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TCGI in partnership with PADCO, provides technical assistance and support to the USAID Regional Development Mission/Asia for improving environmental conditions in Asia. TCGI works with USAID ECO-Asia (Environmental Cooperation-Asia) regional program to address environmental challenges and promote: 1) access to clean water and sanitation for the urban poor and 2) to improve environmental governance and transboundary cooperation. TCGI collaborates with Asian national governments, municipalities, and international organizations including the Asian Development Bank, World Bank, and the U.S. Environmental Protection Agency to promote regional dialogue in sharing and replicating innovation across Asia. ECO-Asia program countries include: India, Indonesia, Philippines, Sri Lanka, Thailand and Vietnam.
In the Philippines for example, ECO-Asia supports the Local Water Utilities Administration (LWUA) in the design of financial products for its new market comprising the pre- and semi- creditworthy water districts, in accordance with 2004 Executive Order (EO 279). These financial products will primarily focus on financing efficiency improvement initiatives undertaken by water districts to increase their creditworthiness. Only when deemed sufficiently creditworthy (credit score in the high range of the semi-creditworthy category), would a water district be able to borrow for its expansion plans. Since most utilities are primarily interested in further expansion, the prerequisite of improved creditworthiness should provide sufficient incentive for water districts to focus on efficiency improvements aimed at increasing their financial standing.
The focus on financial products for efficiency improvements substantially reduces LWUA’s lending risks since most of these initiatives would require relatively short-term debt, and, generally, will have a positive impact in a water district’s cash flow, allowing them to service their debt. A piloting approach with two representative water districts, one in each of the pre-creditworthy and semi-creditworthy groups, will help determine what type of efficiency improvements are required. ECO-Asia will help determine how LWUA could complement their lending products with appropriate technical assistance for water districts, to further improve risk management. |
