Water Service Cooperatives Development Act

Offer of te TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES ) First Regular Session P3:57 JUL 14 SENATE RECEIVLU S.B. No. - INTRODUCED BY SENATOR RISA HONTIVEROS AN ACT STRENGTHENING WATER SERVICE COOPERATIVES, ESTABLISHING FOR THIS PURPOSE THE LOCAL WATER SERVICE COOPERATIVES DEVELOPMENT FUND, AND PROVIDING SUPPORT PROGRAMS FOR THEIR GROWTH AND DEVELOPMENT EXPLANATORY NOTE The United Nations recognizes universal access to clean and safe water as a fundamental human right and an essential step toward improving the living standards of all people. Water is a basic human need- essential for hydration, food production, sanitation, and public health-and a critical resource for sustainable development. Despite this, many communities in the Philippines-particularly in rural, geographically isolated, and economically disadvantaged areas-continue to face inadequate access to potable water. These so-called "waterless" or water-poor communities rely on unsafe sources, lack sufficient supply, or depend on unimproved water systems. While several types of water service providers operate in the country-including water districts, local government-managed systems, rural and barangay water associations, cooperatives, and private firms-water service cooperatives have proven to be a viable and sustainable option. Organized by communities themselves, these cooperatives are able to provide safe, affordable, and reliable water supply services, particularly in unserved and underserved areas. A water service cooperative, as defined under Article 23(s) of Republic Act No. 6938, as amended by Republic Act No. 9520 or the "Philippine Cooperative Code of 2008, "is a special type of service cooperative organized to own, operate, and manage water systems for the distribution of potable water to its members and their households. Despite their potential, many water service cooperatives lack access to sufficient technical support, financial assistance, and enabling policies necessary for long-term viability and expansion. Their ability to operate and scale is often hindered by infrastructure limitations, lack of access to capital, regulatory barriers, and minimal

institutional support. This proposed measure, to be known as the "Water Service Cooperatives Development Act, "seeks to address these challenges and strengthen the role of water service cooperatives in achieving universal access to water services. The bill provides for the establishment of a Local Water Service Cooperatives Development Fund in all provinces, cities, and municipalities. It mandates local government units to allocate at least two percent (2%) of their annual National Tax Allotment (NTA) for the development and support of water service cooperatives in their respective jurisdictions. To enhance the sustainability and competitiveness of water service cooperatives, the bill further provides the following: • Recognition of tax incentives, exemptions, and privileges under Sections 60, 61, and 62 of RA 6938, as amended; • Capital infusion by local governments in the form of redeemable preferred shares, bonds, subsidies, donations, or grants; • Prioritized access to loans from public and private lending institutions, particularly for newly organized cooperatives in marginalized communities; • Provision of technical, financial, and institutional assistance to support operations and improve infrastructure. The bill also defines the responsibilities of the Cooperative Development Authority (CDA), the National Water Resources Board (NWRB), and local government units, including: a. Assisting in the establishment and organization of water service cooperatives; b. Identifying areas without adequate water supply services; c. Providing technical support for water treatment, sanitation, and system operation; d. Conducting capacity-building and training programs; e. Granting preferential rights and privileges for water service operations; and f. Ensuring universal access to water for basic daily needs to promote a healthy and productive life. By institutionalizing these mechanisms, this bill aims to expand access to clean and affordable water, particularly in the most vulnerable communities, while strengthening the water service cooperative sector as a responsive economic enterprise that empowers local communities and contributes to inclusive development. In view of the foregoing, the immediate passage of this bill is earnestly sought. abortivero Barafud RISA HONTIVEROS Senator

TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES First Regular Session JUL 14 P3:57 SENATE S.B. No._ 571 RECEIVED BY INTRODUCED BY SENATOR RISA HONTIVEROS AN ACT STRENGTHENING WATER SERVICE COOPERATIVES, ESTABLISHING FOR THIS PURPOSE THE LOCAL WATER SERVICE COOPERATIVES DEVELOPMENT FUND, AND PROVIDING SUPPORT PROGRAMS FOR THEIR GROWTH AND DEVELOPMENT Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1. Short Title. - This Act shall be known as the "Water Service

