the world bank for official use...

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: ICR00004062

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(IBRD-77090)

ON A

LOAN

IN THE AMOUNT OF US$70.36 MILLION

TO THE

REPUBLIC OF THE PHILIPPINES

FOR THE

PARTICIPATORY IRRIGATION DEVELOPMENT PROJECT April 25, 2019

Water Global Practice

East Asia and Pacific Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective: August 31, 2018)

Currency Unit

US$1.00 = PhP53.49

FISCAL YEAR January 1 - December 31

Regional Vice President: Victoria Kwakwa

Country Director: Mara K. Warwick

Senior Global Practice Director: Jennifer J. Sara

Practice Manager: Sudipto Sarkar

Task Team Leader: Maria Theresa G. Quinones

ICR Main Contributor: Dorothy Lucks

ABBREVIATIONS AND ACRONYMS

AFMA Agriculture and Fisheries Modernization Act

APL Adaptable Program Loan

CAS Country Assistance Strategy

CPS Country Partnership Strategy

DBM Department of Budget and Management

EIRR Economic Internal Rate of Return

EMP Environmental Management Plan

FIA Federation of Irrigators’ Associations

ha Hectare

IA Irrigators' Association

IAS Impact Assessment Study

ICB International Competitive Bidding

ICR Implementation Completion and Results Report

IMO Irrigation Management Office

IMT Irrigation Management Transfer

ISF Irrigation Service Fee

kg Kilogram

LGU Local Government Unit

M&E Monitoring and Evaluation

MTPDP Medium Term Philippine Development Plan

NCB National Competitive Bidding

NIA National Irrigation Administration

NIMF National Irrigation Management Fund

NIS National Irrigation System

O&M Operation and Maintenance

OP Operational Policy

PAD Project Appraisal Document

PAP Project Affected Person

PDO Project Development Objective

PDP Philippine Development Plan

PhP Philippine Peso

PIDP Participatory Irrigation Development Project

PMO Project Management Office

RIS River Irrigation System

RP Rationalization Plan

SFSSP Staple Food Self Sufficiency Program

SSL Salary Standardization Law

TSAG Turn-Out Service Area Group

TABLE OF CONTENTS

DATA SHEET .......................................................................................................................... 1

PROJECT CONTEXT, DEVELOPMENT OBJECTIVES AND DESIGN ................................................ 6

CONTEXT AT APPRAISAL .............................................................................................................6

SIGNIFICANT CHANGES DURING IMPLEMENTATION .................................................................. 10

OUTCOMES ......................................................................................................................... 12

RELEVANCE OF PDO .................................................................................................................. 12

ACHIEVEMENT OF PDO (EFFICACY) ............................................................................................ 12

EFFICIENCY ............................................................................................................................... 19

JUSTIFICATION OF OVERALL OUTCOME RATING ........................................................................ 20

OTHER OUTCOMES AND IMPACTS ............................................................................................ 21

KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ....................................... 21

KEY FACTORS DURING PREPARATION ....................................................................................... 21

KEY FACTORS DURING IMPLEMENTATION ................................................................................. 22

BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME ......... 23

QUALITY OF MONITORING & EVALUATION (M&E) ..................................................................... 23

ENVIRONMENTAL, SOCIAL AND FIDUCIARY COMPLIANCE .......................................................... 24

BANK PERFORMANCE ............................................................................................................... 26

RISK TO DEVELOPMENT OUTCOME ........................................................................................... 26

LESSONS AND RECOMMENDATIONS .................................................................................... 27

ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 29

ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 45

ANNEX 3. PROJECT COST BY COMPONENT ........................................................................... 48

ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................... 49

ANNEX 5. BORROWER’S COMMENTS ON THE ICR................................................................. 57

ANNEX 6. CHANGES IN PDO OUTCOME INDICATORS ........................................................... 58

ANNEX 7. SUMMARY OF BORROWER’S PROJECT COMPLETION REPORT .............................. 63

ANNEX 8. LIST OF SUPPORTING DOCUMENTS ..................................................................... 71

ANNEX 9. MAPS .................................................................................................................. 72

The World Bank Participatory Irrigation Development Project (P088926)

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DATA SHEET

BASIC INFORMATION

Product Information

Project ID Project Name

P088926 Participatory Irrigation Development Project

Country Financing Instrument

Philippines Investment Project Financing

Original EA Category Revised EA Category

Partial Assessment (B) Partial Assessment (B)

Organizations

Borrower Implementing Agency

REPUBLIC OF THE PHILIPPINES National Irrigation Administration

Project Development Objective (PDO) Original PDO

The development objective of the overall PIDP APL Program (three phases) is to improve irrigation service delivery on a financiallyand technically sustainable basis that will contribute to increased agricultural production and productivity among beneficiary farmers in irrigated areas. The first phase APL will contribute to this overall program objective through: (a) enhancing NIA's financialviability, and its institutional capacity to support improvements in irrigation service delivery; (b) transferring increased operation and maintenance (O&M) responsibilities for 58 National Irrigation Systems (NISs) to capable Irrigators' Associations (IAs); and (c) increasing irrigation efficiency and promote reliable access to water among farmers in the selected 58 NISs. Revised PDO

The revised project development objective is to improve efficiency of irrigation service delivery on a technically and financiallyviable basis.


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FINANCING

Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$)

World Bank Financing IBRD-77090

70,360,000 58,015,957 58,015,957

Total 70,360,000 58,015,957 58,015,957

Non-World Bank Financing 0 0 0

Borrower/Recipient 43,230,000 42,844,004 42,844,004

Total 43,230,000 42,844,004 42,844,004

Total Project Cost 113,590,000 100,859,961 100,859,961

KEY DATES

Approval Effectiveness MTR Review Original Closing Actual Closing

24-Jun-2009 03-Nov-2009 10-May-2013 31-Mar-2015 31-Aug-2018


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RESTRUCTURING AND/OR ADDITIONAL FINANCING

Date(s) Amount Disbursed (US$M) Key Revisions

11-Feb-2015 37.49 Change in Project Development Objectives Change in Results Framework Change in Components and Cost Change in Loan Closing Date(s) Change in Financing Plan Reallocation between Disbursement Categories Change in Disbursements Arrangements Change in Procurement Change in Implementation Schedule

24-Sep-2015 41.80 Change in Loan Closing Date(s)

31-Mar-2016 46.09 Change in Results Framework Change in Loan Closing Date(s) Change in Disbursements Arrangements Change in Implementation Schedule

13-Feb-2017 51.74 Change in Results Framework Change in Components and Cost Change in Loan Closing Date(s) Reallocation between Disbursement Categories Change in Implementation Schedule

KEY RATINGS

Outcome Bank Performance M&E Quality

Moderately Satisfactory Moderately Satisfactory Modest

RATINGS OF PROJECT PERFORMANCE IN ISRs

No. Date ISR Archived DO Rating IP Rating Actual

Disbursements (US$M)

01 30-Jun-2010 Satisfactory Moderately Satisfactory 4.21

02 17-May-2011 Satisfactory Moderately Satisfactory 9.88

03 06-Sep-2011 Satisfactory Moderately Satisfactory 10.48

04 08-Aug-2012 Moderately Satisfactory Moderately Unsatisfactory 16.02

05 22-Apr-2013 Moderately Satisfactory Moderately Unsatisfactory 20.09


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06 25-Jul-2013 Moderately Satisfactory Moderately Unsatisfactory 22.09

07 07-Feb-2014 Moderately Satisfactory Moderately Unsatisfactory 26.76

08 05-Oct-2014 Moderately Satisfactory Moderately Satisfactory 32.05

09 11-May-2015 Moderately Satisfactory Moderately Satisfactory 39.90

10 21-Aug-2015 Moderately

Unsatisfactory Moderately Unsatisfactory 42.26

11 21-Feb-2016 Moderately


12 02-Sep-2016 Moderately


13 07-Mar-2017 Moderately Satisfactory Moderately Satisfactory 52.20

14 22-Sep-2017 Moderately Satisfactory Moderately Satisfactory 55.79

15 05-Jun-2018 Moderately Satisfactory Moderately Satisfactory 57.60

16 05-Sep-2018 Moderately Satisfactory Moderately Satisfactory 59.86

SECTORS AND THEMES

Sectors

Major Sector/Sector (%)

Agriculture, Fishing and Forestry 100

Irrigation and Drainage 71

Public Administration - Agriculture, Fishing & Forestry 29

Themes

Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Private Sector Development 100

Jobs 100

Finance 6

Finance for Development 6

Agriculture Finance 6


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Public Sector Management 12

Public Administration 12

Administrative and Civil Service Reform 12

Urban and Rural Development 46

Rural Development 46

Rural Markets 6

Rural Infrastructure and service delivery 40

Environment and Natural Resource Management 36

Water Resource Management 36

Water Institutions, Policies and Reform 36

ADM STAFF

Role At Approval At ICR

Regional Vice President: James W. Adams Victoria Kwakwa

Country Director: Bert Hofman Mara K. Warwick

Senior Global Practice Director: John A. Roome Jennifer J. Sara

Practice Manager: Rahul Raturi Sudipto Sarkar

Task Team Leader(s): Carolina V. Figueroa-Geron Maria Theresa G. Quinones

ICR Contributing Author: Dorothy Lucks


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PROJECT CONTEXT, DEVELOPMENT OBJECTIVES AND DESIGN CONTEXT AT APPRAISAL 1. Country and Sector Context. The Philippine economic growth during 2000-2008 averaged around 5.1 percent. Economic growth picked up gradually from 2002 to 2007 when it peaked at 7.2 percent, the highest growth in three decades, but slowed down to 4.6 percent in 2008 as the shocks of the food and fuel crisis and global slowdown took their toll on the economy. However, over the last decade (2009-2018), the economy has grown at a steady rate of 5.8 percent. 2. The agriculture, fisheries, and forestry sector at the time of preparation contributed about 19 percent to the country’s economy and provided employment to almost one third of its labor force. However, the crop subsector was stagnant and rural-urban migration was contributing to declining investment in commercial crop production. Rice production, the main staple food crop, was facing additional issues, including declining farm sizes and deteriorating condition of irrigation infrastructure that provided the critical water source for rice production. Other challenges facing rice farming included limited access to high quality rice seeds, conflict over access to increasingly scarce water resources, insufficient post-harvest facilities, and lack of appropriate agricultural financial services. 3. The government priorities on supporting a more conducive investment climate in the agriculture sector in general, and rice production in particular, was provided in the Agriculture and Fisheries Modernization Act (AFMA). The AFMA’s policy framework focused on improved agricultural production and particularly noted the need for efficient irrigation systems as a primary means of intensifying rice production, especially given the potential irrigable area of 3.13 million hectares nationwide. 4. The Participatory Irrigation Development Project (PIDP) was designed to respond to the Government’s priorities under the AFMA focusing on the rehabilitation of irrigation systems as well as irrigation management transfer (IMT) to Irrigators’ Associations (IAs) or water users’ associations. This was further elaborated in the 2004-2010 Medium-Term Philippine Development Plan (MTPDP) which prioritized investments for the rehabilitation and improvement of existing national irrigation systems (NIS), and the promotion of IMT through capacity building of IAs for effective operation and maintenance (O&M) of NIS. 5. The project was also proposed at the time that the Government was facing major challenges in the irrigation sector. The National Irrigation Administration (NIA), a government owned and controlled corporation which is responsible for the construction, rehabilitation and management of NIS and communal irrigation systems, was unable to efficiently sustain irrigation services in many NIS (most of which are old and in operation for over 30 years) due to lack of sufficient funds to maintain them. This led to further deterioration of the NIS, decrease in irrigated area, and reduction in cropping intensity which affected the IA members’ willingness to pay irrigation service fees (ISF). The participation of IAs in irrigation systems’ O&M had mixed results. Strong IAs were able to comply with their systems’ O&M responsibilities, while newly organized and/or weak IAs only had limited O&M participation. All these factors adversely affected NIA’s revenues and reduced its capability to adequately cover O&M.


