Financing Sanitation Projects

Financing Sanitation Projects

Defining Sanitation• Safe management of human excreta. • Sanitation MDG target looks at improved sanitation

facilities• Improved facility prevents contact with human

excreta:– Flush or pour-flush to latrine pit, septic tank or piped sewer– Ventilated improved pit (VIP) latrine– Pit latrine with slab– Composting toilet

• Having (access to) a toilet is important, but what happens after defecation is even more important

• 66% of SE Asians have a toilet. Only 4% connect to piped sewer

Sanitation - important Millennium Development Goal

800 million East Asians lack adequate sanitation

Some dirty realities• 190,000 deaths each year from diarrheal disease,

mostly children• Millions suffer indignity and deprivation

associated with the need to defecate in public• Many more millions, their neighbors, suffer the

unpleasant outcomes• Marginalized poor are burdened most by invisible

costs of inadequate sanitation• Reaching the Sanitation MDG is unlikely to benefit

the worst-affected

Strategic investments needed to close sanitation gap

In the past• Emphasis on building infrastructure rather than delivering

sustainable improvements to sanitation services• Poor arrangements for operation and maintenance resulting

in disrepair• Very little community involvement

In the future• Promote self-financing of sanitation facilities by households• Use public finance to stimulate demand for improved

sanitation, subsidize large scale public infrastructure to make it bankable

• Involve private sector and stimulate innovative local solutions

Are sanitation projects bankable?

• Micro-financing of household toilet and on-site disposal is especially feasible with households in dense urban areas

• Communal discharge and treatment solutions can be feasible if users pay cost-recovering fees

• Rehabilitation of defunct wastewater treatment plants is feasible if user fee is charged to those connected to sewer

• Government subsidies may be needed to cover some capital costs

User fees are key!

Sewer System & WWT Plant, Nuwara Eliya, Sri LankaProject Profile• 6 kilometers of sewer lines• Anaerobic Baffled Reactor Tank• Mechanized treatment systemTotal estimated Cost - $250,000

280 Homes      

$250,000 infrastructure cost    

60% subsidy amount    

$100,000 Amount to borrow    

$10,000Annual depreciation payment (10 years)    

$10,000 Annual interest payment    

$20,000 Total annual payment    

$71 Cost per home per year    

$9 Operation cost per year    

$0.22 Dollars Per Day    

Pro forma:5% rule: Pay no more then 5% of annual income on WATSAN:• Annual income = $3750• Annual water bill = $75• Annual sewer bill = $80• 5% of $3750 = $187.50TOTAL WATSAN = $155/yr

Is Project feasible?

√

WTP and Sewer For Public Market, San Fernando, PHProject Profile• Treatment plant for 80 Cu. Meters/day• Two lift stations• 850 meters low-pressure pipelineTotal estimated Cost - $110,000

Pro forma:

Willingness to Pay & Sustainability:• Supported by Social Marketing• Strong support of Mayor• Good technology • Positive balance sheet projections

Is Project feasible?

√

Expenses    $29,268 Annual Amortization    $9,756 Operating Expense    

$39,024 Annual Expense    

Revenues    $25,447 Market fee increase    $12,804 Comfort room fees    

$2,012 Connection fees       

$40,263 Annual revenue    

Septage Management Program Dumaguete City, Philippines

Project Profile• Desludging for 22,000 homes• Project owned by city to be turned over to water district• Fee based on water consumption (2 pesos per cubic meter)• Fee will be collected as add on to water billPro forma:

Sustainability:• Project widely supported by community• Annual fee of $4.91 (average) less then one day’s wage – very affordable• Project supported by IEC campaign

Is Project feasible?

√

 Costs    $414,634 Infrastructure cost    

$80,000 Annual Operating Cost    26,829 Annualized capital cost    

$107,300 Annual cost to be recovered    Revenue    

$4.91 Annual septage fee per house    

22,000 Number of houses       

$108,200 Total Revenue    

Help translate DFI interest into action • Member survey - determine interest in water/sanitation financing• Regional workshop – water/sanitation champions• Regional workshop - risk mitigation for water/sanitation

financing • Development of toolkit on risk mitigation• Support development of water sector loan products • Facilitate co-financing and credit guarantees

ADFIAP / ECO-Asia MOU

THANK YOU!

Niels van DijkDeputy Chief of PartyECO-AsiaT 662 651 8977 ext113E [email protected]