load of the final sedimentation tank should be the
same as the existing.
II. Results of Review
The specifications of the final sedimentation tank for each case, are as shown in the following
table.
39
Table 30 Specifications of Final Sedimentation Tank in Each Case
Item Case I Case II
Final
Sedimentation
Tank Shape and
Quantities
SBR process: Not set
Advanced treatment OD process:
Tank φ18 m ×2
New construction (9,000 m3/day):
Tank φ13 m ×3
Expansion or upgrading (12,000
m3/day):
Tank φ18 m ×2
Surface Loading
Capacity
(m3/m2.day)
23.6 New construction: 23.6
Expansion or upgrading: 22.6
Source: Prepared by Study Team
(4) Flocculent Equipment (for phosphorus removal)
I. Review of Biological Phosphorus Removal and Results
This review will be carried out because removal of phosphorus (1.0 mg/L as PO4-P) is essential
for the effluent water standard DA2016-08 for freshwater areas (Class A), which is the regulatory
value for the treated water in this case.
(a) This is not possible to achieve with removal of biological phosphorus only (removal of about
50% of the inflow PO4-P).
(b) Due to site restrictions, it is difficult to construct the biological reaction tank necessary for
phosphorus removal.
(c) The sludge treatment facility shall be constructed outside of the premise, and the phosphorus
incorporated into the sludge due to the biological phosphorus removal will be re-released
during the sludge retention time before transport, so there is a possibility that it will flow back
into the water treatment system.
For the above reasons (a) to (c), phosphorus removal must be done by the flocculant addition
method.
II. Review of Phosphorus Removal Using Flocculants
A) Details of Review
The appropriate type of flocculants shall be selected by studying into the following items.
■ Type of Flocculants
(a) Ferric chloride
(b) Ferric polysulfate
(c) Aluminum sulfate
(d) Polyaluminum chloride
40
■ Comparison Review Items
(a) Phosphorus removal performance
(b) Agglomerating property
(c) Corrosiveness
(d) Ease of handling (safety)
(e) Procurement packing
(f) Chemical pH
(g) Quantity of sludge generated
(h) Price
B) Results of Review
The results of a comparative review of flocculants are shown in the following table.
As a result of the comparative review of flocculants for phosphorus removal, a review was
conducted about the candidate agents, and ferric polysulfate from among the ferrous types and
polyaluminum chloride from among the aluminum types were adopted because of their high
phosphorus removal performance and good agglomeration properties.
As polyaluminum chloride has the advantage of corrosiveness and ease of handling of the
chemical (safety due to high pH), and that the sludge treatment costs can be reduced due to the small
quantity of sludge generated, polyaluminum chloride shall be chosen even though it is expensive.
Table 31 Flocculant Comparison Table
Item Ferrous Types Aluminum Types
Flocculant
Type Ferric Chloride Ferric Polysulfate
Aluminum
Sulfate
Polyaluminum
Chloride
Phosphorus
removal
performance
○ ◎ ○ ◎
Agglomerating
property
◎ ◎ ○ ○
Corrosiveness △ ○ ○ ◎
Ease of
handling
(safety)
△ ○ ○ ◎
Procurement
packing
Liquid Liquid Solid Solid
pH 1.5~ 2.0~ 3.0~4.0 3.5~5.0
Quantity of
sludge
generated
Large Large Small Small
41
Price ◎ ◎ ○ ○
Source: Prepared by Study Team
(5) Filtration Process
I. Details of Review
A) Preconditions
Inflow SS concentration: 20 mg/L
Treated water SS concentration: 10 mg/L or less
B) Treatment Process
(a) Rapid filtration process: This is a filtration process using sand filters. The filtration rate is
about 150 to 300 m/day. Periodic backwashing is required. The quantity of wastewater is
about 3%. There is also backwashing equipment so the facility area is large.
(b) Moving bed filtration process: This is a process of continuous filtration while cleaning the
sand filters. The filtration rate is about 200 to 300 m/day. The quantity of wastewater is
about 6 to 10%.
(c) High-speed fiber filtration process: This is a process that uses fiber filters with low
resistance to passage. The filtration rate is about 1000 m/day. Periodic backwashing is
required. The wastewater quantity is about 2%. Backwashing equipment is required, but
the facility area is small.
II. Results of Review
The results of the comparative review into the filtration processes are shown in the following
table.
For the filtration facility, since it is necessary to remove the SS in the secondary treated
wastewater as part of the process to remove phosphorous that originates in the SS, it must be
accommodated within the limited area of the site. For the following reasons, (c) high-speed fiber
filtration will be adopted.
(a) With the rapid filtration process, the filtration speed is low, and the required filter area is
large, the construction cost is, therefore, greatest.
(b) The moving bed filtration process does not require backwashing equipment, but the
quantity of wastewater is large compared with the other processes, the energy for transfer
of the wastewater will have to be larger.
(c) With the high-speed fiber filtration process, the filtration speed is high, and the facility
area is smallest. Since the quantity of wastewater associated with backwashing is small,
this process has advantages for transfer of wastewater.
42
Table 32 Overview of Filtration Processes
Item Rapid Filtration Process Moving Bed Filtration
Process
High-Speed Fiber
Filtration Process
Schematic
Diagram
Filtration Rate 300 m/day 300 m/day 1,500 m/day
Filter Layer
Thickness
About 1.5 m
(gravel, sand filter,
anthracite)
About 1.0 m
(sand filter)
About 1.0 m
(fiber filter)
Filter Water Head
Loss
About 3 m About 1 m About 1 m
Cleaning
Frequency
1-2 times/day Continuous 1-2 times/day
Cleaning
Wastewater
Quantity
About 3% of the daily
maximum water
filtration quantity
About 6% of the daily
maximum water
filtration quantity
About 2% of the daily
maximum water
filtration quantity
Filter Area 80 m2 or less per tank 6 m2 or less per tank 30 m2 or less per tank
SS Removal
Percentage
60~80% 50~70% 50~80%
Site Area (for
30,000 m3/day)
16 m×20.6 m
(329.6 m2)
16 m×18.2 m
(291.2 m2)
12 m×13.2 m
(158.4 m2)
Source: Prepared by Study Team
(6) Sludge Treatment Facility
I. Details of Review
The capacity of the sludge treatment facility was reviewed using the quantity of sludge generated
by the following two water treatment processes. However, as stated, since the sludge of the existing
treatment plant contains heavy metals, the dehydrator is considered to be out of scope, and the
review was conducted only into concentration and storage.
Case I: Sequence Batch Reactor (SBR) Process (new construction: 9,000 m3/day) + Advanced
Treatment OD Process (expansion or upgrading: 12,000 m3/day)
Case II: Advanced Treatment OD Process (new construction: 9,000 m3/day) + Advanced
Treatment OD Process (expansion or upgrading: 12,000 m3/day)
43
The preconditions for reviewing of basic design were as follows.
(a) Inflow SS loading in the concentration tank: 30 kg-ds/m2.day (design value of the existing
treatment plant) or less
(b) Number of retention days in the sludge storage tank: About 2 days
II. Results of Review
The concentration tank and sludge storage tank specifications in each case are shown in the
following table.
Table 33 Concentration Tank and Sludge Storage Tank Specifications in Each Case
Item Case I Case II
Quantity of SS Generated (kg-
ds/day)
3,680 3,658
Quantity of Sludge Generated
(m3/day)
588 431
Concentration
Tank
Shape and
Quantities
φ9.8 m ×H4 m (effective
water depth) ×2 tanks
φ8.6 m×H4 m (effective
water depth) ×2 tanks
SS Loading
(kg-ds/m2.day) 24.4 29.7
Sludge
Storage Tank
Shape and
Quantities
W6 m×L14.3 m×H3 m
(effective water depth) ×2
tanks
W6 m×L13.1 m×H3 m
(effective water depth) ×2
tanks
Number of
retention days
2.1 2.1
Source: Prepared by Study Team
(7) Effective Use of Filtered Water
I. Details of Review
The following two methods were reviewed for the effective use of the filtered water.
(a) On site utilization (anti-foaming water, on-site sprinkling water, etc.)
(b) Utilization outside of the site
II. Results of Review
The filtered water can be obtained from the high-speed fiber filtration, but it is not sterilized, and
the influence of general bacteria and coliform bacteria should be taken into account when using
water at such state. In this study, the sterilization by ultraviolet (UV) light is being considered, but
UV light has no residual effect. When using the water outside the site, bacteria are highly likely to
survive and reproduce, so it is necessary consider such effect. Therefore, the use of filtered water
44
(assumed to be sterilized with UV light) on site is the most ideal.
(8) Water Treatment Facility
The preconditions for basic design were set from the results of the field survey and the results of
review into the basic design of the water treatment systems (1) to (7) above, and the capacity of the
water treatment facility was calculated. Results were as follows.
I. Preconditions for Basic Design
The preconditions for basic design are shown in Table 34 and Table 35.
Table 34 Quality of Untreated Water and Treated Water
Item Untreated
Water *1
Treated Water Notes
BOD (mg/L) 200 20 Reduce down to 200 mg/L by introduction
of pretreatment facility.
Treated water: Philippine water quality
guidelines and effluent standards Class A SS (mg/L) 200 70 as TSS
CODCr*2 (mg/L) -
60 Treated water: Philippine water quality
guidelines and effluent standards Class A
T-N (mg/L) 40 -
Untreated water: Water quality data is
unclear from 2014/1/8 to 2018/7/11,
assumed to be 40 mg/L
Kj-N*3 (mg/L) (40) 0.5 as NH4-N
Treated water: Philippine water quality
guidelines and effluent standards Class A
NO3-N*4 (mg/L) (0)
14 Treated water: Philippine water quality
guidelines and effluent standards Class A
T-P*5 (mg/L) 14 1
Untreated water: Average value from
2014/1/8 to 2018/7/11
Treated water: Philippine water quality
guidelines and effluent standards Class A
PO4-P*6 (mg/L) (7)*7
No. groups of
coliform bacteria
(MPN/100mL)
- 3,000
Treated water: Philippine water quality
guidelines and effluent standards Class A
Fecal coliform
bacteria
(MPN/100mL)
- 4
Treated water: Philippine water quality
guidelines and effluent standards Class A
Heavy metals
Assumed to be separately treated, the
heavy-metal concentration in the untreated
water is assumed to be less than the
Philippine water quality guidelines and
45
effluent standards Class A.
