Philippines - Communal Irrigation Development Project

F"rILE OY Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-3326-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 COMMUNAL IRRIGATION DEVELOPMENT PROJECT May 18, 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 authorization.  CURRENCY EQUIVALENTS Currency Unit - Philippine Pesos (P) P 1 = US$0.123 US$1 = P 8.1 SDR 1 = US$1.111 WEIGHTS AND MEASURES 1 ha = 2.47 acres 1 m 3.28 ft 1 km = 0.62 miles 1 sq m = 10.76 sq ft 1 cu m = 35.31 cu ft 1 mm = 0.039 in 1 kg = 2.2 lb 1 cavan = 50 kg 20 cavans = 1 metric ton (referred to as ton in this report) ABBREVIATIONS CIS - Communal Irrigation System IA - Irrigators' Association IFAD - International Fund for Agricultural Development M&E - Monitoring and Evaluation MOA - Ministry of Agriculture NIA - National Irrigation Administration O&M - Operation and Maintenance OED - Operations Evaluation Department PIO - Provincial Irrigation Office GOVERNMENT OF THE PHILIPPINES FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY PHILIPPINES COMMUNAL IRRIGATION DEVELOPMENT PROJECT Loan and Project Summary Borrower: Republic of the Philippines Beneficiary: National Irrigation Administration (NIA) Amount: $71.1 million (including a capitalized front-end fee) Terms: The loan would be for a term of 20 years, including 5 years of grace, with interest at 11.6%. Project Description: The proposed project would strengthen NIA's Provincial Irrigation Offices' capacity to plan and implement a program of communal irrigation development, and to operate, main- tain and rehabilitate small national irrigation projects. The project would also finance the construction of communal irrigation works covering about 25% of the area to be covered under NIA's 1982-86 communal irrigation development program, including both new and rehabilitation schemes. Irrigation works to be financed under the project would be implemented through a participatory approach involving the farmer beneficiaries in all phases of project planning, design and construction, and preparing them to carry out more effectively the operation and management of their sys- tem after completion of construction. The project includes a component for training of NIA's technical and institu- tional staff and the farmers in communal irrigation development. It also includes a monitoring and evaluation component. Consultant services would be provided to carry out a study to improve NIA's financial reporting system. Approximately 24,000 farm families, or about 144,000 people, would benefit directly from the project. The project would increase the total purchasing power of small farmers as well as food availability in remote areas. Demand for farm labor in the areas covered is also expected to increase, and the institutional strengthening of NIA is expected to result in significant improvements in the quality and efficiency of NIA operations. The main risk associated with this project concerns the degree of farmer commitment to the participatory approach. Although this approach has not been tried before on such a large scale, NIA has used this approach in developing 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 - about 40 pilot systems over the past 5 years with encour- aging results, particularly the greater acceptability of the systems to the farmers who manage them after comple- tion. The participatory approach offers the most reason- able prospect of meeting the operational and management requirements of communal systems. NIA would also monitor carefully the progress of the participatory approach in order to correct any problems as soon as they arise. A second risk is that input usage may be less than optimal, either because many of the farmer beneficiaries have become ineligible for credit owing to previous defaults, or there may be insufficient inducement because paddy prices may not allow an adequate margin after covering input costs. The Government has already initiated steps to deal with farmer ineligibility for loans by rescheduling loan repayments, particularly where arrears result from factors beyond the farmers- control. The Government has also been reviewing paddy prices from time to time and making adjustments to reflect changes in input prices.  - iii - Estimated Cost Local Foreign Total ---(US$ million)--- Strengthening of NIA 4.3 17.2 21.5 Training 2.1 0.7 2.8 Construction of Communal Irrigation Systems 33.6 25.8 59.4 Monitoring and evaluation 1.2 0.2 1.4 Financial Reporting Study - 0.2 0.2 Base Cost Estimate 41.2 44.1 85.3 Physical contingencies 5.7 6.1 11.8 Price contingencies 12.4 11.3 23.7 Total Project Cost /a 59.3 61.5 120.8 Front-end fee on Bank loan - 1.0 1.0 Total Financing Requirements 59.3 62.5 121.8 Financing Plan Bank 17.5 53.6 71.1 IFAD 3.1 8.9 12.0 Government 33.7 - 33.7 Farmer beneficiaries 5.0 - 5.0 Total 59.3 62.5 121.8 Estimated Disbursements: Bank FY FY83 FY84 FY85 FY86 FY87 FY88 ---------------(US$ million) -------------------