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DBP eyes lower rates for LGUs in water projects

The government-run Development Bank of the Philippines (DBP) is developing a mechanism that will impose lower rates on borrowings of smaller local government units (LGUs), a bank official said over the weekend.

Lawyer Rogelio V. Garcia, one of the four DBP directors from Southern Mindanao, said in a press conference over the weekend that the bank can even provide rate of as low as 3.5% to 4% a year to smaller towns from the regular 6.5% to 7% annually.

“That is now the concept that we are trying to develop and we are preparing a template for this,” Garcia said.

The bank, he added, can even extend the loan period as at present, the “basic length of the loan term of DBP is between seven to 10 years, but we can, of course, make some extension to (on the length of the term) depending on the project.”

This mechanism will be introduced to LGUs and cooperatives that are planning to avail of the program for water facilities that the Mindanao Development Authority (MinDA), in cooperation with the Department of Interior and Local Government and the bank, is preparing to roll out.

Secretary Emmanuel F. Piñol, MinDA chair, said LGUs and cooperatives can even make these facilities a business venture as “they could recover their investments.”

Among the first LGUs to express interest on the program was Compostela Valley (ComVal) which is crafting a P300 million bulk water project to supply potable water to its three towns.

Piñol said he and ComVal Gov. Jayvee Tyron L. Uy discussed the proposal, prompting MinDA to grant the province about P500,000 from its savings to draft the feasibility and engineering study of the water bulk facility of the province.

He said the fund will come from the savings of his agency and will help the province formulate its program with the Development Bank of the Philippines (DBP) will help fund.

“ComVal is actually looking at P300 million loan to provide water to Nabunturan and two other towns,” said Mr. Piñol, adding that this might become among the biggest projects under the water program of his agency.

He said he and Uy were supposed to sign the agreement for the release of the fund last weekend, but the provincial board has yet to pass a resolution needed to authorize Uy to enter into the agreement.

For other provinces that want to emulate ComVal, Piñol said they need to wait for next year as the agency is looking at providing more assistance to them to craft their programs related to potable water and solar irrigation.

“(In providing more assistance to the local government units) our advantage is we have access to other funding agencies,” he said, in reference to international donor agencies like the Japan International Cooperation Agency, European Union, United States Agency for International Development and Australian Assistance for International Development, among others.

In a related development, Piñol said his agency is planning to put desalination facilities in island communities of the Bangsamoro Autonomous Region in Muslim Mindanao and Zamboanga Peninsula that are in dire need of potable water.

He said the facilities, which would either tap the technology from Israel, China and Italy will provide these “often neglected and overlooked (communities) in the country” with potable drinking water.

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