Philippines - Communal Irrigation Development Project

Document of The World Bank FOR OmCIAL USE ONLY Report No. 11512 PROJECT COMPLETION REPORT PHILIPPINES COMMUNAL IRRIGATION DEVELOPMENT PROJECT (LOAN 2173-PH) DECEMBER 29, 1992 Agriculture Operations Division Country Department I East Asia and Pacific.Regional Office 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.  CURRENCY EQUIVALENTS (Pesos per US$) Year Exchange Rate 1981 (Appraisal Year) P8.1 1991 (Completion Year) P27.5 WEIGHTS AND MEASURES Metric System ABBREVIATIONS BOD Board of Directors CIDP Communal Irrigation Development Project CIS Communal Irrigation System DOA Department of Agriculture ERR Economic Rate of Return IA Irrigator Association IDO Institutional Development Officer IBRD International Bank for Reconstruction and Development IFAD International Fund for Agricultural Development IOSP Irrigation Operations Support Project M&E Monitoring and Evaluation MOA Minitry of Agriculture NFA National Food Authority NIA National Irrigation Administration O&M Operation and Maintenance OMM Operation and Maintenance Monitoring PIO Provincial Irrigation Office PCR Project Completion Report RIO Regional Irrigation Office SAR Staff Appraisal Report SEC Securities and Exchange Commission TOR Terms of Reference FISCAL YEAR OF BORROWER 1 January - 31 December  FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General Operations Evaluation December 29, 1992 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on the Philippines Communal Irriaation Development Proiect (Loan 21 73-PH) Attached is a copy of the report entitled "Project Completion Report on the Philippines Communal Irrigation Development Project (Loan 21 73-PH)" prepared by the FAO/CP with Part II contributed by the Borrower. This project pioneered a new relationship between irrigators and National Irrigation Administration. With major irrigator participation and NIA providing financing, advice, training and contracting services, 144 small, scattered, irrigator-owned rice systems were upgraded, extended or built. Despite rebellions, typhoons, cost over-estimates, shortage of Government funds, and implementation delays, results are very good. If a way is found to cope with major maintenance which the owners cannot handle, benefits should be sustained. The Project Completion Report is comprehensive and informative. An audit is planned. 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.  I I I  FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT PHILIPPINES COMMUNAL IRRIGATION DEVELOPMENT PROJECT (Loan 2173-PH) TABLE OF CONTENTS Page No. Preface... ... i Evaluation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . iii PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE . . . . . . . . . . . . . . Project Identity . . . . . . . . . . . . . . . . . . . . . . . Background .......... .. 1 Project Objectives and Description . . . . . . . . . . . . . . 2 Project Design and Organization ..... .. 2 Project Implementation ....... .. 3 Project Results . . . . . . . . . . . . . . . . . . . . . . . . 9 Project Sustainability ............ . 10 Bank Performance .............. . 10 Borrower Performance . . . . . . . . . . . . . . . . . . . . . 11 Project Relationship . . . . . . . . . . . . . . . . . . . . . 11 Consulting Services and Procurement . . . . . . . . . . . . . . 11 Project Documentation and Data ..... ...... . .. . . 12 PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE . . . . . . . . . 13 PART III: STATISTICAL INFORMATION . . . . . . . . . . . . . . . . . . . 15 Related Bank Loans ..................... . 15 Follow-on Project . . . . . . . . . . . . . . . . . . . . . . . 15 Project Timetable . ... . . . . . . . . . . . . . . . . . . . . 15 Loan Disbursements ..................... . 16 Project Implementation . . . . . . . . . . . . . . . . . . . . 17 Project Costs and Financing . . . . . . . . . . . . . . . . . . 18 Project Results . . . . . . . . . . . . . . . . . . . . . . . . 19 Status of Covenants . . . . . . . . . . . . . . . . . . . . . . 21 Use of Bank Resources ....... . ........... . . 22 MAP: IBRD 16197 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.  I  PROJECT COMPLETION REPORT PHILIPPINES COMMUNAL IRRIGATION DEVELOPMENT PROJECT (LOAN 2173-PH) PREFACE* This is the Project Completion Report (PCR) for the Communal Irrigation Development Project (CIDP) in the Philippines, for which International Bank for Reconstruction and Development (IBRD) Loan 2173-PH of US$71.1 million and International Fund for Agricultural Development (IFAD) Loan 108-PH of SDR 10.8 million (equivalent to US$12 million) were approved on June 8, 1982 and September 15, 1982, respectively. The project was restructured and enlarged in scope in March 1988. However, as implementation costs in US$ dollar terms proved to be much lower than expected, mainly because of the lower Peso exchange rate and partly because of the lower actual costs of irrigation works, the amount of the IBRD Loan was reduced at that time by US$20.1 million, to US$51 million. The loan amount was further reduced by US$12.5 million to US$38.5 million in December 1989. The IBRD Loan was closed on November 21, 1991 and the IFAD Loan on November 15, 1991, respectively, when the disbursements under the loans amounted to US$38.1 million and SDR 6.9 million, respectively. The undisbursed balances of US$0.4 million from the IBRD Loan and of SDR 3.9 million of the IFAD Loan were cancelled. Parts I and III of the draft PCR are based on the report of an FAO/World Bank Cooperative Program mission which visited the Philippines in February-March 1992. They reflect a review of all relevant project documentation, field visits to selected project areas and discussions with the Borrower's project staff and associated Bank staff. Part II was prepared by the National Irrigation Administration (NIA) on behalf of the Borrower. The Bank staff wishes to thank the management and staff of NIA, and other involved agencies, for their cooperation and support in preparing this PCR.  