Announcement of Philippines Borrows One Hundred Fifty Million Dollars for Irrigation and Power Project on May 15, 1978

FOR lt\1MEDIAIT· RELEASE •World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 BANK NEWS RELEASE NO. 78/89 MAY 15, 1978 PHILIPPINES BORROWS·$l50 MILLION FOR IRRIGATION AND POWER PROJECT The World Bank has approved a loan of $150 million for a project to provide irrigation and electric power in the Philippines. The project, which is the second stage of the Magat River Multipurpose Project, will eventually extend the irrigation service area to 102,000 hectares (ha) in the Cagayan Valley of Northern Luzon. Under the first stage, irrigation services on some 35,000 ha are being improved and extended with the aid of a $42 million World Bank loan approved in 1975. Included in the present project are, a main dam across the Magat River, • a power generating plant, related structures and technical assistanceo The World Bank loan will help finance the construction of the main dam component which comprises civil works for the main dam, related structures, installed mechanlcal equipment and consulting services. As a result of the project, about 356,000 tons of paddy will eventually be produced each year, partly through a nearly doubled cropping intensity from 107% to 200%. The increase in rice production will save the country about $69 million a year through reduced food imports. The project will also generate about 1,200 gigawatt hours of electric power a year for the Northern Luzon region through an installed capacity of 360 megawatts from the power plant to be financed by the Philippine Government. Families of some 8,000 farmers and 4,400 landless laborers will benefit from the project together with about 15,000 farm families ?.nd 5,500 landless families who are expected to benefit from the first stage.· The per capita income of farmers from 3-hectare plots will rise from $135 at present to $475 for owner-cultivators and from $80 to $305 for tenant farmers. The additional demand for farm labor will be equal to some 36,000 fu 11-t i me jobs. The World Bank loan is for 20 years, including a grace period of 5 years, • with interest at 7.5% per annum . American National Bank and Trust Company of Chic2go has agreed to participate in the first maturity of this loan. NOTE: Money figures are expressed in U.S. dollar equivalents. FORM NO. 1121 T ECHN I CAL DAT A (5-76) Magat River Multipurpose - Stage I I • PROJECT: COUNTRY: Republic of the Philippines TOTAL COST: $346 million BANK FINANCING: $150 million for a term of 20 ye3rs, including a grace period of 5 years, at an interest rate of 7.5% per annum. OTHER FINANCING: Government of the Philippines IMPLEMENTING ORGANIZATION: National Irrigation Administration (NIA) P. 0. Box 465, Green Hills, Rizal, Philippines. PROJECT DESCRIPTION: The project includes construction of the main dam across the Magat River consisting of a concrete spillway, a power intake section and adjoining rockfill embankment sections; constr4ction of the rockfill Baligatan dike running from the right abutment of the main dam to the left abutment of the Baiigatan creek dam; construction of the rockfill Baligatan creek dam, together with an outlet conduit and control works; and provision of consulting services to assist in design and construction supervision. PROCUREMENT: Materials testing equipment and vehicles costing about $0.4 million will be procured after international bidding in accordance with Bank guidelines. A preference 1 imited to 15% of the c. i .f. price • of imported goods, or the custom duty, whichever is lower, will be extended to local manufacturers. Local shopping is appropriate for off-the-shelf items costing less than $10,000 each because the advantages of international competitive bidding will be clearly outweighed by the administrative costs involved. The total cost of such items will not exceed $300,000. Civil works on the Magat dam and appurtenant structures ($229 mill ion) were widely advertised fnternationally and prequalificatfon of prospective bidders hr~ been completed according to Bank guidelines. Work associated with clearing oft~; re. ~rvoir and resettlement of the affected population ($2.4 million) will be carried out mainly by local contractors. There is potentially adequate competition and foreign firms can participate. CONSULTANTS: The project will provide for consultant services to cover the expected period of construction from July 1978 to December 1982. NIA proposes to use the same joint venture of expatriate and local consulting firms that has been involved in the preconstruction phase of the project. Negotiations for provision of consulting services have been completed. It is estimated that about 1,130 man-months of consultant services ~ill be required, with the expatriate firms providing 540 man-months at aP average cost of about $7,900/man-month !exclusive of transportation, equipment and price esca?ation) and the local associates providing 590 man-months at an average cost of $2,500/man-month. Direct NIA counterpart and support services to the consultants will total some 1,640 man-months. The consultant contract will provide for special c~-the-job training, together with 90-day periods of overseas training in Canada and the U.S.A. for 14 of NIA's engineers. NIA has engaged consultants satisfactory to the Bank under terms of reference and conditions approved • by the Bank to assist in final design and supervision of construction. ECONOMIC RATE OF RETURN: 12% ESTIMATED COMPLETION DATE: 1982 - 0 -