Philippines - National Fisheries Development Project

Document of FILE COPY The World Bank FOR OFFICIAL USE ONLY Report No. P-3299-PH REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF THE PHILIPPINES FOR A NATIONAL FISHERIES DEVELOPMENT PROJECT April 30, 1982 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 authoriation.  CURRENCY EQUIVALENTS Currency Unit = Peso (P = 100 centavos) P 1.00 = US$0.123 US$1.00 = P 8.1 GLOSSARY AND ABBREVIATIONS ADB - Asian Development Bank BFAR - Bureau of Fisheries and Aquatic Resources (of MNR) DBP - Development Bank of the Philippines FIDC - Fishery Industry Development Council (of MNR) FRR - Financial rate of return GT - Gross tons ICB - International competitive bidding LCB - Local competitive bidding MNR - Ministry of Natural Resources PFDA - Philippine Fisheries Development Authority (of MNR) PU - Project Unit SEATI - Samar Sea-Ticao Pass Fisheries Development Coporation FISCAL YEAR January 1 to December 31  FOR OFFICIAL USE ONLY PHILIPPINES NATIONAL FISHERIES DEVELOPMENT PROJECT Loan and Project Summary Borrower: Republic of the Philippines Beneficiary: Republic of the Philippines and Samar Sea-Ticao Pass Fisheries Development Corporation (SEATI). Amount; $22.4 million equivalent (including capitalized front-end fee) ./l Terms: Repayable in 20 years, including 5 years of grace, with interest at 11.60% per annum. Relending Terms. $12 million of the loan proceeds would be relent by the Borrower to SEATI with the same grace and repayment period and at the same interest rate as the Bank loan. Interest accrued during the grace period would be capitalized. The Government would bear the foreign exchange risk and the corporation would pay a foreign exchange risk fee. The balance of the loan would be allocated by the Government to the Ministry of Natural Resources for institution building. Project Description: The proposed project is designed to help municipal (small- scale) fishermen, and to improve sector management through institution-building activities. To achieve its first objective, the project would assist municipal fishermen in one of the poorest regions of the Philippines (Masbate/ Ticao Pass/Western Samar) through the establishment of marketing facilities for the efficient collection, transport and distribution of fish, and the provision of input supplies. To meet the second objective, the project would strengthen the three fisheries agencies of the Ministry of Natural Resources - the Philippine * Fisheries Development Authority (PFDA), the Bureau of Fisheries and Aquatic Resources (BFAR), and the Fishery Industry Development Council (FIDC). Project funds would finance (a) an area development subproject, comprising the construction of physical facilities in seven sites, including landing areas, jetties, ice plants, offices, auction halls, bulk fuel storage and related facilities /1 Front-end fee amounts to $331,034. 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.  - ii - Project and the provision of carrier boats, vehicles and input Description. supplies, and (b) training programs, technical assistance (cont'd) and vehicles for PFDA, BFAR and FIDC. The area development subproject would be implemented by SEATI and operated under private management. The project would benefit directly about 2,500 participating small-scale fishermen who would realize higher incomes for their catch through better marketing, improved quality of fish, reduced spoilage and, to some extent, increases in productivity from the integration of input supplies with market outlets. The strengthening of the operations of the fisheries agencies would lead to improved policy direction in fisheries development, better assessment and management of fisheries resources, improved research and extension, and more effective enforcement of fish conservation regulations. The main risks associated with the proposed project are: (a) the innovative approach to establishing the corporation to implement the development subproject; (b) the present weakness of the fisheries agencies; (c) the lack of reliable data on existing fish resources which are believed to be over-exploited; and (d) the sensitivity of the benefits of the motorized fishing craft to relatively small decreases in the price of fish. To address the first issue, the Government has contracted with a competent private firm, experienced in fish marketing, to manage the corporation. To address the second issue, the project provides for a comprehensive program to strengthen the existing institutions. The third issue would be addressed in the project throughi provisLons for improved fishery resource surveys, marine studies and strengthening of the marine enforcement and conservation capabilities of BFAR to ensure a more orderly exploitation of resources. Historically, revenue from fish sales has increased more than inflation and the risk associated with price sensitivity is not expected to be great. In addition, motorized crafts are a small component, and returns to the corporation are much less sensitive to changes in revenues. Although the risks associated with the project are high, Bank support is justified because of the extreme poverty of the project beneficiaries; in addition, municipal fishermen have so far received little effective assistance from the Government.  - iii - Estimated Cost: Foreign Local Total