Philippines - Magat and Chico River Multipurpose Projects

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 7923 e PROJECT PERFORMANCE AUDIT REPORT PHILIPPINES MAGAT RIVER MULTIPURPOSE PROJECTS STAGES I, II, AND III (LOANS 1154-PH, 1567-PH, 1639-PH AND 1639-PH/SAP) AND CHICO RIVER IRRIGATION PROJECT STAGE I (LOAN 1227-PH) JUNE 30, 1989 Operations Evaluation Department This document has a restricted distribution and may be sed by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. WEIGHTS AND MEASURES 1 hectare (hs) = 2.47 acres 1 kilometer (km; = 0.62 miles 1 square kilometer (eq km) - 0.386 square miles 1 meter (m) - 39.37 inches 1 square meter (sq m) - 10.76 square feet 1 cubic meter (cu m) = 35.31 cubic feet 1 million cubic meters (MCM) = 810.7 acre feet 1 millimeter (mm) = 0.039 inches 1 kilogram (kg) = 2.2 pounds 1 cavan (paddy) = 50 kg 20 cavans - 1 metric ton 1 megawatt (MW) - 1,000 (kW) Kilowatts ACRONYMS AND ABBREVIATIONS ADB - Asian Development Bank ADCC - Agricultural Development Coordinating Council ADD - Agricultural Development Division DA - Department of Agriculture DAR - Department of Agrarian Reform ERR - Economic Rate of Return FIA - Farmers' Irrigation Association FIG - Farmers' Irrigation Group GOP - Government of Philippines ICB - International Competitive Bidding IFAD - International Fund for Agricultural Development ISF - Irrigation Service Fee ISOP - Irrigation Operations Support Project LCB - Local Competitive Bidding MRMP - Magat River Multipurpose Project NFA - National Food Authority NIA - National Irrigation Administration NPC - National Power Corporation O&M - Operations and Maintenance PCR - Project Completion Report SAP - Special Action Program SEC - Securities and Exchange Commission USBR - United States Bureau of Reclamation WMT - Water Management Technician TOI* OFICIAL t ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Olkeof uCWWto4etnel MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Performance Audit Report on Philippines Magat River Multipurpose Projects, Stages I, II & III (Loans 1154-PH, 1567-PH, 1639-PH & 1639-PH/SAP); and Chico River Irrigation Project, Stage I (Loan 1227-PH) Attached, for information, is a copy of a report entitled "Project Performance Audit Report on Philippines - Magat River Multipurpose Projects, Stages I, II & III (Loans 1154-PH, 1567-PH, 1639-PH & 1639-PH/SAP), and Chico River Irrigation Project, Stage I (Loan 1227-PH)" prepared by the Operations Evaluation Department. Attachment This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT PHILIPPINES MAGAT RIVER MULTIPURPOSE PROJECTS STAGES I, II & III (LOANS 1154-PH, 1567-PH, 1639-PH & 1639-PH/SAP) AND CHICO RIVER IRRIGATION PROJECT STAGE I (LOAN 1227-PH) TABLE OF CONTENTS Page No. PREFACE .............................................................. i BASIC DATA SHEETS ................................................... iii EVALUATION SUMMARY ................................................. viii PROJECT PERFORMANCE AUDIT MEMORANDUM I. Background .......1.................................... 1 II. Maxat River Multipurpose Projects, Stages I, II & III ... 2 Project Description ......................................... 2 Project Implementation ...................................... 3 Project Results ............................................ 4 Water Charges and O&M ................................... 7 III. Chico River Irrigation Project, Stage I ................. 8 Background .......................................8......8 Project Description ............................ ........ 8 Project Implementation .................................. 9 Project Results ............................... ...9......9 Water Charges and O&M ................................... 12 IV. Main Findings .......................................... 12 Construction Standards ................................... 12 Progress in Agrarian Reform ............................. 13 Project Organization .................................... 14 Resettlement .................................... ..... 15 Tribal People .......................................... 16 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not o*herwise be disclosed without World Bank authorization. Table of Contents (Cont'd) Paze No. PROJECT CCWLETION REPORT (MAGAT RIVER MULTIPURPOSE PROJECT) Project Objectives and Description ...................... 21 Execution of Physical Targets............................ 23 Project Costs......................... ........... 25 Diabursements............ .... ...........0.......... 25 Agricultural Organization and Training............ ....... 25 Service Area, Cropping Intensity and Ti . . . 26 Operations And Maintenance (O4M)............$............. 28 Dam Safety Evaluation................. . .................. 28 Bank Performance ........... ........................................ 29 Performance of Consultants and Contractors............... 30 Project Impact and Economic Reevaluation................. 30 Issues ................................................. . 32 Lessons.................................................. 32 PCR Annexes I. Key Aspects of the Project............................... 34 II. Comparative Summary of Expenditures and Disbursements.... 35 PROJECT COMPLETION REPORT (CHICO RIVER IRRIGATION PROJECT) Project Objectives and Description....................... 39 Project Costs, Financing and Disbursements............... 40 Project Implementation...................................... 40 Agri-Institutional Development and Training.............. 41 Input-Output Monitoring...........................................'42 Service Area Cropping Intensity and Yields............... 42 Operations and Maintenance (O&M)........................... 43 Water Quality............................................... 43 Bank Performance............................................ 44 Performance of Consultants and Contractors............... 45 Project Impact and Economic Reevaluation................. 45 Issues...................................................... 46 Conclusions and Lessons Learned............................ 47 PCR Annexes I. Key Aspects of the Project............................. 49 II. Comparative Summary of Expenditures and Disbursements.... 50 COHNENTS FROM THE BORROWER Attachment I - National Irrigation Administration MAPS PROJECT PERFORKANCE AUDIT REPORT PHILIPPINES MAGAT RIVER MULTIPURPOSE PROJECTS STAGES I, II & III (LOANS 1154-PH, 1567-PH, 1639-PH & 1639-PH/SAP) AND CHICO RIVER IRRIGATION PROJECT STAGE I (LOAN 1227-PH) PREFACE 1. This is a Project Ptrformance Audit Report (PPAR) of the Magat River Multipurpose Projects, Stages I, II and III, involving four Bank loans in the total amount of US$218.1 million and one IFAD loan of US$10.0 million, and the Chico River Irrigation Project, Stage I, involving a Bank loan of US$50.0 million. 2. Loan 1154-PH for US$42.0 million was approved in August 1975 to finance Magat Stage I and closed, fully disbursed, in June 1983. Loan 1567-PH for US$150.0 million was approved in May 1978 to finance Magat Stage II and closed in May 1986 with an undisbursed balance of US$43,172. Loan 1639-PH for US$21.0 million and IFAD Loan 8-PHI for US$10.0 million were approved in December 1978 to finance Magat Stage III and closed, fully disbursed, in December 1985. Loan 1659-PH/SAP for US$5.1 million was approved in January 1984 to support an additional component of Magat Stage III and closed, fully disbursed, on June 1986. Lhe Chico River Irrigation Project Stage I, was financed by Loan 1227-PH for US$50.0 million, approved in April 1976 and closed in June 1986 after an undisbursed balance of US$6.5 million was cancelled. 3. The PPAR consists of the Project Performance Audit Memorandum (PPAM) prepared by the Operations Evaluation Department (OED) and two Pro).ct Completion Reports (PCR) issued in June 1988 by tne Asia Regional OffLce. The PPAR is based on the attached PCRs, the Staff Appraisal Reports, the loan documents, and a study of prcJect files. The PCRs consist of overviews summarizing two comprehensive PCRs available in project files and prepared in 1986 by the Philippines National Irrigation Administration (WTIA) for the Magat and Chico projects respectively. An OED mission visited the Philippines in February-March 1989, and discussed the effectiveness of the Bank's assistance with NIA officials at the central, provincial and project levels, officials of the Department of Agriculture, and governors of the two provinces in Northern Luzon. Their kind cooperation and valuable assistance in the preparation of this report are gratefully 4cknowledged. 4. Both the Borrower and Bank PCRs provide a complete account and assessment of project experience, and discuss the performance of the Bank and project executing agencies. The PPAM, prepared two years after project completion, reevaluates project outcome and economic viability and elaborates on qome issues which have adversely affected project results: the low construction standards of civil works, slow progress of agrarian reform and insufficient interagency coordination. The successful resettlement component of Magat and the tribal problem of Chico are also reviewed by the PPAM. 5. Following standard OED procedures, copies of the draft PPAR were sent to the Government and to IFAD. Coments received from the Borrower are reproduced as Attachment I. - iii - PoMCT cOMLTIONU oar Philippia Megat River HAltipurpose Proiact: Stage I (Loan 1154-PH) BASIC DATA SOET MT PROJECT DATA Appraisal Actual or Actual as 1 of expectation current estimate appraisal estimate Total project costs (US$ million) 84.0 85.7 102 Loan amount (USS million) 42.0 42.0 100 Date Board approval 7/22/75 Dats Loan Agreement 6/7/75 Date effectiveness 11/4/75 Date Loan closing 6'30/82 6/30/83 114 Date project completion A 12/31/61 12/31/63 133 Sconomic Rate of Paturn /b 13.0 9.5 Financial performance Satisfactory Technical partormance Fair institutional performance CUILATIVE DI SBURSEMENTS FY76 FTY77 FTY78 FT79 FT80 FT81 FT82 FT83 Appraisal estimate (US$ m) 0.4 6.2 18.1 30.0 37.5 41.7 42.0 42.0 Actual (US$ a) - 2.4 11.4 18.6 26.3 28.9 37.4 42.0 Actual as Z Gf estimate - 38.7 63.0 62.0 70.1 69.3 89.0 100.0 Date of final disbursement: July 11, 1983 Amount cancelled (US$ a): /c Staff Inpute (taff*eek) FY74 FT75 FY76 FY77 FY78 FY79 FY80 FY81 FY82 FY83 FTY84 FY85 FTY86 FT87 Total Identification/ preparation 11.3 4.9 - - - - - - - - - - - - 16.2 Appraisal 0.1 60.6 0.3 - - - - - - - - - - - 61.0 Supervision - - 8.2 24.3 12.. 8.9 4.3 5.2 8.4 4.3 7.3 3.0 0.5 0.5 87.0 Total 11.4 65.5 8.5 24.3 12.1 8.9 ...3 5.2 8.4 4.3 7.3 3.0 0.5 0.5 164.2 MISSION DATA Date No. of Man-days Specializations Performance Type of Mission ( persons in field represented /d rating /e Trend /f problems /g Supervision 1 04/76 3 12 A.n(2) 1 - Supervision 2 05/77 2 14 A,En 1 1 Supervision 3 04/78 3 15 En(3) 1 1 - Supervision 4 11/78 2 12 Eo(2) 1 1 - Supervision 5 06/79 3 18 En(2),Ec 2 1 F Supervision 6 03/80 2 10 En(2) 1 1 M Supervision 7 11/80 3 15 En(3) 1 1 F Supervision 6 10/81 2 6 En(2) 2 2 F Supervision 9 04/82 2 10 En(2) 1 1 M Supervision 10 02/83 1 7 En I I F Supervision 11 10/83 1 7 En I 1 - Total 126 OTHER PROJECT DATA Borrower: Republic of the Philippines r-c-- qq National Irrigation Administration (NIA) 7ical ear f rrover: January I- December 31 Name oy currency kabbreviation) Peso (P) Cur Exchange Ra,es paisai year average USS1.00 - f 7.25 Intervening year average US$1 00 - P 7.38 Completion year average USS1.00 - P 14.00 Follown P7oject: I Me.Magat River Multipurpose Project: Stage 11 Loan nuamber: 1567-PH Loan amount (USS a) :50.0 Date board approval: 04/28/78 /a The project was aubstantially complted by 12/31/82. The pace of the finishing work suffered due to criticNl lack of local funds in Iio 1983. /b or the entire project including Stages I, Mti pro and III (SAP). te Loan utilized fully. 7 A Agriculturalist; En * Engineer; Ec - Economist. I = Problem free or minor problems; 2 * Moderate problems. I - Improving; 2 - Stationary. F * Financial; M - Managerial. - iv - PRAWICT COMPLETION REPORT Philippines: Wagat River multipurpose Project: Stane II (Loan 1567-PH) BASIC DATA 8888T E PROJECT DATA Appraisal Actual or Actual as I of epectation current estimate appraisal estimate Total project costs (US$ Ptllioa) A 606.00 380.55 93.7 Loan amount (US$ atilioo) 150.00 149.57 99.7 Date Board approval 04/28/78 Dote Loam Agremet 05/23/78 Date effectiveness 08/24/78 Dete Loan closIng 12/31/83 12/31/85 136 Date project completion lb 12/31/82 12/31/85 156 / Economic Rate of Return /c 13.0 9.5 Financial performance /d Satif actory Technical performance P ;air Institutional performance Cood CUltlfl.ATIVEDISB URSEMENTS FT79 FT80 FY81 FY82 FY83 FY84 FT85 FT86 Appraisal estimate (US$ a) 34.4 81.5 109.1 132.9 145.0 150.0 150.0 150.0 Actual (USS a) 43.0 55.3 104.7 132.9 139.1 144.2 147.1 149.6 Actual as 2 of estiate 125.0 67.8 96.0 100.0 96.0 96.1 98.1 99.7 Date of final disbursement 07/01/86 Amount cancelled (US$ a): 0.43 Staff inputs (staff-weeks FY76 FY77 FY78 FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 Total Identification/preparation 0.4 4.5 20.4 - - 25.3 Appraisal - 43.3 - - - 43.3 Supervision - - 1.6 9.7 12.2 11.2 6.5 12.3 6.7 5.8 5.8 0.2 72.0 Total 0.4 47.8 22.0 9.7 12.2 11.2 6.5 12.3 6.7 5.8 5.8 0.2 140.6 MISSION DATA Date No. of Man-days Specializations Performance Type of Mission (mo/yr) persons in field represented /e rating /f Trend /g problems /h Supervision 1 03/79 2 15 A,En 2 3 T Supervision 2 12/79 2 15 En(2) 2 1 M Supervision 3 03/80 3 30 A,Ec,En 2 2 M Supervision 4 10/80 2 20 A,En I 1 T Supervision 5 03/81 1 12 A 1 1 T Supervision 6 04/82 2 12 En(2) I I T Supervision 7 11/82 3 18 En(3) I 1 - Supervision 8 10/83 1 6 En I 1 - Supervision 9 01/84 2 8 Ec(2) 1 1 F Supervision 10 11/84 1 5 En 1 1 - Supervision 11 05/86 2 10 En(2) 1 1 - Total 151 OTER PROJECT DATA Borrower: Republic of the Philippines zf[:u:tP A#ency: National Irrigation Administration (NIA) eaFicl yero rrower: January 1- December 31 Name of currency (abbreviation) Paso (P) Currency.Exchanse Rates piaTl year average US$1.00 - P 7.37 Intervening year average US$1.00 - P 8.37 Completion year average US$1.00 * P 20.50 Pollow-onvpoje.ct: Fiame c Magat river Multipurpose Project: Stage III Loan number: 1639-PH Loan amount (US$ a) 21.0 Date Board approval: 12/12/78 /a In addition to the Package II works, estimated at appraisal to cost US$346.0 million, financed by IBRD under Loan 1567-PH, the project also included Package I works - mostly site preparation, grouting and diversion tunnels estimated at USS60.0 million - for which financing was provided by the Borrower. /b In fact, the dam and reservoir were @uebrantially completed toward end of CY 1982 and started storinx and delivering water. The whole vroiect was substantially completed by end of CY 1984 with some minor works spilline nwer in 1985/86. /c For the entire project including Stages I, II, III and III (SAP). 77 Along with other projects in the Philippines, the project suffered from inad.quate allocation of local funds, in particular toward the end of the implementation period. /e A * Agriculturalist; En * Engineer; Ec - Economist. 7T 1 - Problem free or minor problems; 2 * Moderate problems. I - Improving; 2 - Stationary; 3 - Deteriorating F - Financial; M - Managerial; T - Technical. bimiest Imea:t aiver matietg le Pects Scnge III (Lou 1639-m-) VASIC §A2A WR1 Appresal Acttual or Aetual as I of Moeetaue cweat estiate aggrateal.MBtigte Total project costs (us$ millie) 62.0 61.6 99.4 Leas emuta (USg Millie) Lt 21.0 21.0 100.0 ate eatrd appreml 12112/78 oate Lesa Agrement 01/26/79 Sate effectiveees 04/25/79 gate Less closing 12/31/83 12/31/85 140 sate project completies 1k 12/31/82 06/30/86 in /C lEaemic late of .turm /d 13.0 9.5 sicial perftexaae & Satisfactory Techacal performac* Good lastitutioPalperformace ood CIAAll.ATIVE DISBURSIITS FT80 FT81 FT82 FT83 FT84 MT85 Appraisal astieste (US$ a) /f 2.2 7.5 14.2 19.4 21.0 21.0 Actual (US$ a) /f 2.1 3.2 9.2 15.1 20.0 21.0 Actual as Z of Wtimate 95 43 65 78 95 100 Date of final disbursement 04/19/85 Aunt cancelled (US$ a): 0.01 Staff Inputs (Staff-weeks) FT78 FY79 FT80 FT81 FT82 FT83 FT8 FY85 FT86 FT87 Total Identification/preparation 1.5 - - - - - - - - - 1.5 Appraisal 17.6 60.6 - - - - - - - - 78.2 Supervision - 0.9 3.4 3.3 11.0 4.6 8.1 6.8 5.6 2.1 45.8 Total 19.1 61.5 3.4 3.3 11.0 4.6 8.1 6.8 5.6 2.1 125.5 MISSION DATA Date No. of Man-days Specializations Performnce Type of Mission (no/yr) persons in field represented /i ratina /h Trend /1 prohlems /1 Supervision 1 07/80 2 12 So(2) 1 2 Supervision 2 12/80 3 20 En(3) 1 I FM Supervision 3 10/81 2 7 ZD(2) 2 2 F Supervision 4 04/82 2 12 En(2) 2 1 NT Supervision 5 02/83 1 8 En 2 1 F Supervision 6 10/83 1 7 En 2 1 F Supervision 7 05/84 1 9 En 2 1 F Supervision 8 01/85 (Form 590 update) 2 1 F Supervision 9 04/85 2 13 En(2) 1 2 M Supervision 10 05/86 2 14 Bn(2) 1 1 F Total 102 OyER PROJECT DATA borrower: Republic of the Philippines National Irrigation Administration (NIA) RE yar' airrower: January I- December 31 mane or currency abbreviation) Peso (9) Curenc Exhage Rate@ L*praslyear average us$1.00 - P 7.37 st 'rvening year average us$1.00 - P 8.37 Compl'qtion year average US$1.00 - P 2t.50 Follow-on PrOjeet: Hame:Magat River Multipurpose Project: Stage III Loan amber: 1639-PH (SAP) Loan amount (USS a): 5.1 Data board approval: 01/17/84 /a Joint financing with International Fund for Agricultural Development (hAD) Loan 881 of US$10.0 Billion. 7 Project was substantially completed on 12/31/85. 7F Delay is due, in general, to lsg in construction nf civil works and, in particular, to addition of the Baligatan Hydroelectric Plant. Dele- in completion of the power plant did not prevent full utilization of the completed project components. /d For the entire project including Stages I, II, Ill and III (SAP). 7 Along with other projects in the Philippines, this project suffered from Inadequate allocation of local funds, in particular from 1983 oard. It These figures only relate to Sak Loan. Each withdrawal application was apportioned between the bank Loan sad the Fund Loan in the ratio of 21:10. 4 En - Engineer. 1I * Problem free or minor prthlem; 2 - Moderate problem. 