Report No. 27245

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The Inspection Panel

Report and Recommendation

'HILIPPINES: Manila Second Sewerage Project (Loan No. 4019-PH)

qovember 25,2003

The Inspection Panel

Report and Recommendation On

Request for Inspection

Philippines: Manila Second Sewerage Project (MSSP)

(Loan No. 4019-PH)

On September 26, 2003, the Inspection Panel (the “Panel”) received a Request for Inspection (the “Request”), related to the Mani la Second Sewerage Project (MSSP). On October 1, 2003, in accordance with the Resolution establishing the Inspection Panel (the “Resolution”),’ the Panel notified the Executive Directors and the President o f the International Bank for Reconstruction and Development (IBRD)’ that i t had received the Request, which constituted Registration o f the Request under the Panel’s Operating Proced~res .~ The Panel received Bank Management’s Response to the Request for Inspection on October 23, 2003 (the “Response”). As provided in paragraph 19 o f the Resolution, the purpose o f this report i s to determine the eligibility o f the Request and make a recommendation to the Executive Directors as to whether the matters alleged in the Request should be investigated.

A. THE PROJECT

2. The Request raises issues related to the project financed under the Bank’s Loan No. 4019-PH, (Manila Second Sewerage Project) (hereinafter referred to as the “Project”). The objectives o f the Project are “to: (a) reduce the pollution of Metro Manila waterways and Manila Bay; (b) reduce the health hazards associated with human exposure to sewage in Metro Manila; and (c) establish a gradual low-cost

’ International Bank for Reconstruction and Development (IBRD) Resolution 93- 10, dated September 22, 1993. For the purposes o f this Report, the IBRD i s sometimes referred to as the “Bank”. See The Inspection Panel, Operating Procedures (August 1994), at 7 17. 3

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improvement of sewerage services in Metro ma nil^."^ The Project included, inter alia, a septage5 management program which covered “three aspects namely: (i) collection and hauling of septage from septic tanks, (ii) sea dumping of septage, and (iii) p i lot septage treatment plant.”6 For these purposes, three barge loading stations each with a capacity to transfer about 500 cubic meters per day (m3/d) o f septage from collecting vehicles to barges were to be constructed at Napindan, Estero de Vistas and Para i iaq~e.~

According to Management Response, “[ulnder the Project, barging of septage from Napindan and Estero de Vitas (two of the three septage barge loading stations), and sea disposal at a designated site, in accordance with the I996 ECC [Environmental Compliance Certificate], was expected to operate from September 1998.” The Response adds that the Paraflaque barge loading station (the third station) was never built.*

Management Response states that on August 31, 1999, “the description of the project was amended to incorporate, among other things, the ‘carrying out of septage trials ’ as ocean dumping was a new technology in the phi lip pine^."^ I t adds that when the Project was restructured, the expected date for the cessation o f sea disposal was revised from the year 2003 to 2005.

The Panel notes, however, that under the original Project design sea dumping was expected to be a temporary solution while the other water treatment facilities were constructed or upgraded under the Project. The Staff Appraisal Report listed as one o f the Project r isks “delays in building septage treatment plants and possible continuation of sea disposal beyond the stipulatedperiod.”” Schedule 5 to the Loan Agreement (Implementation Program) provided that “the Borrower shall take al l actions necessary to enable it to adhere to a timetable for cessation of sea disposal or septage acceptable to the Bank.”” Schedule 6 to the Amending Agreement provided “Performance Indicators” on the “Improvement o f Environment” that called for reducing “Septage disposed at the ocean”: from 450 (m3/d) in 2001 to 300 in 2003 and ‘Nil’ (nothing) in 2006, for the West Service Area covered by M W S I

Agreement Amending Loan Agreement between Metropolitan Waterworks and Sewerage System and IBRD (hereinafter “1998 Amendment”), LoanNo. 4019-PH, March 17, 1998, at p. 16, Schedule 2.

Management’s Response uses several terms regarding waste. The Response states “septage ’ is partially or fully degraded human wastes siphoned out of septic tanks; ‘sewage’ is composed of the raw wastes generated by domestic activities, mostly from toilets and kitchens; ‘liquid human wastes’ include a l l types of human wastes that are in liquid form or have liquefied, such as leachate from solid wastes. I n preparation of the response, i t is assumed that references in the Request to dumping of sewage o r household l iquid waste in fact refer to septage.” The Response, at 1 11 Fn 2. The World Bank, Staff Appraisal Report, Report # 15346-PH, Republic o f Philippines, Manila Second

Sewerage Project (hereinafter “Staff Appraisal Report”), April 12, 1996, Annex 2,16. 1998 Amendment, at p. 16, Schedule 2.

* The Response, at 7 3 1. Id., at 1 19.

lo Staff Appraisal Report, p. 28,16.22. Loan Agreement between Metropolitan Waterworks and Sewerage System and IBRD, Loan No. 4019-

PH, June 19, 1996, Schedule 5,14.

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and f rom 350 (m3/d) in 2001 to 300 in 2003 and ‘Nil’ (nothing) in 2006, for the East Service Area covered by MWCI.12

6. The Project also included the upgrading o f both Mani la central sewerage system and Ayala sewerage system, as wel l as the strengthening o f the technical capabilities to operate and maintain sewerage systems, to construct, supervise, and, develop septage treatment experiments. I t also included the strengthening o f the technical capabilities for the environmental monitoring and preparation o f follow- up sewerage projects. Additionally, the Project provided for the strengthening o f laboratories, through the provision o f specialized instruments, equipment, furniture and materials.13

7. Management Response states that “[oJn November 12, 2002, the description of the Project was amended to incorporate, among others, the new small sewage treatment plants (maximum 23 facilities), and the rehabilitation of the Dagat- Dagatan Sewage Treatment Plant, which had not been meeting national standards for its operations prior to the Project. These investments were intended to enable the new systems to reduce biochemical oxygen demand (BOD)[’41 loading in the long-term in MM [Metropolitan Manila] waterways and Manila

B. FINANCING

8. On June 19, 1996, the Bank entered into a loan agreement with the Metropolitan Waterworks and Sewerage System (MWSS), a Government corporation established in 1971, (the “Borrower”) providing for a US$57.0 m i l l i on equivalent to finance about 75% o f the total Project cost (the “Loan Agreement”). Subsequently, the Borrower entered into concession agreements with the Manila Water Company, Inc. (MWCI) and Manyilad Water Services, Inc. (MWSI) whereby M W C I and M W S I wil l operate the Borrower’s system o f waterworks and sewerage services within their respective concession areas.

9. As a result o f the concession agreements, the Borrower requested the Bank to amend the Loan agreement to permit M W C I and M W S I to carry out the portion o f the Project within their respective concession areas.

10. As a result, the Board approved o n November 30, 1997, an amendment to the Project description setting forth the parts o f the Project to be carried out by each o f the concessionaires. On M a y 17, 1998, the Borrower and the Bank entered into an Agreement Amending the Loan Agreement reflecting this new arrangement.’ In addition, the Loan’s closing date was extended from December 31,2001 to June 30, 2003. On June 19, 2003, the closing date was again extended to December 31,

1998 Amendment, at Schedule 6. l3 1998 Amendment, at Schedule 2. l4 Biochemical Oxygen Demand i s a commonly used measure o f organic pollution.

The Response, at 7 9.

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2004. At the request o f the Borrower, on April 7, 1998, the Bank canceled US$9 mi l l ion equivalent from the Loan, and on January 21, 2003, the Bank canceled an additional amount o f US$11.9 mi l l ion equivalent. A s a consequence, the outstanding loan amount was reduced to US$36.1 mi l l ion equivalent.

C. THEREQUEST

Timpuyog Zambales Inc., a local non-governmental (NGO) based in San Narciso, Zambales, and in Metro Mani la submitted the Request for Inspection (Annex l), acting on its own behalf and on behalf o f over 1,350 residents o f the province o f Zambales in the Philippines (the “Requesters”). l6 The Panel, however, noted that a number o f the signatures were included under captions which do not relate directly to the Request for Inspection, or that belonged to people living out o f the country. The Panel has, thus, disregarded about 50 o f these signatures for purpose of registration o f the Request and noted them as supporting the R e q u e ~ t . ’ ~

The Requesters claim that the residents o f the provinces o f Bataan and Zambales are being adversely affected by a component o f the Mani la Second Sewerage Project. According to the Request, the Project component involves sea dumping o f liquid wastes from Metro Mani la to the South China Sea, 69 km from the Corregidor Island, near the provinces o f Bataan and Zambales. The Requesters claim that a waiting barge at the port area in Manila Bay, f i l led with the equivalent o f eight tanker trucks carrying a minimum o f 400m3 o f liquid waste each, would travel three days to a designated spot where the barge would then pump out i t s load within a ten kilometer radius using a seven meter pipe lowered into the sea at a depth o f around 2,300m. This procedure would be carried out for f ive years, from 2002 to 2007, nine months a year, ceasing operations during the rainy season from July to September, when the sea current moves inward.

The Requesters also allege “key questions surfaced by various sectors that would be potentially affected by the project have not been adequately addressed.”” These concerns include, f i rst o f all, the risk o f negative impact o f sea dumping on people’s health, but also, the adverse environmental impact o f possible ‘red tide’ or ‘fish kill’ phenomena, affecting the fishing industry and the economy o f the coastal areas near the dumping site in general, and finally, the possible destruction o f precious tourist coastal destinations, thus damaging the tourist industry to these local areas.

In support o f their claims, the Requesters reference the concems expressed by the Department o f Agriculture’s Bureau o f Fisheries and Aquatic Resources (BFAR), which has declared that the dumping site i s a r ich fishing ground and warned that the dumping activity would compromise the lives o f the r ich variety o f marine

l6 Request, Letter to the Inspection Panel Chair dated September 8, 2003. l7 During its f ield visi t to the Project areas, the Panel received supplemental documents f r o m the Requesters in support o f their claims. l8 Request, A Brief Background o f the Project, at p. 1.

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creatures as wel l as the livelihood o f fishing communities nearest the site. According to the Requesters, the BFAR also said cases o f algal b loom (‘harmful algal bloom’) and ‘fish kill’, were potential effects o f the dumping activity.

The Requesters deny the validity o f MWSS’ justifications for the safety o f i t s dumping procedure, namely that i) bacteria accompanying the liquid waste wil l perish within 15 minutes upon contact with salt water; ii) liquid waste will dissipate long before i t reaches the municipal waters; and, iii) the same technology has been used in many European countries and Japan from the 1970s up to the early 90s. The Requesters argue that MWSS has failed to prove that sea dumping wil l not adversely impact people’s health and the r ich marine life, and they claim that the procedure used by M W S S “is already banned in many c o u n t ~ i e s . ~ ’ ~ ~

Furthermore, the Requesters allege that the concerned local governments and populations did not receive proper information and were not consulted regarding the dumping. The Requesters state that the provincial board o f Zambales passed several resolutions disapproving the Project component, one o f which demanded the cancellation o f the Project’s Environmental Compliance Certificate, issued by the Department o f Environment and Natural Resources, “because of the violation regarding the lack of proper information to and consultation with the concerned local governments and their constituents.”20

In addition, the Requesters question the economic evaluation o f the Project claiming that while the Borrower argues that this i s a less costly method o f managing urban sewage system, there are other effective land-based, environmentally friendly and even less costly methods o f doing so. The Requesters argue, “investing in ecologically sound approaches turn out to be more cost- efJicient in the long-term.”21

Finally, the Requesters claim that MWSS conducted ‘dumping testing’ between October 2001 and March 2002 and did not release the testing findings. MWSS also failed to report to the Project stakeholders, such as local governments and organized groups in affected areas, about the results o f its monitoring activities, which raised doubts about the Bank’s effective supervision o f the Project.

The Requesters’ submission includes 7 Annexes. The Annexes consist of: i) a letter from the Philippine Coast Guard to the Administrator o f MWSS regarding the non- issuance o f a dumping permit, ii) an objection o f the Bureau o f Fisheries and Aquatic Resources (BFAR) on the Project’s implementation, iii) a memorandum from BFAR to the Secretary o f the Department o f Agriculture recommending suspension o f the dumping by the MWCI, iv) a memorandum f rom the Director o f the Department o f Agriculture to the Secretary o f the Department o f Environment and Natural Resources (DENR), v) Sangguniang Panlalawigan o f Zambales

l9 Id., at p. 2. Id., at p. 3.

” Id., atp. 1. 20

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(Provincial Board) Resolution No. 2002-402 disapproving the request o f MWSS to grant the Provincial Governor o f Zambales authority to sign a Memorandum o f Agreement on the creation o f a multi-partite monitoring team for the Project, vi) Provincial Board’s Resolution No. 2002-403 requesting that the DENR cancel the Environmental Compliance Certificate o f the MSSP, and, vii) Provincial Board’s Resolution No. 357-2002 protesting the plan to dump septage and sewerage waste into the sea waters surrounding Corregidor Island. The request also includes a map o f septage dumping areas.

20. In its Notice o f Registration, the Panel noted that the above claims may constitute violations by the Bank o f various provisions o f the following operational Policies and Procedures:

OD 4.01 Environmental Assessment OP/BP 10.04 OD/OP/BP 13.05 Project Supervision OP/BP 17.50 Disclosure o f Information

Economic Evaluation o f Investment Operations

D. MANAGEMENT RESPONSE

21. On October 23, 2003, the Panel received Management’s Response to the Request for Inspection (the “Response,” attached as Annex 2). The Response includes an Annex 1, which presents Management’s detailed responses to the Request in a table format.22

22. In the Summary section o f the Response, Management states that i t has agreed with the Borrower to undertake an action plan to address the Requesters’ concerns and to stop ocean dumping under the Project. Management also planned to initiate a dialogue with the Requesters, and proposed to ask the Borrower to carry out several actions to deal with their concerns. According to the Response, these actions include that M W S S disclose the information the Requesters asked for, along with the monitoring reports, and, as part o f the preparation for the proposed Mani la Third Sewerage Project (MTSP), that MWSS conduct a further environmental review o f the option o f septage disposal in the lahar lava fields (resulting from the Mt. Pinatubo eruption) with the appropriate consultation and disclosure o f the results. Management further committed to continue i t s review of, and support to, the Borrower’s preparation o f the proposed MTSP. According to Management, MTSP would involve construction o f additional septage treatment plants and vacuum desludging tanker trucks to expand sewage and sanitation services in Metropolitan Manila.23

23. O n the issue o f eligibility o f the Request, Management’s Response states that prior to September 2003, Bank’s records did not contain any communications from the

22 The Response, at 7 2 and 47. 23 Id., at 7 48.

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requester^.^^ According to the Response, the f i rst contact between the Requesters and Management took place the f i rst week o f September 2003, when a caller phoned the Bank’s Mani la office.25 Later during the same month, the Bank’s team received three letters, o f which two were copied to the Inspection The Response further states that on September 17, 2003, the Bank’s team forwarded the Requesters’ letter to MWSS asking MWSS to meet with the Requesters and discuss their concerns.27

24. The Response also states that Management was informed, after having received the Requester’s letter, that o n several occasions since June 2002 the Requesters asked for official confirmation and supplementary information f rom M W S S regarding news aper and unofficial reports about non-implementation o f septage disposal at sea?‘According to the Response, in July 2002, MWSS provided the Requesters with the Loan Agreement, the Project Environmental Impact Assessment (EIA), and overview o f the Project with information o n sea dumping.29 The Response further claims that “the Bank was not aware of all these exchanges between MWSS and T i m p ~ y o g . ” ~ ~

25. The Response also refers to paragraphs 1 and 5(e) o f the Panel’s Operating Procedures, August 19, 1994, which states that “before submitting a Request steps must have already been taken (or efforts made) to bring the matter to the attention of Management with a result unsatisfactory to the Reque~ter”~‘ and that the Request should include “a description of the steps taken by the affected party to resolve the violations with Bank stag and explanation of why the Bank’s response was inadeq~ate”~~ and based o n the argument stated above, concerning the receipt o f the Request nearly simultaneously by Management and the Inspection Panel, that Management “was not afforded the opportunity to address the Requestors ’

26. Concerning the EIA process, Management states that the Project was classified as Category A. M W S S prepared an EIA and an Environmental Management Plan (EMP), which, the Bank and DENR commented in September 1995, after Project appraisal. Subsequently, M W S S submitted a Supplementary EIA in December 1995 and a more elaborate EMP in November 1996.34 Each concessionaire also submitted its own EMP, M W S I in April 2000 and M W C I in September 1998 and

24 Id., at f 43. 25 %id. 26 Id., at f 44. 2’ Ibid. 28 Id., at fi 45. 29 Ibid. 30 Ibid. 31 See The Inspection Panel, Operating Procedures (August 1994), at fi 1. 32 Id., at f 5(e). 33 Management Response, at f 46. 34 Id., at f 20 and21.