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6. Rationale for Bank Involvement. The World Bank’s Country Water Resources Assistance Strategy for the Philippines (2003) recognized the need to support NIA to close the gap between the potential irrigable area and the actual irrigated area. It emphasized that IMT be pursued more deliberately and undertaken in consultation with the IAs. It recommended that deteriorated sections of the NIS should be rehabilitated, improved and modernized before O&M and management functions are transferred to the IAs. The project was consistent with the Bank’s Country Assistance Strategy (CAS; FY10-12, Report No. 47916-PH), particularly with respect to promoting agricultural productivity and supporting infrastructure development as well as promoting better governance in the irrigation sector. 7. Furthermore, at the time of project preparation, the Government was in the process of streamlining its bureaucracy and had required all agencies to prepare their respective Rationalization Plans (RP). Consequently, it requested the Bank to assist NIA in the implementation of the latter’s RP which required downsizing the NIA staff but strengthening the capacity of the IAs to take a greater role in O&M activities. The Bank had expertise and experience in the development and improvement of irrigation systems worldwide and was well placed to assist NIA in both institutional strengthening and improving the efficiency of irrigation service delivery. 8. Theory of Change (Results Chain). To support the achievement of the project development objective (PDO), the project was designed with a three-pronged approach (Rationalization Plan, IMT Program, and repair and rehabilitation of NIS) and supported with hardware and software investments and a series of simultaneous and linked activities. These were designed to improve the efficiency of irrigation service delivery to ultimately contribute to increased agricultural production (yield) and productivity (cropping intensity) in the 58 project-assisted NIS.

Figure 1. Theory of Change

NIA organizational restructuring and strengthening.

Repair, restoration and modernization of diversion and intake structures, main and lateral canals and structures, drainage facilities, and service roads.

Staff separated under the Rationalization Plan; and corresponding savings prioritized for improved O&M in project -assisted NIS.

NIS rehabilitated to provide improved irrigation and drainage services.

Enhanced NIA’s financial viability and institutional capacity to support improvement in irrigation service delivery.

Organizational development and strengthening of IAs: • Capacity building of

IAs on cropping calendar, irrigation water delivery and O&M.

• Turn-over of O&M responsibilities to IAs (IMT Model Contracts).

IAs created and/or strengthened and assumed O&M roles under IMT model contract arrangements.

Transferred increased O&M responsibilities in the NIS to capable IAs.

Increased reliable access to water among farmers in the 58 NIS.

Improved efficiency of irrigation service delivery on a financially sustainable basis.

Improved efficiency of irrigation service delivery on a technically sustainable basis.

Increased agricultural production and productivity.

Activities Outputs Intermediate Results PDO Outcomes


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9. The combined activities and interventions of the various components/sub-components were expected to facilitate the following:

a. Irrigation sector restructuring and reform of NIA through the RP implementation (Component 1a): Supporting the institutional reform of NIA was expected to improve budget availability and allocation for the irrigation systems’ O&M activities.

b. Strengthening and engagement of IAs in the systems’ O&M through the IMT Program

(Component 1b): Providing the IAs with organizational strengthening and technical support activities were expected to enable them to assume greater responsibility for irrigation systems’ O&M. More active and capable IAs that are engaged in O&M activities were expected to improve operation, maintain functionality and extend the irrigation facility’s life.

c. Improving the functionality of NIS through infrastructure investments (Component 2):

Undertaking repair and rehabilitation of intakes, irrigation canal structures and facilities, drainage facilities and service roads was expected to improve the physical and operational capacity of NIS to convey and distribute water efficiently to the rice farms.

Project Development Objective (Original and Revised PDO) 10. The original PDO in the Loan Agreement and in the Project Appraisal Document (PAD) contained slightly different wordings. These were eventually harmonized under a project restructuring in February 2015. 11. Loan Agreement PDO. “The project constitutes the first phase of a long-term program supporting irrigation reforms in the Philippines whose objective is to improve irrigation service delivery of the Borrower so as to have it provided on a financially and technically sustainable basis in order to contribute to increased agricultural production and productivity among beneficiary farmers in irrigated areas.” 12. Project Appraisal Document PDO. “The development objective of the overall PIDP APL Program (three phases) was to improve irrigation service delivery on a financially and technically sustainable basis that will contribute to increased agricultural production and productivity among beneficiary farmers in irrigated areas. The proposed first phase of the Adaptable Program Loan (APL) was aimed to contribute to this overall program objective through: (a) enhancing NIA's financial viability, and NIA’s institutional capacity to support improvements in irrigation service delivery; (b) transferring increased O&M responsibilities for 58 NISs to capable IAs; and (c) increasing irrigation efficiency and promoting reliable access to water among farmers in the selected 58 NISs.” 13. Revised PDO. The harmonized PDO approved through a Level 1 restructuring in February 2015 is as follows: “To improve the efficiency of irrigation service delivery on a technically and financially viable basis”.

14. The revised PDO maintained the original intent of the project. The more precise language was

designed to assist in improving attribution of project activities through the causal pathways. There was

no fundamental change in the components and activities and the focus remained improving efficiency in


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irrigation service delivery through improved irrigation systems and better financial and technical capacity

by strengthening the IAs and the NIA.

Key Expected Outcomes and Outcome Indicators

15. The original outcome indicators were designed to track the flow of resources for O&M as well as the improved water delivery in the targeted NIS. These were: (a) ISF collection rate increased from 55 percent to 86 percent nationwide; (b) ISF collection efficiency increased from 61 percent to 85 percent in the NIS covered by the project; (c) NIA financial viability index (based on cash and non-cash flows and exclusive of depreciation) increased from 1.04 to 1.44; (d) NIA financial viability index (based on cash and non-cash flows and inclusive of depreciation) increased from 0.99 to 1.27; (e) transfer from the Borrower to NIA under Fund 1011 reduced from PhP300 million to PhP175 million at the end of the project; (f) IAs performing acceptably under IMT Models 2-42 increased from 74 percent to 85 percent; (g) percentage of IAs with ISF share released within one month after collection increased from 10 percent to 60 percent; and (h) IA members expressing satisfactory rating for services received increased from 60 percent to 85 percent. 16. The above indicators were reviewed during project implementation. Some financial indicators at the NIA level which were assessed to be beyond the influence of the project were eventually restructured. Intermediate indicators that were more closely aligned to the PDO were elevated as outcome indicators. The original and revised PDO outcome indicators are presented in Tables 1 and 2, respectively, and the details of the changes in these indicators are discussed in Annex 6. Components 17. Component 1: Irrigation Sector Restructuring and Reform (US$31.96 million estimated at appraisal; US$31.37 million actual cost). This involved the following subcomponents: (a) NIA Rationalization Plan which supported the RP’s phased reduction of NIA staff and corresponding severance payments of voluntary retirement packages; and (b) NIA Institutional Strengthening and IMT Program which supported the organizational development and technical capacity building for IAs, strengthening the capacity of NIA staff to support the IAs and manage their work more effectively, implementation of IMT model contracts for O&M and ISF collection as contribution to finance O&M, and establishment of water management demonstration farms to promote water saving technologies. 18. Component 2: Irrigation Infrastructure Development (US$68.22 million estimated at appraisal; US$65.31 million actual cost). This involved the following subcomponents: (a) Rehabilitation and Modernization of Irrigation Systems which supported the rehabilitation and modernization of 58 existing NIS (15 Core A and 43 Core B NIS)3. Activities in Core A NIS included major and comprehensive

1 Fund 101 is the subsidy of the national Government to NIA to cover restoration, rehabilitation and repair of existing NIS. 2 The IMT Program (NIA Memorandum Circular 47, series of 2008) is a participatory approach program which ensures ownership and enhancement of capacities of IAs in the improvement and sustainable O&M of NIS. The program consolidated and streamlined the various IA contracting arrangements regarding the O&M of NIS. It had four models of contracts with specific scope and level of O&M responsibilities. The IAs were expected to gradually move from lower to higher model contracts with increasing responsibility for O&M and more responsibility for management of finances for O&M. In 2017 the four models were unified into one common contract to align with the Free Irrigation Service Law. 3 PAD originally included 14 Core A NIS, but one was divided into two, leading to 15 Core A NIS. There were initially 44 Core B


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rehabilitation of diversion and intake structures, main and lateral canals and structures, service roads, and drainage facilities, among others. Works in Core B NIS included less comprehensive and minor rehabilitation and repair works such as canal desilting, and repair and/or installation of secondary and farm level structures and facilities; and (b) Support to Social and Environmental Safeguards which supported the implementation of social and environmental safeguard activities such as the resettlement of displaced persons, payment of compensation for rights of way, and implementation of other activities in the Environmental Management Plans, Resettlement Action Plans, and Indigenous Peoples Action Plans. 19. Component 3: Project Management and Coordination (US$4.81 million estimated at appraisal; US$4.01 million actual cost). This component supported the overall project management, including incremental operating costs and monitoring and evaluation (M&E). In addition, the project supported a series of studies to assist NIA with its reform agenda. These included the Irrigation Sector Development Master Plan, implementation of the NIA’s RP, volumetric pricing, national ISF policy and equipment management, among others. SIGNIFICANT CHANGES DURING IMPLEMENTATION 20. First Restructuring (February 11, 2015). The first restructuring harmonized the PDO in the PAD and the Legal Agreement. It also responded to the Government’s request to increase the scope of the project to include the rehabilitation of an additional eight NIS that were damaged by Super Typhoon Haiyan, and with the Government committing to provide 90 percent of the funding requirements as additional counterpart budget. The increased scope necessitated changes in component cost, loan closing date, financing plan, procurement and implementation schedules, and reallocation between disbursement categories. However, these changes did not materialize because of the eventual shift in the government’s strategy of funding post disaster damages through their regular programs. Consequently, the project continued with the original scope. 21. The restructuring also updated some indicators to better align with the revised PDO. The adjustments/changes in the original indicators were made to sharpen the link to the PDO’s focus on technical and financial viability of the NIS to achieve efficient irrigation service delivery. Moreover, two Bank core indicators and three irrigation sector indicators were added as part of the corporate requirements. Two indicators regarding NIA’s financial position were dropped as the original indicators were too broad and were affected by factors beyond the scope of the project. Annex 1 provides detailed information on the achievements of continued and dropped indicators. 22. Second and Third Restructuring (September 24, 2015 and March 31, 2016). The second and third restructuring were extensions of the loan closing date for six months and 11 months, respectively. These extensions were granted to provide time for the Government to complete the internal processing of the first restructuring. 23. Fourth Restructuring (February 13, 2017). The fourth restructuring covered the extension of the loan closing date to continue the remaining works in four of the project’s largest Core A systems. The loan extension also allowed the implementation of additional rehabilitation works in four Core B systems

NIS, but one NIS had works completed under a different program by project commencement and was dropped from the list.