1 - Improving; 2 - Statiowary. F * Financial; M - Manage tial; T * Technical. - Vi - FWACT CONFINTON IMPORT Philmpelss: Mgasl iver hatiprse Projeti Stage III (lss 1639-PWSA) L SASIC DATA SAR Appraisal Actual or Actual as 2 of esectatieu curmeat estimate appeereal estimate total project eets (US$ million) / 62.0 61.6 99. loss smnnt (US$ million) 3.1 5.1 100.0 Sate P -d appreval 01/17/84 Date Loss Agreement 02/17/84 Bate effectivemes 06/04/84 Date Loaa closing 12/31/85 06/30/s6 126 Date project completion 12/31/85 06/30/66 126 Seesomic Rate of Return /c 13.0 9.5 Financial performance Satisfactory Technical performance fair Insti.utional performance Good CUMULATIVE DISBURSENTS FT84 FT85 FY86 FY87 Appraisal estimate (US$ a) 0.5 5.0 5.1 5.1 Actual (US$ i) 0.0 1.9 5.0 5.1 Actual as I of estimate 0.0 38.0 98.0 100.0 Amunt cancelled (US$ a) - Staff Inputs (Staff weeks): FY84 Identification/ preparation - Appraisal 7.6 Supervision /d Total 7.6 SUPERVISION MISSION DATA /d OHER PROJECT DATA borrower: Republic of the Philippines Efeutia ancy: National Irrigation Administration (MA) necal Ye borrower: January 1- December 31 Name of currency (abbreviation) Peso (P) Currency Exchanuse ates Apraisal year average US$1.00 * P 18.00 Intervening year average US$1.00 - P 20.00 Completion year average LSS1.00 - P 20.50 Follow-on proect: None /a Supplemental loan, pursuant to Bank's Special Action erogram (SAP), was intended principally to cover componeate added during Implementation of HRIP Stage III financed under Loan 1639PH. lb These figures are the same as those for Loan 1639PR. /c The ERR is for the entire MIMP Implemented in three stages. /d This is covered under Loan 1639PM. - vii - 9EILIMsI 1C RIVEB IUIcD-T1M PMRjCTc ?W M C 1 ag- t £ 5A0IC §aTA ~ UET ~ =EC MA #p aal åm1a er kSteI a. 1 ft ~ tseetaiee SLnea MIOgsto 3 ~ ortäecS 8111~: t appoval03(23MN ‡mt hycal r12te pt2- i mil.ogi .1t26 0. /3 0 18. /sijas 3 5 48. . 0 å..ate ot return () . : a c a ro of retura (A) Prinmelal rPad ro (.) .tilaSstor> a f p e No f air COMELATIVE DI88URTE2 NT is eti ( illion) 1.0 5.5 20.5 37.5 49.0 1.0 5 0 . 50 50.0 åeprato 04- 3. 72_ 3cA0.0 Aporactu l U ilion 0.1 2.6 9. 15.0 4.0 2.1 33 . 3 . Actual a9 1 of 8stimate 6.2 47.3 47.3 40.0-U8.8- 52. 2 .6 91.8 -b.6M OV0. Date of final lisbureenc APr , m6 Principal repa.d to (o./day/yr.) (US‡ million) miSsion DATA Dece No. of MWn-day Speciallaationa Performacc Typ* of Mis96o , (80/yr) persona in field represented /h rating /c Trond /d problem i* Identification 12174 2 15 A.En Preparation 04/75 3 70 Ec.A En appra ia 10/175 5 90 Acn (3) Subtotal 10 1025 Supervisio04/76 4 8 Ajp(3) 1 - Suervision 02 12/76 1 7 En ägporvtsion 3 c$/77 2 16 A, En i i Superv&son 4 05/78 3 20 En(3) 2 1M Igpervieion 5 07178 1 6 En 2 1 T Superviclon 6 09/7 2 10 A,Ec 2 l M Su rviion 7 1178 2 12 E2 2 2 M uprson 05/79 3 16 Enk(21,Ec 2 T Sup2r!is2on 0171 1- 6 E 1.prvsio.1 09179 2 leMc Suporvision 11 02/80 2 8 Ea(2) 2 2 M Supervision 12 10/80 1 5 A - - Sue.rvision 13 12/80 3 12 en3 Fi Supervision 14 l0/Bl 1 5 En 3 2 FIT Superviaion 15 04/82 2 11 En(2) 2 1 M upervision 16 06/83 1 8 En 1 1 u peviio 17 02184 2 12 E1(2) 1 T Supervsion 18 11/184 1 7 En 2 1 T Cjoervision 19 53185 2 12 En() 2M Supervislon 20 05TA6 2 10 EF(2 i subtotal 38 200 Total 48 375 0TER PRJECT DATA Sorroer M.public of the Philippine1 Inecuting agency Natiomal rri ation Adinistration (NIA) Ficcal Year of borromer January 1 - December 31 NM of currency (abbreviation) Peso (P) Appraisal year average US$1.00 - P 7.44 Intervening yeare 3verag US$1.00 - Completion year avarage US31.00 - P 20.50 Follow-on project: /f None la A nominal *aving of US$27,224.95 vae canceled effective April 2, 1986. A agriculturiet; Ee - economiet; En - enginaer. 1 - problem-free or ainor problema; 2 - moderate problem; and 3 - major problems. l improvi; 2- otati~aary; 3- deterioratLs. / PF financial; M •managerial; T - techaical. 7T Stage II Project mas eevisaged to expand the Stage I irrigated area of 19,700 ha to Gbout 49,000 ha. This vae dependec on ater supply from upotream atorage on the river that would have become available ia eae of conetruction of a proposed dam for hydroolectric poecr. Goveroment has poetpid inlefinitely the implementation of the po~er dam (and the Stage II irrigation project) due to otrong opposition from the tribal people to the their dieplaceeat by the reservoir. - viii - PROJECT PERFORMANCE AUDIT REPORT PHILIPPINES MAGAT RIVER MULTIPURPOSE PROJECTS STAGES I, II & III (LOANS 1154-PH, 1567-PH. 1639-PH & 1639-PH/SAP) AND CHICO RIVER IRRIGATI^N PROJECT STAGE I (LOAN 1227-PH) EVALUATION SUMMARY Introduction 1. The projects supported government efforts to reach self- sufficiency in rice and to raise incomes of small farmers by doubling irrigated area between 975 and 1990. The five loans under review were part of a Bank contribution of fifteen loans to the irrigation subsector in the Philippines. The projects aimed at improving irrigation for paddy production in the Cagayan valley of Northern Luzon, a region with good soil and water resources. The National Irrigation Administration (NIA), a well- established semi-autonomous government-owned corporation, was to be responsible for project design, implementation and operation. Project Objectives 2. As a result of its large size and cost, the Magat River Multipurpose project was implemented in three stages, each supported by different loans, consisting of (i) the rehabilitation and construction of irrigation systems covering about 102,000 ha and beneficting about 42,000 families (Stages I and III); and (ii) the construction of the Magat River Dam and resettlement from the reservoir of 308 rural families (Stage II). At appraisal the total cost of the three stages was estimated at US$552.0 million to be disbursed over seven years, from 1976 to 1982. 3. The Chico River Irrigation project was the first stage of a larger development plan including the construction of four dams for hydroelectric production in the Central Cordiilera and agricultural development of about 40,000 ha in the Cagayan Valley. Stage I was limited to 19,700 ha to be served by runoff from the river diversion; the second phase would include an additional 29,300 ha served by one of the proposed dams. Stage I consisted of the construction of irrigation facilities benefitting about 8,050 families, Lhe construction of roads and the feasibility study for Stage II. At appraisal, project cost was estimated at US$84 million to be disbursed over five years, from 1976 to 1981. - ix - Implementation Experience 4. Project implementation took ten-and-a-half years for Magat and eleven years for Chico, an overrun of 502 and 120% respectively. Late award of contracts, poor performance of contractors, frequent typhoons, shortages of material and inadequate allocation of local funds were the main reatons for delay. In Magat, the resettlement of 308 families displaced by the construction of the dam was successiully implemented, In Chico, the strong opposition of, and poor communication with the Cordillera tribal people was a further cause of implementation delay and the reason why Stage II was abandoned. At completion in 1986, the two projects had achieved their physical targets, with a cost underrun in US$ terms of 4% for Magat and 2.6% for Chico. Prolect Results 5. In view of the results obtained at project completion, t PCRs projected that full development would be reached in 1991 for .he two projects with an incremental paddy production slightly below appraisal estimates for Magat and slightly above for Chico. The project ERRs were re-estimated at 12% and 15% respectively, about the same as at appraisal. 6. Audit findings, two-and-a-half years after completion, differ substantially from PCR conclusions. The absence of reliable maps at project inception adversely affected the quality of design. In both projects the irrigation command area has proved to be smaller and water resources lower than originally estimated. A relatively large portion of the project areas has remained idle, undeveloped or rainfed cultivated due to slow progress of the agrarian reform and financial difficulties of farmers. Poor design and inadequate coastruction standards of the irrigation systems have adversely affected come areas and make opezation and maintenance (O&M) more difficult. In Chico, the unexpected influx of squatters from neighboring tribes has resulted in land disputes and slow agricultural development. The audit re-estimated incremental production for Magat and Chico at about 88% and 70% respectiv,'y of PCR estimates and 72% and 74% of appraisal projections. Full development is expected to be delayed by one year for Magat and four years in Chico. The audit has reestimated the ERRs at respectively 9.5% and 7.7%. Generation of hydroelectric power is another important benefit of the Magat project, but was not included in the ERR calculation since it was financed from other sources. 7. The social benefits of the projects are more important than projected. Internal migration and subdivision of land have resulted in a considerable increase in the number of project beneficiaries, and stabilization of the rural population. Farmers' incomes have increased substantially in Magat, but only moderately in Chico. The development of Irrigation Water Associations, responsible for 0&M of the tertiary irrigation system and for the collection of irrigation service fees has been successful in Magat but slow in Chico. A number of associations have also expanded their activities to include marketing of agricultural inputs and output. -x - Sustainability 8. As in many irrigatior projects, sustainability of project benefit- largely depends on how the irrigation system will be operated and maintained in the coming years. Both projects are currently well- organized, with competent managers and motivated staff. Collection of Irrigation service fess (ISP) has covered OM expenditures for the past three years, but the latter have remained lower than projected and will have to be increased in the near future. A higher rate of ISF collection will be of critical importance for the sustainability of project benefits. An increase in irrigated area and cropping intensity is highly dependent on the progress of agrarian reform. Price of rice is also an important fact4r, which may affect, positively or negatively, farmers' attitudes and the time full development is reached. Findines and Lessons 9. The projects have undoubtedly contributed to achieving national self-sufficiency in rice and the stabilization of the rural population in the project area. Economic viability is, however, lower than anticipated and project experience has brought some useful lessons: - There is a need for better supervision by NIA and the Bank during implementation of irrigation projects in the Philippines. The current status of project civil works and equipment indicates that the construction standards and design of the irrigation systems have been below average and will require improvements when the projects are rehabilitated. - Project results have been hampered by slow progress in agrarian reform, illustrating the need for the Bank to assist the Philippines in implementing its land redistribution program particularly in the case of costly irrigation investment, the return of which is dependent on high cropping intensities. - The institutional system in the Philippines, whereby responsibility for project implementation is shared among different departments, requires interagency coordination well beyond project construction. - Lessons from past experience have contributed to the success of the Magat resettlement component: good planning, open dialogue with, and respect for the traditions of the resettled population, fair compensation and the establishment of an independent unit to settle disputes have been the key elements of success. - The absence of a clear Bank policy on tribal peoples when the projects were appraised was an important reason for tribal problems experienced in the Chico River project. Poor communications with tribal people and - xi - inappropriate government reaction resulted in clashes with the tribal population and ultimately in large-scale movements of tribal people into irrigable lands. While a new policy was defined in 1982, there is a need for the Bank to make this policy known to the public, to anticipate problems in due time and to prepare plans ir consultation with the affected people. PROJECT PERFORMANCE AUDIT MHORADU PHILIPPINES MAGAT RIVER MULTIPURPOSE PROJECTS, STAGES I, II & III (LOANS 1154-PH, 1567-PH, 1639-PH & 1639-PHISAP) AND CHICO RIVER IRRIGATION PROJECT, STAGE 1 (LOAN 1227-PH) I. BACKGROUND 1. In the early and mid 70s, at the time the projects were identified and prepared, agriculture was the predominant sector in the Philippine economy, accounting for about one third of net domestic product, over one half of total employment and nearly three quarters of export earnings. Performance was good, with a growth rate of over 4% p.a. in real terms, or somewhat faster than that of GDP. The problems of poverty and income distribution were, however, particularly acute in the agricultural sector: of the 15 million people in the lowest 40% decile, 12 million (80%) lived in the rural areas. 2. A major government objective was to increase rice production as a means of raising incomes of small farmers and att&ining national self- sufficiency in food grains. With the continued growth of population and incomes, the demand for rice was expected to rise by 3.0%-3.5% annually. Based on a projected annual growth of 3.7%, the government planned to reach a balance between production and consumption by 1982 and to be in a position to export about 350,000 tons in 1990, by increasing irrigated harvested area from 960,000 ha in 1975 to about 1.6 million ha by 1990. 3. In the event, public investment resulted in a doubling of the irrigated area. With the adoption of high-yielding varieties and increased fertilizer application, the growth rate in rice production reached 5.3% p.a. in the 1972-1980 period and the country became self-sufficient in rice. Since 1982, however, total agricultural growth has declined to about 1.8% p.a., due to adverse weather conditions, shortage of agricultural credit, low international commodity prices, gradual deterioration of soil and forest resources and weak public sector management. 4. Persistent widespread rural poverty remains the most disappointing aspect of past economic performance. Three quarters of Filipino families with incomes below the poverty level live in rural areas. Land distribution is highly skewed. Although average farm size is about 3.6 ha, some 5% of farmers with 10 ha or more account for one third of all farmland. Some 40% of all farms are cultivated by tenant farmers and population pressure has caused even the most marginal lands to be brought under cultivation. Since 1972, government has pursued a program of -2- agrarian reform aimed at the transfer of land ownership to tenant farmers on rice and corn land. Landowners may retain up to 7 he if they till the land themselves.11 5. Irrigation in the Philippines includes three different types of systemsi (a) National Irrigation Systems (NIS), constructed, operated and maintained by the National Irrigation Administration (NIA), a government- owned corporation which currently operates 127 NISs serving about 600,000 ha; (b) Communal Irrigation Systems (CISs), small gravity systems under 1,000 ha each, owned and operated by farmer irrigators' associations and covering an aggregate area of about 700,000 ha; and (c) Pump Irrigation Systems (PISs), privately owned by cooperatives or individuals, with command areas from 20 to 100 ha, and serving a total area of about 200,000 ha. 6. The projects under review were part of the government NIS program to increase paddy production and farmers incomes by providing reliable year-round irrigation so that farmers would be motivated to apply improved farm inputs and techniques and would achieve higher cropping intensities and yields. The loans were the fifth, sixth, tenth, eleventh and fourteenth of 15 Bank loans for the irrigation subsector, which together are expected to contribute to irrigating about 490,000 ha and benefitting 290,000 families by 1990. NIA was to be responsible for project execution. Since 1962, NIA has been a semi-autonomous agency attached to the Ministry of Public Works and Highways. NIA's mandate includes planning, constructing and operating all NISs in the Philippines, is to be accountable to water users and to achieve financial viability through collection of water charges. Several agencies of the Ministry of Agriculture were to provide supporting services to farmers. The Ministry of Agrarian Reform was to be responsible for implementing the transfer of land ownership to tenant farmers. II. MAGAT RIVER MULTIPURPOSE PROJECTS. STAGES I. II & III Prolect Description 7. The projects aimed at improving irrigation for paddy production in the Cagayan Valley of Northern Luzon, a region with good land and water resources. The feasibility study for the Magat River Multipurpose project (MRMP), prepared in 1973 by NIA with USBR assistance, proposed that due to its physical size (102,000 ha) and large cost (about US$500 million) the project be implemented in stages, with various financing. As originally designed, and somewhat modified during project implementation, MRMP was a three-stage investment including: 1/ The June 1988 Comprehensive Agrarian Reform Program (CARP) extends the 1972 legislation to crops other than rice and corn. Land retention limits are set at 5 ha for each landowner, and 3 ha for each child who is actively managing the farm. -3- (a) Stage I, supported by Loan 1154-PH for US$42.0 million, approved in 1975, consisting of rehabilitation or upgrading of existing irrigation systems on about 52,000 ha, the construction of new systems for about 22,800 ha and elevation of the existing Marie diversion daml (b) Stage II, financed under Loan 1567-PH for US$150.0 million, approved in 1978, including the construction of the Magat and Balagatan dams and resettlement from the riservoir area of 308 families; (c) Stage III, supported by Loans 1639-FH and 1639-PH/SAP, of US$62.0 million and US$5.1 million, approved in 1978 and 1984 respectively, with an IFAD Loan 8-PHI for US$10.0 million, comprising the rehabilitation and construction of irrigation systems to serve 26,770 ha, hydroelectric equipment for the Balagatan power station and the construction of three pumping stations to serve 8,000 ha of the Stage III area. The three stages also included the construction of roads, office buildings and housing, the purchase of O&M equipment and communication systems and consultant services. Total cost of the three stages was estimated at US$552.0 million, to be disbursed over seven years between 1976 and 1982. 