Source: Prepared by Study Team
Notes
*1:Assumed to be the water quality flowed into OD tank.
*2:Chemical Oxygen Demand by potassium dichromate
*3:Kjeldahl Nitrogen
*4:Nitrate Nitrogen
*5:Total Phosphorus
*6:Phosphate Phosphorus
*7:The concentration of PO4-P is assumed to be 50% of T-P
Table 35 Design Parameters of Each Facility
Item Existing Value Present Set
Value
OD Tank BOD‐SS loading (kg-BOD/kg-SS) 0.055 0.055
BOD volumetric loading (kg-BOD/m3.day) 0.186 0.2
Final
Sedimentation
Tank
Surface loading (m3/m2.day) 24.1 24.1
Sludge
Concentration
Tank
SS loading (kg/m2.day) 28.9 29.7
Retention time (h) 27.0 25.9
SBR Number of cycles (times/day) - 3
Drawdown rate - 1/3
Aeration time (h/day) - 12
Source: Prepared by Study Team
II. Case I Facility Overview
A) Overall Layout
The overall layout is shown in the following figure.
46
Fig. 36 Overall Layout of Case I
Source: Prepared by Study Team
B) Treatment Flow
The treatment flow is shown in the following figure.
Fig. 37 Treatment Flow for Case I
Source: Prepared by Study Team
C) Construction Sequence
The construction sequence is shown in the following table.
47
Table 38 Construction Sequence for Case I
Step Event Quantity of Water to be Treated in
the Plant, etc.
Step 0 1. Deal with heavy metals
2. Construction of sludge treatment facility
Specified separately
Specified separately
Step 1 1. New pretreatment facility (removal of oil)
(21,000 m3/day)
↓
2. Removal of existing facility
・Primary sedimentation tank
・Sludge drying bed
↓
3. Construction of new treatment facility
(9,000 m3/day)
・ Rehabilitation of main administrative
building (including electrical room)
・ SBR tank
・ Rehabilitation of chlorine mixing tank
(UV equipment)
(9,000 m3/day)
・ Electrical instrumentation equipment
Electrical substation: For 21,000 m3/day
Power equipment: For 9,000 m3/day
Instrumentation equipment: For 9,000
m3/day
In-house power generation: For 21,000
m3/day
Monitoring equipment: For 21,000
m3/day
8,600 m3/day (use of existing OD
tank, etc.)
8,600 m3/day (use of existing OD
tank, etc.) ・ Commence removal after installation of
the new pretreatment facility
・ Vacuum transport sludge from the existing
sludge storage tank to the sludge treatment
facility constructed in “Step 0”
After completion of new
construction, 8,600 m3/day →9,000
m3/day
Step 2 1. Remove the existing 8,600 m3/day
treatment facility
・OD tank
・Final sedimentation tank
・Sludge concentration tank
・Sludge storage tank
↓
2. New 12,000 m3/day treatment facility
・OD tank (12,000 m3/day)
・Final sedimentation tank (12,000 m3/day)
9,000 m3/day (to be treated in the
OD tank constructed in “Step 1”)
・The sludge is directly withdrawn
from the final sedimentation tank
constructed in “Step 1”, and
vacuum transported to the sludge
treatment facility constructed in
“Step 0”.
After completion of the new
construction, 9,000 m3/day
48
・Rapid filtration facility (21,000 m3/day)
・Polyaluminum chloride (PAC) injection
equipment (21,000 m3/day)
・Rehabilitation of chlorine mixing tank
(UV equipment)
(12,000 m3/day)
・Sludge concentration tank (21,000
m3/day)
・Sludge storage tank (21,000 m3/day)
・Expansion of electrical instrumentation
equipment
Expansion of power equipment:
Expansion for 12,000 m3/day
Instrumentation equipment: Expansion for
12,000 m3/day
Monitoring equipment: Incoming signals
for the above expansions
Ammonia control: For 12,000 m3/day
→21,000 m3/day
・After completion of the new
construction, vacuum transport
the sludge from the sludge
storage tank constructed in “Step
2” to the sludge treatment facility
constructed in “Step 0”
Source: Prepared by Study Team
The electrical equipment in Table 38 above will be upgraded to the electrical substation that can
cover all the SBS + OD equipment, and an emergency generator will be installed as backup for all the
equipment in the case of a power outage, the same as for the existing facilities. Also, the monitoring
equipment will have to be capable of monitoring the status of operation, stoppage, breakdown of all
the equipment, and monitoring the displays of the instruments. Power supply to the monitoring
equipment and the instrumentation equipment will be from an uninterruptible power supply (UPS).
D) Overview of Main Facilities
The list of the main facilities is shown in the following table.
Table 39 List of the Main Facilities for Case I
Facility Name Shape Quantity Notes
1. SBR Facility (new construction: 9,000 m3/day)
Flow Equalization
Tank
W39.5 m×L6.5 m×H7.0 m (effective water
depth)
1
SBR Tank W17.0 m×L16.0 m×H6.0 m (effective water
depth)
6
2. Advanced Treatment OD Facility (expansion or upgrading 12,000 m3/day)
OD Tank W3 m×L33 m×H6.4 m (effective water depth) 4
49
3. Final Sedimentation Tank Facility (12,000 m3/day)
Final
Sedimentation
Tank
φ18 m 2
4. Rapid Filtration Facility
Untreated Water
Tank
W10.2m×L12.3 m×H2.0 m (effective water
depth)
1
Filtered Water
Tank
W5.0 m×L4.9 m×H6.1 m (effective water
depth)
1
Backwashing
Wastewater Tank
W5.0 m×L4.9 m×H6.1 m (effective water
depth)
1
5. Sterilization Facility
Sterilization Tank W3 m×L8 m×H2.0 m (effective water depth) 1 Reuse existing
6. Sludge Treatment Facility
Concentration
Tank
φ9.8 m×H4 m (effective water depth) 2
Sludge Storage
Tank
W6 m×L14.3 m×H3 m (effective water depth) 2
Source: Prepared by Study Team
III. Overview of Case II Facilities
A) Overall Layout
The overall layout is as shown in the following figure.
50
Fig. 40 Overall Layout for Case II
Source: Prepared by Study Team
B) Treatment Flow
The treatment flow is shown in the following figure.
Fig. 41 Treatment Flow for Case II
Source: Prepared by Study Team
C) Construction Sequence
The construction sequence is shown in the table below.
51
Table 42 Construction Sequence for Case II
Step Event Treatment plant corresponding
water quantity, etc.
Step 0 1. Deal with heavy metals
2. Construction of the sludge treatment
facility
Specified separately
Specified separately
Step 1 1. New pretreatment facility (removal of oil)
(for 21,000 m3/day)
↓
2. Remove existing facility
・Primary sedimentation tank
・Sludge drying bed
↓
3. 9,000 m3/day new treatment facility
・ Rehabilitation of main administrative
building (including electrical room)
・ OD tank
・ Final sedimentation tank
・ Rehabilitation of chlorine mixing tank
(UV equipment)
(9,000 m3/day)
・Electrical instrumentation equipment
Electrical substation: For 21,000 m3/day
Power equipment: For 9,000 m3/day
Instrumentation equipment: For 9,000 m3/day
In-house power generator: For 21,000 m3/day
Monitoring equipment: For 21,000 m3/day
Ammonia control: For 9,000 m3/day
8,600 m3/day (use existing OD
tank, etc.)
8,600 m3/day (use existing OD
tank, etc.) ・ Commence removal after installation of
the new pretreatment facility
・ Vacuum transport sludge from the existing
sludge storage tank to the sludge treatment
facility constructed in “Step 0”
After completion of new
construction, 8,600 m3/day →9,000
m3/day
Step 2 1. Removal of existing 8,600 m3/day
treatment facility
・OD tank
・Final sedimentation tank
・Sludge concentration tank
・Sludge storage tank
↓
2. New 12,000 m3/day treatment facility
・ OD tank (12,000 m3/day)
・ Final sedimentation tank (12,000
m3/day)
9,000 m3/day (to be treated in the
OD tank constructed in “Step 1”)
・The sludge is directly withdrawn
from the final sedimentation tank
constructed in “Step 1”, and
vacuum transported to the sludge
treatment facility constructed in
“Step 0”.
After completion of new
construction, 9,000 m3/day
→21,000 m3/day
・After completion of the new
52
・ Rapid filtration facility (21,000 m3/day)
・ PAC injection equipment (21,000
m3/day)
・ Rehabilitation of chlorine mixing tank
(UV equipment)
(12,000 m3/day)
・ Sludge concentration tank (21,000
m3/day)
・ Sludge storage tank (21,000 m3/day)
・ Expansion of electrical instrumentation
equipment
Expansion of power equipment: Expansion for
12,000 m3/day
Instrumentation equipment: Expansion for 12,000
m3/day
Monitoring equipment: Incoming signals for the
above expansions
Ammonia control: For 12,000 m3/day
construction, vacuum transport
the sludge from the sludge
storage tank constructed in “Step
2” to the sludge treatment facility
constructed in “Step 0”
Source: Prepared by Study Team
The electrical equipment in Table 42 above will be upgraded to the electrical substation that can
cover all the equipment for OD+OD, and an emergency generator will be installed as backup for all
the equipment in the case of a power outage, the same as for the existing facility. Also, the
monitoring equipment will have to be capable of monitoring the status of operation, stoppage,
breakdown of all the equipment, and monitoring the displays of the instruments. Power supply to
the monitoring equipment and the instrumentation equipment will be from an uninterruptible power
supply (UPS).
