Technical Assistance Consultant’s Report
This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design.
Project Number: 44132 December 2015
Republic of the Philippines: Rural Community-Based Renewable Energy Development in Mindanao (Financed by the Asian Clean Energy Fund under the Clean Energy
Financing Partnership Facility)
Prepared by Holger Ludwig
Lahmeyer International GmbH
Bad Vilbel, Germany
For National Electrification Administration (NEA)
Asian Development Bank
FINAL REPORT
TA-7781 (PHI): Rural Community-Based
Renewable Energy Development in Mindanao
– 07 Consulting Firm (44132-012)
Micro hydropower plant Dalupan, Davao Del Sur, at inauguration day, 29 July 2015
Final Report Page ii
Country: Philippines
Client: Asian Development Bank (ADB) 6 ADB Avenue, Mandaluyong City
1550 Metro Manila, Philippines
Contact: Mr. Choon-Sik Jung
Energy Specialist, Energy Division
Southeast Asia Department (SEEN)
Consultant: Lahmeyer International GmbH
Friedberger Str. 173
61118 Bad Vilbel
Germany
Authors: Holger Ludwig
Renewable Energy Specialist / Team Leader
Contact: Dr. Alexis Bonneschky
Head, Economics and Energy Efficiency
Department, Lahmeyer International GmbH
+49 6101 55 1124
Date: 25 September 2015
Final Report Page iii
Table of Contents
EXECUTIVE SUMMARY .......................................................................................................................... 1
1 PROJECT OBJECTIVES AND OVERVIEW OF TASKS ........................................................ 7
1.1 Introduction ........................................................................................................................ 7
1.2 Background ......................................................................................................................... 8
1.3 Objective ............................................................................................................................. 8
1.4 Implementation................................................................................................................... 8
2 CONSTRUCTION AND INSTALLATION OF DEMONSTRATION RENEWABLE ENERGY
(MHPP) SYSTEMS ......................................................................................................... 9
2.1 Procurement ....................................................................................................................... 9
2.1.1 Procurement for the Installation Works of MHPPs ..................................................... 9
2.1.2 Dalupan MHPP Procurement ...................................................................................... 9
2.1.3 Getsemane and Sto. Nino MHPPs Procurement ....................................................... 10
2.2 Construction / Installation ................................................................................................ 11
2.2.1 Construction and Installation of Dalupan MHPP ....................................................... 11
2.2.2 Construction and Installation of Getsemane MHPP.................................................. 12
2.3 Technical Capacity Building of CBO's Members for O & M Services ................................. 12
2.4 Identification of Local Sources for the Supply of Spare Parts ........................................... 13
3 PROVISION OF LEGAL FRAMEWORK AND PERMITS FOR OPERATION OF MHPPS .... 14
3.1 Renewable Energy Service Contract Application .............................................................. 14
3.1.1 Application Process ................................................................................................... 14
3.1.2 Dalupan MHPP Project, Municipality of Don Marcelino ........................................... 16
3.1.3 Getsemane MHPP Project, City of Bayugan .............................................................. 17
3.1.4 Sto. Niño MHPP Project, City of Bayugan .................................................................. 19
3.1.5 Conversion of the Pre-Development RESC Application to Commercial RESC ........... 19
3.2 Water Permit Application (WPA) for Electric Power Generation ..................................... 20
3.2.1 Documentary Requirements ..................................................................................... 20
Final Report Page iv
3.2.2 Application Process ................................................................................................... 20
3.2.3 Current Tasks and Activities ...................................................................................... 24
3.3 Net-Metering Contract ...................................................................................................... 25
3.3.1 Application Process ................................................................................................... 26
3.3.2 Recent Tasks and Activities ....................................................................................... 32
3.4 Certificate of Non-Coverage .............................................................................................. 33
3.4.1 CNC Application Process and Screening .................................................................... 34
4 FINANCIAL AND ECONOMIC ANALYSES OF THE RENEWABLE ENERGY FACILITIES ... 35
4.1 MHPP Dalupan – Business Model ..................................................................................... 35
4.1.1 Financial Evaluation ................................................................................................... 35
4.1.2 Financial Evaluation Results ...................................................................................... 38
4.1.3 Sensitivity Evaluation Results .................................................................................... 39
4.1.4 Conclusion ................................................................................................................. 41
4.2 MHPP Getsemane – Business Model ................................................................................ 41
4.2.1 Financial Evaluation ................................................................................................... 41
4.2.2 Financial Evaluation Results ...................................................................................... 44
4.2.3 Sensitivity Evaluation Results .................................................................................... 46
4.2.4 Conclusion ................................................................................................................. 47
4.3 Multipurpose (Corn) Mill – Business Model for RE appliances ......................................... 47
5 ESTABLISHMENT OF COMMUNITY BASED ORGANIZATIONS (CBO) .......................... 48
5.1 Establishment of Community Based Organizations (CBO) ................................................ 48
5.2 Capacity Building for CBO ................................................................................................. 51
5.2.1 Training and advisory service for CBO management ................................................ 51
5.2.2 Financial Capacity Building of CBO members ............................................................ 52
5.2.3 Financial Capacity Building of CBO Members for Fund Management and Livelihood /
Enterprise Development .................................................................................... 52
Final Report Page v
5.2.4 Introduction of microfinance institutions or credit facilities to support the capital
requirements of the new technology ................................................................ 53
6 ESTABLISHMENT AND INITIAL OPERATION AND MANAGEMENT OF THE REVOLVING
FUNDS FOR LIVELIHOOD ENHANCEMENT ................................................................. 56
6.1 Background ....................................................................................................................... 56
6.2 Pilot Testing ....................................................................................................................... 56
6.2.1 Approach ................................................................................................................... 56
6.2.2 Implementation of Pilot-Testing of the Revolving Funds .......................................... 56
6.2.3 Profiling of Potential Beneficiaries and Livelihoods for Pilot-Testing ....................... 61
6.2.4 Community Discussions of Approved Policies for Revolving Fund Management ..... 62
6.2.5 Pilot Testing Results .................................................................................................. 63
6.3 Revolving Fund Forecast ................................................................................................... 65
6.4 Training and Advisory Service for Revolving Fund Management ..................................... 71
6.5 Operation of Revolving Fund after Project Implementation ............................................ 72
7 EMPHA“I“ ON WOMEN’“ ROLE AND PARTICIPATION IN THE PROJECT .................... 73
8 KNOWLEDGE DISSEMINATION AND PREPARATORY WORK FOR SIMILAR RE PROJECTS
REPLICATION AND SCALING UP ................................................................................. 75
8.1 Replicable RE Projects ....................................................................................................... 75
8.1.1 List of Replicable Projects .......................................................................................... 75
8.1.2 Pilot Implementation of Shortlisted Projects ............................................................ 75
8.1.3 Findings in Project Implementation .......................................................................... 76
8.1.4 Replication in Other Sites .......................................................................................... 77
8.1.5 Challenges in Future Replication ............................................................................... 79
8.1.6 Replication by a Private Proponent ........................................................................... 80
8.1.7 List of Replicable Projects .......................................................................................... 83
8.2 Lessons Learnt ................................................................................................................... 83
8.3 Knowledge Dissemination Plan ......................................................................................... 84
9 PROCUREMENT, CONTRACTS AWARD AND DISBURSEMENT ................................... 85
Final Report Page vi
9.1 Procurement ..................................................................................................................... 85
9.1.1 Procurement of Technical Survey Services ............................................................... 85
9.1.2 Procurement of Two MHPPs ..................................................................................... 85
9.1.3 Procurement of NGO / MFI ....................................................................................... 85
10 PROJECT MANAGEMENT ........................................................................................... 88
10.1 Coordination with Stakeholders ....................................................................................... 88
10.1.1 National Electrification Administration (NEA) ........................................................... 88
10.1.2 Local Government Units (LGU) .................................................................................. 88
10.1.3 Electric Cooperatives ................................................................................................. 94
10.1.4 Department of Energy (DOE) ..................................................................................... 94
10.1.5 National Commission on Indigenous People (NCIP) .................................................. 94
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List of Annexes
Annex 1 Dalupan MHPP – Business Model
Annex 1-A Dalupan MHPP - Comparison of Projected Investment Cost and Actual Investment Cost
Annex 1-B Dalupan MHPP – Financial Evaluation
Annex 1-C Dalupan MHPP – Cash Flow Projections for Reserves Scenario
Annex 2
Getsemane MHPP – Business Model
Annex 2-A Getsemane MHPP - Comparison of Projected Investment Cost and Actual Investment
Cost
Annex 2-B Getsemane MHPP – Financial Evaluation
Annex 2-C Getsemane MHPP – Cash Flow Projections for Reserves Scenario
Annex 3
Business Plans for the operation of the Multipurpose (Corn) Mill
Annex 3-A Multipurpose (Corn) Mill – Business Plan – GAWA
Annex 3-B Multipurpose (Corn) Mill – Business Plan - DARECDA
Annex 3-C Multipurpose (Corn) Mill – Business Plan - KASAFA
Annex 4
Pilot Testing Schemes on Revolving Fund
Annex 4-A Pilot Testing Scheme on Revolving Fund for GAWA and KASAFA
Annex 4-B Pilot Testing Scheme on Revolving Fund for DARECDA
Annex 5
List of challenges in replication of projects
Annex 6
List of replicable projects
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List of Tables
Table 1: Summary table of project achievements ................................................................................ 2
Table 2: Associated Fees for RESC application .................................................................................... 16
Table 3: Associated Costs for Water Permit ....................................................................................... 23
Table 4: Requirements for RESC application ....................................................................................... 24
Table 5: Total Project Cost and Financing Plan (Barangay Dalupan) .................................................. 36
Table 6: Total Project Operating Expenses (Barangay Dalupan) ......................................................... 36
Table 7: Initial Year of Operations, 2016 prices (Barangay Dalupan) ................................................. 38
Table 8: Resulting Financial Indicators (Barangay Dalupan) ............................................................... 39
Table 9: Summary of Findings (Barangay Dalupan) ............................................................................ 40
Table 10: Total Project Cost and Financing Plan (Barangay Getsemane) ........................................... 42
Table 11: Total Project Operating Expenses (Barangay Getsemane) ................................................. 43
Table 12: Initial Year of Operations, 2016 Prices (Barangay Getsemane) .......................................... 45
Table 13: Resulting Financial Indicators (Barangay Getsemane) ........................................................ 45
Table 14: Summary of Findings (Barangay Getsemane) ..................................................................... 46
Table 15: Established Community-Based Organizations (CBOs) for the Project, 2014 ...................... 48
Table 16: MHPP Operators per Project Site ........................................................................................ 50
Table 17: Training-Workshops provided to the CBOs in the Three Project Sites, 2014 ..................... 51
Table 18: Steps and Procedures in Loan Processing for RF Pilot-Testing Implementation ................ 57
Table 19: DARECDA RF pilot testing loan package for farming and electricity-based micro-enterprise
household beneficiaries, Barangay Dalupan, Don Marcelino ................................... 57
Table 20: GAWA RF Pilot Testing Loan Package for Farming and Electricity-Based Micro-Enterprise
Household Beneficiaries, Barangay Getsemane, Bayugan City ................................. 59
Table 21: KASAFA RF Pilot Testing Loan Package for Farming and Electricity-Based Micro-Enterprise
Household Beneficiaries, Barangay Sto. Nino, Bayugan City .................................... 60
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Table 22: Roles, Functions, and Responsibilities in the RF Pilot Testing Implementation .................. 61
Table 23: Criteria for Selection of Household Beneficiaries of RF Pilot Testing Implementation ...... 62
Table 26: DARECDA, Project Income Statement ................................................................................. 67
Table 27: DARECDA, Projected Cash Flow .......................................................................................... 67
Table 28: DARECDA, Projected Balance Sheet .................................................................................... 68
Table 30: GAWA, Projected Cash Flow................................................................................................ 69
Table 31: GAWA, Projected Balance Sheet ......................................................................................... 69
Table 32: KASAFA, Projected Income Statement ................................................................................ 70
Table 33: KASAFA, Projected Cash Flow .............................................................................................. 70
Table 34: KASAFA, Projected Balance Sheet ....................................................................................... 71
Ta le : Ge de i di ato s o o e a d e ’s pa ti ipatio i the p oje t CBO ................... 74
Table 36: Actual Costs and Resulting Cash Flow Profile of Pilot Projects ........................................... 77
Table 37: Original Investment Costs and Updated Cash Flow Profile of Pilot Projects ...................... 78
Table 38: Experience in Pilot Projects ................................................................................................. 79
Table 39: Financing Plan ...................................................................................................................... 81
Table 40: Operating Expenses ............................................................................................................. 81
Table 41: Other Assumptions .............................................................................................................. 82
Table 42: Discount Rate of 7% ............................................................................................................ 83
Table 43: Coordination with the Local Government Units, January 2014 to August 2015................. 89
Table 44: Timeline and Milestones of FPIC Activities / Processes by NCIP XI and XIII (Caraga), 2014-
2015 ..................................................................................................................... 10-96
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List of Figures
Figure 1: Pre-Development RE Service Contract Application Process ................................................ 15
Figure 2: Net-Metering application scheme ....................................................................................... 31
Figure 3: CNC Application Process ...................................................................................................... 34
Figure 4: Organizational Structure of CBOs at Project Sites, 2014 ..................................................... 49
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List of Abbreviations
ADB Asian Development Bank
ALTERDEV Alterdev Services Foundation Inc.
ASELCO Agusan del Sur Electric Cooperative
BIR Bureau of Internal Revenue
BLGU barangay local government unit
BOD board of directors
CPDO City Planning and Development Office/Officer
CAPEX capital expenditure
CBO community based organization
CENRO Community Environmental and Natural Resources Office
CFEI certificate of final electrical inspection
CLGU city local government unit
CNC certificate of non-coverage
COC certificate of compliance
CPI consumer price index
CQS Consultant’s qualification selection
CT consultant team
DA Department of Agriculture
DAO department administrative order
DARECDA Dalupan Renewable Energy Community Development Association
DAS distribution asset study
DASURECO Davao del Sur Electric Cooperative
DENR Department of Environment and Natural Resources
DIS distribution impact study
DOE Department of Energy
DOE ITMS DOE Information Technology and Management Services
DOE REMB Department of Energy Renewable Energy Management Bureau
DoLE Department of Labor and Employment
DOST Department of Science and Technology
DPRDI Davao Provinces Rural Development Institute, Inc.
DPWH Department of Public Works and Highways
DSOAR distribution services and open access rules
DTI Department of Trade and Industry
DTL deputy team leader
DU distribution utility
EC electric cooperative
ECA environmentally critical areas
ECC environmental compliance certificate
ECP environmentally critical projects
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EDO Regional Executive Director's Office
EIS environmental impact statement
EOI expression of interest
ERC Energy Regulatory Commission
FBI field-based investigation
FIT feed-in tariff
FPIC free and prior informed consent
GA general assembly
GAWA Getsemane Agricultural Workers Association
IFMA Integrated Forest Management Agreement
IP indigenous peoples
IPRA indigenous people rights act
IRR internal rate of return
ITH income tax holiday
ITMS Information Technology Management Service
LAPS Land Analytics and Planning Solutions
LGU local government unit
MFI NGO micro-financing institution / non-government organization
MHPP micro hydropower plant
MLGU municipal local government unit
MOA memorandum of agreement
MOU memorandum of understanding
MPDO Municipal Planning and Development Office/ Officer
MRDP Mindanao Rural Development Program
NCIP National Commission on Indigenous Peoples
NEA National Electrification Administration
NIA National Irrigation Administration
NIPAS National Integrated Protected Areas System
NTP notice to proceed
NWRB National Water Resources Board
O&M operation and maintenance
OCT original certificate of title
OJT on the job training
OPEX operation expenses
PAMB Protected Area Management Board
PCA Philippine Coconut Authority
PEE professional electrical engineer
PHI Philippines
QE qualified end-users
RA republic act
RE renewable energy
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RESC Renewable Energy Service Contract
RF revolving fund
RFQ request for quotations
RNF RNF Industries Inc.
SEC Securities and Exchange Commission
SSS Social Security System
TA technical assistance
TCT transfer certificate of title
TOR terms of reference
TWG technical working group
UDP upland development program
VAT value added tax
WD water district
WFP work and financial plan
WPA water permit application
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EXECUTIVE SUMMARY
The Asian Development Bank (ADB) has assigned the Joint Venture of Lahmeyer International GmbH
(as lead), Lahmeyer Hydroprojekt GmbH and Lahmeyer IDP Consult Inc. as Consultant for the Rural
Community-Based Renewable Energy Development in Mindanao Project, a technical assistance to
develop viable business models for sustainable livelihood development utilizing renewable energy in
the Caraga and Davao regions of Mindanao, Philippines and to support the National Electrification
Administration (NEA) in its efforts in providing electricity in the rural areas of the country.
The TA provided consultancy services in three Barangays ((i) Barangay Dalupan, Don Marcelino,
Davao del Sur, (ii) Barangay Getsemane in Bayugan City, Agusan Del Sur, and (iii) Barangay St. Nino
in Bayugan City, Agusan Del Sur) with the establishment and capacity building of community-based
organizations (CBOs) in all three project areas, the development of livelihood enterprises/activities,
the establishment and initial management of financial tools (revolving fund) and the procurement
and installation of two micro hydropower plants in Barangay Dalupan (25kW) and in Barangay
Getsemane (30kW). A third MHPP to supply Barangay St. Nino (15 kW) in Bayugan City, Agusan Del
Sur could not be realized due to the extremely high bids and loss of the hydraulic potential of the
site caused by a landslide in the area.
The MHPPs are to be operated under the Net-Metering Agreement which is herewith implemented
for the first time for micro hydropower plants in the Philippines. This allows the communities to use
their own low cost generated power for their business activities and to sell excess power from the
MHPPs to the Electric Cooperatives (ECs). For this reason the TA were closely working with the
concerned government agencies, the DOE and the ECs to process all necessary permits to allow the
communities to operate the MHPPs. The generated revenue will be used to cover the operation and
maintenance costs to ensure a sustainable setup of the installed equipment and for the support of
livelihood measures within the community.
The CBOs and their members were trained in the operation and management of the power plants
and revolving funds. Together with the CBOs the TA developed a number of sustainable business
activities and provided capacity building to improve the livelihood conditions and to expand the
livelihood options to benefit women, men and their households in the target communities. Special
focus was given on the involvement of woman. Two NGOs that specializes in revolving funds
operation, community organization, and livelihood development were engaged to establish and
initially manage the RF and to implement capacity building programs for the CBOs.
The Revolving Funds were introduced to the communities by implementing a Pilot Testing Scheme.
Under the monitoring and supervision of the NGOs, selected families learned to use the financial
possibilities of using small credit tools. The CBOs had the chance to implement for the first time a
one cycle of the revolving fund.
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Furthermore, the TA developed a Knowledge Dissemination Kit to widely spread the experiences and
lessons learnt under this project and to support future activities in the development of micro
hydropower schemes under the Net-Metering agreement towards the sustainable improvement of
living conditions in rural areas in the Philippines.
The following table gives an overview of the project’s detailed tasks and outputs and the status of
accomplishment for the desired results:
Table 1: Summary table of project achievements
OUTPUT 1 – Renewable energy resource and demand assessment Contents /
Pages / Annex
(i) assess energy resources
(on grid and off grid);
(ii) review available appro-
priate renewable energy
technologies and business
models;
(iii) review infrastructure
and private sector capacity,
e.g., manufacturing capaci-
ties/capabilities and
transport infrastructure;
(iv) develop service deliv-
ery mechanism;
(v) develop a socioeco-
nomic profile of beneficiar-
ies, identify indigenous
people, conduct gender
analysis, and prepare a
gender action plan;
(vi) assess end user needs
for various energy forms
for different uses, the tech-
nology and supply mecha-
nisms for the different end
Output 1 was done by a different Consultant in
2012.
The aim of this TA was to identify 10-20 sites in
Davao (Region XI) and Caraga (Region XIII) re-
gions in Mindanao where distributed local RE-
based rural electrification is viable.
The report can
be downloaded
from the ADB
website.
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user groups, and the asso-
ciated poverty and gender
implications; and
(vii) develop a model for fi-
nancing and innovative
payment schemes
OUTPUT 2 – Pilot Renewable energy projects Contents /
Pages / Annex
Sub-output 2.1:
Construct and install three
demonstration renewable
energy (MHPP) systems
Installation of two MHPPs (Getsemane and Da-
lupan), both are in operation
The procurement and installation of the pro-
posed Sto. Nino MHPP was put on hold due to
budget restrictions and destruction of the hy-
draulic potential by landslide.
Chapter 2.2
Pages:
11 – 12
Sub-output 2.2:
O ga ize people’s organi-
zations to operate and
manage these power plant
systems
Establishment of CBOs in all three project sites
Strengthening the CBO through several capacity
building activities
Chapter 5.1
Pages:
47 – 50
Sub-output 2.3:
Train technicians and oper-
ators, at least 20% of whom
should be women
Development of trainings concept
On the job training during installation and con-
struction works for candidates
Implementation of technical trainings for opera-
tor and management
4 of 15 (26 %) operators are women
Chapter 2.3
Page:
12 – 13
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Sub-output 2.4:
Conduct financial and eco-
nomic analyses of the re-
newable energy facilities
Financial and economic assessment of each of
the MHPPs
Assessment of the business environment
Development of business plans for Multipurpose
(Corn) Mill Operation
Chapter 4
Pages:
34 – 46
Sub-output 2.5:
Provide and facilitate the
legal framework and per-
mits to ensure the CBOs to
operate the MHP and sell
the electricity generated
from MHP to ECs with all
the local and national agen-
ies’ li e si g e ui e-ments
Facilitation of all necessary legal requirements
for the operation of the MHPPs including RESC
and Net-Metering Agreement.
Chapter 3
Pages:
14 – 33
Sub-output 2.6:
Identify local sources for
the supply of spare parts
Local sources for the supply of spare parts are
identified.
Chapter 2.4
Page: 13
OUTPUT 3 – Productive Use of Renewable Energy
Sub-output 3.1:
Build capacity of CBOs on
small enterprise develop-
ment;
Development of training program in cooperation
with NGO / MFI
Implementation of trainings program
Chapter 5.2
Pages:
50 – 54
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Sub-output 3.2:
Transfer technology on
productive uses of energy,
with inputs
Introduction of Multi-Purpose (Corn) Mill
Chapter 4.3
Page:
46
Sub-output 3.3:
Enhance productivity and
livelihoods through tech-
nology assistance, busi-
ness advice, value chain,
and market linkages
Introduction of Multi-Purpose (Corn) Mill
Chapter 4.3
Page:
46
Sub-output 3.4:
Provide links to micro-
finance institutions or
credit facilities to support
the capital requirements
of the new technology
and/or for value addition;
and
Three micro-finance institutions were identified
which provide financial services to communities in
the project regions.
Chapter 5.2.4
Page:
52 – 54
Sub-output 3.5:
Ensure that at least of half
of beneficiaries will be
women or households
headed by women.
Almost 50% of the CBO members and participants
of the capacity building measures are women.
The consideration of gender aspects was a contin-
uously process of the project work.
Chapter 7
Page:
72 – 73
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OUTPUT 4 – Establishment of CBOs and revolving fund for livelihood enhancement.
Sub-output 4.1:
Set up and train local com-
munity based organiza-
tions
Implementation of training programs for finan-
cial and administrative capacity building by
NGOs
Chapter 6.4
Page:
70
Sub-output 4.2:
Set up and operate revolv-
ing funds
Installation of a sustainable financing scheme
Start of revolving fund operation with pilot im-
plementation by selected households
Chapter 6
Pages:
55 – 71
OUTPUT 5 – Knowledge dissemination and ppreparatory work for similar RE projects replication
and scaling up.
Sub-output 5.1:
Develop knowledge kit
(business models) and
knowledge dissemination
plan through work-
shops, training, and web-
site
The knowledge kit is to be produced in a hard copy
and a digital soft copy version.