8. Although NIA was to bA responsible for project execution, a project Agricultural Development Coordinating Council (ADCC), chaired by the provincial governor and comprising representatives of all (about 12) government agencies engaged in rice production, was established to coordinate project activities and to provide support services to farmers. 9. At project appraisal, total population of the project area was estimated at 282,000, or 42,000 rural families. The average size of farm was 3.3 ha. In the Stage III area, farm size distribution was skewed, with 10% of farms covering 35% of the area. Under the agrarian reform law, and after completion of the land transfer process, some 21,500 owner operators (67% of the farmers) were expected to cultivate 732 of the project area. The remaining 10,500 farmers would be leaseholders. Project Implementation 10. The three projects were implemented over ten and a half years, a 50% time overrun, due to delays in the bidding and award of contracts, poor performance of some contractors, occasionai shortages of material, adverse weather conditions and, from 1982 onward, inadequate allocation of local funds. Execution of physical targets differed somewhat from appraisal estimates. The Magat Dam, 114 meters high and 4.2 km long, with a 1,200 Mm3 storage capacity, was successfully constructed and on time.2/ The small 2/ The 300 MW Magat hydroelectric pl&nt was constructed and equipped by the National Power Corporation (NPC) under separate financing. -4- Balagatan dam was also constructed and equipped with a 6MW hydroelectric plant. More diversion dams and intake structures than expected were constructed or rehabilitated. Main and lateral canals, as well as roads, exceeded appraisal targets, while the drainage system and farm ditches were considerably below expectations (details in PCR). The resettlement of families displaced and the compensation of property lost due to the construction of the Magat reservoir was efficiently handled by NIA (paras. 40 & 41). 11. At project completion in 1986, the final MRMP service area was estimated at 97,400 ha, or 96Z of apprainal target. A large number of Farmer Irrigation Groups (FIGs) and Associations (FIAs) were established by NIA for the operation and maintenance of the tertiary irrigation system. A training program for farmers in improved crop production, water management and marketing of inputs and output was completed. Another training program for water management technicians was underway. Actual project costs for Stages I, II, and III were respectively 110%, 98% and 114% of appraisal estimates in Peso terms, but only 102%, 94% and 99% in US$ terms, totalling about US$528.0 million, due to the devaluation of the Peso during project implementation. Project Results 12. An increase in irrigated area took place immediately after completion of the Magat dam in 1984. The cropping intensity rose from 92% in 1982 to 146% in 1986. Paddy yields increased both in the wet and dry seasons. Based on the above progress, the Borrower's PCR and the Bank's overview reestimated the incremental production of paddy to 442,466 tons at full development (1991), or 81% of appraisal est1mates, due to the reduction of the irrigation service area and an upward revision of production without the project. This shortfall was partly compensated for by higher yields than anticipated at appraisal. The overall project ERR was reestimated by the PCR at 12% (13% at appraisal) assuming a 50:50 cost allocation of the Magat Dam between power and agriculture. 13. Audit findings, two and a half years after completion, differ substantially from PCR conclusions for the following reasons: - The total irrigable area is now estimated by NIA at about 81,000 ha, 17% lower than estimated at completion, due to the rolling nature of the terrain, and inaccurate topo maps resulting in water levels in the canals being lower than the areas to be served. As a result, part of the project area is still, and will continue to be, cultivated in rainfed conditions in the absence of new investment. - A number of relatively large farms untouched by the agrarian reform have remained uncultivated by their absentee owners and are not leased out (paras. 34-36). - 5 - - The low price of paddy, farmers' financial difficulties and labor shortages have resulted in the low use of inputs, poor respect for the cropping calendar and delays in farm development, including terracing in the rolling areas. A few years after completion, faulty design and insufficient construction standards can be observed in the irrigation system, making operation and maintenance more difficult than expected (paras. 32-33). The density of turnouts - 1:50 ha - is too low to serve adequately some undulating project areas. Electric transmission lines lack sufficient power to operate pumps at full capacity in the 8,000 ha which requires pumping; breakdown of pumps and gates are frequent; scouring in canals is evident. In addition, the flood forecasting system has been vandalized and the dam micro-seismic instruments are not operating. - As in many other irrigation projects in the Philippines, water resources have been lower than expected at project appraisal. During the 1980-88 period, the recorded average annual flow of the Magat River was 17% lower than the 40-year average, with two years (1983 and 1987) below the minimum annual flow ever recorded in the previous thirty years. In addition, during the past three years, annual witer discharge for irrigation was 13% higher 3/ than anticipated at appraisal for full development, reflectirg a lower than expected water efficiency 4/ due to poor respect for the cropping calendar by a number of farmers and the difficulties in operating the irrigation system. The combination of these two factors resulted in water shortages in 1987 and low water elevation in the reservoir at the beginnning of 1989. 14. As a result of the above shortcomings, irrigation cropping intensity has remained between 136% and 144% for the past three years, or slightly lower than in 1985 (152%) and significantly lower than expected at full development (197%). In the pumping area, cropping intensity under irrigation has varied from 40% to 60% due to the problems mentioned above, and the viability of the low-lift pumping system is doubtful. Yields have also stagnated and remain below PCR expectations. The audit estimated that about 20% of the project area is still cultivated under rainfed conditions (34% at project completion), and that about 15% will not be irrigated at full development. Table 1 summarizes and compares Appraisal, PCR and PPAM estimates of cripped area, cropping intensity, yields and paddy production at full development. The overall project ERR has been reestimated by the audit at 9.5%, or lower than PCR and appraisal estimates - respectively 12% and 13% - btut still relatively satisfactory for a project of this nature. 3/ An average of 27,254 m3/ha was diverted at headworks compared with 24,100 anticipated at appraisal. 4/ Estimated by the audit at 39% compared to 45% at appraisal. -6- mas MIMMIA mu-mmmm ar mm . na 6ithm with atm ai a Al 1 setwa 4 t ait fieal as time a prejeft prejet epleaien developeans audit developeans At appreloa e CR (1MNO) (1901) (101) (Sat) se41 embOete Pmaoam 104,000 104,000 97.40 97,400 W.400 47,40 *o 300 (hs) 5Iri8b.are 16.10 104.000 97.400 47,400 81,000 a.,ogo T1 M (ha) - wem aese iprigaed 40,M50 97,00 67,75 97,400 71.991 79.000 0 0 - &a aeamn reI.e. s7,1se - as,ed - to 20.000 15,000 - - - dry nmen irrigated .& -2Z" -.= -21" 11-M -ZLM ZE To"1 110,9*0 195.000 110.4W 1,asa 10.418 Uo0Oo e4s 0s trrigsatin cropping iaseaL4A._ 112.45 is7 187.85 197.1s 14.12 167.71 am e Yael (Son&/ha) - wet aosn irrijed 2.5 4.0 8.0 0.0 0.0 4.0 1005 am - Wat se'son roinfed 1.0 - 2.4 - 2.4 2.5 - - - dry seamen irrigated 2.6 4.2 0.5 4.5 4.0 4.1 Ogg 911 Ptdd Froduasion 24185 799,8100 41M.45 912.0s B'*01 644,700 81! 711 (tens) IurementeI P cio (tose) - s5.a1s ase.a90 442.44* s41.21 590.015 7as aM (*) . *atiete 15. The power component is another indirect benefit of the project, although not taken into account in the ERR calculation since it was not financed under the Bank loans.5/ Between 1984-88, about 53% of water released from the dam was used both for irrigation and power, with only 292 for power alone. On the other hand the benefits of the small Balagatan power plant have been limited due to the breakdown of one generator and lack of spare parts for many months. 16. The social benefits of the projects have been more important than expected. The successful handling of the resettlement component together with the success of the project agricultural development have resulted in internal migration and subdivision of lands. The project population of the Stage I area increased by about 60% between 1972 and 1988, and average farm sise declined by about half, from 3.31 ha to 1.72 ha. A similar trend is 5/ The construction cost of the dam was allocated 50:50 between Magat II and the Power project. -7- noted in Stage III. In addition, as a result of the agrarian reform, share-cropping which accounted for 341 of farms at project start-up has been abolished and most farmers are now owner-operators, land transfer certificate holders or leaseholders. Despite this reduction in farm size, farmer incomes ir. constant terms are expected to be about 602 higher at full development than without the project. Farmer Irrigation Groups and Associations have continued to progress in number and area for the past three years, expanding their activities to marketing of agricultural inputs and output and provision of credit to their members. Water Charges and O&M 17. Water charges are higher and the organization of water users' groups is more advanced in the Philippines than in many other countries. NIA is authorized to chazge an Irrigation Service Fee (ISF) on irrigated lands to finance O&M and to recover the initial investment costs over 50 y-ars. In the Magat gravity systca, ISF is currently recovered from Zarmers on the basis of 300 kg ot paddy per hectare and per calendar year, in cash or in kind. This is an increase of 50 kg compared with the fee at completion and represents Pesos 1,050 per ha in 1988 (about US$50.7 equivalent). In the pumping area, the irrigation fee is higher: 700 kg or Pesos 2,430. Irrigation Associations are encouraged to collect irrigation fees from thein members and receive a bonus if ISF collections are above predetermined levels and a discount for prompt payment. At project completion, the collection rate was estimated at 58% or slightly above the national average (54%). The total amount recovered (Pesos 3.7 million) exceeded the actual. O&M expenditures (Pesos 2.7 million) by more than 40%. 18. The PCR estimated that the 0&M budget would increase to P. 4.4 million in 1987, P. 4.8 million in 1988, and P. 6.6 million in 1991. Therefore, the collection rates 7f the ISF would have to be raised to an average of 65% to cover fully O&M budget. In 1987 and 1988, ISF collection rate actualll reached 62%, and total amounts collected have covered 0&M expenditures by 119% and 136% respectively. It is worth noting, however, that O&M expenditures have actually been 30-40% below expectations. Thereft-e there is a need to improve collection rates to cover fully what is considered desirable 0&M levels. As some Irrigation Associations recently increased their collection rate to more than 80%, an improvement in ISF collection can be expected. A Bank-supported project, the Irrigation Operations Support project kLoan 2498-PH, approveO in June 1988) aims at strengthening NIA's capability to provide O&M services and accelerating the Irrigation Association development program. The project is expected to correct some weaknesses of the present system: unsatisfactory billings due to incomplete and outdated records and insufficient O&M expenditures and services. - 8 - III. CHICO RIVER IRRIGATION PROJECT, STAGE I Backaround 19. Preliminary studies carried out in the early 70s by the National Power Corporation (NPC) concluded that four storage dams and hydroelectric plants with a combined generating capacity of 1,000 MW could be constructed on the Chico River in the Cordillera Central of Northern Luzon. NPC started a feasibility study on Chico 2, the most promising dam site, but had to stop work due to opposition of tribesmen in the proposed reservoir area. The focus of the study then shifted to Chico 4 where problems of population resettlement were expected to be minor, since only 75 families were involved. Simultaneously, NIA undertook a feasibility study for irrigation development from the Chico River and concluded that year-round irrigation of about 40,000 ha of paddy would be economically viable in the Cagayan plain, at the foot of the Cordillera Central. 20. As a result of the need to coordinate the development of irrigation with the construction of dams on the Chico River, it was decided to implement the Chico River Irrigation project in two stages; the first (1976-1980) would be limited to 19,700 ha that could be served by runoff from the river diversion, and the second (1980-1984) would include an additional 29,300 ha served by the Chico 4 storage dam, scheduled to be constructed over the 1979-1984 period. Prolect Description 21. The Stage I project was to rehabilitate and upgrade existing irrigation systems covering 7,500 ha and to construct a new irrigation network on about 12,200 ha. The main project components included the construction of a diversion dam and intake works on the Chico River; the construction of a catchment dam on the Talaca Creek; improvement or construction of irrigation and drainage facilities on 19,700 ha; the procurement of 0&M equipment; the construction of about 65 km of provincial roads; an erosion control study and a feasibility study for the Stage II Chico River Irrigation project. The total project cost was estimated at US$84.0 million, to be disbursed over five years, from 1976 to 1981. As in Magat, NIA was to be responsible for project execution with the assistance of an Agricultural Development Coordinating Council, chaired by the provincial governor and representing all agencies involved in rice production. 22. The project population included 8,050 farm families, or a total of about 44,000 people, with the following distribution: owner/operators, 42%; leaseholders, 25%; sharecroppers, 25%; others, 8%. Farm size was 2.5 ha. Some 95% of the owners had properties of less than 7 ha, but the remaining 5% owned about 30% of the project area. Under the agrarian reform law, about 5,850 ha (30% of the project area) was to be transferred to 2,800 tenants thus increasing the number of owner operators to about 85% of the farming population. -9- Proiect Implementation 23. Project implementation took eleven years (January 1976-December 1986), an overrun of 120Z. Changes in project design, land acquisition problems, late procurement of equipment, shortages of material, damage to partly completed works by typhoons And floods, weak project management initially and shortage of counterpart funds latterly, were among the main reasons for delay. Another important factor for implementation delays was the strong opposition of the Kalinga and Bontoc tribes of the Cordillera Central against the Chico River development plan (paras. 42-46). This opposition, supported by a large press campaign organized by activist groups all over the world, resulted in armed attacks at the work sites, causing casualties, destruction of construction equipment, and the resignation of the main foreign contractor. Construction of project works was resumed under force account but preparation of the feasibility study for Stage II was abandonned. On the other hand, the road component located in the adjacent Magat project area was less affected by the above problems and completed only one year behind schedule. The erosion control study was successfully completed and led to the Watershed Management and Eror'on Control project, financed under Bank Loan 1890-PH (1980) and aimed at reforestation of the Pantabangan and Magat watersheds. 24. At project completion at the end of 1986, the project service area was estimated at 19,407 ha, or 99% of appraisal estimate. Main project works included the Chico Diversion Dam, 747m long and 7m high, with two intakes; the Talaca Catchment Dam, 141m long and 6.25m high with one intake; the main diversion canal, 22km long, including a 78m long siphon; a number of secondary canals and service roads. Actual project costs were estimated at US$81.8 million, or 2.6% lower than appraisal estimates, although final costs in Pesos were 31% higher, reflecting the appreciation of the US$ against the Peso during project implementation, construction delays and increases in the cost of basic construction material. 