Pöyry - IDP Consult, Inc.

Municipal Finance, Strengthening and Management

SUPPORT TO LOCAL GOVERNMENT FINANCING

Funder: Asian Development Bank, PPTA 7451
Agency: Bureau of Local Government Financing, Department of Finance
Location: Philippines
Year: 2010
Brief: The project strives to provide analytical inputs, system development, and institutional strengthening support to the Bureau of Local Government Finance (BLGF) and Municipal Development Fund Office (MDFO), both of Department of Finance (DOF), Department of Budget and Management (DBM) and the Department of the Interior and Local Government (DILG), as Coordinating Committee on Decentralization (CCD) chair to further support local government capabilities in improving local resource mobilization, expenditure management, and service delivery reforms. ADB TA 7451 addresses the technical and developmental concerns among local institutions and communities through the upgraded, strategic and sustainable provision of LG services without incurring additional financial burden on the National Government. Such objectives have to be met through fiscal consolidation measures including revenue augmentation and efficient expenditure management aided by appropriate programming and internal strengthening exercises at the Local Government level. Ultimately, LGFBR 2 reinforces the implementation of a sound and transparent fiscal framework that will serve as a foundation for strengthened resource mobilisation, budgeting and access to credit markets by the LGUs.
Tasks: The scope of consultancy work undertaken by Pöyry IDP for the TA focuses on three components: (i) enhancing efficiency and accountability in financial management, planning and expenditure; (ii) improving access to public and private sources of capital for financing of policy reforms and development projects; and (iii) reducing dependency on internal revenue allotments by developing local sources of revenue. For the first component, principal activities are providing support to development supplemental budgeting guidelines for LGUs, developing a cash flow forecasting template for LGUs, designing a comprehensive competency profile and certicification targeting local budget officers, and enhancing the computerization of the Statement of Receipts and Expenditures as means to retool LGU revenue forecasting and programming. For the second component, to provide support to the CCD technical secretariat through the DILG by assisting in the documentation of meetings, preparation of the agenda and briefing materials, providing quick-policy response to key issues, and preparation of terms of reference for research and other technical assistance; supporting the system design and programming services for the computerization and upgrading of all MDFO administrative and operational functions such as loan applications and processing; and providing training to MDFO personnel on the application of various financial and debt management practices. Activities for the last component include developing guidelines and prototype program for building and administering a local business taxpayer database.

LOCAL GOVERNMENT FINANCE AND BUDGET REFORM PROJECT

Funder: Asian Development Bank, PPTA
Agency: Department of Interior and Local Government
Location: Philippines
Year: 2008
Brief: The project called for increasing LGUs’ efficiency and effectiveness in basic public services delivery to their constituent communities. The technical assistance included developing a framework/mechanism for effectively managing the changes embodied in the LGFBR policy matrix through a cost-effective and transparent approach; preparation of city planning strategies and investment programming guidelines through capacity strengthening interventions directed at LGU planners and staff; capability development assessment; and development of a framework for analyzing LGU performance. Project involved thorough and regular consultations with relevant government institutions such as the BLGF, MDFO and DILG.
Tasks: Tasks across the three main components include: i) Provide technical and administrative support to the operations of the CCD including the conduct of quarterly evaluations (ii) Design and set-up of a CCD on decentralization bringing together representatives of concerned agencies. (iii) Development of a framework / mechanism that will be used by the aforementioned coordinative body to cost effectively manage the change embodied in the LGFBR policy matrix at various levels (iv) Bridging of sectoral issues and promotion of the institutionalization of LGFBR concerns and TA outputs. For the second component: (i) Preparation of city planning and investment programming guidelines that will be integrated and synchronized with the provincial planning and investment programming system developed under TA 4512. (ii) Utilization of LGPMS results in physical planning and investment programming in budgeting and financial resource mobilization (iii) Capability development assessment for 3 pilot cities (iv) Revise the city planning guidelines; For the third component: (i) Development of a framework for analyzing overall LGU performance by linking governance with revenue performance and service delivery performance (ii) Development of LGU service standards; and (iii) Review performance-based grants systems that have been implemented in other countries as well as discussions in the Philippines on performance-based grants and assess how well the LGPMS meets the needs of performance measurement systems to be used in performance-based grant systems.

