January 29, 2023

The city government, through the Tourism Infrastructure and Enterprise Zone Authority (Tieza),is planning to secure a loan from the Asian Development Bank (ADB) for the rehabilitation of the city’s 35-year-old sewage treatment plant in efforts to service the entire city and improve the quality of its wastewater.
The STP rehabilitation and upgrade will cost the city $58.19 million, or roughly P3 billion, to be paid from 2031 to 2049, or about P147M annually.
The loan will be acquired by Tieza for the city, while the city and Tieza will enter into a memorandum of agreement for the terms of the loan reimbursement.
Tieza will apply for $62.97M loan on behalf of the city from ADB, P114M of which is intended for the training of the city’s tourism workers under the Baguio Tourism Resiliency Pro-ject, which the Tieza will provide the city as a grant.
The initial financial, economic, and structural upgrade assumptions are an offshoot of a feasibility study made by an ADB consultancy firm on the current condition of the city’s sewer system, which has been discharging most of its wastewater to the river systems untreated leading to high coliform and pollution levels of the Balili River and three other rivers whose headwaters are found in Baguio City, in violation of the water quality standards set by the Department of Environment and Natural Resources.
The initial reports were presented during the Sept. 6 session of the city council by the ADB partner consultancy firm Egis.
Mayor Benjamin Magalong and City Environment and Parks Management Officer Rhenan Diwas also attended the council meeting to get its approval on the endorsement of the STP rehab project to the National Economic and Development Authority for its review.
Once approved, the construction of the new STP will start on 2022 up to 2026.
The loan will cover the Balili catchment area, but Diwas said it will also include adoption of a mixture of processes – there will be a sewer system and a septage system that will service areas not covered by the Balili STP that would translate to increased capacity or households that can be serviced by the STP.
“As of now we only have 8,600 cubic meters capacity per day, and the effluent is only around 6,600 per day, which is only five percent of the supposed area that must be covered. If we rehabilitate old networks, we can increase the coverage area,” Diwas said.
He added an upgraded STP will provide three sources of income for this city – sewerage fee collection from household and commercial establishments, from the septage and fecal management plan, and sludge which when treated can be sold as agricultural input.
Egis consultancy team leader Tom Kendall said the project will deliver benefits for the whole city because by having treatment at Balili it will be able to accept septage throughout the city, including Bued and other rivers, leading due to improved septage management and water quality.
The project would require residents in service areas to pay a tariff or sewerage fee that may increase every five years and which would largely cover the payment of the loan to Tieza. The amount is still being finalized.
Local Finance Committee head Leticia Clemente said the city needs some computations that are not yet complete.
Based on the consultants’ assumptions, she said there should be more in-depth study especially on the tariff and the ability of consumers to pay the fee.
She added there is also a need to approve a schedule of tariff since the proposal if approved will start implementation on 2023.
While agreeing there is an urgent need for the city to rehabilitate its STP, Councilor Betty Lourdes Tabanda expressed concerns about the huge cost of the project that she said “will bind successors and future administrations up to 2049 to paying a loan.”
“I’m a little wary about incurring loans because that will mean it will be the future administrations that will be paying for the loans. Although it is good to have projects like this, we also have to think of what the effect will be, and I hope we will not stifle the development of future administrations because they may be bound by the loans that we may incur. Is it not possible to use other means?” Tabanda said.
Magalong has assured they have exhausted all avenues to be able to undertake the project without so much impact on the capacity to pay of constituents.
“We first approached DENR which in the end declined because it has no budget, the same with the Department of Public Works and Highways. We also pursued a public-private partnership, but the tariff will be around P150 per cubic meter, which is exorbitant and totally unacceptable. This (ADB loan through the Tieza) is the most viable solution,” the mayor said.
“We are not only looking on the impact on our finances, but we also take note of its impact on the environment and social impacts which are intangible but are more significant than the financial impact,” he added, saying it is the city’s moral obligation to clean its wastewater before dumping it to the rivers.
Diwas added the plan is the most advantageous to the city. “Since 2019 we have been entertaining proposals from various PPP proponents. All of them required P100 per cubic meter sewerage fee. And they offered only for the development of the STP.No networks, no septage, no fecal sludge management. The point is mas mataas ang sisingilin if go through PPP,” Diwas said.
The council approved the request for it to endorse the project to NEDA, subject to the conditions or clarifications raised by the council members. – Hanna C. Lacsamana