25. Farmer irrigation groups have been organized by NIA covering about 76% of the project area. Training of farmers in improved crop production and water management has taken place. An important input-output monitoring program has been established. Project Results 26. At project completion in 1986, irrigated area was 9,450ha in the wet season and 8,675ha in the dry season, an increase of 422 from pre- project levels. Yields were estimated at 3.5t/ha and 4.0t/ha for the wet and dry season respectively, an increase of about 50%. The Borrower PCR and Bank overview projected that full development would be reached in 1991, with a 190% cropping intensity (186% projected at appraisal), higher yields (18%) and higher paddy production (20%) than expected at appraisal. However, due to an upward revision of the situation without project, incremental production at full development was estimated at 94,770 tons, slightly above (5%) appraisal expectations. On this basis, the project ERR was reestimated by the PCR at about 15%, the same as at appraisal. - 10 - 27. As in Magat, audit findings at the beginning of 1989 differ from PCR conclusions of 1986s - The final command area is expected to be significantly smaller than PCR estimates, due to the rolling nature of some areas, inadequate too maps at project preparation, the presence of sandy soils unsuitable for paddy production, the conversion of lands to residen*ial and commercial use and soil erosion in some areas. - The development of idle lands, including terracing, is unexpectedly slow due to the financial difficulties of farmers and land owners absenteeism. - Influx of immigrants, mostly Kalinga tribal people, has resulted in a 48% population increase over four years, the illegal occupation of land by squatters, land disputes and hostility among different ethnic groups. This unexpected settlement, compounded by insecurity due to the presence of lawless and armed political groups in the project area, is an important reason for the slow land development and limited use of agricultural inputs. - The cropping calendar adopted by NIA is not observed by many farmers, on the grounds that it does not fit the climatic .onditions of the region, leading to longer than expected cropping seasons and waste of irrigation water. - The present status of irrigation facilities shows signs of degradation, due to erosion, siltation, uncontrolled manipulation and subsequent breakdown of gates and damage to dam intake gates from river debris. In addition, as the crest of the Chico diversion dam is used as a bridge by local residents, gatekeepers are compelled to open the sluicegate twice a day to lower the water level flowing over the dam and facilitate passage, thus disturbing water diversion to the main canal. - Water diverted per hectare has exceeded projections by about 67% due to the fact that (i) water, though not fully utilized, has to be distributed throughout the full project area; (ii) the cropping calendar is not respected, and (iii) irrigation is more constant flow than the planned rotational system. As a result, water efficiency is low and tailenders of the irrigation system have been adversely affected by water shortage. 28. Based on data provided by the project authority for the period 1985-89 the irrigated area has increased by 11% in the wet season, and by 44% in dry season. Total irrigated area for both seasons in 1988 was - 11 - 19,539 he, or 532 below projections for full development. About half of the project area was still cultivated in rainfed conditions. Yields for the past four years have stabilized at about 3.7t on average in the irrigated area, 60% higher than without the project, but 232 below projections. Under prevailing conditions, full development is not expected to be reached before 1995 and a certain portion of the project area is expected to remain rainfed. Table 2 shows Appraisal, PCR and Audit projections of area, yields and production. The project ERR is now reestimated at 7.7%. ORCA RIW RICTIANi FM.MF STMI I MA. VIR M3.D Alan.tIAN ME DDICTI mal Est.Zaimiae PC Estimate (1968) PPAM4 Estimate (1e99 without With at project at full actual at at full final as 2 final as I project project cimpletion development audit developaent of appr.east. of PR st (1986) (1991) (1908) (1995) Project area 19.700 19,700 19,400 19,400 19,400 19,400 S 96 (hs) Irroinble area 7,500 19,700 9,450 19.400 13,000 13,000 "is 671 (ha) Cropped area (he) - wet seaso irrigated 7,500 19,700 4,450 19,400 9,950 13,000 egg 671 - wet season rainfed 12,200 - 9,957 0 9,450 6,400 - - - dry season irrigated 5,300 17,000 8,675 17,500 9,990 13,000 761 74% Irrigation cropping 651 1881 931 1901 1081 1341 72B 711 YieM (tons/ha) - wet saon irrigated 2.6 4.5 3.5 4.5 3.5 4.0 891 891 - wet **aeon rainfed 1. - 3.2 - 2.6 2.8 - - - dry season irrigated 2.9 4.0 4.0 5.0 8.9 4.1 1031 S2N Paddy Production 57,000 147,000 99,637 174,800 96,186 123,220 641 705 (tons) Incrementa I EAmoui (tone) - 90,000 31,026 94,770 41,166 66,220 745 70 29. At project completion, it was found that the influx of immigrants had resulted in a substantial decline in average farm size, from 2.5 he to about 1.0 ha. The agrarian reform process has been much slower than expected and made more difficult by illegal settlement. The number of full owners has only slightly increased (14%) while that of share tenants has been reduced by 56% and the number of leaseholders has increased by 502. A substantial fraction of the project area, originally purchased by the project authority for resettling displaced families from tha Chico 4 dam site, was illegally occupied by Kalinga ethnic groups. The social - 12 - situation remains uncertain and volatile. Due to the reduction of average farm size, noc fully compensated for by higher cropping intensity and yields, farmer incomes are expected to stabilize at a level only slightly above that of the without project situation. Water Charges and O&M 30. In the Chico gravity system, the ISF rate has remained at 250 kg paddy p.a. and per hectare, payable in cash or in kind. The PCR indicates that the collection rate was particularly high between 1980 and 1985, an eierage of 71.2%. At project completion in 1986, the collection rate went down to 62Z and the total amount recovered from farmers covered only 651 of O&M expenditures. The collection rate decll.ned to 41% in 1987 but increased to 67% in 1988, covering respectively, 87% and 132%, of O&M expenditures. As in Magat, however, actual O&M expenditures in 1988 were actually 20% below PCR estimates. The collection rate in Chico is adversely affected by water shortages and by the resistance of tailenders who often do not receive enough irrigation water. In addition, Kalinga migrants tend to be transient in the project area, return to their original villages after harvest and do not pay the irrigation fee. As 0&M costs are expected to increase significantly in coming years, the Chico project runs the risk of low cost recovery, resulting in low O&M expenditures and the need for rapid rehabilitation. IV. MAIN FINDINGS 31. The projects have undoubtedly contributed to national food self- sufficiency. Their social impact is important, since a larger number of people than anticipated have benefitted from the projects, thus reducing unemployment and migration to cities. Despite population increases, farmers' incomes and living standards have improved. Collection of irrigation service fees needs improvement but has provided NIA with sufficient funds for operating and maintaining the irrigation systems. The economic impact of the projects has, however, been lower than anticipated due to exogenous factors (fall of world price of rice) and endogeneous factors, the most important of which are the smaller than expected service area and lower cropping intensities and yields, resulting in lower production and delays in achieving full development. The following project issues are discussed because of their importance for these, as well as other, irrigation projects in the Philippines: construction standards; progress of agrarian reform; project orgonization; the resettlement component of Magat and the tribal problem of Chico. Construction Standards 32. Only a few years after project completion, a number of breakdowns of, and damages to, the irrigation system can be noted in the two projects. On some occasions, broken equipment remained idle for months due to lack of spare parts. Provincial roads, implemented under the Chico Project, are - 13 - already in urgent need for rehabilitation. Generally speaking, project civil works and equipment show signs of degradation, which cannot be considered normal in projects of this age. It is clear that the construction standards in both Chico and Magat have been below average, partly explaining why actual performance now falls below expectations. Poor quality of works, combined with the faulty design of some components, also resulted in difficulties for the project authority in adequately operating and maintaining the irrigation system. Project experience demonstrated the need for reliable maps at the preparation stage, better selection of contractors, better quality of civil works and more supervision by NIA and the Bank during implementation. 33. The present shortcomings in construction standards have implications for future rehabilitation. Such rehabilitation provides an opportunity for rethinking objectives and updating the irrigation design to meet new requirements. Too often, however, rehabilitation consists only of repairing major damage w(thout considering possible changes in design. In these two projects, questions will arise sooner or later as to whether using more modern distribution techniques is desirable, whether the location of some canals is adequate or the density of turnouts is adapted to the rollirg nature and the land tenure of the project area. There is need to monitor carefully the performance of the irrigation systems during the coming years and to review possible changes, both in standard and design, which could be introduced later in event of rehabilitation. Progress in Agraian Reform 34. As the agrarian reform law was passed a few years before project appraisal, the Bank assumed that the provisions of the law would be rapidl' applied to the project areas. The appraisal reports simply mentioned expected changes in land tenure before and after implementation of agrarian reform, which was expected to be carried out by the Department of Agrarian Reform during project construction. 35. In fact, after a good start, thne progress of agrarian reform has slowed tremendously, mostly due to government's financial difficulties. Currently, DAR limits its activity to enforcing leasehold with security of tenure, one of the law's objectives, but has virtually discontinued expropriation and transfer of land to smallholders. The result is that a significant portion of the project areas comprises lands which are supposed to be expropriated and redistributed sooner or later, and therefore have remained idle, uncultivated by their owners and untenanted. The slow pace of agrarian reform partly explains the current lower cropping intensity and lower production than anticipated at project appraisal and completion. In addition, idle land in Chico amounting to 30-40% of the total project area has to some extent triggered and facilitated the large influx of tribal people, land disputes and peace and order problems. 36. Project experience has demonstrated the need for the Bank to pay more attention to the agrarian reform process in irrigation projects in the Philippines, where return on costly investment is highly dependent on - 14 - satisfactory cropping intensity. In retrospect, special funding for rapid implementation of agrarian reform would have been justified in the case of these two projects. Alternatively, helping the government to complete its agrarian reform program in some priority zones could have been considered by the Bank. Proiect Ortanization 37. Irrigation projects in the Philippines are designed, constructed and managed by the National Irrigation Administration (NIA) which is part of the Public Works Department. The Department of Agriculture (DA) is responsible for agricultural research and extension. A number of other departments and institutions are also responsible for implementing their respective parts of the project. This wide distribution of responsibilities makes project execution and management more difficult than when most or all agencies involved in agricultural development are part of the same ministry. In the case of the two projects under review, interagency coordination was ensured by the Agricultural Development Coordinating Council (ADCC), chaired by the provincial governor and including all institutions involved in project execution. 38. Project organization proved relatively successful during project execution. Since project completion, ADCC has been less active in Magat and dismantled in Chico, and coordination has suffered. The role of NIA became dominant, not only for operating the irrigation system, but also for organizing farmers and monitoring project results. However, NIA has no authority for supporting services, which are the responsibility of DA but remain essential for project success, such as the promotion of innovative techniques in rice farming, including high-yielding varieties and agro- chemicals, and efficient water management. DA resources have been severely curtailed over past years and DA staffing has been reduced drastically. The stagnation of yields to about 4t/ha in dry season and 3.8t/ha in wet season in Magat - where water is abundant and yields of 5t and 6t/ha are obtained by the best farmers - is a clear indication that stronger technical assistance to farmers is still needed in the project area. The inexperience of many farmers, who do not respect the cropping calendar and use traditional long-cycle varieties, has also resulted in the irrigaticn schedule relying on continuous flow with high water losses rather than the originally planned rotational schedule. 39. In Chico, the influx of new and inexperienced farmers creates a special demand for an efficient extension service. In addition, there is a need for better dialogue between NIA and DA to determine whether the present cropping calendar, partly rejected by farmers, is really adapted to the climatic and soil conditions of the project area. Closer cooperation between NIA, DAR and provincial authorities could also help alleviating the land tenure and agrarian reform problems affecting both projects and the social disturbance prevailing in Chico. A lesson to be drawn from project experience is the need to keep, and strengthen, interagency r.oordination committees beyond project construction, since a number of problems"that may adversely affect project results only become apparent at or after project completion. - 15 - Resettlement 40. The Magat resettlement component was successful, contrasting with the negative experience of the Bank-supported Upper Pampanga River Irrigation Project. In the latter, the resettlement issue and its possible Impact was not addressed at project preparation and appraisal; it was not part of the project description, although a provision of US$1.1 million was made for relocation in appraisal cost estimates. A total of 2,300 families, or 13,000 people, were actually resettled, at a cost of US$11.7 million, in an adjacent area where they have been unable to earn a livelihood. The PPAR 6/ drew attention to *The lack of appreciation at appraisal of the magnitude and complexity of population resettlement; the lack of resettlement planning; a ten-fold increase in costs; the lack of economic viability of the resettled farmers; additional inflow of compensation seekers; and poor choice of resettlement sites." 41. Lessons learned from the Upper Pampanga experience have been put to a good use in the Magat Project. Despite the relatively small number of families (308) to be relocated, the resettlement component was carefully prepared and appraised. Provision of US$7.3 million was made for the costs of resettlement. A Resettlement and Reservoir Division (ARD) was created within the project organization with responsibility for resettling the families affected by the reservoir in three resettlement sites to be provided with year round irrigation and village infrastrt.ure. NIA purchased the land and provided each family with a 3 ha irrigated farm plot, a 600 sq.m house plot, and a newly constructed house. NIA paid compensation for land, houses, buildings and all improvements submerged by the reservoir for a total of P. 11.5 million, or the equivalent of US$ 7,900 (in 1988 terms) on average per settler. Payments were credited to the respective settler to offset his repayment of the new houss, farm lot and house lot, varying from US$ 5,400 to 8,200 (in 1988 terms). The balance in favor of the settler was paid to him in cash; in case of a deficit, the balance is paid by the settler, without interest, over a period of 20 years. In 1989, four years after resettlement, a number of beneficiaries have fully repaid theit debt. Each village was provided with potable water, electricity, a school, church and community center built as part of the project. Provision was made for financial assistance to settlers until they have harvested their first crop in the new areas. Land, valued at Pesos 5,000-9,000/ha at the time of resettlement, is now worth about Pesos 35,000/ha. All settlers expressed their satisfaction, except for the rolling nature of the farming area, which required more time and more resources than initially envisaged for full development. The success of the project resettlement component can be attributed to the following main factors: good planning; relocation close to the original area; respect of traditions and ceremonial rites; continuous and open dialogue between RRD and villagers; fair compensation; establishment of an independent committee to settle disputes, and NIA's compliance with its commitment. 6/ World Bank, OED Report No. 3063, dated June 30, 1980. - 16 - Tribal People 42. Although the project area was not part of, but adjacent to, tribal lands, Implementation of the Chico River project resulted in a tribal problem that was seized upon and blown out of proportion by activist groups and politicians, both inside and outside the Philippines. Although the problem did not preclude project execution, it raised the question of the Bank policy regarding tribal people in Bank-financed projects, and Bank reaction when its policy - or lack of - is strongly criticized, as was the case in the Chico River project. 43. Opposition to the development of the Chico River Basin started immediately after the FAO/CP Reconnaissance Mission in 1975, in the form of protest letters sent to the Bank by foreign religious groups. During project appraisal and implementution, the Bank was flooded by dozens of letters and petitions, both from national and international sources. A number of articles criticizing the Bank were published in the international press. Films and interviews were showed on U.S. television.7/ The essence of the protests was that implementation of the Chico River complex, including four dams for power generation and two irrigation projects, would inundate ancestral lands, force thousands of families out of their land and threaten the tribal people's traditional way of life. As feasibility studies of the four dams had not yet started the number of families affected by the development plan was not known. However, the rumor that 90,000 people would be displaced by the construction of the four dame started spreading in the Cordillera Central and was largely disseminated by the international press. Local communities believed that Bank support for the Chico River irrigation project would ultimately result in full implementation of the Chico complex and the displacement of the population. 