Preparing a Sanitation Tariff and Finance Study for Baguio City

Asian Development Bank (ADB)

Philippines 🇵🇭

Expertise: Tariff and finance, sewerage and faecal sludge management
Expertise Group: Finance and Investment

Consultant Source: International
TOR Keywords:

Objective and Purpose of the Assignment

Background

  1. Baguio Resilient City Tourism Project. The Government of the Philippines requested support from the
    Asian Development Bank for the Baguio Resilient City Tourism Project (BRCTP). The BRCTP will contribute
    to the government’s Transforming Communities Towards Resilient, Inclusive, and Sustainable Tourism
    (TouRIST) program. One of the project outputs is to improve sanitation infrastructure and services,
    thereby improving water quality and reducing adverse impacts on health in Baguio City. The Baguio City
    Government (BCG) is the implementing agency for the BRCTP.
  2. Technical Assistance (RETA) – 9897: Accelerating Sanitation for All in Asia and the Pacific. To
    complement the BRCTP, the Regional Technical Assistance (RETA) – 9897: Accelerating Sanitation for All
    in Asia and the Pacific will finance this assignment to support the implementation of priority
    activities under the faecal sludge management (FSM) plan 2021-2050 for the city of Baguio. The RETA
    champions the principles of citywide inclusive sanitation (CWIS). CWIS is a public service approach to
    planning and implementing urban sanitation systems which demonstrate three core functions: (i) a
    responsible authority(ies) is executing a public mandate for inclusive urban service delivery, (ii) the
    authority(ies) is accountable for performance against its mandate, and (iii) resource management and
    planning reflect authority mandates, priorities, and performance accountability.
  3. Water supply in Baguio City. Access to drinking water service is unequal in Baguio City. According to
    the household survey conducted in 2020 (Source: Baguio City Faecal Sludge Management: Situation
    Assessment, Amédé Ferré, 2020. Unless otherwise stated, data are from this report.), two-thirds of the
    households receive water from the Baguio Water District with significant disparities between the four
    catchments. These residents consume on average around 100 liters per capita per day. This relatively
    high consumption results in significant generation of wastewater and faecal sludge in the city. The
    remaining households receive water from tanker trucks (17%), protected wells (16%), and unsafe sources
    (4%). Water consumption is expected to be low for these households.
  4. Sewerage system. Baguio’s sewerage system is composed of a separate sewerage network and covers most
    of the Balili River catchment with 10,412 registered sewer connections in 2019. Connections comprise
    mainly residential (57%) and commercial establishments (42%) (Source: CEPMO, Baguio City).
    Approximately 10% of Baguio population is connected to the city sewer line. The city has one sewage
    treatment plant (STP) which was built in 1986 with a design capacity of 8,600 m3 per day. Since 2010,
    the daily sewage inflow monitored at the BSTP inlet has been decreasing, from 12,464 m3/d (in 2010) to
    6,618 m3/d (in 2019). The reason of this decrease is unclear given the apparent good condition of the
    network and proactive maintenance approach (Source: Sanitation Situation, Baguio Situation Assessment
    Volume 3, Baguio Sanitation Improvement Project, Egis, July 2020).
  5. Connection and sewage treatment fees. The one-time sewer connection fee is PHP200 as per law. The Tax
    Ordinance No. 2003-04 set the sewerage monthly fee for household at PHP35/month for one toilet and
    PHP50/month for more than one toilet. So far Baguio residents connected to the city sewer line are not
    obliged to pay for the service due to the absence of a billing mechanism. Only residences that pay
    annual real estate taxes are charged the sewerage fees. Businesses pay sewerage fees to the CTO on top
    of the business tax. An ordinance is currently being drafted by CEPMO to determine a billing mechanism
    for households and to set a new sewerage tariff.
  6. Onsite sanitation. Onsite sanitation is prevailing and by far the main source of liquid waste
    generated in the City. Around 90% of households in Baguio city currently rely on onsite sanitation and
    related faecal sludge management services. Despite proposals to increase the sewer network coverage and
    construct new sewage treatment plants in the city, this is only likely to be achieved incrementally due
    to the high cost. Onsite sanitation and FSM related services will therefore most likely remain the main
    sanitation services in the city in the short (2025) and medium terms (2035).
  7. Poor management of both onsite sanitation facilities and communal septic tanks remains the main