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updated i t in 2002 based on recommendations o f Del f t Hydraulics a firm hired by the Bank as an independent c o n ~ u l t a n t . ~ ~

The consultations and disclosure o f information regarding the EWEMP process started in 1994, and the EL4 documents were disclosed as o f March 1, 1995 in Washington and June 22, 1995, in the phi lip pine^.^^ Management also indicates that in 1995-1996, consultation and disclosure efforts focused in particular on sea dumping in the provinces o f Bataan and Zambales. In 2000, MWSS, i t s concessionaires, and the Bank met the Governor and representatives o f the Provincial Board in Zambales and discussed the Project, including sea dumping operation^.^^ The Governors o f Bataan and Zambales endorsed the Project in separate letters to the DENR respectively in January 12, 2000, and July 20, 2000.38 Consultation efforts continued with stakeholders during Project preparation and implementation and included the septage management plan and the sea dumping operations. Management, however, indicates that while M W S S and M W C I reported meetings with Timpuyog o n June 27, 2002 in Zambales and o n July 5, 2002 at MWSS, where the Loan Agreement, Project EIA, and an overview o f the Project with information on sea dumping were dis~losed,~’ contacts with the population o f Bataan do not appear to have occurred after sea dumping began.40

Concerning the analysis o f alternatives, Management states that the March 1995 EIA analyses f ive interim septage management options: disposal at sea; disposal on lahar sites; treatment in a plant; dewatering in combination with disposal in sanitary landfills; and incineration, as wel l as the no-project alternative. The sea disposal alternative was selected as the preferred interim solution until treatment capacity for Metropolitan Manila’s septage was established with the completion o f the septage treatment plant in 2005.41 The December 1995 Supplementary EIA also considered four additional septage disposal alternatives, which i t did not re~ommend.~ ’

On the environmental impacts o f sea disposal, Management indicated that the Project was expected to have relatively minor negative effects, as predicted in the EL4 and the November 1996 EMP. These effects including: i) noise disturbance during construction; ii) noise and odor disturbance during septage collection and shipping and operation o f the pi lot treatment plant; and, iii) possible accidental or improper discharge o f ~ e p t a g e . ~ ~ The 1996 EMP concluded that the great water depth in the identified sea disposal site, the turbulence in the area, the biodegradability o f the septage and the spread disposal operation employed, long

35 Id., at f 22. ’‘ Id., at f 20,23, and Annex 5, Chronology o f Project Events and Summary o f Consultations. Id., at f 23.

38 Id., at Annex 1, No. 6. 39 Id., at f 45 and at Annex 1, No. 10. 40 Id., at f 23. 41 Id., at f 24 and at Annex 1, No. 1 and 2. 42 Id., at f 24. 43 Id., at f 25.

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term adverse impacts were not expected to Moreover, according to Management, no dumping was to be permitted during the months o f July to September because the currents and prevailing winds could carry floating septage towards the shoreline.45 According to the Response, a Bank-hired independent expert (Fenviron, December 1995), and a study prepared by Danish Hydraulic Institute (MSSP-Modeling o f the Dispersion o f Septage from Ocean Dumping, January 1997), concurred with the EWEMP that the environmental r i s k in the sea disposal o f septage would be i n ~ i g n i f i c a n t . ~ ~

30. According to Management the sea disposal site is one o f eight waste disposal sites designated by the PCG in 1991, and the site f i t s the guidelines established by the 1972 London Convention on the Prevention o f Marine Pollution by Dumping o f Waste and Other Matters.47 On May 8, 1995, MWSS submitted the Project EL4 to the Philippines Environmental Management Bureau (EMB) for review and for issuance o f the Environmental Compliance Certificate. The Certificate was issued on October 10, 1996, and contained conditions relating to operations sea disposal, creation o f a Multipartite Monitoring Team (MMT), monthly and annual monitoring o f the coastal waters and offshore o f the concerned provinces, and, establishment o f an Environmental Guarantee Fund.48 Management raised concerns about the compliance o f M W C I with the Environmental Compliance Certificate conditions regarding the submission o f monitoring reports to EMB and regional offices, and regrets i t s failure to be more proactive in pressing for creation o f the Environmental Guarantee Fund.49

3 1. Management also states that sea dumping took place from April 27, 2001 to June 8, 2001 and resumed from October 3, 2001 to July 17, 2002, which Management characterized as sea dumping on a trial basis although a significant volume o f septage was dumped during this period (25,396 cubic meters).50 The trial dumping, for which a national permit had been issued, took place by barges loaded from the Estero de W a s Stations1 The sea dumping did not resume because the P C G did not issue a new transport permit. However, Management asserts that the issuance o f a transport permit became moot because o f the emergence o f lahar site dumping as a feasible a l t e r n a t i ~ e . ~ ~

32. Concerning monitoring and supervision, Management states that M W S S and i t s concessionaires have been submitting jo int reports on monitoring and compliance with the Environmental Compliance Certificate and the EMPs, but it does not indicate to whom the reports have been submitted. In late 2001, the Bank hired

44 Id., at 121. See also Box 2 Deep Sea Septage Disposal. 45 Id., Box 2 Deep Sea Septage Disposal. 46 Id., at 1 27, and 28. 47 Id., at 7 26. 48 Id., at 1 29.

Id., at 1 30. 50 Id., at Annex 1, No. 9. 51 Id., a t131 . 52 Id., at 1 33.

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Delft Hydraulics to: i) supervise the Project’s implementation according to the Environmental Compliance Certificate and EMP; ii) supervise the preparation o f any Environmental Compliance Certificate and EMP required for construction o f new sludge treatment facilities in Metropolitan Manila; and, iii) identify implementation gaps and recommend corrective actions. In October 2002, during i t s ninth supervision mission,53 and based on one o f the consultant’s recommendations, the Bank requested from MWSS and i t s two concessionaires an Environmental Audit Report, which would cover the period of M a y 2001 to December 2002. The Reports are yet to be finalized.54

33. Management states that as part o f the gth supervision mission, i t encouraged MWCI, one o f the two concessionaries, to continue testing septage disposal at lahar sites in Pampanga and tar la^.^^ The Response also states that M W S S collected sugar cane and soil samples to be tested and adds that “[w]ater sampling was not undertaken because no wells were identijied in the area.”56 The Bank asserts that during the supervision mission it confirmed the absence o f any human settlements in the lahar disposal area.57 Management also discussed with M W S S and M W C I the components o f the proposed Mani la Third Sewerage Project, which included three new septage treatment plants.58 During the loth Supervision Mission from August 26 to September 9, 2003, MWSS and its two concessionaires ( M W C I and MWSI) informed the Bank o f their intentions not to undertake further septage sea dumping. MWSS also proposed not to construct the Parafiaque Barging Loading Station to the agreement o f Management. On September 30,2003, and after the formal exchange o f letters between M W S S and its concessionaires, MWSS formally proposed to the Bank the non-implementation o f sea disposal. According to the Response, the Bank has agreed to this.59

34. Finally, the Response states that the issues the Requesters raised are already being addressed. Management believes that i t has made every effort to fol low and apply the Bank’s guidelines, policies and procedures applicable to the matters raised by the Request and to pursue concretely its mission statement in the context o f the Project. Management concludes that, as a result, the Requesters’ rights or interests have not been, nor wil l they be, directly and adversely affected by a failure o f the Bank to implement i ts policies and procedures.60

Annex 7 l i s t s Management’s formal supervision missions. 54 Id., at 1 34.

Id., at 1 39. Id., at 1 41.

” Ibid. 58 Id., at 140.

Id., at 1 42. Id., at 1 49.

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E. ELIGIBILITY

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The Panel must determine whether the Request satisfies the eligibility criteria for an Inspection, as set forth in the 1993 Resolution establishing the Panel and the 1999 Clarifications, and recommend whether the matter alleged in the Request should be investigated.

The Panel has reviewed the Request and Management’s Response. The Panel Chairperson visited the Philippines from October 25 through October 30, 2003 .61 During her visit, the Chairperson met with officials in the Ministry o f Finance, the Requesters, local authorities and affected people in the Project area,62 representatives o f MWSS and their two concessionaires M W C I and MWSI, officials from the Coast Guard, Department o f Environment and Natural Resources, and Bureau o f Fisheries and Aquatic Resources, as we l l as with Wor ld Bank officials in Mani la and Washington, D.C.63

The Panel i s satisfied that the Request meets the eligibility criteria provided in the 1993 Resolution and paragraph 9 o f the 1999 Clarifications except for one procedural criterion, as noted below.64

During the visit, the Panel confirmed that, Timpuyog, Zambales, Inc, and other signatories o f the Request are legitimate parties under the Resolution to submit a Request for Inspection to the Inspection Panel. They have a common interest and common concerns and reside in the Borrower’s territory, as required in Paragraph 9 (4 * The Panel i s satisfied that the Request “does assert in substance that a serious violation by the Bank of its operational policies and procedures has or is likely to

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The Panel’s Executive Secretary Mr. Eduardo Abbott assisted the Chairperson. 62 The Chairperson o f the Inspection Panel visited Manila, Iba, and surrounding areas in Zambales. 63 The Panel wishes to thank the office o f the Mr. Amaury Bier, Executive Director representing the Philippines, for the assistance provided during the eligibility stage. I t wishes to thank national and local Government officials, NGO representatives, local people and representatives o f MWSS, M W C I and MWSI who took time to meet wi th the Panel’s team. Finally, it would like to thank Bank staff in the Philippines and in Washington for their logistical support. 64 Paragraph 9 o f the 1999 Clarifications mentions certain “ techca l eligibility criteria” that must be met b y a Request for Inspection:

The affectedparty consists o f two or more persons with common interests or concerns and who are in the borrower’s territory. The Request does assert in substance that a serious violation by the Bank and IDA o f their operational policies and procedures has or i s likely to have a material adverse effect o n the Requesters. The Request does assert that i t s subject matter has been brought to Management’s attention and that, in the Requesters’ view, Management has failed to respond adequately to it, thus demonstrating that i t has followed or i s taking steps to follow the Bank’s policies and procedures. The matter i s not related to procurement. The related Loans have not been closed or substantially disbursed. The Panel has not previously made a recommendation o n the subject matter.

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have material adverse effect upon the requester.’’ The Requesters have alleged serious harm from the sea disposal o f sewage, Bank’s support for which may allegedly constitute a serious violation o f Bank policies and procedures, as required in paragraph 9 (b).

40. The Panel notes that the subject matter i s not related to procurement, as required in paragraph 9 (d).

41. The expected closing date o f the related loan i s December 3 1, 2004. And only 25.60 per cent o f the Loan had been disbursed as o f the date the Request was filed. The Request therefore satisfies the requirement in paragraph 9 (e) that the related loan has not been closed or substantially disbursed.

42. Furthermore the Panel has not previously made a recommendation o n the subject matter o f the Request. Therefore, the Request satisfies paragraph 9 (f).

43. The Panel, however, finds that the Requesters have not fulfil led the procedural requirement that they bring the subject matter o f the Request to the Bank’s attention for Management to address before filing a Request with the Panel.

44. The Requesters’ f i rs t contact with the Bank occurred when the president o f Timpuyog Zambales, Inc. called the World Bank’s country office Mani la and asked whether the office could send a document to the Inspection Panel via pouch. After being refused, the Requesters forwarded the Request to the Panel by mail. At the same time Timpuyog Zambales sent the World Bank office Mani la a letter and the associated documents, which complained about the same issues.

45. Timpuyog Zambales has had previous contacts with M W S S in an effort to resolve the issue of sea dumping. In June-July 2002, February 2003, and o n September 1, 2003, Timpuyog expressed to MWSS its desire for off icial confirmation o f the newspaper reports and informal communication regarding non-implementation o f septage disposal at sea, and requested supplementary information. At least some o f the signatories also met with M W S S in an effort to resolve the problem, when M W S S made a public presentation o n the Project in Zambales o n June 27, 2002, and at MWSS o n July 5, 2002. The Panel was unable to find any contact between Bank Management and staff and the Requesters during these meetings. Both the Requesters and the citizens interviewed and M W S S indicated that n o one f i o m the Bank had been present o n these occasions.

46. The Panel notes that Management’s response indicates that o n several occasions in early 2000 it went to Zambales to meet with the Governor and representatives o f the Provincial Board and discussed with them sea dumping operations and that consultations in June and July 2002 with MMT members and Timpuyog included the septage management plan and the sea dumping operations. The Response specifically notes that “interaction with the Zambales stakeholders (sic) was

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continued throughout” (after sea dumping began).65 This would seem to suggest that Timpuyog, which has protested sea dumping from the beginning and the residents of Zambales may have already satisfied the requirement that they bring their problem to the Bank’s attention. However, in conversations with Timpuyog, the Vice Governor of Zambales and members of the Provincial Board, other concerned citizens of Zambales and the fishermen’s association and with MWSS, we could find no instance in which any World Bank staff had met with them.

47. The Panel notes that the refusal of the World Bank office in Manila to forward the Requesters correspondence to the Panel by pouch is not in compliance with BP 17.55, which requires the country office to forward all such documents unopened by pouch to the Panel upon request.66

48. In reviewing Management’s Response, the Panel notes that the 1972 London Convention requires that a State party issue a permit for the site of dumping and that all parties to the Convention file annual reports to the International Maritime Organization (the secretariat for the Convention) listing the sites and noting wastes disposed of at the sites.

49. The Philippines listed the general site where the dumping occurred in its 1994 and 1995 Annual Report to the International Maritime Organization (IMO). What is noteworthy is that the 1995 report indicated the disposal of 900 tonnes of ‘sewage sludge’ at the site where the ‘test’ sea dumping of Minila Wastes took place in 2002 and 2003.67 It puzzles the Panel that there is no mention of this fact in the Management Response.

50. The Philippines has filed no annual report since 1996 with the MO, although the 1972 London Convention requires all State party to file an annual report. The Panel notes that this period covers the period of the Project supported by the Bank.

5 l. During the visit to the Philippines the Panel confirmed that the Requesters and the public generally have not had access to the monitoring data for the ‘test’ period of sea dumping of sewage wastes (septage). The Panel notes that MWSS represented to the Panel that it would provide this data to the Requesters if they were to again make their request by a formal letter to MWSS. The Requesters have been so informed.

” The Response, at 7 23. BP 17.55, August 1999, at 1 2 states that “Ifa request for inspection is delivered to a Bankfield ofice,

the head of the office issues a receipt to the requester and forwards the request to the Panel in the next Pouch”, and 7 3 adds “lfa communication addressed to the Panel is delivered to any Bank staff member, that staffmember promptly forwards it, unopened to the Executive Secretapy of the Panel and informs hisher department director.” 67 International Maritime Organization, London Convention, Compilation Report, 1994, table 2.2 and 1995, table 2.2.

13

F. CONCLUSIONS

52. Because the procedural criterion o f paragraph 9 (c) that the Requesters have brought the “subject matter (...) to Management’s attention and that, in the requester’s view, Management has failed to respond adequately demonstrating that i t has followed or is taking steps to follow the Bank’s policies and procedures” has not been satisfied in this Request, the Panel concludes that the eligibility criteria have not been met.

53. The Request and Management Response contain conflicting assertions and interpretations about the issues, the facts, compliance with Bank policies and procedures, and harm. The Panel can only address these issues during the course o f an investigation. However, because o f the Requesters’ failure to satisfy the procedural criterion noted above, the Panel cannot make a recommendation on whether to investigate the subject matter o f the Request for Inspection.

14

ANNEX 1

REQUEST FOR INSPECTION

08 Septonbar 2003

A BRIEF BACKGROUND OF THE PROJECT

anila ~~~~~~ S3"age Pro&xt (h&S"P) i s carried out by the Metropolitan Wate,works and Sewerage System ( W S S ) and i ts private concessionaires Manila Water Co., Inc. (MWCI) and Maynilad Water Services, Inc. ~ ~ § ~ ~ . The MWSS signed a loan agreement with i&e International Bank for Reconstruction and Development in 1998 for this project.

~~~~~~~ ~~j~~~~~~~ sand ~~~~~~~~t~

Based on. t he 1996 loan agreement document the project a h 3 to (a) reduce the poh lu~on of Metro Manila waterways and the Manila Bay; (b) decrease the hea l th hazard from human exposure to sewage €or the city's residents; and (c) establish a gradual low-cost improvement of sewerage services in Metro Manila by expanding the MWSS' septage management program. (Schedule 2, p.16).

While the project's major sewage processing component i s to put up ecologically, sound lmd- based sewage processing facilities, these were no t adequate or operational two years ago until the present. Thus, the project proponents concentrated on a supposedly less costly method of disposing of t he sewage - that is collectilag and dumping o ~ M ~ ~ s w Mmiia's ~ ~ ~ ~ ~ h ~ ~ d liquid waste k to the South China Sea, In a site about 69 kilometers from Corregidor Island near the coastad provinces of Bataan and Zambales.

F ~ l l ~ ~ i n g the project plan, dumping shall be undertaken as follows: After eight (8) tanker trucks (equivalent t o a minimum of 400 cubic meters) o f liquid waste i s loaded onto a waiting barge at the por t area in Manila Bay, this will travel for t h e e days until it reaches the designated spot. The barge will then pump out i t s load within a 10-kilometer rad ius through a seven meter (am) pipe lowered from the belly of the barge at a depth of around 2,300 meters. Liquid waste dumping would b e undertaken for nine months in a year, ceasing operations during the rainy months from July to September, when the sea current moves inward. Based o n the plan, sea dumping would b e carried out for five years, f rom 2002 until 2007 (Appendix 3 of 1994 Environmental Impact Assessment).

~~~~~~~~, ~~~~~~~~~~~~~~ SOEid ImsrPpsPat of

This project's sea dumping component is a dear ease of dumping waste ifi others' backyard. While the project proponents argue that this i s a less costly method of managing urban sewage system, there are other effective land-based, more environment f ~ e n d l y and less costly methods. Moreover, investiag in ecologically sound approaches turn out to be more cost-efficient in the long-term.