44. Kalinga and Bontoc tribes soon showed opposition to government staff responsible for the study of the Chico River Basin. Government's reaction was particularly blundering and translated itself into sending in the troops, which resulted in clashes with the population. More important, government's intentions were never clearly expressed and no open dialogue ever took place between tribal people and the government. In view of the tribal opposition, government interrupted the feasibility study of the Chico dams, except for Chico IV. A plan was prepared for the resettlement of about 75 families, who would have been displaced by the construction of the dam. As the oppositicn increased and some clashes with tribal people occurred in the Chico River Irrigation project (para. 23) the Bank dropped its support for the feasibility study of Chico II and resettlement plan altogether. 45. Bank reaction to the wave of protests was essentially defensive. All letters were answered, explaining that the Bank was not involved in the 7/ The resettlement program of Magat, although successfully implemented also came under attack by the U.S. House Banking Committee on International Development Institutions. - 17 - Chico complex development plan, which was essentially a government initiative, except for the construction of the Chico River irrigation Stage I project located outside the tribal area and the feasibility study of Stage II. In fact, the Bank had no clear policy regarding tribal people P/ at that time and was unable to respond to its critics on a constructive * way. The situation changed in 1982, when the Bank issued its operational manual statement (0MS) No.2.34: Tribal people in Bank financed projects. The ONS clearly specifies thats "The Bank will assist projects only when satisfied that the Borrower or relevant government agency supports and can implement measures that will effectively safeguard the integrity and well-being of the tribal people. Measures at either extreme should be avoided; either those that perpetuate isolation from the national society and needed social services; or those promoting forced, accelerated acculturation unsuited to the future well-being of the affected tribal people. The Bank would not be prepared to assist with a project if it appears that the project sponsor had forcibly "cleared" the area of tribal people beforehand." The same OMS also spells out measures to be taken at project preparation and appraisal: "The presence of tribal people should be identified in appropriate country sector work and regional reviews. During project identification, the approximate numbers, location, and degree of acculturation of tribal people in the general region of the project should be ascertained. The relevant government agency and its procedures, programs, legislation and plans for such peoples should be determined. The status of demarcation and delimitation of tribal lands and their enforcement should be outlined. In certain cases (e.g. tribes in early stages of acculturation), an anthropological reconnaissance should be included in pre-feasibility studies. Preinvestment funds could be used for studies to inform the tribal people about the proposed project and obtain their views." 46. Some lessons for the Bank can be drawn from project experience. First the need, already recognized, to have a clear policy regarding sensitive issues like tribal people and damages to the environment. 8/ An operational manual statement on social issues associated with involuntary resettlement in Bank-financed projects (OMS. 2.33) was issued in February 1980. The OMS gave guidance in the preparation, negotiation and implementation of resettlement plans but did not specifically address policy and procedures with regard to Bank projects affecting tribal people. - 18 - Second, the need to make such policy known not only to the Borrowers, but also to the public in general, and third, the neei to anticipate and identify problems in good time and to prepare plans in consultation with the affected people and their traditional leaders. These aspects were overlooked by the Bank at project preparation and appraisal. The project was engineering-oriented since its inception. As noted by the Bank overview, project implementation was supervised almost exclusively by engineers. Although the project was not located in tribal lands and had no resettlement objective, its possible indirect effect on neighboring tribal population was not id*ntified at appraisal. Finally, the Bank was not adequately staffed at that time to deal with specific problems of this nature, a situation which has since been corrected. - 19 - PHILIPPINES MAGAT RIVER MULTIPURPOSr PROJECT: STAGES I, II AND III Loans 1154-PH, 1567-PH, 1639-PH and 1639-PH/SAP PROJECT COMPLETION REPORT June 30, 1988 Agriculture Operations Division Country Department II, Asia Region - 21 - PHILIPPINES MAT RIVER MULTIPURPOSE PROJECT: STAGES I. II AND III Loans 1154-PH. 1567-PH, 1639-PH and 1639-PH/SAP PROJECT COMPLETION REPORT Overview 1. This Overview is based on the Project Completion Report (PCR) for the three-stage Magat River Multipurpose Project (MRMP) prepared by the National Irrigation Administration (NIA), the implementing agency of the Government of the Philippines (GOP). The PCR reflects the findings and opinions of GOP officials closely associated with the project and in general presents a, objective and accurate view of project implementation, performance and impact. This Overview summarizes the PCR findings and conclusions, and draws as well on preparation documents, the appraisal report, aide-memoires and reports of Bank supervision missions, and other materials available in Bank files. Attached to the Overview are two annexes which provide consolidated information for the entire MRMP (Annex I on Key Aspects of the Project and Annex 2 on Expenditures and Disbursements). Project Objectives and Description 2. Project Objectives. The principal objectives of the project were: (a) to increate paddy production and farmer incomes in the project area by providing rel:.able year-round irrigation water, together with improved water delivery and management facilities, so that farmers would be motivated to adopt improved farm inputs and techniques and would thereby achieve higher irrigated cropping intensities and yields; (b) to help create employment opportunities and accelerate economic development of the area by providing a base for related agro-industrial activities; and (c) to develop the hydropower potential of the Magat river and mitigate flood damages. 3. Original Project Description. The MRMP was planned as a multipurpose three-stage undertaking. - 22 - (a) Stage I (financed under Loan 1154-PH, for US$42.0 mill.on, approved in August 1975 J/ comprised rehabilitation of 12,190 ha of existing irrigation systems and construction of new systems for 22,810 ha; feasibility studies and some preliminary works for Stage II; upgrading or construction of 830 km of project roads; a training program for water management staff; technical assistance to NIA for irrigation systems operation and construction management; and procurement of O&M equipment. (b) Stage II (financed under Loan 1567-PH, of US$150.0 million, approved in May 1978) provided for construction of the 114-meter high and 4.2 km long Magat dam and appurtenant structures, including supply and installation of spillway and power intake gates, and resettlement of families affected by the reservoir. (c) Stage III (co-financed under Loan 1639-PH, of US$21.0 million and IFAD Loan 8-PHI, of US$10.0 million, approved in January 1979) / consisted of extension of Stage I activities by construction of irrigation and drainage facilities and roads on a further 26,770 ha, comprising rehabilitation of 5,500 ha of mostly communal gravity and small pump systems and entirely new facilities on 21,270 ha. All three project stages, particularly Stage II, included provision for consulting services. 4. Components Added during Implementation. The completed project included the following additional major components which were not foreseen at appraisal: (a) upgrading of 40,000 ha Stage IA 2/ area to standards agreed for the rest of the MRMP area; (b) permanent office buildings, staff quarters and social facilities for operating staff, guesthouses, laboratories, equipment sheds and motor pools, watermaster working stations, gatekeepers' quarters, power distribution and lighting facilities, communication systems, hydromet stations, paddy drying floors and warehouses; (c) operations and maintenance of completed facilities during the project implementation period; (d) procurement of force account equipment; (e) procurement of a larger fleet of O&M equipment; and (f) the Baligatan hydroelectric power station. The inclusion of these features rendered project coverage more comprehensive and provided a better basis 1/ Before Bank involvement in the Magat scheme, in 1973 the Asian Development Bank had provided US$5.0 million (part of a larger loan) for rehabilitation and improvement of irrigation and drainage facilities in an area of about 40,000 ha, known as Stage IA. Bank Loan 1154-PH financed a total of 35,000 ha of Stage IB. / Subsequently, in February 1984, the Bank extended Supplemental Loan 1639-PH/SAP, amounting to US 5.1 million under its Special Assistance Program (SAP), intended to cover principally project components added during implementation of Stage III. 1/ See footnote 1. - 23 - for appropriate O&M. Baligatan hydroelectric plant, with a power generating capacity of 6MW, exploits otherwise unused hydropower from irrigation releases for running the three large new pumping stations within the project area, which would otherwis; have been dependent on the more costly alternative of power from the national grid. Execution of Physical Targets 5. Quantities of Principal Project Components at Completion. The final quantities of several principal prnject components were somewhat different from the appraisal estimates: Table 1: APPRAISAL VS. ACTUAL QUANTITIES Item Quantities Appraisal Estimate Actual Diversion Dams (No.) New 1 2 Rehabilitation - 3 Intake Structures (No.) New 3 5 Rehabilitation - 5 Main and Lateral Canals (km) 1,290 1,400 Irriga-ion Structures (No.) a/ 3,985 Irrigation Turnout Structures (No.) a/ 2,364 Main and Secondary Drains (km) 1,125 408 Service and Access Roads (km) 1,365 1,835 Farm Ditches (km) 5,910 2,249 Farm Drains (km) 3,710 473 a/ Not quantified at appraisal. - 24 - 6. The variations from appraisal quantities reflected needs encountered as implementation proceeded. While the actual quantities of most items are higher than appraisal estimates, the actual lengths of drainage canals and terminal facilities fell short. With regard to the latter, the presence of suitably located natural drainage lines in several areas eliminated the need for constructing drains in such places, and the rolling nature of the service area in many locations facilitated plot to plot water flow more effectively than expected at appraisal, thereby considerably reducing the need for separate farm ditches and drains. As far as possible, farm ditches were located along ridges facilitating direct irrigation of areas on either side and thereby eliminating the need for supplementary farm ditches. 7. Implementation Schedule. Table 2 below compares appraisal and actual implementation periods of the three MRMP stages. 4/ Table 2: APPRAISAL vs. ACTUAL IMPLEMENTATION SCHEDULE Implementation Schedule Actual as % of the Duration Duration Appraisal Stage Period (yrs) Period (yrs) Stage I Jan. 1976 6 Jan. 1976 b 133 (Ln. 1154-PH) to to Dec. 1981 Dec. 1983 Stage II Jan. 1978 5 Jan. 1978 8 160 (Ln. 1567-PH) to to Dec. 1982 Dec. 1985 Stage III Jan. 1979 4 Jan. 1979 7-1/2 187 (Ln. 1639-PH, to to Ln. 1639-PH/ Dec. 1982 June 1986 SAP) TOTAL MRMP Jan. 1976 7 Jan. 1976 10-1/2 150 to to Dec. 1982 June 1986 A/ These dates are based on a review of information in Bank supervision reports and other materials on file, and differ in a few instances from dates shown in the PCR. - 25 - 8. The PCR (para. 7.03' describes some of the causes of delays in project implementation. In addition, inadequate allocation of local funds, particularly from CY1982 onward, was the main reason why a disproportionate period of time elapsed between completion of major Stage II and III components and conclusion of finishing work. Despite this fact, the good work done by NIA, its consultants and contractors resulted in substantial completion of the major project component (the large Magat dam and appurtenant works) on schedule. NIA was also very efficient in handling the resettlement of 308 families permanently displaced by the Magat reservoir and the compensation for submerged houses, property and 4,500 ha of agricultural land. Project CGsts 9. Final project costs in Peso terms are 110%, 98% and 114% of the appraisal estimates for Stages I, II and III, respectively. Overall, the final cost is about 111% of the total appraisal cost. In US dollar terms, the actual costs of Stages I, II and III, respectively, are only about 102%, 94% and 99% of the corresponding appraisal estimates, amounting to an overall equivalent of 96% of appraisal estimates. The slightly lower actual cost in US dollar terms is a reflection of an increasing Peso to US dollar exchange rate during the implementation period. Disbursements 10. The disbursements from the four Bank loans and the IFAD loan, aggregating US$227.7 million, financed about 43% of the final project costs of US$527.8 million equivalent. The remaining costs (about US$300.1 million equivalent) were funded by GOP. (Construction of the Magat powerhouse, generating units and transmission lines was implemented by GOP under separate arrangements without Bank assistance and is not c-vered by the PCR.) Loan 1154-PH for MRMP Stage I (US$42.0 million) was fully 'isbursed in 7-1/2 years, as against 6 years estimated at appraisal; the Closing Date was extended by one year from June 30, 1982 to June 30, 1983. Loan 1567-PH (US$150.0 million) for Stage II was very nearly fully disbursed in eight years, against 5-1/2 years estimated at appraisal. The final loan disbursement was made 2-1/2 years after the original Closing Date (at which time the small undisbursed balance of US$43,172.48 was cancelled.) Loan 1639-PH (US$21.0 million) and the IFAD Loan 8-PHI (US$10.0 million) for Stage III were both fully disbursed in six years, as against 4-1/2 years envisaged at appraisal. Loan 1639-PH/SAP (US$5.1 million) was also fully disbursed. Agricultural Organization and Training 11. Project O:ganization for Agricultural Development. A project- specific Agricultural Development Coordinating Council (ADCC), comprising the heads of all government agencies and representatives of commercial enterprises engaged in rice production, was established to improve inter- agency coordination in the delivery of agricultural support services to beneficiaries. The ADCC is chaired by the provincial Governor, and a newly created Agricultural Development Division (ADD) served as its secretariat. The ADD was dlso responsible for: (a) assisting the development of - 26 - (FIAs) 5/ to improve irrigators' participation in the O&M, collection of irrigation service fees (ISF) and implementation of improved water management practices; (b) project monitoring and evaluation with respect to delivery of agricultural inputs and support services; and (c) research on improved rice production techniques and optimization of farmers' incomes. 12. ADD organized training for about 80,000 farmers in improved crop production and water management, farm credit, procurement of inputs and marketing of farm produce. With regard to farmer mobilization, by April 1986 NIA/ADD had organized almost the entire service area of the project into FIGs, and had helped to establish 236 FIAs covering 40,460 ha (of which about 90% were registered with the SEC). NIA/ADD assisted the FIGs and FIAs both in the establishment and registration process and in their efforts at: (a) group marketing of farm produce to the Natio.al Food Authority (NFA), which enabled them to obtain the marketing incentive fee, and (b) obtaining rebates from group purchases of farm inputs. Finally, NIA encouraged the FIAs to assume contractual responsibilities for O&M of laterals and ISF collections, which helped to generate additional income for members. 