MANAGEMENT SUPPORT FOR DHAKA WATER SUPPLY AND SANITATION AUTHORITY

Funder: Asian Development Bank, PPTA 7001
Agency: Dhaka Water Supply and Sanitation Authority
Location: Dhaka, Bangladesh
Year: 2009
Brief: The objective of this TA is to (i) foster and strengthen the autonomy of the national urban water supply and sanitation service utilities through operations monitoring, review and redesign, and capacity building and service enhancement provisions, (ii) develop appropriate institutional and regulatory frameworks to enable successful implementation of the urban water supply and sanitation sector reforms being proposed under the Program, and (iii) assist DWASA in optimizing the existing water supply sources through subsector planning, capital investment management, and regulatory works, and ensuring smooth start-up of the project implementation.
Tasks: The scope of work of the Regulation consultant comprised: (i) Review the existing regulatory frameworks of the water and sanitation sector in Bangladesh; (ii) Review the regulatory frameworks of power and telecom sector in Bangladesh; (iii) review and summarize the good practices of regulatory framework for the WATSAN sector, including legal frameworks, organization and staffing of the regulatory commissions, funding sources, effective interrelations, and drawing lessons from regional regulatory frameworks for the urban WATSAN sector; (iv) Compare different options to regulate urban water supply, including regulation by ministry, by independent regulatory commission dedicated to the water sector, and by regulatory commission covering multiple public utilities; and (v) Support the LGD’s committee to finalize the proposal on regulatory framework.

SUPPORTING THE ESTABLISHMENT OF THE KHULNA WATER SUPPLY AND SEWERAGE AUTHORITY

Funder: Asian Development Bank, PPTA 7223
Agency: Khulna Water Supply and Sewerage Authority
Location: Khulna, Bangladesh
Year: 2009
Brief: The TA provides advice to the KWASA in establishing essential frameworks of corporate governance and utility management. The activities include: conducting a diagnostic analysis, preparing institutional development plans, developing fundamental systems for utility management, and conducting a survey to examine potential customer base. Specific activities include: Diagnostic analysis, Revenue assessment, Diagnostic analysis and comprehensive assistance to the the Water Utility Management Specialist in conducting a short diagnostic analysis of the water supply sector in Khulna. As the KWASA was recently established by separating it from the KCC, the analysis should include detailed assessment on: recent trends of revenues and expenditures of KCC’s water works division; financial management systems of the KWASA; and Human resources transferred from the KCC and to be recruited by KWASA for financial management;
Tasks: Key support activities provided by Pöyry’s expertise include the overall design and development of essential frameworks of corporate governance and utility management, and the delivery of general advisory services to ADB and KWASA on financial management. Specific tasks included general diagnostic analysis and revenue assessment; Provided assistance to the the Water Utility Management Specialist in conducting a short diagnostic analysis of the water supply sector in Khulna. As the KWASA was recently established by separating it from the KCC, the analysis included detailed assessment on: recent trends of revenues and expenditures of KCC’s water works division; financial management systems of the KWASA; and Human resources transferred from the KCC and to be recruited by KWASA for financial management; Assessed consumers’ willingness to connect to KWASA’s pipe network per social survey findings, and estimated the potential customer base based on the survey; Estimated the revenue potential of the KWASA, depending on: transition to volumetric charge from the fixed charge; tariff level; and expansion of the service area; and developed a simple financial model to project the future cash flow and assess the financial viability.

SMALL WATER UTILITIES IMPROVEMENT AND FINANCING PROJECT (SWIF)

Funder: World Bank, Water and Sanitation Program
Agency: Government of the Philippines
Location: Philippines
Year: 2007
Brief: Component 3 of the Small Water Utilities Improvement and Financing Project (SWIF) was established with the objective of improving the performance and financial viability of small water utilities, and support them to increasingly access to market-based financing in line with the Philippines water sector financing policy. SWIF has three components: (1) Developing performance improvement plans, with investment components; (2) Evaluating investment viability through consumer surveys and pricing review; and (3) Improve the access of small water utilities to finance provided by financing institutions. This Third Component of the SWIF project looked into the development of financial products for small utilities, with the goal of establishing a new financing window/product or of modifying policies on an existing window/product that would cater to the requirements of small utilities. It reviewed the ability of small water utilities to prepare loan proposals that will meet the criteria of financial institutions (FIs). Where there were gaps, Component 3 identified the requirements of the FIs, without losing sight of the public service mission of water utilities.
Tasks: The Pöyry consultants looked into the development of financial products for small utilities, with the goal of establishing a new financing window/product or of modifying policies on an existing window/product that would cater to the requirements of small utilities. The team reviewed the ability of small water utilities to prepare loan proposals that will meet the criteria of financial institutions (FIs), and conversely identified the requirements of the FIs, without losing sight of the public service mission of water utilities. Experts conducted interviews with potential FIs and discussed the possibility of these FIs to finance the requirements of the SWUs; On the demand-side, the consultant team assisted in the finalization of the project implementation plans that were prepared by the SWUs. The consultant team also prepared case studies on access to finance and to other financial services available, based on interviews and assessment of participating SWUs and reference materials from other studies. It looked into the factors that contributed to the successful loan proposals and reasons why some proposals failed. The case studies also included the identification of constraints and opportunities in access to financing with the end in view of developing products that would help SWUs access debt-financing.