D) Overview of Main Facilities
The list of the main facilities is shown in the following table.
Table 43 List of the Main Facilities for Case II
Facility Name Shape Quantity Notes
1. Advanced Treatment OD Facility
OD Tank W2.5 m×L43 m×H6.4 m (effective water
depth)
3 For 9,000 m3/day
OD Tank W3.0 m× L 33 m× H 6.4 m (effective water
depth)
4 For 12,000 m3/day
2. Final Sedimentation Tank Facility
53
Final
Sedimentation
Tank
φ13 m 3 For 9,000 m3/day
Final
Sedimentation
Tank
φ18 m 2 For 12,000 m3/day
3. Rapid Filtration Facility
Untreated Water
Tank
W10.2 m× L 12.3 m× H 2.0 m (effective water
depth)
1
Filtered Water
Tank
W 5.0 m× L 4.9 m× H 6.1 m (effective water
depth)
1
Backwashing
Wastewater Tank
W 5.0 m× L 4.9 m× H 6.1 m (effective water
depth)
1
4. Sterilization Facility
Sterilization Tank W 3 m× L 8 m× H 2.0 m (effective water
depth)
1 Reuse existing
5. Sludge Treatment Facility
Concentration
Tank
φ8.6 m× H4 m (effective water depth) 2
Sludge Storage
Tank
W 6 m× L 13.1 m× H 3 m (effective water
depth)
2
Source: Prepared by Study Team
IV. Superiority of Japanese Corporations (Japanese Products)
In both Case I and Case II, the use of the following Japanese products will not only satisfy the
Philippine water quality guidelines and effluent standards Class A (nitrogen and phosphorous), but
will also facilitate installation of a 21,000 m3/day treatment facility within the existing treatment
plant, reducing maintenance costs, support operation and management, substantial land acquisition
and other benefits. The superior points of the representative devices and controls are described
below.
A) SBR
■ Adoption of Intermittent Inflow SBR
Intermittent inflow SBR is adopted and generally used in Japan. This process enables anaerobic
/ aerobic conditions to be easily created inside reactors to remove nitrogen.
B) Advanced Treatment OD Process
■ Adoption of Axial Flow Pump Method
A deep-water depth is required due to the site area limitations, and the axial flow pump method
54
(Japanese product) facilitates a water depth of up to 6 meters. Furthermore, anaerobic / aerobic
zones can easily be created, and the amount of oxygen can be adjusted with the air volume
provided by the blower. Adoption of this method enables the air blow water depth to be made
shallower, minimizing blower power requirements (reducing electric power consumption).
In addition, the axial flow pump drive unit is located above the tank, providing superior ease
of maintenance since the OD tank does not need to be emptied.
■ Adoption of Nitrification Control System
A nitrification control system is being adopted that enables the concentration of NH4-N in the
treated water to be controlled at or below the target value (Philippine water quality guidelines
and effluent standards Class A for NH4-N: 0.5 mg/L or less), to reduce blower air blow volume
and decrease power consumption. In addition, an NH4-N concentration meter which is a Japanese
product is used for measurement of the NH4-N concentration in the advanced treatment OD tank.
This control system is a Japanese product.
C) Filtration Process
■ Adoption of High-Speed Fiber Filtration Process
In addition to needing to remove SS in the secondary treated water as part of the process of
phosphorus removal from the SS, the facility must be accommodated within the limited site area.
Therefore, a high-speed fiber filtration process is being adopted that operates at a high speed of
1,500 m/day and has a small quantity of wastewater (approximately 2% of filtered water)
associated with backwashing. This enables installation in the limited site area.
(9) Dealing with Effluents Containing Heavy Metals
The results of the inflowing sewage water quality analysis (data from 2014/1/8 – 2018/7/26)
detected there were 8 items and 7 types of metals (aluminum, zinc, nickel, copper, total manganese,
ferric, total iron and molybdenum). An opinion was raised an interview with representatives of
Baguio City concerning this issue that “The source of pollutants (heavy metals) was not factory
effluents, but rather from dental clinics”. However, from the fact that so many types of metals were
detected in the sewage, the study team presumes that there are other sources of pollutants aside from
those mentioned. However, in light of the fact that the source of pollutants has not been specifically
clarified at this point in time, it is expected that inflow of heavy metals will continue in the future,
and may increase. As stated in Table 34, it is assumed that heavy metals will be treated separately,
the same as in normal sewage treatment facilities, and the concentration of heavy metals in the
untreated water will be equal to or less than the Philippine water quality guidelines and effluent
standards Class A. Therefore, it is necessary that a study be carried out into the standards and
regulations regarding sewage effluents with respect to heavy metals, the methods to identify sources
55
of wastewater, joint wastewater treatment facilities for effluents containing heavy metals, etc., and
it is desirable that this be dealt with by Baguio city. The attached document shows the current status
of heavy metals contained in the untreated water.
On the other hand, there are cases in Japan where a heavy metal treatment facility is provided for
pretreatment within a sewage treatment plant, and, where seepage water containing heavy metals is
treated in landfill disposal sites. The study team possess heavy metal treatment technologies and
experience, and can make proposals by using these technologies after a review into heavy metal
treatment by Baguio City.
For reference, Fig. 44 shows an overview of coagulation/flocculation and sedimentation, and
removal of heavy metals by chelating resin, and Fig. 45 shows an overview of a treatment facility
for effluents containing heavy metals constructed in a public sewage treatment plant, as examples
of heavy metal removal equipment.
Fig. 44 Heavy Metal Removal Equipment (example)
Source: Prepared by Study Team
Fig. 45 Example of Facility for Treating Effluents Containing Heavy Metals
56
Source: Prepared by Study Team
57
3.Review of Project Implementation Scheme and Project Feasibility
In this chapter, the scheme when this project is implemented as a PPP was reviewed after
evaluating the feasibility of implementing this undertaking as a public utility based on the
specifications and approximate cost of the designated infrastructure facilities.
(1) PPP Application Status in Water Supply/Sanitation Sector in the Philippines
PPPs in the Philippines are carried out in accordance with Republic Act No. 7718 (revised BOT
Act) which was enacted in 2010. While adoption of a diverse range of methods, including BTO and
other such methods, have been approved, there is the regulation that government support shall be
kept within 50% of the total project cost. In addition, while the two-tiered system has been adopted
for large-scale government projects in recent years, the PPP scheme is being actively promoted at
the rural level and in areas beyond Metropoitan Manila. Water supply was the main type of project
in the water and sanitation sector up until now, but PPP projects in the “Water supply + Septage”
sector have been implemented in recent years, and there have also been projects using the JV scheme.
Fig. 46 PPP Status in Water Supply/Sanitation Sector in the Philippines
Source: Prepared by Study Team from PPP Center website
58
(2) Feasibility When Implemented as a Public Utility
I. Current Operation of Sewerage Services
Currently, CEPMO which is a department within the Baguio City government is operating and
maintaining their existing sewage treatment facility. Baguio City is collecting sewerage usage
charge from corporations registered in the city, but this income does not cover the O&M costs for
the sewerage services provided. Therefore, an Internal Revenue Allotment (IRA) and other local
government revenue sources is being used to make up for the loss incurred by the operation of
sewage treatment plants. The current project scheme is described in the diagram below.
Fig. 47 Current Operation Scheme
Source: Prepared by Study Team
II. Feasibility of the Facility When Implemented as a Public Utility
The feasibility was confirmed when the required sewage treatment facility expansion or
rehabilitations are performed for sewerage services in the present status based on the current
operation form. The Financial Internal Rate of Return (FIRR) and Net Present Value (NPV) were
calculated and reviewed as indicators of the relevance of the project based on the public costs
expected for the project and the income.
The evaluation period used was a total of 36 years, including the operation period of 30 years
from the completion of renovation of the existing sewage treatment plant, taking into consideration
the economic useful life of the facilities, devices and equipment installed with the project and similar
project cases. The discount rate was set during the evaluation period taking 2019 as benchmark year.
Regarding the public utility development costs, a review was conducted based on the project costs
which consist of the initial investment costs calculated in the Pre-F/S and the O&M costs. A 5%
physical contingency was included in the total financial cost as well as a 1% price discretionary
reserve.
In this study, it was assumed that the NSSMP subsidy being implemented by the national
government for LGUs (Local Government Units) would be utilized based on the premise that it
would be difficult for Baguio City to cover all necessary development costs. This will reduce the
Baguio City
CEPMOWastewater Treatment, Conveyance Maintenance Operation
Users
Payments(Sewerage Tariff from commercial
and industrial institutions)
National Government(Internal Revenue Allotment)
Development Fund(Complement the shortage of
LGU’s budget)
Provide Service
Budget for Service
59
burden on LGUs for initial investment and fund procurement, increasing the profitability of the
project and possibly limiting the amount to be borne by the LGUs. The details of NSSMP are
described later in “5. Review of Financing”, but it is assumed that 50% of the initial investment
costs for sewerage development will be provided by support from NSSMP.
The assumed costs in the CDIA Pre-F/S are described in the table below.
The income is the amount that is currently collected from users in Baguio City, which consists of
a certain amount (30% of water supply basic charge) which is set and paid by businesses registered
in the city together with taxes. At the current stage, since it is unclear whether or not there will be
an increase or decrease in income as a result of a change in the set charges or other factor, it was
assumed that the sewerage usage income to be obtained during the evaluation period would be the
same, and the review was conducted based on the income as of 2017.