13. To meet the demand for more and better trained water management staff, NIA established a Water Management Training Center in the project area. Since one Water Management Technician (WMT) was to be assigned as first-level manager in every 500 ha, NIA aimed to train 204 WMTs for the whole MRMP service area. The program was well designed and included field orientation, a live-in seminar workshop and on-the-job training. However, because of financial difficulties only 81 trainees successfully completed the program, and NIA increased the area of responsibility of each WMT to 750-1,000 ha. Of the 81 trained WMTs, only 49 are presently deployed in the MRMP service area; the remaining 32 WMTs have either resigned from NIA or been transferred elsewhere. Together with 49 untrained WMTs, a total of 98 WMTs are assigned to the MRMP area (one WMT for every 1,000 ha). Nevertheless, NIA hopes to maintain water management efficiency through the increasingly cooperative interface between the WMTs and FIAs. Service Area. Cropping Intensity and Yields 15. Service Area. The final MRMP service area of 97,402 ha is 96% of the appraisal estimate of 101,770 ha, as shown in Table 3 below. The small shortfall is explained in pp. 21-22 of the PCR. ./ FIGs are informal farmer groups covering small areas (a'out 40 ha average), while FIAs are formal groups comprising several FIGs each. FIAs have legal status and are registered with the Securities and Exchange Commission (SEC). - 27 - Table 3: ESTIMATED AND ACTUAL SERVICE AREA A/ -Service Area- MRMP Stae A eraisal Estimate Final ------------------(ha)------------------------- Stage IA 40,000 41,020 IB 35,000 29,752 Stage III 26,770 26,6Q Total 101,770 97,402 a/ These figures differ slightly from those in Table 1.1 of the Supplemental Information to the PCR. 16. Croping Intensity. Based on an analysis of Table 10.1 of the PCR and Table 3.1 of the Supplemental Information, k/ the total irrigated areas and cropping intensities for the MRMP during 1982-86 are as follows. Table 4. IRRIGATED AREAS AND CROPPING INTENSITY Irrigated Area (ha) Cropping Intensity Year Wet Season Dry Season Total (%) 1982 42,921 46,545 89,466 92 1983 40,849 44,620 C5,469 88 1984 60,377 56,250 116,627 120 a/ 1986 12/ 70,770 71,417 142,187 146 a/ Stage IA area alone had attained a cropping intensity of 193% in 1984, which was very close to full development. ]/ Data for 1985 are incomplete. The marked increase in irrigated area and cropping intensity from 1983 to 1984 was due to the substantial completion of the Magat Dam. By 1986 the total annual irrigated area had increased to 142,187 ha, or 126% of the preproject (1974) figure of 62,785. The achievement of an estimated annual irrigated area of 191,882 ha at full development in 1991 will represent a further 35% increase over the 1986 figure. A./ Table 3.1 of the Supplemental Information modifies Table 10.1 of the PCR by flattening out the rdtes of development of irrigated areas and cropping intensities in earlier years and assuming a steeper rate of development in later years, arriving at the same end-1991 result. No explanation is offered for either version. Table 4 of this Overview is an attempt to reconcile the two versions, based on data available in Bank project files. - 28 - 17. YitldA. Regarding crop yields at the time of project completion, there is some disparity in the "actual" figures in Table 10.1 of the PCR and the "with project' figures in Table 11.4 of the Supplemental Information. According to the PCR, the average yield in the 1984 wet season was 4.16 tons/ha. However, the Supplemental Information shows the "with project" wet season yield at completion (1986) as only 3.76 tons/ha. Further, the PCR estimate of 4.5 tons/ha for the dry season paddy yield at full development appears on the low side. With adequate water supplies assured from the Magat reservoir, dry season yields should exceed wet season yields and, in fact, yields of about 4.25 tons/ha were actually achieved in the 1983 dry season in Stage I areas (PCR, Table 10.1). Therefore, about 5.0 tons/ha for the dry season at full development would not be an unrealistic estimate. Finally, since Stages I and II were substantially completed in 1983 and Stage III towards the end of 1985, full development in at least the major part of the service area should be possible before 1991. (Appraisal targets for full development were: Stage IA in 1982, IB in 1985 and III in 1987.) Operations and Maintenance (O&M) 18. For the Magat dam, the project consultants prepared a detailed docum3nt on the rationale and methodology of the sophisticated instrumentation and O&M of the gates and structures under routine and emergency conditions. For the irrigation and drainage facilities, NIA has produced a document for guidance of its staff. If these instructions and the example set for O&M of components completed during construction are followed, project works should function effectively without requiring early and frequent rehabilitation. NIA is also pursuing a cautious and phased program of contracting O&M of laterals and sub-laterals to FIAs: NIA has contracted with 54 FIAs the maintenance work of about 210 kms of laterals/sub-laterals and results are being monitored. If successful, this approach will be expanded to include operation of the laterals and collection of ISF, although NIA will continue to operate and maintain the main canals and structures. 19. The project irrigation systems were designed for overall irrigation efficiencies of 39% in the wet season and 48% in the dry season, with a water duty foc diversion of 2.4 liters/second/ha, for an annual irrigation intensity of 200%. The PCR confirms these design assumptions (Table 4.13), but does not comment on how well the systems are actually being operated. It is essential to keep a close watch on water use efficiencies at the present stage of project development. Water availability currently exceeds the requirements of lands to be cropped and this could give rise to wasteful water use practices that would not be sustainable in future. Dam Safety Evaluation 20. In compliance with the Loan Agreement, NIA maintained an independent board of consultants for dam safety throughout the implementation period. NIA also set up a permanent in:ernal dam safety organization and established a program foi safety evaluation of Magat and - 29 - other dams. Towards the end of MRMP implementation, the Bank financed a training program for NIA staff in the inspection and evaluation of instrumentation; the course was conducted by the consultants who had designed and supervised installation of the instruments. Also, after substantial completion of the high dam, NIA and the Bank agreed that the board of consultants for dam safety should continue during the maintenance period of MRMP. The board inspected the dan in November 1983 and March 1984 wth the reservoir at high and low elevations respectively (the foreign exchange costs of the two visits were met under Loan 1567-PH). However, the next inspection did not take place until December 1987 (charged to Loan 1890-PH). 21. The Supplemnntal Information to the PCR gives a fairly detailed account of the structural performance and safety monitoring of the Magat dam complex. Overall, the dam and appurtenant structures appear to be safe, although the PCR identifies some areas of concern. About 4% of the instruments embedded in various parts of the dam structures to monitor their safety are currently inoperable. These include two micro-seismic recorders and all four strong motion accelerographs. The flood forecasting system has not functioned s-nce August 1983 and no program is outlined for rehabilitation and continued functioning of the flood forecasting system. Hairline cracks on the external surface of the spillway chute, excessive readings on piezometer no PDK-13, rock slides on the banks of the spillway plunge pool and horizontal seepage flows through the main dam between elevation 140m to 160m and above 180m are being closely monitored by NIA staff. The dam safety consultant who inspected the Magat complex in December 1987 (para. 20 above) has recommended some corrective measures, and the Bank has agreed to allocate funds under the Watershed 4anagement and Erosion Control project (Loan 1890-PH) to finance parc of the costs. Bank Performance 22. Appraisal of MRMP was covered in three appraisal reports: Nos. 727a-PH of June 5, 1975; 1911-PH of April 28, 1978; and 2150a-PH of November 17, 1978. The Supplemental Loan of US$5.1 million under the SAP was covered in the President's Report of December 1983. The reports were thorough and comprehensive, and appraisal cost estimates were reasonably accurate (para. 9 above). There were no major problems in design and implementation, although some components did have to be added during project execution. 23. A total of 32 Bank supervision missions (11 for State I, 11 for Stage II and 10 for Stage III), aggregating 76 sw, visited the MRMP during the 10-1/2 years of implementation. The missions systematically reviewed all aspects of project implementation and actively participated with NIA staff at all levels in addressing problems and in finding appropriate solutions. Of particular significance was the Bank's role in helping to resolve project staffing and funding problems, the latter often through timely advances from NIA's own corporate funds to complement inadequate and dciayed releases from the national budget. The Bank provided additional assistance in mitigating the acute shortage of local funds by raising the disbursement rates for Loans 1567-PH and 1639-PH (Stages II and III) effective November 1, 1982: for civil works, from 40% and 45% to 90%; and - 30 - for goods procured locally from 65% to 85%. The Bank also responded favorably to the Borrower's request for additional financing for the project and approved a supplemental loan of US$5.1 million. On the other hand, review of Bank supervision reports shows that MRMP was supervised almost exclusively by engineers (agriculturalists did not visit Stage I after May 1977 and Stage II after March 1981; an agriculturalist never supervised Stage III). While the PCR does not highlight any particular problems in this regard, it was certainly not an optimal staffing arrangement. Finally, in retrospect the Bank could have been more vigilant in ensuring inspections by the dam safety board of consultants at more frequent intervals (paras. 20-21 above). Performance of Consultants and Contractors 24. Performance of the foreign and local consulting consortium responsible for the project feasibility study, engineering design and construction supervision was good. The quality of construction and timely completion of the Magat dam were due in part to the professional competence of the project consultants. The performance of the two individual consultants employed by NIA, for construction management and O&M, was also satisfactory. Finally, the independent board of consultants for dam safety evaluation rendered useful advice during constructi >n and the initial phase of operations. 25. Overall, 69% of project civil works were implemented through contracts, with the remaining 31% executed through force account. The PCR presents a detailed account of contract awards. In all, 9 major contracts were awarded through international competitive bidding (ICB). The two main ICB contracts (for construction of the main dam and appurtenant works, river diversion tunnels and installation of gates) were awarded to local contractors and were completed successfully and on time. The other seven ICB contracts also went generally well, although some needed additional time for completion. Of a total of 38 major domestic contracts, only four could not be successfully completed despite time extensions; the unfinished work was taken over by NIA and completed through force account. The performance of five major supply and installation contracts, 153 local minor contracts and an unspecified number of small package contracts was genera"ly satisfactory. Project Impact and Economic Re-evaluation 26. Imgact. The project has provided 933 million cubic meters of live reservoir storage for dependable year-round irrigation water, improved irrigation and drainage facilities over 50,298 ha of existing area and new facilities on 47,104 ha of extension areas, and strengthened water management capability throughout the project area. Annual paddy production is expected to reach about 912,000 metric tons at full agricultural development in 1991--702,000 metric tons more than the pre-project situation and about 95,000 tons higher than the appraisal target. During 1986, paddy production was already 575,520 tons, or 175% over the pre- project level of 210,000 tons. This incremental production contributes greatly to Philippines' objective of attaining self-sufficiency in rice production. It is estimated that owner-operators and leaseholders - 31 - cultivating 2 ha farms would obtain net annual farm incomes of about P 26,200-P 26,300, and these higher incomes should generate more economic activity and improve living standards in the project area, as well as increase the tax revenue base of the government. 27. Another major direct project benefit is the generation of hydroelectric power. National Power Corporation (NPC) has built a powerhouse which generates 360 MW for the natiohal grid, with provi1sion for installation of generators for another 180 MW. Also, a small 6 MW power plant (Baligatan) built and operated by NIA provides power in the project area for running pumping stations to lift irrigation water to higher areas. 28. Additional direct project benefits include: (a) mitigation and prevention of flood damage becauie of the regulation/retention effect of the Magat reservoir; (b) provision of a source for domestic and industrial water supply; and (c) provision of a base for recreation and fish conservation and controlled exploitation. On the transport side, the MRMP has provided two major bridges across the Magat river and about 1,835 km of O&M, farm-to-market and access roads, which in turn facilitate expansion of marketing, processing, public transport and related economic activities. The MRMP has also generated additional employment: temporary employment during implementation, substantial permanent employment for O&M, additional incremental agricultural employment in paddy production, and employment in related aczivities such as milling, storage, marke'ing and manufacturing of farm inputs. 29. Finally, the project has had a substantive human resource development impact. NIA staff at all levels gained valuable experience working on a large multipurpose project together with reputable expatriate professionals. This enabled NIA to organize a subsidiary, NIACONSULT, Inc., which now provides engineering consultancy services in a number of other Asian countries. 30. Economic Re-evaluation. Although the three stages of the MRMP were financed under four Bank loans, appraised and approved at different times, they serve one large block of contiguous area with one principal water source and are therefore indivisible for the purposes of economic evaluation. The PCR has re-estimated the economic rate of return (ERR) for the entire MRMP at 12%. This is slightly less than the appraisal estimate of 13%, but as noted earlier in this Overview, the PCR uses rather conservative assumptions concerning the period required for full agricultural development, as well as the achievement of higher irrigation intensities and crop yields, and therefore understates the direct benefits. Also the substantial additional benefits from the project road infrastructure were not included in the ERR calculation at appraisal or the re-estimation at completion. - 32 - 31. Irrigation Service Fees (ISF). The relevant covenants in the loan agreements stipulated that the Borrower would levy such charges for water use in the project areas as necessary to provide NIA with revenues sufficient to cover all 06K costs and, in addition, provide for recovery within a reasonable period of a part of the investment costs, without impairing the users' incentives and capacity to pay. The appraisal reports were more specific and foresaw a gradual increase in ISF levels through full development. In the event, such increases did not occur (at least not on the scale expected), and the PCR therefore correctly noted that ISF collections would not fully meet the O&K costu at the stage of full project development (1991). However, this problem has since been addressed separately by the recently approved Irrigation Operations Support Project (Loan 2948-PH), under which NIA will be increasing O&M outlays by about 50% nationwide during the next three years. 32. Dam Safety. The 114 m high Magat Dam, with some geological defects at site and fitted with a battery of sophisticated instruments, requires periodic safety evaluation by qualified and experienced professionals. Pantabangan Dam (UPRP, Loan 637-PH) is also a high dam which needs similar evaluation. Some NIA staff have received dam safety training from project consultants and NIA's creation of a permanent internal dam safety unit is a step in the right direction. However, the need for periodic safety inspection by a panel of independent consultants of repute would still remain. 33. Sharing of Magat Dam Costs. It was estimated at appraisal that the costs of the multipurpose Magat Dam would be allocated between power and irrigation in the ratio of 38:62. The Loan Agreement of Loan 1567-PH included a covenant that the Borrower would "furnish, by March 31, 1981, to the Bank for its review, a plan to allocate between NIA and NPC, the investment cost of the Project...". During implementation, the Bank was informed that a dialogue was ongoing between NPC and NIA and that they had tentatively agreed to divide the costs 50:50 (also reflected in some of the PCR assumptions), although the Bank was never formally advised of the outcome. Lessons 34. In conclusion, MRMP was a successful undertaking. The hydroelectric potential of the Magat river has been exploited; increased paddy production is being gradually achieved; the substantial road network has already opened up the area for further economic developemnt; and the orderly resettlement of the 308 families displaced by the reservoir was an unqualified success. The PCR (pp. 356-360) provides an adequate coverage of lessons learned from the project, to which the following few points should be added. - 33 - 35. Inadecuate Local Funding Suport. The Loan Agreements required the Borrower to establish and maintain a Special Fund from which NIA might draw without restriction to meet project expenditures. GOP complied with this covenant and local funding was adequate in the initial years of implementation, when the larger civil works contracts were executed. However, starting in end-1982 local fund allocations became inadequate, reflecting the unsatisfactory economic situation in the country, and the Special Fund became dormant. This coincided with the project phase in which relatively smaller contractors were active. These smaller contractors had inadequate resources, could not get much commercial credit and found it difficult to function if they did not receive prompt payment for interim bulls. The Bank's SAP proved very helpful in mitigating the critical shortage of local funds at this juncture. It also would appear important for the Government to institute a coordinated program for development of the local construction industry, including facilities to provide easier access to commercial credit for small and medium-size contractors. 