Philippines - Aurora - Penaranda Irrigation Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4555 PROJECT PERFORMANCE AUDIT REPORT PHILIPPINES AURORA-PENARANDA IRRIGATION PROJECT (LOAN 984/CREDIT 472-PH) June 16, 1983 Operations Evaluation Department 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. ABBREVIATIONS APIP - Aurora-Penaranda Irrigation Project ERR - Economic Rate of Return IDA - International Development Association ISF - Irrigation Service Fees NIA - National Irrigation Administration MCM - Millions of Cubic Meters PCR - Project Completion Report PCRO - Project Completion Report'Overview PENRIS - Penaranda River Irrigation System PPAM - Project Performance Audit Memorandum PPAR - Project Performance Audit Report UPRP - Upper Pampanga River Irrigation Project FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT PHILIPPINES AURORA-PENARANDA IRRIGATION PROJECT (LOAN 984/CREDIT 472-PH) TABLE OF CONTENTS Page No. Preface ............ i Basic Data Sheet ... ...... ....---o......... . . . . . . . . .. . . . i Righlights ........ o... . .to.............. to..... . . . ... .. ...... PROJECT PERFORMANCE AUDIT MEMORANDUM I. SUMMARY o....... . . .. . . .. . . .. . . .. . . ......... 1 Background ... .... ..............." 1 Project Design .................. .... . .......... 1 Project Implementation ..................... . ......... 2 Results .............................. o......*.......o..... 3 II. MAIN ISSUES .................... . . ..................... 3 A. Cropping Intensity and Water Supply Limitations ...... 3 B. Size of Irrigation Service Area ...................... 5 C. NIA's Performance in the Service Area ............... 6 D. Economic Rate of Return .............................. 7 E. Irrigation Service Fees (ISF) ........................ 7 Attachment I - Borrower's Comments ................. ...... 10 PROJECT COMPLETION REPORT OVERVIEW Project Objectives ... . . .. .o. .... ............. .... ..... 15 Description of Project Works .......................... .... 15 Project Execution Highlights ................................. 16 Variations in Irrigation Service Area .................e....... 17 Inadequacy of Water Supply ................... .-. ....... . ... 17 Final Project Cost ........ .... ...... ....... ...... o .... o .... 18 Disbursement and Procurement Problems ........................ 18 Economic Revaluation ............ ......................... ... 19 Project Benefits ....... ............ . . . ................ 19 Annexes 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.  PROJECT PERFORMANCE AUDIT REPORT PHILIPPINES AURORA-PENARANDA IRRIGATION PROJECT (LOAN 984/CREDIT 472-PH) PREFACE This is a performance audit of the Aurora-Penaranda Irrigation Project, for which Loan 984-PH and Credit 472-PH were approved in April 1974 in the sum of US$9.5 million each. The credit was closed in 1977 and, after cancellation of US$62,595, the loan was closed in August 1982. The audit report consists of a memorandum prepared by the Operations Evaluation Department and a Project Completion Report Overview (PCRO) dated November 18, 1982 prepared by the East Asia and Pacific Regional Office; while the Project Completion Report (PCR) prepared by the borrower's executing agency, the National Irrigation Administration (NIA), also forms part of the report, it is not attached due to its length and volume, but a copy is available in OED files. An OED mission visited the Philippines in November 1982. The mission held discussions with officials of NIA and other agencies of Govern- ment both at headquarters and at field sites. Farmer representatives were interviewed in addition to bankers and traders in the private sector. The information obtained was used to test the validity of the analysis and conclusions reached in the PCR and PCRO. The audit memorandum is based on the discussions, on interviews with Bank staff associated with the project, and on a review of the PCR; the PCRO; the President's Report (No. P1419-PH) dated April 17, 1974; the Appraisal Report (No. 348A-PH) dated April 1, 1974; the Loan and Credit Agreements dated May 14, 1974; correspondence with the borrower; and internal Bank memoranda on project issues as contained in relevant Bank files. A copy of the draft report was sent to the Borrower on March 21, 1983. Comments received from the National Irrigation Administration are included in an Annex to the Project Performance Audit Memorandum (PPAM). Attention is drawn to significant points through footnotes to the PPAM text. The audit finds that the data and most of the analysis contained in the PCR and the PCRO provides a generally accurate presentation of the project's principal achievements and shortcomings. However, the audit is unable to accept the rate of return in either document, and the basic data sheet, presented herewith, reflects a re-estimation. The audit memorandum consists of a summary of the project's salient design and performance fea- tures, and a discussion of a number of selected issues. The valuable assistance provided by the Government of the Philip- pines and the borrower's executing agency, the National Irrigation Administra- tion (NIA), is gratefully acknowledged.  - ii - PROJECT PERFORMANCE AUDIT BASIC DATA SHEET PHILIPPINES AURORA-PENARANDA IRRIGATION PROJECT (LOAN 984-PR/CREDIT 472-PH) KEY PROJECT DATA Appraisal Actual or Actual as 2 of Item Estimate Estimated Actual Appraisal Estimate Total Project Coste (US$ million) 40.0 57.6 144 Loan Amount (US$ million) 9.5 9.4 La 9 Credit Amount (US$ million) 9.5 9.5 100 Date Board Approval - 04/30/74 - Date Effectiveness 08/14/74 08/22/74 Date Physical Components CompleteL/b May 1978 December 1981 188L Proportion completed by above date (%) 73 100 Closing Date 06/30/79 08/82 161/c Economic Rate of Return (2) 17 8.0 Financial Performance - Fair Institutional Performance Fair CUMULATIVE DISBURSEMENTS FY75 FY76 FY77 FY78 FY79 FY80 FY81 FY82 Appraisal estimate (US$ million) 2.4 6.7 14.9 17.3 19.0 19.0 19.0 19.0 Actual (US$ million) 2.5 7.2 11.2 13.5 15.8 17.4 18.5 18.9 Actual as X of estimate 104 107 75 78 83 91 97 99.5 MISSION DATA Date No. of Handaye Specializations Performance Types of Mission (mo./Yr.) Persons in Field Represented/d tTrend Problem..& Identification 10/72 2 20 - - - - Preparation 11/73 n.a. n.a. - - - - Appraisal 10/73 3 51 - - - - Subtotal 71 Supervision i/h 04/74 2 10 - - - - Supervision 2 04/75 3 20 - - - - Supervision 3 03/76 5 15 - 1 1 H Supervision 4 01/77 3 10 - 1 1 0 Supervision 5 10/77 2 10 - 1 1 - Supervision 6 02/79 1 10 e 1 2 - Supervision 7 03/80 2 10 d,e 2 1 - Supervision 8 12/80 2 10 - 2 - - Supervisioq 9 06/81 2 1 d,e 1 1 M CompletiouLi 07/82 - - - - - - Total 186 - 37 manweeks OTHER PROJECT DATA Borrower Republic of the Philippines Executing Agency National Irrigation Administration (NIA) Fiscal Year January 1 - December 31 Name of Currency (abbreviation) Peso (-) Currency Exchange Rate: Appraisal Year Average 1974 US$ 1.00 - f6.729 Intervening Years Average 1978 US$ 1.00 - P7.407 Completion Year Average 1981 US$ 1.00 - f8.13 Follow-on Project: Name Balog Balog Casecnan, Lower Agnol /a After payment of application number 140 on June 17, 1982, the unwithdrawn balance of US$62,595.74 was cancelled on July 1, 1982. /b The project was substantially completed on December 31, 1980. An extension of one year was allowed for the procurement of 0 & M equipment. /c Calculated from date of loan approval. 71 a - agriculturist; b - agricultural economist; c - financial analyst; d - engineer; a - irrigation engineer. /e 1 - problem-free or minor problems; 2 - moderate problems; and 3 - major problems. 77 1 - improving; 2 - stationary; and 3 - deteriorating. 4 F -financial; M - managerial; T - technical; P - political; and 0 - other. h Supervision missions were joint missions involving other projects, the man-weeks drawn are pro-rated. /i The PCR was prepared by the National Irrigation Administration, the implementing agency. 71 Project tentatively scheduled for 1985. s - iii - PROJECT PERFORMANCE AUDIT REPORT PHILIPPINES AURORA-PENARANDA IRRIGATION PROJECT (LOAN 984/CREDIT 472-PH) HIGHLIGHTS Through a variety of projects the Bank is supporting the Government of the Philippines in efforts to attain national self-sufficiency in grain production. This project is one of a series promoting new or improved irriga- tion, and specifically is a follow-on to the Upper Pampanga River Irrigation Project. Appraised in 1973/74 the project was expected to rehabilitate exist- ing structures and install new works to irrigate an area of 25,300 ha at an estimated total cost of US$40 million. Physical completion was delayed by approximately three years due primarily to contracting problems in the irrigation service area compounded by some very adverse weather conditions, and consequently costs rose by about 44%. While the project resulted in a substantial increase in rice produc- tion (estimated at 96,600 tons per annum) this was 20% below appraisal esti- mates due to the volume of available water being below expectation for the dry season, and more serious flooding problems in the wet season than anticipated. Consequently, the estimated ERR will be below original estimates (PPAM, paras. 