Table 48 Financial Income (2017)
(Unit: Thousand PHP)
Annual Charge
Sewerage Usage
Charge
17,646
Source: CEPMO
The FIRR and NPV were calculated based on the above data. This resulted in it being impossible
to calculate the FIRR due to a significant negative value. The NPV amounted to a value of
approximately minus 1,385 million PHP when it was assumed that the capital cost was the 7.5%
interest rate for 25 year Philippine government bonds. The NPV value further worsens when sewage
culverts are included, amounting to approximately minus 2,140 million PHP.
Table 49 Results of Feasibility Evaluation When Operated as Public Utility
Entity Evaluation Index Calculation Results
Sewage Treatment Facility
(Without Sewer Culverts)
Sewage Treatment Facility
(Including Sewer Culverts)
Public FIRR Cannot be Calculated Cannot be Calculated
NPV (Million PHP) -1,385 -2,140
Source: Prepared by Study Team
III. Results of Feasibility Evaluation of Public Utility
Evaluation of the feasibility as a public utility resulted in the conclusion that charge income that
will enable project costs and O&M costs to be recovered cannot be expected, and will be
substantially below the 7.5% rate for 25 year Philippine government bonds. Therefore, this means
that it will be difficult for the public utility operator to ensure the management of sewerage services
in a self-sustaining manner. Reviews were conducted in the following sections due to the fact that
60
a different project scheme needs to be used in order to enable this project to succeed.
(3) Review of Project Schemes
During the review of project schemes, handling of the demand risk and handling of the fund
procurement risk were reviewed, and the options considered to be financially possible were
proposed as sewerage development projects for Baguio City. This review enabled us to conclude
the following two options which combine public and private sector participation for sewerage
infrastructure development and operation.
I. Service purchasing type PPP project in which profitability can be secured on private sector side
as a PPP project
II. Joint operation as JV with Baguio City Water District which is the water supply entity
I. Service Purchasing Type PPP Project
The Build Transfer Operate (BTO) method is one option as the PPP scheme for this feasibility
study due to the fact that the initial investment is large for projects such as sewerage services and
there is a high level of public need. For this project, a review was conducted into the BTO method
as shown in the diagram below as a scheme that is generally used.
Fig. 50 Exemplary PPP (BTO) Scheme
Source: Prepared by Study Team
The required treatment volume for sewerage services is determined by the water supply volume
and the wastewater volume that is naturally produced due to rainfall. As the treatment volume
fluctuates due to the amount of rainfall, natural disasters such as floods and the environment, when
operated with the self-supporting method, the sewerage operation company needs to shoulder all
Japanese Firm
SPC
Baguio Water District/ Baguio City
BTO Contract
Users
ServiceProvision
FinancialInstitution
User Fee(Sewer Charge, Environmental Charge)
Availability Payment(computed by performance level)
LoanWastewater TreatmentConstructionOperation and
Maintenance
Fee Collection
Local Firm
Invest(60%~)
Invest(~40%)
61
demand risks, which is a large burden for the operation company. Therefore, the decision was made
to review the system where a certain amount is paid to the operator from the public utility (Baguio
City) as an availability payment for the PPP project in which compensation is paid according to
sewage treatment operation / management performance. Since availability payment provides
payment for the provision of services at a certain level according to the requirements of operation
and maintenance that are determined in advance, regardless of fluctuations in charge income from
the service recipients, the private sector company does not need to shoulder the demand risk. In
addition, since the fluctuation in the amount paid by the public sector is comparatively small, this
has the merit of making it easier to formulate long-term fiscal expenditure plans.
Furthermore, when the PPP scheme was reviewed during this study, it was assumed that an SPC
(Special Purpose Company) in which Japanese corporations participate will be the entity that
develops the facilities and becomes the operator. The scope of the infrastructure to be developed,
operated and maintained by the Japanese corporation was assumed to be expansion, upgrading,
operation and maintenance of the existing sewage treatment facility which is the core project.
Calculation of the development cost for sewer culverts was also performed, but due to the fact that
improvements in efficiency and effects cannot be expected by having this work implemented by a
Japanese company and that developing the sewer culverts would result in a large increase in the
cost, the judgment was made that there are no financial merits in having the sewer culverts
developed or operated by the SPC.
Table 51 Development Scope by Public and Private Sectors
Sewage Treatment Facility
(Without Sewer Culverts)
Sewage Treatment Facility
(Including Sewer Culverts)
Public Private Public Private
Expansion of Sewage Treatment
Facility
✔ ✔
Rehabilitation of Sewage
Treatment Facility
✔ ✔
Development of Sewer Culverts ✔ ✔
Source: Prepared by Study Team
II. JV with Baguio City Water District
In the JV scheme for this feasibility study, it was assumed that the JV that is comprised of the
Baguio City Water District which operates the water supply services in Baguio City, Baguio City
and a joint Philippine-Japanese private sector entity will develop and operate the Baguio Sewage
Treatment Plant.
The Baguio City Water District is a public corporation which supplies water in Baguio City, and
has approximately 40,000 connections in Baguio City, including general households and businesses.
The total customer water consumption volume in the Baguio City Water District is 8.6 million
m3/day. The cash flow in the Baguio City Water District has already been stabilized by non-revenue
water reduction, increasing the number of connections, review of the O&M costs and other such
measures. The Water District recorded a net profit of 143 million PHP in fiscal 2017.
62
Table 52 Water Service Cash Flow in Baguio Water District (2017)
(Unit: Million PHP)
Item Amount
Sales 577
Operating Costs 424
Operating Profit 154
Other Profit (Costs) (11)
Net Profit 143
Source: Prepared by Study Team
The Baguio City Water District was not providing sewerage services as of February 2019, but the
provision of integrated water supply and sewerage services by a JV that involves the Baguio City
Water District and other entities will enable an increase in operational efficiency to be achieved for
personnel and maintenance expenses, which can be expected to result in stimulation of investment
activities to improve services.
In the following section, (4) decribes VfM when the project is implemented as PPP, (5) describes
feasibility in PPP, and (6) describes the same in JV.
Fig. 53 JV Scheme
Source: Prepared by Study Team
(4) VfM When Project Implemented as PPP
The life cycle costs when sewerage development / operation is implemented as a conventional
public utility and when it is implemented as a PPP (BTO) project were compared. The result of the
comparison is that VfM can be achieved through a PPP.
JapaneseFirm
JV Company
Baguio WaterDistrict
User
ServiceProvision
FinancialInstitution
User Fee(Water Supply Charge, Sewer Charge,
Environmental Charge)
LoanWastewater TreatmentConstructionOperation and Maintenance
Local Firm DPWHNSSMP
Baguio City
Drinking Water SupplyConstructionOperation and Maintenance
Invest Invest Invest Invest
63
I. Prerequisites
The evaluation period used was a total of 36 years, including the operation period of 30 years
from the completion of rehabilitation of the existing sewage treatment plant, taking into
consideration the economic useful life of the facilities, devices and equipment installed with the
project and similar project cases. The discount rate was set during the evaluation period taking 2019
as benchmark year.
The project financial costs consist mainly the initial investment costs and the O&M costs. A 5%
physical contingency was included in the total financial cost as well as a 1% price discretionary
reserve.
The costs assumed in this study are described in the table below. This review by the Study Team
resulted in the projection that the development costs could be substantially reduced compared to the
CDIA Pre-F/S if efficiency can be enhanced based on the assumption that integrated development
and operation will be implemented.
The income is the amount that is currently being collected from users in Baguio City, which
consists of a certain amount (30% of water supply basic charge). Such income is set and paid for by
businesses registered in the city together with taxes. At the current stage, since it is unclear whether
or not there will be an increase or decrease in income as a result of a change in the set charges or
other factor, it was assumed that the sewerage usage income to be obtained during the evaluation
period would be the same, and the review was conducted based on the income of Baguio Ciity as
of 2017.
Table 54 Financial Income (2017)
(Unit: Thousand PHP)
Annual Charge
Sewerage Usage Charge 17,646
Source: CEPMO
The income source for the private sector company when the project is implemented as a PPP will
be the availability payment amount set by the public authority. In this study, a target FIRR value of
10% was set as a criterion for a private sector company to participate in PPP projects in order to set
the availability payment amount.
II. Results of VfM Calculation
The VfM was calculated based on the above data. Due to the fact that the operation costs can be
minimized in addition to the development costs when this project is implemented through a PPP
scheme, the financial burden on the public utility side can be reduced. When sewer culverts are not
included, a VfM figure of 39% can be anticipated compared to a public utility which was planned
64
when the CDIA Pre-F/S was implemented. Therefore, the judgment can be made that
implementation as a PPP project will provide higher quality public services.
Fig. 55 VfM by PPP Project (Without Sewer Culverts)
(Unit: Million PHP)
Source: Prepared by Study Team
There will still be a financial burden on Baguio City when the project is implemented as a PPP
project, but the financial burden can be reduced and equalized compared to when Baguio City
independently procures the funds and develops / operates the facility itself.
Furthermore, even when the sewer culverts are developed with a PPP project, the VfM value is
20%, verifying that the financial burden on the public sector can be reduced in this case also.
65
Fig. 56 VfM by PPP Project (Including Sewer Culverts)
(Unit: Million PHP)
Source: Prepared by Study Team
(5) Feasibility Evaluation When Implemented as PPP Project
A feasibility evaluation was conducted when the project is implemented as a PPP project with the
above prerequisites. The private sector company can expect to make profits commensurate with the
capital invested when this project is implemented as a PPP project. In this study, an availability
payment was set based on the assumption that an FIRR value of 10% can be secured since
commercial banks have made the judgment that the sewage treatment business has a higher level of
profitability than loan interest. The NPV values based on this premise were 88 million PHP (without
sewer culverts) and 200 million PHP (including sewer culverts).