36. O&M of Completed Facilities. As project facilities/components were progressively completed, they needed to be maintained, but appraisal cost estimates aid not include provision for tbis. This could have led to deterioration of works completed earlier on in the project, requiring rehabilitation by the time the entire project was finished; however, the difficulty was recognized during implementation and the project scope was expanded to include O&M of completed facilities. Provision for such expenditures should be included in all appraisal cost estimates. - 34 - ANNEX 1 PHILIPPINES MAGAT RIVER MULTIPURPOSE PROJECT, STAGES I, II AND III LOANS 1154-PH, 1567-PH, 1639-PH, AND 1639-PH (SAP) PROJECT COMPLETION REPORT Key Aspects of the Project Anticipated Actual at at full Anticipated Preproject project agricultural final situation Appraisal completion development as % of (1974) estimate (1986) (1991) appraisal Total project cost (US$ million) - 552.0 527.8 - 95.6 Total project cost (P million) - 4,042.7 4,503.5 - 111.4 Total construction period (year) - 7 10.5 - 150.0 Total loan disbursed (US$ million) - 218.1/a 217.7/a - 99.8 Loan amount as % of project cost - 39.57 41.27w - 104.3 Cropped Area (ha) Wet-season irrigated 40,828.0 101,770.0 70,770.0 97,402.0 95.7 Wet-season rainfed 34,115.0 - 23,585.0 - - Dry-season irri&ated 21,957.0 98,825.0 71,417.0 94,480.0 95.6 Total 116,900.0 200,595.0 165,772.0 191,882.0 95.7 Cropping intensity (%) 112.4 197.1 162.9 188.5 95.6 Yields (metric tons/ha) Wet-season irrigated 2.1 4.0 3.8 5.0 125.0 Wet-season rainfed 1.4 - 2.4 - - Dry-season irrigated 2.2 4.2 3.5 4.5 107.0 Paddy produLtion (metric tons) 210,000.0 817,000.0 575,520.0 912,170.0 112.0 ERR (%) - 13.0 - 12.0 92.0 /a IFAD Loan 8PHI provided US$10.0 million as cofinancing for Stage III. Including this, the total loan at appraisal was US$228.1 million and actual disbursements US$227.7 million. /b Including IFAD cofinancing, these figures would become 41.3% and 43.1% for appraisal and actual respectively. - 35 - ANNEX 2 PHILIPPINES MAGAT RIVER MULTIPURPOSE PROJECT, STAGES I. II AND III LOANS 1154-PR, 1567-PH4 1639-PH AND 1639-PH (SAP) PROJECT COMPLETION REPORT Comparative Summary of Expenditures and Disbursements (US$ million) Disbursements Disbursements Expenditures (annual) /c (cumulative) /c Year /a Appraisal Actual/b Appraisal Actual Appraisal Actual 1976 2.3 3.9 0.4 - 0.4 - 1977 27.8 9.7 5.8 2.4 6.2 2.4 1978 55.7 26.9 11.9 9.0 18.1 11.4 1979 119.5 68.0 46.3 50.2 64.4 61.6 1980 119.9 111.4 56.8 22.1 121.2 83.7 1981 107.1 120.2 37.1 53.1 158.3 136.8 1982 79.6 98.2 30.8 42.7 189.1 179.5 1983 40.1 54.2 17.3 16.7 206.4 196.2 1984 - 16.7 7.1 10.0 213.5 206.2 1985 - 10.6 4.5 5.8 218.0 212.0 1986 - 7.8 0.1 5.5 218.1 217.5 1987 - 0.3 - 0.2 218.1 217.7 Total 552.0 527.9 218.1 217.7 218.1 217.7/d /a IBRD fiscal year. 7-b Borrower's fiscal year is from January 1 to December 31. The actual expenditures in this column are approximate derivations from the annual expenditures given in the PCR and are intended for affording a comparison with the appraisal expenditure schedule in IBRD fiscal years. /c These figures are the totals of disbursements made from all four IBRD loans; however, these do not include disbursements from the IFAD Loan 8-PHI of US$10.0 million, which provided cofinancing for the project. /d IBRD loans 1154-PH, 1639-PH and 1639-PH (SAP) and IFAD Loan 8-PHI were fully disbursed. A small amount of about US$0.4 million from Loan 1567-PH was canceled. Inclusive of the IFAD Loan, the total amount disbursed was US$227.7 million. - 37 - PHILIPPINES CHICO RIVER IRRIGATION PROJECT: STAGE I (LOAN 1227-PH) PROJECT COMPLETION REPORT June 30, 1988 Agriculture Operations Division Country Department II, Asia Region - 39 - PHILIPPINES CHICO IVER IRRIGATION PROJECT: STAGE I (LOAN 1227-PH) PROJECT COMPLETION REPORT overview 1. This Overview is based on the Project Completion Report (PCR) for the Chico River Irrigation Project-Stage I, prepared by the National Irrigation Administration (NIA), the implementing agency of the Government of the Philippines (GOP). The PCR presents an objective view of project implementation, performance and impact; some Supplemental Information not in the PCR was provided by NIA in April 1988 and is appended to the PCR. This Overview also draws on the project preparation documents, appraisal report, aide-memoires and reports of Bank supervision missions and other materials available in Bank files. Attached to the Overview are a Basic Data Sheet and two Annexes (Annex 1: Key Aspects of the Project, and Annex 2: Summary of Project Expenditures and Loan Disbursements). Project Objective s and Description 2. The principal objectives of the project were to: (a) increase paudy production and farmer incomes in the project area by providing better irrigation, drainage and related water management facilities, as a result Jf which farmers would be motivated to adopt improved farm inputs and techniques and thereby to achieve higher irrigated cropping intensities and yields; (b) establish a system to monitor non-water agricultural inputs and agricultural production; (c) help to create employment opportunities and accelerate economic development of the project area by providing a base for the generation of related agroindustrial activities; (d) provide an improved road network in the region; and (e) undertake two feasibility studies for future projects. 3. The project features and design are described in Chapters III and IV of the PGR. In summary, the project comprised: (a) construction of one diversion dam on the Chico River; (b) improvement of existing irrigation and drainage systems in 7,500 ha; (c) construction of new irrigation and drainage facilities in an additional 12,200 ha rainfed area; (d) procurement of O&M equipment; (e) an erosion control study for the catchment areas of the Magat and Pantabangan dams; (f) establishment of an input-output monitoring program; (g) a feasibility study for a Stage IT Chico River irrigation project; and (h) construction of about 65 km of all- weather provincial roads in the adjacent Magat project area. 4. The project was conceived as the first part of a two-stage operation. The second stage, to expand the irrigated area from 19,700 ha to about 49,000 ha, was dependent on additional water supply from upstream storage on the Chico River that was to become available through construction of a proposed hydroelectric dam. However, GOP has postponed the powqr dam indefinitely due t- strong opposition from local tribal - 40 - people. The postponement (or ultimate abandonment) of the second stage of irrigation development does not adversely affect the benefits of the first stage project, which is self-standing, utilizing water supplies of the Chico River diverted (i.e., without storage) by the dam constructed under the project. (The Stage I diversion dam, unliKe the proposed high dam for power, did not involve any population resettlement.) Project Costs. Financing and Disbursements 5. Project Costs. A comparison of appraisal and actual project costs is given in para. 8.02 and Annex 8 of the PCR. For easy reference, a comparative summary in US dollars is attached as Annex 2 to this Overview. Final project costs in Peso terms (P 827 million) are 31.3% higher than the appraisal estimate (P 630 million). However, in US dollar terms, actual costs (US$81.8 million) are 2.6% lower than the appraisal estimate (US$84 million). The cost underrun in US dollar terms, in spite of the long implementation delay, is generally indicative of an overly generous appraisal estimate and the appreciation of the US dollar against the Peso. 6. Project Financing. IBRD Loan 1227-PH for US$50 million, signed on April 8, 1976 and effective on June 30, 1976, was intended to finance about 59.5% of the total estimated Droject cost of US$84 million. With the final project cost of US$81.8 million equivalent, the loan has actually financed about 61.1%. The balance of US$31.8 million equivalent (38.9%) was financed by GOP. 7. Loan Disbursements. Annex 2 to this Overview compares appraisal and actual disbursement schedules (annual and cumulativ.). The last disbursement was made on April 1, 1986, and the nominal balance of US$27,225 was cancelled on that date. Project Implementation 8. Schedule. The PCR (para. 7.02) points nut that actual implementation took 11 years (January 1976 to December 1986) rather than the five years (January 1976 to December 1980) foreseen at appraisal--a time overrun of 120%. Delays were due to slow procurement of equipment for force account work; land acquisition problems; changes in design leading to rebidding of the three major contracts for the Chico div' rsion dam, the large river siphon and the main canal; slowness in contractor mobilization; serious shortages of fuel and cement in 1979; damage to partly completed works by typhoons; peace and order problems; and weak project management during the early stages. 9. The appraisal implementation schedule was also clearly too optimistic. The status of engineering at appraisal and even at loan signing in April 1976 was not such as to justify the use of January 1976 as the starting date for implementation of the irrigation component. Secondly, the appraisal allowed only four dry seasons for construction, which was inadequate. In addition, appraisal overlooked the possibility of - 41 - problems arising from the fact that the irrigation component was located in an area which was (a) populated by tribal people who had their own views on development and rendered acquisition of rights-of-way difficult and time- consuming, (b) politically sensitive, giving rise to peace and order problems and (c) subject to typhoons and floods. On the other hand, the project roads component, located in the adjacent Magat project area, did not suffer to the same extent from the aforementioned problems and so completion was delaed by only a little more than one year beyond the appraisal schedule. 10. Physical Quantities. Annex 1 of the PCR compares the principal physical features of the project per appraisal and as constructed. A number of items (including, among others, the large Chico Siphon) were not quantified at appraisal. For those which were quantified, the number of diversion and intake structures and the length of main canals actually constructed are more than the appraisal estimates, while the actual quantities of laterals, drainage canals, service and access roads, farm ditches and farm drains are less. NIA explains that initial estimates did not adequately reflect the rolling topography and the large number of natural creeks providing good drainage, as detailed surveys had not been done prior to appraisal. 11. Studies. Th- Stage II feasibility study was cancelled for reasons given in para. 4 above, after some work had been done on hydrology, land surveys and agronomy. The Erosion Control Study for Pantabangan and Magat watersheds was successfuly completed and led to the Watershed Management and Erosion Control Project financed under Bank Loan 1890-PH, approved in August 1980. Agri-institutional Development and Training 12. A project specific Agricultural Development Coordinating Council (ADCC) was created to improve interagency coordination in the delivery of agricultural support services to farmer-beneficiaries. The provincial heads of all government agencies and representatives of commercial enterprises engaged in the implementation of rice production programs in the area are members of the ADCC, with the provincial Governor as the chairman. In addition, an Agricultural Development Division (ADD) was created at the start of project implementation to coordinate the provision of non-water inputs in the project area simultaneously with the provision of improved irrigation facilities. The ADD serves as the secretariat of the ADCC. In order to accelerate adoption of innovative techniques in rice farming, five pilot demonstration farms were established in strategic locations in the project area to test the use of high-yielding varieties, agro-chemical inputs and efficient water management. - 42 - 13. Farmer Organization and Training. Through end-1985, ADD had organized training for about 8,700 farmer-participants, designed to promote cooperative awareness on improved crop production and water management, acquisition and utilization of farm credit, procurement of farm inputs and marketing of farm produce. Further, ADD has assisted farmers to organize themselves in Farmers' Irrigation Groups (FIGs) and Farmers' Irrigation Associations (FIAs). The former are informal groups within the 50 ha rotational area, while FIAs are formal groups each composed of several FIGs. FIAs have a legal status and are supposed to be registered with the Securities and Exchange Commission (SEC). Through end-1985, 348 FIGs had been organized covering an area of 14,970 ha (about 76% of the project area); however, organization of FIAs was relatively slow, with only 17 established in an area of 2,440 ha (about 12% of the project area). Of these, only 11 FIAs were registered with the SEC and only one FIA had contracted with NIA for operation and maintenance (O&M) of project irrigation facilities. Input-Output Monitoring 14. The project included a component for establishing an IOMP to monitor production inputs and benefits in the project area, as well as in the service areas of five other projects financed under previous Bank Loan/Credit Nos. 637-PH, 984/472-PH, 1080-PH, 1102-PH and 1154-PH (a total area of about 210,000 ha). The program was intended to provide warnings of input bottlenecks and indicate the size and direction of benefit flows. Para. 3.03 of the PCR describes the mechanics of implementation of the IOMP, and also mentions in para. 10.5 that, in spite of IOMP, NIA could not check the build-up and flow of farm inputs in and to the project area before the cropping season commenced, with the result that NIA could react only after the cropping season started and input shortfalls were observed, by which time it was often too late to remedy the situation for that particular crop. However, the program was a success in so far as it enabled NIA to draw the attention of concerned agencies to input shortfalls and to secure a measure of coordination in providing adequate inputs for following cropping season. Service Area. Croping Intensity and Yields 15. The firmed up service area at project completion was 19,407 ha, which was very close to the appraisal estimate of 19,700 ha. The pre- project irrigated area was 7,500 ha in the wet season and 5,300 ha in the dry season, an annual total of 12,800 ha. At project completion in 1986 the irrigated areas were 9,450 ha and 8,675 ha, respectively, in the wet and dry seasons, an increase of about 42% from the pre-project level. The PCR states that for 1987 11,850 ha and 10,280 ha would be irrigated during the wet and dry seasons and that full project development would be achieved in 1991 with 19,407 ha irrigated in the wet season and 17,500 ha in the dry season. These projections appear reasonable and would fully meet appraisal expectations. - 43 - 16. With regard to paddy yields, the PCR projects 4.5 and 5.0 metric tons/ha for the wet and dry seasons, respectively, at full development. These projections are higher than appraisal estimates of 4.0 metric tons/ha for both wet and dry seasons. However, the PCR projection of "without project" yield for wet sea.on rainfed areas at full development is also substantially higher than the corresponding appraisal estimate (2.2 tons/ha, as against 1.7 tons/ha). PCR Table 10.2 indicates that a paddy yield of 4.6 tons/ha was achieved in the wet season of 1979 and 4.5 tons/ha in the dry season of 1978 in the old and comparatively very small part of the project service area. Lower yields were achieved in subsequent years, mainly because of interference by ongoing construction work and rising prices of agricultural inputs. Thereafter the progressive completion of project activities resulted in substantial increases in irrigated areas from 1984 onwards and yields also recovered to 3.5 tons/ha in the wet season and 4 tons/ha in the dry season of 1986. Annex 1 of this Overview summarizes the pre-project irrigated areas, paddy yields and production, the actual situation at project completion in 1986, and anticipated results at full agricultural development in 1991. Operations and Maintenance (O&M) 17. Chapter XIII of the PCR describes the O&M of project facilities. The O&M budget shown comes to about P 300/ha of service area in 1988, decreasing to P 260/ha by 1991. The decline may be due to the gradual layoff of agricultural staff employed by NIA in the initial stages of project implementation to complement the staff of the Department of Agriculture. Nonetheless,even the higher level of O&M expenditure (i.e., P 300/ha) is inadequate and would lead to system deterioration and need for early rehabilitation. This problem is now being addressed separately by the recently approved Bank loan (No. 2948-PH) for the Philippines Irrigation Operations Support Project, under which NIA will be increasing O&M outlays by about 50% nationwide during the next three years. 18. The PCR does not address the issue of actual water use efficiency, which is particularly essential at this stage of project development, when the water available in the system is more than the requirements of the corresponding ltnds to be cropped and could therefore lead to wasteful prac;:ices. Water Quality 19. Mine tailins from Batong Buhay gold mine (BBGMI) located about 70 km upstream of the Chico diversion dam, which discharge into the Chico river when the mine is in operation, may adversely affect the project's water quality. This factor was not foreseen at appraisal, but was first noticed in late 1983, when BBGMI renewed operations after a long period of inactivity. Farmers complained of water killing some fish, stunted plant -44- growth and lowered rice yields, and expressed concern about contracting pollution-related diseases. NIA has tried through the National Pollution Control Commission (NPCC) 1/ and the local Jovernment to keep a close watch on the potential problem. An agreement between NIA, NPCC and BBGMI management was signed in August 1985 for continuous monitoring of water quality at strategic locations in the river and the project area, and to set up pilot farms to evaluate the effects on paddy production. However, the mine was subsequently foreclosed by the new Government and BBGMI is now one of the non-performing assets scheduled for privatization under the Assets Privatization Trust. NIA has continued to monitor water quality in the Chico RIS and reports no problems at this time, although the situation could change dramatically if the mine were re-opened without first developing an action plan to deal with disposal of the mine tailings. Bank Performance 20. While appraisal was generally comprehensive, it was not realistic regarding the likely rate of project implementation. Designs of some major works took more time to finalize than was forecast and then had to be revised after tendering,requiring rebidding of the contracts. Further, the appraisal implementation schedule did not fully allow for the probable delays due to the climatic, cultural, and peace and order problems in the project area (paras. 