14 and 26). The main lesson of this project is the need to carefully relate proven volumes of water to optimal size irrigation service areas. Where data on available water volume requires a high degree of judgemental interpreta- tion, it may be wise to split potential irrigation service areas into two implementation phases (PPAM, para. 22). Other points of interest are: - the design decision to transit water some 75 km when it could possibly have been utilized more economically in alternate service area(s) (PPAM, para. 20); - some over optimism in realizable levels of water use efficiency (PPAM, para. 21); - the adverse effects of poorly designed contracting procedures (PPAM, paras. 23-25); - iv - - problems of irrigation fee collection associated with farmer inability to dispose of crop production at reasonable prices during crucial periods (PPAM, para. 30); - the need to be aware of the economic cost of irrigation fee collec- tion procedures and keeping this under review within national policies (PPAM, para. 32-33). - 1 - PROJECT PERFORMANCE AUDIT MEMORANDUM PHILIPPINES AURORA-PENARANDA IRRIGATION PROJECT (LOAN 984/CREDIT 472-PH) I. SUMMARY Background 1. The Aurora-Penaranda Irrigation Project (APIP) forms part of a Bank-supported effort by the Philippines Government to attain self-sufficiency in rice production. Within the overall development effort investments have been, and are being, made in quality seed production, improved farm level credit facilities and agricultural advisory services; together with sub- stantial investments in necessary physical works - both new and of a rehabili- tation nature - to promote irrigation and hence double cropping. 2. This project, appraised if 1973/74, was a follow-on to the Upper Pampanga River Irrigation Project I (Loan 637-PH). Estimated to cost US$40 million, towards which the Bank approved a loan of US$9.5 million and a credit in like amount, the project was designed to provide for the construction of necessary civil works in rehabilitating and expanding an irrigation area of a total of 25,300 ha adjoining and to the south of the earlier project. 3. The anticipated benefits derived from the expectation that cropping intensity on the 25,300 ha would rise from 143% to 200% and simultaneously improved yields would be attained, resulting in an annual net increase of rice paddy production of 120,000 tons. Project Design 4. The project was prepared by Government's National Irrigation Admin- istration (NIA) with the assistance of consultants. To supplement water drawn from the Penaranda River to supply the proposed irrigation area, the design called for the construction of dams and canal diversion works in the Aurora River Basin to increase the volume of water stored in the Pantabagan Reser- voir, constructed under the earlier project and some 75 km north of the proposed irrigation service area. During the dry season water from this storage was to be channelled through the earlier project's irrigation area and ultimately, via a conduit across the Penaranda River, joined with the main irrigation water intake off the Penaranda River. 5. Organizational arrangements for project implementation were similar to, and in part a continuation of, those found satisfactory in the first project under the direction of NIA. Similarly arrangements covering comple- mentary action (not included directly in the project) by other agencies of 1/ See PPAR No. 3063, dated June 30, 1980. - 2 - Government for such matters as agricultural advisory services, credit and land reform followed those established under the Upper Pampanga River Irrigation Project. Project Implementation 6. Aprraisal estimated construction to be completed by May 1978, and the loan closing date was established as June 1979. Construction, however, continued through December 1981 (the revised official loan closing date), and the final disbursement against the loan occurred on June 17, 1982 - the credit having been fully disbursed by March 1977. 7. There were no delays with civil works construction in the Aurora basin; these works, estimated at 44% of base line estimated project cost, were completed slightly ahead of schedule with a cost overrun of 29%, which was attributable to weaker geological conditions than expected and some work disruptions caused by typhoons. All the evidence indicates that this part of the project was carried out efficiently with high quality end results. 8. In contrast, there were substantial delays and a 76% cost overrun in carrying out the works in the irrigation service area and some delays in effecting the intermediate connecting works between the Pantabagan Reservoir and the irrigation service area intake works some 75 km to the south. 9. At the end of 1982 certain necessary minor works had still not been completed (estimated cost US$1.5 million approximately), and in addition NIA had decided that the diversion weirs on three minor rivers within the service area would not be cost-effective and would not be constructed. 10. Apart from delays, occasioned by the extended project period, there were no significant problems with disbursements. The IDA credit of US$9.5 million was fully disbursed by March 1977; however, in respect of the loan following a lenient additional extension period of seven months some US$62,595 was cancelled; the last disbursement occurred on June 17, 1982 and the loan was closed in August 1982 in an amount of US$9.437 million. The original closing date was extended twice from June 1979 to eventually December 1981, it was not officially extended to cover the final eight month period. 11. There were no significant design changes; minor changes included the additional grouting necessary at the dam sites in the Aurora Basin and the deletion of the three diversion weirs in the irrigation service area, which has some impact on the subsequent volume of water available. However, the ratio between rehabilitation and new works in the service area changed from appraisal estimates - similarly the site of some of the new works changed. 12. Final costs, as given in the PCR, are US$57.064 million or 144% of appraisal estimates excluding US$1.5 million estimated for essential work remaining and excluding compensation paid to contractors of US$0.28 million approximately. -3- Results 13. Although there has been a change in ratio!/ between rehabili- tated and new irrigation works and although the sites of the new areas do not correspond to appraisal forecast, the gross area covered by the project approximates the 25,300 ha anticipated. However the appraisal estimates of 200% crop intensity, i.e., 100% double cropping, is not possible. Some 5,000 ha of the land flood in the wet season, reducing the irrigation potential, and in the dry season there is insufficient water within the system to take advantage of all the works carried out. On the positive side paddy yield levels on that land which can be irrigated have risen to approximately 4.6 tons per ha - or 15% above appraisal estimates, and the value of the end product (rice) has increased proportional to farm input costs in economic terms. 14. Both the Borrower's PCR and the Region's PCRO documents acknowledge flooding problems in the wet season and water limitation problems in the dry season; both however calculate economic rates of return on the assumption of 200% cropping intensity. The PCR calculates an ERR of 11.6% while the Region's PCRO arrives at a 13.0% figure. These figures compare with an appraisal estimate of 17%. Audit concludes that the maximum cropping inten- sity possible in the average year would be 180%, and, as this would assume maximum efficiency in water-use which is not currently in evidence, the probable cropping intensity is unlikely to exceed 173% without substantial additional investments in drainage and/or provision of additional water. On this basis and otherwise using the Region's methodology (which is closer to that of appraisal than that used in the PCR) the audit ERR would be 8.55%. II. MAIN ISSUES A. Cropping Intensity and Water Supply Limitations 15. The appraisal document optimistically assumed a 200% cropping inten- sity, i.e., 100% of the farmers employing 100% double cropping annually. This would be optimistic even with adequate water supplies - the time needed for farmers to adjust to a very strict cropping calendar and the implications for working capital and credit are discussed in para. 25 of PPAR No. 30631/ of June 30, 1980. The most disappointing aspect of this project however is that the volume of water available for dry season irrigation is much below expecta- tion. In the event the volume of dry season water available to the service area is between 60% and 70% of that anticipated; thus the issue is whether appraisal could or should have anticipated this end result. 