Chapter 8.3
Pages:
83
Sub-output 5.2:
Prepare a list of similar
project sites with invest-
ment plan for replication
and scaling up RE develop-
ment in other locations
Completed
Chapter 8.1
Pages:
74 – 82
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1 PROJECT OBJECTIVES AND OVERVIEW OF TASKS
1.1 Introduction
The Asian Development Bank (ADB) is currently at the last stage of implementing the Technical
Assistance (TA) 7781: Community-Based Renewable Energy Development in Mindanao Project (with
the National Electrification Administration (NEA) as Executing Agency. The purpose of this TA Project
is to support the Philippine Government to increase access to energy in rural areas in Mindanao. The
expected outcome of the Project is viable business models for livelihood development using
renewable energy in the Caraga and Davao regions of Mindanao.
The TA is to install renewable energy pilot system (micro hydropower) and establish a community-
based organization (CBO) such as a cooperative in each of the three proposed project barangays to
help implement the project and ensure the long-term sustainability of the micro hydropower system
and its benefit. The TA has also created a revolving fund for livelihood enhancement that will be
initially operated by a microfinance organization but turned over eventually to local CBOs in each of
the three barangay communities identified in the pilot project area. The fund is to provide financial
assistance to help the project beneficiaries using the energy productively to generate income, which
will pay for the energy service and the maintenance of the pilot facilities.
Aside from NEA, the other national and regional government agencies involved in the project are the
Department of Energy (DOE), the National Commission on Indigenous Peoples (NCIP), the Energy
Regulation Commission (ERC), the Department of Environment and Natural Resources (DENR), and
the Mindanao Development Authority (MinDA).
The Consultant engaged by the ADB is the Joint Venture of Lahmeyer International GmbH, Lahmeyer
Hydroprojekt GmbH, and Lahmeyer IDP Consult Inc., in association with SIBAT Inc. (Wellspring of
Science and Technology), which is one of the pioneers in community-based Renewable Energy
particularly in the development of microhydro power plants (MHPPs). The TA project is to be
implemented over a 20-month period, from January 27, 2014 to September 30, 2015.
A participatory approach was adopted, involving close consultation with key stakeholders and target
communities, since it is important that facilities developed during the implementation of the Project
are within the management capabilities of the implementing agencies and community organizations
responsible for sustainable operation and maintenance. The Project was prepared in accordance
with relevant national legal requirements and standards, and ADB requirements, policies, and
guidelines.
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1.2 Background
The harnessing and utilization of renewable energy comprises a critical component of the
go e e t’s st ateg to p o ide e e g suppl fo the ou t . With the e a t e t of the Renewable Energy Act (RA 9513) in 2008, the DOE has been formulating program and projects to
promote RE technologies as competitive energy options and maximize the use of RE potentials.
In Year 2010, a TA Project from the ADB namely TA-7781 (PHI): Rural Community-Based Renewable
Energy Development in Mindanao was developed in collaboration with the DOE and NEA.
Preliminary activities for this TA are the site validation and a stakeholder workshop and detailed
technical evaluation of the MHPP and socio-economic livelihood assessment in the proposed project
sites in Bayugan City in Agusan del Sur and Don Marcelino in Davao del Sur.
1.3 Objective
The general objective is to develop viable business models for livelihood development using
renewable energy in Mindanao.
1.4 Implementation
Based on the objective, the Consultant identified project activities and sub-activities, which were
implemented in various packages and those, are as follows:
1. Pilot Renewable Energy Projects. This package entailed the acquisition and installation of
two micro-hydro systems and eventually their operation and maintenance (O&M); the
identification and establishment of the legal entities that will operate and manage the RE
systems; and carrying-out analyses of the renewable energy facilities.
2. Productive Use of Renewable Energy. This package pertains to the institutional component
of the project including the engagement of MFIs or NGOs and ensuring an active role from
the o e populatio of the o u ities.
3. Establishment of CBOs and Revolving Fund for Livelihood Enhancement. This package covers
the capacity building in the CBOs.
4. Knowledge Dissemination and Preparatory Work for RE Projects Replication and Scaling-Up.
This package addresses the general objective of the TA by documenting the entire process
and coming up with a tool that will be adopted and replicated.
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2 CONSTRUCTION AND INSTALLATION OF DEMONSTRATION
RENEWABLE ENERGY (MHPP) SYSTEMS
2.1 Procurement
2.1.1 Procurement for the Installation Works of MHPPs
Three sites were recommended for installation of MHPPs, namely, Barangay (Brgy.) Dalupan in Don
Marcelino, Davao del Sur and Barangay Getsemane and Barangay Sto. Nino in Bayugan City, Agusan
del Sur. However, due to budget constraint, the sites were reduced to two, namely Brgy. Dalupan
and Brgy. Getsemane. The installed subprojects are referred to as Dalupan MHPP and Getsemane
MHPP.
Procurement commenced about the middle of 2014, May 28, 2014 to be exact. Requests for
Quotations were sent to potential contractors with deadline of submission set on June 27, 2014. It
was also required that contractors inspect the sites and attend a pre bid conference held to inform
them of the project bid requirements and to gather clarificatory questions on the projects. The pre-
bid conference was held in Bayugan City attended by representatives of interested contractors.
Participation of LGU officials in the sites was noted. Various concerns were raised by the contractors.
Some issues were clarified during the meeting while others had to be resolved at a later time.
Bid submission period had to be extended upon the requests of interested contractors who had yet
to inspect the site. Inspecting the sites was stalled due to the occurrence of armed encounters near
the two barangay sites in Bayugan City between the Philippine Army and Communist armed rebels.
Contractors were accordingly notified of the extensions thus, giving them sufficient time to prepare
respective quotations.
2.1.2 Dalupan MHPP Procurement
Three bidders namely, Triple V Industrial Services (Triple V), RNF Industries Inc. (RNF), and Petco
Renergy Corp. (Petco), submitted their respective quotations. However, quotations were incomplete
or non-compliant. Of the three bidders, Triple V Industrial Services Inc. was the least incomplete as
it still needed to send detailed technical information and staff requirements. Although bid amounts
were submitted, the other bids were substantially non-compliant for failure to provide vital bid
documents. All the quotations exceeded the budget for the Brgy. Dalupan MHPP subproject.
Evaluation of the technical aspects of the Triple V and RNF bid proposals and documents was
commenced in July 2014. Bid evaluation results showed that Triple V was the only contractor that
complied with the requirements by submitting price quotation and filled up forms and documents.
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During the month of August 2014, negotiations with Triple V were conducted by the Consultant.
After the submission by Triple V of revised bid documents and a series of reviews and revisions, the
Dalupan MHPP Installation Project Contract was signed on September 15, 2014, with the following
salient features.
1) Contract period – Five months or 150 calendar days
2) Contract amount – PHP 9,483,003.15
3) Advance payment guarantee equivalent to 15% of contract amount.
4) Performance security equivalent to 50% of contract amount.
Notice to proceed was sent on September 26, 2014 to Triple V giving it five months to complete the
project or until February 28, 2015. Triple V commenced mobilization works immediately. Triple V
complied with the contract requirement on the submission of an advance payment guarantee,
Pe fo a e Bo d a d Co t a to ’s All Risk I su a e. Triple V sent its Billing Statements during the
progress of the works. Towards late February 2015, it was agreed that the design of the powerhouse
will be revised. Accordingly, an Amendment to the Contract was prepared and agreed upon.
In the middle of March 2015, the imported MHPP equipment arrived from Indonesia and was
brought on March 30, 2015 at the Brgy. Dalupan site. Triple requested for extension of one month
from February 28, 2015 which was granted. Additional extension was also requested and granted
considering that the equipment was already being installed. The project has been completed and
ready for turnover to the community based organization set up in the area.
2.1.3 Getsemane and Sto. Nino MHPPs Procurement
As mentioned above in 2.1.1, the submission of quotations for the two sites of Brgy. Getsemane and
Sto. Nino, was extended to July 17, 2014. After receiving and evaluating all quotations from
contractors and for purposes of expediency, it was decided that the contractor to be engaged will be
the same contractor (Triple V) for the Dalupan MHPP Installation Project. It was also concluded that
the budget allocated for the two sites of Getsemane and Sto Nino would not be sufficient to pay for
the MHPP subprojects. Accordingly, only the Getsemane MHPP subproject was pursued instead of
the two subprojects.
In November 2014, the Consultant gathered and determined from Triple V its final bill of quantities,
data and attachments to the MHPP contract. Triple V was concerned about the delay due to the
possible late delivery by foreign supplier of the imported equipment and a delay in completion of
civil works due to the very difficult physical/terrain conditions in Brgy. Getsemane as well as the
inaccessibility of the construction site due to the unavailability of roads in much of the barangay. The
Consultant considered the concerns of the contractor and accordingly incorporated in Section 3 of
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the MHPP Contract a provision on an extension of the completion time by thirty days from end of
the original period.
On November 24, 2014, the Getsemane MHPP Installation Project Contract was signed. The Notice
to Proceed (NTP) was also issued with the start date set on November 24, 2014 and with a completion
period of four months or up to March 24, 2015. On December 13, 2014, having complied with
documentary requirements for the advance payment and performance guarantee, the advance
payment was released to Triple V on January 22, 2015, after Triple V was not able to mobilize due to
consecutive typhoons (Hagupit and Seniang) that hit the southern Philippines and caused destruction
and landslide to the vicinity of the MHPP site. Triple V reported that as per information from Brgy.
Getsemane, landslides occurred on some areas leading to their barangay due to Tropical Storm
Seniang. The road was not passable even for motorcycle & carabaos. Three areas in the vicinity of
the site were greatly damaged. Clearing operations of the affected areas had to be conducted before
installation works can be commenced.
While the completion of the MHPP project was supposed to be on March 24, 2015 with an allowed
extension of one month, the unexpected damage and destruction caused by the two typhoons
resulted in considerable delay in the installation works necessitating further extension of
completion. The imported equipment finally arrived on July 15, 2015. The project is close to
completion.
2.2 Construction / Installation
The Consultant managed to install two MHPPs at (i) Brgy. Dalupan, Don Marcelino, Davao del Sur
(MHP 25kW) and (ii) in Barangay Getsemane (MHP 30kW) in Bayugan City, Agusan Del Sur. The
installation was supervised by the Electro-Mechanical expert and the Team Leader.
2.2.1 Construction and Installation of Dalupan MHPP
The installation of the Dalupan MHPP started in October 2014 and was scheduled to be finalized
after five months in January 2015. The Contractor was in the position to execute the construction
works of intake, waterway and power house almost according to the agreed timetable. The civil work
has been completed by the end of February 2015.However the installation of the equipment was
delayed due to the late shipment to the Philippines by the supplier. Finally the system is running on
single phase mode and is supplying some areas of Barangay Dalupan (particularly Sitio Cunalom) as
Single Standing Grid since April 2015 due to the three-phase line connection cannot be finalized
before the end of the project implementation time end of September 2015 by DASURECO. The
official inauguration of the Dalupan MHPP was on 29 August 2015 under participation of the
stakeholders including NEA, ADB, LGU Don Marcelino and the Consultant.
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2.2.2 Construction and Installation of Getsemane MHPP
The Consultant and its Contractor were facing different challenges during the construction of the
Getsemane MHPP. Especially the very difficult road condition and as a result the limited accessibility
to the site were having a big influence on the construction process. The transportation of material
required more time and effort and is one of the reasons why there was only limited response to that
tender. It resulted in a long procurement process and the installation works started not before end
of November 2014. Short after the start of the construction the work was interrupted in December
2015 due to high water level of the River Jordan and the very difficult transport condition as a result
of the heavy rain events the last two months. The access road to the Barangay was partially not
passable, materials could only be transported by the use of Carabao.
Finally the construction and installation of Getsemane MHPP will be finished in September 2015.
That time, ASELCO will also have extended the one-phase grid connection for the MHPP and the
system will be in operation before end of the project. The inauguration is planned end of September
2015.
2.3 Technical Capacity Building of CBO's Members for O & M Services
The identified operators and technicians, 25% of them are women actively participated in the
construction and installation of the MHPP. In the construction of every component of the MHPP
system, they were required to join the workforce as part of their on the job training (OJT). Every
week, two operators were on duty for the actual construction and they are being taught on every
aspect and component of the MHPP system.
Trainings for the operators of the Dalupan MHPP were conducted last April 20, 2015 and August 9,
2015. It was attended by 17 participants, four women and 13 men. Out of the 17 participants, eight
of them are already identified as operators by the CBO. Nine of them are new and considered as
second liner operators. The trainer discussed every component of the MHPP system and its function.
From the weir site up to every household connected to the system. They were also taught on the
operation and proper maintenance of every component. It was also discussed on what to do in case
trouble will occur during operation. They were taught on what to check for every situation that will
occur. They were also taught safety procedures.
After the lecture, actual operation of the MHPP plant by the operators conducted. They were given
the task to start up and to shut down the plant. They were also instructed to monitor the output on
the panel board and to record every hour the different parameters such as voltage, current and
frequency of the system. This will help them to locate possible causes of trouble when there is a
difference on the normal output during operation.
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Trainings on the operators of Getsemane MHPP were conducted last May 12, 2015. It was attended
by 17 participants, five women and 12 men. These were composed of eight operators and nine CBO
officers.
The trainer discussed every component of the MHPP system and its function. From the weir site up
to every household connected to the system. They were also taught on the operation and proper
maintenance of every component. It was also discussed on what to do in case trouble will occur
during operation. They were taught on what to check for every situation will occur. They were also
taught safety procedures. Actual operation of the MHPP plant by the operators not yet done and
was scheduled within this month when the plant will operate.
2.4 Identification of Local Sources for the Supply of Spare Parts
Spare parts of the MHPP are available locally. In Davao City, The Davao Diamond and Industrial
Services are already supplying most of the spare parts of other MHPP projects in Mindanao. The
contractor, Triple V Industrial Services also has the capacity to troubleshoot the components of the
electro-mechanical equipment and has link to supplier abroad for the special parts such as the
mother board of the electronic load controller. They can also fabricate cross-flow turbines.
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3 PROVISION OF LEGAL FRAMEWORK AND PERMITS FOR OPERATION
OF MHPPS
3.1 Renewable Energy Service Contract Application
3.1.1 Application Process
The application process to secure Renewable Energy Service Contracts (RESC) for the Bayugan and
Don Marcelino project areas was initiated during the first week of August 2014, through the
submission of documentary requirements to the DOE. The application process for the pre-
development stage of the RESC has been presented in Error! Reference source not found.. Complete
sets of the RESC applications for each project area were collated, prepared, and packaged by the
Project Team containing the following pertinent forms and supporting documents:
a. Letter of Intent;
b. Blocking Map (Illustrating the proposed location of the project site as indicated by GPS
coordinates using the PRS92 datum);
c. RESC Application Form;
d. Authorization/Certification from Municipal/City LGUs allowing Lahmeyer International
to negotiate and apply for a RESC in behalf of the Municipal/City LGUs as project
proponents;
e. Profile of Bayugan and Don Marcelino, including a listing of all elected LGU officials;
f. Profile of Lahmeyer International, including the following documents:
List of Technical Consultants;
List of Equipment; and
List of On-going and Completed Energy-Related Projects.
g. Work Program with Financial Commitments;
h. Certification from the Asian Development Bank (ADB) attesting to the provision of
financial support through a policy and advisory technical assistance grant;
i. Projected Cash Flow Statements during the Pre-Development Stage;
j. Feasibility Study and Preliminary Engineering Design; and
k. MOU and/or LGU Endorsement of the Proposed Renewable Energy Project.
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After submission of the RESC applications, the Project Team constantly facilitated the processing of
each application and coordinating with the DOE to expedite the approval and release of the RESC.
The DOE Information Technology Management Service (ITMS) verified and validated that none of
the proposed RESC applications associated with the three project areas overlapped with other
energy resource applications or contracted areas and may proceed to the next stage of the
application process pending the following: (i) payment of application and processing fees for the
Dalupan MHPP Project; (ii) address issues in relation with geopolitical jurisdiction and the coverage
of the proposed site for Getsemane MHPP Project within an area prescribed in the Integrated Forest
Management Agreement (IFMA); and (iii) address issues in relation with the coverage of the
proposed site for the Sto. Niño MHPP Project as part of the National Integrated Protected Areas
System (NIPAS).
Figure 1: Pre-Development RE Service Contract Application Process
Renewable Energy Service Contract (RESC) Application Submitted to the Office of the
DOE Secretary (OSEC)
OSEC endorses RESC application to DOE Renewable Energy Review and
Evaluation Committee
DOE Renewable Energy Review and Evaluation Committee transmits to the Information Technology Management Services (ITMS) for verification and
validation of proposed project site for overlaps with other energy resource
applications or contracted areas
OSEC issues order of payment (Application Fee + Processing Fee)
Proposed project
area valid?
Paid?
OSEC Legal Division and DOE Renewable Energy Review and Evaluation Committee evaluates compliance to legal requirements
Legal requirements
complied?
DOE Renewable Energy Review and Evaluation Committee evaluates
compliance to technical and financial requirements
Compliant to all
requirements?
DOE Renewable Energy Review and Evaluation Committee recommends
approval and awarding of RESC to OSEC
DOE Renewable Energy Review and Evaluation Committee and OSEC
advises schedule for signing RESC
OSEC and Project Proponent signs RESC
Issuance of RESC
NO
YES
YES
YES
YES
DOE Issues Notice
of Disqualification
NO
NO NO
Conversion of RESC (Pre-Development Stage) to RESC (Commercialization Stage)
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The subsequent sections outline the activities, tasks, issues, associated fees, and steps taken by the
Project Team in order to facilitate the processing of the RESC applications for the three (later on two)
project sites and resolve problems and issues arising from the application process.
Table 2: Associated Fees for RESC application
FINANCIAL COMMITMENT FOR RE SERVICE CONTRACTS
Resource
Application
Fee
(One Time
Fee)
Processing Fee
(One Time Fee)
Development
Assistance
(One Time Fee)
Training Fund
(Annual)
Signature Bonus
(One Time Fee)
Hydropower PHP1,000.00 Pre-
Development:
PHP23,850.00
Development:
PHP23,850.00
New Certificate
of Registration
(Transfer):
PHP4,350.00
Pre-
development
and
Development
Stages:
PHP50,000.00
(10MW and
below)
PHP100,000.00
(10MW –
50MW)
PHP500,000.00
(50MW and
impounding
hydro)
Pre-
development
and
Development
Stages:
PHP50,000.00
(10MW and
below)
PHP100,000.00
(10MW –
50MW)
PHP500,000.00
(50MW and
impounding
hydro)
Pre-
development
and
Development
Stages:
PHP50,000.00
(10MW and
below)
PHP100,000.00
(10MW –
50MW)
PHP500,000.00
(50MW and
impounding
hydro)
3.1.2 Dalupan MHPP Project, Municipality of Don Marcelino
The DOE issued an Order of Payment for the Dalupan MHPP project during the last quarter of 2014,
containing the assessed amount necessary to cover the cost of RESC application and processing fees.
The Municipality of Don Marcelino agreed to assume the payment of fees, associated with the RESC
application amounting to PHP 24,850.00. The LGU finalized the request for fund disbursement and
initially anticipated the release of funds in December 2014. However, the funding was eventually
released early January 2015 due to delays encountered in processing fund disbursements during the
onset of the holiday season. Further issues arose when the Municipality of Don Marcelino attempted
to pay the application and processing fees to the DOE Mindanao Regional Office in February 2015.
The DOE Mindanao Regional Office did not receive the payment recommended that the Municipality
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of Don Marcelino verify and confirm the need to pay for the RESC application and processing fees
with the DOE in Manila due to the possibility that the payment of fees may be waived considering
the relatively small size and nature of the project.
The Project Team coordinated and confirmed with the DOE that the Municipality of Don Marcelino
must pay for the RESC application and processing fees due to the possibility that the MHPP generated
electric power may be sold commercially to the local electric cooperative after the close of the
project through Power Supply Agreements. The DOE-OSEC assured coordination and arranged with
the DOE Mindanao Regional Office to receive the payment from the Municipality of Don Marcelino.
The payment of processing and application fees for the RESC was finalized during the last week of
March 2015.
Due to miscommunication with the DOE Mindanao Regional Office and the Municipality of Don
Marcelino regarding the forwarding of the RESC payment details, the official receipt was forwarded
to the DOE in Manila in May 2015. Actual RESC processing and evaluation started during the last
week of May 2015 and has been expected to be finalized within 45 days.
As of July 2015, the RESC for the Dalupan MHPP Project has completed legal evaluation conducted
by the DOE Legal Office, except for a request for additional documentation showing Sangguniang
Bayan approval for the LGU to exercise corporate powers. In compliance to the request of the DOE
Legal Office, the Project Team provided a copy of the Sangguniang Bayan resolution allowing the
LGU to sign a Memorandum of Understanding (MOU) with the ADB, NEA, and the Davao del Sur
Electric Cooperative (DASURECO) as evidence of Sangguniang Bayan approval for the LGU to exercise
corporate powers.
The DOE Legal Office has forwarded the RESC Application to the DOE RE Management Bureau (DOE-
REMB) for technical evaluation during the last week of July 2015. The technical evaluation has been
on-going and now delayed by the need for the REMB to verify that no conflict exists in the use of
water resource for the MHPP project and has not provided any timeline for the completion of the
technical evaluation.
3.1.3 Getsemane MHPP Project, City of Bayugan
In addition to verifying and validating any potential overlap of proposed project areas with other
RESC applications or existing contracted areas for the development and utilization of energy
resources, the DOE-ITMS has determined the possible coverage of the proposed Getsemane MHPP
project site within a specified area stipulated by an Integrated Forest Management Agreement
(IFMA). The DOE recommended further coordination with the DENR and requested additional
documentary requirements to ascertain compliance with Executive Order No. 23, Series of 2011. In
addition to issues regarding the IFMA coverage, the DOE-ITMS further requested additional
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documents certifying that the proposed project site falls within the political and geographical
boundaries of the City of Bayugan. Records and data of the DOE-ITMS show the proposed location
of the project site falling within the political and geographic boundaries of the Municipality of
Prosperidad, Agusan del Sur.
The Project Team and the City Planning Office initiated coordination and consultation with the DENR
Community Environment and Natural Resources Office (DENR-CENRO) in October 2014 in order to
resolve issues asserted by the DOE. Based on data provided by the DENR-CENRO through written
correspondence in November 2014, the proposed location of the Getsemane MHPP project falls
within the political and geographical boundary of the City of Bayugan and reveals no record of any
IFMA covering the area.
The Project Team has submitted the additional documents and data provided by DENR-CENRO for
further evaluation and assessment by the DOE. The DOE-ITMS has finalized the verification and
validation based on the submitted documents and transmitted the official correspondence from DOE
Office of the Secretary (OSEC) during the last week of February 2015 allowing continuation of the
application process as well as the notification for payment for application and processing fees.
The City of Bayugan agreed to assume the payment of fees associated with the RESC application
amounting to PHP 24,850.00 and finalized the request for fund disbursement in April 2015. Payment
was made by the LGU during the first week of June 2015. Actual RESC processing and evaluation has
been expected to be finalized within 45 days.
As of July 2015, the RESC for the Getsemane MHPP Project has completed legal evaluation conducted
by the DOE Legal Office, except for a request for additional documentation showing Sangguniang
Panglungsod approval for the LGU to exercise corporate powers. In compliance to the request of the
DOE Legal Office, the Project Team provided a copy of the Sangguniang Panglungsod resolution
allowing the LGU to sign a Memorandum of Understanding (MOU with the ADB, National
Electrification Administration (NEA, and the Agusan del Sur Electric Cooperative (ASELCO) as
evidence of Sangguniang Panglungsod approval for the LGU to exercise corporate powers.
As with the Dalupan MHPP Project, the DOE Legal Office has forwarded the RESC Application to the
DOE RE Management Bureau (DOE-REMB) for technical evaluation during the last week of July 2015.
The technical evaluation has been on-going and now delayed by the need for the REMB to verify that
no conflict exists in the use of water resource for the MHPP project and has not provided any timeline
for the completion of the technical evaluation.