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that were damaged by several strong typhoons. These NIS required immediate repair of critical sections to ensure continued irrigation of the farms. The supplementary works necessitated revision in component costs, reallocation between disbursement categories, and updating of the implementation schedule. 24. The target percentage of “female beneficiaries” was also reduced due to the policy of IAs of limiting their membership to only one person per household which in most cases is the head of the family (usually the male). This did not affect the total number of beneficiaries as the targeted households remained the same. The restructuring also addressed the effects of the abolition of the ISF collection by including a new indicator on “annual O&M budget received by the irrigation systems from the government as a percentage of the annual ISF between 2014 and 2016” as a substitute indicator to measure availability of budget for O&M. The monitoring of the indicators on ISF collection efficiency (nationwide and project level) was discontinued effective January 1, 2017 in view of the ISF abolition. 25. Other Changes. The priorities of NIA evolved over the years. During project preparation, NIA’s priority as per the MTPDP (2004-2010) focused on the rehabilitation and improvement of existing NIS. During project implementation, the emphasis on these increased further due to the Government’s objective to return as many NIS as possible to fully operational condition, and with the construction and expansion of NIS as additional key priority. As a result, NIA’s overall budget increased from PhP12.6 billion in 2009 to PhP41.7 billion in 2018, which necessitated engagement of project/temporary staff on top of the approved RP positions. 26. The project was designed as a long-term program for implementing institutional reforms in the irrigation sector through the APL instrument. However, the APL approach was not pursued as this lending instrument was no longer available within the Bank. Nevertheless, the original long-term program requirements have been partly addressed with the enhanced strategic focus of the government on the irrigation sector through the Staple Food Self Sufficiency Program (SFFSP)4, Build-Build-Build Program5 and the progress already achieved under the project and other irrigation projects. The project also supported NIA prepare an Irrigation Sector Development Master Plan (road map) which is already being implemented using NIA’s resources and financial assistance from other development partners. A technical assistance to further modernize the existing irrigation infrastructure including promoting the potential for crop diversification through irrigation is also being worked out by the Bank with NIA. 27. At appraisal, there was strong government focus on rationalization and efficiency of the bureaucracy, including strengthening of NIA as a corporation. A model of operational efficiency and financial viability (especially ISF collection) had been at the forefront of NIA’s priorities and this was cascaded down to field offices and IA level. However, the Government in 2016 instituted a major policy change when it abolished the ISF and declared irrigation delivery service free under the Free Irrigation Service Law (Republic Act 10969). This law changed the nature of irrigation service delivery in the country from being a semi-commercial operation into a purely government-subsidized public service. To compensate for the loss of ISF, a major source of NIA’s revenue, the Government provided O&M subsidy

4 The Staple Food Self Sufficiency Program was the Government’s banner program for the development of food and agriculture during the Aquino Administration (2011-2016). The interventions were clustered around three main strategies on: (a) raising productivity and competitiveness of rice; (b) enhancing economic incentives in the rice market; and (c) managing food staples consumption. The SFSSP received significant funding with the largest allocation given to irrigation. 5 The Build-Build-Build Program is an ongoing priority program of the Duterte Administration that focuses on infrastructure development, including irrigation.


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to NIA starting in 2017. The Free Irrigation Service Law signaled a stronger Government support to the irrigation sector and positively contributed to achieving the PDO. While the means for funding of O&M activities shifted from using internally generated funds to receiving Government subsidy, the funding required by NIA and the IAs for O&M activities remained stable and considered a budget priority. OUTCOMES RELEVANCE OF PDO 28. The project was designed according to the Bank’s and the Government’s priority policies, programs and strategies at the time of preparation. The PDO remained relevant throughout implementation and is consistent with the Bank’s Country Partnership Strategy (CPS) for FY15-19 (Report No. 78286-PH, dated May 14, 2014) at the time of closing. It addressed the CPS’ Engagement Area 3 on “rapid, inclusive and sustained economic growth”. In particular, it supported Outcome 3.4 on “improved agriculture productivity and income” and more specifically contributed to the achievement of Milestone 3.4.1 on “area provided with irrigation and drainage services” and Milestone 3.4.2 on “increase in cropping intensity”. 29. The project continued to be consistent with the AFMA priorities towards commercialization of agriculture, and specifically in upgrading irrigation systems for rice production. It was also relevant to the country’s national plan - the Philippine Development Plan (PDP; 2017-2022), which put irrigation as one of the priority sectors for infrastructure development to expand economic opportunities in the country. The PDP includes among others, the provision of subsidy for capital investment and O&M of irrigation facilities, strengthening the implementation of IMT Program, and rehabilitation of irrigation systems. With the alignment of the PDO to the CAS at appraisal and the current CPS and PDP, the relevance of the PDO is rated High. ACHIEVEMENT OF PDO (EFFICACY) Achievement of Original PDO and respective Original PDO Outcome Indicators 30. The original PDO was “to improve irrigation service delivery of the Borrower so as to have it provided on a financially and technically sustainable basis in order to contribute to increased agricultural production and productivity among beneficiary farmers in irrigated areas”6. The achievement of the original PDO outcome indicators at the end of the project is shown in

Table 1. Achievement of Original PDO Outcome Indicators

Original Indicators Baseline (2009)

Original Target

Accomplishment

End of Project

Percent (%)

Financial Sustainability

a. Nationwide ISF collection efficiency (%) 55 86 60 70

b. ISF collection efficiency in the NIS covered by 61 85 67 79

6 At the time of project preparation, it was not required to have indicators for the part of PDO which comes after the phrase “in order to”, thus no indicators were identified for “increased agricultural production and productivity”. At the time of ICR preparation, guidance had changed and the ICR Team was advised to report on agriculture production and productivity.


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Original Indicators Baseline (2009)

Original Target

Accomplishment

End of Project

Percent (%)

the project (%)

c. NIA financial viability index (based on cash and non-cash flows and exclusive of depreciation) (%)

1.04 1.44 0.98 68

d. NIA financial viability index (based on cash and non-cash flows and inclusive of depreciation) (%)

0.99 1.27 0.97 76

e. Transfer from Borrower to NIA under Fund 101 (PhP million)

300 175 2,639 (1,508)

Technical Sustainability

f. IAs performing acceptably under Models 2-4 (%)

74 85 99 116

g. IAs with ISF share released within one month after collection (%)

10 60 71 118

h. IA members expressing satisfactory rating for services received (%)

81 85 97 114

31. Financial Sustainability. One of the key factors to help sustain improved delivery of irrigation service was the availability of funds for O&M in existing NIS. The financial-related outcome indicators were used to track the level of NIA’s financial resources for O&M purposes. It was expected that the project’s investment support for the rehabilitation and repair of the 58 NIS as well as its support for the capacity building of IAs would improve irrigation water delivery. These were expected to eventually increase the level of satisfaction of farmers and improve the collection of ISF payments as well. The implementation of the RP was also expected to generate savings for NIA which could be used to increase funds for O&M. With the expected increase in ISF collection and generation of savings from its RP, NIA’s viability index was expected to improve and consequently make NIA less dependent on subsidies from Fund 101 for O&M activities. 32. ISF Collection Efficiency (Nationwide and PIDP-assisted NIS)7. One of NIA’s key policies is to use the proceeds from ISF collection to fund O&M requirements. From 2009 to 2016, the ISF collection

efficiency for both nationwide and project-assisted NIS improved from 55 percent to 60 percent (70 percent of target) nationwide, and from 61 percent to 67 percent (79 percent of target) in project-assisted NIS. The growth in ISF revenues for project-assisted NIS was initially slow because of delays in the civil works procurement and implementation, such that the expected improvements in irrigation services, particularly for larger systems, were not completed until later in the project. ISF collection efficiency was also affected by the damages on NIS brought about by a series of strong typhoons that severely affected the country, particularly in Northern Luzon where majority of the project-assisted NIS were located.

7 The ISF per ha is calculated as follows: X kg * rice support price. X is 150 kg and 100 kg during the dry and wet season, respectively. In 2018, the rice support price was PhP17/kg. The ISF was PhP2,550 (US$47.7) and PhP1,700 (US$31.8) per ha during the 2018 dry and wet season, respectively.


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33. The ISF collection reached its highest efficiency in 2014 nationwide at 67 percent (78 percent of target) with a total revenue of PhP1.92 billion and 69 percent (81 percent of target) in project-assisted NIS. ISF collections declined in 2015 to PhP1.78 billion in anticipation of the election promises to provide free irrigation service and further reduced in 2016 to PhP1.5 billion when the Government officially announced that ISF would be abolished. Because of the positive trend until 2014, it was expected that without a change in the policy, ISF collection efficiency would have reached the end of project targets. This assumption was confirmed by interviews with several IAs who indicated that they continue to collect cash contributions from their members (from about US$30 to US$50 per farmer per cropping season) to supplement the O&M subsidy from NIA. 34. NIA Financial Viability Index (Including and Excluding Depreciation). The index is defined as NIA’s revenue from ISF collection, amortization from communal and pump irrigation systems and equipment rental income vis-à-vis its expenses for salary of regular personnel and operating costs. The viability index exclusive of depreciation was positively influenced by increased ISF collections and reduction in the number of staff because of the implementation of the RP8 in the early years of the project (1.49 in 2011 and 1.36 in 2012). From 2013 onwards, the index declined due to the implementation of the Salary Standardization Law (SSL) which increased NIA’s expenditures for salaries and the free irrigation service which decreased income. At the end of the project, the index was around 1.0 which was lower than target. It should be noted however, that the index reflects only to a small percentage of NIA’s income. NIA receives a large subsidy from the Government for locally funded and foreign-assisted projects/investments. Moreover, since 2017, it has received from the Government an annual O&M subsidy of PhP2.43 billion in 2017, PhP2.6 billion in 2018, and PhP2.70 billion 2019. Taking all these sources into account, NIA remains a financially viable organization. 35. Transfer from Borrower to NIA under Fund 101. The expectation that the Government’s subsidy for the rehabilitation, restoration and repair of NIS would decrease over time with increased financial self-reliance of NIA did not materialize. As mentioned earlier, the increased priority of the Government to rehabilitate as many NIS as possible resulted to increased Government transfers to NIA. From 2012 to 2016, the Government implemented the SFSSP under which significant funding was provided to NIA. This flagship program supported investments for the rehabilitation of many NIS nationwide to increase rice production and improve cropping intensity. After 2016, the funding continued from other Government sources and at the end of the project, the transfer under Fund 101 was PhP2.64 billion which was significantly larger than the target of PhP175 million. 36. Rating. The targets for the financial-related indicators were partly met due to changes in the Government’s national policies for the irrigation sector which were outside the control of the project. Without these changes, it was expected that targets would have been achieved. Nevertheless, since subsidy carries certain continuity risks, the contribution of the project towards this part of the PDO is considered Modest.

8 The RP was completed on time and the number of permanent staff was significantly reduced with the retirement of 2,523 staff (100 percent of target) from a workforce of about 6,700 staff in 2009. This resulted savings in personnel salaries which were deposited in the National Irrigation Management Fund (NIMF). The total amount deposited in the NIMF reached PhP1.63 billion at the end of the project. The NIMF was a trust fund created through NIA Board Resolution No. 9769-09 in 2009 (and supplemented by NIA Memorandum Circular 16, series of 2009) to ensure the availability of sufficient funds for O&M and routine rehabilitation and emergency repairs of NIS.


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37. Technical Sustainability. The technical-related outcome indicators were used to assess the mechanisms by which improved irrigation service delivery could be sustained beyond the project. The assumption was that rehabilitation of irrigation and drainage infrastructure coupled with IA’s increased role in O&M activities would help sustain irrigation service delivery. A total of 126,184 hectares and 196,442 farmer-beneficiaries have benefited from the project, particularly from improved irrigation service delivery. 38. IAs Performing Acceptably under Models 2-4. All 924 IAs in the project-assisted NIS have signed IMT model contract agreements9. Based on the contract assessment conducted by NIA staff, the IAs’ performance had significantly improved from 74 percent before the project to 99 percent (116 percent of target) at project closing. The IAs’ contract responsibilities included clearing and desilting of canals, minor repair of structures and facilities, and collection of ISF, among others. The IAs indicated that the various capacity building activities provided under the project helped significantly in the implementation of the IMT contracts. A total of 4,433 batches of training courses were conducted for 172,402 IA participants. These training courses were focused on organizational development and strengthening, leadership and skills enhancement, O&M and management of NIS, and financial management. Training outputs included the development of the IA’s cropping calendar, water distribution plan, system O&M plan, and budgeting and financial recording system. Technology training courses and exposure visits to model farms were also undertaken. The IA capacity building activities under the IMT Program were rolled-out and extended to some 2,100 IAs outside of the project’s 58 NIS which have IMT contract agreements with NIA. 39. Release of IAs’ ISF Share. As part of the IMT contracting arrangement, the IAs were given a share from the ISF collection, with the percentage depending on the model contract. A total of 71 percent (118 percent of the target) of the IAs received their share from the ISF collection within one month. This was a significant improvement considering that, before the project, only about 10 percent of the IAs were able to receive their ISF shares on time. Most had to wait for more than a month before their ISF shares were released. The quick release of their ISF shares enabled the IAs to undertake regular O&M activities on schedule. 40. IA Members’ Satisfaction Rating for Services Received. As a result of the project’s technical and institutional development interventions, 97 percent of IAs (114 percent of target) reported a satisfactory rating10 for irrigation services received, especially on the timely delivery of water, NIA’s technical support in maintaining main infrastructure, and assistance to IAs in O&M activities. This high level of satisfaction was confirmed in the Implementation Completion and Results Report (ICR) workshops and the PIDP Impact Assessment Study.