66
Fig. 57 Results of Feasibility Evaluation (Without Sewer Culverts)
(Unit: Million PHP)
Source: Prepared by Study Team
Fig. 58 Results of Feasibility Evaluation (Including Sewer Culverts)
(Unit: Million PHP)
Source: Prepared by Study Team
(6) Feasibility Evaluation When Implemented as JV with Baguio City Water District
In addition to the BTO method, a feasibility evaluation was conducted regarding providing
integrated water supply and sanitation services, taking into account a comparatively high level of
profitability of water supply services. Wages for engineers can be minimized through integrated
(500)
(400)
(300)
(200)
(100)
-
100
200
300
400
500
Revenue Investment O&M Tax Cash Flow
(500)
(400)
(300)
(200)
(100)
-
100
200
300
400
500
Revenue Investment O&M Tax Cash Flow
67
operation of water supply and sanitation services. On the other hand, since there is no reduction effect
from integrated operation for electric power and chemical costs, the required costs for water supply
and sewage treatment were totaled. In addition, the assumption was made that the water supply and
sanitation service income and the operation costs would be progressively increased in response of
inflation since 2017. The FIRR rate for water supply and sanitation services without sewer culverts
was 11.90%. When sewer culverts were included, the FIRR rate was 6.80%.
Fig. 59 Results of Feasibility Evaluation (JV without sewer culverts)
(Unit: Million PHP)
Source: Prepared by Study Team
(1,700)
(1,500)
(1,300)
(1,100)
(900)
(700)
(500)
(300)
(100)
100
300
500
700
900
1,100
1,300
1,500
1,700
Revenue Investment O&M Tax Cash Flow
68
Fig. 60 Results of Feasibility Evaluation (JV including Sewer Culverts)
(Unit: Million PHP)
Source: Prepared by Study Team
(7) Sharing of Feasibility Review Results with Related Organizations
When the feasibility review results were shared with related organizations (Baguio City Mayor,
Baguio City Budget Office, Baguio City Water District, DWPH, JICA Philippine Office, RCBC
(Rizal Commercial Banking Corporation), DBP(Development Bank of the Philippines), etc.), no
particularly significant concerns were raised.
(1,700)
(1,500)
(1,300)
(1,100)
(900)
(700)
(500)
(300)
(100)
100
300
500
700
900
1,100
1,300
1,500
1,700
Revenue Investment O&M Tax Cash Flow
69
4.Review of Benefits to Baguio City and the Philippines
This chapter reviews the benefits that the sewerage development project will provide to the
economy of Baguio City and the Philippines as a whole.
The review content for Baguio City and the Philippines as a whole is described in the table below.
Table 61 Framework for Benefit Review
Baguio City Philippines
Current Issues
• Deterioration of the existing
treatment plant has resulted in a
reduction in the treatment capacity,
as it cannot satisfy the need for the
population and the rising number of
tourists.
• Plans call for effluent standards to
be made stricter for Baguio City. It
is difficult to satisfy these standards
with the performance of the existing
treatment plant.
• Development of sewage treatment
facilities outside of Metro Manila is
extremely limited, and use of the
subsidy (NSSMP) for sewerage
infrastructure development is
limited.
• There have been cases of tourist
sites and other locations being
closed and inflow of tourists
restricted due to environmental
pollution or non-compliance
environmental laws and policies.
Benefit
Perspective
Verify contribution of sewerage
development project to CLUP which is
a master plan for development of
Baguio City while keeping solution of
the above issues in mind.
Verify whether solving the above
issues with a sewerage development
project in Baguio City can become a
model case and can be expected to
have ripple effects on other cities.
Source: Prepared by Study Team
(1) Review of Benefits to Baguio City
I. Issues for Baguio City
As stated in “(1) Background and Objective of Study in the Introduction”, the population of
Baguio City has increased by approximately three-fold from the time the existing sewage treatment
plant was developed in the 1980s and the current point in time (as of 2015). In addition, many
tourists visit Baguio City as a summer holiday destination (three times the population), and the
population including tourists is rising. On the other hand, deterioration, aging of infrastructure and
other factors have resulted in the treatment capacity of the existing sewage treatment plant dropping
from approximately 12,000 m3/day in 2010 to approximately 8,000 m3/day in 2013.
Additionally, the water quality guidelines and effluent standards in the Philippines have been
revised and made stricter, and there are currently plans to raise the standards for Baguio City from
the current level of Class C to Class A. In light of these factors, there is the possibility that the
existing sewage treatment plant cannot provide the required level of sewage treatment service
volume/quality.
70
Fig. 62 Transition in Baguio City Population and Number of Tourists
Source: Prepared by Study Team based on the Materials from Philippine Statistics Authority
II. Contribution of Sewerage Development Project to CLUP
The goals related to the Baguio City sewage treatment project are included in the CLUP, which
is a 10-year development plan from 2013 to 2023. Note that in the CDIA Pre-F/S proposed technical
plan related to the rehabilitation and expansion of the sewage treatment plant and is considered an
official plan for Baguio City for sewerage.
Table 63 Positioning of Sewerage Development Project in CLUP
(Sewerage development project included in blue frame)
Chapter Title
I. Baguio City Overview
II. Integrated Land Usage Plan
A. Vision and Mission
B. Goals / Strategy / General Policy (* Stated below)
C. Space Plan
D. Land Usage Plan
E. Priority Sector Programs/Projects/Activities (PPAs)
1. Solid Waste Management
2. Sewage Management
a. Development of Sludge Facilities
b. Development of Small-Scale Treatment Facilities
c. Expansion/Rehabilitation of Sewage Treatment Facility Owned by City
d. Development of Community Sludge Tanks Outside Existing Treatment
Facility (BSTP) Target
e. Inventory Related to Current Status of City Wastewater Treatment such as
Sludge Tanks, Connections to Sewers, etc.
637,298
1,115,264
301,926 318,676 345,366
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Tourists Population
71
f. Development of Small-Scale Sewage Treatment Facilities Outside BSTP
Target Area
g. Large Increase in Sewer Connections to Treatment Plant
h. Strengthen IEC 6 Activities Related to the Environment (Impact of
Climate Change)
3. Forest / Water Resource Management
4. Park Management
5. Air Quality Management
6. Water Resource Development/Water Quality Management
7. Land Management
8. Housing
9. Economic and Entrepreneur Development
10. Human Resource Development Program
11. Transportation
12. Communication Development Program
13. Water Quality Enhancement Project
14. Electric Power / Electrification
15. Public Building Development
16. Public Safety Program
III. Execution Plan
Source: Prepared by Study Team from CLUP
The content of CLUP II-B. (development goals/strategy) and contribution to achievement of the
said goals by the sewerage development project are organized below.
Table 64 Development Goals in CLUP and Strategy to which Baguio City Sewerage
Development Project is Expected to Contribute
Goal Main Strategy to which Baguio City Sewerage Development
Project is Expected to Contribute
Balanced Ecology Strengthen Enforcement of Environment Related Laws
Strictly enforce laws and regulations on anti-pollution,
littering, illegal tree cutting and other related laws.
Properly and strictly enforce national and local laws and
regulations on natural resources, physical and land uses
and the environment.
Faster Economic Growth Promote Tourism by Protecting/Improving Environment
Promote the city as prime tourist destination by preserving
and enhancing its natural environment.
Higher Levels and Culturally
Enriched Social Development N/A
6 Abbreviation of Information, Education, and Communication, surmise this refers to educational activity.
72
Efficient and Effective
Development Administration
and Management
Secure Administrative Responsibility/Accountability
Promote the elements of good governance in all
transactions or activities of the city such as, accountability,
transparency, competency, responsibility, predictability,
efficiency and effectiveness.
Cooperation Between National Government and Local
Government for Project Planning/Implementation
Pursue coordinated planning and implementation of
programs and projects of national government agencies
and LGUs.
Cooperation with Private Sector for City Investment Projects
Promote tripartite partnership between private investors,
labor, and public to gain support to the City’s Investment
Portfolio.
Increase Financial Revenue
Intensify revenue sourcing through increased tax
collection, identification of new sources of revenue,
implementation of fiscal laws and policies with the aim of
increasing income to improve quality services of the city.
Decrease Financial Expenditures
Reduce cost of local government services without
sacrificing its quality to increase fiscal capacity.
Boost Technical Level of City Government and Staff
Continue enhancing organizational and technical
competency of officials and staff.
Fund Procurement for Development of Large-Scale Projects
such as BOT
Explore alternatives to funding critical big development
projects such as BOT, bond flotation, grants, etc.
Efficient and Effective
Infrastructure Support
Facilities and Utilities
Provide Equal City and Public Services Throughout City
Provision of equitable distribution and allocation of urban
services, facilities and utilities in all areas following their
functional roles to the overall city development.
Source: Prepared by Study Team from CLUP
(2) Expected Benefits to the Philippines as a Whole
I. Issue 1 for The Philippines as a Whole and Each City: Delay in Sewerage Development in
areas beyond Metro Manila
Sewerage system development has proceeded in Metro Manila in the Philippines, but
development is extremely limited beyond it. The penetration rate of sewage treatment facilities is
above 10% in Metro Manila, but is only three to five percent outside of Metro Manila.
73
Table 65 Sewerage Infrastructure Development Status Inside/Outside Metro Manila
Inside Metro Manila Outside Metro Manila
Development
Scope
West District: Maynilad
East District: Manila Water
Only several cities
(Baguio, Vigan, Zamboanga7, etc.)
Penetration
Rate
West District: 11%
East District: 12%
(As of 2013)
3-5%
(As of 2013)
Source: Prepared by Study Team based on MWSS, 2014, “Water Supply and Wastewater Programs”, ADB, 2013,
“Water Supply and Sanitation Sector Assessment, Strategy, and Road Map”
As stated in “(1) Background and Objective of Study in the Introduction”, the government of the
Philippines created a subsidy system (NSSMP) in 2013 which makes up about 40-50%8 of total
development costs for sewerage infrastructure outside of Metro Manila. However it took five years
for the first project to be supported by the NSSMP subsidy to be carried out for in Zamboanga in
20189 . Furthermore, the project in Zamboanga was carried out through a conventional public
procurement process10.