    challenges. Most of the systems have never been emptied, resulting in an expected heavy organic load of
    the effluent; and illegal dumping of 40% of collected faecal sludge from desludging providers has
    significantly contributed to the high pathogens’ concentration recorded in Baguio’s rivers.
  8. Access to improved facilities is high with 94% of households having access to a basic sanitation
    service, which is an improved facility that is not shared. Households relying on shared facilities
    represent 5% of the households, and 1% practice open defecation. Most of the disposal systems are sealed
    tanks (76%), i.e., a single sealed tank or septic tank with two or more chambers. Most of the facilities
    are pour-flush systems (72%). There are 11% of households relying on pour-flush latrines mostly
    encountered in Bued and Ambalanga catchments. This system does not comply with the City regulations.
  9. Emptying periodicity. Despite the regulation stating an emptying periodicity no longer than 4 years
    (Ordinance No. 36, series of 2020) , the demand for the faecal sludge emptying service remain very low
    in Baguio. Only 13% of households already requested the faecal sludge emptying service. the current
    average faecal sludge emptying periodicity is more than nine years, which is more than twice the
    mandatory desludging periodicity. Households request the service only when problems occur with the
    facility. Enforcement is lacking. Moreover, communal septic tanks (CSTs) managed by the city are very
    rarely or not desludged (12 in total but 5 no longer in function).
  10. Emptying service. The faecal sludge emptying service is performing well and entirely motorized. The
    private sector is actively involved with nine private service providers. The City also operates this
    service. There are 13 operational trucks in the city. Desludging tariff usually range from PHP9,000 to
    PHP15,000 per desludged facility—roughly equivalent to PHP2,000 to PHP3,000/m3.
  11. Septage treatment service. The city has been operating a Septage Treatment Plant (SpTP) since 2019.
    The Wastewater, Water & Ambient Air Management Division (WAMD) staff which is responsible of the
    operation and maintenance of the plant record faecal sludge quantity disposed at the plant. With only 11
    m3 of faecal sludge per day on average disposed and treated at the SpTP in 2019, the plant operates at
    60% of its capacity which is 20 m3/day. The disposal fee is PHP400/m3 of septage disposed.
  12. Currently households having a septic tank that is being desludged spend around seven times more than
    households relying on city sewerage service. Households connected to a communal septic tank get a free
    of charge service.
  13. By strictly enforcing the existing regulation (i.e. (i) no more than four-year desludging
    periodicity, and (ii) a sewerage fee of PHP35/month/toilet), the situation would even worsen: households
    relying on onsite sanitation would spend around eight times more than households relying on sewerage
    service (this considers the collection, transport and treatment service costs only).
    Objective and Purpose of the Assignment
  14. With the support of ADB, the Baguio City Faecal Sludge Management Plan 2021-2050 (FSM Plan) was
    developed to guide Baguio City’s interventions to deliver faecal sludge management services in an
    efficient, equitable, and sustainable way to improve environmental and public health. Two consultants
    have been engaged to support the implementation of the FSM plan. The FSM Plan foresees the update of
    sanitation service tariff to cover the service costs throughout the service chain (from containment to
    desludging, collection, transport, treatment and reuse/disposal) while promoting equity between the
    service users and optimization public resources. Service users are households that rely on onsite
    sanitation service, communal septic tank service and sewerage service.
  15. This Terms of Reference (TOR) is intended for the engagement of an individual consultant
    (Consultant) to conduct a study on sanitation (sewerage and septage) tariff and finance. The Consultant
    will review the tariffs for all forms of sanitation in Baguio, including (i) sewerage (one-time sewer
    connection fee and monthly sewerage fee for households): (ii) FSM services (desludging tariff and
    disposal fee), and (ii) commune septic tank (CST) services (fee to use the CST services), and make
    recommendations on financing.
    Duration and Location of the Services
  16. The Consultant will be engaged intermittently over a 9-month period. The Consultant is expected to
    start in October 2021.
    17.The assignment shall be in Baguio City, Philippines. The Consultant will hold office at a space
    provided by the BCG, subject to travel being allowed by the government