9 There are four IMT model contracts (Models 1 to 4) reflecting the increasing level of responsibility of IAs in the operation and maintenance of their NIS. Under the Free Irrigation Service Law, these were combined into a single “Modified” IMT Contract. The 2018 data tracked the performance of the same cohort of IAs showing both increased and maintained performance. 10 The Farmers’ Satisfaction Survey is a nationwide survey undertaken by a third-party survey team. The survey covers all IAs and determines the IA members’ satisfaction on the following: (a) compliance in the implementation of agreed cropping calendar; (b) timeliness in the delivery and distribution of irrigation water; (c) equitability in the delivery and distribution of irrigation water; (d) NIA action on the requested rehabilitation and construction of irrigation systems and projects; (e) quality of construction and rehabilitation of irrigation facilities and structures; (f) action on the requests for technical advisories/support services; (g) quality of technical advisories/support services provided; (h) prompt action on request for trainings and other capacity building programs; and (i) quality of training and other capacity building programs provided.


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41. Rating. Considering that all the outcome indicators exceeded their targets, and that almost all the farmer-beneficiaries are satisfied with the services that they received under the project, this part of the PDO is rated High. 42. Agricultural Production and Productivity. The agricultural-related intermediate outcome indicator of cropping intensity was used to measure the effect of rehabilitation of irrigation and drainage infrastructure and improved irrigation services on production and productivity. Rice yield was also monitored to provide additional information. 43. Agricultural Production. The average paddy rice yield in the project-covered NIS increased by 17 percent, i.e., from the baseline of 4.27 tons/ha and 4.48 tons/ha during the wet and dry seasons in 2009, respectively, to 5.00 tons/ha and 5.26 tons/ha during the wet and dry seasons in 2017, respectively11. Moreover, the average yield in the project-assisted NIS in 2017 is about five percent higher than NIA’s national average of 4.73 tons/ha and 5.05 tons/ha during wet and dry seasons in 2017, respectively. The availability of water increased farmers’ confidence to invest in improved (hybrid) rice seed varieties and other farm inputs. 44. Agricultural Productivity. The rice cropping intensity increased from 151 percent in 2009 to 171 percent in 2017 (101 percent of target). Considering the increases in rice yields in the project-supported irrigation area, the total productivity increased from 833,603 tons to 1,106,924 tons, or an increase of 273,321 tons. 45. Rating. The project achieved outcomes that are higher than the national average which demonstrates that it had a positive impact on agricultural production and productivity. These benefits are likely to be sustained as a result of improved financial and technical capacity for O&M. Since the project did not have specific targets for this part of the PDO, it is rated as Substantial. 46. Overall Efficacy Rating (Pre-Restructuring). Considering that one of three parts of the PDO is rated High, one Substantial and one Modest, the overall achievement of the original PDO is rated as Substantial. Achievement of Revised PDO and respective Revised PDO Outcome Indicators 47. The project’s revised PDO and PDO outcome indicators maintained the original intent of the project but updated wordings. The revised PDO is “to improve the efficiency of irrigation service delivery on a technically and financially viable basis”. Bank core indicators and irrigation sector core indicators were incorporated in the results framework while some PDO outcome indicators were revised to focus on outcomes that would support the viability of providing irrigation service delivery. The achievement of the revised PDO outcome indicators at the end of the project is shown in Table 2. The following paragraphs will describe the results of the outcome indicators that have not been discussed earlier.

11 Full cropping data for end 2018 was not yet available at the time of completing the ICR.


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Table 2. Achievement of Revised PDO Outcome Indicators

Revised Indicators Baseline Revised Target

Accomplishment

End of Project

Percent %

Technical Viability

a. Area provided with irrigation and drainage services (New and Improved; Hectare) - core sector indicator

0 118,950 126,184 106

b. Area provided with irrigation and drainage services (New; Hectare) - core sector indicator

0 3,438 2,787 81

c. Area provided with irrigation and drainage services (Improved; Hectare) – core sector indicator

0 115,512 123,397 107

d. IAs performing acceptably under Models 2-4 (%)

74 85 99 116

e. Cropping intensity in project NIS (%) 151 170 171 101

Financial Viability

f. NIA financial viability index (based on cash and non-cash flows and exclusive of depreciation) (%)

1.04 1.20 0.98 82

g. Ratio of actual to desirable O&M cost in PIDP Systems (%)

0.53 0.69 0.70 101

h. Annual O&M budget received by PIDP systems compared to the average annual O&M budget received during the past 3 years (%)

0 70 98 140

World Bank Core Indicator

i. Direct Project Beneficiaries (Number) - core indicator

0 176,000 196,442 112

j. Direct Project Beneficiaries - Female (%) – core indicator

0 18 17 94

48. Technical Viability. The restructuring maintained the original assumption that civil works investments coupled with IA’s increased role in O&M activities would help sustain irrigation service delivery. 49. Area Provided with Improved and New Irrigation and Drainage Services. These indicators were originally intermediate results indicators. These were considered Bank’s core irrigation sector indicators and thus upgraded from being intermediate results indicators to outcome indicators during restructuring. A total of 126,184 hectares (106 percent of target) and 196,442 farmer-beneficiaries (112 percent of target) have benefited from the project. The area comprised of improvement of 123,397 hectares (107 percent of target) of existing rice farms and 2,787 hectares (81 percent of target) of new areas. Since project preparation, some existing irrigated farms had decreased their production area due to


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unavailability of water and/or damaged facilities because of natural calamities, hence rehabilitation and improvement of existing areas was prioritized over generation of new areas. The improved technical condition of the irrigation systems was achieved through improvements and/or construction of structures and facilities which were agreed by NIA and the IAs based on the approved program of works and technical specifications. During construction, the IAs participated in monitoring the progress of civil works activities and upon completion of each contract, a joint inspection and walkthrough were undertaken by NIA and IAs to check the quality of works and functionality of the structures and facilities. Works were fully completed in 56 of the 58 NIS. The remaining works in the two NIS were included in the NIA’s budget for 2019 and procurement of works are ongoing with completion targeted in 2019-2020. 50. IAs Performing Acceptably under Models 2-4 and Cropping Intensity. These indicators have been discussed earlier in the section on the achievement of the original PDO. Both indicators exceeded their targets. 51. Rating. Based on the achievement of the indicators and the positive response from farmers on the improved technical operation of their systems and the improved level of O&M, this part of the revised PDO is rated as Substantial. The achievement is expected to increase further once the remaining works in the two NIS are completed. 52. Financial Viability. The objective of ensuring efficiency of irrigation service delivery on a financially viable basis was anchored on the extent to which funds through the NIA and IAs would be made available to cover the required O&M activities on a timely basis. 53. NIA’s Financial Viability Index (Excluding Depreciation). This has already been discussed in the section on the achievement of the original PDO. Although the indicator achieved only a target of 82 percent, NIA remains financially viable as it has other funding sources that were not considered for the calculation of the index. 54. Ratio of Actual to Desirable O&M Cost. This indicator was originally an intermediate results indicator and was upgraded to an outcome indicator during restructuring. This was achieved at 101 percent of the target ratio of 0.69 given NIA’s priority of allocating resources for O&M activities. Initial funding came from the NIMF which was established under the project. The participation of IAs in O&M activities under the IMT contract agreement and the timely release of ISF share to the IAs which they used for their regular O&M activities complemented the NIA’s O&M funding. In addition, IA members provided in-kind contributions through labor for canal desilting, clearing embankments, repair of minor structures, etc. These contributions were not considered in calculating the ratio. 55. Annual O&M Budget. This was a new indicator that was added to assess the extent to which the O&M budget of NIA and IAs was maintained after the enactment of the Free Irrigation Service Law. Based on NIA’s financial records, it continued to allocate 98 percent (140 percent of target) of the average annual O&M budget released in the past three years. 56. Irrigation Service Delivery. Irrigation service delivery relates to the management of water from abstraction to the field in a technically sustainable manner and requiring certain managerial and financial resources. Under the project, the improvement in the efficiency of irrigation services is measured through


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cropping intensity and yields. An irrigation scheme has a certain design abstraction volume. With infrastructure in good condition after the rehabilitation and with improved water management, more water will reach the fields. This in turn will result in more area under irrigation (reflected in cropping intensity), with water delivered in the right quantities at the needed times for increased crop production (reflected in yields). As discussed above, both cropping intensities and yields have increased as a result of the project interventions and it can be concluded that the efficiency of irrigation service delivery has improved. 57. Rating. Two of the three outcome indicators for NIA’s financial viability had been achieved. The end objective of ensuring availability of financial resources for O&M has been addressed. Thus, the contribution of the project towards this part of the PDO is considered Substantial. 58. Overall Rating (Post-Restructuring). With both parts of the revised PDO rated as Substantial, the overall rating under the restructured PDO is Substantial. The management of water from abstraction to the field, including the availability of financial resources and the institutionalized conduct of O&M activities by both NIA and IAs have improved efficiency in irrigation service delivery. These were manifested in the full achievement of the targets in the irrigated area and cropping intensity. EFFICIENCY 59. Economic Internal Rate of Return (EIRR). The project’s EIRR was calculated at 33 percent (see Table 3 below) compared to an estimate of 25 percent at appraisal. This was determined based on data of all 15 Core A NIS and a sample of 11 Core B NIS (out of 43) and using the same basic approach as at appraisal, with some modifications on the assumptions and methodology.

Table 3. Economic Internal Rate of Return

PAD Estimates (%) End of Project Results (%)

Core A Systems 23.0 27.9

Core B Systems 49.0* 49.4**

Overall 25.0 32.9 * For 44 Core B NIS. ** For 11 of 43 Core B NIS.

60. The end of project economic analysis recognized that especially for some Core B NIS there were other civil works funded by other sources that contributed to increased production (e.g., SFSSP funds). For some Core B NIS, the extent of benefits extended to the entire command area due to improved water availability and reliability from improved and rehabilitated headworks and main canals but was only partial in other NIS where minor canal works were carried out. The PAD attributed 100 percent of benefits to the project, while the ICR discounted the benefits at 80 percent for Core A NIS, 30 percent for Core B NIS that received additional financing for expanded works, and 5 percent for the remaining sample Core B NIS where only minor works were undertaken.12

12 The discounted values were determined based on consultations with IAs during the ICR workshops held in June 2018, and on the amount of financing received per system relative to the respective command areas. Also, it was reported that other interventions during project implementation funded from other sources contributed to improved agriculture production.


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61. The original project design assumed that the project would target generation of new areas to improve cropping intensity and result in increased agricultural production. A 5 percent overall increase in yield was estimated at appraisal but this was not incorporated in the ICR calculation of benefits. However, project implementation covered more areas for restoration and rehabilitation rather than generation of new areas, improving crop yields significantly over a large area. At end of project, the average yield in Core A NIS increased by 15 percent during the dry cropping season on the average with the project’s intervention, with essentially no change13 during the wet cropping season. For the sample Core B NIS, the average yield increased by 17 percent and 27 percent on the average during the wet and dry seasons, respectively. Thus, the higher end-of-project EIRR is largely due to increases in crop yields and lower investment costs than estimated. 62. Other key assumptions used in the economic analysis in the PAD were that the physical works would take about five years to complete. Partial benefits were expected to accrue starting on the third year of implementation. While this was the case for some of the NIS, others were constructed or completed beyond the fifth year or during the extended project period. To net out the effect of inflation, the ICR analysis used the same 2008 prices for farm gate price of rice and the cost of production. This method was used on the assumption that improved water delivery services and improved farm management practices due to the project did not contribute significantly to quality improvements of agricultural produce that would result in higher output prices. 63. Without the three-year delay in project implementation, the end-of-project EIRR would have been marginally higher at 33 percent from 32.9 percent.14 The delays were mainly caused by slow procurement processes in the early stage of the project, particularly reliance on ICB for large contracts. 64. The robust economic analysis would warrant a Substantial efficiency, but considering the slow start and long implementation period, the efficiency of the project is rated Modest. Annex 4 provides a detailed analysis on efficiency.