II. Issue 2 for the Philippines as a Whole/Each City: Closure of Tourist/Other Locations Due
to Environmental Degradation
The increase in the number of tourists and other visitors to locations that do not have sewage and
other such facilities has resulted in the serious problem of environmental degradation in various
areas in the Philippines. President Duterte has issued orders to prohibit the entrance of tourists into
tourist destinations. Closure and penalty orders have been issued to tourist facilities and ordered
implementation of environmental rehabilitation programs in tourism regions, which have resulted
in stagnation of the tourism industry in regions which was considered a big blow to the local
economy.
Table 66 Current Status/Impact of Environmental Pollution in Tourist/Other Locations
Region Background/Status Impact
Boracay Island Visiting by tourists prohibited for six months
due to environmental pollution on the island
caused by increase in number of tourists.
Limits on number of visitors implemented
after island was reopened to tourists.
NEDA announced that it will
invest 25.27 billion Pesos
(Approx. 52.4 billion Yen)
for environmental
rehabilitation (15.89 billion
7 The sewerage infrastructures in Baguio, Vigan, and Zamboanga Cities have been developed in the 1920s and 1930s
by USA. 8 Response to interview that subsidy rate had been revised to 50% as of Aug. 2018 9 Confirmed in interview in November 2018 that budget was implemented in 2018 10 From response to interview in July 2018
74
Wastewater treatment facilities were
developed and illegally constructed
structures were removed.
Pesos to be procured from
private sector companies).
El Nido,
Palawan
Closure order issued for tourist facilities that
violate environmental related laws and codes
(environmental improvements implemented
when facilities not closed).
N/A Panglao Island,
Bohol
Manila Bay Water quality deteriorated due to household
sewage, industrial wastewater containing
harmful substances, percolating water from
garbage dumps and other wastewater inflow
(Number of bacteria coliform 3 times or
more allowable value).
Operation suspension order issued for
facilities in areas that do not have wastewater
treatment facilities, and declared that max.
Penalty of 200,000 Pesos per day (Approx.
416,000 Yen) would be imposed.
Rehabilitation program to commence in
2019 (minimum of 4 years).
Total cost of environmental
improvements projected to be
132 billion Pesos (Approx.
274.5 billion Yen).
Source: Prepared by Study Team using news report from NNA news, etc.
III. Benefits of Baguio City Sewerage Development Project on The Philippines as a Whole
The sewerage development project in Baguio City can be judged to be significant to the
Philippines as a whole from the following perspectives.
This development project is being implemented outside Metro Manila where the penetration
rate of sewage treatment facilities is substantially low.
Utilization of NSSMP is being reviewed for fund procurement.
A PPP scheme including private sector participation is being reviewed as an option.
Sewerage infrastructure development project includes environmental management in tourist
sites.
From the above points, the sewerage development project in Baguio City is envisaged as a
showcase for infrastructure development by LGUs through long term partnerships with the private
sector. It is anticipated that it will result in ripple effects on other LGUs and contribute to
environmental preservation and sustainable development of a balanced economy.
75
5.Review of Financing
In this chapter, based on the premise that an NSSMP subsidy (up to 50% of total development costs)
will be applied for a sewerage infrastructure development project, a review was conducted into the
fund procurement methods used by the private sector company which needs to cover the the remaining
50%. In addition, a description of the interview survey that was conducted with domestic and overseas
financial institutions as part of this review is also provided.
(1) Overview of NSSMP
The NSSMP was established through the Philippine Clean Water Act of 2004. It is a system that
provides a 50% subsidy by the central government to LGUs for sewerage infrastructure
development projects. The NSSMP has a goal of improving water quality in urban areas outside
Metro Manila and protecting public health in the Philippines by the year 2020, and HUCs including
Baguio City have been strongly urged to develop sewage treatment systems by this year (refer to
diagram below).
The DPWH has jurisdiction over the NSSMP, and the Environmental and Social Safeguards
Division (ESSD) is a unit in this department tasked to promote the NSSMP, functioning as the focal
point with related departments and divisions as well as serves as the supervising agency for NSSMP
as a whole (refer to diagram below).
Fig. 67 Goal/Objectives/Targets/Strategy of NSSMP
Source: Prepared by Study Team based on NSSMP Program Operations Manual (hereinafter referred to as “POM”)
1. By 2020, all LGUs have developed septage management systems and the 17 highly urbanized cities (HUCs) have developed sewerage systems.
2. By 2020, approximately 43.6 million people have access to septage treatment facilities and about 3.2 million will have access to sewage treatment facilities.
3. By 2020, PhP 26.3 billion has been invested in sanitation improvement projects.4. By 2020, about 346 million kilograms of BOD is diverted from the environment per year
as a result of the sewerage and septage management projects.
Goal
Objectives
Targets
To improve water quality and protect pubic health in urban areas of the Philippines by 2020.
1. To enhance the ability of local implementers to build and operate wastewater treatment systems for urban centers.
2. To promote the behavior change and supporting environment needed for systems to be effective and sustainable.
StrategyTo facilitate a bottom-up, demand-driven project development process by providing national government support and incentives.
76
Fig. 68 Implementation Organizations of NSSMP
Source: Prepared by Study Team based on NSSMP POM
Before an application is made to the NSSMP, it is necessary to formulate a plan for sewage
treatment and other details, followed by technical design and implementation of an F/S.
Subsequently, the LGU submits application documents to the DPWH for the NSSMP subsidy based
on the results of the F/S that was performed. Afterwards, when the application documents have been
positively appraised in the screening process done at the DPWH, the process proceeds to
implementation of actual project construction, operation, maintenance, evaluation and monitoring
following the procurement procedure. As stated in “(1) Background and Objective of Study in the
Introduction”, only Zamboanga City has made a successful application for NSSMP support as of
February11. The DPWH observed that one of the reasons for the lack of NSSMP applications and
adoptions is that there is no budget to implement the F/S required for NSSMP application, and it
has created a system that subsidizes the costs for the said F/S.
11 Budget implemented in 2018.
Policy
NSSMP Implementation Focal Point
Project Implementers
Project Facilitators
NEDA INFRACOMSub-committee on Water
Resources
NSSMP Committee
NSSMP Office(DPWH – ESSD)
Water Districts LGUs
Private Companies
DENR(WQMAs)
Industry Asscrr’s &
DonorsMWSS LWUA DOH DILG
77
Fig. 69 NSSMP Process
Source: Prepared by Study Team based on NSSMP POM
(2) Expected Fund Sources for This Project
In this project which will implement upgrade and expansion of a sewage treatment facility in the
Philippines, it is expected that the fund sources for the 50% portion of the development costs that
will not be covered by the NSSMP subsidy will be as shown in the diagram below. The fund sources
are roughly divided into public funds and private sector funds. It is expected that the public funds
for Baguio City which is an LGU will consist of city government finances and donor funds.
Furthermore, it is also expected that loans will be made with concessional conditions, which include
project loans and two-step loans.
Fig. 70 Expected Fund Sources for This Project
Source: Prepared by Study Team
First, regarding the financial situation of LGUs, the annual revenue and expenditures of Baguio
City (Fiscal 2016) both amounted to approximately 1.6 billion Pesos (approximately 3.4 billion
Yen)12. It shows that it would be difficult for Baguio City to independently cover the costs of this
project for the initial few years when this project is implemented.
12 OANDA rate as of Jan. 22, 2019 (1 Peso = 2.08 Yen)
Sanitation Planning
Sewerage / Septage System
Design
Project Feasibility
Application and Selection
Procurement
Construction
Operation and Maintenance
Monitoring and Evaluation
78
Next, there is the possibility that donor funds may be provided by means of loans. These loans
consist of development funds that are made to developing countries with favorable conditions such
as low interest and a long concession term in order to support efforts to facilitate the development
of developing countries. Normally, the conditions under which loans are extended are determined
by considering the income level and other conditions in the target country13. Furthermore, loans are
classified into project type loans and non-project type loans. Project type loans consist of (1) Project
loans, (2) Loans for Engineering Services (E/S), (3) Development financing loans (two-step loans)
and (4) Sector loans. Non-project type loans consist of (1) Development policy loans, (2) Product
loans and (3) Sector program loans. It is thought that the loans that can be applied to this project
consist of (1) Project loans and (2) Development financing loans (two-step loans), which are project
type loans.
In addition, when considering the private sector funds that may not be independently invested in
this project, it is expected that the PPP scheme will be used, with funds provided by public and
private financial institutions. The banking sector in the Philippines is dominated to a large extent in
terms of the scale of total assets by the private banks centered around conglomerates and
government based banks. Specifically, the top five banks in the Philippines in the diagram below
which include Banco Deoro (BDO) (Sy Conglomerate), Metropolitan Bank and Trust Company (Ty
Conglomerate) and Bank of the Philippine Islands (BPI), account for the majority of assets in the
Philippines.
Many PPP projects obtain funds by means of fund transfer within corporate groups beneath
conglomerates, or by procuring funds by appropriating corporate financing by private sector
constituent companies. When there are projects that require large-scale fund procurement, banks
procure funds by forming syndicates.
However, when funds are procured by transferring funds within a corporate group beneath one
of the above conglomerates or by other such means, there are rules on DOSRI (Directors, Officers,
Stockholders, and Related Interests of the bank) for the financial activity within the group set forth
by the Bangko Sentral ng Pilipina (BSP) (Central Bank of the Philippines). Consequently, there are
transactions between conglomerates because of the lending restrictions within groups.