I  - iii - PROJECT COMPLETION REPORT PHILIPPINES COMMUNAL IRRIGATION DEVELOPMENT PROJECT (LOAN 2173-PH) EVALUATION SUMMARY Objectives 1. The main objectives of the project were to: (a) support a national program under which farmers would effectively participate in the planning and construction of communal irrigation systems (CIS) and, after completion, would assume full control of the operation and maintenance (O&M) of the systems; (b) strengthen the capabilities of the National Irrigation Administration (NIA) and its Provincial Irrigation Offices (PIO) to select, design and implement efficient CISs, and maintain and operate small national systems; and (c) increase rice production and the incomes of about 24,000 farm families currently growing rainfed crops by providing irrigation facilities and support services. To achieve these objectives, the project, over a six-year period (1982-87), was to: (a) strengthen 67 PIOs through construction and rehabilitation of existing PIO offices and equipment workshops and provision of equipment and vehicles; (b) support training of about 2,600 Institutional Development Officers (IDO) and technical staff of PIOs, extension staff of the Ministry of Agriculture (MOA) and farmer leaders from 1,900 Irrigator Associations (IA); (c) construct 94 new CISs on about 22,800 ha and rehabilitate and extend 50 existing CISs to cover about 10,700 ha; (d) establish a new monitoring and evaluation (M&E) system within NIA; and (e) finance a consultant study to improve NIA's internal financial reporting system. 2. Total project costs were estimated at US$121.9 million. The Bank and IFAD approved loans of US$71.1 million and US$12 million, respectively, were to finance all foreign exchange costs (51Z) and about 35% of local costs. The balance of the project costs was to be met by Government (US$33.8 million) and through farmers' equity contributions (US$5 million or up to 10% of the initial investment costs of CISs in the form of land, labor, materials or cash). Overall responsibility for project implementation was with NIA. Its PIOs, with close participation from the IAs, were to be the principal functionaries of the project. Implementation Experience 3. The project had a clear conceptual framework which fitted well with the Government's development goals of increasing food production and incomes of the rural poor, using highly participatory approach. The project was prepared by NIA and further pr__essed by two successive Bank pre-appraisal and appraisal missions. Although the design was basically satisfactory, more attention should have been given to provision of agricultural support services (including credit  - iv - and the post-harvest facilities) to the farmers expected to benefit from CIS development. The inadequacy of support services, combined with the lack of suitable drying and storage facilities for the incremental paddy production, caused the pace of agricultural development during the earlier years to be slower than expected. The pace of development improved in later years as coordination among implementing agencies improved. Costs of CIS development seemed to be somewhat overestimated at appraisal as, through adoption of more appropriate engineering solutions and a shift of emphasis on rehabilitation over new construction, considerable savings occurred during implementation. This, together with the declining Peso exchange rate against the US dollar, provided room for later restructuring of the project and for enlarging its scope. 4. Overall, despite considerable delays, project implementation was satisfactory. Initial delays were caused by a 9-month lapse in the effectiveness of the IFAD loan. Problems of timely recruitment of staff and procurement of equipment caused further delays. But the most serious problem causing implementation delays was the shortage of counterpart funds. Other difficulties included lengthy procurement delays, sporadic law and order problems, delay in approval of staff positions and reorganization within NIA. Individual sub- projects were usually completed in one year or one season, and the standard of construction, intake structures and distribution works, sometimes built by farmers themselves, was adequate for the purpose. However, some inaccuracy in surveying and mapping resulted in over-estimation of the service areas. This also resulted from the failure to exclude from the service area calculation permanently cropped areas within some subprojects crop lands. 5. Because of the substantial savings in the loan funds for reasons mentioned earlier, the project was restructured and substantially enlarged in scope in March 1988. Total project cost was re-estimated at about US$92 million in March 1988, although this estimate was further lowered to US$70.8 million in December 1989. Project implementation was rescheduled for completion in 1990. The Bank loan amount was reduced to US$38.5 million by cancelling US$20.1 million in March 1988 and US$12 million in December 1989. The restructured project increased the total service area by about 60%, from the original of 33,500 ha to 53,000 ha. The service area to be covered by the new CISs increased marginally from 22,800 ha to 23,800 ha, while the area expected to benefit from the rehabilitation and extension of the existing CISs almost tripled, from 10,700 ha to 29,200 ha. The proposed study of NIA's internal financial reporting system was cancelled as a similar study had already been completed in 1987 under an Asian Development Bank-financed project. 6. As of November 1991, 136 CISs covering a total service area of 33,315 ha were completed. These included 45 new CISs (11,210 ha) and 91 existing CISs (22,105 ha). The remaining 29 CISs (20 new and 9 existing), started under the project, are being completed under the ongoing Second Communal Irrigation Development Project (CIDP II, Loan 3261-PH). These final 29 CISs have already generated a total service area of about 4,200 ha, or about 23% of the total potential irrigable area of 18,645 ha. The loan was closed on November 21, 1991, 3