Scope of Work

  1. The Consultant will undertake a sanitation tariff and finance study. Two other studies will be
    conducted in parallel under the same Technical Assistance, as follows:
    (a) Scheduled desludging feasibility study to increase onsite sanitation desludging periodicity
    compliance (by an individual international consultant); and
    (b) A sanitation social program to ensure universal access to FSM services (by an individual
    international consultant).
  2. The international consultants who will prepare the three studies mentioned in para. 18 will be
    assisted by a coordinator. The coordinator will assist all the international consultants with, amongst
    others, data collection, conducting interviews with stakeholders, data analysis, and providing
    recommendations. Further, the two consultants to support the implementation of the FSM Plan mentioned in
    para. 14 will also collaborate with the Consultant on the project background, information sharing, and
    other technical discussions.
  3. The Consultant will manage and closely work with these consultants as at team to complete the
    delivery of the expected outputs and ensure consistency. The Consultant will manage and steer the
    project and will manage and review the consultants’ inputs and will ensure a high-quality and timely
    submission of deliverables.
  4. The main objective of the tariff and finance study is to cover the service costs while equity
    between service users is a transversal objective.
  5. There is a lack of equity between households who rely on sewerage service and those relying on
    onsite sanitation and faecal sludge management services. As in many countries and cities, households
    relying on onsite sanitation spend more on sanitation services than households connected to sewerage
    systems. Sewerage services are heavily subsidized while onsite sanitation and FSM services are not.