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3.1.4 Sto. Niño MHPP Project, City of Bayugan
As with the issues facing the Getsemane MHPP Project, the DOE-ITMS has determined the coverage
of the proposed Sto. Niño MHPP project site within an area stipulated under the National Integrated
Protected Areas System (NIPAS). The DOE recommended further coordination with the DENR and
requested additional documentary requirements to ascertain compliance with Republic Act No.
7586.
Consultation and coordination with the DENR-CENRO in October 2014 confirmed the coverage and
inclusion of the Sto. Niño MHPP project site in the Andanan Watershed Forest Reserve, created
under Presidential Proclamation No. 734 dated 29 May 1991 and serves as one of the initial
components of NIPAS. Management of the watershed area has been assigned to the Protected Area
Management Board (PAMB) pursuant to DAO No. 2008-26, Rule No. 12. Pursuant to existing
guidelines of the DENR, the DENR-CENRO recommended that the Project Team submit a project
proposal to PAMB, containing a request for a resolution allowing the implementation of the Sto. Niño
MHPP project within the proclaimed watershed reserve, in addition to the required Certificate of
Non-Coverage.
NOTE: The deployment of the Sto. Niño MHPP has been deferred. Coordination with concerned
stakeholders, particularly with the DOE, NWRB, and the DENR has been initiated by the Project Team
during the last week of February 2015 to communicate the deferment of the project.
3.1.5 Conversion of the Pre-Development RESC Application to Commercial RESC
Based on the Implementing Rules and Regulations of Republic Act No. 9513 (Renewable Energy Act),
the development or commercial stage RESC involves the production or utilization of RE resources,
including the construction and installation of relevant facilities up to the operation phase of any RE
facility. In the case of the Dalupan and Getsemane MHPP Projects, wherein the MHPP facility has
already been constructed, the pre-development RESC must be converted into a development or
commercial RESC to be compliant with the regulations prescribed by the Renewable Energy Act.
In order to convert the pre-development RESC, the project proponents must declare commerciality,
achieve milestones and benchmarks provided under Department Order No. DO2013-08-0011, and
apply for a conversion of the RESC prior to expiration. The Declaration of Commerciality shall be
based on the feasibility studies and/or exploration activities conducted by the project.
The project proponent will be expected to secure permits, clearances or certificates such as, but not
limited to Certificate of Non-Coverage (CNC), Free and Prior Informed Consent (FPIC), Water Rights
Permit, Certificate of Non-Overlap, LGU (Barangay and Municipal/City Level) Endorsement of the
project, and all other regulatory requirements from government agencies applicable to the operation
of the deployed MHPP facilities.
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3.2 Water Permit Application (WPA) for Electric Power Generation
3.2.1 Documentary Requirements
All applications shall be filed in the prescribed form, sworn to by the applicants and supported by
the following documents:
a. Proof of land ownership of, legal title to, or right to use, the property where the water
source is situated;
b. Vicinity Map/Location Plan with scale 1:10,000 or 1:50,000 showing the exact location
of the point of diversion;
c. Brief Description of the project stating among others: (i) How water will be used; (ii)
Amount of water required; (iii) Amount of electric power to be generated; and (iv) Other
necessary information;
d. Environmental Compliance Certificate (ECC) (for projects considered as Environmentally
Critical Projects or projects located in Environmentally Critical Areas) or CNC from DENR-
Regional Office;
e. Certificate of Registration from DOE and Certificate of Endorsement; and
f. Other documents that may be required by the Board.
3.2.2 Application Process
Step 1: Screening
a. WPA form and Notices completely accomplished and notarized;
b. Compliance with prescribed basic requirements;
c. Coordinates (Latitude and Longitude) of water source shall be determined by the
National Water Resources Board (NWRB) Evaluation Section Staff; and
d. WPA Number / Reference Number assigned by the NWRB Permits Section.
Step 2. Cashier
Payment of processing and application fees (PHP 5,000.00) for Electric Power Generation
Projects).
Step 3. Filing
a. Applicant submits the accomplished WPA form along with Notices and
documentary requirements to the NWRB Records Section; and
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b. Routing of the WPA to NWRB Water Rights Division.
Step 4. Application Endorsement and Posting of Notices
a. NWRB Permits Section prepares endorsement letter;
b. WPA endorsed to the nearest Department of Public Works and Highways (DPWH)
Engineering District Office or the National Irrigation Administration (NIA)
Provincial Irrigation Office covering the location of water source point of
diversion; and
c. Endorsement Letter along with the Notices for WPA shall be sent to the
following offices/agencies for posting (the prescribed period of posting shall be
30 days upon receipt of the WPA Notices):
Barangay Chairman covering location of water source point of diversion;
City/Municipal Secretary covering location of water source point of
diversion;
Secretary, Sangguniang Panlalawigan (Provincial Council) covering location
of water source point of diversion;
Department of Public Works and Highways (DPWH) District Engineer
National Irrigation Administration (NIA) Provincial Irrigation Office
Regional Office – DPWH
Regional Office - NIA
National Power Corporation
Regional Office – DENR
Local Water District (WD)
NWRB
Step 5. Mailing of Endorsement and Notices
The Administrative and Financial Division Record Unit mails the endorsement letter and
request letter for posting of the notices to the abovementioned offices/agencies.
Step 6. Field Investigation
Water Rights Investigator of DPWH Engineering District or NIA Provincial Office
conducts ocular inspection at proposed site, prepares and submits report to NWRB (In
cases where the DPWH or NIA does not have the capability to conduct field inspections and/or
investigations, the NWRB Staff shall assume the conduct of field inspections and/or
investigations).
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Step 7. Protests/Opposition
a. Additional 30 days shall be allotted for the filing of formal protests/opposition on
the WPA by any affected party after the prescribed posting period;
b. Affected parties shall submit a Letter of Protest/Opposition to NWRB. Processing
fee amounting to PHP3,000.00 shall be paid during the submission of the Letter of
Protest/Opposition;
c. Cases of protests/opposition shall be docketed by NWRB Water Rights Division
Staff;
d. The Chief of the NWRB Water Rights Division shall assign the case to a Hearing Officer
who shall conduct a formal hearing on the protest or opposition; and
e. Resolution of cases shall be recommended to the NWRB Executive Director.
Step 8. Evaluation
a. Determine water source whether surface water, spring or deep well source;
b. WPA shall be evaluated by considering (i) Water requirement of the Applicant;
(ii) Water availability within the area; (iii) Capacity of the water source; and (iv)
Effect of the water usage of the applicant to other users; and
c. Recommendation to the NWRB Board for the amount of water to be granted to
the Applicant.
Step 9. Recommendation and Approval
a. WPAs evaluated and recommended to the NWRB Board shall be submitted to
the Director, National Hydraulic Research Center for review, comment, and
recommendation;
b. All WPAs with a recommended amount of water of 100 liters per second and below
shall be approved/deferred/denied by the NWRB Executive Director;
c. All WPAs with a recommended amount of water of more than 100 liters per second
shall be deliberated and approved/deferred/denied by the NWRB Board; and
d. The NWRB Board Secretary shall prepare a Board Resolution containing the
approved WPs. The Board Resolution shall be signed by all the members of the
NWRB Board.
Step 10. Conditional Water Permit
a. The NWRB Water Rights Division assigns a conditional water permit number to
approved water permit applicants;
b. Billing Section computes the Annual Water Charge for payment by approved
water permit applicants;
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c. NWRB Water Rights Division Staff prepares the Conditional Water Permit;
d. Conditional Water Permit shall be signed by the NWRB Executive Director
after appropriate clearances;
e. Approved water permit applicants shall be notified by mail. Order of Payment
shall be prepared by the Regional Executive Director's Office (EDO);
f. Approved water permit applicants pay the corresponding Annual Water Charge
to the Cashier; and
g. Conditional Water Permit shall be released upon presenting to the EDO, the Official
Receipt issued by the Cashier for the payment of the Annual Water Charge.
Step 11. Releasing of Water Permit
a. As soon as Conditional Water Permit holders comply with the conditions imposed
in the Conditional Water Permit, the NWRB Water Rights Division Staff reviews and
ascertains compliance and prepares a recommendation for issuance of Water
Permit to be approved by the NWRB Executive Director;
b. Water Permit shall be prepared by NWRB Water Rights Division Staff and signed by
the NWRB Executive Director; and
c. Water Permit shall be released upon payment of appropriate fees and charges.
Table 3: Associated Costs for Water Permit
ONE TIME CHARGES
Approved Rates
Processing and Application Fees PHP5,000.00
Transfer of Water Permit PHP5,000.00
Certificate of Water Availability PHP1,500.00
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ANNUAL WATER CHARGES
Base Cost Not more than 10
LPS
More than 10 LPS but
not exceeding 50 LPS
More than 50
LPS
Withdrawal
Cost
PHP5,000.00
/LPS PHP2.75 /LPS PHP4.25 /LPS PHP5.50 /LPS
3.2.3 Current Tasks and Activities
The Project Team has initiated the preparation of documentation for the application of water
permits for the Getsemane and Dalupan MHPP projects. Main impediment in the actual filing of the
application lies with the need for a DOE endorsement that will be released after the approval of the
pre-development RESC.
Table 4: Requirements for RESC application
Requirements Status
1. WPA (Duly accomplished WPA Form)
Note the following requirements:
The PMMO or NWRB Official Receipt Number, the date
and amount paid shall be indicated
The official name or (local name) of the river, creek, brook,
lake, etc. or the words spring or groundwater, whichever is
appropriate, shall be indicated
The location of the diversion point indicating the
sitio/barrio and the municipality where the diversion point
is located
Indicate method of diverting water whether by dam,
pump, etc.
Indicate the months during the year when the flow of the
stream is considered low flow (say, for example, from
January to April)
Indicate the amount of water applied for, expressed in
liters per second
Indicate the purpose for the Water Permit application
(e.g., power generation, irrigation, and others)
For hydraulic water based electric power development,
indicate the power plant rated capacity in kilowatts
Specify other uses for the Water Permit application
Completed
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Indicate the names of appropriators holding or claiming
rights to the use of water including the amount in liters
per second and nature of use, both downstream and
upstream of the proposed point of diversion
2. Proof of land ownership on the site -- Certificate from LGU to
utilize the water source
Completed. Coordinated with the
Municipality of Don Marcelino and
City of Bayugan to seek assistance
in securing a
certificate/authorization from the
Getsemane and Dalupan Barangay
Governments to utilize the water
source.
3. Location plan and vicinity map of water source (use scale of
1:50,000) showing: (i) Point of diversion of source of water
(Longitude and Latitude), and (ii) Nature of diversion works whether
temporary or permanent
Done. Utilized the blocking map
submitted for the RESC Application.
4. Certificate of Non-Coverage from DENR Done.
5. Brief description of project which includes:
(i) How water will be used
(ii) Amount of water needed
(iii) Power expected to be generated
(iv) Amount of water to be discharged back to source
(v) Measures to be taken to avoid water pollution
(vi) Scheme of development
Completed
6. Certificate of Registration and Certificate of Endorsement from
the DOE
Will be provided by the DOE after
the approval of the RESC.
7. Other requirements as deemed necessary by the NWRB Securance is based on DOE approval
of RESCs.
3.3 Net-Metering Contract
Based on discussions with stakeholders, the method preferred to interconnect the MHPPs to the
local distribution grid is net-metering. Net-Metering serves as a consumer-based RE market
development mechanism to encourage the participation of qualified end-users (QEs), within the
captive market of local distribution utilities (DUs), to generate electric power from eligible grid
connected RE facilities. Excess generated electricity will be exported directly into the local
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distribution grid and given corresponding peso credits based on the blended generation cost of the
DU, excluding generation adjustments. Peso credits earned by QEs within an agreed time period will
be offset from the electricity bill of the QE.
The implementation of a Net-Metering Program has been provided under Section 10 of Republic Act
No. 9513 (Renewable Energy Act) and regulated based on the Net-Metering Program Rules approved
by the Energy Regulatory Commission (ERC) under ERC Resolution No. 9, Series of 2013.
3.3.1 Application Process
Application for Net-Metering Services with the DU
QEs seeking to participate in the Philippine Net-Metering Program must file a written request or
inquiry with the local DU to initiate the net-metering service application process. Upon receipt of
such request or inquiry, the DU will provide the following information and documents: (i) Net-
Metering Application Form; (ii) Identification Document; (iii) Standard and/or detailed planning data
as specified in Section 6.4 and Section 6.5 of the Philippine Distribution Code1 and other data as
required by the DU; (iv) List of Certified Equipment; (v) Electric Power Plant Parameters Form; (vi)
Application Fee Information; and (vii) Interconnection and Metering Requirements.2
As soon as the accomplished Net-Metering Application Form and all supporting documents have
been submitted, the DU will proceed to verify the accuracy and completeness of the application
documents. The DU must issue an acknowledgement receipt with feedback on whether or not the
application documents are complete and the application process can proceed to the next phase
within 10 business days from the receipt of the application, as prescribed in the Net-Metering Rules.3
Technical Evaluation
With the acknowledgement and acceptance of the application by the DU as complete, the DU
proceeds towards the conduct of a technical evaluation by performing an initial assessment to
determine the necessity of undertaking a specific distribution impact study (DIS) in accordance with
1 Section 6.4 of the Philippine Distribution Code (ERC Resolution No. 115, Series of 2001) specifies the standard planning data requirements
(i.e., Energy and demand forecast, Embedded generating unit data, and User system data) while Section 6.5 specifies the detailed plan-
ning data requirements (Detailed embedded generating unit data and embedded generating plant data) needed by a DU in planning the
development and reinforcement of the distribution system. 2 Energy Regulatory Commission Resolution No. 9, Series of 2013, Rules Enabling the Net-Metering Program for Renewable Energy, Annex
A-1 (Net-Metering Interconnection Standards), Section 5.1 to Section 5.3 (2013). 3 Ibid. Section 5.4
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the DSOAR.4 The conduct of a DIS may be necessary in order to evaluate the ability of the distribution
system to safely and reliably accommodate the proposed interconnection of a new electric power
generation source and determine the need to upgrade distribution system assets.
In the event that the conduct of a DIS may be required, the DU informs the applicant accordingly and
issues an Offer of Service for DIS containing the following: (i) Scope of the DIS, including the
identification of distribution constraints and the need for additional dedicated connection assets or
distribution system upgrades required to provide the requested service; (ii) Estimated time frame
needed to complete the DIS; (iii) Applicable fees associated with the conduct of the DIS; and (iv)
Additional information required by the DU from the applicant. The applicant must respond to the
offer of service from the DU whether or not to proceed with the conduct of the DIS within 30 days
from the receipt of any such offer. Should the applicant agree to the offer of service from the DU,
the applicant must pay all applicable fees and provide the required information needed by the DU
to perform the DIS. The DU will have 60 days to complete the conduct of the DIS. Following the
completion of the DIS, the DU will provide the applicant with the completed DIS results and related
work papers within 5 working days, including any additional interim agreements, technical
modifications, and/or the further necessity of conducting a distribution asset study (DAS) to
complete the net-metering interconnection.5
In case a DAS becomes necessary, the DU may issue an Offer of Service for DAS within 30 days after
the completion of the DIS. The applicant must respond to the offer of service from the DU whether
or not to proceed with the conduct of the DAS within 15 days from the receipt of any such offer. In
responding to the offer of service provided by the DU, the applicant has the following options: (i)
Undertake the DAS and advise the DU accordingly; (ii) Contract the conduct of the DAS with a third
party, accredited pursuant to ERC guidelines and advise the DU accordingly; or (iii) Agree to the offer
of service for DAS from the DU. The DU shall be bound by the decision of the applicant. The period
of time to complete the conduct of the DAS will be specified in the offer of service whether
performed by the applicant, a contracted third party, or the DU. Following the completion of the
DAS, the party undertaking the DAS will provide the other parties involved with a copy of the
completed DAS results and related work papers within 5 working days.6
4 The Distribution Services and Open Access Rules (DSOAR) refer to the rules promulgated by the Energy Regulatory Commission under
ERC Resolution No. 2, Series of 2010 covering the terms and conditions for the connection of generating facilities to a local distribution
system. 5 Energy Regulatory Commission Resolution No. 2, Series of 2010, Amended Distribution Services and Open Access Rules (DSOAR), Section 2.9.4
(2010). 6 Ibid. Section 2.9.5
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Construction of Interconnection Facilities
With the conclusion of the technical evaluation, the DU will then finalize the design of
interconnection facilities based on the results of the DIS and/or DAS, along with the applicable
project costs. Prior to the execution of the Net-Metering Agreement and commissioning, the RE
based electric power generating facility will be physically inspected and checked by the LGU for
electrical safety and conformance to the provisions of the Philippine Electrical Code and the National
Building Code before the installation of electric power meters by the DU.7 The LGU will issue a
Certificate of Final Electrical Inspection (CFEI) once the facility has been found to be compliant to the
Philippine Electrical Code and the National Building Code. Upon the issuance of a CFEI, the DU will
conduct an initial inspection and check electro-mechanical components of the facility for
conformance to the technical requirements, and system parameters Net-Metering Rules, and the
Philippine Distribution Code. The construction of interconnection facilities may then proceed
following the completion of the initial inspection by the DU.
Commissioning, Interconnection, and Project Agreements
As soon as the construction of the generating and interconnection facilities has been completed and
ready for operation, the installed system and system components must undergo
functional/performance testing and commissioning, closely monitored and witnessed by the DU.
Testing and commissioning include among others: (i) Verification and inspections; (ii) Production
Tests to check response to abnormal voltage, abnormal frequency, and synchronization; (iii)
Unintentional Islanding Functionality Test; (iv) Cease-to-Energize Functionality Test; and (v) Other
tests which ensure compliance to the parameters prescribed in Section 6 and Section 7 of the Net-
Metering Interconnection Standards.8
Upon ensuring the compliance of the generating facility, project agreements (such as the Net-
Metering Agreement and Fixed Asset Boundary Document) may then be finalized and signed along
with the payment of all applicable fees by the applicant.9
7 Substantial completion of electro-mechanical installation has been assumed in this case.
8 Energy Regulatory Commission Resolution No. 9, Series of 2013, Rules Enabling the Net-Metering Program for Renewable
Energy, Annex A-1 (Net-Metering Interconnection Standards), Section 10 (2013). 9 Ibid. Section 5.7.
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Figure 2: Net-Metering application scheme
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Application for Certificate of Final Electrical Inspection from LGUs
The Office of the City or Municipal Engineer through the Electrical Section conducts and supervises
electrical safety inspection, testing, and verification of electrical wirings for residential, institutional,
commercial, and industrial structures before the installation of electric power meters by DUs to
ensure the conformance of such to the provisions of the Philippine Electrical Code, National Building
Code, and pertinent ordinances and issuances of the concerned LGU.
To initiate the application process, the applicant must submit the following documents: (i) Electrical
Permit Form (DPWH Form No. 96-001E), accomplished, signed, and sealed by a Professional Electrical
Engineer (PEE); (ii) 5 sets of the proposed electrical plans, signed, and sealed by a PEE; (iii) Scope of
Work; and (iv) Other supporting documents as may be required by the LGU. The Electrical Section
receives the documents and evaluates the accuracy and completeness of the submitted forms and
documents. Upon verifying and acknowledging the completeness of the documents, the applicant
will be requested to pay the applicable fees.
The Electrical Section will then proceed to review and evaluate the proposed electrical plans for conformance to provisions of the Philippine Electrical Code and National Building Code. As soon as
the plans have been found to be compliant, the Electrical Section proceeds to approve the submitted
electrical plans, process the application, and issues an electrical and/or building permit to allow the
applicant to start construction of the proposed facility.
When a substantial part of the electro-mechanical systems have been installed, the applicant may
submit a request for inspection. The LGU will then conduct a physical inspection and check the
compliance of the installation with respect to the approved electrical plans. Once satisfied with the
conduct of installation, the Electrical Section issues a Certificate of Final Electrical Inspection (CFEI).
3.3.2 Recent Tasks and Activities
The Project Team initiated the processing and negotiation for the Getsemane and Dalupan MHPPs’ net-metering contracts in January 2015 through written request to ASELCO and DASURECO, stating
the intent of the Project Team to apply for a net-metering agreement and interconnection in behalf
of the Bayugan City and Municipality of Don Marcelino LGUs. Without receiving a reply from the ECs,
the Consultant Team coordinated with NEA in order to assist in facilitating the application process
with the ECs in April 2015. NEA proceeded to send letters of endorsement to the ECs and templates
of the application form and the possible documentary requirements which may be needed by the
ECs in evaluating the application for net-metering and interconnection to the Project Team.
Upon receiving the template of the application from for net-metering and interconnection
agreement from NEA, the Project Team commenced gathering the required technical data and
finalizing required documentation. The Project Team submitted during the first week of June 2015,
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the net-metering and interconnection application forms, single-line diagrams, and application for
Certificate of Compliance (COC) as QEs for the Dalupan and Getsemane MHPP systems to DASURECO
and ASELCO respectively. In addition, NEA conducted the DIS for the DASURECO and ASELCO
Distribution Grid as a counterpart contribution towards the implementation of the project.
The Don Marcelino and Bayugan LGUs were listed as project proponents in behalf of the CBOs which
are being currently organized with the assistance of the Project Team. As soon as the CBOs have
been organized, the MHPPs and all operational, legal, financial, and managerial functions will be
completely handed over to the community and CBOs. However, upon completing the initial
evaluation during the last week of July 2015, DASURECO, ASELCO, and NEA recommended to the
Consultant Team that the CBOs be listed directly as the project proponents in the application for net-
metering and interconnection and COCs as the actual QE for net-metering agreement. The
Consultant Team has secured the LGUs consent for the CBOs to replace them as proponents for net-
metering agreement and amend all documentation for re-submission to DASURECO and ASELCO
pursuant to the recommendation of NEA.
3.4 Certificate of Non-Coverage
Based on the DENR Administrative Order No. 30 Series of 2003 (DAO 30-03), all agencies and
instrumentalities of the national government including government owned and controlled
corporations as well as private corporate firms and other entities must prepare an Environmental
Impact Statement (EIS) for every action, project or undertaking, which significantly affects the quality
of the environment. Section 4 of Presidential Decree No. 1586 (Establishing the EIS System) thereof
provides that no person, partnership or corporation shall undertake or operate in any part such
declared environmentally critical projects (ECPs) and within environmentally critical areas (ECAs)
without first securing an Environmental Compliance Certificate (ECC.
The following are the categories of projects/undertakings under EIS system:
Category A. Environmentally Critical Projects (ECPs) with significant potential to cause negative
environmental impacts;
Category B. Projects that are not categorized as ECPs, but which may cause negative
environmental impacts because they are located in Environmentally Critical Areas (ECAs);
Category C. Projects intended to directly enhance environmental quality or address existing
environmental problems not falling under Category A or B; and
Category D. Projects unlikely to cause adverse environmental impacts.
All other activities not covered by the EIS system must secure a Certificate of Non-Coverage (CNC) as
provided for in DAO 03-30.
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3.4.1 CNC Application Process and Screening
Based on the existing procedural manual for DAO 03-30, the application for a CNC only requires the
completion of an application form to be processed in the DENR Automated Processing System. CNC
applications no longer require submission of a Project Description Report. Supporting documentary
requirements may include, but not limited to location map, proof of land/site ownership (Tax
Declaration, TCT, OCT, Lease Contract and Others), and SEC or DTI Registration.
The CNCs for the Dalupan and Getsemane MHPP Projects were issued on May 2014.
Figure 3: CNC Application Process
Project Proponent
Screening Officer(Application Form + Documentary
Requirements)
Records (Receiving)
Documents
Complete?
NO
YES
EIAM Division, EMB
Office of the Regional Director, EMB
(Approval/Disapproval)
Records (Releasing)
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4 FINANCIAL AND ECONOMIC ANALYSES OF THE RENEWABLE ENERGY
FACILITIES
4.1 MHPP Dalupan – Business Model
The micro hydro power subproject in Sto. Cunalom, Brgy. Dalupan, Don Marcelino was identified to
be one of the recipients of the TA establishing the MHPP from among four sites identified in Don
Marcelino. As stated in the Final Report for the TA 7781 – Rural Community Based Renewable Energy
Development in Mindanao, the Project was chosen because the site is at the center of population,
the hydro potential can still cover the energy demand and the investment cost is within the available
ADB Budget.