Uatil now the follovi&g key questions stirfaced by various sectors that would be potentially dfected by the project have not been adequately addressed. These concerns include:

(1) heal th risks to peopie'plosed by any sea dumping activity to achieve the project gods; (2) negative impact on the economy in the mast& areas near the dumping site due to

possible 'red tide' or "fish ki!!" phenomena, thereby jeopardizing the ITrshlng indushy; and

(3) possible destruction of precious tourist coastal desfkations, thus d isc~urag ing v k i m r s to these local areas.

project team has yet to prove i t s claim fhe this sewerage dumping at sea is sde for e's heal-th and to the r i ch marine l i fe it will af€ect. This technology i s already banned in

m a y countries because it violates new internationdl laws of the seas.

In the late 2002, the Philippine Coast Guard suspended issuing dumping permits after the local governments opposed the project (Annex 1). The consent of the latter i s a prerequisite for the issuance of the permit. The government's Bureau of Fisheries and Aquatic Resources (WAR) under the Department o f Agriculture, has declared that the dumping site is a r i ch fishing ground and warned that the dumping activity would compromise &e lives of t h e rich variety of marine creatures as well as the livelihood of fishing communities nearest the site. The BFAR also said cases of algal bloom (such as the red t ide phenomenon) and fish kill (due to lack of oxygen supply) are potential effects of the dumping activity ( h e x e s 2,3,4)

With the sea dumping component, the project implementing team was unable to achieve its set goals. Even if it i ry clear that the method i s simply moving waste from the bay to the sea, and the heal th r isks to Metro Manila residents to the residents in other communities nearest to the dump site, still, the proponents choose this method of waste disposal, They just@ this with the claims that: (If it does no t cause hea l th problems since bacteria accompanying the liquid waste will perish within 15 minutes upon contact with salt water; (2) it i s safe because the liquid water would dissipate long before they would reach the municipal waters; (3)this technology was used in many countries including many European countries atad Japan in the 1970s up to the late 80s and early 90s when they have developed other ways to dispose of the i r sludge; and (4) it is presently an authorized industr ia l waste dumping site anyway.

In 2000, t h e proponents sought the endorsement of the project by local government oEcia9s wi thout adequate information about i ts potential impact on the local areas and did n o t consult local residents about it. In the province of Zambales the provincial governor was made to endorse it but he made it clear that this was o n the c o r a d i t h that all globally accepted governing rules and regulations a d envirosvnental requirements will be strictly complied to protect the interest of our constilx~ents." H is letter i s annexed to the project Environmental Impact Assessment Certifiicate since this is a condition for the issuance of the Project's Environmental Compliance Certificate (ECC).

Dumping testing were undertaken in 2001 and 2Q02 vkimally under wraps, as the LGUs and the people of the affected coastal provinces have n o t been properly and sufficiently informed o f the details of the said testlng. It was only then that the local monitorFng team were requested to b e formed by the provincial governments. Neither were there m y report submitted about the monitoring of the %-atem or the testing undertaken, These violate the ECC issued to the project proponents in October 1996 (Sees. 12,13,14).

'"vm publ ic hearings on the project was held in July an0 in October, 2002 in +he provincial capitol in Iba, Zambdes with local and regional goveriment officials, people's organizarions, and the privaxe sector. In bo th these fora, all sectors present have expressed the i r disapprmal of the project especially because t h e safeq- and soundness of t h e project could n o t be assured.

Fo lb i -hg this, Zambales signed a resolution (2802-402) in December 2002 c l i s a p p r o ~ g ; the request of the project proponent W S S for the provincid board to authorize the provincial governor to sign the Memorandum Of Agreement for the creation of a local Monitoring Team €or the project. The formation of t he monitoring body i s one condition for the issuance of the project's ECC. Another resolution was passed (No. 2002-403) demanding the cancellation of the Pssjed ECC by t h e Department of Envkorament and Natural Resources because of the violation regarding the lack of proper in fomat ion to and consultation with the concerned local governments and their constituents h e x e s 5 and 6). A number of municipal legislative councils also expressed the same sentiment (Annex 7).

the provincial board of

Eo more sea ~~~~~~~, ever .

It must be emphasized that while t he MWSS and its concessionaires carried out dumping testing in October 2001- March 2002, it has n o t issued any statement about the results of the testing findings. I ts environmental monitoring team has n o t also reported to project stakeholders, such as local governments and organked groups in affected areas, about results of its monitoring activities.

Due to people's opposition and other developments stated above, the septage dumping activities has been temporarily suspended early this year (2003) by the W S S and its two concessionaires. This was the declaration made by an u r " e d MWSS official, in a local newspaper interview (Mena Mae S. Flores, Manila Standard, February 9, 2003). This was also confirmed by the NIWSS technical staff when reached by phone. A n AXWSI representative also said that other liquid waste management alternatives are now employed.

A number of NGOs l i ke the TIMPUYOG Z m b a l e s and the Zarnbales Resort Owners' Association have individually requested €or the MWSS and the DENR to make their posi t ion o f f k i d and state this in clear terms for the interest o f all other stakeholders. Until this day, t h e agency has no t made any official declaration about its shelving o f the sea dumping activities. Neither has it made any definite commitment that sea dumping tviu never b e undertaken at m y t h e in tlae future nor provide information regarding i t s alternative mode of disposing of i t s collected liquid wastes f rom Metro Manila.

08 September 2003

i

2. Dumping i s violation on the condition stated in the Enviroimental Compliance Cert i lica le { ECC) \vi thou t adeq uale iiioiii t o r i ug .

3. Stticlies os1 the iminediate e(I'cct aftcr dumping 011 marimc life has not been done.

4. Manila Day i s ali~cady vcry polluted itnd miy adclilional sti-css in terms o f pollution in nearby waters would ciefinitcly aggrsavote the situation.

5. Simnge phenomeiion affecliiig coastal areas l i ke Anilao and Calatagan, Batarigas and Boliigo, Pangasinan have occurred at this tiine ~l1ic l - i could be related to the dumping activities.

The area ideiitifietl for dumping i s a fishing ground, hence a t l~oroi~gh evaluation on the effect o f dumpiiig to niarine l i fe i s very important.

il

Secretary LEONARD0

. , -. CI~C---~----.. _._ _ _ .___ -._ ~ ... ..I.. --- I ..

1. On April 11, 2002, iri n riieetirig wilh Undersecrelary RAMON PAJE of the Dcparlinonl of Enviroi iiiiei 1 t and Malural Resources, Director JUL!AN AMRDOR of [lie Environinenlal Maiiayeimri l Bureau and Dir'eclor FLORENOO BARANGAN of the Coaslat and Marine Management OTfice of the DENR, the undersigned brought to the altention of [tie said officials the concern of the OFAR over.the conlinuuus duinpiiiy of septaye in the Soulh China Sea under the Manila Second Soweraye Project financed by the lnternalional Bank for Rural DcveloprPient (IBIKI) Loan NO. 40.19 of the Manila Water and Sewerogo System (MWSS).

The Metropolitan Waterworlrs and Sewerage System ~ ~ W S ~ ~ has an on- going project on sewerage wilh fidancial support from the World Bank to improve the qualily of saiiitalion services by radically expanding its septage management program for Metro Manila. 'Tlie project is managed by two MWSS concessionaires, Mayn'!lad for \he west zone and the Manila Water Company Inc. {MWCI) for the east zone. ( Atlached as Annex A is a brief summary of the Projecl)

2.

3. One of the pruject compoiietits includes collection of 5epIage fro;n residential areas and t~ic coilecied septage is disposed at sea in rsw or untreated form. The scptage disposal site as designated by the Phil. Coast Guard (PCG), is located 62 hiit west of {lie island of Corregidor wirh a water depth of 2,300 r6eiers and about 20 ltrn away from [he nearest navigaiio!! lane. Tim spread disposaf riicliluzf is being appltz-d and the wzsfe disposed of by barges.

'

} ~ ~ ~ ~ ~ ~ 4 ~ ~ ? ~ ~ ~ ~ Y ~ f E i i W O i l ) i S e S E w E R A G E S\ibirril

4.

5.

6.

The Environrnoiitai Compliance Certificate (ECC) for this project was the DENR on October I O , 1996. There are three (3) significant granted by

conditk~ns stipulated in lhe ECC: (a) a Muttipar tite Monitoring Tea cornposed of the concerned government agencies including the BFA forrried to ensure effective environmenbai tnonitoring, (b) regular monthly monitoring of affected water resources to’ include coastal walers of Bataan, Zainbales and Cavile for physical and cherriical parameters of water and, (c) aiinual rmnitor’ing of marine biota (planktons, algae and important fish species) in the coastal waters.

From irifoririation galtiered, the MWCI, after trial runs conducted in May 2001 has resumed dumping septage in the Socrlh China $ea eventhough the Memorandum of Agreement for- the creation of the Multipartite Monitoring Team and the creation of lhe Environrnental Moraitoring Fund has not yet been signed by tile. concerned agencies iri violation of the conditions set forth in the Environrnenlal Clearance Certificate (EEC) issued by the DENR.

Even wilhout the formal creation of the Mcillipartite Monitoring Team, the W A R wanted to conduct an assessment of the actual dumping site particu’iarly its effect on marine life but this can be done only with adequate information on the schedule and location of septage dumping. A specific request for this information was, therefore, made by BFAR in a rrieeting on June 8, 2801 among representatives of the MWCI and of the agencies that would constitute tho ~ u l t i ~ a r ~ i t @ Monitoring Team. (-The Minutes of the said meeting is hereto attached as Annex 8 )

While information has been received that dumping activities have recently resumed, WE have not been provided with the information requested for.

Considering !tie nature of the materials and the circumstances under which they are disposed at sea and its ‘irn’plications on marine life as we!! as its possible effects on public heallh, the BFAR recommends that the d ~ ~ ~ ~ n ~ operations of MWCI be suspended irninediately until adequate monitoring and additional safeguards can be put in place.

1

Altached is letter zddressed to Secretary HEGERSUN ACVAREZ containing , the said request.

5

MEMORANDUM FOR: Secr.c:t:rry HEHERSON T. ALVAREZ Uapai Irnont of Environmeni and Natural Rssourcos

Dale: '1 9 April 2002

SU f3 J ECT: Mnriita Sacond Sewerage Project (MSSP) It i lcrr iat ionnl Bank for Rural bcvclopmont (IBRD) Loan No. 4019 PH

1. Tho Melropolllori Wnlerworlts and Sewerage System (MWSS) h a s an on- going project on soworage with linancial support from Lhe World Dank to Improve l l io qualily of sariitalion services by radically expandirig its septege managomonk program for Maim Manila The project is iiianaged by two MWSS cor;cessionaires, Mnyriilad lor the west zone and (lie I\/lanila Water Company Inc. (MWCI) for Ilx cast zone. ( Altached as Annex A is a brief summary of the Pr ojocl)

2. One of flit! projecl cornponenls includes colleciion or seplsga from rcsidenl ial areas and l l ie collecled septaga is disposed at sea in row or wilraaled form. l ' l ic scplage disposal site as designalsd by the Phil. G o a d GtJard (PCG), i s localsd 62 km wesl of the island of Corregidor with a watsr deplli of 2,300 ineters arid about 20 km away from the nearest navigation Inno, Tho spread disposal niolhod is being applied and (he was40 disposed of by t3nr g c SI

. I f

3. T/!e Environtnenlal Coriipliance Certificat'b (ECC) fdr: this prajact was grariied by \ l ie DENR on Oclobor .iol 1996. There are three (3) slgniflcanl condillom stipulaied in the ECC* (a) a Mutlipartiie Monitoring Teem (MMT) composod of Iho concerned yoveriiliierzt agencies including [he BFAR, shall be formed to e i m m effective environrnenlai mcniloring, jb) regtilar monihiy monitoring of eifeclad water resources to include coastal waters of EJataan, Znmbalea and C a v i k lor physical and chemical parameters of waier and, ( c ) annual monl!criny ai marine biota (planktons, algae and imporbil l fish species) in tha cossbl wliterz

4. ' rhs Environr;?eri\al Coinpliarxe Cetliricate (ECC) lor lhis project was granted b y the DEN17 011 Oc!obei. .IO, 1996. There are three ( 3 ) significant conditions stipulaled ii i the ECC: (a) a Muttipm tile Moriitoring Team (MMT) coiiiposed of lhe concerned yovernrnerlt agencies including the BFAR, shall be iorriied to ensure effective erivironrnental rnonitoring, (b) regciiar monthly rnoi4toring of affected water' resources to' include coastal waters of Bataan, Zainbafes atid Cavite for physical and clieisiical paraineters of water and; (e ) a i i r~~ ia l iiioniloriilg of rriar'ii i c biula (plarildons, algae and important fish species) in tlis coaslal wal8rs.

5. From irilurnm!icm gjz\!ie!ed, ! !?e bV.NCl, after. trial runs cmciiioted in M q 2001 has resumed duriiping seplaye in \fie Soii(h China Sea oventhough the Meillorandurn of Agreernenl for' the creation of the Multiparlile Monitoring Team and [ l ie creation of lhe Erwiroi-irnenlal Monitoring Fund has no( yet been signed by tile coricerned agericies iii violalion of tile conditions set forth in the Environiiienlai Clearance CerLificate (EEC) issued b y II le DENR.

G , Ever1 witliout [lie formal crealion of the MtiItipsrtile Monitoring Team, the BFAR wanted to conduct an assessrlient of the actual duniping site particularly its effect on iriai.ine life but this can be done only wi(h adequate information on \he schedule and localion of seplaye dumping. A specific request for this inforrnaliori was, therefore, rnade by BFAR in a trieeting on June 8, 2001 among represenlalives of h e MWCI and of [lie agencies lhat would constitute the Multipartite MoniIoring Tearii. j'flie Mirtules ot l l ie said meeting is hereto attached as Annex B)

While infortriation has been received that dumping aclivilies have recently resumed, we have not been provided wilh Ihe information requested for.

Considering II ie nalure of [ha inaterials and \he circumstances under which h e y are disposed al. sea and its 'irn'plications on marine life as well as i ts, possible effects or1 public tieallh, the BFAR recoinmends that the dumping operations of MWCI be susp,ended iriiinedialely until adequate rnonitoring and additional safeguafds can be put in place.

Altached is tetter addressed lo Seci'elary 1-lE~ERSON ALVAREZ containing \tie said request.

c

1.

c .

2

- Pag

2-402 -

\Ve hereby certify PO the correctness of the f ~ ~ c p i t i g rcsolutiom which was duly egular session hcld on November 4, adopted by the Sanp#nhng

24102.

-.

EX-OFFICIO MEMDEIQ

. 'Governor

Annex6 ,

- Page 2 o f Res. No. 2002-403 -

WHEREAS, one o f the projcct components includes the coUection ofscptage from rcsidcntial areas and for thcse collccted septige to be disposed at sea in raw and untreated fotm specifically at the disposal site designated by the Philippine Coast Guard a t 68 km. \Vest OF Corregidor island in the Province o f Bataan with a water depth of 2,300 meters and ailcgcdly about 70 km. away from the l'rovince o f Z m b d e s ;

\ T W 3 U X S , the Environmcntal Compliance Certificate (ECC) for this project p n t c d by die Dtpament of Environment and Natural Resources on 10 October 1996 specifically provides that endotscments from the different local government units to include the coastal municipalities o f Dataan, Zambales and Cavite shall be secured before project implcmenmtion. ?'he Sanguniang Panlalawigan o f Zambales has signified i ts strong opposition to this project as provided in its resolution 'dated G March 2000 (after 4 years when M\'cSS presented thc project to Zambales) and t l ie M W S S has failed to secure endorsements from the coastal municipa!tties o f Zamhales;

\VHEREAS, the Sangpniang I'anlalawipi of Zmbales did not grant the authority to Governor Vicentc P. AIagsaysay to sign in t h e Memorandum of Agreement (MOA) crcating the hfulti-Partite hfonityring Team and it w s also reported that the Bureau of I:ishcrics & Aquatic llcsourccs (BFAR) ;I$ wc l l as other govemment agencies and representxtives from the locd gnvemmcnt units o f Batam and Cavite have also not yet signed in the said MOA;

\VI-IEREAS, asidc from marine pollution that maybe generated because o f this sea disposal of scptagc that may cndmger the source o f livelihood of many fisher folks in I3atmn and Zamlralcs, that sca disposal of sepwge shdl result to various diseases not to nicntion its great impact on the tourism promotion activities o f Zambales and i ts neighboring areas such the Sulxc Day Mctropolitan Area, Batam md Cavite;

NOW 1'1 IEIIISI~OTII?, UPON UNANIMOUS ACCORD of all the Members present, t l ic Snnlpniarig 1;:iniztawip~ ot'%:imtm1cs in ion assemblcd hcrchy -

II1ZSOI,VIS, as i t is 1icrcl)y resolved, to adopt a resolution strongly requcsting the 1)cp:irtment o f Cnvironmcnt and Natural l~esourccs to cancel thc Environmental Compliance Ccrtificatc (13CC) of Manila Second Sewetagc Projcct due to i ts sea disposal of scpk~nge comporicrit and the allcgcd serics of disposal o f scphge at Bataan Pcninsula already conducted b y MIVSS dcspirc thc non-formation of the Multi-Partite Monitoring ?'em;

RISSOLVJZD FlJlUJ3El< to request the Environmental Management Bureau o f the Dcpartrnent o f Environment and Natural Resources to immediately investipte and impose inimcdiatc 1cg;ll actions apinst the &flVSS bnsed on the reports o f the Philippine Coast Guard concerning t h e scrics of sea disposal o f scptagc already conducted b y R.I\VSS despite .the noti-formation o f the Multi-Partite Monitoring ?'earn.