JUSTIFICATION OF OVERALL OUTCOME RATING 65. The overall outcome rating is assessed as Moderately Satisfactory based on the preceding assessment and detailed in Table 4.

13 This was due to the influence of typhoons and flooding during the wet season during the project period. 14 Considered delays in four Core A systems i.e., Upper Chico River Irrigation System (RIS), West Apayao-Abulug RIS, THIRIS and Zinundugan RIS. The impact is marginal because completed works by original closing date in these NIS were more than 60percent of actual costs, except for Zinundungan RIS which completed only a third of the civil works by the original project closing date. The economic rate of return for Zinundungan RIS would have been higher at 23 percent from 21 percent had it completed works according to schedule.


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Table 4. Summary of Ratings

Split Ratings Relevance

of PDO Efficacy

Assessment Efficiency

Assessment Outcome

Before Restructuring

High Substantial

Modest

Moderately Satisfactory

After Restructuring Substantial Moderately satisfactory

Overall Moderately

Satisfactory

66. Overall, the project has supported the irrigation sector development agenda and priorities of the Government. It has also demonstrated the improved efficiency of irrigation service delivery on a technically and financially viable basis through the combination and synergistic effects of investments in civil works, capacity building of IAs, and institutional reform in NIA.

OTHER OUTCOMES AND IMPACTS 67. Capacity Building for NIA Staff. The project provided opportunities for some 100,400 training participants from the Central Office and Field Offices to enrich their technical, institutional, and operational knowledge and experience, including climate resilient irrigation design, project and contracts management and supervision, and institutional development/IMT implementation, among others. Handling of safeguards matters such as right-of-way negotiations, addressing community health and safety issues and provision of livelihood skills training for project-affected and Indigenous Peoples households were also imparted to the field staff. These were new processes and were highlighted by staff during the ICR Workshops as very relevant and important in their work. 68. Gender and Development. About 17 percent of the beneficiaries were female IA members (94 percent of target). Membership of women in both IAs and IA Boards continued to increase. There are now about 30,310 women IA members (108 percent of target) from 15,866 at the start of the project. The percentage of women members in the IA Boards rose from seven percent from project start to 10 percent at present. In many IAs, women members played a vital role in the collection of irrigation fees. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME KEY FACTORS DURING PREPARATION 69. Project Design Built on and Further Strengthened NIA’s Existing Policies and Implementation Capabilities. The initial project preparation was undertaken quickly given NIA’s preliminary work on the NIS technical design (feasibility studies, detailed engineering and design, etc.) and its operational knowledge on the component implementation. The project design adopted and further improved the agency’s established systems, procedures and institutional arrangements, considered NIA’s experiences and lessons learned in past projects, and determined potential risks. New and/or updated guidelines were prepared and issued to support project design and implementation including the above-mentioned memorandum circulars on the IMT Program and NIMF, and the Executive Order on the phased


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implementation of the RP. The memorandum circulars developed during project preparation became NIA’s standard operating procedure and adopted in all programs and projects. Specifically, the IMT program harmonized/unified and streamlined the different O&M arrangements with IAs, and the NIMF was established in each Regional Irrigation Office and became the main source of funds for O&M activities. 70. Significant Delays in the Processing and Approval of the Rationalization Plan. The preparation of RP took a longer period than anticipated given the various regional consultations undertaken and the finalization of a downsized structure. The review of the RP was also significantly delayed due to the slow processing by the Department of Budget and Management (DBM) which was the only agency authorized to review the RPs of all government agencies. It took almost two years before the NIA’s RP was approved which delayed project negotiations and commencement. While waiting for the government approval of the RP, NIA started with initial implementation activities such as the formulation of implementing guidelines on the IMT Program and NIMF, conduct of right-of-way negotiations, and implementation of initial capacity building for the IAs. The Bank also conducted technical assistance and capacity building activities on modern irrigation infrastructure design, improved water management, and other proactive efforts to prepare NIA staff for project implementation. 71. Identification of Risks and Adequacy of Mitigation Measures. There were two related risks identified in the PAD as substantial. These were: (a) the possibility of NIA staff resisting the implementation of IMT and that they would not shift their orientation from construction to system O&M; and (b) IMT Guidelines might not be effectively implemented if unattractive to NIA. These risks were evident in the initial phase of implementation but were mitigated by the extensive training conducted to orient staff on IMT policies and guidelines, and assistance in upgrading staff skills towards systems management as earlier described. The success in overcoming these risks was reflected in the positive performance of the IMT-related indicators. 72. However, as mentioned earlier, the legal and policy changes regarding the abolition of ISF, and implementation of the SSL and the SFSSP which affected the achievement of some of the financial indicators were not anticipated during preparation. These were new programs and priorities of the succeeding government administrations which were planned and launched during project implementation and were outside the control of the project. KEY FACTORS DURING IMPLEMENTATION 73. Government Ownership. The Government remained committed throughout project implementation. Project activities had been mainstreamed in the NIA operations and guided by the agency’s memorandum circulars/operating guidelines. As noted previously, the IMT Program was adopted by NIA and rolled out nationwide. Staff were familiar with the guidelines and procedures, and focal persons were designated at the field offices who served as lead in project planning, implementation and supervision. Counterpart funding was provided on time, including funds for the implementation of safeguards activities. The greater attention paid to the irrigation sector from 2012 under the SFSSP demonstrated the Government’s commitment to support the sector, including the project. 74. However, the project was understaffed especially in the initial project implementation phase. The DBM did not approve all the positions as agreed during preparation. While the staff performed multiple


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roles initially, this affected the timely processing of various requests and supervision of contracts especially when civil works activities picked up. This was addressed with the engagement of contractual staff. 75. Delays in the Procurement of Civil Works. Delays in procurement and re-bidding were experienced in the large civil works packages especially those undertaken through ICB. These delayed and extended project implementation period which eventually required project time extensions. Since irrigation construction periods were limited and undertaken only during the fallow period or between the cropping seasons, two of the 58 NIS could not be completed during the project period. NIA has provided funding under their 2019 budget to complete these remaining works. 76. The overall project experience with the four (4) ICB contracts was not encouraging given the significant delays and various issues encountered in contract implementation. On the contrary, about 71 percent and 77 percent of the contracts procured under the National Competitive Bidding (NCB) and Shopping procedures, respectively, were completed on time or ahead of schedule. These contracts were undertaken by local contractors who were familiar with the local conditions, and/or had done previous works in the region. Given these experiences, the Bank allowed NCB and Shopping methods to be used in rebidding of the cancelled ICB contracts as well as in procuring additional works under the project.

77. Staple Food Self Sufficiency Program (SFSSP). Project implementation was affected when the Government launched the SFSSP in 2011 which doubled NIA’s budget in 2011-2012 and continued to provide significant funding in 2013-2016. This was unexpected and was not considered in the RP and thus put a toll on the downsized NIA structure and staffing. As the project activities were mainstreamed in the NIA operations and undertaken by regular/permanent staff, some activities were delayed as the NIA staff were required to also give priority to SFSSP activities. This situation was addressed by engaging additional temporary project staff, including seasoned irrigation engineers who were engaged as third-party monitors and provided technical advice on the civil works implementation and quality assurance. 78. Climate Change. A major challenge faced by the project was in relation to climate change. During implementation, the Philippines was hit by a series of typhoons of increasing intensity, most notably Super Typhoon Haiyan in 2013 which was the largest known storm globally. Extended rainy season with heavy downpour and flash flood, almost every year, shortened the construction period which delayed the completion of civil works, especially those in Luzon. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME QUALITY OF MONITORING & EVALUATION (M&E) 79. M&E Design. The results framework covered the main intent of the project and focused on the desired results and outcomes. There was no requirement for a Theory of Change at design stage, but the main indicators aligned with the Theory of Change as shown in Figure 1. However, the indicators were more on the direct results and outcomes of the irrigation-related outputs rather than the outcome related to agriculture production and productivity. Nevertheless, NIA collected and tracked the achievements in yield and cropping intensity which were the key indicators to measure agriculture production and productivity, respectively.


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80. M&E Implementation. The Bank provided technical assistance to the project in developing a detailed Performance Indicator Reference Sheet that was the basis for development of a satisfactory project wide management information system. Thereafter, progress data was generated in a satisfactory manner, although some challenges in data flow and delays were experienced. The project liaised closely with the relevant offices in NIA in the collection of required data, including with the Corporate Planning Group and the Systems Management Section which managed NIA’s database and management information system on NIS. 81. M&E Utilization. Monitoring data was analyzed to track performance and identify problems in implementation. M&E activities included carrying out a baseline study, a mid-term review, and an impact assessment study at project completion. These were used to adjust implementation approaches and targets and to assess end of project performance. Indicators were adjusted during restructuring to align more closely with the revised PDO.

82. Justification of Overall Rating of Quality of M&E. The M&E system as designed and implemented enabled the assessment of the achievement of the objectives and tested the links in the results chain. However, the shifts in context on financial indicators regarding ISF collection efficiency and NIA viability index created challenges in tracking resources for O&M. This was eventually replaced with new indicators which allowed the project to measure the overall progress. Overall, the M&E is rated as Modest. ENVIRONMENTAL, SOCIAL AND FIDUCIARY COMPLIANCE 83. Safeguards. The project generally complied with Bank’s safeguards policies throughout implementation. Overall, the NIS did not pose large-scale adverse social and environmental impacts, but pertinent safeguards policies were triggered, including Involuntary Resettlement (Operational Policy or OP 4.12), Indigenous Peoples (OP 4.10), Safety of Dams (OP 4.37), Environmental Assessment (OP 4.01), and Pest Management (OP 4.09). 84. Involuntary Resettlement and Indigenous Peoples (IPs). Land acquisition was necessary for 10 NIS and was carried out through fully documented land transfer or voluntary donations. There was a total of 960 families, consisting of 401 landowners, 288 informal settlers and 271 owners of crops trees that had encroached into existing canal right of way. Of the informal settlers, 35 families (13 are IPs) have availed of the resettlement sites that NIA and host Local Government Units (LGUs) have provided while the rest opted to relocate on their own or set back their homes from the canal after receiving cash compensation. Of the 401 who had lost portions of their lands (average of 708 sq. m per family), 102 opted to receive compensation at the prevailing market price, while other affected people donated their lands. For NIS whose land was acquired through donation, the feedback obtained from affected land owners was generally positive, particularly due to the assistance provided for livelihood/enterprise development activities. There were some initial delays in the payment of compensation due to lack of legal supporting documents from claimants and different documentary requirements for the various types of tenurial status. These were all settled and funds for three absentee claimants were deposited in a trust account.