The original proposal is a mini-grid in Dalupan which will be distributed to the consumers in the area.
The mini-grid was projected to serve the households nearest to the power house in the areas of
Mandala, Sitio Cunalom, Sitio Banag and Sitio Miago.
The construction of a micro hydro power plant in Sitio Cunalom, Brgy. Dalupan referred to as the
Project will directly serve (on-grid) the Community Based Organization registered under the name of
Dalupan Renewable Energy Community Development Association (DARECDA). An initial 114
households near the MHPP that are still not energized will be served with the remaining generated
energy exported to the Electric Cooperative grid. The capacity of the MHPP is s projected at 25 kW
or 219,400 kWh per year.
4.1.1 Financial Evaluation
As Projected
The evaluation of the viability of the MHPP in Brgy. Dalupan in 2013 was based on a Project Cost of
PHP7.209 Million. ADB will finance the full cost of the project except for the cost of land of PHP0.022
Million which will be the LGU equity to the Project. It was also projected that the initial annual
operating expense (OPEX for 2014) would amount to PHP0.168 Million or representing a ratio of
2.3% of Project Cost. In terms of the ratio of OPEX (before depreciation), the projected expenses
equate to 19% of projected revenues. The revenues were based on FIT rates which are higher than
the blended generation cost, the rate used in this update of financial projections.
Initial Investment
The review of the financial viability of the investment in the MHPP in Sitio Cunalom, Barangay
Dalupan used the actual Project Cost for the construction of the MHPP. The total initial investment
for the Project is PHP9.483 Million. The actual Investment Cost of PHP9.483 Million represents an
increase of 31.5% over the estimates made in the Feasibility Study only two years earlier (2012).
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The details of the Project Cost are presented in Annex 1-A. Adding the estimated amount of P0.554M
for licenses and construction supervision will bring the total investment to PHP10.037 Million. The
licensing and land were financed by LGU as their counterpart to the Project.
The capital per kW installed capacity of the Project is PHP401,483 (USD9,125), increasing by
PHP113,127 from the projected cost of PHP288,356 in 2013.
Table 5: Total Project Cost and Financing Plan (Barangay Dalupan)
Capital I est e t Peso 000 Amount Funding
Electro-Mechanical 2,854.21 ADB
Civil Works 6628.79 ADB
Construction Supervision 462.00 ADB
Permits and Licenses 92.07 LGU
Operating and Maintenance Expenses
The annual Operating and Maintenance expenses are estimated for a) salaries and benefits of
employees manning the MHPP; b) the maintenance expenses equivalent to 0.5% of Civil Works and
Electro-Mechanical Equipment/works component of Project Cost; c) other administrative expenses
which include transportation, communication, supplies and audit expenses. Table 6 presents the
initial year estimates (2015 prices):
Table 6: Total Project Operating Expenses (Barangay Dalupan)
Operating Expense Amount
Salaries of Operators/Supervisors 363,893
Maintenance 47,415
Administrative & Miscellaneous 26,000
Total 437,308
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Compared to the projections in 2013, there is an increase of almost 259% of the OPEX forecast in the
feasibility study.
MHPP Revenues
(i) The rated capacity of the plant is 25 kW or 219,000 kWh per year. With the assumed total
losses (transmission and other losses) there will be a maximum energy sale of
175,200 kWh/year.
(ii) Under the proposal for the MHPP in Barangay Dalupan, the Project will energize the
remaining sitios of 184 households. In the actual project implementation, the revenues will
be computed under a Net Metering Arrangement. This is an arrangement where the MHPP
will be registered as a consumer of the Electric Cooperative (EC) as provided under the
Renewable Energy Law for renewable energy (RE) systems of less than 100 kW. The export
energy of the MHPP (net of DARECDA livelihood) under the Net Metering Arrangement will
be valued at the blended generation cost of DASURECO (EC).
(iii) In order to account for the revenues of the MHPP accruing from the total kWh sold, the
projected cash flow will include the CBO livelihood energy consumption priced at the EC
retail rate. This means that the MHPP Cash Flow will reflect sales from the usage of CBO,
simulating the sales of the EC to the CBO as if the former were providing the energy instead
of the MHPP.
(iv) Revenue computation assumes that the energy exported to DASURECO (EC) will be paid
monthly. The volume of sold energy will be net of the consumption of the CBO for its
livelihood operations.
Cash Flow Projections Assumptions
In evaluating the feasibility of the Project undertaken, the cash flow projections used the following
assumptions:
(i) On the basis of the provision of the grant from ADB to finance the MHPP, the ideal or target
rate of return will be 12%.
(ii) The base scenario will compute for revenues assuming that the energy exported to the EC
will be net of the consumption for the livelihood operations of the CBO based on its the
Business Plan. The blended generation cost is assumed to increase at 3.0% per annum.
(iii) In projecting the operating and maintenance costs for the computation of the rate of return,
the number of staff considered a 24-hour operation with a supervisor and helpers overseeing
operations working on two shifts. The staff are also assumed to receive the minimum daily
wage including the mandated insurance (SSS), housing contribution (Pag-ibig) and medical
coverage (PhilHealth).
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(iv) The salaries and wages for the administrative component of operations, i.e., cashier,
bookkeeper and Business Manager are assumed to be taken care of by the CBO Operations.
All operating expenses are assumed to increase at 3.3% per annum (CPI).
(v) The MHPP operations is assumed to be VAT-exempt and entitled to a seven-year income tax
holiday (ITH) and thereafter subject to a 10% income tax. This is based on Republic Act No.
9513 as part of the incentives provided to duly-registered RE developers.
(vi) The taxes paid computed the income net of the 25-year depreciation for the total
asset/investment of the MHPP.
4.1.2 Financial Evaluation Results
a) Evaluating the cash flow from the MHPP in the next 25 years shows the operation will be
able to recover the total investment in 18 years given the base scenario assumptions as
discussed above.
b) Aside from generating positive cash flow, the MHPP should be able to pay an assumed 10%
income tax after the seven-year income tax holiday (ITH). The annual cash flow will start at
PHP0.295 Million and will continue to increase reaching PHP0.831 Million by the end of the
25-year projected operations.
c) However, the cash flows will not be sufficient to bring in the ideal rate of return of 12% (as
projected). First and foremost, the actual investment cost increased by 40%. In addition, the
OPEX projections in this update is 258% higher than the original feasibility study as shown
below:
Table 7: Initial Year of Operations, 2016 prices (Barangay Dalupan)
Salaries Maintenance Administrative Total
Feasibility Study 175,394
2015 Update 375,901 48,980 26,858 451,739
d) Taking the ratio of annual operating expenses to total investment cost would show that the
projections in the feasibility study reflected a 2.4% annual OPEX (PHP0.175 Million) to
investment cost (PHP7.209 Million). On the other hand, with the updated initial OPEX
computed at PHP0.452M, the ratio to the total investment cost of PHP10.037 Million is
equivalent to 4.5 percent.
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e) In this update, revenues were derived using the blended generation cost and the EC retail
rate. The average rate/ kWh in the initial year is PHP4.26 Million. This is lower than the FIT
rate of PHP5.90 Million in the feasibility study.
f) The resulting financial indicators of viability indicate a much lower rate of return (IRR)
compared to the desired 12% as projected in the feasibility study. The IRR is at 3% (base
scenario) and the payback period will be 18 years. This is compared to the original study in
the table below:
Table 8: Resulting Financial Indicators (Barangay Dalupan)
4.1.3 Sensitivity Evaluation Results
a) The sensitivity analysis undertaken in this update considered scenarios involving the (1) %
usage of energy by the CBO, and (2) lower energy sold (60%).
b) Under the first sensitivity scenario, it is projected that the CBO will diversify their livelihood
activities that will require the usage of more electricity in their operations. If they were able
to do this, then the value of revenues generated by the MHPP will be higher compared to
exporting the energy to the EC. This would impact on the computed internal rate of return
Base Scenario Original FS
Net Present Value Peso (5,464,136) 1,000
Internal Rate of Return % 3% 12%
Payback Period years 18 8
Annual Generation kWh 219,000 168,803
Maximum Energy Sold kWh/year 175,200 153,948
Hydro capital cost per kW installed capacity Peso/kW 401,483 288,356
USD/kW 9,125 6,706
USD: Peso 44 43
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(IRR) of the MHPP. This will also be more beneficial to the CBO members and the community
because more economic activities result from having the MHPP in the Barangay.
c) From a 3% rate of return in the base scenario, a 69% maximum usage of energy by the CBO
by year six (2021) will result to an IRR of 8%, an increase of PHP2.43 Million to the net present
value and shortened payback period from 18 years to 12 years.
d) The second sensitivity scenario assumed that the maximum energy sold will only be at 60%
on the basis of less generated energy. This scenario tests the impact on the IRR and to the
cash flow of the reduced energy sales. The forecast shows the annual cash flows are still
adequate to cover the operating and maintenance costs. Under this more conservative
assumption, the net present value of the cash inflows are lower and the resulting IRR is (1%).
e) Table 9 presents a summary of the findings: (presented in detail in Annex 1-B)
Table 9: Summary of Findings (Barangay Dalupan)
Base Scenario Maximized Energy
Usage 60% Energy Sales
Net Present Value Peso (5,464,136) (3,036,289) (7,009,053)
Internal Rate of Return % 3% 8% (-1)%
Payback Period years 18 12 >25
Discount Rate % 12
f) In view of the absence of funds required for servicing of loans or return of capital, a scenario
considering the deposit of reserves is included in this update. This is targeted to enable the
CBO to finance the future major capital expenditure (CAPEX) or replacement of the
mechanical component (Asset Replacement Reserves) of the facility.
This scenario is shown as Reserves Scenario in Annex 1-C.
g) The Reserves Scenario shows CBO Reserves (dividends, minor repairs, etc.) will accumulate
to about PHP5.02 Million in twenty-five years. For the Asset Replacement Reserves, this will
amount to PHP9.67 M under the base scenario. But under the low generation scenario, the
amount will be 39% lower or about PHP5.93 Million.
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4.1.4 Conclusion
a) From the foregoing, it is deemed that the 25 kW plant at Sitio Sto. Cunalom, Brgy. Dalupan
is sustainable in terms of cash flow. Attaining the desired rate of return of 12% (as projected)
is however critically dependent on 1) usage of electricity by the livelihood activities of the
CBO; 2) O&M costs forecast 3) % energy exported to the EC.
b) The evaluation is premised on the basic assumption that the Plant will operate continuously
and is very critical in esta lishi g the P oje t’s feasi ilit .
c) All projections consider a collection efficiency of not less than 99% in projecting cash flows.
No additional CAPEX are provided in the forecast. The monthly maintenance provision
however may be set aside in a fund to ensure that cash are available for repairs and CAPEX
in the future.
d) The tables from the Financial Model developed for this Study are all presented in Annex 1
including the projected financial statements for MHPP operations.
4.2 MHPP Getsemane – Business Model
The micro hydro power project in Brgy. Getsemane, Bayugan City (Agusan del Sur) was identified to
be one of the recipients of the Technical Assistance establishing the MHPP that will serve the
households nearest to the powerhouse as a standalone off-grid micro system.
The construction of a MHPP in Brgy. Getsemane, Bayugan City, referred to as the Project will operate
on-grid. The MHPP will directly serve the Community Based Organization registered under the name
of Getsemane Agricultural Workers Association (GAWA). There is an initial 97 households near the
powerhouse that are still unenergized to be served and the remaining generated energy exported to
the Electric Cooperative grid. The capacity of the MHPP is as projected at 30 kW or 262,800 kWh per
year.
4.2.1 Financial Evaluation
As Projected
The evaluation of the viability of the MHPP in Brgy. Getsemane in 2013 was based on a Project Cost
of PHP7.953 Million. ADB will finance the full cost of the project except for the cost of land of
PHP0.021 Million which will be the LGU equity to the Project. It was also projected that the initial
annual operating expense (OPEX for 2014) would amount to PHP0.182 Million or representing a ratio
of 2.3% of Project Cost. In terms of the ratio of OPEX (before depreciation), the projected expenses
equate to 17% of projected revenues. The revenues were based on FIT rates which are higher than
the blended generation cost, the rate used in this update of financial projections.
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Initial Investment
The review of the financial viability of the investment in the MHPP in Barangay Getsemane used the
actual Project Cost for the construction of the MHPP. The total initial investment for the Project is
PHP13.306 Million represents an increase of 67.3% over the estimates made in the Feasibility Study
only two years earlier (2012).
The details of the Project Cost are presented in Annex 2-A. Adding the estimated amount of
PHP0.574M for licenses and construction supervision will bring the total investment to
PHP10.880 Million. The licensing and land were financed by LGU as their counterpart to the Project.
The capital per kW installed capacity of the Project is PHP462,654 (USD10,515), increasing by
PHP197,558 from the projected cost of PHP265,096 in 2012.
Table 10: Total Project Cost and Financing Plan (Barangay Getsemane)
Capital I est e t Peso 000 Amount Funding
Electro-Mechanical 3,612.34 ADB
Civil Works 9,693.72 ADB
Construction Supervision 462.00 ADB
Permits and Licenses 111.57 LGU
Operating and Maintenance Expenses
The annual Operating and Maintenance expenses are estimated for a) salaries and benefits of
employees manning the MHPP; b) the maintenance expenses equivalent to 0.5% of Civil Works and
Electro-Mechanical Equipment/works component of Project Cost; c) other administrative expenses
which include transportation, communication, supplies and audit expenses. Table 11 presents the
initial year estimates (2015 prices):
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Table 11: Total Project Operating Expenses (Barangay Getsemane)
Operating Expense Amount
Salaries of Operators/Supervisors 432,241
Maintenance 66,530
Administrative & Miscellaneous 26,000
Total 524,771
Compared to the projections in 2013, there is an increase of almost 300% of the OPEX forecast in the
feasibility study.
MHPP Revenues
(i) The rated capacity of the plant is 30 kW or 262,800 kWh per year. With the assumed total
losses (transmission and other losses) there will be a maximum energy sale of
210,240 kWh/year.
(ii) Under the proposal for the MHPP in Brgy. Getsemane, the Project will sell all the generated
energy to the servicing electric cooperative, the ASELCO. In the actual project
implementation, the revenues will be computed under a Net Metering Arrangement. This is
an arrangement where the MHPP will be registered as a consumer of the Electric
Cooperative (EC) as provided under the Renewable Energy Law for RE systems of less than
100 kW. The export energy of the MHPP (net of GAWA livelihood) under the Net Metering
Arrangement will be valued at the blended generation cost of ASELCO (EC).
(iii) In order to account for the revenues of the MHPP accruing from the total kWh sold, the
projected cash flow will include the CBO livelihood energy consumption priced at the EC
retail rate. This means that the MHPP Cash Flow will reflect sales from the usage of CBO,
simulating the sales of the EC to the CBO as if the former were providing the energy instead
of the MHPP.
(iv) Revenue computation assumes that the energy exported to ASELCO (EC) will be paid
monthly. The volume of sold energy will be net of the consumption of the CBO for its
livelihood operations.
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Cash Flow Projections Assumptions
In evaluating the feasibility of the Project undertaken, the cash flow projections used the following
assumptions:
(i) On the basis of the provision of the grant from ADB to finance the MHPP, the ideal or target
rate of return will be 12%.
(ii) The base scenario will compute for revenues assuming that the energy exported to the EC
will be net of the consumption for the livelihood operations of the CBO based on its the
Business Plan. The blended generation cost is assumed to increase at 3.0% per annum.
(iii) In projecting the operating and maintenance costs for the computation of the rate of return,
the number of staff considered a 24-hour operation with a supervisor and helpers overseeing
operations working on 2 shifts. The staff are also assumed to receive the minimum daily
wage including the mandated insurance (SSS), housing contribution (Pag-ibig Fund) and
medical coverage (PhilHealth).
(iv) The salaries and wages for the administrative component of operations, i.e., cashier,
bookkeeper and Business Manager are assumed to be taken care of by the CBO Operations.
All operating expenses are assumed to increase at 3.3% per annum (CPI).
(v) The MHPP operations is assumed to be VAT-exempt and entitled to a seven-year income tax
holiday (ITH) and thereafter subject to a 10% income tax. This is based on Republic Act No.
9513 as part of the incentives provided to duly-registered RE developers.
(vi) The taxes paid computed the income net of the 25-year depreciation for the total
asset/investment of the MHPP.
4.2.2 Financial Evaluation Results
a) Evaluating the cash flow from the MHPP in the next 25 years shows the operation will be
able to recover the total investment in 20 years given the base scenario assumptions as
discussed above.
b) Aside from generating positive cash flow, the MHPP should be able to pay an assumed 10%
income tax after the seven-year ITH. The annual cash flow will start at PHP0.469 M and will
continue to increase reaching PHP0.969 million by the end of the 25-year projected
operations.
c) However, the cash flows will not be sufficient to bring in the ideal rate of return of 12% (as
projected). First and foremost, the actual investment cost increased by 67%. In addition, the
OPEX projections in this update is 300% higher than the original feasibility study as shown
below:
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Table 12: Initial Year of Operations, 2016 Prices (Barangay Getsemane)
Salaries Maintenance Administrative Total
Feasibility Study 175,116
2015 Update 446,505 68,726 26,858 542,089
d) Taking the ratio of annual operating expenses to total investment cost would show that the
projections in the feasibility study reflected a 2.2% annual OPEX (PHP0.175 Million) to
investment cost (PHP7.953 Million). On the other hand, with the updated initial OPEX
computed at PHP0.542 Million, the ratio to the total investment cost of PHP13.880 M is
equivalent to 3.9 %.
e) In this update, revenues were derived using the blended generation cost and the EC retail
rate. The average rate/ kWh in the initial year is PHP4.81. This is lower than the FIT rate of
PHP5.90 in the feasibility study.
f) The resulting financial indicators of viability indicate a much lower rate of return (IRR)
compared to the desired 12% as projected in the feasibility study. The IRR is at 2% (base
scenario) and the payback period will be 20 years. This is compared to the original study in
the table below:
Table 13: Resulting Financial Indicators (Barangay Getsemane)
Base Scenario Original FS
Net Present Value
Peso (7,979,942)
1,000
Internal Rate of Return % 2% 12%
Payback Period
years 20
8
Annual Generation kWh 262,800
188,730
Maximum Energy Sold kWh/year 210,240
172,122
Hydro capital cost per kW installed capacity
Peso/kW 462,654
265,096
USD/kW 10,515
6,165
USD: Peso 44 43
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4.2.3 Sensitivity Evaluation Results
a) The sensitivity analysis undertaken in this update considered scenarios involving the (1) %
usage of energy by the CBO, and (2) lower energy sold (60%).
b) Under the first sensitivity scenario, it is projected that the CBO will diversify their livelihood
activities that will require the usage of more electricity in their operations. If they were able
to do this, then the value of revenues generated by the MHPP will be higher compared to
exporting the energy to the EC. This would impact on the computed IRR of the MHPP. This
will also be more beneficial to the CBO members and the community because more
economic activities result from having the MHPP in the Barangay.
c) From a 2% rate of return in the base scenario, a 74% maximum usage of energy by the CBO
by year six (2021) will result to an IRR of 6%, an increase of PHP2.05 M to the net present
value and shortened payback period from 20 years to 14 years.
d) The second sensitivity scenario assumed that the maximum energy sold will only be at 60%
on the basis of less generated energy. This scenario tests the impact on the IRR and to the
cash flow of the reduced energy sales. The forecast shows the annual cash flows are still
adequate to cover the operating and maintenance costs. Under this more conservative
assumption, the net present value of the cash inflows are lower and the resulting IRR is (2%).
e) Table 14 below presents a summary of the findings: (presented in detail in Annex 2-B)
Table 14: Summary of Findings (Barangay Getsemane)
Base Scenario Maximized
Energy Usage 60% Energy Sales
Net Present Value Peso (7,979,942)
(5,933,692) (10,100,795)
Internal Rate of Return % 2% 6% (-2)%
Payback Period years 20 14 >25
Discount Rate % 12
f) In view of the absence of funds required for servicing of loans or return of capital, a scenario
considering the deposit of reserves in included in this update. This is targeted to enable the
CBO to finance the future major capital expenditure (CAPEX) or replacement of the
mechanical component (Asset Replacement Reserves) of the facility.
This scenario is shown as Reserves Scenario in Annex 2-C.
g) The Reserves Scenario shows CBO Reserves (dividends, minor repairs, etc) will accumulate
to about PHP5.10 Million in twenty-five years. For the Asset Replacement Reserves, this will
amount to PHP12.23 M under the base scenario. But under the low generation scenario, the
mount will be 50% lower or about PHP6.12 Million.
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4.2.4 Conclusion
a) From the foregoing, it is deemed that the 30 kW plant at Brgy. Getsemane, Bayugan City is
sustainable in terms of cash flow. Attaining the desired rate of return of 12% (as projected)
is however critically dependent on 1) usage of electricity by the livelihood activities of the
CBO; 2) O & M costs forecast 3) % energy exported to the EC.
b) The evaluation is premised on the basic assumption that the Plant will operate continuously
and is very critical in esta lishi g the P oje t’s feasi ilit .
c) All projections consider a collection efficiency of not less than 99% in projecting cash flows.
No additional CAPEX are provided in the forecast. The monthly maintenance provision
however may be set aside in a fund to ensure that cash are available for repairs and CAPEX
in the future.
d) The tables from the Financial Model developed for this Study are all presented in Annex 2
including the projected financial statements for MHPP operations.
4.3 Multipurpose (Corn) Mill – Business Model for RE appliances
The production of corn was identified as the main income and livelihood component in all three
beneficiary areas. The development and improvement of the production process accompanied by a
possible generation of higher income would most likely have a strongest and positive impact on the
living conditions of the community members. Thus in cooperation with the new established CBOs
the NGOs developed a business plan for the installation and operation of a Multipurpose (Corn) Mill.
The Multipurpose (Corn) Mill is foreseen to be installed in the Multi-Purpose Room and will be
operated by the CBO by using own consumption from the MHPP.
The Business Plans for the operation of the Multipurpose (Corn) Mills for the GAWA, KASAFA and
DARECDA CBO are shown in Annex 3.
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5 Establishment of Community Based Organizations (CBO)
5.1 Establishment of Community Based Organizations (CBO)
Three CBOs were organized for the management and operation of MHPPs at the project sites. With
the exception of Brgy. Sto. Nino wherein the construction of MHPP did not materialize during the
duration of the project due to the destruction of typhoon Seniang to the water source, the Dalupan
MHPP in Don Marcelino and Brgy. Getsemane MHPP in Bayugan City were successfully implemented
in accordance with the plan. The following CBOs were all registered with DOLE Provincial Offices in
Davao del Sur and Agusan del Sur as Associations confirming their legal identities and also registered
with the Bureau of Internal Revenue (BIR) in order for them to be able to transact livelihood activities
with the issuance of official receipts. The three CBOs were also able to open bank accounts in their
respective areas utilizing the Rural Bank of Malita for the Dalupan CBO (DARECDA) and One Network
Bank for the Getsemane and Sto. Nino CBOs (GAWA and KASAFA respectively). Table 15 describes
the CBOs as legitimate organizations duly registered by government agency.
Concerted efforts between the Consultan Team, the NGOs (DPRDI and ALTERDEV), and the LGUs
facilitated the organizing of the three CBOs for the identified project sites.
Table 15: Established Community-Based Organizations (CBOs) for the Project, 2014
Name of organization DoLE registration No. Date registered Remarks
Dalupan Renewable
Energy Community
Development
Association (DARECDA)
ROXI-DSPO-WA-09-2014-
547
03 September
2014
- 167 members Members
(38 women; 129 men)
-Registered with BIR on 10
September 2014; Bank
Account with Rural Bank of
Malita
Getsemane Agricultural
Workers Association
(GAWA)
CARAGA-ADS-2014-12-
WA-146
02 December
2014
- 94 Members (36 women;
58 men)
-Registered with BIR on 20
April 2015; Bank Account
with One Network Bank
Kapines-Awaan Sto.