Detailed Tasks and/or Expected Output

  1. The consultant shall:
    •Identify gaps in the current tariff structure for both sewerage and septage services. Sewerage tariff
    will be limited to domestic connections. This will include amongst others the review of the ordinance
    that is currently being drafted by CEPMO to determine a billing mechanism for households and to set a
    new sewerage tariff.
    • Identify the most appropriate services tariff and cost recovery structure taking into consideration
    OPEX and CAPEX of services. Sanitation services include: (i) sewerage (one-time sewer connection fee and
    monthly sewerage fee for households): (ii) FSM services (desludging tariff and disposal fee), and (ii)
    CST services (fee to use the CST services).
    • Ensure equitable and transparent tariffs for the different kinds of service users.
    • Compare required tariff to cover service costs with existing economic data (for instance, household’s
    financial capacity, and household’s willingness to pay) to determine affordable and realistic tariff.
    Assess the required public funding and subsidies (if necessary) to ensure full recovery of the costs.
    • Assess the affordability of tariffs for the poorest households and the affordability gap. Identify and
    assess options for financing recurrent services for the poor including differential pricing. Identify
    cross-subsidies, public funding or other sources of financing to ensure sustainable services for the
    poor. It is expected from the Consultant to consider a wide range of options and best practices (e.g.
    richer paying more, internal cross subsidies such as sewerage to septage; water to sewerage; CSOs,
    social support from welfare payments, etc. In collaboration with the consultant who will prepare the
    sanitation social program, recommend suitable methods for targeting the poor.
    • Assess the feasibility to implement tariff equalization, in collaboration with the consultant who will
    prepare the sanitation social program.
    • Identify potential legal constraints to implementing recommended tariffs and financing.
    • Identify suitable options and recommend the most appropriate billing mechanism and payment system
    including flexible payment systems where possible, within the context of Baguio. Flexible payment
    systems should be assessed. Consider barriers to bill paying and how payments can be improved to
    increase revenue, e.g. payment by mobile phone, longer office hours, vendors;
    • Determine the most appropriate tariffs for the public desludging service, and make recommendations for
    the private desludging tariff in order to limits intrusiveness in the private sector and help maintain
    fair competition between operators;
    • Quantify the sanitation tariffs and taxes required for full cost recovery;
    • Structure the new sanitation tariffs and taxes to drive good consumer behaviour;
    • In collaboration with the the consultant team engaged to develop the Baguio City Sanitation and
    Hygiene Behavior Change Communication Strategy and Action Plan, develop the communication objective, and
    key messages to phase in the new tariffs and taxes;
    • According to the results of the scheduled desludging feasibility study, the Consultant may be
    requested to also set tariff for private desludging service. The Consultant must initiate discussions
    with private service providers to ensure their acceptance and involvement.
    • Compare between costs to be paid by households to build a septic tank and household costs to connect
    their toilets to the city sewer line or CST, including existing public subsidies. Moreover, in
    collaboration with the consultant in charge of the sanitation program social development, make
    recommendations to adjust differences and reduce inequalities.
    • Provide recommendations to ensure a fair contribution from household beneficiaries to get connected to
    the Baguio sewerage system within the BRCTP. According to the feasibility study, households will not
    contribute to get a sewer connection.
    • Consider gender equality and social inclusion as targeted in the GESI action plan.
    • Develop tariff implementation procedures and identify any prerequisite actions needed, e.g.
    legislation/regulation changes, agreements;
    • Provide specific inputs to improve and finalize the draft ordinance regarding sanitation tariff;
    • Assist the BCG to prepare and implement a tariff reform considering improvement of cost recovery for
    operation and maintenance of the sewerage system and sewage treatment facilities
    • Act as resource person in meetings, workshops and consultations related to tariff discussions; and
    • Assist the city in seeking approval for the tariff recommendations by drafting policies, paper,
    guidelines, as necessary
  2. The Consultant will prepare a ppt PowerPoint presentation for each report; and organize
    consultations, meetings, and workshops as necessary to collect feedback and comments to the study.
    He/she will assist ADB and BCG with other tasks related to the sanitation tariff and finance study as
    reasonably requested by ADB and BCG.
    Reporting Requirements and Time Schedule for Deliverables
  3. The Consultant will report to Thuy Trang Dang, Senior Urban Development Specialist, Asian
    Development Bank; Mr. Rhenan Diwas, Head of City Environment and Parks Management Office, BCG, and Ms
    Antonette Anaban, Assistant City Planning and Development Coordinator and OIC Head of the City Disaster
    Risk Reduction and Management Office during the term of his/her assignment . The Consultant will lead
    the consultants responsible for the other two studies mentioned in para. 18.
  4. If travels are allowed, the Consultant will be required to travel to the Philippines. Dates in the
    schedule and places of assignment section are indicative and will be agreed with ADB prior to travel.
    Client’s Counterpart Support
    27 The Consultant will work closely with the CEPMO/WAMD, CBAO, Health Division, Department of
    Environment and Natural Resources (DENR), and Baguio City Local Government Unit (LGU).
  5. The Consultant will have to consult at least the following key documents which will be provided by
    the Client:
    • Baguio City Faecal Sludge Management: Situation Assessment, Amédé Ferré, Dec. 2020
    • Baguio City Faecal Sludge Management Plan 2021-2050, Amédé Ferré, Feb. 2021
    • Baguio Situation Assessment, Baguio Sanitation Improvement Project, Egis, July 2020
    • Baguio Feasibility Study, Baguio Sanitation Improvement Project, Egis, Feb. 2021
    • Institutional Development Consultancy, Baguio City Sanitation Improvement Project, Matthew Giesemann,
    Feb. 2021

Minimum Qualification Requirements

The following are the minimum qualification requirements for the Consultant:
• Master’s degree in finance, public health, environmental engineering, sanitation, or a related field,
or a combination of a first degree, and postgraduate/professional training.
• At least 10 years of general experience;
• At least 7 years of experience of practical experience with tariff and/or finance studies preferably
in the sanitation sector (sewerage and FSM related services). Experience and knowledge in Citywide
Inclusive Sanitation (CWIS) principles and projects is an advantage;
• Experience in working with utilities is an asset.
• Experience in at least two projects involving tariff setting;
• Experience in at least two projects as a team leader/project manager;
• Preference will be given to candidates able to demonstrate experience of working in projects where
partnerships were fostered with the private sector, government agencies, and community groups and/or
nongovernmental organizations;
• Regional or country experience is required; and
• Excellent written and spoken English with excellent technical report writing skills.
• Excellent communication skills and proven effective project management, and should be able to
coordinate with and synthesize outputs from various subject experts.

Minimum General Experience: 10 Years
Minimum Specific Experience (relevant to assignment): 7 Years


POSITION TYPE

ORGANIZATION TYPE

EXPERIENCE-LEVEL

DEGREE REQUIRED