Septage Management Revolving Fund SMRF 264 MEMBER COMPANIES

Septage Management Revolving Fund (SMRF)

264 MEMBER COMPANIES PBSP is the largest business-led social development NGO in the Philippines

PBSP Member-companies

Our National Reach Health Education Environment Livelihood

PBSP is the business sector’s response to reduce poverty in the country 264 corporate members 6, 800 projects implemented nationwide 7. 6 million beneficiaries reached Ph. P 10. 8 billion funds disbursed 45 years of leading the collective response of business to address poverty Ph. P 2. 4 billion members’ contributions

4 Focus Sectors Health Tuberculosis, HIV/AIDS, and maternal and neonatal child health Environment Responding to climate change challenges through waste management and rehabilitation of watersheds and coastal ecosystems, provision of water systems and disaster risk reduction Education Access to quality basic elementary and secondary education Livelihood and Enterprise Development Improving income of households by working along the value of chain and advocating inclusive business

We seek sustainable solutions to systemic problems We believe that addressing a systemic problem would require a collective, multi-sector engagement working towards a common agenda. COLLECTIVE ACTION SYSTEMIC PROBLEM SUSTAINABLE SOLUTIONS SYSTEMIC CHANGE INCLUSIVE BUSINESS We work with companies and communities to forge partnerships in developing business solutions that can bring about sustainable outcomes for the poor in a way that benefits business as well.

We deliver social impact through meaningful partnerships by leveraging business sector investment in social development THE GLOBAL FUND TO FIGHT AIDS, TUBERCULOSIS, AND MALARIA USAID HEALTH DFAT-AUSTRALIA AECID - FHD EDUCATION UNDP BUSINESS CALL TO ACTION WORLD BANK LIVELIHOOD WORLD FOOD PROGRAMME INTERNATIONAL RESCUE COMMITTEE ENVIRONMENT

Septage Management Revolving Fund (SMRF) • A $ 500, 000 revolving fund from Oxfam for establishment of LGU Septage Management Systems • For lending to LGUs and/or water districts; or with own enterprise entity • Priority are Yolanda-affected areas (Year 1) but may later be expanded to other municipalities (Year 2)

Started application process • Palo, Leyte • Tanauan, Leyte • Catbalogan, W Samar Needs re-orientation • Bantayan, Cebu • Madridejos, Cebu • Sta. Fe, Cebu Conducted Introductory Mtg or WS/ Interested in accessing the loan • Daanbantayan, Cebu • Medellin, Cebu • San Remegio, Cebu • Ajuy, Iloilo • Estancia, Iloilo • Sara, Iloilo

Septage Management Revolving Fund (SMRF) • Fund is for purchase of vacuum trucks and/or establishment of treatment plant • Provision of technical assistance to LGUs to develop business plan, craft their ordinance, design treatment facility, develop promotion plan, etc.

Project Steering Committee • Purpose o Established to assist PBSP in the direction and decision making for the project, in particular the management of loans taken by municipalities from the revolving fund and the provision of technical advice o Aims to influence national policy in relevant areas, and share and promote good practice

Project Steering Committee • Members • • Oxfam GB PBSP Department of Environment and Natural Resources (DENR) Department of Interior and Local Government (DILG) Department of Health (DOH) Department of Public Works and Highways (DPWH) Laguna Lake Development Authority (LLDA)

Roles of PBSP • Provide technical assistance to LGUs in setting up their septage management programs, together with Oxfam • Receive and review LGU/water district loan applications, including the conduct of due diligence for LGUs/WDs applying for the fund • Present to the Steering Committee to seek their recommendations • Approval of LGU/WD applications

Roles of PBSP • Monitor and ensure SMRF-recipients’ compliance to the terms of the financial advance • Evaluate and report project progress • Maintain accounting and recording system for all transactions • Continue to manage the SMRF after the pilot phase • Undertake resource mobilization activities to sustain and grow the revolving fund

Institutional Strategies 1 Partner with water service providers (fully owned, co-owned, supported) 2 Partner with other adjacent local government units 3 Partner with private (outsource septage management components, International or local NGO (Public-private partnership) 4 Manage all components

Partnership with Water Service Provider Item Local Govt. Legislation Adopting Septage Management Yes Capital and Operating Expenses 50% Desludging of Septic Tanks Operation of Septage Treatment Plant 50% Yes Collection of Tariff (septage user fee) Share of Net Income Water Service Provider Yes 50% Case - Dumaguete Septage Management System

Partnership with Water Service Provider Item Local Govt. Water Service Provider Legislation Adopting Septage Management; Community Support Yes No Capital and Operating Expenses 100% Desludging of Septic Tanks Yes Operation of Septage Treatment Plant Yes Collection of Tariff (septage user fee) Yes Share of Net Income 100% Case - Baliuag, Bulacan Septage Management System