Nino Agriculture
Farmers Association
(KASAFA)
CARAGA-ADS-2014-12-
WA-149
15 December
2014
- 72 Members (40 women;
32 men)
Note: DoLE – Department of Labor and Employment; BIR- Bureau of Internal Revenue
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CBO Structure
The three CBOs have almost similar organizational structure as Association (Figure 4). The General
Assembly (GA) is the highest governing body in the structure as this is composed of all the members
and officers of the CBOs. The members of the CBO duly elects the Board of Directors that are
comprised by the officers of each community-based organization.
Guiding Principles
Accountability &
Responsibility
Figure 4: Organizational Structure of CBOs at Project Sites, 2014
Du i g the CBOs’ t ai i g o O ga izatio al De elop e t, it as e phasized the NGO fa ilitato s that principles of accountability and responsibility be adopted by the CBOs in the selection of officers
and personnel for the organization. While the GA is responsible in looking at the performance of the
BOD and subsequently down the line, the different committees are accountable to the BOD, which
is then held responsible to the GA. The CBOs differ in the number of committees that they formed
depending on their focus of tasks within the organization. For DARECDA, they have created four
committees, namely: MHPP, Public Information, Education, and Livelihood/Credit. For Getsemane
and Sto. Nino sites, they have committees on Power Tender, Education, and Credit. Primarily, the
specific committees were set up to divide the tasks and focus on major activities by the organization.
General Assembly
BOD
President
Vice-President
Secretary
Treasurer
Auditor
Business Manager
Livelihood
Committee/Credit
Committee
Education Committee
Public Information
Committee
MHPP/Power Tender
Committee
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MHPP Operators/power tenders at the project sites
Table 16: MHPP Operators per Project Site
Project site Men Women
Barangay Dalupan Abuzayer Aradani
Richard Sumbo
Allan Kiyo
Aurelio Dalucan
Ernesto Guintolon
Honasan Tale
Jovena Tusan
Priscilia Mante
Barangay Getsemane Samuel Bolondros
Joseph Marsada
Jessie Castillon
Elwin Anding
Junie Ardiente
Armando Quinte Jr.
Jonathan Momo Jr.
Ermilda Momo
Rosa Lastima
Only few women were interested to be part of the MHPP operation/maintenance team/ committee.
In each of the project areas, CBOs were established purposely to operate, manage and maintain the
MHPP and livelihood activities. Once set-up and organized, CBOs were provided with several
training-workshops to equip them to do the identified required tasks.
Establishment of Community-Based Organizations (CBO)
The organizing of CBO started in June to August 2014 in Barangay Dalupan through meetings by the
CT with the community and with the active participation of LGU of Don Marcelino. The months of
October to November 2014 were mostly focused in the conduct of training-workshops of CBOs by
NGOs and with the guidance of the CT. Coaching sessions were conducted as a follow through
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activities in order for the CBOs to understand better and apply what they have learned from the
training-workshops through hands-on activities.
It is important to note that in the establishment of CBOs, it entails series of and constant
networking/coordination work with various groups such as: LGUs at the municipal and barangay
levels, NGOs, ECs, communities (including tribal councils/leaders/elders), and NCIP FBI/FPIC Teams
and their Regional and Provincial Offices. Specific organization of CBOs is reflected in Table 14.
5.2 Capacity Building for CBO
5.2.1 Training and advisory service for CBO management
The following training-workshop topics and sessions were provided to the three CBOs, all-necessary
for the implementation of the project (Table 17). All training sessions were conducted in the
o u it e e s’ lo al la guage Ce ua o e e ith the IP o u ities, as this as the common language that can be understood and used by the community members. In cases where
some of the words/phrases were not understood by some members, then somebody from the CBO
who can translate in IP language usually assist the facilitators during the conduct of training just to
make sure that everyone understood the basic concepts in each topics that were given.
Table 17: Training-Workshops provided to the CBOs in the Three Project Sites, 2014
Schedule of Training Topic No. of participants Location
Oct. 2-4. 2014 Organization & Project
Management
15 (9W; 6M) Bgy. Sto. Nino
Oct. 9-11, 2014 Organization & Project
Management
15 (8W; 8M) Bgy. Getsemane
Oct. 21-22, 2014 Policies, Systems &
Procedures
15 (8W; 7M) Bgy. Getsemane
Oct. 27-28, 2014 Policies, Systems &
Procedures
15 (9W; 6M) Bgy. Sto. Nino
Oct. 28-30, 2014 Organizational
Development and
Policies, Systems, and
Procedures
16 (5W; 11M) Bgy. Dalupan
Nov. 12-14, 2014 Simple Business
Planning
16 (5W; 11M) Bgy. Dalupan
Nov. 19-21, 2014 Simple Business
Planning
15 (8W; 7M) Bgy. Getsemane
Nov. 26-28, 2014 Basic Accounting and
Financial Management
16 (5W; 11M) Bgy. Dalupan
Nov. 28-30, 2014 Simple Business
Planning
15 (9W; 6M) Bgy. Sto. Nino
Jan. 28-30, 2015 Financial Management
and Simplified
Bookkeeping
13 (7W; 6M) Combined participants
from Bgy. Getsemane
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and Sto. Nino; held in
Bayugan City
For the participants of the training-workshop, all officers and some members of the three CBOs were
required to attend and participate. DARECDA CBO had 16 participants (with five women and 11 men).
Getsemane CBO GAWA had 15 participants (with eight women, seven men) while Sto. Nino also had
15 participants (with nine women, six men).
Members of the CT were able to sit down with the NGOs to review their modules prior to the conduct
of each training activity. Suggestions to simplify the modules and the need to translate these in the
local language (Cebuano) were made. In each training workshop activity, introductory messages was
provided by the Social Development & Gender Specialist to set the tone with emphasis on the
importance of such undertaking in relation to the goals and objectives of the TA Project. Other tasks
provided by the Consultants were specific inputs, coaching during the workshop sessions, and
advises during the activity proper to the NGO Team and CBOs.
5.2.2 Financial Capacity Building of CBO members
Training-workshops on financial capacity of CBOs were included in the roster of topics (Table 17)
given to them that include Basic Accounting and Financial Management, Simplified Bookkeeping and
Simple Business Planning. Series of coaching sessions were also provided to the CBOs related to each
training-workshop that they get and during practice/hands-on of specific task especially by Officers
or BODs. This way, they get the feel of the responsibilities assigned to them and understand their
roles better.
It was however observed that the CBOs’ level of understanding, as well as absorption of the topics
varied. For example, for Dalupan Community which has undergone previous engagements with other
development agencies such as the Upland Development Program (UDP), Mindanao Rural
Development Program of the World Bank (MRDP), have relatively better understanding of the topics.
For communities like the Barangay Getsemane and Barangay Sto. Nino in Bayugan City with relatively
previous limited or no exposure with development agencies, it takes time for them to understand
simplified versions of the topics especially on Financial Management and Bookkeeping. It is therefore
very significant to provide them a series of coaching sessions given the limited time frame of the
project.
5.2.3 Financial Capacity Building of CBO Members for Fund Management and
Livelihood / Enterprise Development
In line with overall tasks to build the capabilities of CBOs in managing the RF, the DPRDI Project Team
coordinated with DARECDA in providing the necessary intervention among participant-beneficiaries
in the pilot-testing phase. Considering that half of these beneficiaries were agricultural producers
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engaged in corn production, the seminar on Sustainable Agriculture conducted in May 2015 focused
on sustainable agricultural practices and the many benefits derived they provide to farmers. As part
of their outputs, participants were asked by DPRDI to come up with their production plan that
determines the necessary budget allocation for each activity. This would also serve as part of the
individual monitoring of farming beneficiaries on their revolving fund utilization.
For the electricity-based household beneficiary-participants of the three CBOs, the seminar focused
on proper and appropriate financial recording that would allow them to monitor expenses in their
micro-enterprises. By training them to do proper recording of their expenses, beneficiaries are
trained along the process to strictly monitor and observe the inflow and outflow of money in their
economic activity.
Insights gathered from the experiences of both set of beneficiaries shall be collected by the NGOs
through its own monitoring and documentation activities. In a similar manner, the CBOs will be
trained in this kind of monitoring as part of their hands-on training and learning in managing their
revolving funds in the future.
5.2.4 Introduction of microfinance institutions or credit facilities to support the capital
requirements of the new technology
The Consultant Team in cooperation with the NGOs Alterdev for the Bayugan City, Agusan Del Sur
subproject and DPRDI for the Municipality of Don Marcelino, Davao Del Sur subproject region
identified all together three institutions which are providing micro finance services to cooperatives
and business organizations in Mindanao. Those services can be used from the CBOs for a future
support of their business activities including the introduction of new technologies. However, at the
current stage the CBOs in the three project sites are not yet in the position and required to handle
with additional financial sources. The management of the CBOs first has to ensure and experience
the correct execution of the Revolving Fund before new financial sources need to be used.
The following institutions will provide micro-financial services:
Baug CARP Beneficiaries Multi-Purpose Cooperative (BCBMPC)
BCBMPC started as an association called Magallanes Aqua Culture Developers Association (MACDA).
It was registered into cooperative last February 8, 1995 under CDA Registry Number CGY-1883 and
re-registered on November 9, 2009 under the new registration number 9520-1300-1993. It was
composed of Agrarian Reform Beneficiaries (ARB) involved in extensive or primitive culture of bangus
and sugpo with limited stocking per hectare. The Board of Directors and Management shift its
operations to savings and credit in February 23, 2004. The cooperative expand its services to the
community to the whole province of Agusan del Norte, Cabadbaran City, Butuan City, Surigao City
and Bayugan City.
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The cooperative has an existing 102 employees for the 3 operations. The BCBMPC is one of the CUES
– Philippines partner in CARAGA Region which is a program of USAID tie up with the World Council
of Credit Union (WOCCU). The cooperative adheres to the financial disciplined introduced by CUES-
Philippines that adopts the MCUB Methodology in order to become a Model Credit Cooperative that
assures the safety of the investments of cooperative members, to become stable and sustained its
operations for a couple of years.
The cooperative promote trainings for all its staff and officers to develop their skills and capabilities
to become competent in the delivery of quality service to all its members.
Alterdev has already many years of successful cooperation with BCBMPC.
BCBMPC Contact Details:
Tel. No. : Butuan Branch- (085) 342-8816
Email: [email protected]
CDA- Registration Number 9520-13001993
San Francisco Growth Enhancement Multi-Purpose Cooperative (SAFRAGEMC)
SAFRAGEMC provides Financial, Economic and Social Services for the Welfare and Development of
its members and to Communities in the region and calls itself an alternative to commercial banking.
It supports and strengthens the core values, e.g. Self-help, Self-responsibility, Democracy, Solidarity,
Equity, Equality, Honesty, Caring for Others, Openness and Social Responsibility.
The Cooperative provides loans on Salary, Commercial, Agricultural Production, Emergency, Pension
and Micro-Finance and savings in terms of Regular Savings, Time Deposit, Kiddie Savings and Youth
Savings.
Alterdev has already many years of successful cooperation SAFRAGEMC
SAFRAGEMC Contact Details:
Head Office : National Highway, Brgy. 5, San Francisco, Agusan del Sur
Tel. No. : (085) 839-5110
C. E. O. : Frederico A. Blanco
Website : www.safragemcommunity.com
CDA- Registration Number 9520-13011486
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Peoples Bank of Caraga, Inc. (PBC)
The Peoples Ba k of Ca aga, I . PBC e isio s so ial uplift i the ou t side ought a out widespread, worthwhile and sustainable economic activities, generated from appropriate
te h ologies a d effe ti e edit fa ilities. Its issio is to effi ie tl deli e desi a le fi a ial services to the countryside, supplemented by capacity building for enterprise development, and
utilization of suitable technologies, towards sustainable livelihood and improved quality of life
among the less-privileged sectors of society.
Founded in 1972 as the Rural Bank of Talacogon, Inc., PBC acquired its current name in 2001. Today,
it has branches in Bayugan, Cabadbaran, Prosperidad, Sibagat, Digos, Lupon, San Francisco, Sta.
Josefa, Compostela, Oroquieta, Talacogon, and Kapalong.
The Head office is at San Francisco, Agusan del Sur and it has 12 branches across Mindanao (1 branch
in Digos, Davao del Sur).
It provides the following services:
Time and premium saving deposit
Agricultural loan
Commercial loan
SME loan
Micro Finance Loan with Micro Insurance package, such as:
- Micro Agricultural loan
- Farm inputs financing loan
- Small business loan
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6 ESTABLISHMENT AND INITIAL OPERATION AND MANAGEMENT OF
THE REVOLVING FUNDS FOR LIVELIHOOD ENHANCEMENT
6.1 Background
Part of the tasks in assisting the community subjects of the grant to develop and pilot viable business
models for livelihood development is the establishment and operation of revolving funds.
Specifically, one of the livelihood activities that will utilize the revolving funds is the establishment
of a CBO micro-credit facility catering the financing needs for the electricity-based household micro
enterprises and farm production inputs of the members of the CBOs.
The revolving fund / micro-credit facility is part of the total Revolving Fund Grant that is provided
under the Technical Assistance Grant of the ADB.
6.2 Pilot Testing
6.2.1 Approach
To ensure that the communities are prepared for the operation of the micro-credit facility, the pilot
testing of the operation and management of the revolving funds was facilitated by the Consultant
Team early this year. The objectives of the Revolving Fund (RF) pilot-testing are as follows:
i. To determine and enhance the capability of the CBO in the operation and management
of the RF.
ii. To determine the effectiveness of the RF in addressing the livelihood and micro-
enterprise needs and potentials of the community households, and
iii. To capture and provide the lessons and references for the subsequent regular operation
and management of the revolving funds.
The actual conduct of the pilot testing on the operation and management of the Revolving Fund
(micro-credit facility) started in May 2015 and was completed by August 2015. The details of the
activities, roles and responsibilities of CBOs, member-recipients of Pilot testing loans and Consultant
Team members who are monitoring the process; and the procedures and policies to be tested are
contained in the proposals submitted by the NGOs (Annex 4).
6.2.2 Implementation of Pilot-Testing of the Revolving Funds
The months of May to August 2015 marked the pilot testing of the RF scheme in the three project
sites.
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With the selected beneficiaries fulfilling all requirements for the pilot testing of the operation and
management of the revolving funds coming from the Project, the NGOs DPRDI and ALTERDEV
facilitated efforts for the immediate release of budget coming from ADB and its subsequent
downloading from Lahmeyer International. With this, the funds were downloaded to NGOs and
subsequently deposited to the account of the CBOs DARECDA, GAWA, and KASAFA, which in turn
released them to its intended household beneficiaries. The official receipt of funds by beneficiaries
from each CBOs marked the start of the pilot-testing phase in the RF management and utilization
(see also Table 18 for details).
O e all, the CBOs’ C edit/Li elihood Co ittees as ell as NGOs have closely monitored the pilot
household beneficiaries on the utilization of abovementioned funds. Other pertinent undertaking in
the RF pilot-testing scheme involves the crafting of specific steps and procedures in loan processing
of household beneficiaries (Table 18).
Table 18: Steps and Procedures in Loan Processing for RF Pilot-Testing Implementation
Steps in Loan Processing for CBOs
Filling-up of loan application form by the CBO member beneficiaries
Processing of loan application by the Credit Committee
Conduct orientation/seminar to the loan applicants/household beneficiaries
CBO will validate, approve and submit request for fund release to NGO based on the budget allocation
NGO will validate, approve, and release the requested funds to the bank account of the CBO
CBO will release loan amount to the member borrowers/household beneficiaries
NGO and CBO will monitor and evaluate the individual household beneficiaries of the RF pilot testing
implementation
Collection of loan repayment of household beneficiaries
Safekeeping of funds through proper financial recording
For DARECDA CBO, the RF pilot testing loan package is provided below (Table 19) highlighting five
farming household beneficiaries and five electricity-based (micro-enterprise) household
beneficiaries. The data shows amount of loan package by individual household beneficiaries, interest
and service charges, loan duration, and repayment mode.
Table 19: DARECDA RF pilot testing loan package for farming and electricity-based micro-enter-
prise household beneficiaries, Barangay Dalupan, Don Marcelino
Loan Categories
Principal
loan
amount
Interest
rate
Service
charges
Duration
of loan
Repayment
mode
A. Electricity-based household microenterprise beneficiaries
1. Fish Vending
Emeriza Aradani
2,000.00
3 months Weekly
Payment
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Loan Categories
Principal
loan
amount
Interest
rate
Service
charges
Duration
of loan
Repayment
mode
2. Ice Candy Production
Delyn Masayao
1,000.00
1%/mo.
or 3% for
the entire
3 months
duration
of the
loan
1%
3 months Weekly
payment
3. Softdrinks retail
Sherra Mae Esmael
2,260.00 3 months Weekly
Payment
4. Ice production
Randy Pandamon
1,000.00 3 months Weekly
Payment
5. Furniture tool (electric planer)
Ricolito Campaan
3,000.00
3 months Weekly
Payment
Sub-total 9,260.00
B. Farming household beneficiaries*
6. Corn Production – 1 ha.
Sebio Tali
6,820.00
1%/mo.
or 3% for
the entire
3 months
duration
of the
loan
1%
3 months Lump-sum
7. Corn Production – 1 ha.
Jerry Dalucan
6,820.00 3 months Lump-sum
8. Corn Production – 1 ha.
Ernesto Guintolon
6,820.00 3 months Lump-sum
9. Corn Production – 1 ha.
Nomerson Limburan
6,820.00 3 months Lump-sum
10. Corn Production – 1 ha.
Lisa Tanway
6,820.00
3 months Lump-sum
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Loan Categories
Principal
loan
amount
Interest
rate
Service
charges
Duration
of loan
Repayment
mode
Sub-total 34,100.00
Total 43,360.00
* Includes seedlings and farm inputs only
For GAWA CBO in Getsemane project site, the loan package of RF pilot testing implementation is
reflected in details in Table 20.
Table 20: GAWA RF Pilot Testing Loan Package for Farming and Electricity-Based Micro-Enterprise
Household Beneficiaries, Barangay Getsemane, Bayugan City
Loan Categories
Principal
loan
amount
Interest
rate
Service
charges
Duration of
loan
Repayment
mode
A. Electric-based household microenterprise
1 Frozen foods marketing
3,000.00 3% per
month
2 % 3 months Payment
2 Chicks growing/raising
5,000.00 3% per
month
2 % 3 months Weekly
payment
3 Waffles & hot cake making
3,000.00 3% per
month
2 % 3 months Weekly
Payment
B. Farming household beneficiaries
4 Pechay and baguio beans
farming
3,000.00 3% per
month
2 % 2.5 months Lump-sum
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Loan Categories
Principal
loan
amount
Interest
rate
Service
charges
Duration of
loan
Repayment
mode
5 Pipino/cucumber and baguio
beans farming
3,000.00 3% per
month
2 % 2.5 months Lump-sum
6 Corn farming
4,000.00 3% per
month
2% 3 months Lump-sum
7 Corn farming
4,000.00 3% per
month
2% 3 months Lump-sum
Total 25,000.00
Table 21: KASAFA RF Pilot Testing Loan Package for Farming and Electricity-Based Micro-Enterprise
Household Beneficiaries, Barangay Sto. Nino, Bayugan City
Loan Categories
Principal
loan
amount
Interest
rate
Service
charge
Duration of
loan
Repayment
mode
A. Electricity-based household micro-enterprise
1. Frozen Foods marketing 3,000.00 3% per
month
2% 3 months Weekly
Payment
2. Coffee vending and fruit
salad marketing
3,000.00 3% per
month
2% 3 months Weekly
payment
3. Waffles & hot cake making 3,000.00 3% per
month
2% 3 months Weekly
Payment
B. Farming household beneficiaries
4. Pechay and baguio beans
farming
3,000.00 3% per
month
2% 2.5 months Lump-sum
5. Pipino/cucumber and baguio beans
farming
3,000.00 3% per
month
2% 2.5 months Lump-sum
6. Corn farming 4,000.00 3% per
month
2% 3 months Lump-sum
7. Corn farming 4,000.00 3% per
month
2% 3 months Lump-sum
Total 23,000.00
Interest charges and service fees were included in the loan package of the three CBOs to cover
operating expenses of the organization in administering the loan programs. The collected interest
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and service fees will go to the institutional fund of the CBO. This fund will cover related operational
and other miscellaneous expenses.
6.2.3 Profiling of Potential Beneficiaries and Livelihoods for Pilot-Testing
An initial but very important aspect of pilot-testing the operation and management of the revolving
fund in the Project is the proper screening and selection of beneficiaries and their preferred
livelihood. Both NGOs – DPRDI and ALTERDEV Project Teams had conducted the profiling of
household-based livelihood activities, focusing on those involved in micro-enterprises and
agricultural production. Specific roles, functions, and responsibilities in the RF pilot testing
implementation are provided in Table 22.
Table 22: Roles, Functions, and Responsibilities in the RF Pilot Testing Implementation
NGOs CBOs Household Beneficiaries
Conduct orientation
relative to the pilot testing
scheme
Assist/coach in selection
of household
beneficiaries
Assist/coach in the
processing of loan
application
Validate, approve and
release of funds to the
CBO’s a k a ou t; Assist/coach the
household beneficiaries
in implementation of
livelihood options
Assist/coach in the
collection of accounts
Assist/coach in the
financial control and
recording of all financial
transactions;
Provide capability-
building activities to
enhance and develop
the managerial skills of
the CBOs.
Evaluate and monitor
the livelihood projects
Document individual
experiences of
household beneficiaries
Select household
beneficiaries for pilot testing
based on criteria
Process loan application of
the household beneficiaries
Approve and release loans to
household beneficiaries
Conduct monitoring and
evaluation of beneficiaries
Collection of loan accounts
Financial control and
recording of all the financial
transactions
Manage the designated
personnel involved in the
operation of revolving funds
Access funds through loan
application
Manage revolving fund /loan
according to its purpose
Pay loan following the terms
and conditions (policies,
systems and procedures of
RF)
Participate in all activities
called for and conducted by
the CBOs (e.g., seminars and
meetings)
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After careful screening of potential candidates for the pilot testing of revolving funds were
undertaken, the list of beneficiaries was finalized in each project sites.
6.2.4 Community Discussions of Approved Policies for Revolving Fund Management
In accordance with the efforts to further clarify and harness the cooperation of the community for
the e ol i g fu ds a aila le i the P oje t, the NGOs ith the CT’s assista e o du ted o u it consultations as regards the utilization and process of accessing the available resources. Community
discussions with the three CBOs (DARECDA, GAWA, and KASAFA) largely focused on the objectives
and methodology to be applied in the revolving fund.
For the methodology, this focused on the following items: a) project management; b) pilot test
duration; c) roles, functions and responsibilities of parties; d) criteria for selection of beneficiaries;
e) loan procedure; f) loan package, interest and other charges, and; g) bases for loan allocation per
enterprise. Subsequent discussions as regards monitoring and evaluation and budgetary
requirements were likewise discussed with the CBOs. This was to ensure that the project remains
transparent in dealing with its beneficiaries in the community.
To make sure that all stakeholders are properly informed on the project, additional discussions were
o du ted ith the a a ga , u i ipal, a d it LGU offi ials th ough the p oje t’s o ta t pe so s at the planning offices of both project areas as well as ECs. These discussions emphasized the co-
management scheme in the revolving funds of the CBOs. Through these efforts, stakeholders in the
ADB-funded project remained committed in their perceived roles and functions in project
implementation.
As a result of the coordinated efforts, beneficiaries were carefully selected for the RF implementation
based on the set criteria by the CBOs (Table 23). It also clarified and enhanced the objectives,
methodology, and policies, system and procedures on RF utilization and management through the
active participation and involvement of various stakeholders in the whole process.
