Costly, Incomplete Irrigation Projects Being Paid for by Gov’t, Farmers at Losing End

Published on October 25, 2008

Delays in government irrigation projects, and unresolved inquiries and cases of corruption pertaining to these are costing taxpayers millions since 2002. But in the end, it is the small farmers bear the brunt of corruption, said IBON Foundation Research Head Jose Enrique Africa.

BY RONALYN OLEA
Bulatlat

Delays in government irrigation projects, and unresolved inquiries and cases of corruption pertaining to these are costing taxpayers millions since 2002. But in the end, it is the small farmers who bear the brunt of corruption, said IBON Foundation Research Head Jose Enrique Africa.

In his presentation at the launching of the Transparency International’s Global Corruption Report (GCR) 2008: Corruption in the Water Sector, Africa cited two irrigation projects rigged with irregularities – the Casecnan Multipurpose Irrigation and Power Project (CMIPP) in Nueva Ecija and the Talibon Small Reservoir Irrigation Project in Bohol. Said projects discussed in the Philippine case studies were presented by Africa to the GCR 2008.

Irregularities

The CMIPP has two components – a $675 million build-operate-transfer (BOT) project that diverts water from two rivers, runs this through a hydroelectric power plant, and collects it in a dam; and a P6.8 billion irrigation component for distributing water to 53,000 hectares of rice land and for rehabilitating irrigation systems for 55,100 hectares more.

Africa identified controversies in the approval of the project. He said that an inter-agency committee,

which evaluated the project, found the CMIPP not financially viable. “They found that over the 20 year life span of the project, they estimated it would be able to deliver water only about 53 percent of the time.”

He also revealed that an agreement was executed even before going through the appropriate processes. The National Irrigation Administration (NIA) executed an agreement with the contractor CE Casecnan Water and Energy Company, Inc., a local subsidiary of California Energy International, in November 1994.

“It was controversial because it was only submitted to the appropriate government body, the Investment Coordination Committee of the NEDA (National Development Authority) three months later, in January, 1995, and the approval was actually made only in May 1995.”

Africa also pointed out that the project was unsolicited and therefore, under the law, it should not qualify for government guarantees.

He said the implementation was also problematic as project delays were quite significant. Although the target completion of the project was supposed to be in 1998, construction for the irrigation component only started substantially in 2003. It was supposed to be completed by 2008.

Africa said, “The delay is a problem because of government guarantees. The government has been paying water delivery fees since 2002 even as the project has not yet been completed.”

The Philippine government had paid $320 million in guaranteed water delivery fees from 2002-2006. “This was paid despite the fact that less than one and a half percent of the land to be irrigated by the project has been irrigated. A total of 50, 000 hectares have yet to be irrigated.”

Africa blamed the ‘onerous’ contract with the Casecnan CE that obliges the NIA to pay water delivery fees of a minimum guaranteed dollar-denominated amount for 20 years whether or not any water is actually delivered or any farmland is actually irrigated.

Over the same period, Africa said, the total gross revenuesof NIA was just $170 million but they had to pay the CE Casecnan $320 million. The Bureau of Treasury has been paying these water fees on behalf of NIA and considers these as loan to NIA.

In 2006, NIA paid $77.2 million to CE Casecnan.

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