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85. The project also ensured that IPs were given equal opportunities in project activities and decision-making processes. Membership to IAs was open to all, including IPs who were provided with organizational development, technical/O&M and livelihood training. 86. Safety of Dams, Environment, and Pest Management. The Safety of Dams OP was used to guide the inclusion of safety consideration in the design of works, where relevant. During preparation, a Bank dam safety specialist inspected a dam in the biggest irrigation system under the project (Magat River Irrigation Improvement System). While project activities in this NIS would not involve works in the dam but only repair works in the canal structures, the dam safety status and other features were assessed and found satisfactory. Most of the civil works supported under the project were rehabilitation of intake structures rather than major dam/intake construction works. Nonetheless, construction supervision included ensuring all required material testing and other safety measures were followed. In addition, some civil works contracts included allocation for safety structures such as flood protection and other safety features as relevant. Environment-related mitigation measures were also included in the bid documents and closely followed up with the contractors during the construction period. These included proper disposal of construction debris and waste materials, dust control, and source of quarry materials with corresponding permits. The project did not directly include activities related to pest management practices, but NIA staff collaborated with the Department of Agriculture who delivered training to IAs on proper use of fertilizers and pesticides and integrated pest management practices. 87. Grievance Mechanism. Complaints and suggestions were handled at the System Management Committee (SMC) level. Each NIS established a SMC which was composed of representatives from NIA and IAs that met on a regular basis. Depending on the issues discussed, relevant parties/representatives from the contractors, LGUs, other government agencies, seed companies and other institutions were invited to discuss and find solutions on the IA and community concerns. 88. Supervision of Safeguards Implementation. The Bank’s implementation support missions always included social and environmental safeguards specialists in the team. The missions not only pointed out areas of non-compliance, but also provided technical support and advice to help the project comply with safeguards policies. These included postponing civil works in areas where PAPs had not been paid yet or required corrective measures to improve occupational and community health and safety. The lack of trained safeguards personnel at field level affected the timely preparation/updating of safeguards instruments and implementation of safeguards measures. Overall safeguards performance was rated as Satisfactory by the end of the project. 89. Fiduciary. Overall, the project complied well with fiduciary covenants and agreements. In few cases during the first two years of project implementation, there were substantial delays in the generation of the required interim financial reports, but the timeliness significantly improved until project closing. There were also delays in the submission of the annual audited project financial statements due to necessary consolidation of financial statements coming from the various field offices (Regional Irrigation Offices) which were also reviewed by their respective auditors from the Commission on Audit. Where delays occurred, these were for valid reasons beyond the control of NIA. In two instances, the independent auditors rendered a disclaimer audit opinion on the project financial statements due to presentation issues and deficiencies in the disclosure on the notes to the financial statements that were eventually addressed by the project. The challenges with procurement have been noted above and the


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extent to which this delayed implementation. At the time of project closure, the financial management and procurement performance were both assessed as Moderately Satisfactory. BANK PERFORMANCE 90. Bank Performance in Ensuring Quality at Entry. The Bank team worked closely with project and other Government counterparts during preparation. It provided technical inputs in the design of the project, including relevant international experience and lessons. The Bank also helped NIA justify to the oversight agencies the rationale for a five-year implementation of the RP as against the prescribed one-year period in view of the time required to undertake the civil works and IMT activities. As noted earlier, technical training and workshops were also extended to NIA staff prior to project commencement to prepare them for project implementation. International experts were engaged by the Bank to provide technical inputs and share new innovations and technology. While the Bank team performed well to obtain Government agreement on the project design and scope, the targets for some indicators were not adjusted given the time lag in Government approval of the RP. 91. Quality of Supervision. During implementation, the Bank conducted regular and intense implementation support missions, including interim follow-up missions where required. All missions included a team with multi-disciplinary composition. The Bank conducted extensive field visits and held regular interactions with management of NIA, oversight agencies, LGUs, contractors, IAs, farmers, project affected persons and other stakeholders and discussed findings and required actions. The Bank worked collaboratively with the project implementors to find solutions to project management and implementation issues. These included providing alternative instruments for land acquisition to break an impasse, advising on additional structures and corrective measures to improve occupational and community health and safety, helping improve implementation of safeguards instruments by including livelihood and technology training assistance to project affected peoples and IPs, and addressing procurement issues through flexible use of procurement methods. Furthermore, through project restructuring, some indicators were adjusted to be more realistic and consistent with the NIA’s overall targets. 92. Justification of Overall Rating of Bank Performance. The Bank performance is rated as Moderately Satisfactory. The Bank could have been more proactive adjusting or restructuring financial indicators to even more realistic targets, given the various developments outside the control of the project. RISK TO DEVELOPMENT OUTCOME 93. It is expected that benefits from project investments will continue to accrue given that the rehabilitation and restoration of the targeted NIS has been completed and that IAs are now more capable to conduct their own O&M activities. It is likely that the level of achievement in terms of improved cropping intensity, systems operations and maintenance will be maintained and, in some circumstances, improved further than assessed at project completion as water users become confident with improved water delivery.


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94. The change in the policy on ISF could constitute a risk to sustainability of project benefits if Government would reduce or stop providing subsidy to NIA and IAs for O&M. However, the Government’s continued commitment and priority accorded to the irrigation sector, especially the provision of O&M subsidy, improved the sustainability of project investments. At present, financial system for O&M is now more resilient. NIA had been provided by the Government with O&M subsidy to ensure continued functioning and operation of NIS. 95. Many IAs also started collecting contributions (referred to under different names such as sustainability fund, O&M assistance fund, voluntary contributions for O&M, etc.) from their members to augment their resources for O&M and organizational development activities. The contributions were agreed through the IA General Assembly and the contribution scheme is sometimes even supported by LGU ordinance. 96. Climatic risks to outcomes are expected to arise, particularly where NIS are affected by calamities. The Philippines has been affected by climatic changes and intensified storm events. The first restructuring of the project included consideration and some support to climate proofing in selected NIS. This was reported by respective regions and IAs to be successful but is not extensive nationwide. This is an area of potential risk management for the sector in the future. LESSONS AND RECOMMENDATIONS 97. Organizational Development and Strengthening of IAs. NIA is one of the pioneers in involving and partnering with water users/farmers in irrigation development. It started with the Participatory Approach Program in the ‘70s wherein water users were organized into IAs and were capacitated to be involved in the planning, design, implementation and O&M of their respective irrigation systems. This approach was continued and improved under the IMT Program supported by the project. The results reconfirmed that greater engagement of farmers in irrigation management at the local level can achieve improvements in system O&M to achieve adequate, timely and equitable supply of irrigation water. The encouraging results of the IMT Program can be attributed to the following:

a. The capacity building activities for IAs and Federation of IAs were provided according to their organizational development status and corresponding O&M responsibilities, but with the objective of preparing them to assume increased or higher O&M responsibilities in the future. The customized approach addressed the priority needs of IAs and focused on key areas to support their activities.

b. The IAs were given the prerogative to decide the IMT model contract (Models 1-4) based on their

capacity and readiness to assume O&M responsibilities. This was very important as they were not forced to assume responsibilities that were not matched with their skills and experience.

c. The capacity building program covered an integrated set of interventions on knowledge and skills

enhancement on organizational, financial and technical/O&M aspects. These included establishing their organization’s policies and guidelines; installing/strengthening their financial management system; development and implementation of O&M-related activities (cropping calendar, water distribution plan, alternative wetting and drying, etc.); provision of agricultural


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technology including exposure to successful farms/enterprises; undertaking enterprise/livelihood activities; and linking with government and private agencies for services provision, technical assistance and economic opportunities, among others.

98. Fit for Purpose Procurement Approach. There is very limited window to undertake rehabilitation and repair works in existing NIS due to the presence of crops which require continuous irrigation water. In most cases, works can only be done during the fallow period or in between cropping seasons (i.e., after harvest and before land preparation). In this regard, packaging of works based on technical merits and selection of the most appropriate procurement methods should consider the specific local conditions, cropping pattern, climatic factors and availability of contractors. 99. Under the project, the use of NCB, Shopping and community participation methods undertaken by local contactors proved to be efficient in 71 percent of contracts (i.e., 49 percent were completed on time and 22 percent completed ahead of time) compared to the use of ICB which suffered significant delays and, in some cases, required re-bidding. The smaller contracts had lower estimated costs which were delegated to the regional offices which have proven capacity in procurement supervision and contract administration. They were also able to focus and complete the procurement process on time given the lower number of procurement activities at the field office level. These were complemented by qualified local contractors who were familiar with the local conditions and adopted construction management approaches suited to the area. Multiple smaller works also enabled simultaneous construction which maximized the limited construction period. 100. With the Bank’s new Procurement Regulations, the issue on what procurement process to follow would be resolved upfront during project preparation with the agreement of a Project Procurement Strategy for Development (PPSD). This strategy would assess all options available and the best fit for purpose approach will be selected and agreed. 101. Importance of Adequate Funding for O&M. The collection of ISF had been a major source of funds in the past to support the O&M needs of NIS. In 2017, the government decided to provide free irrigation service and abolished the ISF. Nevertheless, because of past experience and increased awareness on the detrimental impact of the lack of O&M financing, the Government released O&M subsidy to NIA to ensure that irrigation systems would be properly operated and maintained. Similarly, the training and other technical support provided to IAs had provided awareness among their members that adequate funds should be available for proper and timely conduct of O&M. Contrary to the situation in other countries that do not have ISF, many IAs in the Philippines started collecting funds from their members even after the ISF was abolished. This showed that the comprehensive institutional development support provided under the project has led to mature IAs that were fully aware of the O&M requirements and their corresponding responsibilities. .


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ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS

A. RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: Improve efficiency of irrigation service delivery on a technically and financially viable basis.

Indicator Name Unit of Measure Baseline Original Target Formally Revised

Target

Actual Achieved at Completion

Area provided with irrigation and drainage services (ha)

Hectare(Ha) 0.00 102132.00 118950.00 126184.00

27-May-2009 31-Mar-2015 31-Aug-2018 31-Aug-2018

Area provided with irrigation and drainage services - New (ha)

Hectare(Ha) 0.00 0.00 3438.00 2787.00

27-May-2009 31-Mar-2015 31-Aug-2018 31-Aug-2018

Area provided with irrigation and drainage services - Improved (ha)

Hectare(Ha) 0.00 0.00 115512.00 123397.00

27-May-2009 31-Mar-2015 31-Aug-2018 31-Aug-2018

Comments (achievements against targets):

The targets for the total and improved area provided with irrigation and drainage services were exceeded at 106 percent and 107 percent, respectively, while 81 percent accomplishment was achieved for new area. Improvement of existing critical irrigation facilities and structures was prioritized to ensure timely and adequate water delivery for the existing farms. The lower than expected achievement for new area was due to uncompleted works in two irrigation systems. (Note: These indicators were added during the first project restructuring as part of the


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World Bank’s core sector indicators. The indicator on the “total area to be irrigated” was upgraded from an intermediate results indicator to an outcome indicator.)


Target


Direct project beneficiaries Number 0.00 196164.00 176000.00 196442.00

27-May-2009 31-Mar-2015 31-Aug-2018 31-Aug-2018

Female beneficiaries Percentage 10.00 30.00 18.00 17.00

31-Mar-2015 31-Aug-2018


The target for direct project beneficiaries was exceeded at 112 percent achievement due to the additional area rehabilitated and the series of organizational and technical capacity building activities implemented by the project. The proportion of female beneficiaries achieved 94 percent of the revised target. The project’s inclusive approach of involving all interested family members and conduct of gender mainstreaming and related training facilitated an increase in female membership and developed more women to become Irrigators Associations’ (IA) leaders/officials. The reduced target for female beneficiaries was in view of the policy of the IAs to only consider one member per family which is usually represented by the head or male member of the family. (Note: These indicators were added during the first project restructuring as part of the World Bank’s core indicators.)


Target


Irrigation service fee (ISF) Text 55% 86% 72% 60%


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collection efficiency nationwide.

27-May-2009 31-Mar-2015 31-Dec-2016 31-Dec-2016


This indicator only achieved 83 percent of its target. While the ISF collection showed an increasing/positive trend in the early years of the project, this started to decrease when free irrigation was announced during the 2015-2016 campaign period for the national elections. Extrapolation of the trend to the end of the project would have brought the ISF efficiency at or close to the revised target.


Target


NIA financial viability index based on cash and non-cash flows and exclusive of depreciation.

Text 1.04 1.44 1.20 0.98

27-May-2009 31-Mar-2015 31-Aug-2018 31-Dec-2018


This indicator was 82 percent achieved. This was initially positively influenced by the strengthening of ISF collections but was eventually negatively impacted by the implementation of the Salary Standardization Law (SSL) which increased NIA’s expenditures on salaries, and the cancellation of the ISF (per the Free Irrigation Service Law) which was one of the main sources of NIA’s income. The Index has a narrow definition and is not very relevant anymore for NIA as it does not consider other incomes and subsidies that ensure that NIA is a financially viable organization.


Target



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PIDP IAs performing acceptably under Models 2-4.

Text 74% 85% 85% 99%

27-May-2009 31-Mar-2015 31-Aug-2018 31-Dec-2017


The 116 percent accomplishment of target demonstrated the ability of IAs to undertake and fulfill their O&M contract obligations under the Irrigation Management Transfer (IMT) Program. This was due to the various capacity building and O&M training activities that were extended to the IAs under the project as well as improvement/rehabilitation in the physical facilities which greatly helped the IAs undertake their respective O&M activities and gradually take on more responsibilities.