Table 23: Criteria for Selection of Household Beneficiaries of RF Pilot Testing Implementation
Farming household beneficiaries Electricity-based household beneficiaries
CBO member in good standing/active
Corn/vegetable farmer
Participated in the orientation of RF policies,
systems and procedures
CBO member in good standing/active
Business knowledge/experience in micro
enterprise
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Good credit standing/record in loan repayment Participated in the orientation of RF policies,
systems and procedures
Good credit standing/record in loan repayment
6.2.5 Pilot Testing Results
Initial assessments of the CBOs and NGOs on the status of RF implementation repayment showed
positive results such that all electricity-based microenterprise household beneficiaries in the three
project sites were able to pay their loans according to the set schedules. Farming household benefi-
ciaries in Dalupan, Don Marcelino have already paid either in full or partial their loans in mid-August
2015 and expected to have been fully paid at the end of the cropping cycle of their farm production
activities, which will be until end of August 2015 (Table 24 and Table 25). For KASAFA CBO benefi-
ciaries in Barangay Sto. Nino, Bayugan City, the NGO reported that all household beneficiaries have
already fully paid their loans from the revolving fund last August 9, 2015 while for GAWA CBO bene-
ficiaries, it is expected that all will full pay their loans end of August 2015.
Table 24: Repayment of DARECDA Farming Household Beneficiaries for the Revolving Fund Pilot
Testing as of August 11, 2015
Name of
Beneficiaries
Livelihood
Activities
Date of
loan
release
Amount
Loan
Service
Fee (1%)
collected
last May
29, 2015
Interest
for 3
months
(3%)
collected
last May
29, 2015
Date of
Payment
Amount Paid
by the
Beneficiaries
Balance
1.Sebio Tali Farming-
Corn
Production
May
29,
2015
6,820.00 68.20 204.20 August
10, 2015
3,000.00 3,820.00
2.Ricardo
Tamway
Farming-
Corn
Production
May
29,
2015
6,820.00 68.20 204.20 Aug. 11.
2015
500.00 6,320.00
3.Ernesto
Guintolon
Farming-
Corn
Production
May
29,
2015
6,820.00 68.20 204.20 August
11, 2015
5,000.00 1,820.00
4.Romerson
Limburan
Farming-
Corn
Production
May
29,
2015
6,820.00 68.20 204.20 August
11, 2015
6,820.00 0
5,Jerry
Dalucan
Farming-
Corn
Production
May
29,
2015
6,820.00 68.20 204.20 August
9, 2015
800.00 6,020.00
Total 34,100 341.00 1,021.00 16,120.00 17,980.00
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Table 25: Repayment of DARECDA Non-Farming Household Beneficiaries of the Revolving Fund
Pilot Testing as of August 11, 2015
Name of
Beneficiaries
Livelihood
Activities
Date of
loan
release
Amount
Loan
Service
Fee (1%)
collected
last May
29, 2015
Interest
for 3
months
(3%)
collected
last May
29, 2015
Date of
Payment
Amount Paid
by the
Beneficiaries
Balance
1. Loreto
Aradani
Fish
Vending
May 29,
2015
2,000.00 20.00 60.00 August
8, 2015
500.00 1,500.00
2.Bocarie
Esmail
Soft drinks
Retailing May 29,
2015
2,260.00 22.60 67.80 August
9, 2015
500.00 1,760.00
3.Ricolito
Campaan
Furniture
May 29,
2015
3,000.00 30.00 90.00 August
8, 2015
3,000.00 0
4.Geniars
Masayao
Ice Candy
Production May 29,
2015
1,000.00 10.00 30.00 August
8, 2015
500.00 500.00
5.Antara
Ismail
Ice Candy
Production May
29,2015
1,000.00 10.00 30.00 August8,
2015
300.00 800.00
TOTAL
9,260.00 92.00 277.80 4,800.00 4,460.00
a) Getsemane Agricultural Workers Association (GAWA)
i. As p ese ted du i g the Thi d “takeholde s’ Wo kshop o du ted o Jul 30, 2015, the
CBO made progress in managing the loans extended to its members totaling PHP25,000.
ii. Both the Credit and Education Committee functioned effectively enabling the release of
the loans before the end of May 2015.
iii. As of mid-July, the loans for electricity-based household micro enterprises amounting to
PHP11,000 (three member families) have settled 35% of the loans (one loan falling short
of the total amount due).
iv. In addition, two of the four loans totaling PHP14,000 household farm loans have settled
89% of the principal amount borrowed. The rest (two loans) are due by harvest time or
not earlier than July 31, 2015.
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b) Kapines-Awaan Sto Nino Agricultural Farmers Association (KASAFA)
i. As p ese ted i the Thi d “takeholde s’ Wo kshop o du ted o Jul 30, 2015, the CBO
made progress in managing the loans extended to its members totaling PHP23,000.
ii. Both the Credit and Education Committee functioned effectively enabling the release of
the loans before the end of May 2015.
iii. As of mid-July, the loans for electricity-based household micro enterprises amounting to
PHP9,000 (three member families) have a 96% collection efficiency on the principal
amount.
iv. In addition, one loan amounting to PHP3,000 out of the total PHP14,000 household farm
loan is fully paid. The rest (three loans) are due by harvest time or not earlier than July
31, 2015.
c) Dalupan Renewable Energy Development Association (DARECDA)
i. As p ese ted i the Thi d “takeholde s’ Wo kshop o du ted o Jul 30, 2015, the CBO
made progress in managing the loans extended to its members totaling PHP43,360.
ii. Both the Credit and Education Committee functioned effectively enabling the release
of the loans before the end of May 2015.
iii. As of mid-July, the loans for electricity-based household micro enterprises amounting
to PHP9.260 (five member families) have an outstanding principal loan of 48%.
iv. In addition, one loan amounting to PHP6,820 for household farm production is fully
paid. The rest (four loans) are due by harvest time or not earlier than July 31, 2015. By
August 11, 2015, the outstanding principal loan is 53% of PHP34,100 or equivalent to
PHP17,980.
6.3 Revolving Fund Forecast
With the grant of a Revolving Fund which will provide the initial capital for the micro-financing facility
for the CBO, the forecast of the resulting financial position of the loan operations was made. The
following general assumptions are the bases for projecting the operations:
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a) Capital
The assumed capital is based on the total number of potential members of the CBO. The
initial RF capital will allow 20% of the members to borrow an average of PHP10,000 loan.
These loans shall be used by the recipients for electricity-based household micro-
enterprises and household farm production inputs. Considering the low revenue base,
the CBO will not be able to immediately cover its operating expenses. Thus, the capital
provision will include a working capital to defray the initial year expenses.
b) Revenues & Collection Efficiency
A 2% service fee will be deducted from the total loan amount with interest rates of 3%
per month payable in four months. The CBO shall lend out whatever is collected every
month minus the salaries and administrative expenses of the CBO. The CBO should
ensure a 97% collection efficiency (PHP97 collected out of every PHP100 loan
amortization due from members) to attain the forecast cash position.
c) Expenses
The CBO shall hire a loan officer who shall be responsible for bookkeeping and reporting
to the CBO Board and Management. The other staff (collector) is assumed already hired
in the other livelihood activities of the CBO, not chargeable to the micro-credit RF facility.
d) Profitability
A three-year forecast of the operations of the micro-financing facility of the CBO shows
modest profitability. All three CBOs should also be able to maintain a positive asset
growth rate during the three-year operations. This means that the CBOs can sustain their
operations and not erode its loan capital and cash provided to them through the grant
of Revolving Fund.
e) DARECDA Financial Forecast
i. In its initial 3 years operation, the PHP400,000 loan capital should be able to make
available a total of 130 loans a year (or equivalent to more than three turnovers for
the year). This is also on account of the initial working capital for operating expenses
which enabled more loan repayment collection to be available for new loans to
members.
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ii. The CBO will earn an average of PHP761 total interests on one loan. On the other
hand, the average salary that the CBO can manage to pay is only around PHP7,000 a
month . This is on the assumption that the employees work for 20 days a month.
Table 24: DARECDA, Project Income Statement
Year 1 Year 2 Year 3
Revenue
Service fee 26,000 25,397 32,187
Interest income 92,223 93,700 114,432
Total Revenue 118,223 119,097 146,620
Less Operating Expenses
Salaries 75,292 77,777 80,343
Office Maintenance & Supplies 1,200 1,240 1,281
Transportation 3,000 3,099 3,201
Communication 1,800 1,859 1,921
Total Operating Expenses 81,292 83,975 86,746
Net Income 36,931 35,122 59,874
iii. Assuming the 97% collection efficiency target is attained, the operations will result
to an over-all asset growth rate of 8.8% in the next three years. Their collection
performance will be the critical factor in ensuring that there are cash available for
members to borrow.
Table 25: DARECDA, Projected Cash Flow
Year 1 Year 2 Year 3
Collection Efficiency 97% 97% 97%
Collection – Interest 82,958 100,155 113,810
Collection - Principal 1,044,373 1,193,653 1,436,013
Membership Capital - - -
Total Collection from Loans & Capital 1,127,331 1,293,808 1,549,823
ADB Revolving Fund Grant 400,000
Total Receipts 1,527,331 1,293,808 1,549,823
Less: Loan Releases 1,274,000 1,244,439 1,577,175
Less: Operating Expenses 81,292 83,975 86,746
Total Disbursements 1,355,292 1,328,414 1,663,921
Cash Inflow from Lending Activities 172,039 (34,606) (114,097)
Beginning Balance, Petty Cash 81,292 253,331 218,725
Ending Cash Balance 253,331 218,725 104,627
iv. By the end of the third year of operations, the CBO which had an PHP81,292 petty
cash from the RF Grant funds at the start of operations would have raised this to
almost PHP105 thousand with Loans Receivable of P505 thousand. The projected
financial statements are shown below:
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Table 26: DARECDA, Projected Balance Sheet
Year 1 Year 2 Year 3
Asset:
Current Assets 508,958 550,535 609,787
Cash 253,331 218,725 104,627
Loans Receivable 255,627 331,810 505,159
Interest Receivable 9,266 2,811 3,433
Total Assets: 518,223 553,346 613,220
Liabilities and Equity:
Grant from ADB 481,292 481,292 481,292
Member Capital Contribution - - -
Retained Earnings 36,931 72,054 131,928
Total Equity 518,223 553,346 613,220
Total Liabilities and Equity 518,223 553,346 613,220
f. GAWA Financial Forecast
i. In its initial three years operation, the PHP300,000 loan capital should be able to
make available a total of 90 loans a year (or equivalent to three turnovers for
the year). This is also on account of the initial working capital for operating
expenses which enabled more loan repayment collection to be available for new
loans to members.
ii. The CBO will earn an average of PHP761 total interests on one loan. On the other
hand, the average salary that the CBO can manage to pay is only around
PHP5,600 a month . This is on the assumption that the employee work for 20
days a month.
Table 29: GAWA, Projected Income Statement
Year 1 Year 2 Year 3
Revenue
Service fee 17,000 18,354 21,164
Interest income 61,064 64,039 80,107
Total Revenue 78,064 82,393 101,271
Less Operating Expenses
Salaries 72,500 74,893 77,364
Office Maintenance & Supplies 1,200 1,240 1,281
Transportation 2,000 2,066 2,134
Communication 1,800 1,859 1,921
Total Operating Expenses 77,500 80,058 82,699
Net Income 564 2,335 18,571
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iii. Assuming the 97% collection efficiency target is attained, the operations will
result to an over-all asset growth rate of almost 2.7% in the next 3 years. Their
collection performance will be the critical factor in ensuring that there are cash
available for members to borrow.
Table 27: GAWA, Projected Cash Flow
Year 1 Year 2 Year 3
Collection Efficiency 97% 97% 97%
Collection – Interest 55,686 67,495 79,625
Collection - Principal 706,306 804,506 1,019,532
Membership Capital - - -
Total Collection from Loans & Capital 761,992 872,002 1,099,157
ADB Revolving Fund Grant 300,000
Total Receipts 1,061,992 872,002 1,099,157
Less: Loan Releases 833,000 899,343 1,037,047
Less: Operating Expenses 77,500 80,058 82,699
Total Disbursements 910,500 979,400 1,119,746
Cash Inflow from Lending Activities 151,492 (107,399) (20,589)
Beginning Balance, Petty Cash 77,500 228,992 121,594
Ending Cash Balance 228,992 121,594 101,004
iv. By the end of the third year of operations, the CBO which had an PHP81,292 petty cash
from the RF Grant funds at the start of operations would have raised this to almost
PHP101,004 with Loans Receivable of PHP295,563. The projected balance sheet is shown
below:
Table 28: GAWA, Projected Balance Sheet
Year 1 Year 2 Year 3
Asset:
Current Assets 372,686 378,477 396,567
Cash 228,992 121,594 101,004
Loans Receivable 143,694 256,884 295,563
Interest Receivable 5,378 1,921 2,403
Total Assets: 378,064 380,399 398,970
Liabilities and Equity:
Grant from ADB 377,500 377,500 377,500
Member Capital Contribution - - -
Retained Earnings 564 2,899 21,470
Total Equity 378,064 380,399 398,970
Total Liabilities and Equity 378,064 380,399 398,970
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g. KASAFA Financial Forecast
i. In its initial three years operation, the PHP250,000 loan capital will enable a total of
73 loans a year (or equivalent to almost three turnovers for the year). This is also on
account of the initial working capital for operating expenses which enabled more
loan repayment collection to be available for new loans to members.
ii. The CBO will earn an average of PHP761 total interests on one loan. On the other
hand, the average salary that the CBO has to pay amounts to PHP4,500 a month.
This is on the assumption that the employees reports for only 20 days a month.
Table 29: KASAFA, Projected Income Statement
Year 1 Year 2 Year 3
Revenue
Service fee 14,600 14,726 18,298
Interest income 51,931 52,122 68,922
Total Revenue 66,531 66,848 87,220
Less Operating Expenses
Salaries 58,540 60,472 62,467
Office Maintenance & Supplies 1,200 1,240 1,281
Transportation 2,000 2,066 2,134
Communication 1,800 1,859 1,921
Total Operating Expenses 63,540 65,637 67,803
Net Income 2,991 1,211 19,418
iii. Assuming the 97% collection efficiency target is attained, the operations will result
to an over-all asset growth rate of almost 3.2% in the next 3 years. Their collection
performance will be the critical factor in ensuring that there are cash available for
members to borrow.
Table 30: KASAFA, Projected Cash Flow
Year 1 Year 2 Year 3
Collection Efficiency 97% 97% 97%
Collection - Interest 46,903 55,586 68,418
Collection - Principal 592,440 659,117 873,366
Membership Capital - - -
Total Collection from Loans & Capital 639,343 714,703 941,785
ADB Revolving Fund Grant 250,000
Total Receipts 889,343 714,703 941,785
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Less: Loan Releases 715,400 721,566 896,613
Less: Operating Expenses 63,540 65,637 67,803
Total Disbursements 778,940 787,202 964,416
Cash Inflow from Lending Activities 110,403 (72,499) (22,631)
Beginning Balance, Petty Cash 63,540 173,943 101,443
Ending Cash Balance 173,943 101,443 78,812
iv. By the end of the third year of operations, the CBO which had an PHP63,540 petty
cash from the RF Grant funds at the start of operations would have raised this to
almost PHP78,812 with Loans Receivable of PHP256,280. The projected balance
sheet is shown below:
Table 31: KASAFA, Projected Balance Sheet
Year 1 Year 2 Year 3
Asset:
Current Assets 311,503 316,178 335,092
Cash 173,943 101,443 78,812
Loans Receivable 137,560 214,735 256,280
Interest Receivable 5,028 1,564 2,068
Total Assets: 316,531 317,742 337,159
Liabilities and Equity:
Grant from ADB 313,540 313,540 313,540
Member Capital Contribution - - -
Retained Earnings 2,991 4,202 23,619
Total Equity 316,531 317,742 337,159
Total Liabilities and Equity 316,531 317,742 337,159
6.4 Training and Advisory Service for Revolving Fund Management
The first and second quarter of 2015 (with the extended time frame of the project) were focused on
the piloting of Revolving Fund (RF) at the household level in the three project sites. The piloting
involved selected households with farming as major livelihood activity as well as households that
utilize electricity-based microenterprise. The NGOs ALTERDEV and DPRDI with close guidance and
consultation with the CT, assisted the CBOs in the implementation of the RF.
Specifically, the months of March to April 2015 generally involves the proper screening and
identification of pilot-beneficiaries, determination of their livelihood options. This also includes the
implementation of initial system, policies and procedures governing revolving fund management and
utilization.
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6.5 Operation of Revolving Fund after Project Implementation
The rules and regulations for the operation of the Revolving Fund after project implementation will
be defined in the hand over agreement at the end of the project between ADB, NEA, LGU, CBO.
The chapter will be part of the Final Report.
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7 EMPHASIS ON WOMEN S ‘OLE AND PA‘TICIPATION IN THE P‘OJECT
Concerns on gender particularly the role of women and men in the project as a whole were
emphasized and integrated during the SDGS preliminary meetings/consultations where project was
presented, during training and workshops by NGOs, and informal coaching sessions with the CBO
members and officers. During the scanning period of the project, it was found out that the three
project sites ha e i fo al g oups of o e . These e e o ga ized i to Wo e ’s Asso iatio s the LGU purposely for livelihood activities in each village or Barangays. Awareness raising on their
specific roles and functions when the project was introduced did not start from zero due to this
existing structure.
With the p oje t i ple e tatio , e phasis o o e ’s ole a d pa ti ipatio i the p oje t as given due attention. However, there were cultural considerations especially in indigenous people-
dominated commu ities like Ba a ga Dalupa ith ostl B’laa t i es i Do Ma eli o a d Barangay Sto. Nino dominated by Manobo tribe in Bayugan City. Just like in all other IP areas in the
country, men are regarded as household heads and also those who sit in tribal council are composed
ostl of elde s ho a e e . Gi e the du atio of the p oje t, i di ato s of o e ’s pa ti ipatio can be seen in four major aspects: 1) CBO membership, 2) organizational structure, 3) MHPP
operation, and 4) revolving fund pilot testing (Table 35).
Ge e all , it a e glea ed that i all fou aspe ts, o e ’s pa ti ipatio is sig ifi a t a d the e is huge room for improvement as the project will go on with proper guidance from the NGOs and LGUs
which will be working closely with the CBOs.
CBO Membership
O e all, o e ’s pa ti ipatio i CBO e e ship i ol ed o e thi d of the total populatio covering the three project sites. This ranges from 36% to 56%, which is good enough for a starting
project particularly in IP areas. Of the three groups, KASAFA membership is being dominated by
women with 56%. During meetings however, men head of households usually send their wives to
attend meetings as they tend to attend to their farm activities.
The project should take note that organizing an IP community takes longer period of time considering
cultural implications especially gender issues.
CBO Officers/Board of Directors
Wo e ’s pa ti ipatio i de isio -making process within the CBO was expressed through their
involvement as officers of the Board of Directors of the organization. They occupied the so-called
positions as Secretary, Treasurer, Auditor, while men occupy the position as Chair of the Board, Vice
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Chair. DARECDA and GAWA averaged 31% and 53% participation of women, respectively while
KASAFA rated a high of 60%. In terms of the committees, these are headed and participated in by
mostly women particularly in Credit/Livelihood, and Education Committees.
MHPP Operators
For the MHPP operation, there were two women who are involved in the maintenance and operation
of MHPP in both DARECDA and GAWA. However, men dominated this aspect of the project based
on the given criteria for selection by the project engineer. As the project continues, it is expected
that more women will participate.
Revolving Fund Piloting
I e ol i g fu d piloti g, o e ’s oles e e e p o isi g a d sig ifi a t as the o sist al ost half of the beneficiaries who participated. Their involvement was mostly in electricity-based
household enterprise and some in farm household enterprise. With the continuation of the RF
implementation as part of livelihood activities, more women signified their interest to participate.
Table 32: Ge der i di ators o o e a d e s parti ipatio i the proje t y CBO
CBO/Indicator Women Men Total
1
Membership
DARECDA 38 (23%) 129 (77%) 167
GAWA 36 (38%) 58 (62%) 94
KASAFA 40 (56%) 32 (44%) 72
2
BOD/Officers
DARECDA 5 (31%) 11 (53%) 16
GAWA 8 (53%) 7 (47%) 15
KASAFA 9 (60%) 6 (40%) 15
3
MHPP Operators
DARECDA 2 (33%) 6 (67%) 8
GAWA 2 (29%) 7 (71%) 9
4
Revolving Fund Piloting
DARECDA 4 (40%) 6 (60%) 10
GAWA 3 (43%) 4 (57%) 7
KASAFA 3 (43%) 4 (57%) 7
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8 KNOWLEDGE DISSEMINATION AND PREPARATORY WORK FOR
SIMILAR RE PROJECTS REPLICATION AND SCALING UP
8.1 Replicable RE Projects
8.1.1 List of Replicable Projects
In a study for ADB, 20 sites in Davao were identified to be suitable for distributed RE-based rural
electrification. The final shortlist was arrived at using the following criteria:10
a. Number of unenergized households that can be served by the proposed renewable energy
power plant;
b. Distance from the last tapping point of the grid
c. Compactness of the unenergized households
d. Accessibility to the proposed project site location
e. Existing and/or potential income generating equipment using electricity which can enhance
the income of the local community
f. Support from the Municipal and Barangay Local Government Units (LGUs)
g. Availability of sufficient renewable energy resource
h. Potential to connect the mini-grid to the main Electric Coop grid
8.1.2 Pilot Implementation of Shortlisted Projects
The sites were identified as the best off-grid or on-grid in Davao and Caraga regions of Mindanao. In
2014, three Pilot Projects were implemented using grant funds from ADB. Two of these projects were
included in the list, i.e. Brgy. Dalupan, Municipality of Don Marcelino (Davao del Sur) and Brgy.
Getsemane, Bayugan City (Agusan del Sur). The Pilot Projects were both unenergized at the time of
study and recommended to be owned and managed by the Community. The project profile of the
Projects are shown below:
1) Barangay Dalupan, Municipality of Don Marcelino, Davao del Sur
a) The technical study conducted for Barangay Dalupan recommended a 25 kW installed
capacity, operating at 95% grid availability at near 90% load factor with 4% transmission
losses to attain viability. The required investment was forecast at PHP7.209 Million;
10 Fi al Co sulta t’s Repo t, TA-7781-PHI Rural Community-based Renewable Energy Development in Minda-
nao, 2012
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b) The energy produced will be sold at the FIT rate of PHP 5.90, subject to digression after two
years on 60% of the rate;
c) The actual construction required a Project Cost of PHP9.483 Million (civil works and
mechanical equipment) resulting to an equivalent cost of PHP397,800 per kW installed
capacity or an increase of 45% to the projected cost.
d) The MHPP facility will be owned and operated by a CBO registered with the DoLE as
Dalupan Renewable Energy Community Development Association (DARECDA), operating
on-grid.
e) A Net Metering Agreement will be entered into between the CBO and DASURECO (Electric
Cooperative/EC) for the sale of exported energy to the EC at the blended generation cost
of the EC.
2) Barangay Getsemane, Municipality of Don Marcelino, Davao Sur
a) The technical study conducted for Barangay Dalupan recommended a 30 kW installed
capacity, operating at 95% grid availability at 74% load factor with 4% transmission losses
to attain viability. The required investment was forecast at PHP7.953 Million;
b) The energy produced will be sold at the FIT rate of PHP5.90, subject to digression after two
years on 60% of the rate;
c) The actual construction required a Project Cost of PHP13.306 Million (civil works and
mechanical equipment) resulting to an equivalent cost of PHP397,800 per kW installed
capacity equivalent to an increase of 67% to the projected cost.
d) The MHPP facility will be owned and operated by a CBO registered with the DoLE as
Getsemane Agricultural Workers Association (GAWA), operating on-grid.
8.1.3 Findings in Project Implementation
1) On-Grid MHPP Operation
Contrary to the projected sale of electricity using FIT rate, the CBO will only realize revenues
equivalent to the blended generation cost of the ECs. This will impact on the resulting rate of return
but the Project will generate adequate cash flows to sustain operations. However, if the CBO will be
able to use more energy than exported which would mean more livelihood activities generated, then
the return will be higher for the MHPP.
2) Operating Expenses
The Operating and Maintenance Costs will include the salaries of two operators and two supervisors
working on two-shifts per day, 0.50% of the Civil Works and Cost of Power Plant maintenance
expenses, subject to 3.3 annual inflation.