I

RESOLVED I'INAI,J.,Y that copies of this resolution be fi"1icd t l ie hlanager of the htetropolihn \Varerworks PC Snvetxgc System; the Secrchry and Region I J I Dircctor o f tlic Ilcpartmcnt OF 13nvimnmcrit arid NatumI llcsourccs (DBNR); the Dircctor of the Environmental Rianagcmcnt Ihrcau (15'4.3) o f the DENR; the Sccrctary and Region 111 Dircctor o f the Dcpartmcnt o f Yourism; the Secretmy and Region 111 Director of the Department o f Wealth: the Commandmt and Zambdes Office Director o f the Philippine Coast Guard (PCG); the National Director and Kegion Ill. Dircctor o f the Bureau of Fisheries and Aquatic Resources (WAR); all the Municipal Mayors and Municipal Tourism

Agricuulturc Officers of Zambdes; the e ZambrJes Resort Chvners Association lhtd & Fishery Council (PAFc); the atic Resources Managemcnt Council

(I'PAIIhiC), for thcir information and appropriatc action.

ADOP"'ED UNANllttOUSLY this 4"' dny of Novcmber 2002. - - - - - - - - - - - " - - - _ s"cf/

- ?age 3 of Res. No. 2002-403 - .

W e hereby certify to the correctness of thc foregoing resolution which was duly &ptcd by the Snnwniang Panlalawigan during i ts regular session he ld on November 4, 2002.

4ecretazy to the S.P. Datc Signcd:

RIZALX#O F. PABLO, JR. Member

I lste Signcd:

PAR0 hfemlier

Dntc Signcd:

h4cmbcr Datc S ipmi : , Datc Sigicd:

I

Member Datc Signcd: 7 , a t c Signed:

S K President Dntc Sig11cd: D i r c Sigticd:

~ ~ $ ~ ~ * Vim Mayor h o r E. Fontimayor.. .......... .Presiding QEces Non. Virginis M. Pampa.. .................... S.B. Member Son. Aurora A. CaIidm.. ..................... S.B. Member

Hon. Filipina L. D d a o . . ................... ..S.B. Member

A. Abejon ..................... .S.B. Member

Non. Menandro N. Maybhh.. .............. S.B. Member

Non. Eihd R. Cdaywy.. ................... ..S B. Member Hon. Hoon, Antonio M. C&iles, Jr.. .............. ..S.B. Member Won. Oscar Tp. Martangan.. ................... .5.B. $Amber Hm. Alexander E. Abille.. ................... .Li,iga President €Ion. Ciara A. Cabacumgm.. ................... SIC. Fed. Prcs~deni

**** I

NOW ~~~~~~:

WSBL'crED, as it i s hereby resohe to protest the plan STMetro Maarila to dump their septic tank and sewerage waste into the sea waters surrounding corregidor island;

R;GSOLWD 43, that copies of this resolution be fiimished the Metro Manila Authorities concemed, the f h q p " n , Irfon. k & s n Torres, the Provincial Governor, Hon. Vicente Magsaysay, the Smg=,a;unimg ~ ~ i ~ ~ ~ ~ g ~ ~ , Xba, Zambdes for their information and notation;

OXILSY ADOFTXD this 2gth day of October, 2002 on motion of khn. Filipina L. Dmlao, duly seconded by all Members present.

** * ** f6

I hereby certify to the correctness ofthe forego

ANNEX 2

MANAGEMENT RESPONSE

BANK MANAGEMENT RESPONSE TO REQUEST FOR INSPECTION PANEL REVIEW OF THE

PHILIPPINES MANILA SECOND SEWERAGE PROJECT (Loan No. 4019-PH)

Management has reviewed the Request for Inspection of the Philippines Manila Second Sewerage Project (Loan No. 4019-PH), received by the Inspection Panel on September 26, 2003 and registered on October 1, 2003 (RQ03/1). Management has prepared the fol-lowing response.

iii

CONTENTS

Abbreviations and Acronyms ......................................................................................... iv

I. INTRODUCTION.................................................................................................... 1

II. THE REQUEST....................................................................................................... 1

III. PROJECT BACKGROUND................................................................................... 2

IV. ELIGIBILITY........................................................................................................ 15

V. MANAGEMENT’S RESPONSE.......................................................................... 16 Map Map 1. IBRD No. 32767 - Manila Second Sewerage Project (MSSP),

Request for Inspection Annex

Annex 1. Claims and Responses Annex 2. September 19, 2003 Letter from the Bank to MWSS Annex 3 September 30, 2003 Letter from MWSS to the Bank, with three attach-

ments Annex 4 October 15, 2003 Letter from the Bank to MWSS with Amendments to the

Loan Agreement – Countersigned by MWSS on October 17, 2003 and by the Government of the Philippines on December 10, 2003 and Substituted on December 18, 2003 for the Earlier Unsigned Letter

Annex 5 Chronology of Project Events and Summary of Consultations Annex 6 Monitoring Activities and the Multipartite Monitoring Team Annex 7 MSSP Supervision Missions

iv

ABBREVIATIONS AND ACRONYMS

ADB Asian Development Bank BFAR Bureau of Fisheries and Aquatic Resources BOD Biochemical Oxygen Demand BP Bank Procedure DENR Department of Environment and Natural Resources ECC Environmental Compliance Certificate EGF Environmental Guarantee Fund EIA Environmental Impact Assessment EMB Environmental Management Bureau EMP Environmental Management Plan Government Republic of the Philippines (the Guarantor) IBRD International Bank for Reconstruction and Development

(the Bank) IPN Inspection Panel MM Metro Manila MMT Multipartite Monitoring Team MOA Memorandum of Agreement MSSP Manila Second Sewerage Project (the Project) MTSP Manila Third Sewerage Project (proposed) MWCI Manila Water Company Inc. (Concessionaire) MWSI Maynilad Water Supply Inc. (Concessionaire) MWSS Metropolitan Waterworks and Sewerage System (the Bor-

rower) NGO Nongovernmental Organization OD Operational Directive OP Operational Policy PCG Philippine Coast Guard PHP Philippine Peso SAR Staff Appraisal Report TOR Terms of Reference USD United States Dollar

Currency Unit USD 1 = PHP 54.99 (as of 10/02/03)

I. INTRODUCTION

1. On October 1, 2003, the Inspection Panel registered a Request for Inspection, IPN Request RQ 03/1 (hereafter referred to as “the Request”), concerning the Philippines Ma-nila Second Sewerage Project (MSSP) (Loan No. 4019-PH) financed by the International Bank for Reconstruction and Development (the Bank).

2. Structure of the Text. The document contains the following sections: Section II briefly presents the request; Section III lays out a background of the Project, its imple-mentation status and progress, with a focus on sea disposal issues; Section IV addresses the issue of eligibility of the Request; and Section V summarizes the Management’s re-sponse. Annex 1 presents the Requestors’ claims, together with Management’s detailed responses, in table format.

II. THE REQUEST

3. The Request for Inspection was submitted by Timpuyog Zambales Inc., a local nongovernmental organization (NGO) on its own behalf and on behalf of 1,350 local residents, mostly members of 28 various local people’s organizations, and environmental advocates from Zambales, Metro Manila (MM) and Zambalenos in the United States and Canada (hereafter referred to as the “Requestors”).

4. Attached to the Request are:

(i) A brief background of the Project, dated September 8, 2003;

(ii) Letter of August 30, 2002 to the Administrator of the Metropolitan Waterworks and Sewerage System (MWSS) from the Office of the Commandant, Philippine Coast Guard (PCG) regarding the non-issuance of a dumping permit;

(iii) Objection of the Bureau of Fisheries and Aquatic Resources (BFAR) on the Continuous Implementation of the MSSP by the MWSS, undated;

(iv) Memorandum of BFAR of April 19, 2002 recommending suspension of the dumping by the Manila Water Company Inc, with attached request ad-dressed to the Secretary of the Department of Environment and Natural Resources (DENR);

(v) Excerpt from the Minutes of the Regular Session of the Sangguniang Panlalawigan of Zambales, held at the Session Hall, Capitol, Iba, Province of Zambales on November 4, 2002, containing Resolution No. 2002-402 disapproving the request of MWSS for the Sangguniang Panlalawigan of Zambales to grant an authority to Governor Vicente P. Magsaysay to sign

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the Memorandum of Agreement (MOA) on the creation of a multi-partite monitoring team for the MSSP;

(vi) Excerpt from the Minutes of the Regular Session of the Sangguniang Panlalawigan of Zambales, held at the Session Hall, Capitol, Iba, Province of Zambales on November 4, 2002, containing Resolution No. 2002-403 strongly requesting the DENR to cancel the Environmental Compliance Certificate (ECC) of the MSSP due to its sea disposal of septage compo-nent and the alleged series of sea disposals of septage to Bataan Peninsula already conducted by the MWSS as confirmed by the PCG despite the non-formation of the Multipartite Monitoring Team (MMT);

(vii) Excerpt from the Minutes of the Regular Session of the Sangguniang Ba-yan of San Narciso, Zambales, held at the Third Floor, Session Hall on October 28, 2002, containing Resolution No. 357-2002 protesting the plan of MM to dump their septic tank and sewerage waste into the sea waters surrounding Corregidor Island; and

(viii) Map of Septage Management Option Ocean Dumping Areas, MSSP, pre-pared by the Consultants OEC-DCCD.

5. No further materials were received by Management in support of the Request.

6. The Request contains claims that the Panel has indicated may constitute violations by the Bank of various provisions of its policies and procedures, including the following:

• OD 4.01 on Environmental Assessment, October 1991;

• OP/BP 10.04 on Economic Evaluation of Investment Operations, September 1994;

• OD 13.05 on Project Supervision, January 1996; and

• BP 17.50 on Disclosure of Information, March 1994.

7. The Bank’s records do not contain any communications from the Requestors, Timpuyog, Zambales, Inc, until September 2003. See Section IV below.

III. PROJECT BACKGROUND

8. The Project. The MSSP (Loan No. 4019-PH) is an IBRD Loan to the MWSS, in the amount of USD 57 million. The Project was prepared during the early 1990s, ap-praised in June 1995, negotiated in April 1996, approved by the Board on May 21, 1996, and signed on June 19, 1996. However, the date of Project effectiveness was postponed when the privatization of MWSS was being planned and executed in 1996-1997. After the concessions became operative in August 1997, both concessionaires—Manila Water

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Company Inc (MWCI) and Maynilad Water Supply Inc (MWSI)—communicated their decision to accept their portion of the Project activities without modification. The Project was accordingly restructured and approved by the Board on November 30, 1997. The Agreement Amending Loan Agreement was signed on March 17, 1998, and became ef-fective on the same date. The closing date was also amended at that time from December 31, 2001 to June 30, 2003.

9. On August 31, 1999, the description of the Project was amended to incorporate, among other things, the “carrying out of septage trials,” as ocean dumping was a new technology in the Philippines. On November 12, 2002, the description of the Project was amended to incorporate, among others, the new small sewage treatment plants (maximum 23 facilities), and the rehabilitation of the Dagat-Dagatan Sewage Treatment Plant, which had not been meeting national standards for its operations prior to the Project. These in-vestments were intended to enable the new systems to reduce biochemical oxygen de-mand (BOD) loading in the long-term in MM waterways and Manila Bay.1

10. On January 21, 2003, at the Borrower’s request, the Bank canceled USD11.9 mil-lion from the Loan due to exchange rate savings. On June 19, 2003, the closing date was extended to December 31, 2004, to enable the Borrower to complete the activities under the Project.

11. Project Objectives. The objectives of the MSSP were to assist MWSS to: (a) re-duce the pollution of MM waterways and Manila Bay; (b) reduce the health hazards asso-ciated with human exposure to sewage in MM; and (c) establish a gradual low-cost im-provement of sewerage services in MM by expanding MWSS’s septage management program.2 The primary benefits from the Project will come from reduction of pollution and improved environmental conditions, thereby reducing human exposure to sewage and protecting public health in MM. Further, it will permit realization of the benefits from existing investments in sewerage in MM and improve sanitation service quality and cov-erage.

12. Manila Sewerage and Septage Situation. MM forms the National Capital Region and consists of seventeen municipalities (with a population of about 8.9 million in 1991). Since 1997, the water supply and sewerage services have been operated by two private concessionaires: MWCI, the East Concession; and MWSI, the West Concession under 25-year agreements. Prior to 1997, the water supply and sewerage services were operated by MWSS. MWSS, a Government corporation established in 1971, retains ownership of all existing assets and those to be financed by concessionaires.

13. According to the data available at Project appraisal, only 18 percent of the waste-water generated in MM households was collected by localized separate sewerage sys- 1 BOD is a commonly-used measure of organic pollution. 2 In this document several terms regarding waste are used: “septage” is partially or fully degraded human wastes si-phoned out of septic tanks; “sewage” is composed of the raw wastes generated by domestic activities, mostly from toilets and kitchens; “liquid human wastes” include all types of human wastes that are in liquid form or have liquefied, such as leachate from solid wastes. In preparation of the response, it is assumed that references in the Request to dump-ing of sewage or household liquid waste in fact refer to septage.

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tems. Nearly all of this was discharged through an outfall into Manila Bay; only 1 percent was treated, mostly by the Ayala and Dagat-Dagatan sewage treatment plants. Most resi-dential wastewater (82 percent, or around 7.5 million people) was discharged into the public drainage system either directly or through approximately one million septic tanks.

14. These septic tanks were not desludged and the effluent flows into the water bodies were essentially untreated, causing heavy pollution everywhere in MM, and particularly in high density areas. With periodic desludging, existing septic tanks would remove at least 30 percent of the pollution generated by municipal wastewater. In terms of BOD, such pollution was estimated at about 1,000 tons per day. About 80 percent of this pollu-tion originated equally from households and industrial wastewater and 20 percent from solid waste dumped in surface drains and rivers. Most of the pollution generated from domestic, industrial, and commercial activities in MM eventually ended up in the three primary water bodies: the rivers and canal system, Laguna de Bay, and Manila Bay. As a result, the river system in MM was biologically dead, Laguna de Bay increasingly turbid, and the eastern shoreline of Manila Bay was unsuitable for recreation. With

15. Project Components. As appraised in 1996, the Project included the rehabilitation of existing separate sewerage networks and the Ayala sewage treatment plant, and im-plementation of the first phase (1998-2000) of the septage management plan. The facili-ties included: (a) construction of a septage treatment plant and three barge loading sta-tions for the shipment of septage; (b) rehabilitation of the central and Ayala sewerage systems, including new sewer house connections; and (c) laboratory instruments, equip-ment, tools, spare parts and specialized vehicles for improved sewer maintenance. The implementation support included: (a) supervision and monitoring of construction, septage collection and septage treatment plant operation; and (b) preparation of designs and docu-ments for the next stage of sewerage system and septage management expansion. At the time, sea disposal of septage was included in the Project as an interim, short-term so-lution to reduce pollution of Manila Bay and waterways (see para 24 below on analysis of alternatives) and was to have ceased in 2003, by which time it was expected that future septage treatment plants would be operational. The expected date of cessation of sea dis-posal was revised to 2005 when the Project was restructured. The 1998 Agreement Amending Loan Agreement included a performance indicator for septage disposal to end prior to 2006.

16. Implementation Status and Progress. Key accomplishments of the Project to date include the Makati (formerly Ayala) Wastewater Treatment Plant (serving one of the most important business districts of MM), which has been brought up to DENR standards while increasing the incoming flow of the plant by about 50 percent. Rehabilitation of Manila (City) Central Sewerage System is 50 percent completed. The contract for the Septage Treatment Plant and Rehabilitation of Dagat-Dagatan Sewage Treatment Plant was signed on September 1, 2003 after a long delayed bidding process.

17. Under MSSP, the Bank is continuing to expedite the Borrower’s efforts to de-velop a long term solution to septage treatment and disposal. The new Dagat-Dagatan Septage Treatment Plant, part of the long-term solution for septage disposal, is being constructed under MSSP, with a capacity of 400 cubic meters per 16 hours of operation.

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This is expanded from an original design capacity of 200 cubic meters/day. The plant is expected to start operations from December 2004. Designs for expansion of the sewerage system and additional septage/wastewater treatment plants are being carried out under the MSSP, and are expected to be financed by a proposed Manila Third Sewerage Project (MTSP). See Box 1.

Box 1. Proposed Manila Third Sewerage Project – MTSP

Proposed Project Development Objective(s). The main project development objective is to improve and expand sewerage and sanitation services in the East Zone concession of the MWSS service area by providing cost-effective investments. The project is expected to reduce the further pollution of Pasig River, Manila Bay, Laguna Lake and other tributaries in and around MM. Also, the project is expected to have a significant impact on improving the living conditions of mostly low-income urban poor who live in densely populated areas and along inland waterways. It would complement the Asian Development Bank (ADB) supported Pasig River Rehabilitation Project which is financing the construction of a US$10 million sanitation facility and tankers.

