Financing Sanitation Projects
Sanitation - important Millennium Development Goal
Defining Sanitation
• Safe management of human excreta.
• Sanitation MDG target looks at improved sanitation
facilities
• Improved facility prevents contact with human excreta:
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–
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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
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 Lanka
Project Profile
• 6 kilometers of sewer lines
• Anaerobic Baffled Reactor Tank
• Mechanized treatment system
Total estimated Cost - $250,000
Pro forma:
280 Homes
$250,000
infrastructure cost
5% rule: Pay no more then 5% of
annual income on WATSAN:
subsidy amount
• Annual income = $3750
Amount to borrow
• Annual water bill = $75
$10,000
Annual depreciation payment (10 years)
• Annual sewer bill = $80
$10,000
Annual interest payment
$20,000
Total annual payment
• 5% of $3750 = $187.50
$71
Cost per home per year
TOTAL WATSAN = $155/yr
$9
Operation cost per year
60%
$100,000
$0.22
Dollars Per Day
Is Project feasible?
√
WTP and Sewer For Public Market, San Fernando, PH
Project Profile
• Treatment plant for 80 Cu. Meters/day
• Two lift stations
• 850 meters low-pressure pipeline
Total estimated Cost - $110,000
Pro forma:
Expenses
$29,268
Annual Amortization
Willingness to Pay & Sustainability:
$9,756
Operating Expense
• Supported by Social Marketing
Annual Expense
• Strong support of Mayor
Revenues
• Good technology
$25,447
Market fee increase
• Positive balance sheet projections
$12,804
Comfort room fees
$39,024
$2,012
Connection fees
$40,263
Annual revenue
Is Project feasible?
√
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 bill
Pro forma:
$414,634
Costs
Sustainability:
Infrastructure cost
• Project widely supported by community
$80,000
Annual Operating Cost
26,829
Annualized capital cost
$107,300
Annual cost to be recovered
Revenue
$4.91
22,000
$108,200
• Annual fee of $4.91 (average) less then
one day’s wage – very affordable
• Project supported by IEC campaign
Annual septage fee per house
Number of houses
Total Revenue
Is Project feasible?
√
ADFIAP / ECO-Asia MOU
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
THANK YOU!
Niels van Dijk
Deputy Chief of Party
ECO-Asia
T 662 651 8977 ext113
E nvandijk@eco-asia.org