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3) Financing of Project
The Project, being funded by grants will not require servicing of loans which significantly affects cash
flows. Per the Business Plan prepared, the operating requirement of the MHPP operation will only
include: salaries, maintenance costs and administrative costs for transportation, communication,
and supplies.
4) Ownership & Capacity Building
The CBO which will own the MHPP facility was organized also during the construction period of the
MHPP and given initial training on organizational and financial management. These aim to arm the
CBO with skills both in MHPP operation and the livelihood program chosen by the CBOs.
8.1.4 Replication in Other Sites
1) Actual Project Cost & Operating Profile
a) The update of the costs and feasibility for the two Pilot Projects as summarized in Table 33
could be used as benchmarks if the Project can be replicated in other sites under similar
conditions with the Pilot sites. Note that the cash flow forecast indicate that cash inflows
will sustain operation and maintenance and provide for a payback of less than the twenty-
five year projected operations.
Table 33: Actual Costs and Resulting Cash Flow Profile of Pilot Projects
b) Given the conditions above, financing of the Project by grants would still be feasible on the
basis of financial sustainability of the facility. There are other social considerations needed
Dalupan Getsemane
Installed Capacity 25 30
Total Construction Cost Peso '000 9,483 13,306
Average Cost per kW Installed Capacity Peso '000 379.32 443.54
Maximum Energy Sold kW 175,200 210,240
% Usage by CBO 19% 12%
% Exported to EC 81% 88%
Average 25 -yr Blended Generation Cost Peso/ kWh 7.52 7.49
Initial Five Years of Operation
Blended Generation Cost Peso/ kWh 4.93 4.81
Annual Average Revenue Peso '000 864 1,121
Annual Average Cost 483 579
Annual Average Cash Inflow Peso '000 381 542
Internal Rate of Return % 3% 2%
Payback Period years 18 20
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to be evaluated including the support of the local government units. The strong support
from both the Barangay and Local government units were found very beneficial and
advantageous in the Pilot Projects. This included financial support for the counterpart
funding (licensing, contribution of MHPP site, etc.).
c) However, at the resulting actual construction cost and IRR, the replication of the Project by
private proponents will only be desirable if the realized savings from using the generated
e e g a o e the ost of fi a i g a d etu o the P opo e t’s apital.
2) Feasibility Scenario at Original Investment Cost
a) It was earlier stated that the construction cost of the Projects undertaken departed
significantly from the projected costs. In Barangay Dalupan, the cost is at PHP379,320
(USD8,621) per kW installed capacity or equivalent to an increase of 45% over the
PHP261,200 (USD5,932) projected construction cost.
b) To compare the updated projections if the actual construction costs were within the
projections in the original technical study done for the Pilot Projects, the 12% desired rate
of return could still be attainable as shown in Table 34.
Table 34: Original Investment Costs and Updated Cash Flow Profile of Pilot Projects
Dalupan Getsemane
Installed Capacity 25 30
Total Construction Cost Peso '000 6,526 7,214
Average Cost per kW Installed Capacity Peso '000 261.02 240.46
Maximum Energy Sold kW 175,200 210,240
% Usage by CBO 64% 63%
% Exported to EC 36% 37%
Average 25 -yr Blended Generation Cost Peso/ kWh 10.73 9.75
Initial Five Years of Operation
Blended Generation Cost Peso/ kWh 5.61 5.79
Annual Average Revenue Peso '000 983 1,218
Annual Average Cost Peso '000 466 545
Annual Average Cash Inflow Peso '000 517 673
Internal Rate of Return (IRR) 12% 12%
Payback Period years 8 8
c) Given that the Pilot Projects are operating under the Net Metering Arrangement with
e po ted e e g p i ed at the EC’s le ded ge e atio ost, the attai e t of the desired rate of return and payback period hinge on the realized savings by the Operator
from operating the MHPP. In Table 34, a 64% usage by the CBO would result to the 12%
IRR.
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8.1.5 Challenges in Future Replication
Using the parameters in the previous study shortlisting the unenergized communities in the Caraga
and Davao regions, the highlights of the actual experience are presented in Annex 5. The highlights
of the actual experience are shown in Table 35.
Table 35: Experience in Pilot Projects
Parameter
Location of communities The difficulty of transporting materials and bad weather
affected the timeliness of construction. It was not
established whether the increase of actual costs (bid
price) was primarily due to the situation of the access
road. It was part of the recommendation that the
improvement of access road will happen before the
implementation of the project.
Local demography and population size Since the MHPPs will be operating on-grid, the actual
sale of energy is not affected by the demography and
population size. The critical factor would be the
willingness and capacity of the EC to agree on the Net
Metering Arrangement for the MHPPs.
Latent demand for electricity The demand for electricity would be critical to areas that
will operate on an off-grid scheme.
On the other hand, for the Pilot Projects owned and
operated by CBOs that are under their formative period,
the demand for electricity is not yet established.
Whether or not the CBOs will maximize the benefits of
the MHPP will be the challenge. Under the Net Metering
Arrangement, the CBO as a registered user of electricity
has to engage in electricity-based livelihood activities.
Availability of renewable energy
sources
There should be a reliable Feasibility Study and Design
for the Project The provision of grant funds for the
technical and feasibility study will affect actual
investment cost for any Proponent of MHPP projects.
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Existing or potential local income
generating power consumers
The sustainability of the MHPPs will also be affected by
the operation of the livelihood program of the CBO. The
higher usage of energy by the Cooperative in the future
will bear on the rate of return for the Projects.
Locally available community
development or financing
organizations
Grant funding for the development, organization and
training of the CBO will be a critical advantage for future
implementation in the potential sites.
Without regulatory barriers The support of all stakeholders which include the LGUs,
Regulatory and permitting agencies is important to the
operational arrangement that will be made in the other
sites.
The dissemination of the actual experience in the Pilot
Projects (Knowledge Kit) will be helpful for future
proponents of MHPP Projects.
With policy enablers Under a Net Metering Agreement where the EC will be
paying the CBO / Proponent the blended generation cost
spells the difference in the sustainability of MHPP (cash
flow). This is in contrast to the earlier idea that the
MHPP owner would be credited (future use) for the
energy exported to the EC.
8.1.6 Replication by a Private Proponent
Using as bases the results of the update of feasibility study and Business Plan done for the Pilot
Projects, a scenario where a Private Proponent is assumed to undertake the Pilot Project is made.
The results of the sensitivity could give an indication of how future Projects could be replicated using
the actual experience in the Pilot Projects in Brgys. Dalupan and Getsemane.
1) Assumptions
The following assumptions shown below were applied to test the sustainability of the Project
assuming a private proponent will take on a Project resembling the conditions existing in Barangay
Dalupan:
a) The construction cost of the MHPP is at the actual cost incurred in installing the MHPP in
Barangay Dalupan;
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b) The cost of training on MHPP operation, permits and licenses, and other incidental
expenses shall be financed by the Private Proponent;
c) The Proponent must have a business enterprise or unit that will require the electricity
generated by the MHPP and where the Proponent can derive the returns for his/her
investment. Otherwise,
d) The financing terms as shown in the Financing Plan below were adopted from the
Development Bank of the Philippines (DBP) loan for RE projects. A new financing scheme
was recently made available in Land Bank of the Philippines but has a shorter repayment
period.
Table 36: Financing Plan
The operating expenses and other assumptions for the operation are shown below:
Table 37: Operating Expenses
Financing
Bank Loans % interest rate repayment yrs grace period
Regular Loan 40% 5% 15 -
Soft Loan 40% 5% 15 5
Equity Capital 20% 15%
Cost of Capital Amount (P'000) % Cost of Capital
Regular Loan 4,015 5% 2%
Soft Loan (with longer grace period) 4,015 5% 2%
Equity Capital 2,007 15% 3%
ADB Grant 10,037 7%
Operating & Maintenance
Salaries Number Daily WagePhilhealth,
MHDF/Mont SSS Annual (Base)
Supervisors 2 275 225 8% 186,972
Crew 2 260 225 8% 176,921
363,893
Maintenance % Equipment Cost ('000) Annual
Electro-Mechanical 0.5% 2,854 14,271
Civil Works 0.5% 6,629 33,144
Other Expenses Monthly Annual
- Transportation 500 6,000
- Communications 500 6,000
- Office/Other Supplies 250 3,000
- Business Permit / Audit Fee 417 5,000
- Miscellaneous 500 6,000
26,000
Total 437,308
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Table 38: Other Assumptions
2) Results of Model for Private Proponent
a) The cash flows will have debt servicing which will be an additional operating /cash
requirement on the day-to-day operations.
b) The discount rate taken is the cost of capital computed at 7%. Per financing plan above,
8 % of the p oje t ill e fi a ed a loa a d % ill e the o e ’s apital ith a 15% required rate of return.
c) Under the base scenario, only 20% of the generated energy will be used by the Proponent
and the balance is exported to the EC. The Project will not be desirable considering the IRR
of 3%.
d) At the base scenario, only 75% of total debt service (maximum) can be covered by the
revenues (80% export at blended generation cost).Thus, the Project will not be desirable
to a Private Proponent whose usage of electricity (Business Unit) is not at the optimum
level.
e) If the Proponent were able to use 70% of the energy for its Business Unit, then the Project
will give a return of 9%, higher than the discount rate of 7% (cost of capital). The Project
has a 19 year payback period due to the payment of the loan:
Year of Evaluation 2015
2016
Revenues
Blended Generation Rate 4.14
Retail Rate 9.00
Annual Increase 3%
CPI Index 3.3%
O & M Costs
% of Capital Investment 4.5%
Depreciation of Power Plant
% of Capital Investment 4.0%
"yes" (1) or "no" (0) year to start
VAT-Exempt/ Special Privilege 1 0.0% 1
"yes" (1) or "no" (0) End year of Holiday
Income Tax Holiday 1 10.0% 8
Initial Year of Operations
Cash Flow Inputs
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Table 39: Discount Rate of 7%
8.1.7 List of Replicable Projects
On the basis of the foregoing, Annex 6 shows the list of Municipalities where it is deemed that the
Projects in Barangay Dalupan and Barangay Getsemane may be replicated.
The Municipalities were earlier listed as viable for implementation. The recommended
Implementation Models considered the four existing off or on-grid Models. However, the
Community-Based implementation particularly under grant financing is not discounted. The
undertaking by a Private Proponent denotes the site as feasible due to the high commercial or
income generating demand for electricity and/or large number of unenergized households.
8.2 Lessons Learnt
On NCIP FPIC Process
The implementation of community-based renewable energy projects in Bayugan City and Don
Marcelino tends to demonstrate that FPIC processes in indigenous communities take considerable
time and effort in ensuring that necessary and appropriate consent is generated from target project
beneficiaries. The experiences in both sites revealed that NCIP as a project stakeholder takes a crucial
role in the prevailing policy environment that governs projects situated in indigenous communities.
Thus, it becomes imperative for future community-based renewable energy projects with indigenous
peoples to seriously consider community processes under existing rules in the Indigenous Peoples
Rights Act (IPRA).
Discount Rate % 7%
Base Scenario70% Proponent's
Energy Usage
Net Present Value Peso (3,265,389) 2,518,888
Internal Rate of Return % 3% 9%
Payback Period Years >25 19
Annual Generation kW 219,000
Maximum Energy Sold kW/year 175,200
Hydro capital cost per kW installed capacityPeso/kW 401,483
USD/kW 9,125
Accumulated Cash Balances at Year-end
(after OPEX and debt service payments
Year 1 Peso (105,043) 58,334
Year 2 Peso (300,430) 166,801
Year 3 Peso (487,023) 374,350
lupan Year 4 Peso (639,663) 401,761
Year 5 Peso (756,468) 429,946
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Prior to the start of the study, lessons tend to demonstrate that the Technical Study should have
considered the role of NCIP as part of project implementing agencies on the side of government. As
a major stakeholder, it appea s that NCIP’s fu tio ust fo pa t of the p oje t i ple e tatio plan, more specifically in the conduct of FPIC among indigenous communities covered by the project.
Related to this, project implementation time frame must take serious consideration of the tedious
FPIC process as well as the many and various constraints of NCIP that include limited personnel and
budget. This came out as a suggestion by NCIP Region XI in one of the earlier stakeholder
consultations in Davao. Getting them involved as project implementer or stakeholder at the onset of
the p oje t a pa e the a fo the age to gi e p io it to the p oje t’s u de taki gs as pa t of their institutional plan.
On Community Organizing Process
As per project experience, community-organizing process must involve NGOs that are based locally
and have a grasp of the situation (culture, language, terrain) of the local communities selected in the
project sites. Indigenous peoples and communities are not easy to organize; hence, it usually takes
longer period of time to get their approval and establishment of rapport with organizers especially
those who are not familiar with their culture and language. Selection of committed groups/NGOs to
assist in the organizing component of the project proved to be crucial.
On Coordination with LGUs and other Stakeholders
LGUs role in the project implementation is very significant being the initial proponent of the pilot
project. Their roles/tasks are fundamental and essential in the overall project implementation such
as processing of permits, certifications, clearance (security), NCIP related processes that are needed
in carrying out the project. It is therefore imperative to work closely with the LGUs at the City,
Municipal, and Barangay levels to ensure that all aspects of project are in place including the turnover
of the project to the community-based beneficiaries.
8.3 Knowledge Dissemination Plan
The Consultant is to develop a knowledge kit on basis of the outputs and results of the project. This
knowledge kit is to be produced in a hard copy and a digital soft copy version. The hard copy version
is to be printed and made directly available for distribution to LGU and communities. NEA, ECs and
ADB will present it during workshops. The soft copy version should be published for download from
the NEA’s a d ADB’s e site. This ill ake su e that i te ested pa ties ha e a ess to the esults and accumulated knowledge in order to successful implement future projects.
It is recommended also to publish an edition of the knowledge kit in local languages so that the
beneficiaries have also access and might initiate a development of projects from their interest.
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9 PROCUREMENT, CONTRACTS AWARD AND DISBURSEMENT
9.1 Procurement
The Consultant conducted procurement of Technical Survey Services, MHPP Installation Projects and
Engagement of NGOs using methods under ADB procurement guidelines (March 2013).
9.1.1 Procurement of Technical Survey Services
Using the ADB guidelines on Shopping Method, Requests for Quotations (RFQ) were sent to several
contractors for providing technical survey services in the three sites of Brgy. Dalupan, Don Marcelino,
Davao del Sur, Brgys. Getsemane and Sto. Nino both in Bayugan City, Agusan del Sur. Of the 17
invited contractors, only two contractors submitted quotations and documents namely, a) LAPS Land
Analytics and Planning Solutions and b) S.C. Serrano Surveying and Engineering Services
The evaluation of the submissions of the two contractors showed that LAPS has superior
qualifications and capability to undertake the survey project and the offer of LAPS was considered
the lowest substantially responsive quotation. After the negotiations and issuance of the Letter of
Acceptance, the Contract for the Conduct of Technical Survey in the three sites was entered into and
signed. The contractor was advised to start survey works on May 5, 2014 for Brgys. Getsemane and
Sto. Nino sites and on May 9, 2014 for Brgy. Dalupan site.
The contractor, LAPS Company, was able to submit by end of July 2014 the final survey reports (soft
copy and hard copy) as well as maps pertaining to the surveying works it conducted in Barangay
Dalupan, Don Marcelino, Davao del Sur, and in Brgys. Getsemane and Sto. Nino, Bayugan City,
Agusan del Sur. All reports have been accepted by Consultant.
9.1.2 Procurement of Two MHPPs
The procurement process of the two MHPPs in Brgys Dalupan, Don Marcelino, Davao del Sur, and
Brgys , Bayugan City, Agusan del Sur is discussed in detail in 4.1 Sub-output 2.1. Procurement of Sto
Nino MHPP was not conducted due to budget constraints.
9.1.3 Procurement of NGO / MFI
The method used for selecting MFIs/NGOs as provided for in the Terms of Reference (TOR) is the
Consultants Qualification Selection (CQS) of the ADB Guidelines on the use of Consultants (March
2013).
The Guideli es p o ides that The o o e o ADB shall i p epa e the TOR, ii e uest a plified E p essio s of I te est EOls a d i fo atio o the o sulta ts’ e pe ie e a d o pete e
relevant to the assignment, (iii) establish a shortlist of at least three firms, and (iv) select the firm
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with the most appropriate qualifications and references based on the EOls. The selected firm shall
be asked to submit a combined technical-financial proposal and then be invited to negotiate the
contract. Should negotiations fail, the borrower or ADB shall start negotiations with the next ranked
fi u til a ag ee e t is ea hed.
On May 8, 2014, Requests for Expression of Interest (R-EOI) were sent to six micro-financing
institutions/non-government organizations (MFI/NGO). Of the six MFI/NGOs invited, four submitted
their respective EOI namely, Alterdev Services Foundation Inc. (ALTERDEV), Planet Finance Technical
Assistance, Inc., Davao Provinces Rural Development Institute, Inc. (DPRDI) and Propegemus
Foundation Inc.
After evaluation of the expressions of interest and submissions, one MFI/NGO was selected for the
two projects sites in Bayugan City, Agusan del Sur and one MFI/NGO was selected for the project site
in Brgy. Dalupan, Don Marcelino, Davao del Sur. For the Bayugan City project sites, Alterdev got the
highest score. For Brgy. Dalupan, Don Marcelino project site, DPRDI got the highest score.
Following the procedure for CQS, Alterdev submitted its Biodata-Technical and Financial Proposals
for the subprojects in Bayugan City while DPRDI submitted its proposal for Dalupan, Don Marcelino,
Davao del Sur. They were later invited for negotiations on their Technical Proposal/Personnel and
Financial Proposals.
As a result of the negotiations, Alterdev submitted a Revised Work Plan for a six-month period of
operation and a Revised Technical and Financial Proposal. Likewise, DPRDI also submitted its revised
Financial Technical Proposal. Accordingly, the proposals of Alterdev for Bayugan City Barangay sites
and DPRDI for the Brgy. Dalupan, were endorsed and recommended to ADB.
Following the no-objection from ADB to both contracts, the Contract for Consultancy Services with
DPRDI was signed on August 30, 2014 to commence on September 1, 2014 ending on February 28,
2015. The contract amount agreed upon is PHP918,336.00. Later, In November 2014, DPRDI
requested for an amendment of its Consultancy Services Contract for the removal of the requirement
for advance payment guarantee required under the contract. Accordingly, Consultant agreed to the
non-submission of the advance payment guarantee provided that every billing payment shall be
subject to 10% retention. The Amendment of the Consultancy Services Contract was signed by
Consultant and DPRDI dated November 2014.
The Alterdev Contract for Consultancy Services was signed on 29 August 2014 with effectivity date
set on September 1, 2014. The agreed contract period is six months commencing on September 1,
2014 up to February 27, 2015.
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The two NGOs assisted the residents in the vicinity of the sites by forming the workers’ association
registered under Presidential Decree No. 442 as the Community Based Organizations in the sites and
training them on the handling of community livelihood projects. The CBOs would soon be ready to
take over the operation and maintenance of the MHPP as well as developing their own livelihood
projects.
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10 PROJECT MANAGEMENT
10.1 Coordination with Stakeholders
10.1.1 National Electrification Administration (NEA)
NEA as the Executing Agency of the project played an active role in the project implementation. The
experts from Lahmeyer International had several meetings with the Project Implementation Unit of
NEA to coordinate the project implementation and technical aspects of the installation of the MHPPs.
During regular meetings with NEA the Consultant informed about the status of the project
implementation and discussed relevant issues and strategies to successful achieve the expected
results.
10.1.2 Local Government Units (LGU)
At the onset of project implementation, the Consulting Team had coordinated with the respective
local government units (LGUs) at the project areas, namely, Bayugan City and Don Marcelino. The
first quarter (January to March 2014) of project implementation focused mostly on the following: 1)
close coordination work with the LGUs during the first Field Mission visits to the three project areas
– Brgy. Sto. Nino and Getsemane both located in Bayugan City and Brgy. Dalupan of Don Marcelino;
2) validation of the information provided by the Technical Study done by the first team; 3)
presentation and introducing the project to the communities including discussion of the role of
communities for the project; 4) second stakeholders consultation that was held in Davao City that
highlighted signing of the MOU by the stakeholders as basis of implementing the different tasks,
roles, and responsibilities during the implementation phase. In all these undertakings, the LGUs (City
LGU, Municipal LGU, and Brgy. LGU) being the initial proponent of the project have full support and
pla ed ke oles i the i ple e tatio of the pilot p oje t of ADB’s TA-7781 in the Philippines with
the mentioned focus areas in Mindanao.
During the first quarter period, coordination with LGUs were mostly done with the office of the
Mayor through the Mayors and Administrators and designating the office of the City/Municipal
Planning and Development Offices (CPDO/MPDO) as focal office for the project. Both Planning and
Development Officers and their staff became the constant contacts by the Project/Consulting Team
during the duration of the implementation phase of the project.
During the second quarter (covering the months of April to June 2014) of project implementation,
coordination work by the Project/Consulting Team revolved around processing of required permits,
certifications, NCIP requirements for the FPIC processes, community assembly and initial CBO
organizing in Dalupan, Don Marcelino, survey team field visits to project sites, and pre-bidding
conference held in Bayugan City.
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For the third quarter period (July to September 2014), the Consulting Team had closely monitored
through the LGU of Bayugan City the peace and order/security issues affecting the field visits in the
project sites. Other requirements like certification from LGUs needed by NEA as well as by ECs and
additional document such as geographical map of Bayugan required by NCIP were closely
coordinated. Field Mission visit by ADB and Consulting Team and validation session of the draft NCIP
MOA in Don Marcelino were likewise undertaken with the LGUs. This quarter also highlighted the
NGO procurement process and introduction of NGOs by the Consulting Team to the LGUs and
communities regarding their roles and tasks to provide capability building activities and organizing
of CBOs.
Linkaging with LGUs during the fourth quarter period covering the months of October to December
2014 were focused on the following: 1) second review and validation of NCIP draft MOA at the
Sangguniang Bayan Hall of Don Marcelino; 2) securing of RESC application and payments as required
by NEA/DOE for the MHPPs from the LGUs; 3) provided project updates by Consultant Team during
field visits; and, 4) coordination with other government agencies like DA, DoLE, DTI, DOST for possible
support to livelihood of the CBO beneficiaries of the project.
In the extended period of project implementation January to August 2015, most of the coordination
works involved Field Mission Visits by ADB and Consultant Team who provided project updates to
LGUs i.e., NCIP processes, halting of Sto. Nino MHPP due to destruction brought about by Typhoon
Seniang last December 2014, revolving fund pilot testing in three project sites, electrical and water
permits processing, inauguration of the Dalupan MHPP in Don Marcelino, 3rd stakeholde s’ consultation, and turn over discussion of the project to LGU and CBO as ultimate beneficiaries.