It is proposed that the project have the following major components: • Sewerage systems and treatment. This component would involve the construction

of sewage pipelines and treatment plants in several locations in the MWCI concession area. Existing communal septic tanks would also be upgraded to secondary level of treatment.

• Septage management. This would include construction of septage treatment plants to process septage from domestic septic tanks and the procurement of vacuum desludging tanker trucks. This component would allow full coverage of the East Zone concession area in terms of sanitation services.

• Technical assistance. This component would finance the information campaign on proper liquid waste disposal and environment preservation, consultant services during implementation, and preparation of follow-up programs on sewerage and sanitation.

• Public assessment of sewerage and sanitation services. This would involve up-grading the water supply monitoring system to include sewerage and sanitation ser-vices.

The estimated total project cost is USD85 million and the projected Board date is February 2005.

18. The MSSP is more than three years behind the schedule defined at effectiveness, due primarily to the effects of the Asian financial crisis and the 1998-1999 El Niño, and the concession agreement targets for sewerage and septage management have not been met, thereby delaying the implementation of the long-term septage management plans. Implementation of the MWSI portion was also delayed due to procurement problems. Consequently, not all indicators for 2001 were met, and only a few indicators are likely to be met in 2003.

19. In addition to efforts carried out under the Project, complementary efforts to re-solve the environmental and health problems caused by inadequate disposal of septage are being undertaken under the ADB financed Pasig River Rehabilitation Project, which is supporting a septage treatment plant, to be located in Antipolo, with a capacity of 600 cubic meters, and expected to be operational by December 2005.

20. Environmental Impact Assessment Process (1994-1996). The Project was cate-gorized by the Bank as environmental Category A. The EIA dated March 1995 (final ver-sion) was submitted by MWSS to the Bank and was disclosed at the Bank’s Public In-

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formation Center in Washington on March 1, 1995 and in the Philippines on June 22, 1995, at the time of appraisal. After the appraisal, the Bank and DENR sent MWSS its comments on the EIA and the Environmental Management Plan (EMP) in September 1995 to which MWSS responded by submitting a Supplementary EIA report in December 1995, which was disclosed and was the subject of subsequent consultations with various stakeholders.

21. Environmental Management Plans. As noted above, the March 1995 EIA con-tained a Project EMP. The Supplementary EIA prepared in December 1995 contained specific mitigating measures, implementation arrangements and schedules, in response to the Bank and DENR comments. A more elaborate EMP in four parts was submitted in November 1996 that contained detailed engineering designs, specific measures for each component, water quality standards, and institutional arrangements. For sea dumping, it was expected that short term aesthetic impacts (color, turbidity, smell) would occur in the disposal areas. However, because of the great water depth, the turbulence in the area, the biodegradability of the septage and the spread disposal operation employed, long term adverse impacts were not expected to occur.

22. After the Project restructuring that occurred following privatization, each conces-sionaire was required to submit its own EMP consistent with the concessionaire agree-ment with MWSS. MWSI submitted an EMP in April 2000 following detailed discus-sions with a number of stakeholders. MWCI submitted an EMP in September 1998 and updated it in 2002 based on some recommendations of the Delft Hydraulics Report.

23. Consultation. For the purpose of the EIA, consultations and disclosure for the Project were carried out in June 1994. In 1995-1996 additional consultations and disclo-sure were undertaken, particularly regarding sea dumping in the provinces of Bataan and Zambales. On several occasions in early 2000, MWSS, MWCI, MWSI and the Bank went to Zambales to meet with the Governor and representatives of the Provincial Board to secure their endorsement of the Project and discussed with them the various Project components including the sea dumping operations. The MMT discussed the Project at length in meetings from 1997 onwards, including the monitoring procedures for the sea dumping. Consultation with municipalities (including Cavite, Zambales and Bataan), lo-cal communities (including fisherfolk, beach owners, and tourism staff), and with NGOs took place during project preparation and implementation (see Annex 1, Item 4 and An-nex 5 of this document for detailed information). Specifically, consultations in June and July 2002 with MMT members and Timpuyog included the septage management plan and the sea dumping operations. While contacts with Bataan do not appear to have oc-curred after sea dumping began, interaction with the Zambales stakeholder was continued throughout.

24. Analysis of Alternatives. The sea disposal option was analyzed in the March 1995 EIA. This option was selected as the preferred interim disposal solution, compared to disposal in the “lahar” areas remaining from the eruption of Mt. Pinatubo,3 incineration, 3 When Mt. Pinatubo erupted in June 1991, huge amounts of lahar flows (hot mudflow composed of volcanic debris and water) devastated more than 10,000 hectares of agricultural land in Central Luzon including the provinces of Tarlac

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or dewatering in combination with disposal in sanitary landfills, all in the context of the short time frame of several years for which an interim disposal site would be needed. At the time of the EIA, although the lahar dumping option was only slightly more costly than the sea disposal option, the impacts could not be fully assessed because the lahar de-posits themselves were physically unstable. Therefore, the option was considered not fea-sible at that time. In addition to being the least-cost solution among the feasible alterna-tives, sea disposal presented an advantage in requiring relatively minor investments in permanent structures, and it allowed disposal—with its important benefits for the urban environment—to begin quickly. Sea disposal also provided operational flexibility to in-crease, decrease, or completely stop the collection and disposal of septage without the serious impact on operations that would occur using other technologies. In the December 1995 Supplementary EIA (Annex 4), four additional septage disposal alternatives were considered but not recommended. It was recognized, however, that sea disposal was “en-vironmentally unacceptable as a permanent solution” (SAR April 1996, page 27). At Pro-ject appraisal, Bank staff concluded that “the combination of phased construction of sep-tage treatment capacity, utilization of an existing wastewater treatment plant, and temporary sea disposal represents the most practical and least-cost option for the septic tank management program if sea disposal is only available as a temporary solution.” (SAR April 1996, page 27). Sea dumping was planned to cease by the time sufficient treatment capacity was in place.

25. Environmental Impacts of Sea Disposal. The Project was expected to have a marked net positive environmental impact by: (a) reducing the level of human exposure to raw wastewater, with public health benefits; (b) reducing organic pollution of MM wa-terways and Manila Bay, and protecting groundwater from contamination; and (c) in-creasing MWSS capacity to control pollution. Relatively minor potential negative effects predicted in the EIA included: (a) traffic and noise during construction; (b) increased lev-els of noise and odor during septage collection and shipping and operation of the pilot treatment plant, and (c) possible accidental or improper discharge of septage.

26. The identified sea disposal site is one of eight waste disposal sites designated by the PCG in 1991, in accordance with the guidelines established by the 1972 London Convention on the Prevention of Marine Pollution by Dumping of Waste and Other Mat-ters. The site is located approximately 115 kilometers from the barging stations, outside normal fishing grounds, about 20 kilometers off the nearest navigation lane, with an ocean depth of about 2,300 meters. During December to April, the current flows west-ward away from the shores; in the month of May the surface water circulates in a clock-wise eddy pattern; from June to November, under the influence of the strong southerly wind, it moves towards Luzon’s west shores in a north to northeasterly direction.

27. The EIA estimated that from the total residential water pollution load of 390 tons/day of BOD, about 30 percent or 130 tons/day of BOD would be removed from MM’s waterways by effective performance of existing septic tanks and improved Central and Pampanga. This caused widespread economic and environmental damage and created vast tracts of barren land in the area once considered the “rice and sugar bowl” of Luzon. Dumping of septage was considered to be beneficial as the septage contains essential plant nutrients and good water holding capacities, which lahar does not possess.

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and Ayala sewerage systems. Results from a number of scientific studies showed that coliform and other bacteria die-off in sea water takes place within 14-15 minutes after disposal (March 1995 EIA, Section 3.4.4). According to the March 1995 EIA, potential impacts were also expected to be “insignificant.” The Bank engaged an independent out-side expert (Fenviron, December 1995) to visit the Philippines and evaluate the likeli-hood that deep sea disposal of septage might have an adverse impact on the marine envi-ronment. The expert concluded that on the basis of internationally available data, the environmental risk in the sea disposal of septage is insignificant. This is due to both the relatively low levels of contaminants in septage, and the exceptionally high dispersion characteristics of the disposal site, which is more than 45 kilometers from the nearest shoreline. The accelerated collection and sea disposal of septage was also considered to give rise to significant and measurable benefits in the Pasig River and inner Manila Bay. See Box 2.

Box 2. Deep Sea Septage Disposal

The surface water on the west coast of Luzon Island generally circulates in a northward pattern. On the northern part of the west coast of Luzon, the circulation is deflected in a northwest direction from December to April, and in a northeast direction from June to November; it has a clockwise eddy pattern during the month of May. See Map 1.

In addition, as one goes northward along the west coast of Luzon the tide is diurnal (one high, one low). In general, this means 12 hours of flooding and 12 hours of ebbing. However, there are also slack periods due to flow reversal. Analysis indicated that the tidal conditions would provide an addi-tional opportunity for septage to settle out of the water column before it would reach the shore. The density of dumped septage is in the range of 1.03 to 1.05 ton/cubic meter. This is little above the sea density of the Philippine Sea which as a density of 1.02 to 1.024 ton/cubic meter. Thus, the septage would float for some time before it settles.

If the septage is dumped initially at the start of tidal flooding period (inflow), the septage would travel approximately 22.25 kilometers toward the shore over a 12 hour period. During the next period when the tidal flow reverses (ebbing) the septage would travel backward by approximately 17.80 kilometers. The net transport distance over a tidal cycle would then be 4.45 kilometers/day. The near-est shore from the dumping site is some 45 kilometers.

The settling of the septage is similar to an estuarial mud. The rate at which septage would settle out of the water column (settling velocity) typically depends on the relationship between septage con-centration and the ocean salinity. The expected concentration of dumped septage is 40-65 grams per liter and the salinity of the Philippine Sea is 33.3 parts per trillion. Under these conditions, the ex-pected settling velocity would be approximately 0.3 millimeters per second. However, it is expected that with diffusion after the dumping, the septage concentration would decrease, thus the settling ve-locity increases further accelerating the settling process (March 1995 EIA, Annex 2).

Under the prevailing conditions at the selected site, the EIA concluded that the impact of sea dumping would be insignificant, due to the limited loading at the dump site, which would be equivalent 3.3 to 9.3 tons/day BOD, and 6-7 tons/day of suspended solids. During sea disposal, impacts on navigation and fisheries are unlikely. Short term aesthetic impacts (water color, turbidity and smell) would occur in the disposal area. However, given the deep water depth, the turbulence in the area, the biodegradability of the septage, and the spread disposal operation employed, long term adverse impact was not expected to occur (November 1996 EMP). According to the March 1995 EIA (Page 3-6, Section 3.4.4, under sea dumping), coliform and other micro organisms die off within 14-15 minutes following the disposal of raw septage, and the water quality of the dumping area restores to pre-dumping stage in five to six hours after the discharge. (Kochi University study 1985, 1986). Deposition of solids within 20 kilometer radius area (1,256 square kilometers) is estimated at 0.04 millimeters after 65,000 ton of septage are discharged during the first 3 years. Some positive benefits on fish and marine life may be expected due to the availability of organic matters and nutrients.

The worst-case scenario in relation to the dumping of septage would occur during the months of July to September, when currents and prevailing winds have a northeast flow. Under these conditions, floating septage could be carried towards the shoreline. Therefore, no dumping was to be permitted during these most critical months.

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28. The environmental impact of sea dumping was further assessed through a mathe-matical model prepared by Danish Hydraulic Institute before the loan became effective (MSSP-Modeling of the Dispersion of Septage from Ocean Dumping, January 1997). The hydrodynamic model was used to predict the transport, dispersion and fate of dis-solved and particulate pollutants from dumpsites for various loadings. Concentrations and zones of settlement were predicted and compared to international environmental quality standards. The model predicted that: (a) bacteria would not reach the coastline under any scenario; (b) no detrimental effect was expected from solid deposition on the ocean floor at depths of more than 100 meters; some effects would be found in shallow areas (mostly depths of less than 50 meters), which were not thought to be harmful to the benthic com-munity based on international comparisons; and (c) under the most unfavorable scenario, some debris could enter the Manila Bay and reach the shores south of the Bay. The model also noted that the nutrients provided from the dumping could positively affect primary productivity in the vicinity of the dump site.

29. In accordance with national environmental regulations, MWSS submitted the Pro-ject EIA to the Philippines Environmental Management Bureau (EMB) for review on May 8, 1995. The ECC for: (a) septage collection and septage sea disposal; (b) Dagat-Dagatan pilot sewage treatment plant; (c) upgrading of the Ayala (Makati) and Manila Central sewerage systems; (d) street drainage improvement; and (e) other advanced sep-tage treatment plants in Quezon City, Taguig and other Pasig River adjoining areas, was issued on October 10, 1996. The relevant conditions in the Project ECC are:

• Condition 11. All septage/effluent shall meet the National Water Quality Standards and shall be disposed of only at designated disposal sites identified by the Philippines Coast Guard in accordance with the requirements of the 1972 London Convention on the Prevention of Marine Pollution by Dumping of Waste and other Matter.

• Condition 12. An MMT composed of representatives from BFAR, the Laguna Lake Development Authority, the Metro Manila Development Authority, the Department of Health, the PCG, the Department of Public Works and Highways, MWSS, the Local Government Units, concerned and the affected parties shall be formed within sixty (60) days from the receipt thereof to ensure effective environmental monitoring at all phases of Project development/implementation.

• Condition 13. Regular monthly monitoring of affected water resources to include the coastal waters of Bataan, Zambales and Cavite for biological, physical and chemical parameters including BOD, dissolved oxygen, turbidity, suspended solids, color, nitro-gen, phosphorus, oil, grease, fecal coliforms and total coliforms shall be undertaken, the results of which shall be submitted to the EMB and relevant DENR regional offices on a quarterly basis.

• Condition 14. Annual monitoring of marine biota (planktons, algae, and important fish species) in the coastal waters and offshore of Bataan, Zambales and Cavite shall be conducted, the results of which shall be submitted to the EMB and DENR Regions II & IVA.

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• Condition 16. An Environmental Guarantee Fund (EGF) shall be established by the proponent through an MOA to cover the cost of monitoring and compensa-tion/rehabilitation for damages by the Project.

30. Status of Compliance with Conditions of the ECC.

• Condition 11. The DENR and the PCG separately issued certifications attesting to the characteristics of the wastes that were dumped in the sea and both agencies, based on their laboratory analysis, classified the wastes to be domestic in nature, non-toxic and therefore exempt from RA 6969, otherwise known as “Toxic and Hazardous and Nu-clear Waste Control Act of 1990.” Since the PCG escorts and supervises each dumping operation it also issues for each dumping activity an “After Dumping Operations Re-port” to ensure that each operation is in accordance with the 1972 London Convention. The report contains details of the dumping operations, the volume and type of wastes and the exact location of the dumping site.

• Condition 12. MMT convened for the first time on February 17, 1997. Since the Pro-ject was delayed by nearly three years, the MMT had no need to meet again until 2001. It convened again before sea dumping began and met frequently during the first year of the trial period.

• Conditions 13 and 14. Although the members of the MMT have not been involved col-lectively in monitoring the various activities of the Project, DENR, MWSS, the conces-sionaires, PCG and BFAR conduct their regular monitoring of the marine and coastal waters in the area. During the course of preparing this response, the Bank has been ad-vised that a Notice of Violation was sent by DENR to MWSS on July 26, 2002 for non-compliance of ECC conditions 13 and 14 regarding non-submittal of monitoring reports to EMB and regional offices. MWSS has submitted to the EMB a response on this violation notice but has not yet received a reply. Management has been advised that to date, MWCI has submitted regular reports to EMB but not to the DENR Re-gional Offices III and IVA regarding Condition 13 on biological, physical and chemi-cal water quality parameters; for Condition 14, only partial monitoring results of ma-rine biota, including plankton and algae but not fish species were submitted to EMB but not to the DENR Regional Offices.

• Condition 16. The MOA is considered by DENR as legal and binding despite the ab-sence of the signatures from Local Government Unit representatives of Bataan and Zambales, BFAR and a national fisherfolk coalition NGO known as Pampano. The EGF (PHP 5 million in escrow account) and Environmental Monitoring Fund (PHP 3 million, revolving fund) are to be jointly established by MWSS, MWSI and MWCI. This issue has been discussed in several MMT meetings. MWSS asked DENR in May 2003 if it could establish a fund in the absence of the four signatories to the MOA with a smaller amount, in order to defray costs of immediate needs. DENR has not yet re-sponded to this. Although this issue was addressed during supervision, Management could have been more proactive in pressing for creation of the EGF.

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31. Sea Disposal “Trial”. Under the Project, barging of septage from Napindan and Estero de Vitas (two of the three septage barge loading stations), and sea disposal at a designated site, in accordance with the 1996 ECC, was expected to operate from Septem-ber 1998, and from Parañaque (the third station) from November 2002. Only the Estero de Vitas Station was operated on a trial basis, from April 2001 to July 2002. The Napin-dan barge station has been built, but not used; contracts for Parañaque have not been is-sued, because sea disposal subsequent to the 2001-2002 trial has not been authorized by the PCG nor undertaken (see para 33 below). The sea dumping trials were closely super-vised and monitored by the PCG.