1/ One reason for the change was an underestimation of the existing works area by appraisal - see Borrower comments (para. 3). 2/ The Upper Pampanga Irrigation Project (Loan 637-PH). 16. There are three contributing factors to the lower than expected volume: (a) less than previously recorded dry season flows in the Penaranda River, (b) the failure of NIA to install three small diversion works on minor rivers within the irrigation service area, and (c) less than anticipated annual flow from the new Aurora diversion works. 17. The reasons for reduced dry season flows in the Pnaranda River have not yet been determined; they are likely to have two causes, first that the applicable area of the Philippines is passing through a below normal flow period for all streams (this premise is borne out in part by the unexpected low levels in the Pantabagan storage reservoir 75 km to the north), and, second that empirical evidence suggests that a probable cause is steadily increasing dry season use of water along the upstream portions of the Penaranda River and its tributaries.!! Theoretically it should have been possible for appraisal to trace potential upstream water use, however, the increased use of water may only be significant during the period since data examination in 1973. 18. With regard to the small diversions that NIA decided not to con- struct, it will be apparent that appraisal could not foresee lack of sub- sequent actions; however, detailed designs for these diversions were not prepared prior to implementation, and the rationale for them as an essential component was not specifically documented. Available documentation leaves the impression that these works were desirable mainly for contingency supple- mentary water supply purposes. Within this context is not surprising that NIA decided against construction when initial design detail indicated costs above those notionally available in project documents - especially within the context of overall project cost overruns. There are also indications that flow in the three streams concerned is substantially less in the dry season than perhaps anticipated by appraisal. 19. With respect to the flow from the diversion works in the Aurora Basin, the appraisal had to rely on only two years- flow data (and stated so). In brief, there was a known risk that flows could be below the 164 MGM used for calculation purposes in the project documents. .The decision to proceed, despite the risks, with the Aurora diversion works had more to do with the unused storage capacity of the Pantabagan reservoir than the require- ment of the Penaranda irrigation system per se, i.e., additional water stored in the reservoir could be put to good and effective use irrespective of the Penaranda system. This judgement has proved valid, for, although flow from Aurora averaged only 127 MCM through 1981 and only 97 MCM in 1982, neverthe- less these limited amounts will allow some 10,000 ha of dry season irrigation per annum which otherwise could not have occurred within the total Pampanga system. (It should be noted that the storage level in the Pantabagan reservoir in November 1982 represented less than 67% of the Pampanga system's dry season 1/ An additional reason is watershed denudation - see para. 5 of Borrower comments. - 5 - requirement.) The resultant incremental output implies that the Aurora works would have a satisfactory rate of return if taken in isolation from all other project activities. B. Size of Irrigation Service Area 20. In view of the element of risk associated with water flows from the Aurora Basin, the crucial design judgement concerned the size of the service area to be irrigated, i.e., the size of area over which civil works could be installed economically. The decision to assume that all the water from Aurora should be transited 75 km and used in the Penaranda area, when, as discussed above, at least a portion of it (and possibly all of it) could have been used economically in the nearer existing systems is difficult to rationalize in economic terms, and there is no evidence to suggest that the trade-offs between using the water from Aurora within the existing system or within a new area requiring new investments were seriously examined. This criticism is of course made with the benefit of hindsight; it should be pointed out that in the early 1970s, in the absence of firm data, empirical evidence suggested, and the weight of expert judgement considered, that there was more water available to existing systems than in practice has proved to be the case. 21. Nevertheless, with the knowledge that certain parts of the proposed service area contained potentially serious drainage problems!! allied to the known limitations in the reliability of data on water flows intended for the system, the size of the area to be covered by investments was clearly opti- mistic. This optimism was also reflected in the assumption that water use efficiency at the farm level within the proposed service area would reach 58% (see Annex 5 of Appraisal Report) while the general level of efficiency in the Upper Pampanga project was only at the 43% level,2/ and further efforts were needed there also to raise efficiency to 48% to assure adequate water supply over the intended gross area. 22. In summary, there was considerable optimism in the assessments of water volumes available, compounded by further optimism in the degree of water use efficiency likely to be attained. The main lesson is the need to care- fully relate proven volumes of water to the optimal size of the service area (and/or to alternative service areas). Where judgemental factors indicate possible water volumes above those actually proven it may be wise to split civil works into two implementation phases within the service area(s); initi- ating implementation of the second phase only when subsequent data proves initial judgements to be correct. With the benefit of hindsight, it is clear that had this approach been adopted in this project it is probable that the amount of civil works, and costs thereto, would have been reduced; without 1/ In practice a minimum of 5,000 ha of the service area floods badly, and considerably more within the boundaries of the originally anticipated service area. 2/ However, the borrower states that efficiency is now at the 60% level - see para. 6 of Borrower comments. - 6 - reducing the incremental production attained and thereby increasing the economic rate of return. In addition, it is probable that, consequentially, the stress on NIA's implementation capacity would have been reduced to the advantage of both quality and work costs - see following paragraphs. C. NIA's Performance in the Service Area 23. The National Irrigation Administration clearly handled the construc- tion of the civil works in the Aurora River Basin most satisfactorily; how- ever, this cannot be said of the less glamorous rehabilitation of irrigation facilities and their extensions within the service area. The management of initial contracting procedures was so unsatisfactory as to require a complete revision of approach to bidding and size of contracts;1/ further, the type of contracts eventually entered into were quantity-price related and initiated in the absence of pre-design or quantity survey applicable to the works to be carried out. The delays associated with the failure of the first set of contract procedures led to a decisionr12 by NIA to carry out more force account work than anticipated at the time of appraisal; this, in turn, resulted in certain areas being designated for force account work and the balance for contract work; however, as the "quantity-price" type contracts had upper gross payment ceilings and did not specify completion of all works of a specific type or within a specific area, they created a number of situations where works were left in an incomplete state. In turn this inevitably led to difficult programming problems whereby force account staff had to pick up and complete a series of works previously unscheduled to themselves. 