Fully Owned by LGU San Carlos City, Neg. Occidental (Owns and Operates Water System) Bayawan City, Negros Oriental (Has Water District) Legislation Adopting Septage Management; Community Support Yes Capital and Operating Expenses Yes Desludging and Transport of Septage Outsource Yes Operation of Septage Treatment Plant Yes Collection of Septage User Fee with Water Bill Yes Water District Inst. For Global Environmental Strategies, Japan GTZ; Eco. Gov. Item Training on Septage Management Systems

Partnership Between Adjacent LGUs Municipality of Alabel - possesses a septage treatment plant - too expensive to operate alone General Santos City - adopted septage management ordinance with option to outsource services - needs a septage treatment plant Status - Under negotiations for treatment of septage from General Santos City at Municipality of Alabel.

Regional Septage Management Systems Regional System for Los Banos, Calamba, San Pablo and Bay Private Enterprise Adoption of Four Separate Septage Management Ordinances; Community Support Yes Capital and Operating Expenses No Yes Desludging and Transport of Septage No Yes Operation of Septage Treatment Plant No Yes Collection of Tariff (septage user fee) No Yes Share of Any Net Income No Yes Item

Partnership with International/National NGO Item INGO Loan as Start-Up Capital and Local Govt. Intl. NGO Technical Assistance and Revolving Fund from INGO Legislation Adopting Septage Management; Community Support Yes Desludging of Septic Tanks Yes Operation of Septage Treatment Plant Yes Collection of Tariff (septage user fee) Yes No No No Case – Some Towns Damaged by Typhoon Haiyan

Application Process Flow Submission of application for loan + requirements Conduct of due diligence of LGUs/water districts Approval of loan Awarding Monitoring and Evaluation

Policies and Procedures for the Operation of the Revolving Fund LGU Qualifying criteria • Is in a Yolanda-affected area • Has provided land for septage treatment plant • Has a business plan that supports an affordable tariff sufficient to repay the revolving fund loan • Passed an ordinance that imposes the tariff* • Underwent a due diligence assessment Amount and terms of revolving fund • Funding terms will be based on the recommendation of PBSP after the due diligence assessment • Loan can be more or less Php 4. 5 million per LGU/WD (inclusive of PBSP admin fee) • Repayment must be within 5 years (with 1 year grace period)

Policies and Procedures for the Operation of the Revolving Fund Equity requirement Land for the treatment plant/truck Interest rate/ Admin fee 0% interest 5% admin fee to be deducted (one-time fee) Fund release schedule 1 st release: two weeks after acceptance of complete requirements 2 nd release: when 80% of 1 st tranche funding has been disbursed, submission of work and financial plan to complete the project and report on percentage of work completed Payment schedule Quarterly payments; Grace period of up to 1 year will be allowed depending on cash flow

Policies and Procedures for the Operation of the Revolving Fund Default and penalties Penalty charge consistent with the financial sector (1% per month on unpaid amortization) If monthly amortization remains unpaid for 30 days, a recommendation to the SMRF Steering Committee will be submitted which may include a restructuring of the account.

Policies and Procedures for the Operation of the Revolving Fund Application documents 1. 2. Letter of Intent and accomplished application form 3. 4. Copy of local ordinance 5. Land ownership document (site of treatment plant): TCT/OCT (stamped/signed issued by the local Registry of Deeds) with latest valuation of property and tax declaration 6. ECC (Environmental Compliance Certificate) or CNC (Certificate of Non-Coverage) Copy of Septage Management Plan with business plan that includes repayment and info on source of repayment funds WD Board Resolution signifying intent to apply for funding and authorizing the General Manager and Treasurer to sign documents

Policies and Procedures for the Operation of the Revolving Fund Due diligence documents 1. Audited Financial Report / COA Report in the last 3 years (should have no significant findings) 2. List of management staff/Project Management Team who will be involved in the project and their profiles/bio-data 3. 4. 5. Annual Investment Program (for LGUs) Seal of Good Housekeeping (an advantage but not required) List of loans in the last 3 years and credit standing / Certificate of Maximum Borrowing Capacity issued by the DOF Bureau of Local Government Finance (BLGF)

Policies and Procedures for the Operation of the Revolving Fund Additional requirements necessary to process and release the funding 1. 2. 3. Promissory note for every fund release/availment 4. Signed agreement between LGU/WD and PBSP Unregistered REM or chattel mortgage Opening of a bank account specifically ring-fenced for SMP (funds will be transferred through this account)

Thank you! Philippine Business for Social Progress PSDC Building, Magallanes cor Real Streets, Intramuros, Manila, Philippines Tel: (+63 2) 527 -7741 to 48 Fax: (+63 2) 527 -3747 Email: pbsp@pbsp. org. ph www. pbsp. org. ph