32. Sea dumping occurred from April 2001 to June 2001 and resumed in October 2001 to July 2002. The water quality monitoring results taken from five offshore moni-toring stations (two in Bataan and three in Zambales) during the septage dumping periods in 2001–2002 show that none of the water quality criteria4 applicable to coastal and ma-rine waters, Luzon Sea Class “SC” were exceeded in the designated dumping area, except for those—oil, grease and heavy metals—where the background levels in the Luzon Sea were already above the limits for SC waters based on monitoring results covering five years before the dumping period. Results of the monitoring are to be found in the Quar-terly Environmental Compliance Reports submitted by the two concessionaires. The en-tire sea dumping trials were supervised by the PCG whose ships escorted the barges, veri-fied the dumping location, and monitored the dumping procedures. The PCG also regularly undertook concurrent water quality sampling and analysis for each dumping.

33. Status of Sea Disposal. The trial sea dumping of septage, for which a permit had been issued, stopped on July 17, 2002.5 The sea dumping did not resume because the Philippines Coast Guard did not issue a new dumping permit. On August 30, 2002, the Coast Guard stated that it would not issue the dumping permit because the MOA was not enforceable until all the concerned agencies and Local Governments had affixed their signatures; it also requested the inclusion of two patrol boats in the Project package. On October 30, 2002, MWSS received from DENR a letter to the effect that it considered the MOA legal and binding despite the absence of the signatures from Local Government Unit representatives of Bataan and Zambales, and that it authorized the MMT to under-take its activities with those members who had already signified their concurrence with the MOA. Following that letter, on November 15, 2002, the PCG reiterated its earlier po-sition and did not provide the dumping permits to MWCI. The issuance of a dumping permit became moot because of the emergence of lahar site dumping as a feasible alterna-tive.

34. Status of Environmental Monitoring and Auditing. MWSS, MWSI and MWCI have been submitting joint reports (Environmental Compliance Reports and ECC-Compliance Monitoring Reports) summarizing the results of monitoring and compliance

4 These include: temperature, pH, dissolved oxygen, BOD, total suspended solids, surfactants, oil/grease, phenolic sub-stances, total coliform, arsenic, cadmium, chromium hexavalent, cyanide, lead, total mercury, and organophosphate. 5 During preparation of this response, the Bank was advised by MWSS that based on reports submitted by the PCG and transmitted to us by the MWSS, July 17, 2002 is the last date that dumping occurred. All previous reports from MWCI had indicated that the last dumping took place in June 2002.

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with the ECC and the EMPs. In late 2001, an independent consultant (Delft Hydraulics) was hired by the Bank to: (a) supervise the implementation of the Project according to the ECC and EMP; (b) supervise the preparation of any ECC and EMP required for construc-tion of new sludge treatment facilities in MM; and (c) identify implementation gaps and recommend corrective actions. The consultant’s final report was submitted in November 2002. At the time only MWCI was operating new facilities and revised its EMP accord-ingly. A number of the recommendations made by the consultant in an interim report were discussed with MWSS, MWSI and MWCI during the 9th Supervision Mission (Oc-tober 2002). One of these concerned preparation of an annual environmental audit. In Oc-tober 2002, the Bank requested an Environmental Audit Report, covering the period of May 2001 to December 2002. MWSS was to deliver the report by July 2003, prior to the next supervision mission. The report is still under preparation as MWSS only submitted the TOR and received a no objection letter from the Bank in September 2003. MWCI has an ongoing audit and expects to have its report completed by the end of this month. MWSI has started its audit and expects it to take one month to complete.

35. Current Septage Disposal Operations. The 1995 EIA advocated a pilot study for lahar disposal of untreated septage, since this option had the potential to be the least ex-pensive in the long term. As noted above, at the time of the EIA, such a study could not be undertaken because the lahar deposits themselves were physically unstable. Since the EIA was prepared, the lahar deposits have stabilized enough to undertake pilot studies, which have been ongoing since mid-2000. These pilot studies have indicated the techni-cal feasibility of using the lahar areas and have had favorable results with regard to both costs and impacts. See Box 3 below.

36. It is important to note that the lahar dumping activity is considered an environ-mental enhancement program that generates environmental benefits rather than negative impacts. Septage sludge contains essential elements required by agricultural crops, mak-ing the septage a potential organic fertilizer and soil conditioner resource. It uses low cost, low technology methods to increase the soil fertility of the nutrient deficient, barren farms in the lahar-affected areas. The use of the sludge as a fertilizer/conditioner has been approved and issued a permit by the Fertilizer and Pesticides Authority, legally in charge of regulating the agriculture use of septage.

37. Septage collected by MWSI is currently stored at the Dagat-Dagatan Sewage Treatment Plant. Although the DENR has not raised any objection to this activity follow-ing its regular monitoring of the plant, the Bank requested the Borrower to present an ac-ceptable proposal for disposal in its September 2003 supervision mission. MWSI will continue the disposal of dewatered septage at the Dagat-Dagatan treatment plant until it has formulated an acceptable septage disposal strategy.

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Box 3. Trial and Evaluation of Lahar Application of Septage by MWCI

MWCI began a trial disposal at a lahar site in April 2000, with experimental plots of limited collected septage, which has continued to the present. Beginning in July 2002, septage quantities of at least 150 cu-bic meters per day were applied at the identified lahar sites in Pampanga and Tarlac. A provisional or condi-tional registration from the FPA for the trial application was granted in 2000 and 2001 after one planting or crop season of efficacy testing. A full license was granted on December 12, 2002 for dried sludge and an-other full license for domestic liquid sludge after the second year of planting or crop season of efficacy test-ing. On February 14, 2003, FPA granted MWCI a full license as a manufacturer and distributor of fertilizer after using the dried and liquid sludge continuously for four crop years. MWCI is exploring the possibility of continued disposal of septage at a lahar site as soil conditioner and fertilizer to augment any shortfall in ca-pacity of the sewage treatment plants to be constructed. Monitoring of the soil and plant samples is done regularly to keep track of any possible build-up of nutrients or metals in the subject areas.

An evaluation of the agricultural use of liquid sewage sludge being disposed by the MWCI is being con-ducted to determine its effects on the growth and yields of sugarcane in Angeles loamy sand. The experi-mental application of liquid and dried sludge in the lahar-affected areas in Pampanga and Tarlac uses com-posted and liquid sludge as soil conditioner for rice, corn and sugar crops, mixing these with other organic byproducts like sugar milling wastes such as biogas slops, mudpress, and fertilizers in the form of urea. The experiments using the sludge on sugar crops in lahar-stricken areas in Pampanga are being conducted by the Luzon Agricultural Research and Extension Center of the Sugar Regulatory Administration in Paguiruan, Floridablanca, Pampanga, while the trials in other areas in Pampanga and Tarlac are being done in collabo-ration with farmers groups and Local Government Units.

These experiments are being conducted to make use of the organic contents of sludge to improve the structure of the soil and its water retaining capability. While this is most often done with dewatered sludge cake applied with a manure spreader before plowing, liquid sludge contains water and this could also add extra benefit during the dry season as it helps promote growth. This will make sewage sludge a beneficial resource for the farming community, which as an environmental good practice makes use of sludge as an indigenous fertilizer material and soil conditioner rather than treating it as a waste byproduct.

38. Long Term Septage Disposal Plans without Sea Disposal. Long-term plans for septage disposal include consideration of the following:

• Based on the assumption that the lahar site remains physically stable, MWCI will con-tinue to use lahar, because of the benefits associated with this alternative along with the lower cost (PHP 325 per cubic meter of septage for lahar dumping compared to PHP 629 per cubic meter of septage for sea dumping). The capacity can be increased but the plan is to operate at a rate of 200 cubic meters/day.

• The new septage treatment plant in Antipolo is expected to be on line by December 2005. The plant would treat around 600 cubic meters/day and will be financed by ADB.

• The proposed MTSP would finance three septage treatment plants with a total capacity of around 500 cubic meters/day. The feasibility study is currently being prepared by a consultant firm engaged under MSSP. Together with the ADB-financed treatment plant, this would provide capability to treat almost all of the septage to be collected in MWCI’s concession area.

• MWSI operations may be taken over by MWSS following arbitration as a result of fi-nancial difficulties. This will generate a big gap in planning and investments for the West Zone. It is expected that MWSI/MWSS will use the septage treatment plant in Dagat-Dagatan at a rate of 400 cubic meters/day (16 hours/day) and dispose an addi-

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tional 200 cubic meters/day in lahar. Long term plans for MWSS/MWSI will depend on the financial situation following arbitration.

• The sludge produced from the septage treatment plants is likely to be co-disposed on lahar sites, and made available to the farmers for agricultural and horticultural use as soil conditioner.

• The Bank anticipates that a further environmental review of the lahar option, with ap-propriate consultation and disclosure of the results, would be undertaken as part of the preparation for the MTSP. This would allow for incorporation of mitigative measures not yet in place or other operational modifications, and assist the Borrower to optimize the benefits of this disposal option.

39. Continuing Work on Resolution of Sea Disposal Issues. During the October 2002 supervision mission, the Project team was notified that sea dumping was stopped on June 30, 2002 (later corrected to July 17, 2002) and MWCI did not enter into a barge contract for the full-scale operations which had been planned to commence in October 2002 (Annex 5 of the October 2002 Aide Memoire). During the mission, the Bank en-couraged MWCI to continue to test land application of desludged septage in lahar-stricken, agricultural lands in Pampanga and Tarlac. Earlier in February 2002, the Bank encouraged MWSI to change the specifications and scope of one of its procurement packages under the Project to include the rehabilitation of the Dagat-Dagatan Sewage Treatment Plant that has been receiving septage for a long time. The Bank also discussed with MWSI increasing the capacity of a holding tank to 400 cubic meters/day at the Da-gat-Dagatan Septage Treatment Plant, which will allow it to work up to 16 hours/day (from 8 hours/day).

40. In the same mission, the Bank discussed with MWSS and MWCI the components of the proposed MTSP. The proposed investments would include three new septage treatment plants. Together with the ADB-financed treatment plant (see para 19), this would establish the capacity to treat almost all of the septage from the East Concession Zone. A detailed Project preparation schedule was discussed and agreed.

41. Although the 10th Supervision Mission was not conducted until August 2003 (be-cause of difficulties with traveling as a result of SARS), the Bank followed up on the lahar alternative through its locally based staff. The Bank and MWSS were briefed by the Sugar Regulatory Authority (part of the Department of Agriculture) on the progress and results of testing operations. The results were presented at three regional conferences.6 The Bank also made a site visit to observe the actual spreading of septage. MWSS col-lected sugar cane and soil samples for testing in the laboratory of the Sugar Regulatory Authority. Water sampling was not undertaken because no wells were identified in the area. The lahar soil is very porous and water percolates through it very fast and very deep

6 12th Central Luzon Agricultural Research and Development Consortium Regional Symposium on Research and De-velopment, Bataan State University, Abucay, Bataan. August 17, 2001, 49th PHILSUTECH Annual National Conven-tion, Waterfront Cebu City, August 13-16, 2002; 14th Regional Symposium on Research and Development, Science City of Munoz, Nueva Ecija. July 2003.

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into the ground. The team also confirmed the absence of any human settlements in the lahar disposal area.

42. During the 10th Supervision Mission from August 26 to September 9, 2003, the Bank team was informed that MWSS, along with the two concessionaires, intended not to further utilize the option of sea dumping under the Project. In response, the Bank Project team agreed with the MWSS proposal that it would not initiate the construction of the Parañaque Barging Loading Station. The Bank Project team discussed with all the parties the process that would be needed to formally stop sea dumping. Accordingly, MWSS wrote to the concessionaires on September 5, asking them to formally provide informa-tion on their positions. The concessionaires responded on September 12 and 17, 2003. On September 19, 2003, the Bank forwarded the letter from the Requestors (prior to the reg-istration of the Inspection Panel request) to MWSS (see Annex 2 of this document). Sub-sequently, on September 30, prior to the Bank’s receipt of the Inspection Panel registra-tion of the Timpuyog request, MWSS formally proposed to the Bank the non-implementation of sea disposal (see Annex 3 of this document). The Bank has agreed to this with appropriate modification of the Loan Agreement (see Annex 4 of this docu-ment).

IV. ELIGIBILITY

43. Requestors’ Consultation and Discussion with the World Bank. The Bank’s re-cords do not contain any communications from the Requestors, Timpuyog, Zambales, Inc, until September 2003. The Bank was first contacted by Timpuyog, Zambales, Inc, through a phone call in the first week of September, prior to receipt of the letter, to the external relations officer in the Manila office. The caller inquired about sending a letter to the Inspection Panel using the Bank’s diplomatic pouch. The caller was encouraged to communicate with the Bank Project team, and was given the contact information of the team leader and the Manila-based environmental specialist; the team was also advised of this inquiry but to their knowledge they were not contacted.

44. Three letters from Timpuyog, all dated September 8, 2003, were received by the Bank’s team. To the Bank’s knowledge, at least two of these letters were copied to the Inspection Panel. They were addressed to the external relations specialist and the envi-ronmental specialist in Manila and to the team leader in Washington DC and were re-ceived by the Bank on September 9 (Manila), September 10 (Manila), and October 1 (Washington, DC). On September 17, the Bank team forwarded the Requestors’ letter to MWSS and asked MWSS to meet with Timpuyog to discuss their concerns. The team was in the process of finalizing a formal response to Timpuyog when the October 1, 2003 Inspection Panel registration was received. In a letter dated October 1, 2003 to Tim-puyog, the Bank team acknowledged receipt of Timpuyog’s letter and the submission of its Request to the Panel.

45. After the Bank forwarded the letter from Timpuyog to MWSS, and asked MWSS about its previous dialogues with Timpuyog, the Bank was informed that in June-July

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2002, February 2003, and on September 1, 2003, Timpuyog expressed to MWSS its de-sire for official confirmation of the newspaper reports and informal communication re-garding non-implementation of septage disposal at sea, and requested supplementary in-formation. MWSS also reported that it provided to Timpuyog, in July 2002, information including the Loan Agreement, the Project EIA, and a PowerPoint presentation that pro-vided an overview of the Project including information on sea dumping. However, the Bank was not aware of all these exchanges between MWSS and Timpuyog before receiv-ing the letter from Timpuyog on September 9, 2003.

46. The Panel’s Operating Procedures (August 1994) state that “before submitting a Request steps must have already been taken (or efforts made) to bring the matter to the attention of Management with a result unsatisfactory to the Requester” and that the Re-quest should include “(e) a description of the steps taken by the affected party to resolve the violations with Bank staff, and explanation of why the Bank’s response was inade-quate.” Given that the requests to the Bank and to the Inspection Panel were nearly simul-taneous, the Bank was not afforded the opportunity to address the Requestors’ issues.

V. MANAGEMENT’S RESPONSE

47. The Requestors’ claims, accompanied by Management’s detailed responses, are provided in Annex 1.

48. As part of the Bank’s actions to address the questions raised in the Request, Man-agement:

• Has agreed to the Borrower’s proposal for no more ocean dumping under the Project, as indicated in Annex 4;

• Will ask the Borrower to disclose the information (including the monitoring reports) requested;

• Will initiate a dialogue with the Requestors, as originally planned before the Inspection Panel case was registered, to address its concerns;

• Will request the Borrower to conduct a further environmental review of the lahar dis-posal option, with appropriate consultation and disclosure of the results, as part of the preparation for the MTSP; and

• Will continue to review and support the Borrower’s preparation of the proposed MTSP, to expand sewage and sanitation services in MM, which would involve construction of additional septage treatment plants and vacuum desludging tanker trucks.

49. Management regrets that these concerns were not raised with Bank staff before the Request was sent to the Panel. As the response shows, these issues are already being addressed. Management believes that the Bank has made every effort to apply its policies and procedures and to pursue concretely its mission statement in the context of the Pro-

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ject. In Management’s view, the Bank has followed the guidelines, policies and proce-dures applicable to the matters raised by the Request. As a result, Management believes that the Requestors’ rights or interests have not been, nor will they be, directly and ad-versely affected by a failure of the Bank to implement its policies and procedures.

ANNEX 1 CLAIMS AND RESPONSES

No. Claim/Issue OD/

OP/BP Response

Environmental Impact Assessment

1. EIA – Interim septage disposal. While the Project’s major sewage processing component is to put up ecologically. sound land-based sewage processing facilities, these were not adequate or operational two years ago, until the present. Thus, the Project proponents con-centrated on a supposedly less costly method of disposing of the sewage, that is collecting and dumping of Metro Manila’s household liquid waste into the South China Sea, at a site about 69 kilometers from Corregidor Island near the coastal provinces of Bataan and Zambales.

4.01 The objectives of the Project are: (a) to reduce the pollution of MM wa-terways and Manila Bay; and (b) reduce the health hazards associated with human exposure to sewage in MM; and (c) establish a gradual low-cost improvement of sewerage services in MM (from Loan Agreement 1999, Schedule 2). The Project included a septage management plan for disposal of MM’s septage, with sea disposal as an interim solution until treatment capacity was established. At appraisal this interim solution was estimated to be needed until 2003 (EIA March 1995, Figure 3.20, page 341), when the septage treatment plant was expected to have been com-pleted. This date was revised to 2005 when the Project was restructured (Board Memo on Restructuring Nov 30, 1997, page 7).

The disposal site is 14o20’N and 120o00’E in the Luzon Sea (Page 3-15 of EIA 1995), as shown in Map 1. The sea disposal option, according to analysis undertaken at appraisal, was the least-cost solution (SAR page 55; March 1995 EIA, pages 6-15). See Item 2 below for the analysis of alternatives.