24. In brief the process of monitoring and planning controls for carry- ing out work schedules within the irrigation service area was clearly inade- quate to handle the situations which developed. However, notwithstanding the macro situation, there is no evidence which points to lack of responsibility or endeavor on the part of individuals - on the contrary many individuals or groups reacted with initiative on many occasions. The root problem appears to lie in the ill-designed contracting-procurement procedures, compounded by over-optimism concerning NIA's ability to retain high quality personnel for unglamorous force account works which carry little political support over an extended period, particularly during a time when high-profile civil works offered personnel alternative attractive and challenging tasks. 1/ The borrower believe that over ambitious construction schedules led to insufficient time being alloted to pre- construction engineering design - see para. 7 of Borrower comments. 2/ There is evidence that Bank staff initially disagreed with this decision, but there were no recorded firm objections. However, the Bank did draw NIA's attention to limitations in the Loan Agreement (Schedule 3.B.2). Subsequently, the agreement was amended and the initial upper limit of US$2.2 million was raised to US$6 million. - 7 - 25. The intermix of partial contracting and partial force-account work in the irrigation service area allied with the absence of adequate monitoring controls created a situation where, instead of operations proceeding in a phased manner across the area according to priority criteria, civil works operations were taking place simultaneously in many different parts throughout the area. This precluded the possibility of deleting sections from the work program to reconcile gross area of coverage with reduced water availability as knowledge of the latter became established. D. Economic Rate of Return 26. The original project design estimated end results with a gross incremental paddy production of 120,000 tons per annum, of which 95,210 tons would be attributable to the project, i.e., the economic value of 95,210 tons less production costs were taken as project benefits. It was assumed that the net benefits from the 24,790 tons balance were attributable to other Govern- ment investment programs in, for example, improved seeds, agricultural ad- visory work and on farm credit. (See discussion in PPAR No. 3063 regarding allocation of benefits). On this basis the project was anticipated to have an ERR of 16.65%. 27. Because of water flow and flood control constraints, but allowing for a 15% increase in yields above that anticipated, audit recalculates the estimated incremental production as 96,580 tons (at maturity), of which (using the same methodology1l used at appraisal and in Annex 2 of the PCRO) the net economic value less production costs of 59,380 tons2/ is taken as project benefits. Since appraisal, on-farm production costs have risen approximately 60% while the economic product value has risen 111%. These factors together with a rise in,investment cost result in an estimated ERR of 8.55%. It should be noted, however, that this figure includes acceptance of favorable yield level estimates early in project life which are extrapolated from some ques- tionable survey data. 28. Notwithstanding the disappointments and setbacks suffered during project execution overdue stress should not be placed on the indicative ERR. The project has resulted in a very substantial increase in rice production, and that portion of the increase not directly attributable to the project benefits could, in the main, not have occurred without the basic project works. In addition the infrastructural works now in place leave a potential open for possible works in drainage and/or provision of additional water supply with a potentially high pay-off. E. Irrigation Service Fees (ISF) 29. The ISF rate is set at the support price equivalent of 175 kg paddy in the dry season and 125 kg in the wet season or 300 per annum double crop- ping. In monetary terms, this currently equates with approximately 510 pesos 1/ Incremental production accruing in the "without-project" benefit stream is deducted from total incremental production. 2/ This figure would rise to about 62,000 tons (improving the ERR slightly) if a 50% over-assessment of area prone to flooding has been made. NIA data on flood prone areas are conflicting. - 8 - per ha and is more than adequate (if paid) to meet the current estimated OH costs of 251 pesos/ha. However, the fee collection record is not favor- able; collections as a percentage of due amounted to 27% (1978), 33% (1979), 31% (1980), and 44% (1981). 30. A central problem is that the farmers are often unable to find a ready market for their produce at the official support price (during November 1982, for example, farmers were selling to traders at 65% of the official support price) this is particularly true of farmers in irrigation areas, who must discipline their crop cycle and rapidly dispose of one season's assets to provide investment needs for the next, i.e., they do not have the luxury of being able to await a favorable market for their roduce. This is a macro problem, dealt with more fully in other reports Y; however, it seriously affects NIA's ability to collect fees due. On the one hand, setting ISF by reference to quantities of products provides a fairly realistic mechanism whereby the fees (in monetary terms) are adjusted annually without having to resort to legislative, measures (and possible political connotations thereto), and this seems to present no problem if the farmer can indeed sell his product at the official price. On the other hand, when the farmer cannot sell at support prices he feels cheated if he pays full fees (i.e., more than he has received for the norm quantity of product) and feels justified in avoiding payment. To help overcome this reaction, NIA accepts rice paddy at sypport price volumes instead of cash payment, should the farmer prefer this2 NIA has to absorb handling costs and any shortfalls occurring through weight loss during drying, processing, etc. 31. While this procedure by NIA has the theoretical advantage of helping the farmer, and undoubtedly has resulted in the collection of more funds in some years than would otherwise be the case, the audit doubts whether the procedure is economic in the current project situation. 32. NIA has neither the technical expertise or the equipment and facili- ties, to handle efficiently grain collection, drying, storage and subsequent resale; the task of collecting and handling receipts of grain falls on tech- nical officers whose prime duties are associated with the maintenance of irrigation works, and the programming of water flow through these works. There is an obvious trade-off between losses sustained through the staff not carrying out their proper duties and in lieu thereof dealing with commodity processing, for which they have little expertise. The extent of foregone benefits is currently a matter of wide speculation amongst concerned staff and an attempt by NIA towards quantifying them in the project area and within the wider field of NIA's operations might well provide another important dimension to the on-going debate on how irrigation fees are established and collected. I/ See report of the Rice Processing Project - Loan 720-PH. 2/ The evidence suggests that farmers start to take up the option when "trade" prices are 15% below official suggested price levels - other- wise they prefer to deal with regular buyers to whom they are often indebted via unofficial credit. - 9 - 33. NIA has statutory responsibility for fee collection, and other measures result in NIA having to rely on fees to cover maintenance operations. This financial situation combined with the constraints (para. 30 above) may oblige NIA to effect procedures which are sub-optimal in economic terms; in which case it is important to know to what extent they are sub-optimal and to keep the matter under review within national policies. 34. Finally, while the audit raises matters critical of NIA in the context of this project, nevertheless on a broad front, the audit was favor- ably impressed by a general attitude of dynamism and strong committment; in particular the audit observed, and the PCR indicates, that NIA contains a healthy attitude of self criticism. New and improved approaches are con- stantly sought as exampled by substantive efforts to promote Irrigation Associations; this effort is most commendable for, although it is too early to judge the effectiveness of these Associations, if successful they will go a long way towards solving the maintenance problem.  - 10 - Attachment I Republika ng Pi11pina. BORROWER' S COMMENTS Page 1 PAMBANSANG PANGASIWAAN NG PATUBIG (NATIONAL IRRIGATION ADMINISTRATION) Tanggapan ng Tagapangastwa Lungeod ng Quezon Tel. No. 97-60-71 to 78 Cable Addre8s: NIAPHIL 12 May 1983 MR. SHIV S. KAPUR Director, Operations Evaluation MAY 1 6 Department International Bank for Reconstruction and Development PT 1818 H. Street, N.Y. Washington, D.C. 20433 U.S.A SUBJECT: Comments on the Draft of the Project Performance Audit Report for the Aurora-Pefiaranda Irrigation Project (Loan No. 984 PH and Credit No. 472 PH) Dear Mr. Kapur: Thank you for your letter of 21 March 1983 requesting our comments on the draft of the subject report prepared by the Bank's Operation Evaluation Department. we have reviewed the report in its entirety and we concur in general with the findings and conclusions of the Audit Mission. However, we have prepared, hereto attached, some comments/clarifications which we feel should be considered/ incorporated in the report. we are profoundly grateful for the opportunity given to us to review and comment on the report. Please be assured of our continuing esteem. Very truly yours, CEStr to ) Adm n i stra to r - 11 - Attachment r PaSe 2 CO)NTS ON THE PROJECT PERFORMANCE AUDIT REPORT AURORA-PERARANDA IRRIGATION PROJECT 1. Comments on Paragraph Nos. 7 and 8 We agree with the findings of the Audit Mission that there were cost overrun and considerable delays in the imple- mentation of the project. We would like to reiterate, however, that the major causes of these overruns and delays are attri- buted to additional works which were not properly identified during project appraisal, adverse weather conditions that prevailed during impelmentation of the project, irrigation water delivery during the dry season add peso floating rate and U.S. dollar inflation. These major and other causes are presented in piges 57-59 of the PCa. 2. Comments on Paragraph Mos. 9, 15 and 17 T he estimated remaining works of about US $1.5 m illion furnished to the Audit Mission in November 1982 was field estimates only and subject to confirmation by Central Office. This is presently being verified by an inventory team which will also look into some additional works related to improvement of the drainage conditions in certain parts of the service area. The decision not to construct the proposed cross drain intercept structures at the Bulu, San Niguel and Garlang streams was a deli- berate move made by the NIA after further review and evaluation of the numerous factors that come into consideration during imple- mentation and anticipated during operation of the structures. Some of these factors are as follows: A) These are vitually no flow in the three (3) streams during the dry season; B) The'channels of the three (3) streams are relatively deep that the structures that will be designed and constructed to bring the water levels in the streams to the operating level of the canals cannot be made cost effective. C) The structures as conceived would also require considerable length of protection dikes on both upstream banks of the streams to prevent flooding of adjacent lands during rainy season. 9 D) Alternatively,the operation of a pumping schemes would be prohibitively high not to mention the initial cost of the pumping stations, 3. Comments on Paragraph Nos. 11 and 12 We agree with the findings of the Audit Mission that the ratio between the rehabilitation and new works in the service area changed ftgm appraisal estimates and similarly the site of the new works changed. We would like to clarify, however, that the total service area of the PenRIS Proper is actually 18,200 hectares and not 16,700 hectares as per appraisal. This was firmed-up after undertaking the necessary lot survey in the area. The 1,500 hectares of new areas which are presently located in three different locations within the PenRIS Proper were developed to compensate for the areas deleted at the PenRIS Extension area. This was resorted to after an exhaustive field investigation.wherein it was eenfirmed that some 1,500 hectares of the PenRIS Extension are seriously flooded during the rainy season and that it overlapped with the service area of the Angat-Masin Irrigation System. - 12 - Attachment I Page 3 -2- Presented hereunder is the breakdown of service are as appraised and developeds As Appraised As Developed 1. PenRIS Proper: Rehabilitation 16,700 Has. 18,200 Has. New Area - 1,500 " 2. PenRIS Extension (New Area) 8,600 Has. 5,600 TOTAL 25,300 Has. 25,300 Has. 4. Coments on Paragraph Nos. 13, 25, 26 & 27 Considering a cropping intensity of 180% which approximates the actual condition attainable, the Audit ERR of 8.55% is accep- tab6e to the Agency. This is very close to 8.4% which is the result of re-calculation made by the PCR Committee using the same cropping intensity (180%) plus the additional cost not considered in the original calculation at the time of Audit mission. The NIA agrees to the Audit comment that "stress should not be placed on the indicative ERR". In addition to the increased rice production due to the project which is the main basis of ERR computa- tion, the project has also brought a considerable degree of benefi- cial effects and impact on the socio-economic condition of the direct beneficiaries as well as to the other societal groups within and outside the project area. One good example of u nquantified benefits is the facility and ease of transporting farm inputs and produce caused by the construction of service roads and the resultant increase in the volume of business activity. 5. Comments on Paragraph No. 16 An*her major reason for reduced dry season flows in the Peftaranda River and tributaries is the continuing watershed degration wherein the water retention capacity in the watershed area has drastically changed due to creeping deodation in the area. 6. Comments on Paragraph No. 20 Our record shows that the average water use efficiency at the far* level within the UPRIIS is 60 per cent. This is computed using the following formula: WEIGHTED AVERAGE IRRIGATION EFFICIENCY Irrigation Efficiency = Ave. CWR - Re TWS Where: Ave. CWR = LSIR (AULS) + LPIR (AULP) + FCIR (AUNIP) Total Area Under Irrigation Re = Effective Rainfall TWS = Total water supply (Reservoir supply + local flow) Ave. CWR = Average crop water requirement LSIR = Land soaking irrigation requirement AULS = Area under land soaking LPIR = Land preparation Irrigation Requirement AULP = Area under land preparation FCIR = Field crop irrigation requirement AUNIP = Area under normal irrigation period - 13 - Attachment I Page 4 -3- 7. Comments an Paraoraph Nos. 22, 23 and 24 In line No. 1, paragraph 22 kindly change "National Irrigation Authority "to" National Ir*igation Administration." We firmly believed that the root cause in some of the failures and delays in the proseeson of foree account and contract works at the service area was the limited time alloted for pre-construction and detailed engineering works. to hasten implementation bidded quantities were only based on the density per hactare it other MIA projects similarly situated and not on computed quantities as designed. This peocess, resulted most of the time, to overrun of bidded quauVities during contract implementation. Quantities of work items which exceeded the limits called for in the contract documents were prosecuted under force account. This was pointed out in the PCR as one of the lessons learned in the impelmenta- tion of this project. When the first set of bidding for contract works at the service area failed due to very high bids, packaging of contract wprk into smaller packages was resorted to in an effort of the MIA Management to developed medium-sized contractors add effect more competitive bidding. Along this line, incentives such as equipment financing was adopted to attract more bidders. 8. Comments on Paragraph 31 Although it is not the usual practice of NIA-to collect irri- gation fees alternatively in terms of palay, this move was one of the innovations made by the NIA to improve efficiency in the collection of irrigation fees. A tie-up arrangement with the National Food Authority has been evolved precisely to suppprt NIA's thrust particularly in the handling of palay. The MIA, however, realise that the scheme is not working as anticipated. Considering that MIA is has been more involved in construction and 0 & M of irrigation spstems, efforts have been made to develop NIA's capability in handling Of collection in kind with the estab- lishment of post harvest facilities such as concrete sun driers, weighing facilities and field warehouses. 