Target


Ratio of actual to desirable operation and mainteance (O&M) costs in PIDP systems.

Text 0.53 0.69 0.69 0.70

27-May-2009 31-Mar-2015 31-Aug-2018 31-Aug-2018


This was achieved at 101 percent of the target which means that the actual annual expenditure invested by the National Irrigation Administration (NIA) for O&M of the project-covered existing irrigation systems was in line with estimated minimum requirements. Initial funding came from the National Irrigation Management Fund (NIMF) funds established under the project (savings from the Rationalization Plan or RP), income from the irrigation service fee (ISF) collection and supplementary funds from NIA’s regular budget to comply with the minimum O&M requirements. This demonstrated NIA’s priority accorded to O&M activities which helped improve the delivery of irrigation service. This however, did not include the additional in-kind labor contributions by IA members. (Note: This indicator was upgraded from an intermediate results indicator to an outcome indicator.)


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Target


Cropping intensity in PIDP systems.

Percentage 151.00 170.00 170.00 171.00

27-May-2009 31-Mar-2015 31-Aug-2018 31-Aug-2018


The increase in cropping intensity, at 101 percent of the target, is attributed to the rehabilitation of the critical sections of the irrigation system under the project, regular O&M activities undertaken by the IAs and NIA, and implementation of the cropping calendar and water distribution plan that were formulated and agreed by the IAs. These measures allowed a more efficient conveyance and distribution of water, resulting in an increased area under production. (Note: This indicator was upgraded from an intermediate results indicator to an outcome indicator.)


Target


Irrigation service fee (ISF) collection efficiency in PIDP systems.

Text 61% 85% 85% 67%

27-May-2009 31-Mar-2015 31-Dec-2016 31-Dec-2016


This indicator only achieved 79 percent of its target. As noted above, while the ISF collection showed an increasing/positive trend in the early years of the project, this started to decrease when free irrigation was announced during the 2015-2016 campaign period for the national elections. Extrapolation of the trend to the end of the project would have brought the ISF efficiency at or close to the revised target.


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Target


Annual O&M budget received by PIDP systems compared to the average annual O&M budget received during the past three years.

Text 0% 70% 98%

01-Feb-2017 31-Aug-2018 31-Aug-2018


This indicator was achieved at 140 percent of the target. The indicator was added during the fourth restructuring to assess to what extent the Government subsidy can replace the ISF as a source of funds for annual O&M requirements. The first year showed that the subsidy released by the national government to NIA is about at the level required to fund O&M activities.

A.2 Intermediate Results Indicators

Component: Irrigation Sector Restructuring and Reform


Target


IA members expressing satisfactory rating for services received.

Percentage 60.00 85.00 85.00 97.00

27-May-2009 31-Mar-2015 31-Aug-2018 31-Aug-2018



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This was achieved at 114 percent of the target (97percent of IAs). Based on a satisfaction survey undertaken by a third party, the IAs expressed satisfactory rating for irrigation services received, especially on the timely delivery of water, NIA’s technical support in maintaining headworks, and assistance to IAs in O&M activities.


Target


Staff separated under the NIA Rationalization Plan.

Text 0 2,887 2,523 2,523 retirees

27-May-2009 31-Mar-2015 31-Dec-2016 31-Dec-2016


This was fully achieved at 100 percent.


Target


Total savings from staff separated.

Text 0 690 690 390

27-May-2009 31-Mar-2015 30-Dec-2014 30-Dec-2014



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Only 57 percent of the target has been achieved. While total savings of about PhP771 million was realized in 2011 (fourth year of the five-year RP implementation), the amount decreased in 2014 due to the implementation of the SSL wherein RP savings were partly used to pay for the salary increase of current and retired staff including the corresponding increase in some retirement benefits.


Target


NIA personnel downsized. Text 6,706 3,819 3,819 3,414

27-May-2009 31-Mar-2015 31-Aug-2018 31-Aug-2018


All the RP-approved positions have been filled-up during the prescribed period. However, due to normal staff movements as a result of promotion, retirements, etc., there is an average of around 10 percent vacancies at any time, resulting in fluctuation of staffing levels. Consequently, at project closing the accomplishment was 89 percent of target.


Target


Funds deposited in the National Irrigation Management Fund (NIMF)

Text 0 690 690 1631.29

27-May-2009 31-Mar-2015 31-Dec-2017 31-Dec-2017


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from Year 1 to Year 5.


The target was substantially exceeded at 236 percent. As originally envisioned, the main sources of NIMF came from the savings generated due to the RP and other incomes such as from ISF collection, equipment rental, etc. The NIMF ensured payment of IAs’ share from ISF collection, funding for O&M activities, etc.


Target


Percentage of IAs in the NIS covered by the Project have successfully negotiated and closed IMT program contracts.

Text 75% 90% 90% 100%

27-May-2009 31-Mar-2015 31-Aug-2018 31-Aug-2018


All the 923 IAs have negotiated and signed their IMT contracts, indicating their commitment to undertake O&M activities in their respective irrigation systems.


Target


Operational water user associations created and/or

Number 0.00 922.00 922.00 924.00

27-May-2009 31-Mar-2015 31-Aug-2018 31-Aug-2018


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strengthened (number)


All (100 percent) IAs in the project-covered irrigation systems were provided with a series of organizational development and capacity building activities. These strengthened and prepared the IAs to assume OO&M responsibilities under the IMT Program.

Component: Irrigation Infrastructure Development


Target


NIS rehabilitated with increased disaster resilience.

Text 0.00 4 4

31-Oct-2014 31-Aug-2018 31-Aug-2018


Additional works in the four (4) NIS damaged by series of typhoons were 100 percent completed with improved disaster resilient design.


Target


Water users provided with new/improved irrigation and drainage services (number)

Number 0.00 196164.00 176000.00 196442.00

27-May-2009 31-Mar-2015 31-Aug-2018 31-Aug-2018

Water users provided with Number 0.00 58849.00 28000.00 30310.00


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irrigation and drainage services - female (number)

27-May-2009 31-Mar-2015 31-Aug-2018 31-Aug-2018


The targets for direct project beneficiaries (male/female) and female beneficiaries were exceeded at 112 percent and 108 percent, respectively. These were attributed to the additional area rehabilitated, and the series of organizational and technical capacity building activities implemented by the project. The project’s inclusive approach of involving all interested family members and conduct of gender mainstreaming and related training facilitated an increase in female membership and developed more women to become IA leaders/officials.


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A. KEY OUTPUTS BY COMPONENT

Table A1.3. KEY OUTPUTS BY COMPONENT

Objective/Outcome Target Actual

COMPONENT 1 - IRRIGATION SECTOR RESTRUCTURING AND REFORM

Outcome Indicators

1. Direct project beneficiaries (Number) 176,000 196,442

2. Female beneficiaries (Percentage) 18 17

3. ISF collection rate nationwide (Percentage) 72 60

4. ISF collection efficiency in NIS covered by the project (Percentage) 85 67

5. NIA financial viability index based on cash and non-cash flows and exclusive of depreciation 1.20 0.98

6. NIA financial viability index based on cash and non-cash flows and inclusive of depreciation 1.27 0.97

7. PIDP IAs performing acceptably under Models 2-4 (Percentage) 85 99

8. Ratio of Actual to desirable O&M costs in PIDP systems 0.69 0.70

9. Annual O&M budget received by PIDP systems compared to the average annual O&M budget received during the past three years (Percentage)

70 98

10. Transfer from the borrower to NIA under Fund 101 reduced (PhP Million) 175 2,639


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11. Percentage of IAs with ISF share released within one month after collection increased (Percentage)

60 71

Intermediate Results Indicators

1. IA members expressing satisfactory rating for services received (Percentage) 85 97

2. Staff separated under NIA Rationalization Plan (Number) 2,523 2,523

3. Total savings from staff separated (PhP Million) 690 390

4. NIA personnel downsized (Number) 3,819 3,414

5. Funds deposited in the NIMF from Year 1 to 5 (PhP Million) 690 1,631

6. Percentage of IAs in the NIS covered by the project have successfully negotiated and closed IMT program contracts (Percentage)

90 99.89

7. Operational water user associations created and/or strengthened (Number) 922 924

Key Outputs by Component

1. IAs Organized (Number) 922 924

2. IAs with IMT Contracts (Number) 922 923

3. No. of staff trainings (Batch) (Number) 1,751 1,932

4. No. of staff trainings (Participants) (Number) 47,293 100,408

5. No. of IA trainings (Batch) (Number) 5,389 4,433


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6. No. of IA trainings (Participants) (Number) 209,489 172,402

COMPONENT 2 - INFRASTRUCTURE DEVELOPMENT

Outcome Indicators

1. Total area provided with irrigation and drainage services (ha) 118,950 126,184

2. Area provided with irrigation and drainage services – New (ha)

3,438 2,787

3. Area provided with irrigation and drainage services – Improved (ha) 115,512 123,397

4. ISF collection efficiency nationwide (Percentage) 72 60

5. Cropping intensity in PIDP systems (Percentage) 170 171

6. ISF collection efficiency in PIDP systems (Percentage) 85 67

Intermediate Results Indicators

1. NIS rehabilitated with increased disaster resilience (Number) 4 4

2. Water users provided with new/improved irrigation and drainage services - (Number) 176,000 196,442

3. Water users provided with new/improved irrigation and drainage services - Female (Number) 28,000 30,310

Key Outputs by Component A. Canal System

1. Earth canal (Kilometer) 647.48 648.22


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2. Concrete lined canal (Kilometer) 179.67 181.09

3. Canal structures (Number) 674 626

4. Turn-out (Number) 839 1,088

B. Headworks

5. Diversion dam (Number) 14 17

6. Pumping station (Number) 1 2

7. Pumps (Number) 1 2

8. Intake structure (Number) 4 4

C. Road System

9. Service road (Kilometer) 307.87 296.75

10. Access road (Kilometer) 37 37

D. Drainage System

11. Drainage improvement (Kilometer) 42.38 42.38


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12. Drainage structures (Number) 101 71

COMPONENT 3 - PROJECT MANAGEMENT

Key Outputs by Component

1. Policy studies/consultancy services 11 11


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ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION

Table A2.1. TASK TEAM MEMBERS

Name Role

Preparation

Mei Xie Task Team Leader

Carolina V. Figueroa-Geron Task Team Leader

Maria Theresa G. Quinones Senior Operations Officer

Syed Husain Economist and Project Preparation Specialist

Yoshiharu Kobayashi Senior Water Resources Specialist

Geoff Spencer Lead Irrigation Engineer

Liping Jang Senior Irrigation Engineer

Fabrizio Bresciani Senior Agriculture Economist

Dominic Reyes Aumentado Senior Procurement Specialist

Noel Sta. Ines Senior Procurement Specialist

Preselyn Abella Senior Finance Officer

Josefo Tuyor Senior Environmental Specialist

Victoria Florian S. Lazaro Social Development Specialist

Jose Tiburcio Nicolas Social Development Specialist

Mei Wang Senior Counsel

Andrew Garcia Mendoza Program Assistant

Esperanza Sadiua Program Assistant

Minhnguyet Le Khorami Program Assistant

Brenda L. Phillips Program Assistant

SUPERVISION/ICR

Maria Theresa G. Quinones Task Team Leader

Joop Stoutjesdijk Lead Irrigation Engineer

Dorothy Lucks Institutional Development and M&E Specialist


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Noel Sta. Ines Senior Procurement Specialist

Rene SD. Manuel Senior Procurement Specialist

Tomas A. Sta.Maria Senior Financial Management Specialist

Aisha Lanette N. De Guzman Financial Management Specialist

Josefo Tuyor Senior Environmental Specialist

Jonas Garcia Bautista Environmental and Spocial Safeguards Specialist

Victoria Florian S. Lazaro Social Development Specialist

Roberto B. Tordecilla Senior Social Development Specialist

Ronald Muana Engineer Consultant

Mariles Navarro Economist

Mari Anne DL. Trillana Program Assistant

Liping Jiang Senior Irrigation Engineer

A. STAFF TIME AND COST

Stage of Project Cycle Staff Time and Cost

No. of staff weeks US$ (including travel and consultant costs)