2 Cooperatives Development Act."

Sec. 2, Declaration of Policy. - The State recognizes the vital role of water

service cooperatives in delivering safe and affordable water supply services, 5 particularly in unserved and underserved areas, and as instruments of economic 6 development, social justice, and equity. Towards this end, the State shall promote the 7 growth, development, and expansion of water service cooperatives; provide adequate resources and support mechanisms to strengthen the cooperative movement; enable policies and programs to ensure their sustainability; and extend technical guidance, financial assistance, and other support services to transform water service cooperatives into viable, responsive, and resilient economic enterprises. The State shall also foster partnerships between cooperatives and national and local stakeholders.

Sec. 3. Coverage. - This Act shall apply to water service cooperatives and

multi-purpose cooperatives engaged in water service operations. The benefits granted under this Act to multi-purpose cooperatives shall be limited solely to their water service operations.

Sec. 4. Local Water Service Cooperatives Development Fund. - A Local Water

2 Service Cooperatives Development Fund, hereinafter referred to as the "Fund", is hereby established in every province, city, and municipality to support the 4 development of water service cooperatives within their respective jurisdictions. 5 Each province, city, and municipality shall allocate in their annual budget at least two 6 percent (2%) of their National Tax Allotment (NTA), which shall constitute the Fund 7 for local water service cooperative development: Provided, That cities and 8 municipalities with existing and sufficient potable water supply within their jurisdictions 9 may opt not to appropriate and establish the Fund: Provided further, That provinces 10 shall establish the Fund and assume responsibility for municipalities within their jurisdiction classified as fourth to sixth income class: Provided finally, That municipalities classified as fourth to sixth income class shall commit to the progressive realization of this mandate.

Sec. 5. Utilization of the Fund. - The Fund may be utilized by provinces, cities,

and municipalities for the following purposes: a. Formulation and implementation of development plans and special programs for water service cooperatives; b. Provision of technical assistance, financial support, and other essential services; c. Promotion and mobilization of water service cooperatives as viable and responsive socio-economic enterprises; d. Organization of water service cooperatives, particularly in unserved and underserved areas; e. Implementation of capacity development and training initiatives; f. Identification and organization of groups, sectors, or communities into water service cooperatives to facilitate access to safe and affordable water, promote job creation, and support local socio-economic development; and g. Support for the programs and activities of water service cooperatives in ensuring access to safe and affordable water supply services.

Sec. 6. Incentives and Privileges. - Duly registered water service cooperatives

1 shall be entitled to the tax incentives, exemptions, and privileges provided under 2 Sections 60, 61, and 62 of Republic Act No. 6938, as amended by Republic Act No. 3 9520, otherwise known as the "Philippine Cooperative Code of 2008." In addition, 4 water service cooperatives shall be exempt from the payment of customs duties and 5 taxes on imported equipment, machinery, and other materials directly used in the provision of water supply services.

Sec. 7. Capital Infusion. - Provinces, cities, or municipalities, as the case may

be, shall provide capital infusion to newly organized or existing water service 9 cooperatives in the form of redeemable preferred shares or bonds bearing a maximum 10 interest rate of two percent (2%) per annum and a term of fifteen (15) years, renewable for another ten (10) years. Support may also be provided in the form of subsidies, donations, or grants sourced from the Fund to improve cooperative operations and infrastructure. Interest earned from preferred shares or bonds shall be added to the Fund. 15 Public and private lending institutions shall prioritize lending to water service cooperatives and extend credit with minimal collateral requirements, particularly to newly formed cooperatives in unserved or underserved areas or those with limited access to financing.

Sec. 8. Duties and Responsibilities of Concerned Agencies. - The Cooperative

20 Development Authority (CDA), National Water Resources Board (NWRB), and concerned local government units (LGUs) shall undertake the following: a. Coordinate with other government agencies, civil society organizations, and relevant sectors to assist in the establishment and organization of water service cooperatives, or engage existing viable cooperatives in areas where water services are lacking; b. Identify areas without existing water supply services or where existing services are inadequate; c. Provide technical, financial, and other support services to ensure effective cooperative operations;

d. Implement capacity-building and training programs to enhance industry competitiveness and innovation; e. Grant preferential rights and privileges to water service cooperatives for the lease of public utilities and access to water service-related facilities, including the issuance of franchises, permits, certificates of authority or public convenience, and Environmental Compliance Certificates, within thirty (30) days upon submission of complete requirements; and f. Support water service cooperatives in ensuring universal access to water for basic daily needs to sustain a healthy, clean, and productive life.