9 Comments on the PCRO We agree generally with the findings of the PCAD, however we would like to make execeptions to its observations relative to the implementation at the irrigation service area. Although there have been some shortcomings in the imphementation and some phypical deficiencies on the completed works, the overall performance and quality of workmanship were generally satis- factory considering the various implementation problems encountered. These observations were shared by the various Bank's Missions which periodically visited the work area and oversaw the operations. - 14 - THE WORLD BANK PROJECT COMPLETION REPORT OVERVIEW PHILIPPINES AURORA-PENARANDA IRRIGATION PROJECT (LOAN 984/CREDIT 472-PH) NOVEMBER 18, 1982 b d - 1-5 - PHILIPPINES AURORA-PENARANDA IRRIGATION PROJECT (LOAN 984/CREDIT 472-PH) PROJECT COMPLETION REPORT OVERVIEW 1. This overview is based on the Project Completion Report for the Aurora-Penaranda Irrigation Project, prepared by the National Irrigation Administration (NIA), the implementing agency of the Government of the Philippines. The report reflects the views and opinions of NIA. It has not, however, been cleared by other Government agencies. The report is a detailed document on the history of implementation of the project from inception to completion. We have no major disagreement with the facts presented and support the principal con- clusions reached but some further points should be made and emphasis added. These are discussed below. Basic data on the project are summarized in Annex 1, Table 1, the project costs are shown in Table 2 and the economic revaluation is presented in Annex 2. Project Objective 2. The project is the second Bank-assisted irrigation project to be completed. The Upper Pampanga River Irrigation Project (UPRP), Loan 657-PH, of which the Aurora-Penaranda Irrigation Project may be regarded as an extension, was completed in 1975. The two projects benefit from the Pantabangan Reservoir, share other irrigation facilities and services, and were built and are being operated and maintained by the Upper Pampanga Integrated Irrigation System, a project implementation section of the NIA The main project objective was to enable year-round cultivation of about 25,300 ha of rice land in the Penaranda River Irrigation System, by diverting water from the Aurora-Baler basin to the Pantabangan Reservoir and augmenting the diversion and flow from the Pampanga River to the head works of the Penaranda River Irrigation System (PENRIS). Description of Project Works 3. Two zoned earthfill dams were constructed on the Canili and Diayo Rivers, including a transbasin channel to divert the impounded water from the Aurora Basin into the Pantabangan Reservoir in order to supplement the dry season flow in the Pampanga River. The existing Pampanga-Bongabon diversion dam was raised and the main conveyance canal to the Penaranda Dam was desilted, enlarged and extended and a closed conduit was built under the Penaranda river. Existing irrigation and drainage facilities were improved in the Penaranda River Irrigation System covering about 16,500 ha and new irrigation and drainage facilities were constructed on an extension area of about 1,500 ha. About 485 km of access and irrigation service roads, including bridges, were constructed. Agricultural support services were strengthened and equipment and vehicles were procured for force account - 16 - construction as well as for the operation and maintenance of the project. Comprehensive studies of the land and water resources were carried out in Central Luzon in order to formulate irrigation development plans and evaluate the potential uses of groundw.,ter resources. Thirty-four multi-purpose river development projects were identified and evaluated of which the Balog-Balog, Casecnan and Lower Agno projects are under various stages of project design and development. Project Execution Highlights 4. The Transbasin Diversion Scheme.- Construction of the Transbasin Diversion Scheme was off to a good start during the visit of the first supervision mission in April 1974 which preceded the loan/credit effectiveness by about four months. The camp facilities were completed, good progress was achieved in road construction, clearing of the dam sites, drilling and grouting of the abutments and foundations of the two dams, and the excavation of the Canili connecting channel. These were carried out under force account. Construction contracts for the dans were scheduled for award toward the end of the year. The 96 YV transmission line from Pantabangan Dam was being designed and contracts were awarded for the aerial photography of about 80,000 ha in Central Luzon. 5. This segment of the project was implemented by the UPRP Dam Division, which had successfully managed the construction of the Pantabangan Dam. They were ably assisted by Engineering Consultants International, Inc., who prepared the designs and working drawings, rhe technical specifications and coordinated the force account and contract works. Hydro Resources Contractors Corporation, who also built the Pantabangan Dan, were the main contractors for the dams. Construction activities continued to proceed ahead of schedule despite the extensive drilling and grouting required due to weak geologic conditions and work disruptions caused by typhoons. The work was completed in mid-1976, about one year ahead of the appraisal schedule. 6. Pampanga-Bongabon Dam. The zaising of the Pampanga-Bongabon Dam, the widening, desilting and extension of the main canal of the irrigation system to the Penaranda Dam and the construction of the closed conduit at the PENRIS head works which was started in 1973 progressed intermittently under UPRP Division III. A new UPRP Division IV was established in 1974 to manage this section of the Project. In the Region's view progress in project execution was slow due to poor construction management as well as other factors implied by the PCR, which included: the scattered nature of project works, disputes with contractors, shortage of resources and equipment, and frequent interruptions by typhoons and floods. The raising of the PBRIS Dam was completed in 1974 and the enlarging of the main canal was completed in 1979, about two years behind the appraisal schedule. 7. Penaranda River IrriRation Svstem. The rehabilitation and extension works in the PENRIS area proceeded at a much slower rate. The first set of bids were rejected on the grounds of lack of competition and excessively high - 17 - bids submitted. In our view, this was mainly due to NIA's underestimation of construction costs and the difficulty of the workJng conditions. However, contract conditions were improved following discussions and consultations between NIA Engineers and the Philippines Contractors Association which were initiated by the Bank's April 1975 Supervision Mission. As a result more contractors participated in the subsequent bid invitations. Contract works were often disrupted by extended irrigation seasons which delayed resumption of contract works. Frequent typhoons interrupted work progress and caused extensive damage, and floods rendered remote work areas inaccessible. As a result many contractors failed to perform their obligations and about 55% of the work was completed under force account. The PCR makes no mention that the quality of workmanship was generally poor, and the rate of project imple- mentation was slow, because of the lack of experience of the implementation unit. 8. Due to the above difficulties, project completion was deferred to June 1979, and further to Dece.ber 1980 when physical execution of the project was about 95% completed. The project closing date was extended to Dcember 1981 to allow for the delivery of additional O&M equipment for the project and to repair the damages caused by the October 1980 typhoon as well as to make good some works which were defective because of poor workmanship. The last payment under the loan was made on June 17, 1982 and the unwithdrawn balance of $62,595.74 was cancelled on July 1, 1982. Variations in Irrization Service Area 9. In the Penaranda River Irrigation System, the dry season_cropped area at project completion in 1981 is shown on the PCR as 16,457 ha (14,975 ha rehabilitated and 1,500 extension), the wet season cropped area as 18,020 ha (16,520 ha rehabilitated and 1,500 extension), and the cropping intensity 173%. These are considerably lower than the appraisal estimate of 18,200 ha planned for rehabilitation and 7,100 ha planned to be extended and a cropping intensity of 200%. The Region has not been able to obtain clari- fication for the discrepancy. There is an unresolved difficulty in the determination of the yearly cropped areas under the project and indeed estimates of the project area itself varied from 23,500 ha to 28,000 ha due to errors in surveying and land classification. The difficulty is further compounded because about 5,000 ha along