13 The Philippines is classified as a low/middle income country.
79
Fig. 71 Total Asset Share by Top 10 Banks and Other Banks (As of March 2018)
Source: BSP
As stated in “3. Review of Project Implementation Scheme and Project Feasibility”, it would be
difficult to recover the investment for this project with income for sewerage related charges alone,
and due to the fact that there are risks posed by the difficulty with service charge collection itself, it
was assumed that an availability payment type of PPP project would be adopted. The judgment was
made that Baguio City could shoulder the financial burden for this type of PPP project in view of
the financial situation of the city. The financial situation of Baguio City was briefly described above.
The city revenue of approximately 1.6 billion Pesos consists of approximately 700 million Pesos
(approximately 1.4 billion Yen) from taxes and other internal revenue (independent revenue
source)14, and approximately 900 million Pesos (approximately 1.8 billion Yen) from IRA (Internal
Revenue Allotment) and other external revenue15. Furthermore, IRA comprised approximately 600
million Pesos (approximately 1.3 billion Yen) of the external revenue16. In the Local Government
Code of the Philippines, since it is stipulated that each LGU should use 20% or more of the IRA for
local development projects, Baguio City must spend approximately 120 million Pesos
(approximately 260 million Yen)17 or more on development projects18. The sources of tax revenue
in the Philippines are described in the table below. Baguio City is allowed to collect more types of
14 OANDA rate as of Jan. 22, 2019 (1 Peso = 2.08 Yen) 15 Subsidy from the government; 23% of the total budget for IRA is allocated to “Cities” which Baguio City is
classified as. Out of the allocated portion of IRA, half of the budget is then allocated to each LGU (Province, City,
Town, Barangay) according to the population ratio, 25% according to the land area ratio, and the remaining 25% is
equally allocated to all LGUs. 16 Same as the above 17 Same as the above 18 Confirmed by interview of Baguio City Budget Office in Jan. 2019.
80
taxes compared to other general LGUs by virtue of it being an HUC. In addition, the tax rate upper
limit is set at a higher level than for provinces and towns. From this perspective, it is thought that
Baguio City has more internal revenue compared to other LGUs. Baguio City is considerably less
dependent on Internal Revenue Allotments (IRA) (percentage of IRA share in the annual revenue
of the city is low) in spite of the fact that the IRA calculation method is beneficial for Baguio City
(since the allotment amount is determined based on the population and land area ratios). The
dependence rate of Baguio City on IRA was around 40% for the 5 years between 2012 and 2016 as
shown in the table below, which is a lower value compared to the average value for cities of 66%
and the average value for provinces and towns of 84%.
Table 72 Types of Tax Revenue Sources for LGUs
Type of Tax Province City Town Barangay19
Business Tax X O O X
Real Estate Tax O O Share Share
Idle Land Tax O O X X
Real Estate Transfer Tax O O X X
Printing/Publishing Tax O O X X
Crushed Stone Resource Tax O O Share Share
Delivery Vehicle Tax O O X X
Recreational Facility Tax O O Share X
Influential Individual Tax O O X X
City/Town Tax X O O Share
Patent Tax O O X X
Source: Local Government Code of the Philippines, materials from Philippine Department of Finance
Note: “Share” indicates that a certain amount is allocated from local government that is allowed to collect the
tax.
Table 73 Dependence Rate of Baguio City and Other LGUs on IRA
2012 2013 2014 2015 2016
Baguio City 38% 35% 37% 40% 42%
Average (Province) 84% 83% 85% 84% 84%
Average (City) 66% 66% 66% 67% 66%
Average (Town) 81% 83% 86% 86% 85%
Source: Prepared by Study Team from Philippine Department of Finance website
19 Barangays are smallest local government unit in the Philippines that comprise cities and town, and implement
administrative services.
81
(3) Interview Survey of Domestic and Overseas Financial Institutions
I. JICA
Interviews with the representatives of the JICA Headquarters and JICA Philippine Office
confirmed the possibility of providing funds by means of a two-step loan in case this project is
actually implemented. Two-step loans comprise a portion of project type loans as stated above, but
in general the required funds are provided in order to implement a certain policy such as promotion
of a specific sector or development of the local infrastructure for the poor through the development
bank or other financial institution in the country borrowing the funds20. A Japanese ODA Loan
Agreement for two-step loans was concluded with the DBP in the Philippines for “Environmental
Development Projects” in 2008. Medium and long-term loans were granted in this project in order
to facilitate fund-raising required for four target sectors through the DBP with the objective of
protecting the environment in the Philippines: a. Water supply/water quality preservation
(development of water supply / sanitation facilities), b. Renewable energy, c. Prevention of
industrial pollution and d. Disposal of solid, medical, and harmful waste. The Philippine Water
Revolving Fund (PWRF) was established in cooperation with the DBP in order to facilitate loans to
the a. Water supply/water quality preservation sector, under which funds reimbursed from projects
are saved, and this fund is used to make loans to new projects as the means to provide funds on a
continuing basis. The PWRF scheme is shown in the diagram below.
Fig. 74 PWRF Scheme
Source: Prepared by Study Team based on materials from the World Bank
The main conditions for this project are described below.
20 JICA website: https://www.jica.go.jp/activities/schemes/finance_co/about/kind.html
DOF
JICA USAIDDBP
Private Finance Institutions (PFIs)
Domestic Banks
LGU Guarantee Corporation
(LGUGC)
Water Service Providers(LGUs and WDs)
PWRF
Sovereign Guarantee
StandbyCredit Line
DebtService
Credit Risk Guarantee
Co-Guarantee
Concessional Funds
Debt Repayment
Commercial Loans
Loans
82
Table 75 Loan Amounts and Conditions for “Environmental Development Projects”
Amount
(Million Yen)
Interest (%/Year) Repayment Period/
Grace Period
(Years)
Procurement
Conditions Main Activities Consulting Services
24,846 0.65* 0.01 40/10
General Untied 1.4 - 30/30
* Favorable conditions are applied to portion that contributes to global environment (water supply that contributes to
poverty reduction, renewable energy, sewerage services, prevention of industrial pollution, waste disposal)
Source: Prepared by Study Team from JICA website
Loans were granted for over 70 projects in the above 4 sectors between 2008 and 2018 to LGUs,
private sector companies and public corporations. Two case samples of these projects are provided
below.
The present project is a small-scale project compared to normal loan projects, but the judgment
was made that fund procurement could be facilitated by utilizing a two-step loan that indirectly
targets multiple projects, including small-scale projects like the above cases.
Case 1. Bulk Water Supply Project
Target Sector: Water supply/water quality preservation (development of water supply /
sanitation facilities)
Target Area: Metro Cebu
Sublessor: JV with Cebu Manila Water Development, Inc. and Cebu province government
Loan Amount: Approx. 800 million Pesos
Project Content: Development of water supply sourced from Luyang River. The Metro Cebu
Water District (MCWD) which supplies 56% of the water needed in Metro Cebu depended on
saline groundwater at the time. This project aimed to obtain an alternative source of water and to
newly connect approximately 230,000 household to the water supply system by 2027.
Case 2. Paranaque City Sewage Treatment Plant Development Project
Target Sector: Disposal of solid / medical / harmful waste
Target Area: Paranaque City
Sublessor: Maynilad Water Services, Inc. (Maynilad)
Loan Amount: Approx. 17 billion Pesos
Project Content: Development of sewage treatment plant. Facility with capacity of 76,000
m3/day will be developed to treat sewage from 500,000 households in 9 Barangays in Paranaque
City. JFE Engineering received contract for facility design, construction and commissioning.
83
II. DBP
The DBP is a state-run financial institution in the Philippines which serves as the intermediary
financial institution for the above two-step loan. It was confirmed by means of interviews that the
Baguio City Water District has taken out loans from DBP before, and even though no loans have
been made to Baguio City itself, Baguio City is recognized as a safe borrower. In addition, the lack
of investment funds for the sewerage service sector in the Philippines is viewed as a problem, hence
DBP has an intention of actively making loans to this sector. It will be also possible to consider a
loan for this project, both in PPP and JV schemes.
III. RCBC
Rizal Commercial Banking Corporation (RCBC) is a large commercial bank in the Philippines,
established in August 1960 as a member of the Yuchengco Group, a Filipino-Chinese conglomerate.
Since it was confirmed by means of interviews that loans can be considered for this project, it will
be necessary to continue to share information.
(4) Review of Financing
When the financing environment in the Philippines, interview surveys of domestic and overseas
financial institutions and the financial situation of Baguio City are factored in, the judgment can be
made that the JICA two-step loan scheme or the PPP or JV scheme can be utilized as the financing
method for the portion that is not covered by the subsidy from the NSSMP.
84
6. Review of Future Policy
A proposed project scheme was compiled based on the above results, opportunities to share
information with related institutions were created, the issues that need to be addressed to achieve the
project were organized and the future policy was examined.
(1) Sharing Results of This Feasibility Study with Local Public Institutions (Baguio City, DPWH,
PPP Center)
I. Baguio City
When the results of this feasibility study were shared with Baguio City, the city stated that it
considers implementation of this project to be an urgent issue, that it wantsed to file an application
with the NSSMP, and that it wanted the Study Team to update the NSSMP application with the
technical and financial analysis content that was implemented as a main part of this feasibility
study since the existing NSSMP application draft that was prepared in the Pre-F/S did not include
these aspects.
In addition, it was confirmed from Baguio City Water District that it wished to integrate water
supply and sanitation services in the future. Therefore, although there is not a concrete plan at
present, it is thought that it is possible for the NSSMP application to first be made by Baguio City,
with operation to be subsequently transferred to the Baguio City Water District, with water supply
and sanitation service operation to be implemented as a JV.