Sec. 9. Congressional Oversight. - The Joint Congressional Oversight

Committee on Cooperatives, as created under Article 138 of Republic Act No. 6938, as amended, shall exercise oversight over the implementation of this Act.

Sec. 10. Service Standards and Inter-connection with Bigger Water Utilities

Registered with CDA, NWRB, and LWU. (a) Water Quality Standards. Water service cooperatives are free to utilize any affordable technology, provided that the water delivered consistently complies with the Philippine National Standards for Drinking Water (PNSDW) set by the Department of Health (DOH). (b) Engineering Standards Compliance. Compliance with engineering standards shall be achieved progressively over time. This commitment shall be formalized through the cooperative's Certificate of Public Convenience (CPC) and tariff grants issued by the National Water Resources Board (NWRB), which shall include associated capital investment calendars. (c) Minimum Service Standards. Minimum service standards, other than water quality, such as water pressure and availability, shall be determined and set by the water service cooperative in consultation with its membership. Where certain consumers demand higher pressures, volumes, and hours of availability requiring additional investments, such investments shall be entitled to a reasonable return. Higher tariffs may be set by the cooperative for these specific services, for later

reporting to the NWRB but without the need for prior NWRB approval. (d) Protection of Cooperative Investments and Inter-connection. No water 3 utility, nor any entity other than the concerned cooperative, shall be permitted to unilaterally install waterlines or assume control over service areas wherein a 5 cooperative has previously made capital investments. Provided that, in the event that 6 a cooperative becomes unable to sustain the investments and operations necessary 7 for the continued provision of water services, the Local Government Unit (LGU) having & jurisdiction, in consultation with the cooperative sector and pursuant to policy 9 guidelines to be jointly issued by the Department of the Interior and Local Government 10 (DILG) and the Local Water Utilities Administration (LWUA)-or by the DILG and the Metropolitan Waterworks and Sewerage System Regulatory Office (MWSS-RO), as applicable shall be mandated to ensure that any LGU water department, its private partner, water district, or the MWSS, including any of their respective private partners, shall provide just compensation to the affected cooperative. Provided further, that said compensation shall be computed based on the net present value of the cooperative's water service enterprise, as determined in accordance with applicable valuation 17 standards and regulatory frameworks. (e.) Procurement of Bulk Water Supply by Water Cooperatives. In lieu of 19 developing its own water sources, a duly registered water cooperative may enter into an agreement for the procurement of bulk water supply from the LWUA, the MWSS, or any of their authorized partners or agents. Provided that the price per cubic meter under such procurement agreements shall not exceed the prevailing tariff imposed upon household consumers by the supplying entity. Provided further, that the water cooperative shall be entitled to a non-revenue water allowance, free of charge, equivalent to at least fifty percent (50%) of the non-revenue water rate incurred by the supplying utility in the course of providing water to its own retail customers.

Sec. 11. Implementing Rules and Regulations. - Within sixty (60) days from

the effectivity of this Act, the Secretaries of the Department of the Interior and Local Government and the Department of Environment and Natural Resources, in 30 consultation with the Chairperson of the Cooperative Development Authority, the

1 Executive Director of the National Water Resources Board, and the Governor of the 2 Bangko Sentral ng Pilipinas, and representatives of water service cooperatives and 3 multi-purpose cooperatives engaged in water service operations, shall promulgate the necessary rules and regulations for the effective implementation of this Act.

Sec. 12, Repealing Clause. - All laws, executive orders, rules and regulations,

6 or parts thereof that are inconsistent with the provisions of this Act are hereby repealed or amended accordingly.

Sec. 13, Effectivity. - This Act shall take effect fifteen (15) days after its

9 publication in the Official Gazette or in a newspaper of general circulation. Approved,