8-9 above). 20. Regarding project supervision by the Bank, a total of 17 missions, aggregating about 36 sw, visited the project during its 11 years of implementation. These missions reviewed the various aspects of project implementation and assisted NIA staff in addressing problems and in finding appropriate solutions. Of particular significance was the Bank's role in helping to ensure that the project's staffing and funding requirements were met, the latter often through timely advances from NIA's own corporate funds to complement inadequate allocations and delayed releases from the national budget. The Bank provided additional assistance through the Special Action Program (SAP) by amending the Loan Agreement, effective September 1, 1982, to increase disbursements for civil works from 60% to 95%, and for imported goods procured locally feom 65% to 85%. The Loan amendment also provided for establishment of a Special Account in US dollars in the Central Bank of the Philippines, into which an initial deposit of US$2.3 million was made so that eligible project expenditures could be more quickly reimbursed. It is also worth noting, however, that from October 1980 onwards the project was supervised only by engineers (although both engineers and agriculturalists had participated in supervision during the first four years). A more balanced skill mix during the second half of the project implementation period might have dealt more effectively with such issues as the very slow rate of farmer organization in the project area, the weaknesses of the IOMP monitoring system, decreasing technical support at field level from DA, etc. j/ NPCC is now the Envicoumental Management Bureau of the Department of Environment and Natural Resources. -45 - Performance of Consultants and Contractors 21. The performance of the foreign and local consulting consortium for the erosion control studies for Pantabangan and Magat watersheds (para. 12 above) was good. No consulting firm was engaged for the main infrastructure components, although two individual consultants were employed for construction management and O&M, and their performance was satisfactory. 22. The PCR (Chapter VI) and the Supplemental Information present a fairly detailed account of the contracts awarded for project implementation. As regards the irrigation component, there were 13 major civil works contracts, of which three were handled under international competitive bidding procedures (ICB) and 10 under local competitive bidding (LCB). In addition, 31 minor local contracts (for amounts ranging between P 0.1 and P 1.4 million each) and several small package contracts (for amounts less than P 0.1 million each) were awarded for civil works. The expatriate contractor for the first major contract, the Chico diversion dam, started well. However, two serious typhoons in July 1980 washed out the coffer dam and damaged the work. Soon thereafter the security situation deteriorated; the work site was attacked by an unidentified armed group and the contractor's equipment and vehicles were burned forcing him to suspend operations. Early in 1981 NIA and the contractor mutually agreed to terminate the contract, which was then about 26% complete. As the peace and order situation made it difficult for private contractors (especially expatriates) to work in that area, the Bank agreed to having NIA complete the remaining 74% of the work through force account. For these reasons, construction of the diversion dam took five working seasons, rather than two as planned at appraisal. The second major ICB contract for the Chico river siphon, awarded to a local contractor, was delayed by typhoon damage, changes in engineering design and less than satisfactory contractor performance. The third major ICB contract for construction of the main diversion canal, also awarded to a local contractor, was delayed due mainly to design changes and right-of-way problems (para. 7 above). The contractor completed only 17 km of the total 22 km length of the canal; the remaining 5 km were deleted from the contract due to persistent and unforeseen right-of-way problems. This work was later completed partly through other contracts and partly through force account. Of the 10 major LCB contracts, contractor performance on eight was generally satisfactory. The other two did not perform well (due to inadequate equipment, skilled manpower and financial resouces) and parts of these works were rescinded from the contracts and completed by NIA through force account. Performance of the rest of the small contractors (under P 1.4 million each) was generally satisfactory. Overall, only about 27% of project civil works were implemented through contracts and the remaining 73% were executed through force account. Proiect Impact and Economic Re-evaluation 24. With an assured --ar-round supply of irrigation water and available farm inputs and extension services, annual paddy production in the project area is expected to reach about 175,000 metric tons at full - 46 - development in 1991. This is about 125,000 metric tons more than the pre- project situation and about 28,000 tons higher than the appraisal target. During 1986, paddy production was already 99,640 tons, or twice the pre- project annual production of 49,900 tons (Annex 1 of this Overview). The additional production would greatly contribute to meeting GOP's objective of self-sufficiency in rice and to increasing farm incomes in the project area. It is estimated that owner-operators and leaseholders cultivating average farms of 2.0 ha would obtain net annual farm incomes of about P 24,500 and P 20,700, respectively. 25. In addition to irrigation, the project has made a substantial impact on transportation and communications in the region with the improvement and upgrading of 65 km of provincial roads and construction of 282 km of new O&M, farm-to-market and access roads. In addition to providing for better O&M of irrigation facilities, inflow of nonwater agricultural inputs and outflow of farm production, these roads contribute to the general economic and social uplift of the regional population by enabling expansion of marketing, processing, public transport and related economic activities. Finally, the project has generated additional employment opportunities. Besides the conspicuous employment during implementation, substantial NIA permanent staff and involvement of farmers/local communities is required for O&M. Employment opportunities in paddy production, as well as in related activities such as milling, storage, marketing and manufacture of farm inputs, have also increased. Increased valuation of properties and family incomes should also correspondlingly increase tax revenues. 26. Based on actual performance during implementation and expected performance at full development, the PCR (Chapter XI) has recomputed the internal economic rate of return (ERR) of the project irrigation component at 14.95%, which is only insignificantly less than the appraisal estimate of 15%. However, the PCR has understated the O&M costs of the irrigation and drainage systems. Using optimum O&M costs in the economic analysis would lower the ERR slightly, but it would still be well above the opportunity cost of capital. The substantial additional benefits from the O&M, farm-to-market and access roads were not included, either in the economic evaluation at appraisal or in the re-computed ERR. 27. Agricultural Development Constraints. The PCR (para. 10.06.1) has listed some factors which affected agricultural development in the project area. There have clearly been improvements in terms of the number of amortizing owners and lessees (and a corresponding decrease in the number of share tenants). However, PCR Table 10.6 also shows that the number of agricultural specialists deployed by the Department of Agriculture and Food has dropped rather drastically on project completion, instead of increasing. It is hoped that Government will step up extension work to ensure that full benefits are derived from investments in project infrastructure. - 47 - 28. Water Ouality. As noted in para. 19 above, there is a potential threat to irrigation water quality in the project area. While the steps taken by NIA and the attention given to the problem by the local government have been reassuring, the main reason the problem has abated is the rather sporadic (and for only very short durations) operation of BBGNI, due to the peace and order situation which disrupted power supply to the mine, and the change of government in 1986. The matter would require continued vigilance by the concerned agencies, should BBGMI be privatized and the mine begin operating again. Conclusions and Lessons Learned 29. Overall, the project was a successful undertaking: the objective of increased paddy production is being gradually achieved; and the improvement and upgrading of the three provincial roads in the region, as well as the construction of the O&M, farm-to-market and access roads have already opened up the Chico and Magat River project areas for further economic development. The PCR (para. 14.02) adequately covers the main lessons learned, to which the following should be added: (a) Local Funding. The Loan Agreement required GOP to establish and maintain a Special Fund to ensure continuous and timely flow of local funds for project implementation. GOP was to make available to the Special Fund working capital equal at all times to the project's local funding requirements for the succeeding two-month period. Compliance with the covenant, at best perfunctory, was almost completely lacking in the later years of the project due to GOP budgetary constraints. The Bank's SAP helped mitigate these financial difficulties (para. 20 above), and the Bank should be prepared to extend similar support in the future to otherwise healthy projects whose implementation is lagging due only to local financing constraints. (b) O&M of Completed Works during Construction. As the project facilities were progressively completed they neeued to be maintained, but appraisal estimates did not include provision for this purpose. This could have had serious consequences, with works completed earlier on in the project requiring rehabilitation by the time the entire project was finished. In the event, the problem was recognized during implementation and the project scope expanded to include O&M of comleted facilities, costing about US$3.4 million. Maintenance of completed facilities during project construction is an appropriate investment cost which should always be included in appraisal cost estimates. (c) Contract and Force Account Construction. As explained in paras. 21-22 above, almost three-quarters of the civil works in the project were completed satisfactorily through force account. This is a significant accomplishment to the credit of NIA, as otherwise project completion would surely have been further delayed. Two aspects arising from this experience appear worth noting. First, while stimulating the private construction - 48 - industry in developing countries is a highly desirable objective over the long term, this should be balanced against the benefits of utilizing (and in some cases developing at reasonable cost) the existing construction capability in public sector agencies. Second, in determining at appraisal the shares of civil works to be executed through contract and force account, careful consideration should be given to the specific conditions of the project area, insofar as they are may affect private contractor performance. ANNEX 1 - 49 - PHILIPPINES CHICO RIVER IRRIGATION PROJECT: STAGE I (LOAN 1227-PH) PROJECT COMPLETION REPORT Key Aspects of the Project Anticipated Actual at at full Anticipa- project agricultural ted final Preproject Appraisal completion development as % of situation estimate (1986) (1991) appraisal Total project cost (US$ m1n) - 84.0 81.8 - 97.4 Total project cost (P m1n) - 630.0 827.0 - 131.3 Total construction period (years) - 5.0 11.0 - 220.0 Total loan disbursed (USS m1n) - 50.0 50.0 - 100.0 Loan amount as % of project cost - 59.5 61.1 - 102.7 Cropped Area (ha) Wet-season irrigated 7,500.0 19,700.0 9,450.0 19,407.0 98.5 Wet-season rainfed 12,200.0 - 9,957.0 - Dry-season irrigated 5,300.0 17,000.0 8,675.0 17,500.0 102.9 Total 25,000.0 36,700.0 28,082.0 36,907.0 100.6 Cropping intensity (%) 127.0 186.0 144.7 190.2 102.3 Yields (metric tons/ha) Wet-season irrigated 2.3 4.0 3.5 4.5 112.5 Wet-season rainfed 1.5 - 3.2 - Dry-season irrigated 2.7 4.0 4.0 5.0 125.0 Paddy production (metric tons) 49,900.0 146,800.0 99,637.0 174,830.0 119.1 ERR (%) - 15.0 - 14.9 99.3 - 50 - ANNEX 2 PHILIPPINES CHICO RIVER IRRIGATION PROJECT: STAGE I (LOAN 1227-PH) PROJECT COMPLETION REPORT Comparative Summary of Expenditures and Disbursements (US$ million) Disbursements Disbursements Expenditures (annual) (cumulative) Year/a Appraisal Actual/b Appraisal Actual Appraisal Actual 1977 6.2 3.1 1.0 0.1 1.0 0.1 1978 16.8 4.6 4.5 2.5 5.5 2.6 1979 27.5 8.8 15.0 7.1 20.5 9.7 1980 23.8 12.2 17.0 5.3 37.5 15.0 1981 9.7 10.3 11.5 4.0 49.0 19.0 1982 - 11.9 1.0 7.1 50.0 26.1 1983 - 14.5 - 10.2 50.0 36.3 1984 - 8.8 - 9.6 50.0 45.9 1985 - 4.5 - 2.4 50.0 48.3 1986 - 3.1 - 1.7 50.0 50.0/c Total 84.0 81.8 50.0 50.0 50.0 50.0/c /a IBRD fiscal year. /b Borrower's fiscal year is from January 1 to December 31. The actual expenditures in this colimn are approximate derivations from the annual expenditures given in the PCR and are intended for affording a comparison with the appraisal expenditure schedule by IBRD fiscal years. /c Actual disbursement is US$49.97 million. A nominal balance of US$27,225 was canceled. - 51 - ATTACHMENT I caMENTS FROM BORROWZR TEM 248423 WOLDBANK FOR MR. GRAHAM DONALDSON, CHIEF, AGRICLTURE, INFRASTRDCTURE AND HONAN RESOURCES DIV., OPERATIONS EVALUATION DEPT., REGARDING DRAFT PPAR ON MAGAT RIVER MULTIPURPOSE PROJECT, LOAN MOS. 1154-PH, 1567-PH, 1939-PH, 1639-PHISAP AND CHICO RIVER IRRIGATION PROJECT, LOAN NO. 1227-PH. PLEASE BE INFORMED THAT WE GENERALLY AGREE WITH THE FINDINGS AND WE HAVE NO MAJOR COMMENTS ON THE REPORT. REST ASSURED THAT APPROPRIATE PLANS OF ACTION WILL BE EVOLVED AND IMPLEMENTED TO IMPROVE OPERATIONS PERFORMANCE OF THE TWO PROJECTS. ALDAY/NIAPHIL 42802 NIA PM WORLDBANK THSS lfo B46&y- C/-~a/ dr 2 3 $ SrFR15 9 DIVERSION DAM gMali oaong',00 ha0~~ /SI F RIVE R 1doneIRRIGATION SYSTE PHILIPPINES LUZON ISLAND 0000 ha - XTE rIo c. ROVINCE NAMES - 2 LOCOS NORTE 6 10 C SUR -arnU klr 4 LA UNIONEA '24 5 MOUNTAIN PROVINCE 6 BENGUET MANIA 7 IFUGAO- 8 KAINGA APAYAO ; w 21 9 CAGAYAN Gn S Mnuma r 22 10 ISABELA 11 QUIRINO 400 ha - 12 NUEVA viZCAYA - 20 13 BATAAN MCoden :4 BULACAN Aurora IS NIJEVA EC I>6 na-) Benk A-sstd Lolon Imganor P,c 1b PAMPANGA RROVINCE 120hö. Upper Parnanga F1e Pro1-te 17 PANGASINAN Lon 637PHI 18 TARIAC .. A 1" 11® -". 19 ZAMBALES an lt4 I'gl." Ssl.1o>nro>s>nnl 20 BATANGAS P,o,,II>,o, '841111 21 (AVITE Chien R -o Proiori 22 LA(JNA 'Lo"IQ" 1220 fR3 I17I. Magor proect 24uEr -- Nato Nh, hays24 UZON - -- -- Proenti n da 9uner boso, bondaries- CA VNE i MARIS IA RE REGULATI MAGNT ARSERVOIR DAM AN[. M1AT MARIS~-- RESERVOIR POWER . DIVI-RS. PLANT DAM -;-fb --fBUGAAh DM RUR VONS Ramonw AngadDnan %SOIUTH HIG % kC ANAL ARE- PHIULWS MAGAT RIVER MULTIPURPOSE PROJECT Ä 9 SO5UTM 10W CANA C 4ordnn ha xeIE eiting main canals Proposed mein canels T. e-.° -- Exiffing latera Canrak ® Slog I-A improvement area s-iag IA enso ari Diffun Stage j-BarmprovLment1areas Slage l- # xfftenIon Qrea« Stage, il extension ara, ~ and reservoirs under conismuctio (L..n 1567- PHi \ rolpostid power plant \ @ Pafhdon -i}-National highways nlher roads Rivers and existing dams S-w- - -iMunicepal boundar.es Th. .p ro ----- Provincil bo.ndries Wh~ 0~wa ~ne f th ~1dr,o *« 690(¥ Transmission lines *o nr » . -- ---. 230Kv Transmission lines .anrrn ryrandorserrrrt kKBIUOMETERS or accparrnce of such nonns 49LE MI LES 3' -1 T gg -103 5 o 18 92' San M~ss 10- SMyF 5 3 B 12 1,1 -- 'PHILIPPINES LUZO NISLAND- Ta4. PROVINCENAMES . -! 2 :LOCOSNORTE 14 3 ILOCOSSUR M.ö1 1 4 LAUNION 13a - 24 5 MOUNTAINPROVINCE 6 BENGUET MAfIl 23 1 7 IFUGAO 8 KALINGA-APAYAO 9 CAGAYAN 22 ,/10 ISABELA 11 i UIRINOSN -140 12 NUEVA V1ZCAYA CATCHDA 20 13 BATAAN TUGA GOBG 1 4 RULACAN 'AREAy nk Asited Central LSron 15 NuIEVA ECJA 5rrig04o Pr~I.o 16 PAMPANGA Uppe~PmpangeR rrProct 17 PANGASINAN ..o703 ILo. 637-PN) 19 TARLAC T Auror-Penerand. irngston Pr 19 ZAMBALES ILo0nCR-984/472-PH) 20 ATANGAS Tar~c I,rAion.- Sy lornan C T PrI-lt (LO-n II0-PH 21 CAVITE M R- R IIpurpose Proect 23 RIZAL A €h IL aeIrM)aPotc 24 OU5ZON DIVERS1NWEIR cuOi R-o, w.,o.. %wt~ 24E N ER vi,r Nt-MoalhWays 0 50 10 160 KILOMETERS ER PLATNO4 1221 12~ AA"CTCD CHICO DAM AND P'0WEA PLANTNO.3 CHW0D DA ANm POMN PLANTN02 SiRI NItÖDAMAND OWER PLANT NO-I PHILIPPINES C-IICO RIVER IRRIGATION PROJECT PROPOSED MAIN CANAL WIMP - PROPOSED STORAGE OR DIVERSION DAMS --+ PROPOSEDMAINCANALS PROPOSEDSTAGE I IRRIGATION AREAS PROPOSEDSTAGE 11 IRRIGATIONAREAS MAGAT RIVER MULTIPURPOSE PROJECT STAGE I (MRMP) HARS MAGAT RIVER MULTIPU RPOSE PROJECT STAG E iiMR GMP DAM AI VSION EXISTING DIVERSION DAMS EXISTING NATIONAL HIGNWAYS EXISTING PROVINCIAL IIGNWAS V - - --EXISTING,IGHIWAYSTO EE lMROVED PROVINCIAL MOUNDARIES - MUNICIPAL BOUNDARIES 100 CONTOUR LINES, 100 METER INTERVAL RIVERS 0 5 10 IS 26 MILES 0 5 10 15 20 25 KILOMETERS iC-I MARCH 1191 110 1220 LUZON 0 Claveria SF M,M 0 L"0 VISA YAS .1go MINDANAO Vign0 O Bangued O Tuguegarao ATabuk 1240 LUBUAGAN L U Z 0 N o I.aa 0 sontoc PalananO Lagowe. DAM SANTIAGO San Fernando BAAN BAUANG AMBUKLAO 'bSOLANO 75MW ' - BECKEL --- - Bavom,bonq B/NGA 1omW Cas.gur&, PHILIPPINES LUZON GRID SAN MANUEL 160 LingeyencPATBNN POWER PLANT AND PANTABANGAN i0 M aler 230kv TRANSMISSION SYSTEM VASIwAY TRABlMISSION /POWER PLANTS SUBSTATIONS LINES UA EXISTING NPC C Tarlac CabanaTuar VOA CABANA TU4NX N VA ON-GOING IERD PROJECT ON-GOING OTHER PROJECT A 7th ISRO POWER PROJECT AngeesC (Loan 1460PH MEIOFUITURE POAGAT MEX/COREQUIREMENTS MANGAT 212 MW 4 s0 so 10 OLONGAPO SAPANG PALAY SALITAWA SAPNG PLA YKILOMETERS BALINTAWA K NUCLEAR MANLA MILES EPZA TEGEN00 .. ROCKWELL % MALAYA ALTAAUN GGARDNER No.PO 75 MW SNYDERW SBINAN CALSRAOA LABO O3---MXITIG EC -140 TplyCMAK BAN IV 3 W De BATANGAS GUMACA C Batangas NAGA Boac C F,8M ARI Calapan 2050W MINDORO LEGASPI CANVAo AN. Sr Agon 0.4MW 1200 T22a 1240