the southeastern border of the project area adjoining the Candaba and San Antonio swamps are prone to severe flooding in the wet season and the dry season cropped areas vary directly with the available flow in the PENRIS system. NIA should give priority to improving the drainage facilities, particularly in the vicinity of the swamps, to extend the service area to the full 7,000 ha set at appraisal. Inadequacy of Water SuPDly 10. At appraisal the estimated annual flow available for diversion from the Aurora basin was estimated at 164 MCM. This was based on only a 24-month flow record of the Canili and Diayo Rivers. Subsequent measurement from the flow recording structure on the Transbasin Channel averaged about 127 MCM. It - 18 - was also assumed at appraisal that there would be a significant return flow from conveyance losses in the upper reaches of the Fampanga River - from the Pantabangan Dan to the Pampanga-Bongabon Diversion Dam - to the flow along the PBRIS main canal. However, the discharge capacity of the PBRIS main canal siphon under the Pampanga River is now estimated to be about 20 OIS due to siltation, compared to the initially estimated 34 CIS dry season supplemental flow to irrigate the dry season crop on 25,300 ha. 11. It was further anticipated at appraisal that diversion weirs on the Bulu, San 1iguel and Garlang Rivers would augment the dry season flow in the PENRIS service area. This scheme was abandoned due to the expensive pumping installations that would be required to raise water from the snall rivers into the PENRIS distribution canals. NIA should reconsider this scheme or modi- fication thereof to augment the continuing shortage of water in the PENRIS, especially in the dry season. There is also considerable illegal pumping by landowners adjacent to the main canals. A study conducted by NIA's Project Development Department, at the request of the April 1979 Supervision Mission, indicated that the combined dry season water flow is adequate only to irrigate only about 14,800 ha. The project attained a maximum of 17% cropping inten- sity over the dry season cropped area of 17,800 ha in 1979. With hindsight it seems that there should have been closer evaluation of water availability at the time of appraisal. The PCR does not comment on this. Final Project Costs 12. The project cost estimate was revised in June 1975 to $61.5 million. The final as-built cost is $57.6 million about 44% above the appraisal estimate. The cost increases were mainly due to the extensive drilling and grouting required by the weak geologic formations at the foundations and abutments of the Canili and Diayo Dams, increases in the quantities of some of the irrigation facilities unforeseen during project preparation, Uork interruption due to severe weather conditions and delays in the resumption of construction due to extended irrigation seasons, which resulted in three years of delays in project completion, and the continuing escalation in construction costs as a result of the 1973/74 oil crisis and currency realignments. A comparison of the appraisal cost estimates with the actual project cost is summarized in Annex 1, Table 2. Disbursement and Procurement Problems 13. Disbursements were ahead of the appraisal forecast in the initial years and lagged behind in the later part of the project implementation. In the Region's view, this is mainly due to NIA's complicated and cumbersome procurement procedures, requiring bidder prequalifications, involved technical specifications and lengthy evaluation procedures. Award of contracts was often only after negotiations to reduce responsive lowest bids to the level of the Government estimate, and this approach to contract administration by NIA discouraged contractor participation. Procurement of O&M equipment was so entangled with bureaucratic processes that US$62,595.74, intended for the purchase of 0&M equipment was cancelled even after an extension of seven - 19 - months from the official loan closing date. The PCR does not bring out these matters. The reallocation of loan and credit funds is summarized in Annex 1, Table 3. Economic Revaluation 14. The project costs and benefits are not clearly quantified in the PCR. There are inconsistencies between the cost data and the schedules of expenditures, and production losses due to typhoon damage are not taken into consideration in the economic evaluation. labor requirements for various crops are not explicitly presented. The appraisal economic rate of return, (ERR) was 17%; the PCR derived 11.6%. The Region has recomputated the ERR using the PCR data where available and assumptions employed in assumptions the economic evaluation of the Conmunal Irrigation Project (Loan 2173-PH). This results in a revised ERR of 13%. The recomputations are presented in Annex 2, Tables 1-8. Project Benefits. 15. The Aurora Transbasin Diversion Scheme is contributing about 127 MCM per year to the scarce water resources of the UPRIS. NIA has gained useful technical experience in dam construction and particularly grouting. The rehabilitation and extension works in the PENRIS have contributed towards the continued operation of the system through a series of devastating typhoons. Total agricultural development surveys conducted by the Project Input Output Monitoring Unit indicate that substantial improvements in input applications by farmers resulted in gradual increase in rice production. The yields exceeded the targets set in the five-year Agricultural Development Plan as a result of improved utilization of fertilizers and seed application rates. A substantial number of farmers shifted from transplanting to direct seeding to mitigate shortage of labor and followed more closely the recommended cropping calendar. Rice production significantly increased from 59,700 tons/year in 1975 to 143,600 tons/year in 1979, the peak year of production, when a cropping intensity of 187.3 ha and a yield of 4.25 tons/ha were achieved on 16,850 ha. Attachments Annex 1: Table 1 - Project Basic Data Sheet Table 2 - Project Costs Appraisal/Actual Table 3 - Allocation of Credit and Loan Funds Annex 2: Table 1 - Economic Rate of Return Table 2 - Net Value of Production 1978-79 Table 3 - Net Value of Production in 1979 Table 4 - Net Value of Production in 1980 Table 5 - Net Value of Production in 1981 Table 6 - Net Value of Production at Full Development Table 7 - Rice Production Cost at Full Development Table 8 - Labor Requirement for the Life of the Project - 20 - ANNEX 1 Table 2 PHILIPPINES AURORA-PENARANDA IRRIGATION PROJECT (LOAN/CREDIT 984/472-PH) PROJECT COMPLETION REPORT OVERVIEW Project Cost (US$000) Actual Project Cost /b Appraisal estimate /a Local Foreign Total Local Foreign Total I. Civil Works A. Aurora Diversion 1. Contract works - Aurora transbasin diversion 8,757 6,511 15,268 - - - - Transmission line 1,908 - 1,908 - Power substation 73 - 73 2. Force account works 2,722 1,178 3,900 - - - Subtotal 13,460 7,689 21,149 7,320 6,030 13,350 B. Penaranda Irri.Facilities 1. Contract works 6,654 3,292 9,945 2. Force account works 8,879 3,314 12,194 Subtotal 15,534 6,605 22P139 6,840 4,15 11,025 II. Engineering Supervision Administration 4,586 - 4,586 - - - III. Consulting services 696 317 1,013 150 650 800 I. Equipment, Construction O&M 1,229 2,130 3,359 25 425 450 V. Central Luzon study 3,192 1,878 5,069 2,195 2,180 4,375 VI. Interest & other charges - 321 321 - 2,000 2,000 VII. Expected price increase - - - 4,470 3,530 8,000 Total Project Cost 38,697 18,941 57,638 21,000 19,000 40,000 /a Conversion rates: Appraisal (1974); 7.8 (1975); 7.2 (1976). 