II. DPWH
When the results of this feasibility study were shared with the DPWH, it was confirmed that
Baguio City is a priority LGU for sewerage system development, and that preparations have been
made for the implementation of an evaluation if an application is made to the NSSMP. A Letter of
Intent (LOI) of NSSMP was submitted several years ago by Baguio City to the DPWH, but an actual
application to the NSSMP has not been made, and it was confirmed as a result of this feasibility
study that the DPWH wanted an application to be submitted by Baguio City to the NSSMP if this
is possible. In addition, it was confirmed that an application can be made for subsidy for the cost of
an F/S under a system that was newly created by the DPWH to support LGUs in filing an NSSMP
application in the event the survey content of this feasibility study is insufficient.
III. PPP Center
When the results of this feasibility study were shared with the PPP Center, it was confirmed that
the PPP Center is prepared to conduct a review for this project if an application is made. In addition,
if it is judged that the judgment is made that the information from the existing Pre-F/S is still valid
at this point in time, there would be no problem for the PPP Center with utilizing such information
to make an application for a PPP project after being updated taking into consideration the review
results of this feasibility study. Furthermore, it was confirmed that the Project Development and
Monitoring Facility (PDMF) can be utilized, which is a revolving fund at the PPP Center that
subsidizes the costs to facilitate F/S implementation and transaction advisory for projects that are
feasible under a PPP scheme.
85
(2) Steps After This Study
I. NSSMP Application
The first step required after this study is an application for the NSSMP subsidy, regardless of the
procurement method. Baguio City prepared an NSSMP application proposal when the existing Pre-
F/S was implemented, but these materials need to be updated, including addition and updating
information derived from this feasibility study. Therefore, the study team for this feasibility study
should update the NSSMP application with the technical and financial analysis results from this
survey project, explain the content to the new mayor21 after the incumbent mayor’s current term is
concluded, and submit the entire application for NSSMP support to the DPWH. In parallel with this
work, the continued sharing of information by the Study Team with the DPWH will help facilitate
smooth approval of the application.
In addition, in the event the PPP scheme is used as the fund procurement method, a separate PPP
application will be required for appraisal purposes, which will be made after approval of the NSSMP
application. It was confirmed in a meeting at the PPP Center that the NSSMP application must first
be made since a PPP project cannot be approved unless the fund source has been verified. The flow
of the NSSMP application and PPP application process is described in the diagram below.
Fig. 76 Flow of NSSMP Application and PPP Application Process
Source: Prepared by Study Team based on the NSSMP POM, revised BOT law and other materials
21 Will be described later, but the current mayor of Baguio City is serving third term (final term), and there will be a
mayoral election in May 2019, after which the current mayor will be replaced.
86
II. Bid Tendering
Since the LGU must be the entity to tender an application for NSSMP support, when this project
actually begins to take shape and is approved for subsidy, it will proceed to the bidding process.
For example, the World Bank has specified four types of sewage treatment technology candidates
for sewerage development projects in the Philippines (Examples: Conventional Activated Sludge,
Membrane Bioreactor, Moving Bed Bio-film Reactor and Sequence Batch Reactor), with the
selection of the method used left up to the proposal made by the bidder.
Based on this case, the following quality items should be looked at during the evaluation process
in order to disseminate high quality Japanese infrastructure technology overseas.
● Economic efficiency of LCC concept
● Stability of 24-hour facility operation capability
● Ability to restore operation in the event of a disaster
● Environmental considerations
● Ease of maintenance
(3) Challenges Towards Project Achievement
The challenges that need to be addressed to facilitate achievement of this project consist of
securing 50% of the funds required to pay for development costs, review and finalization of
agreement between Baguio City government and Baguio City Water District on the division of work
(or period / method used when work is to be transferred), competition with other private sector
proposals, the inevitable change of the local chief executive of Baguio City and other such issues.
In order to facilitate implementation of this project, 50% of the development costs which will not
be covered by the NSSMP subsidy need to be covered from other fund sources. However, since
those fund sources differ depending upon the project scheme, it will be necessary to continue to
review multiple possibilities, including financial institutions with which opinions are currently
being exchanged. This is to be done in parallel with the review of the project scheme,
Regarding the division of work between the Baguio City government and Baguio City Water
District, as stipulated in the Philippine Clean Water Act of 2004, the Water District should be in
charge of sewage treatment, and although the Baguio City government and Baguio City Water
District recognize this, concrete plans for the transferring of this work have not been made.
Therefore, it will be necessary to clarify these plans when implementing this project, and perform
implementation of operation / maintenance for this project according to these plans.
Furthermore, in preparation for implementation of this project, it will be necessary to confirm
how the local government would regard unsolicited proposals that were made for the sewage
treatment plant in Baguio City.. As of February 2019, it has been confirmed that a private sector
proposal was made by Metro Pacific Investments Corp. (the largest investor of Maynilad the water
supply sanitation service concessionaire in the West District of Metro Manila), but according to an
interview with Baguio City, an examination by the PPP Selection Committee22 is not in progress
due to the fact that the information required in the Baguio City Public-Private Partnership for the
People Initiative Code is lacking. It will be necessary to continue to share information with Baguio
City and the PPP Center for this project and pay close attention to any ensuing developments in
22 Committee in LGU that implements examination and other work for PPP projects.
87
relation to this.
Finally, regarding conclusion of the term of of the incumbent mayor of Baguio City, regulations
in the Philippines limit mayors to three consecutive 3-year terms. As of February 2019, Mr.
Mauricio Domogan, the current mayor of Baguio City, is serving his third and final consecutive
term as mayor, which started in June 2010, and a mayoral election will be held in May 2019, after
which the current mayor will have a successor. Therefore, the various plans that have been worked
on with the current mayor of Baguio City will not necessarily continue, and it will be necessary to
explain and convince the new mayor based on the merits of this project. On the other hand, since
this project qualifies as an issue that should be urgently solved by Baguio City, at the same time that
mainly the technical issues are discussed and determined with CEPMO, it will be necessary to
continue to share information with the Budget Office. Furthermore, as the approval by the city
council is required for Baguio City to implement this project, it would be useful to make requests
that members of the incoming city council to examine the result of this study.
In addition, after this project is implemented in Baguio City, it is expected that other markets in
the Philippines can be developed by consortiums of Japanese corporations. In this case, narrowing
down of the target potential markets should be considered based on: (1) Cities with a population of
200,000 or more (from the perspective that “certain level of market scale can be expected”), (2)
HUCs that have been requested to develop water supply/sanitation services by the Philippine Clean
Water Act of 2004 (from the perspective that “this is important politically and there is urgency”),
and (3) City that has applied for F/S cost subsidy by DPWH and received the subsidy (from the
perspective that city “Has intention to proceed with sewerage development as an LGU”) (list of
cities is provided in table below).
In the event this project is implemented, it will be necessary to use know-how acquired through
this project by holding seminars and other events for these cities in order to share, advertise and
otherwise disseminate information on this project in Baguio City.
88
Table 77 List of Cities in the Philippines with Population of 200,000 or More
Source: Prepared by Study Team using Philippine Statistics Authority website, Philippine Department of Home
Affairs website, interview with DPWH and other materials
(4) Future Schedule
The study team for this feasibility study will first update the NSSMP application, make a report
on this survey project to the new mayor after he/she is inaugurated in June, update the NSSMP
content as necessary in July, and file the application.
In parallel with this work, discussions and other interactions with local partners will proceed.
# CityPopulation
(2015)Province Region HUC
F/S subsidy from
DPWH
1 Cagayan de Oro 675,950 Misamis Oriental X ✔ ✔
2 General Santos 594,446 South Cotabato XII ✔ ✔
3 Bacolod 561,875 Negros Occidental VI ✔ ✔
4 Iloilo City 447,992 Iloilo VI ✔ ✔
5 Angeles 411,634 Pampanga III ✔ ✔
6 Butuan 337,063 Agusan del Norte XIII ✔ ✔
7 Puerto Princesa 255,116 Palawan IV‑B ✔ ✔
8 Davao City 1,632,991 Davao del Sur XI ✔
9 Cebu City 922,611 Cebu VII ✔
10 Zamboanga City 861,799 Zamboanga del Sur IX ✔
11 Lapu‑Lapu 408,112 Cebu VII ✔
12 Mandaue 362,654 Cebu VII ✔
13 Baguio 345,366 Benguet CAR ✔
14 Iligan 342,618 Lanao del Norte X ✔
15 Lucena 266,248 Quezon IV-A ✔
16 Tacloban 242,089 Leyte VIII ✔
17 Olongapo 233,040 Zambales III ✔
18 Antipolo 776,386 Rizal IV-A
19 Dasmariñas 659,019 Cavite IV-A
20 Bacoor 600,609 Cavite IV-A
21 San Jose del Monte 574,089 Bulacan III
22 Calamba 454,486 Laguna IV-A
23 Imus 403,785 Cavite IV-A
24 Santa Rosa 353,767 Laguna IV-A
25 Tarlac City 342,493 Tarlac III
26 Biñan 333,028 Laguna IV-A
27 Lipa 332,386 Batangas IV-A
28 Batangas City 329,874 Batangas IV-A
29 San Pedro 325,809 Laguna IV-A
30 General Trias 314,303 Cavite IV-A
31 Cabuyao 308,745 Laguna IV-A
32 San Fernando 306,659 Pampanga III
33 Cabanatuan 302,231 Nueva Ecija III
34 Cotabato City 299,438 Maguindanao XII
35 San Pablo 266,068 Laguna IV-A
36 Tagum 259,444 Davao del Norte XI
37 Malolos 252,074 Bulacan III
38 Mabalacat 250,799 Pampanga III
39 Talisay 227,645 Cebu VII
40 Ormoc 215,031 Leyte VIII
41 Meycauayan 209,083 Bulacan III
42 Marawi 201,785 Lanao del Sur ARMM