A duly-organized water district is formed through the following process:

One: LWUA conducts preliminary talks and consultations with interested local government entities.

Two: The local government conducts public hearings to arrive at a consensus on whether to form a water district or not. (LWUA Board Resolution No. 147, Series of 2009, amended the Guidelines for the Formation of Water Districts in Communities Without Existing Water System, and states that “LWUA shall no longer require a public hearing on water district formation as a requisite for the filing of the same.”)

Three: The local legislative body (the Sangguniang Bayan/Lungsod or Sangguniang Panlalawigan, as the case may be) secures nominations for candidates for the water district board of directors from business, civic, professional, education and women sectors of the community concerned.

Four: The Sanggunian secretary collates all nominations and forwards the same to the appointing authority.

Five: The Mayor or Governor appoints the directors.

Six: The local legislative body deliberates and enacts a resolution to form a water district stating therein the name and terms of office of the duly appointed board of directors.

Seven: The Mayor or Governor approves resolution, submits the same to LWUA.

Eight: LWUA reviews the resolution to determine compliance with Presidential Decree No. 198 (Provincial Water Utilities Act of 1973) and LWUA requirements.

Nine: If the resolution complies with requirements, LWUA issues a Conditional Certificate of Conformance (CCC), a water district is born and becomes eligible to avail of LWUA’s comprehensive assistance program.

A water district’s water rate is determined by the following factors:

  • cost of systems expansion
  • operation and maintenance cost
  • number of connectors
  • debt service needs of the water district
  • ten percent reserves
  • operating efficiency

Water rates are implemented only after they are presented in a public hearing and after review and approval by LWUA.
To ensure that the average water user in the province can afford the water service provided by the water district, water rates are set through a socialized pricing scheme. Big water users such as industries and commercial establishments are charged higher rates which, in effect, subsidizes the smaller but more numerous water consumers. In addition, a lifeline rate ceiling is also set, equivalent to 5% of the annual income of the low income group.

LWUA offers four loan windows to water districts

  • Loan Window 1 is open to Level III (individual household connection) and Level II (communal faucet) projects intended for the comprehensive development, repair or rehabilitation of new or existing water supply systems with interest rates ranging from 9.2 %-10.2 % p.a. and a 10- to 40-year repayment scheme.
  • Loan Window 2 is open to projects intended to generate new service connections or for watershed management, and to special loans intended for emergency purposes. Available loan is from 50-100 % of project cost and interest rates are based on prevailing applicable rates.
  • Loan Window 3 is open to projects intended to enhance water supply facilities or commercial operations. Maximum loan available is set to 100% of project cost while the repayment period is either the equivalent to the life of asset acquired or repayment period contracted with the fund source.
  • Loan Window 4, also called the Project Development and Efficiency Improvement Fund (PDEIF), is intended for project development and for efficiency improvement activities such as non-revenue water reduction. The former is available to all water districts and is offered at 6.56 % annual interest, the latter only to “semi-creditworthy” and “pre-creditworthy” water districts at interest rates of 8.2-8.7 % p.a.
  • Special Loan Window is the latest lending facility of LWUA. It is intended for water district expansion projects, well drilling and development of water sources. Maximum loan amount is P10 million and carries a 7.5% p.a. interest rate for a 10-year loan and 9% p.a. for a 15 to 20-year loan.

LWUA is the only lending institution – whether in the public or private sector — with the financial, technical and institutional development competence to enable a water district’s water supply project to generate return-on-investments.

LWUA treats countryside water supply development not simply as a financial venture, nor as a mere waterworks construction project, but as a comprehensive development endeavor that factors in the community’s economic and cultural nuances, among other things, to assure residents of a water supply service that is both reliable and lasting. LWUA’s comprehensive expertise has been responsible for turning Philippine countryside water supply development into the working model for Asia that it is today. Water Districts benefit from this comprehensive expertise through LWUA’s various assistance programs.