7.4 (1977-79); 7.5 (1980). /b Actual Costs derived from NIA. - 21 - ANNEX 1 Table 3 PHILIPPINES AURORA-PENARANDA IRRIGATION PROJECT (LOAN/CREDIT 984/472-PH) PROJECT COMPLETION REPORT OVERVIEW Allocation of Credit and Loan Proceeds Original Allocation at Category allocation project completion I. Civil works (a) mobilization and construc- tion equipment for civil works contractors 3,500,000.00 4,192,153.65 (b) other civil works 7,200,000.00 10,522,098.02 II. Construction and O&M equipment 2,300,000.00 2,625,335.05 III. Consulting services and over- seas training 1,500,000.00 1,276,796.78 IV. Interest and other charges on the loan 2,000,000.00 321,020.76 V. Unallocated/cancelled /a 2,500,000.00 62,595.74 Total $19,000,000.00 $9,000,000.00 /a After payment of application number 140 on June 17, 1982 the unwithdrawn balance of US$62,595.74 was cancelled on July 1, 1982. ANNEX 2 - 22 - Table PHILIPPINES AURORA-PENARANDA IRRIGATION PROJECT (LOAN/CREDIT 984/472-PH) PROJECT COMPLETION REPORT OVERVIEW Economic Rate of Return ('000 Pesos) Total O&M Project Year benefits /a cost /b cost /c 1974 0 1,724 40,361 1975 0 1,596 163,708 1976 0 3,395 142,370 1977 30,870 2,091 75,769 1978 36,110 2,880 46,180 1979 57,419 4,405 41,223 1980 29,239 8,141 42,074 1981 26,500 3,631 21,608 1982 51,775 3,629 1983 77,050 3,629 1984 102,325 3,629 1985-2024 127,600 3,629 ERR = 13.1% /a See Tables 2-8. /b From PCR, Table 9.5. /c Computed from the actual expenditure information given in the PCR. Local cost is multiplied by conversion factor of 0.82. Project cost does not include the Central Luzon study nor the interest payments. PHILIPPINES AURORA-PENARANDA IRRIGATIOU PROJECT (LOAN/CREDIT 984/472-PH) PROJECT COMPLETION REPORT OVERVIEW Economic Analysis - Net Value of Production (1978-79) /b /a Faragate Gross value of Production Net value of Net return from Area Paddy yield price production cost production projected area (ha) (ton/ha) (P/ton) (P/ha) (P/ha) (P/ha) (P million) 1977 1978 1977 1978 1977 1978 1977 1978 1977 1978 1977 1978 Wet Season Irrigated V 16,700 16,700 2.27 1.30 1,500 3,405 1,950 833 886 2,572 1,064 42.9 17.8 W 15,501 10,628 2.80 1.75 1,500 4,200 2,625 883 939 3,317 1,686 51.4 17.9 Rainfed i 8,600 8,600 1.50 0.86 1,500 2,250 1,290 639 680 1,611 610 13.8 5.2 Dry Season Irrigated W 10,800 10,800 1.80 3.30 1,500 2,700 4,950 724 770 1,976 4,180 21.3 45.1 W 13,027 13,905 2.90 4.05 1,500 4,350 6,075 970 1,032 3,380 5,043 44.0 70.1 Total V 36,100 36,100 78.0 68.1 L W 28,528 38,438 95.4 88.0 W - vith project; - vithout project. 1977 1978 /a From PCR, p. 109, Table 8.2a --- (P million) ---- /b Deflated by GDP. V w u 7c See Table 8. Total net value of production before costing labor 78 95.40 68.1 88.00 Less imputed cost of labor /c 15 14.00 15.0 12.00 Total net value of production 63 81.40 53.1 76.00 Net incremental value of production 18.40 22.90 In constant 1981 prices 30.87 36.11 - 24 - ANNEX 2 Table 3 PHILIPPINES AURORA-PENARANDA IRRIGATION PROJECT (LOAN/CREDIT 984/472-PH) PROJECT COMPLETION REPORT OVERVIEW Economic Analysis - Net Value of Production, 1979 Net return Paddy Gross Net from yield Farm value Produc- value pro- /a gate of pro- tion of pro- jected Area /a (ton price duction cost/c duction area (ha) /ha) (P/ton) (P/ha) (P/ha) (P/ha) (P m1n.) Wet Season Irrigated W 16,700 3.57 1,500 5,355 1,040 4,315 72.0 W 15,845 4.25 1,500 6,375 1,102 5,273 83.5 Rainfed W 6,240 2.33 1,500 3,495 798 2,697 16.8 Dry Season Irrigated W 10,800 3.66 1,500 5,490 904 4,586 49.5 W 17,804 4.55 1,500 6,825 1,211 5,614 99.9 Total V1 33,740 - - - - - 138.3 W 33,649 - - - - - 183.4 (P million) Total net value of production before costing labor 138.30 183.40 Less imputed cost of labor /b 14.08 16.46 Total Net Value of Production 124.22 166.94 Net incremental value of production 42.72 In constant 1981 prices 57.42 /a From PCR pp. 109-110, Table 8.2. 7- Shadow wage rate: W = 4.9, W = 4.4. 7- Deflated by GDP index. - 25 - ANNEX 2 Table 4 PHILIPPINES AURORA-PENARANDA IRRIGATION PROJECT (LOAN/CREDIT 984/472-PH) PROJECT COMPLETION REPORT OVERVIEW Economic Analysis - Net Value of Production, 1980 Net return Paddy Gross Net from yield Farm value Produc- value pro- /a gate of pro- tion of pro- jected Area la (ton price duction cost /b duction area (ha) /ha) (P/ton) (P/ha) (P/ha) (P/ha) (P m1n.) Wet Season Irrigated 15,667 2.40 1,500 3,600 1,195 2,405 37.7 W 12,356 2.90 1,500 4,350 1,267 3,083 38.1 Rainfed W 8,600 2.30 1,500 3,450 917 2,533 21.8 Dry Season Irrigated 10,800 3.10 1,500 4,650 1,039 3,611 39.0 W 17,115 4.25 1,500 6,375 1,392 4,983 85.2 Total W 35,067 - - - - - 98.5 W 29,471 - - - - - 123.3 i. W (P million) Total net value of production before costing labor 98.5 123.3 Less imputed cost of labor 14.6 14.4 Total Net Value of Production 83.9 108.9 Net incremental value of production 25.0 In constant 1981 prices 29.2 /a From PCR, pp. 109-110, Table 8.2. 7T Deflated by the GDP index. ANNEX 2 -26 - Tab]e 5 PHILIPPINES AURORA-PENARANDA IRRIGATION PROJECT (LOAN/CREDIT 984/472-PH) PROJECT COMPLETION REPORT OVERVIEW Economic Analysis - Net Value of Production, 1981 Net return Gross Net from Paddy Farm value Produe- value pro- yield gate of pro- tion of pro- jected Area la (ton price duction cost /b duction area (ha) /ha) (-P/ton) (P/ha) (P/ha) (P/ha) (P m1n.) Wet Season Irrigated 16,700 3.20 1,500 4,800 1,397.60 3,402.40 56.8 W 15,692 4.05 1,500 6,075 1,482.15 4,592.85 72.0 Rainfed *R 8,600 2.33 1,500 3,495 1,073.00 2,422.00 20.8 Dry Season Irrigated 10,800 2.90 1,500 4,350 1,215.00 3,135.00 33.8 W 14,417 3.80 1,500 5,700 1,628.00 4,072.00 58.7 Total W 36,100 111.4 30,-I109f Tn-l.7 __ W (P million) Total net value of production before costing labor 111.4 130.7 Less imputed cost of labor /c 15.1 14.75 Total Net Value of Production 113.3 115.95 Net incremental value of production 2.65 /a From PCR Table 8.2a 7- See Table 8. /c See attached table - 27 - ANNEX 2 Table 6 PHILIPPINES AURORA-PENARANDA IRRIGATION PROJECT (LOAN/CREDIT 984/472-PH) PROJECT COMPLETION REPORT OVERVIEW Economic Analysis - Net Value of Production at Full Development Net return Gross Net from Paddy Farm value Produc- value pro- yield gate of pro- tion of pro- jected Area (ton price duction cost /a duction area (ha) /ha) (P/ton) (P/ha) (P/ha) (P/ha) (P m1n.) Wet Season Irrigated W 16,700 3.57 1,500 5,355 1,397.60 3,958.00 66.1 W 25,300 4.40 1,500 6,600 1,482.15 5,117.85 129.5 Rainfed V 8,600 2.33 1,500 3,495 1,073.00 2,422.00 20.8 Dry Season Irrigated 10,800 3.66 1,500 5,490 1,215.00 4,275.00 46.2 W 25,300 4.80 1,500 7,200 1,628.30 5,572.00 140.9 Total V 36,100 - - - - - 133.1 W 50,600 - - - - - 270. (P million) Total net value of production before costing labor 133.1 270.4 Less imputed cost of labor /b 15.1 24.8 Total Net Value of Production 118.0 245.6 Net incremental value of production at full project development 127.6 /a Computations based on PCR data and basic assumptions employed in the evaluation of the Communal Irrigation Development Project (Loan ) /b See Table 8. - 28 - ANNEX 2 Table 7 PHILIPPINES AURORA-PENARANDA IRRIGATION PROJECT (LOAN/CREDIT 984/472-PH) PROJECT COMPLETION REPORT OVERVIEW Rice - Production Cost at Full Development /a (P/ha) /b Wet season Dry season Wet season Dry season Irrigated Irrigated Rainfed Irrigated Irrigated Cultivation 219.80 237.70 170.00 210.00 220.0 Seed 83.00 83.00 119.52 83.00 119.5 Fertilizer 538.35 625.65 538.50 538.35 625.6 Pesticides 245.00 250.00 245.00 245.00 250.0 Harvesting 396.00 432.00 209.70 321.30 329.4 Total 1,482.15 1,628.30 1,073.00 1,397.60 1,215.0 /a Based on the following assumptions at full development: (a) Cultivation - Wet season - Mechanical 65% @ ? 261.60/ha Animal 35% @ F 142.10/ha Dry season - Mechanical 80% @ P 261.60/ha Animal 20% @ P 142.10/ha (b) Pesticides - Lump sum (c) Harvesting - Mechanical threshing @ 6% of yield value (d) Seed and fertilizer derived from appraisal report /b W - with project; W - without project. PHILIPPINES AURORA-PENARANDA IRRIGATION PROJECT (LOAN/CREDIT 984/472-PH) PROJECT COMPLETION REPORT OVERVIEW Labor Requirement for the Life of the Project /a Manday/b 1977 1978 1979 1980 1981 Full Development ha Area Total Area Total Area Total Area Total Area Total Area Total (ha) cost (ha) cost (ha) cost (ha) cost (ha) cost (ha) cost (P m1n) (P mln) (P mln) (P m1n) (P m1n) (P mln) Wet Season Irrigated W 95 16,700 6.9 16,700 6.9 16,700 6.98 15,667 6.6 16,700 6.98 16,700 6.98 ' W 100 15,501 7.6 10,628 5.2 15,845 7.74 12,356 6.02 15,692 7.69 25,300 12.4 Rainfed W 95 8,600 3.6 8,600 3.6 6,240 2.64 8,600 3.56 8,600 3.6 8,600 3.6 Dry Season Irrigated W 95 10,800 4.5 10,800 4.5 10,800 4.48 10,800 4.48 10,800 4.51 10,800 4.51 W 100 13,027 6.4 13,905 6.8 17,804 8.72 17,115 8.38 14,417 7.06 25,300 12.4 Total W 15 15 14.08 14.3 15.1 15.1 W 14 12 16.46 14.4 14.75 24.8 /a The shadow wage rate was taken as 4.9 P/md (W) "with" the project and 4.4 P/md (W) "without." 7b From the Staff Appraisal Report. It was assumed that the labor requirement per ha did not change during the life of the project. cr 2 CM41  IBRD 10921 FEBRARY 1974 LUZONPNA A - SOUSA CCS A SAA XTESIA ARA1tSDVESIN7A TRNISB ARE \A 1 LTRSS AIE ~SA ANt07IG MUTENON ARAM P IS DIVERSION DAM CA-11 NI~ \RIS U VERS -- QUEZiON AREA --TE P MIPOE TRIS AREA - H I TFPROPOSESIMAINACANAL ACA cX SERVICEAAREAREPRASDIVERSSFNDAM SE(VIC A PRRISEDIVEASION DAM ~ ~/- -~--7- ) VEVER PAMPANGA RIVERTSRV AREAS SANTONGO XTEN INA E NRES GRVER AE ISUEXTETSIAN RAREAHOi PBRISDA P SE A A A- IRRIGATIONSYSTEMB OUNDARIES - -- PROJECTO EUNOARE 0 ~ ~ ~ P 20OS0 LAETRS00E80A1L0 I 님  戸  7DC6ANTIJNAJyFAMPANGA BONGADON DIVERSION DA PH IL.IPP INES AURORA -PEÑARANDA IRRIGATION PROJECT PROJECT AAEAr MAIN CANAL - LTRLCANALS RIVEs swAMPS MUNICIPAL BOUNDARES SAN L EONARDO SAN LEONARD DIVERSIDN DA JAEN PEÑARANDA KILOMETER HSAE I, GAPAN SAN ANTONIO SAN ISIDRO C A. 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