The first loan under the Philippines Water Revolving Fund (PWRF) was issued last week to Puerto Princesa City Water District to rehabilitate its water system and improve delivery of water to 23,000 households and establishments. Five more Philippine water utilities are scheduled to obtain loans soon from the fund and start work on long-delayed projects.

The loan to Puerto Princesa—for 560 million Philippine pesos, or about US$1.3 million—will help to refurbish the city’s existing water system, which serves 117,000 people in 36 villages. The loan will also facilitate water distribution to unserved areas, thereby providing access to 48,000 more people by 2014, as well as development of new water sources from the Irawan River and groundwater wells.

The loan is being co-financed by the state-owned Development Bank of the Philippines (DBP) and the Bank of the Philippine Islands (BPI). It is the first agreement under the PWRF’s public-private program where the DBP and private banks jointly undertake financing of water and sanitation projects. The Water District will get a 15-year term loan, with DBP using funds from Japan International Cooperation Agency and BPI using its own funds. Eighty-five percent of the BPI loan is guaranteed by LGU Guarantee Corporation and the U.S. Agency for International Development (USAID) Development Credit Authority.

“There is a need to involve the private sector to pursue development in the countryside, as there is a huge investment requirement on water supply and sanitation,” said Francisco F. Del Rosario Jr., DBP president and CEO, at the agreement signing, as reported in the Manila Bulletin. “These water projects contribute to the initiatives being undertaken by the national government, including one of the objectives of the Millennium Development Goals, which is access to safe and potable water.”

“This is a milestone for BPI,” said Gil Buenaventura, BPI’s chief operating officer. “Whenever we see developments like this being realized, it not only gives us a sense of accomplishment to have supported the water sector but also encourages us to continue doing so, expand, and create new markets.”

DAI is implementing the PWRF Support Program with funding from USAID. Launched in 2006, the program led the development and establishment of the fund and continues to provide project development and transaction support as well as strengthen water and financial sector policies. The PWRF is the first public-private revolving fund outside of the United States and Europe dedicated to financing water and wastewater infrastructure.