2. EIA –Analysis of alternatives. This Project’s sea dumping com-ponent is a clear case of dumping waste in others’ backyard, While the Project proponents argue that this is a less costly method of managing urban sewage system, there are other effective land-based, more environment friendly and less costly methods. Moreover, investing in ecologically sound approaches turn out to be more cost-efficient in the long-term.

4.01 The long-term plans for sewage management envisaged by the Project include rehabilitation of existing sewerage networks and treatment plants and construction of a septage treatment plant. The EIA analyzed five in-terim septage management options: disposal at sea; disposal on lahar sites; treatment in a plant; dewatering in combination with disposal in sani-tary landfills; and incineration, as well as the no-project alternative. In-vestment costs and operating costs were estimated for each option. As an interim, short-term solution to reduce pollution of Manila Bay and the wa-terways, the sea dumping option was found at the time to have the lowest estimated cost and minimal negative impacts on the environment (see Item 4 below).

At the time of the EIA, although the lahar dumping option was very close to the sea disposal option in cost, the impacts could not be fully as-sessed because the lahar deposits themselves were still moving. Since the EIA was prepared, the lahar deposits have stabilized enough to under-take pilot studies, which have been ongoing since end 2000. These pilot studies have indicated the technical feasibility of using the lahar areas and have had favorable results with regard to both costs and impacts.

3. EIA – Impact analysis - Health. Health risks to people posed by any sea dumping activity to achieve the Project goals have not been adequately addressed. - Tourism. Possible destruction of precious tourist coastal destina-tions, thus discouraging visitors to these local areas has not been adequately addressed. - Safety. The Project team has yet to prove its claim this sewerage dumping at sea is safe for people’s health and to the rich marine life it

4.01 The EIA noted that potential impacts to nearby coastal areas from sea dumping were expected to be “insignificant” because of the high degree of expected dilution and mixing resulting from the effects of prevailing cur-rents and winds at the time of dumping and the low survival rates of po-tential pathogens in salt water as well as the distance from the dumping site.

Water quality monitoring conducted by MWSS in the coastal areas of Bataan and Zambales started in1995, 6 years prior to the sea dumping activity to gather baseline environmental conditions in the coastal areas. The water quality monitoring results taken from 5 offshore monitoring sta-tions (2 in Bataan and 3 in Zambales) during the septage dumping periods in 2001–2002 show that the allowable limits for water quality criteria appli-cable to coastal and marine waters, Luzon Sea Class “SC” were not ex-ceeded, except for oil, grease and heavy metals, which were already

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will affect. This technology is al-ready banned in many countries because it violates new interna-tional laws of the seas.

above the water quality criteria for SC waters based on the results of the monitoring undertaken before the dumping period.7

Since both the analysis and monitoring results indicated that water qual-ity would be well within national standards, no specific studies on impacts regarding health and safety or tourism were carried out. See also Box 2 above and item 4 below.

To the Bank’s knowledge, the approach is consistent with the 1972 London Convention, and there are no new applicable international laws of the sea since the 1972 London Convention.

4. EIA – Impact analysis – Marine Resources. Negative impact on the economy in the coastal areas near the dumping site due to pos-sible “red tide” or “fish kill” phe-nomena, thereby jeopardizing the fishing industry has not been ade-quately addressed. The Govern-ment’s Bureau of Fisheries and Aquatic Resources (BFAR) under the Department of Agriculture, has declared that the dumping site is a rich fishing ground and warned that the dumping activity would compromise the lives of the rich variety of marine creatures as well as the livelihood of fishing com-munities nearest the site.

4.01 The dumping site was one of eight designated by the PCG with its memorandum circular #02-91 dated Jan 21, 1991. The Bank has been unable to find any formal reference to BFAR’s declaration of the dumping site as a rich fishing ground; such a declaration appears to be in conflict with other decisions by the Government, including the decision by DENR, which issued the ECC for the dumping. The March 1995 EIA notes that: “A general aquatic resource map of the area indicates that tuna species are found seasonally in the deep seas west of Luzon. According to infor-mation gathered at the Navotas Fishing Port, deep sea fishing is made in the general areas west of Lingayen Gulf, but seldom in the vicinity of Dumpsite 1 CGD.” (Section 4.3.11)

Generally, the 15 kilometers strip from the coastline is considered re-served fishing grounds for local fishermen for shallow fishing. On the Lu-zon west coast this strip is less than 184 meters deep. According to the technical information in Box 2 above, even under the worst conditions, the septage would take five days of horizontal travel to reach the fishing strip, and would be subject to dilution and mixing during that time. It would also be traveling vertically, with some settling deep in the sea. (March 1995 EIA, Appendix 2). Because this analysis indicated that the dilution, mixing and transport of the septage would result in temporary and insignificant incremental effects on water quality, no specific analysis on fisheries was conducted.

In addition, as noted above in item 3, the water quality monitoring un-dertaken for the trial dumping periods indicates that allowable pollution limits were not exceeded.

5. Environmental Compliance Cer-tificate. In the province of Zam-bales the provincial governor was made to endorse [the project] but he made it clear that this was on the condition that “all globally accepted governing rules and regulations and environmental requirements will be strictly com-plied to protect the interest of our constituents.” His letter is an-nexed to the Project Environ-mental Impact Assessment Cer-

4.01 The Project was presented to the Provincial Board and Governor of Zambales on Feb 21, 2000. The Governor of Zambales requested and received additional information to study the Project in June 5, 2000 and signed a favorable endorsement of the Project in July 20, 2000.

In a letter from DENR dated May 3, 2001, issued by Peter Anthony A. Abaya, Director of the EMB, it was stated “under DENR Administrative Order No. 29 Series of 1992 Implementing Rules of RA 6969 known as “Toxic Substances and Hazardous and Nuclear Waste Control Act of 1990,” septic tank effluents are considered as exempted wastes. Thus, this type of waste is not regulated under RA 6969.” The dumping of sep-tage therefore is a valid practice under the 1972 London Convention on the Prevention of Marine Pollution by Dumping of Wastes and other Harmful Matter at Sea considered at the time of the EIA (1995).

7 Based on the water quality data for the five monitoring stations along the coastal areas of Bataan and Zambales pro-vided to the Project team by MWSS, the background levels during almost all of the sampling periods, particularly for parameters on oil and grease, cadmium, copper, lead and at times chromium, were considerably above the set allowable limits—before the dumping—for class “SC” waters, which under DENR’s classification are “for the propagation of fishery resources” The monitoring results during the dumping period (April 2002- June 2002) compared to the pre-dumping period results (1995 - 2001) do not exhibit any marked change either before or after the sea dumping (~ +/- 10 percent) in the water quality characteristics nor any exceedance of the allowable limits (except for the already elevated background levels) in the coastal areas for all 26 physico-chemical and bacteriological parameters monitored.

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tificate since this is a condition for the issuance of the Project’s Envi-ronmental Compliance Certificate (ECC).

6. Consultation. In 2000, the pro-ponents sought the endorsement of the Project by local govern-ment officials without adequate information about its potential impact on the local areas and did not consult local residents about it.

4.01 Details of consultations for preparation of the Project, including the EIA, are provided in Annex 5. Documentation including minutes of meetings and attendance sheets are available in the Project files.

In 1995-1996 consultations and disclosure were undertaken, in particu-lar regarding sea dumping in the provinces of Bataan and Zambales. In October 1996, the MWSS team visited the provinces of Bataan and Zam-bales (including the five coastal Barangays close to the sampling stations for monitoring of water quality) to conduct public consultations focusing on septage management and environmental monitoring component of the Project.

In early 2000, MWSS, MWCI, MWSI, and the Bank went to Zambales to meet with representatives of the Provincial Board to discuss the Project including the potential impacts of sea dumping.

The Governor of Bataan endorsed the Project in a letter to DENR dated January 12, 2000; the Governor of Zambales endorsed the Project in a letter to DENR dated July 20, 2000; the Cavite Governor endorsed the Project on April 3, 2000.

7. Consultation. Dumping testing [was] undertaken in 2001 and 2002 virtually under wraps, as the Local Government Units and the people of the affected coastal provinces have not been properly and sufficiently informed of the details of the said testing. It was only then that the local monitoring teams were requested to be formed by the provincial govern-ments. Neither was there any re-port submitted about the monitor-ing of the waters or the testing undertaken. These violate the ECC issued to the Project propo-nents in October 1996 (Secs. 12, 13, 14).

4.01 MWSS, MWCI and MWSI have been conducting environmental moni-toring activities, and have been reporting to the EMB of the DENR and the Bank.

Regular water quality monitoring was done, the results of which were submitted to EMB of the DENR in the form of quarterly Environmental Compliance Reports since 2001. Condition number 14 of the ECC con-cerning annual monitoring of marine biota was partially fulfilled with data collected on plankton and algae but not on fish species. See also Item 3 above.

The water quality monitoring reports were provided to DENR, the chair of the MMT, which includes representatives from the concerned Local Governments, excluding Bataan and Zambales, who had not signed the MOA.

Economic Evaluation of Investment Operations

8. The letter strongly requests that the World Bank’s MSSP counter-part Project task force as well as the Inspection Panel immediately review the implementation of the Project, reexamine the funding conditions and cost-benefits of its sea dumping component and withhold scheduled loan dis-bursements until all issues sur-rounding sea dumping have been clarified.

10.04 The purpose of the septage management component of the Project is to substantially improve the performance of 300,000 septic tanks (one-third of MM’s septic tanks) which, with periodic desludging, can function as effective pollution abatement instruments. With desludging, the septic tanks can remove 30-65 percent of organic pollution and 90 percent of suspended solids. Without desludging, a maximum of 10 percent removal of organic pollution (BOD) is possible. Full desludging will result in reduc-tion of BOD load by 58-135 tons/day, which is equivalent to 17-39 percent of the total BOD generation of MM (EIA, para. 5.1.1).

Cost-benefit analysis: The benefits of environmental projects, such as environmental improvements and better health of residents, are difficult to value in monetary terms. The SAR, however, did try to obtain lower-bound estimates for individual Project components, including the septage man-agement component. The result showed that the internal rate of return would be 12 percent if ocean dumping were chosen as a permanent dis-posal method. The benefits as captured in the analysis include only the

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No. Claim/Issue OD/

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value of septic tanks as an investment, and do not include any impact of the reduction in pollution loads. Therefore the internal rate of return re-flects the lower-bound of the actual benefits of the Project.

Least-cost analysis: The least-cost analysis tried to find the least cost solution to the attainment of the Government’s target of reducing pollution load in terms of BOD by 20 percent. The analysis first identified that “con-version to combined drainage and sewer system with household septic tanks” is preferred to other alternatives. It then considered various alterna-tives for septage disposal, including disposal at sea, land application, treatment at wastewater treatment plants, and independent septage treatment facilities. At the time, sea disposal was found to be the least expensive option (USD15,000/cubic meter), followed by disposal in the lahar lava fields resulting from the Mt. Pinatubo eruption (USD18,000/cubic meter), and land-based chemical/biochemical treat-ment (USD115,000/cubic meter). The septage management component was economically justified chiefly on least-cost analysis.

In the time since these analyses were undertaken, the lahar option has been pursued on a limited basis. It has proved to be less expensive and is intended to replace sea disposal as an interim option and to be part of a diversified approach to long-term septage management.

Supervision

9. Monitoring. As of April 2002, from information gathered, the MWCI, after trial runs conducted in May 2001, had resumed dumping sep-tage in the South China Sea even though the Memorandum of Agreement for the creation of the Multipartite Monitoring Team and the creation of the Environmental Monitoring Fund had not yet been signed by the concerned agencies in violation of the conditions set forth in the ECC issued by the DENR.

13.05 Sea Dumping. Sea dumping took place on a trial basis from April 27, 2001 to June 8, 2001 and resumed on October 3, 2001 and ended again on July 17, 2002. A total of 25,396 cubic meters of septage were dumped, and around 7,000 septic tanks were desludged. The total amount dumped is equivalent to about twenty-six days of planned full operation.

Monitoring. Water quality monitoring was undertaken at least twice monthly during this trial dumping period. The Bank received regular re-ports from the PCG, MWSS and DENR for the dumping site, and for the monitoring stations of Manila Bay and the coastal area. These reports were reviewed by an Environmental Specialist from Delft Hydraulics, for the EIA Mid-Term Progress Report. The results were discussed with MWSS, MWSI and MWCI in October 2002 during the 7th Supervision Mis-sion (para. 24 of the Aide Memoire).

The concessionaires fund their own monitoring activities. DENR and other Government agencies have used their own budgets to fund their own monitoring activities.

Bank Supervision Activities on the MMT. During Project supervision, Bank staff repeatedly (Aide-Memoires, February and October 2002; Man-agement Letters of July 2001, March and November 2002) urged the Bor-rower to take actions to address the requirements of the ECC, including the operation of the MMT.

MMT. MMT convened for the first time on Feb 17, 1997. The next meet-ing was held on Feb 28, 2001, and subsequent meetings were held on March 16, 2001, May 24 2001, June 8, July 6, 2001, August 10, 2001, October 19, 2001 and November 16, 2001.

EGF. The draft MOA was first circulated at the MMT meeting in March 2001. To date, the MOA has been signed by the Department of Health, the Department of Public Works and Highways, Metropolitan Manila De-velopment Authority, MWSS, Province of Cavite, MWCI, MWSI, Laguna Lake Development Authority, the PCG, and DENR. The MOA is consid-ered by DENR as legal and binding despite the absence of the signatures from Local Government Unit representatives of Bataan and Zambales, BFAR and Pampano. The EGF and Environmental Monitoring Fund are to be jointly set up by MWSS, MWSI and MWCI. MWSS asked DENR in May 2003 whether it could establish a fund in the absence of four signato-ries to the MOA with a smaller amount, to defray costs of immediate needs. DENR has not yet responded to this.

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No. Claim/Issue OD/

OP/BP Response

Information on monitoring activities is provided in Annex 6 and a chro-nology of the Bank’s supervision missions can be found in Annex 7.

Disclosure of Information 10. While the MWSS and its conces-

sionaires carried out dumping test-ing in October 2001 - March 2002, it has not issued any statement about the results of the testing findings. Its environmental moni-toring team has not also reported to Project stakeholders, such as local governments and organized groups in affected areas about results of its monitoring activities. The Project implementers have not made any report about dump-ing testing that was carried out in 2000-2001.

17.50 MWSS/MWCI reported meetings with Timpuyog on June 27, 2002 in Zambales and on July 5, 2002 at MWSS. The minutes of the meeting on July 5, 2002 are available, and the presentation made by MWSS/MWCI to Timpuyog is available on CD-Rom.

The EIA, Project components, details of the sea dumping operations and the water quality monitoring stations, information about the ECC, MMT and results of the consultations were disclosed to stakeholders, in-cluding all MMT members and Timpuyog. Actual monitoring results were not disclosed. However, monitoring results were regularly provided to the EMB of the DENR.

11. A number of NGOs like the TIMPUYOG Zambales and the Zambales Resort Owners’ Asso-ciation have individually requested for the MWSS and the DENR to make their position official and state this in clear terms for the interest of all other stakeholders. Until this day, the agency has not made any official declaration about its shelving of the sea dumping activities. Neither has it made any definite commitment that sea dumping will never be undertaken at any time in the future nor pro-vide information regarding its al-ternative made of disposing of its collected liquid wastes from Metro Manila.

17.50 MWSS and the concessionaires have advised the Bank that sea dump-ing has been stopped and will not resume within the life of the Project, as proposed by MWSS on September 30, 2003, and to which the Bank re-sponded on October 15, 2003. See Annexes 2-4.

ANNEX 2 SEPTEMBER 19, 2003 LETTER FROM THE BANK TO MWSS

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ANNEX 3 SEPTEMBER 30, 2003 LETTER FROM MWSS TO THE BANK, WITH THREE ATTACHMENTS

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ANNEX 4 OCTOBER 15, 2003 LETTER FROM THE BANK TO MWSS

WITH AMENDMENTS TO THE LOAN AGREEMENT – COUNTERSIGNED BY MWSS ON OCTOBER 17, 2003 AND BY THE GOVERNMENT OF THE PHILIPPINES ON DECEMBER 10, 2003 AND

SUBSTITUTED ON DECEMBER 18, 2003 FOR THE EARLIER UNSIGNED LETTER

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ANNEX 5. CHRONOLOGY OF PROJECT EVENTS AND SUMMARY OF CONSULTATIONS

Chronology of Project Events

Date Meeting December 1994 – March 1995 MSSP EIA report submitted. October 9 – 10, 1996 Consultations in 5 barangays in Bataan and Zambales which will host

the sampling stations for the coastal water quality monitoring. April 19, 1996 1st request for Provincial LGU endorsement. October 10, 1996 ECC issued. February 17, 1997 1st MMT meeting. July 27, 1998 2nd request for Zambales Provincial LGU endorsement. June 30, 1999 2nd MMT meeting. November 9, 1999 3rd request for Zambales Provincial LGU endorsement. January 12, 2000 Bataan Governor signed endorsement. February 21, 2000 Presentation to the Zambales Provincial Board. April 3, 2000 Cavite Governor signed endorsement. June 5, 2000 Provided MSSP documents to Zambales Office of the Governor and

Provincial Board. July 20, 2000 Zambales Governor signed endorsement. February 28, 2001 MMT meeting at the MWSS Board Room, presentation on proposed

MMT creation per ECC. March 16, 2001 MMT meeting, draft MOA was presented to the members. May 24, 2001 EMP was distributed during MMT meeting. June 8, 2001 MMT meeting held in MWSS Conference Room. July 6, 2001 MMT meeting held at Napindan Barge Loading Station. August 10, 2001 MMT meeting in DENR EMB office to discuss Annual Monitoring Plan. October 19, 2001 MMT meeting in Capitol Hills. MMT members informed that MOA ap-

proved by MWSS Board of Trustees. November 16, 2001 MMT members workshop, DENR and LLDA did not attend. MOA re-

vised, ceremonial signing scheduled for Dec 2001. January – March 2002 MOA signed by MWSS, MWSI, MWCI. Ceremonial signing did not take

place. April 22, 2002 Visit to Zambales Governor to present MOA. April 29, 2002 Visit to Provincial Board to present MSSP but not tabled in meeting. May 2, 2002 MOA signed by DPWH. May 6, 2002 MOA signed by Cavite. May 13, 2002 Presentation by MWSI to Zambales Provincial Board in order to obtain

signature in MOA. The Provincial Board advised MWSS that the com-mittee on Environmental will evaluate the project.