Table 40: Coordination with the Local Government Units, January 2014 to August 2015
LGUs at project sites Date of coordination work Purpose
Bayugan City LGUs February 4-7, 2014 P oje t tea ’s fi st field isit to Bayugan sites to validate TA
documents and coordinated
with City LGU/BLGUs/ECs re
project implementation
Don Marcelino LGUs February 8-9, 2014 P oje t tea ’s fi st field isit to Don Marcelino and Dalupan
project site to validate TA
documents and coordinated
with City LGU/BLGUs/ECs re
project implementation
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LGUs at project sites Date of coordination work Purpose
Bayugan City LGU February 26-28, 2014 Meeting with City
Administrator and
identification of point person
for the project; confirmed
participants for the 2nd
stakeholders meeting; SD & GS
introduced/presented the
project to the communities in
oo di atio ith CLGU’s CPDO; explained the role of
communities to the project
Don Marcelino LGU March 4-6, 2014 Met with Mayor and MPDO;
confirmed participants for the
2nd stakeholders meeting;
followed up CNC; SD & GS
introduced the project to
Dalupan community in
oo di atio ith MLGU’s MPDO
Both LGUs (Bayugan and Don
Marcelino)
March 13, 2014 2nd Stakeholders Consultation,
Davao City
Both LGUs March 27-28, 2014 Coordination with both LGUs re
CNC application
Bayugan LGU April 7-8, 2014 Coordination with LGU re NCIP
requirements for FPIC (profiles,
resolutions); CNC follow-up
work
Don Marcelino LGU April 10-11, 2014 Coordination with LGU re NCIP
requirements for FPIC (profiles,
resolutions); CNC follow-up
work
Bayugan City LGU April 22-24, 2014 Met with CLGU and BLGUs at
project sites re completion of
NCIP related documents;
followed up signed MOUs; met
also line agencies re possible
livelihood assistance to project
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LGUs at project sites Date of coordination work Purpose
(DTI, PCA, DOST, DoLE in
Agusan del Sur)
Don Marcelino LGU April 28-29, 2014 Coordinated with LGU re NCIP
Work and Financial Plan
meeting; Met with LGU re LGU
and Tribal Council resolutions
for NCIP FPIC process; followed
up signed MOA; met with other
agencies (DA, DTI, DOST) in Don
Marcelino for possible
livelihood support
Don Marcelino LGU May 2-3, 8-10, 2014 Coordinated with LGU re visit of
survey team; visited LGU Don
Marcelino and Dalupan with
survey team/project team
Don Marcelino LGU May 14-16 and 23-26, 2014 MOU related and NCIP required
endorsements, minutes of WFP
meeting with NCIP were
coordinated with LGU
Bayugan City LGU May 29-31, 2014 MOU, NCIP, CNC related
matters
Don Marcelino LGU June 2-5, 16-20, 26-29,2014 Pre-bidding conference,
project presentation in
Dalupan, NCIP process –community assembly,
organizing of CBO
Bayugan City LGU June 6-10, 2014 Pre-bidding conference, WFP
NCIP process and schedule,
visit of surveying companies,
MOU, organizing of community
Don Marcelino LGU July 3, 7-9, and 12-13, 2014 TA Executive Summary copy for
Don Marcelino LGU; CBO
organizing discussions,
registration with DoLE
Bayugan City LGU July 4, 7, 10-12, 16-19, 23-24,
and 27-31, 2014
Peace and order situation,
police clearance /security in
visiting project sites; Met with
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LGUs at project sites Date of coordination work Purpose
Mayor re security issues and
NCIP work order/pre-FBI
process
Don Marcelino LGU August 4-7, 20-26, 2014 Dalupan Certification for NEA
and EC; field visits and NGO
visit
Bayugan and Don Marcelino
LGUs
August 8-9, 11,13-16, 18-19,
2014
EC requirements and NCIP
requirements
Bayugan City LGU August 27-31, 2014 Met with LGU re NGO
engagement; NGO field visits to
project sites; introduced NGOs
to BLGUs
Bayugan City LGU Sept. 1-2, 9-13, 18-23, 25-27,
2014
ADB Field Mission Visit; NCIP
FBI process
Don Marcelino LGU Sept. 3-4, 11, 14-16, and 29-
30, 2014
ADB Field Mission Visit; NCIP
updates; NCIP
validation/review, ceremonial
MOA signing (3-page MOA);
draft NCIP MOA review
Don Marcelino LGU Oct. 1, 7-10, 15-17, 27-30,
2014
Project Team Field Visit;
Second NCIP MOA
validation/review at Don
Marcelino SB Hall, NGO training
updates to LGU
Bayugan City LGU Oct. 13-14, 20-23, 2014 Provided project updates, NGO
training updates, NCIP FBI
updates
Don Marcelino LGU Nov. 3-5, 11-14, and 25-27,
2014
Visit to site; project updates,
RESC certification
Bayugan City LGU Nov. 10, 18, 21, and 27-29,
2014
Visit to sites NCIP FBI, RESC
certification
Bayugan City LGU Dec. 1-3, 17-18, 2014 Followed up RESC application;
DoLE Certification to CBOs,
linkaging to DA of potential
livelihood for CBOs, FBI Report
Don Marcelino LGU Dec. 9-10, 2014 RESC application status, NCIP
draft MOA
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LGUs at project sites Date of coordination work Purpose
Bayugan City LGU Jan. 24, 26-28, 2015 Field Mission Visit; project
updates
Don Marcelino LGU Jan. 29-30, 2015 Field Mission Visit; project
updates
Bayugan City LGU Feb. 2-5, 8, 12, 16,2015 Field visit, NCIP FBI Report,
Don Marcelino LGU Feb. 9-10, 21, 23-25, 2015 Collation of NCIP MOA 2nd draft
comments by parties for
submission to NCIP Province,
field visit, NWRB documents
Bayugan City LGU and Don
Marcelino LGU
March 13-14, 16,18, and 23-
25, 2015
Field mission visits schedules,
project updates, RESC
payments by LGUs, invitation
by Don Marcelino to its
anniversary day
Bayugan City and Don
Marcelino LGU
April 15, 25,30 NCIP meeting with LGU re draft
MOA comments for Don
Marcelino; Field mission visit
schedules by Team and ADB
Consultant
Don Marcelino LGU May 5-7, 23, 28, 2015 Field Mission Visit and ADB
Co sulta t’s field isit confirmation of schedules;
NCIP updates; electrical permit;
MOU copy to LGU reiterating
their role; RF implementation
Bayugan City LGU June 2-4, 13-14, 16, 2015 NCIP process updates; project
updates specifically RF
implementation
Don Marcelino LGU June 8-9, 12, 18, 2015 ADB Field Mission schedule
confirmation, project updates,
NCIP updates
Don Marcelino LGU July 1, 3, 6, 9, 11, 13-14, 24,27-
31, 2015
Don Marcelino MHPP
Resolution, DTL Field visit
itinerary; confirmation;; MOA
signing during MHPP
inauguration; 3rd stakeholders
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LGUs at project sites Date of coordination work Purpose
Consultation in Davao City;
linked Dasureco to MPDO
Bayugan City LGU July 18, 27, 29-31, 2015 NCIP updates from LGU;
Stakeholders consultation;
confirmation of participants
from Bayugan
Don Marcelino LGU Aug. 11, 17, 2015 Letter of request from LGU re
project services extension to
ADB through LIDP as requested
by DTL; followed up update re
NCIP CP after the MOA was
signed
Bayugan City LGU Aug. 17, 2015 Update from LGU re NCIP
Provincial Office meeting (pre-
FPIC)
10.1.3 Electric Cooperatives
The Electric Cooperatives, ASELCO and DASURECO have supported and promoted the project from
the outset. They were involved and consulted in the main technical and legal developments of the
installation and connection of the MHPP, since they will be the partner in supplying and purchasing
power from the CBOs.
10.1.4 Department of Energy (DOE)
The DOE was informed about the project during the Stakeholders consultations.
10.1.5 National Commission on Indigenous People (NCIP)
The issuance of Certificate of Pre-Condition (CP) by NCIP is the ultimate output of FPIC processes for
the ADB TA-7781: PHI MHPP project sites. Specifically, the CP is to be issued to the respective local
government units (municipal LGU for Don Marcelino and City LGU for Bayugan City). Prior to the
issuance of CP, several activities processes have to be complied by the project, with LGUs of Don
Marcelino and Bayugan City taking the lead roles being the project proponents (i.e. providing
financial support during the processes as well as coordination work and technical support). Other
stakeholders such as the community/Brgy. LGUs, CBOs, Tribal Groups/Councils, and Electric
Coope ati es ECs also pla ed sig ifi a t oles i the NCIP’s FPIC p o esses.
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The Consulting Team has been in constant coordination with all the stakeholders and in providing
the overall guidance and assistance needed in implementing the specific undertakings required by
NCIP for the two project areas.
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Table 41: Timeline and Milestones of FPIC Activities / Processes by NCIP XI and XIII (Caraga), 2014-2015
FPIC Activities/Processes by Project Area Time Frame Actual Conduct Remarks
DON MARCELINO
Initial Meeting with NCIP Region XI through FPIC
Focal Person
March 13, 2014 2nd Stakeholders Meeting, Davao
City
SD &GS met with Ms. Djoanna Lyn Demonterverde, FPIC Focal
Person, Reg XI
First NCIP scheduled meeting with Consulting
Team, LGU Representative of Don Marcelino
April 28, 2014 Digos City, Davao del Sur Discussed schedules, FPIC process; SD&GS submitted documents
minus NEA Endorsement
Pre-FBI Conference (Work and Financial Plan
presentation and discussion)
May 12-13, 2014 Digos City, Davao del Sur Attended by LGU Don Marcelino Rep, SD&GS, NCIP Prov'l
Officer, NCIP FPIC Focal Person, NCIP FBI Team Province, IP Rep;
submssion of Project Team Leader of NEA Endorsement and
other documents to NCIP Region XI on May 12
Conduct of FBI by NCIP FBI Team May 23-25, 2014 Barangay Dalupan Conducted by NCIP with the Community
Community assembly and consensus building June 4-5, 2014 June 5, Barangay Dalupan Facilitated by NCIP; participated in by MLGU, BLGU, Community,
Consulting Team, NCIP Team; Consulting Team presented the
project
Drafting of Memorandum of Agreement with
Community
June 10-11, 2014
June 20, Bgy. Dalupan
Continuation of consensus building with community members
and parties to the MOA was done to discuss terms of MOA;
Attended by MLGU, BLGU, LI, NCIP, community, IP Council,
DASURECO; Output: Resolution of Consent giving the project a
nod to organize CBO; NCIP notified SD&GS the need to include
in MOA drafting, validation, & signing CBO Chair, thus another
adjustment in schedule was needed
MOA validation and signing June 19-20, 2014 Barangay Dalupan Not done yet (see above information)
Community Organizing of CBO Last week of June-mid
Sept, 2014
Barangay Dalupan Done by CT with NGO DPRDI in coordination with of MLGU and
BLGU
Draft NCIP MOA submitted to parties 1st week September
2014
September 17, 2014 NCIP emailed the draft MOA to parties - MLGU, DASURECO
including Consulting Team was copied for comments,
suggestions
MOA validation and signing schedule September 19, 2014 Barangay Dalupan Parties not yet ready with comments/suggestions to the MOA;
Consulting Team prepared a 3-page MOA specifically for MHPP
Construction anchored on the original MOA of the Project; 3-
page MOA were presented, agreed upon in consensus and
signed by all parties including NCIP; Remedial measure so as not
to delay MHPP construction
NCIP MOA validation/review with parties (1st mtg) October 8, 2014 Don Marcelino SB Hall Facilitated by NCIP; First presentation of NCIP Draft MOA to
Parties involved - IP Council, CBO, MLGU, BLGU with Consulting
Team and NGO DPRDI as observers and participants; DASURECO
was not around due to an organizational activitiy, thus another
schedule of meeting was set with all parties including
DASURECO.
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FPIC Activities/Processes by Project Area Time Frame Actual Conduct Remarks
NCIP MOA validation/signing (2nd meeting) October 17, 2014 Don Marcelino SB Hall DASURECO and all parties were present except for NCIP Team
who's supposed to facilitate; Facilitated by Don Marcelino LGU
(Mayor Johnson and assisted by Engr. Delute); suggested a
Technical Working Group to work (TWG) on MOA
comments/suggestions to be submitted to NCIP
Meeting by TWG led by Don Marcelino LGU February 23, 2015 Don Marcelino Mun. Hall Discussion of comments re draft NCIP MOA;
Submisison of TWG to NCIP comments/suggestions
to NCIP Draft MOA
February 24, 2015 Done by email by MPDO Submission of comments/suggestions via email to NCIP
Provincial Team and FPIC Focal Person, Reg XI; LGU Don
Marcelino also sent letter to NCIP to fast tract the process and
did series of follow up with NCIP March-June 2015
ADB sent a letter to NCIP Region XI and LGU Don
Marcelino calling for resolution on NCIP FPIC
processes
July 9, 2015 Sent by Fax by ADB/Email Drafting of summary of status of FPIC Process and Confirmation
of receipt by NCIP Region and LGU was done by Consulting Team
LGU Don Marcelino did a Municipal Resolution
addressed to NCIP as response to ADB letter
July 14, 2015 Sent by MPDO to NCIP Province MPDO Don Marcelino copy furnished Project Team
NCIP MOA signing (facilitated by MPDO Don
Marcelino and assisted by the Project Team)
July 29, 2015 Done during the MHPP
Inauguration Programme in
Dalupan, Don Marcelino
All parties were able to sign the MOA
BAYUGAN CITY PROJECT AREAS
Initial Meeting with NCIP XIII through NCIP
Provincial Officer
March 13, 2014 2nd Stakeholders Meeting, Davao
City
SD &GS met with Mr. Randy Rosas, Prov'l Officer NCIP Agusan
del Sur
NCIP Agusan del Sur First Meeting April 23, 2014 Patin-ay Agusan del Sur Coordinated with Mr. Randy Rosas and met with Engr. Shiela
Padillo at NCIP Office; submitted hard copies of required
documents minus NEA Endorsement
Submission of NEA Endorsement and required
documents by Project Team Leader to NCIP
CARAGA
May 12, 2014 NCIP CARAGA Office Submitted by Holger Ludwig via Email; all documents were
gathered and compiled by Atty. Calibo and SD & GS
Series of follow up with NCIP Province by SD & GS
re FBI and FPIC schedules
May-July 2014 NCIP Provincial Office and CARAGA SD & GS Coordinated directly with the new Regional Director in
CARAGA re FBI process; No response was received from the
Province; resulted to issuance of Memo re FBI Team for 2 sites
by NCIP RD
Pre-FBI Conference July 30, 2014 NCIP Provincial Office Facilitated by NCIP FBI Team Leader; attended by Engr. Alimpoos
of Bayugan LGU, NCIP FBI Team, Consulting Team (DTL, SD & GS,
Mech Engr)
Conduct of FBI at project sites August 1st wk 2014 November 10, 2014 for
Getsemane; November 17, 2014
for Sto. Nino
Reasons for delay by NCIP was due to other activities lined up in
other areas; peace and order condition (military-NPA
encounters in June-July 2014)
Submission of FBI Reports to Bayugan LGU and
NCIP CARAGA
End of November 2014 Feburary 2015 Reasons for delay was due to other priority activities
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FPIC Activities/Processes by Project Area Time Frame Actual Conduct Remarks
Meeting with NCIP by Consulting Team February 13, 2015;
March 18, 2015
Butuan Regional Office and Patin-
ay Provincial Office
Feb 8 meeting done by SD&GS; 2nd meeting done by DTL, SD
GS; provided updates of project especialy Sto. Nino case,
extended period; follow up of FPIC process
LGU Bayugan City sent letter to NCIP re FBI Report February 13, 2015 Sent to NCIP Regional Director LGU Bayugan sent letter addressed to RD Pinky Grace Pabelic
requesting for a simplified FPIC process and certifying that
Getsemane has no IP residents; fast tracking of FPIC process
NCIP Regional Office issuance of Work Order for
Provincial NCIP
February 25, 2015 Sent to NCIP Provincial Officer FPIC Team for the conduct of FPIC for the project sites in
Bayugan City
Visit to NCIP Agusan del Sur by SD & GS June 3, 2015 San Francisco, Agusan Sur Followed up FPIC process with Mr. Duetes, assigned staff by Mr.
Rosas as contact person for project sites
NCIP Province to issue notice to LGU Bayugan for
pre-FPIC Conference
After June 19, 2015 Pending No update from NCIP/LGU Bayugan if done
ADB sent a letter to NCIP Region XI and LGU Don
Marcelino calling for resolution on NCIP FPIC
processes
July 9, 2015 Sent by fax/email by ADB Drafting of summary of status of FPIC Process and Confirmation
of receipt by NCIP Region and LGU was done by Consulting Team
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Overall, the following major steps/activities/processes provide a summary of the FPIC processes
undertaken by the project following NCIP requirements, such as:
1) Consultations and initial discussions with NCIP Offices at the Provincial and Regional levels
by CT and LGU Representatives (Municipal/City Planning and Development
2) Officers or CPDO and MPDO) during the first and second quarter of 2014;
3) Submission of needed requirements/documents by the project to NCIP by CT in April-
May 2014;
a) Project profile covering the two project areas of Bayugan and Don Marcelino;
b) Project feasibility study
c) Profile of Don Marcelino and Bayugan City
d) Endorsement of the project from the National Electrification Administration
e) Endorsements of the project by Barangay LGUs of the three project sites (Bgy.
Dalupan, Don Marcelino, and Barangays Getsemane and Sto.Nino, Bayugan ity)
f) Endorsements from the Municipal and City LGUs of Don Marcelino and Bayugan City
g) Endorsements from the Tribal Councils of the three project sites
4) Pre Field-Based Investigation Conference (with LGU Representative, LI, CT, NCIP Team);
5) Conduct of FBI proper by NCIP (with community consultations and general assembly);
6) Pre FPIC Conference with NCIP (with LGU Representative, LI Consultant, NCIP Team);
7) Conduct of FPIC (with community consultations and general assembly);
8) MOA review/validation and signing (facilitated by NCIP and LGU);
9) Issuance of CP by NCIP to LGUs
Don Marcelino
As of July 2015, the municipality of Don Marcelino has complied Steps 1 to 8 including the MOA
signing activity that was undertaken last July 29, 2015 in Dalupan. The signed MOA is the last
e ui e e t p io to the NCIP’s issua e of a Ce tifi ation Precondition which refers to the
Ce tifi ate issued the NCIP attesting to the grant of FPIC by the concerned ICCs/IPs after
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app op iate o plia e ith the e ui e e ts p o ided fo i this Guideli es. The NCIP MOA
signing ceremony was done in time of the MHPP Inauguration Program where all parties except for
NCIP (who already signed the MOA ahead of time) were present. The MOA signing was facilitated by
Don Marcelino Municipal LGU and assisted by the Project Team. The issuance of the CP by NCIP is
the last stage of the process. Supposedly, an NCIP validation/signing for Brgy. Dalupan MHPP was
scheduled in June 19-20, 2014. However, there were delays and draft MOA was not yet prepared by
NCIP. For one, NCIP required the presence of the CBO President/Chair as one of the signatories of
MOA. The project has to undertake CBO organizing with the permission of NCIP through the issuance
of Resolution of Consent (as a result of the series of community consultations/assemblies).
Organizing of CBOs took place in July to September in Brgy. Dalupan. This includes constant
coordination work by CT with MLGU, BLGU, and in September by NGO through the DPRDI. With the
CBO’s egist atio o “epte e ith the DoLE as a Asso iatio – DARECDA and with the
formation of set of officers, the NCIP was properly informed. The NCIP Provincial Office in Davao del
Sur provided then a schedule dated September 19, 2014 as final date for MOA validation and signing.
However, the said activities on the set date did not materialize as draft MOA was only provided to
parties/stakeholders a day before the activity. Comments/suggestions coming from various parties
to the MOA were not yet available. To remedy the signing activity (where all parties were already
present in Dalupan), a three-page MOA specifically for MHPP construction was signed by all parties.
The CT prepared the said MOA. After this event took place, NCIP called for a meeting with different
parties to the MOA (BLGU, MLGU, CBO, Tribal Council, DASURECO and attended by the SD & GS,
NGO, and other members of the Consulting Team) for another MOA validation/signing event (NCIP
MOA) on October 8, 2014 at Don Marcelino SB Hall.
A second validation session again took place on October 17, 2014 (with the presence of DASURECO
since the Representative was not around during the first session) but this time it was facilitated by
the Municipal LGU as NCIP was absent. Comments/suggestions to the MOA from the parties involved
were raised and discussed. A technical working group (TWG) was also assigned to work on the
finalization of comments/suggestions to the NCIP MOA. The TWG led by the MLGU of Don Marcelino
was able to compile and submit it to NCIP in February 2015.
The LGU also reiterated to NCIP in a letter the need to fast tract the process of issuance of CP as the
project is about to end, emphasizing also that the project was a government initiated, non-extractive
in nature, and small-scale for the benefit of Dalupan community. The LGU did follow-ups with NCIP
P o i ial Offi e o the updates of the MOA, hi h is aiti g fo NCIP’s espo se o o ete a tio . In one of the follow up with NCIP XI (Regional Office) by the CT, there were changes in the assigned
staff handling FPIC as well as the OIC at Provincial Office of Davao del Sur. It was also known in the
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second week of July 2015 that the change of personnel also includes that of the Regional Director
position. The changes were immediately relayed to Don Marcelino LGU for proper coordination.
During the ADB Field Mission Visit last June 18, 2015, the Municipal Mayor had committed to do
another follow-up (call and visit) NCIP.
In June 9, 2015, the ADB Project Officer in coordination with the CT of Lahmeyer International sent
a fax and email letter to NCIP Region XI and Provincial Office as well as Municipal LGU of Don
Marcelino stating that both government bodies need to resolve FPIC matters of the MHPP project
a eas efo e it ill e d soo . As e ou se of the ADB’s all to esol e FPIC-related processes, the LGU
of Do Ma eli o afted a Resolutio alli g fo NCIP’s issua e of CP fo the p oje t. As a esult of the call, the MOA signing took place in time for the MHPP Inauguration in Dalupan.
Bayugan City
For Bayugan project sites (Barangays Getsemane and Sto. Nino), it had only completed Steps 1 to 4
to date. The FBI processes only commenced in November 10, 2014 for Getsemane and November
17, 2014 for Sto. Nino. For both project sites, FBI was originally scheduled by NCIP FBI Team to be
undertaken in first week of August 2014. The FBI Report for the two sites was provided to LGU
through the City Planning and Development Office (CPDO) only in February 2015.
A“ Ba uga Cit LGU’s espo se to the FBI Repo t NCIP P o i ial Offi e, it se t a lette to NCIP Regional Office (with copy to Provincial Office) requesting for the issuance of CP for the following
reasons: a) that Barangay Getsemane as certified by BLGU and MLGU has no IP residents (based also
o the FBI Repo t NCIP ; a d that Ba a ga “to. Ni o’s MHPP ill o lo ge e o st u ted due to the damaged brought about by Typhoon Seniang in December 2014 (deforming the MHPP site
with the huge landslides).
With the LGU’s e uest fo a tio f o NCIP, the Regio al NCIP Offi e i CARAGA has o de ed through a Work Order the creation of FPIC Team and implementation of an FPIC to include in the
coverage Barangay Getsemane (and excluding Barangay Sto. Nino) will still undergo FPIC process.
This was due to the fact that based on history according to NCIP; Getsemane has become a hunting
g ou d the IPs. With the Co sulti g Tea ’s eeti g ith NCIP P o i e last Fe ua , it as explained that the FPIC process will entail two consultations and it should not be the full-blown FPIC
process considering the scale, non-extractive nature, and a community-based MHPP. Several
meetings and official communication with the NCIP Province and LGU Bayugan City was held by the
Consulting Team to follow up the process but seemed to be too dependent on the schedule and
availability of NCIP FPIC Team.
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During the ADB Field Mission last July 16, 2015, the Consulting Team provided updates regarding the
status of FPIC processes in the project sites, the CPDO said that they will bring this issue to the Mayor
a d o u i ate di e tl ith Regio al NCIP Offi e to esol e issues ith NCIP’s issua e of CP.
Similar to Don Marcelino, the ADB also sent fax and email letters to NCIP CARAGA/Provincial Office
of Agusan del Sur and to Bayugan City LGU for both agencies to resolve the FPIC related processes.
Constraints in the Implementation of FPIC Processes
Overall, the FPIC processes in both project areas of Don Marcelino and Bayugan City were
constrained by the following: a) foremost is the availability of time by NCIP that it can devote to the
project for reasons that there are other projects that were lined up such as CADTs or Certificate of
Ancestral Domain Title applications and thus need some adjustments in the schedule of activities for
the project; Both NCIP Offices in Davao del Sur and Agusan del Sur Provinces had somehow
acknowledged delays in implementing FPIC given their other schedules; b) changes in team
composition in handling the project sites e.g. FBI Team is different from FPIC Team for Bayugan sites;
and, c) changes in personnel of NCIP where CT and LGUs/project proponents also need to adjust in
ho to oo di ate ith; d to so e e te t the a aila ilit of LGU’s s hedule during meetings with
NCIP (as in the case of Bayugan City where there were some delays in the processing/releasing of
budget to NCIP Provincial FBI Team who implemented the FBI process).
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