May 28, 2002 Meeting with DENR EMB re Zambales non-signing. MMT is still valid and project monitoring will continue.

June 13, 2002 MOA signed by LLDA. June 14, 2002 Meeting between MWSS and BFAR. BFAR expresses objection to the

project. June 17, 2002 Bataan Provincial Board creates a Resolution opposing the dumping of

septage by MWSS within the jurisdiction of Bataan. June 27, 2002 Meeting of MWSS, MWCI and MWSI with TIMPUYOG in Zambales to

discuss MSSP. July 1, 2002 MOA signed by DOH. MWSS and MWCI met with DENR EMB to invite

them for the next MMT meeting. July 2, 2002 MWSS presented the project during the Public Hearing in Zambales.

The Vice-Governor, facilitator of the meeting, advised MWSS that they will discuss among themselves and will advise MWSS on their decision.

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Date Meeting July 5, 2002 MMT meeting discussed formation of Sectoral Monitoring Teams. 3

representatives from Zambales (TIMPUYOG, beach owners and ENROZ). MWSS/ MWCI and MWSI mentioned that they are ready to provide the Environmental Monitoring Fund.

October 30, 2002 Public hearing at the Provincial Capitol, Iba, Zambales. November 19, 2002 MMT meeting at DENR EMB Conference Room. May 21, 2003 MMT meeting at DENR EMB with MOA signatories in attendance.

Summary of Consultations Date Groups Consulted Preparation of the EIA April 25, 1994 Manila based POs including fisherfolk in Manila Bay

Sawata, SAMAKA, Samahang Nanawagan, Samahang Tabing Ilog, LRTB, Samahang Kzapit, Dina, Inc. Sa Ama, Inc.

June 24, 1994 Kalookan community members 2 barangays surrounding the Dagat-Dagatan Sewage Treatment Plant - 205 persons (5% of 22,300 population. from Barangays 34 and 35 of Kalookan City

May 25, 1995 Metro Manila Local Government Units Navotas, Manila, Makati, Quezon City, Valenzuela, Parañaque, Las Pinas, Taguig, Marikina, Kalookan, Pasig, Mandaluyong, San Juan, Pasay, Muntinlupa

Dec. 8, 1995 Manila based NGOs Earth Savers, PCPGE, IRF, PBE, Sagip Pasig, Miriam PEACE, UP Marine Science

October 9, 1996 Municipalities in Zambales Subic, San Narciso, Iba

October 10, 1996 Municipalities in Bataan Morong, Mariveles

Project Implementation April 4, 2000 Bataan Provincial Board July 2, 2002 (in Zambales) 8 LGU-Zambales barangays, 20 different Beach Owners, 2 Timpuyog

officers, 4 Dept. of Tourism staff, 1 newspaper representative July 5, 2002 MMT meeting with 2 NGO observers, Timpuyog - Zambales and Beach

Owners Association (ZROA) - MWSS, MWCI, MWSI, LGU Zambales, DOH, LGU Bataan, DPWH, BFAR, , LLDA, Cavite, PCG

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ANNEX 6. MONITORING ACTIVITIES AND THE MULTIPARTITE MONITORING TEAM

A. Terms of Reference of Project Monitoring Activities

1. Monitoring activities shall be undertaken at least quarterly by the MMT and monthly by MWSS, MWCI, and MWSI in accordance with the requirements of the ECC and Environment Monitoring Plan. Monitor-ing may also be undertaken during or after completion of ECC compliance milestone.

2. DENR-approved methods of analysis as well as sampling and handling methods shall be observed and properly documented by MMT.

3. Acceptable transport and handling methods shall be observed and properly documented.

4. Sampling and observation areas shall be selected from stations identified in the Environmental Impact Assessment for the PROJECT. However, other alternative sites shall be considered whenever appro-priate.

5. At least two (2) sets of samples shall be collected. The first set of samples will be analyzed by the DENR laboratory or a DENR-recognized laboratory. The second set of samples will be analyzed by the laboratory of either MWCI or MWSI.

6. The DENR laboratory or at least two (2) other DENR-recognized laboratories shall be considered as the official laboratory of the MMT.

7. In case of question(s) on specific monitoring results, an independent DENR-recognized laboratory ac-ceptable to the MMT shall be used for validation purposes with the costs of chemical analysis and logis-tical support for handling and transport chargeable against the EMF. The quantity of samples and the cost of tests shall be agreed upon on a case by case basis.

8. All monitoring activities shall be photo-documented. Every monitoring report shall include such photo-graphs.

9. Briefing of MMT members on the PROJECT status shall be done by MWSS/MWCI/MWSI prior to moni-toring.

10. A monthly meeting by the MMT shall be held to discuss observations/concerns, findings and content(s) of monitoring report.

11. Members of the MMT shall decide on matters/issues by simple majority.

12. The MMT may develop such other Operating Guidelines necessary to ensure effective monitoring.

13. The MMT Chairperson, or at least three (3) members of the MMT, can call for a special or emergency meeting, otherwise, a regular meeting shall, at the minimum, be scheduled quarterly.

14. Any decision or approval by the MMT shall require a majority vote, provided there is a quorum. A quo-rum shall require the presence of more than half of the members, including, at all times, the representa-tives of the DENR and the MWSS, MWCI, MWSI.

15. The MMT has the option to call experts to give technical advice.

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B. Legal Authority for Creation of the MMT

DENR Dept Admin Order 96-37, Implementing Rules & Regulations of EIA Law - PD 1586, Section 10.0 of Article IV: Compliance Monitoring:

a. A multi-partite monitoring team (MMT) shall be formed, immediately after the issuance of an ECC pursuant to an EIS. The MMT shall be principally tasked to undertake monitoring of compliance with the ECC conditions, the EMP and applicable laws, rules and regulations.

Section 11.0 of Article IV: Composition of the MMT:

The composition of the MMT and their responsibilities shall be provided in a Memorandum of Agree-ment (MOA) negotiated by the proponent, the DENR and the major stakeholders. In all cases, the MMT shall be composed of representatives of the proponent and of a broad spectrum of stakeholder groups, including representatives from the Local Government Units, NGOs/POs, the community, women sector, concerned PENRO and CENRO, with support from the Regional Office and/or the EMB, whenever necessary, the academe, relevant government agencies, and other sectors that may be identified in the negotiations leading to the execution of the MOA.

C. Responsibilities of the MMT Members MMT Member Specific Roles, Duties and Responsibilities

Environmental Manage-ment Bureau of the DENR (EMB)

• Shall be responsible for policy formation, evaluation of monitoring results, resolu-tion of issues where consensus or decisions cannot be made at the regional level and the provision of needed support for the operationalization of the MMT.

Department of Environ-ment and Natural Re-sources (DENR) Region III and IV

• Shall act as the lead agency in the monitoring work and shall coordinate their tasks to ensure an efficient monitoring of the entire PROJECT.

• Shall make recommendations/appropriate action(s) to resolve issues/problems and concur with monitoring reports.

• DENR-Regional Offices shall provide technical assistance and participate in the activities of the MMT, whenever necessary.

Metropolitan Waterworks and Sewerage System (MWSS) Manila Water Company Inc. (MWCI) Maynilad Water Supply Inc. (MWSI)

• Provide necessary funds for the monitoring activities. • Make available to the MMT information relevant to the determination of compli-

ance with the ECC by the PROJECT. • Grant permission to MMT members to inspect and observe operation activities of

the PROJECT including testing, calibration and operation of pollution control and in-house monitoring equipment during business hours and after receiving notice of such inspection from the MMT.

• Participate during the monitoring reports. • Concur with and sign then monitoring reports. • Coordinate with the other concerned agencies. • Proper information dissemination regarding the project to fisherfolks and other

stakeholders. Department of Health (DOH)

• Shall make monthly report to the MMT based on the reports of public health monitoring conducted by concerned Local Government Units (Bataan, Cavite, Zambales and NCR) in their respective areas of responsibility. However, DOH shall conduct monitoring and evaluation activities in accordance with the said Local Government Units during resolution of issues and concerns of the affected communities.

Department of Public Works and Highways (DPWH)

• Shall monitor for any septage overflows from vacuum trucks.

Bureau of Fisheries and Aquatic Resources (BFAR)

• Shall be responsible for monitoring of fish and aquatic population that may be affected by septage dumping. Any change in the vital oceanographic parameters such as but not limited to marine biota, abundance and distribution that may af-fect health and quality of the fish and catch effort which may be attributed to the project shall be reported and recommended to DENR.

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MMT Member Specific Roles, Duties and Responsibilities Laguna Lake Development Authority (LLDA)

• Shall be responsible for monitoring of the project components/facilities relative to its mandate in its area of jurisdiction. This shall include but not limited to the fol-lowing: ambient river quality monitoring in the pre-determined locations in the Pasig River; regular monitoring of Project facilities (i.e., Napindan Barge Loading Station); and issuance of applicable permit/clearance subject to compliance with requirements.

Metro Manila Development Authority (MMDA)

• Shall monitor traffic flows at the barge loading stations. • Shall review the scheduling for vacuum trucks to ensure that present traffic flow

not be significantly affected by the additional vacuum tankers’ traffic loads. Philippine Coast Guard (PCG)

• Provide adequate escorts on exact location of sea dumpsites and monitor that proper dumping operation is carried out by dumping barge companies.

• Ensure worthiness of barges that will be utilized in the dumping operation and as such, the required vessel’s safety documents and devices/equipment are on board the barges.

• Issue the necessary dumping permit and appropriate departure clearance to the barges at every dumping operations as requested by the barges’ master, who shall thereafter render After Dumping Report to CPGG after the dumping opera-tions.

Principal Government Units of Cavite, Bataan and Zam-bales and NGOs

• Shall be the watchmen of the project. • Shall assist in public information to the Sectoral Monitoring Teams • Participate during monitoring and audit activities • Concur/sign the monitoring reports.

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ANNEX 7. MSSP SUPERVISION MISSIONS8

Dates of Visits Members of the Team (by Function)

August 26 to September 9, 2003 10th Supervision Mission

• Water and Sanitation Specialist/Task Team Leader • Procurement and Disbursement Operations Officer • Environment Operations Officer • Financial Management Operations Officer • Social Safeguards Operations Officer • Consultant

October 23 to 30, 2002 9th Supervision Mission

• Water and Sanitation Specialist/Task Team Leader • Procurement and Disbursement Operations Officer • Environment Operations Officer • Community Participation/Civil Society Relations Officer • Financial Management Assistant • Environmental Consultant

February 13 to 26, 2002 8th Supervision Mission

• Water and Sanitation Specialist/Task Team Leader • Sr. Environmental Specialist • Procurement and Disbursement Operations Officer • Environment Operations Officer • Consultant

May 25 to June 8, 2001 7th Supervision Mission

• Water and Sanitation Specialist • Sr. Private Finance Specialist • Procurement and Disbursement Operations Officer

November 28- December 28, 2000 6th Supervision Mission

• Operation Core Services/Task Team Leader • Water and Sanitation Specialist • Procurement and Disbursement Operations Officer • Environment Operations Officer

April 12 to 24, 2000 and May 24 to 29, 2000 5th Supervision Mission

• Operation Core Services/Task Team Leader • Environment Operations Officer • Consultant-Financial Management

February 14 to 22, 2000 4th Supervision Mission

• Operation Core Services/Task Team Leader • Water and Sanitation Specialist • Manager of WB’s Water and Sanitation Program (Sewer-

age/Sanitation for Low-Income Communities) • Procurement and Disbursement Operations Officer

June 22 to 29, 1999 3rd Supervision Mission

• Operation Core Services/Task Team Leader • Water and Sanitation Specialist • Manager UNDP/WB’s Water and Sanitation Program

(Resettlement) • Procurement and Disbursement Operations Officer

January 26 to February 1, 1999 2nd Supervision Mission

• Operation Core Services/Task Team Leader • Resettlement Specialist • Procurement and Disbursement Operations Officer

August, September, October, 1998 (8 days) 1st Supervision Mission

• Operation Core Services/Task Team Leader • Water and Sanitation Specialist • Procurement and Disbursement Operations Officer

October 27 to November 8, 1997 Restructuring Mission

8 In addition to formal supervision missions, Bank staff based in Manila have been following Project implementation since 2000.

Fortune IslandMarine Reserve/Tourist Zone

Nasugbu MarineSanctuary

Sombrero IslandMarine Reserve/

Tourist Zone

Puerto GaleraMarine Biological Station

Manila Bay

Luzon

Sea

SubicBay

BalayanBay

LakeTaal

Lagunade Bay

BagacBay

Cabra Island

CaponesIsland

Ambil IslandLubangIsland

Golo Island

VerdeIsland

MaricabanIsland

CorregidorIsland

T A R L A C E C I J A

Z A M B A L E S

P A M P A N G A

B A T A A N

B U L A C A N

L A G U N A

R I Z A L

METROMANILA

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C A V I T E

B A T A N G A S

M I N D O R OO R I E N T A L

M I N D O R OO C C I D E N T A L

San Fernando

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Mariveles

Pasig

QuezonCity

PasayCity

Manila

Designated MWSS Liquid Waste Dumpsitein accordance with London Convention (1972)

14°20'N, 120°00'ESeptember - June (abandoned 2003) 10

km.

10 km.C

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M

I

48.6

km

26.2

nm

44.1 km

23.8 nm

60.9 km

32.9 nm

48.6

km

26.2

nm

44.1 km

23.8 nm

60.9 km

32.9 nm

18.3 km

9.9 nm

25.4

km

13.7

nm

15°N

119°E 120°E 121°E

119°E 120°E 121°E

14°N

15°N

14°NVIETNAM

PHILIPPINES

THAILAND

MYA

NM

AR

M A L A Y S I A

SINGAPORE

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PAPU

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I N D O N E S I A

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I N D O N E S I A

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Area ofMain Map

Area ofMain Map

LAOP.D.R.

CHINA

CHINA

SouthChinaSea

Java Sea

ArafuraSea

CelebesSea

Sulu Sea

Gulf ofTonkin

Gulf ofThailand

P h i l i p p i n eS e a

N o r t hP a c i f i cO c e a n

Banda SeaFlores Sea

SouthChinaSea

Java Sea

ArafuraSea

CelebesSea

Sulu Sea

Gulf ofTonkin

Gulf ofThailand

P h i l i p p i n eS e a

N o r t hP a c i f i cO c e a n

Banda Sea

Flores Sea

20°

0°

140°120°100°

140°120°100°

0°

20°

20°

0°

140°120°100°

140°120°100°

0°

20°

PREVAILING WINDS*FEBRUARY

AUGUST

SURFACE CURRENTS*

*Source: Atlas for Marine Policy in Southest Asian Seas, University of California Press, Berkeley and Los Angeles, California, 1983, pps. 10-13.

FEBRUARY

AUGUST

0 500

KILOMETERS

0 500

KILOMETERS

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

PHILIPPINES

MANILA SECOND SEWERAGE PROJECT (MSSP)REQUEST FOR INSPECTION

DESIGNATED MWSS LIQUID WASTE DUMPSITE

LAHAR AFFECTED AREA

SLUDGE DISPOSAL SITES

CLAIMANTS' PROVINCES

CORAL REEFS

EXISTING MARINE PROTECTED AREAS

EXISTING SEA DUMPING AREAS:

CHEMICALS

EXPLOSIVES

METALS

INDUSTRIAL WASTE

SHIPPING LANES

SURFACE CURRENTS-FEBRUARY*

SURFACE CURRENTS-AUGUST*

PREVAILING WINDS-FEBRUARY*

PREVAILING WINDS-AUGUST*

SELECTED CITIES

NATIONAL CAPITAL

PROVINCE BOUNDARIES

C

E

M

I

0 10 20 30 40

KILOMETERS

IBRD 32767

OCTOBER 22, 2003

Mt. PinatuboMt. PinatuboMt. Pinatubo

Moncada(dried sludge)

La Paz(dried sludge)

San Idelfonso(dried sludge)

Bacalor(liquid sludge)

Florida Blanca(both liquid and

dried sludge)

Concepcion(liquid sludge)

Moncada(dried sludge)

La Paz(dried sludge)

San Idelfonso(dried sludge)

Bacalor(liquid sludge)

Florida Blanca(both liquid and

dried sludge)

Concepcion(liquid sludge)