Preparation

FY05 15.321 72,580.32

FY06 26.979 169,302.35

FY07 31.169 202,383.38

FY08 17.567 114,011.87

FY09 37.022 203,251.69

FY10 1.876 1,767.08

Total 129.93 763,296.69

Supervision/ICR

FY07 0 0.00

FY09 0 0.00

FY10 30.723 93,349.16


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FY11 14.823 59,552.42

FY12 15.347 56,946.40

FY13 14.720 54,730.41

FY14 23.390 74,715.75

FY15 25.138 63,820.92

FY16 26.735 120,317.85

FY17 26.284 117,799.47

FY18 22.356 132,924.42

FY19 19.982 107,765.15

Total 219.50 881,921.95


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ANNEX 3. PROJECT COST BY COMPONENT

Components Amount at Approval

(US$M) Actual at Project

Closing (US$M) Percentage of Approval

(US$M)

Irrigation Sector Restructuring & Reform

31.96 31.37 98%

Irrigation Infrastructure Development

68.22 65.31 96%

Project Management & Coordination

4.81 4.01 83%

Contingency 8.42 0.00 -

Front-End Fee 0.18 0.18 100%

Total 113.59 100.86 89%


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ANNEX 4. EFFICIENCY ANALYSIS

PAD Estimated Economic Benefits and Rate of Return 1. The project had two areas of focus: institutional reform and strengthening, and irrigation infrastructure modernization. The economic analysis was done on the infrastructure component, and the financial analysis on the National Irrigation Administration’s (NIA) financial viability, specifically its ability to provide sustainable irrigation services over the long term. Prior to the project, NIA was relying mainly on irrigation service fees (ISF) collected from farmers to support its operations. A significant portion of the ISF collections was being spent on NIA’s personnel and other overhead costs, which left less than 30 percent of ISF collections for operation and maintenance (O&M) of national irrigation systems (NIS), significantly below what was required to maintain existing assets. This resulted in a widening gap between potential and actual irrigated area, including increasingly non-operational areas, as assets deteriorated. The project was to support a more efficient irrigation sector by streamlining NIA’s functions and downsizing the organization, rehabilitating and upgrading infrastructure, and strengthening irrigators associations (IAs) to take on bigger O&M roles through building their capacities for improved O&M, ultimately resulting in increased rice production. The goal was to channel increased ISF collections from farmers including the freed-up resources from NIA’s reorganization towards supporting optimal levels of O&M, with the funds ring-fenced and deposited into a National Irrigation Management Fund (NIMF) set up in each Regional Irrigation Office to allow timely release of ISF share to IAs whenever needed. 2. Tangible and intangible benefits were identified in the PAD as follows: (a) increase in total effective irrigated area both during wet and dry seasons; (b) increase in annual cropping intensity; (c) less managerial effort in water management with more effective water allocation and hydraulic regulation; (d) prompt execution of optimal maintenance and repairs of the systems with the establishment of NIMF; (e) more dependable and adequate water supply with the establishment of water augmentation and reuse systems in selected systems; (f) reduced cost for NIA with the retirement of redundant staff; and (g) improved corporate viability of NIA with the adoption of organizational restructuring, policy reforms, and financial strengthening. Qualitative benefits were also identified to come from the dynamics created between more organized and higher capacity IAs on one hand, and more engaged farmer stakeholders on the other, leading to more efficient use of irrigation water and consequently, more farms being irrigated, and eventually, higher cropping intensity and rice farm yield. 3. The economic analysis estimated the project’s economic returns of project inputs on increased rice production. Project inputs included rehabilitation of irrigation infrastructure, IA institutional strengthening on organizational and financial management, and capacity building on irrigation water management and modern farm practices. The expectation was that this would result in an expansion of the irrigated area, and consequently increased rice production. 4. The NIS that were funded by the project consisted of two types: Core A and Core B. Core A NIS were those that received significant funding for major and comprehensive works having not been rehabilitated in the last 15 years or so prior to the project, while Core B NIS were provided with less allocation mainly for minor repair works since these were rehabilitated relatively recently. All had institutional strengthening components.


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5. Quantifiable economic benefits were valued by the incremental increase in rice production estimated from the increase in irrigated area and value added from production. The value added from production was estimated based on the yield of rice paddy, farm gate price of rice, and estimated cost of rice production.15 Investment costs included the cost of infrastructure modernization, institutional strengthening, physical and price contingencies, and construction supervision and management costs. O&M costs were based on the average optimal O&M cost per hectare estimated by an ADB study in 2000 and updated to 2008 prices using consumer price index. All financial costs and prices were expressed in 2008 prices, domestic currency, and converted to economic prices using government guidelines on project evaluation as follows: shadow exchange rate of 1.2, shadow wage rate for unskilled labor of 0.6, and taxes and duties of 10 percent. In addition, civil works were assumed to be 50 percent foreign component, 50 percent local component, and 50 percent unskilled labor. Capacity building costs were assumed to be 60 percent foreign component, 40 percent local component, and 20 percent unskilled labor. Financial O&M costs were converted to economic prices using a factor of 0.78. 6. The economic internal rate of return (EIRR) of the project in the PAD was estimated at 25 percent with a net present value (NPV) of US$74.06 million, using a 15 percent discount rate over a period of 30 years. The benefit-cost ratio was estimated at 1.81. The estimated EIRR considered only the benefits that would accrue on the project-covered irrigation systems. ICR Economic Analysis 7. The approach in the Implementation Completion and Results Report’s (ICR) economic analysis was cost benefit analysis and basically followed the same methodology applied during project preparation and provided in the Project Appraisal Document (PAD) with some modifications. Below are the modifications in methodology and assumptions used:

a. The irrigated area under the “with project” scenario was based on the average for wet and dry cropping seasons starting on the second year of NIS rehabilitation up to year 2017 using NIA data. In the PAD, this was a single estimated figure which also assumed that all rainfed areas within the NIS would be converted into irrigated area at the end of the project. Using the average figure was deemed to be more realistic and conservative given changes in weather patterns in recent years causing floods and droughts which affect irrigated area.

b. Yield was based on the average for wet and dry cropping seasons starting on the second year of

rehabilitation up to year 2017 using NIA data. While the PAD mentioned improvement in yield among the assumptions used, this was not reflected in the economic model.

c. In the “without project” scenario, data of 2010 was used as the baseline given the delay in project

start-up. The baseline data during project preparation was as of 2004-200516.

d. Benefits in the “without project” and “with project” scenarios were assumed to decrease by two percent annually to reflect NIS deterioration. The PAD did not consider deterioration of facilities.

15 See PAD for the assumptions on the prices, and costs, and methodology used in the data collection. 16 The feasibility studies were prepared in 2006 and used data as early as 2004-2005. The feasibility studies were the basis of the PAD estimates. Program of works of the NIS funded were prepared in 2010.


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e. Partial benefits were assumed to accrue on the year prior to project completion based on actual

implementation. The PAD assumed 25 percent partial benefits on the 3rd year of project implementation, increasing by 25 percent for each succeeding year reaching 100 percent at the end of the 5th year.

f. Attribution of benefits to the project was assumed to be 80 percent for Core A NIS, 30 percent for

Core B NIS that received additional funding on top of their original allocations which allowed additional works to be done, and five percent for the rest of the sample Core B systems on the basis that actual project investments were small relative to the command areas. Based on field visits and consultations with IAs and regional and irrigation management offices during the ICR workshops, other project interventions funded by other sources (e.g., external organizations, government programs/agencies including congressional assistance) were provided concurrently with the project which could have contributed as well to improved rice production (the PAD assumed full attribution of benefits to the project).

8. To net out the effect of inflation, the ICR analysis used the same 2008 prices for farm gate price of rice and the cost of production. This method was used on the assumption that improved water delivery services and improved farm management practices due to the project did not contribute significantly to quality improvements of agricultural produce that would result in higher output prices. 9. The ICR analysis used actual costs of civil works, detailed engineering, environment and social safeguards, capacity building and training, and equipment. The financial costs were converted to economic costs using the same parameters as in the PAD such as: shadow exchange rate of 1.2, shadow wage rate for unskilled labor of 0.6, and taxes and duties of 10 percent. In addition, civil works were assumed to be 50 percent foreign component, 50 percent local component, and 50 percent unskilled labor. Capacity building costs were assumed to be 60 percent foreign component, 40 percent local component, and 20 percent unskilled labor. Prices were expressed in local currency, Philippine Peso (PhP), and at constant prices. Actual O&M cost was 0.69 of the optimal O&M as estimated by NIA and converted to economic costs using a factor of 0.78. While the Irrigation Management Transfer (IMT) policy was expected to lower O&M costs in the long-run, this has not been realized yet. 10. The ICR reviewed 26 systems – all 15 Core A NIS (originally 14 in the PAD)17, and 11 Core B NIS out of the 43 funded including two systems that were earlier part of larger systems identified in the PAD. Four Core B NIS that received additional funding from the project mainly to repair typhoon-damaged facilities adopting climate resilient designs were included in the sample of 11. Total investment cost of the 26 NIS evaluated accounted for 92 percent of the irrigation development component of the project, or 61 percent of total project cost; with the remaining costs being accounted for NIA’s rationalization plan, and project management and administrative costs. Quantified Project Benefits 11. Impact on Irrigated Areas and Cropping Intensity. In the PAD, the goal was to increase existing service area in Core A NIS by 16,852 ha in wet season, and by 14,401 ha in dry season. For Core B NIS, the

17 Apayao-Abulog River Irrigation System (RIS) was split into two: East Apayao-Abulog RIS and West Apayao-Abulog RIS.


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expected increase was 43,908 ha and 26,971 ha in wet and dry seasons, respectively.18 At project completion, the newly generated area was 2,787 ha and 123,397 ha improved area. Priorities were focused less on extending the service area or generating new area but rather on rehabilitating existing irrigable areas which had become either non-operational or operating below potential due to system deterioration. New and improved areas contributed to improving cropping intensity from a baseline of 150 percent to 171 percent at end of project, slightly above the target of 170 percent. The impact on the economic internal rate of return of increased irrigated area while holding yield constant was positive for 19 out of the 26 NIS evaluated19; the remaining seven (7) NIS20 registered a decrease in average irrigated area which could be due to weather disturbances and other reasons. 12. Impact on Paddy Yield. More efficient water management and governance has allowed more

farms to be irrigated, enabled farmers to use high quality seeds and farm inputs that require adequate

water, and to adopt modern farm practices such as alternate wetting and drying (AWD)21. The project

impact on yield was significant in almost all areas especially during dry season, and this is largely because

of the focus during project implementation on rehabilitating areas which otherwise were not as

productive. For Core A NIS and using 2010 as baseline, yield improved by 15 percent for the dry cropping

season on the average with the project’s intervention, with essentially no change for the wet cropping

season due to typhoons and floods that mostly affected Region 2 where many of the Core A NIS are

located. For the sample Core B NIS, yield improved in both wet and dry cropping seasons, by 17 percent

and 27 percent on the average, respectively. Improved yield increased the economic rate of return

significantly in 21 NIS evaluated. The rest had lower yield or no change between the “with” and “without”

project scenarios22. While yield is affected by the availability of water including better organized IAs with

empowered members allowing for a more coordinated cropping schedule, it is also contingent on support

services from the agricultural and rural sectors in making available and accessible high-quality seeds and

farm inputs, IAs having knowledge of modern farm practices, availability of affordable credit programs for

farmers, and crop insurance, among others. The figure below shows the average yield for the project for

selected years with 2010 as baseline. Yield in 2017 improved by 6 percent and 22 percent for wet and dry

cropping seasons, respectively, when compared with the baseline.

18 See PAD dated May 27, 2009 19 This assumes no improvement in yield at end of project, and an economic rate of return above 15 percent, the discount rate. 20 The subprojects with decreased average irrigated area are Dummun RIS, Bagabag RIS, Pinacanauan RIS, Visitacion RIS, Zinundungan RIS, Bonga Pump1 Irrigation System, and Lower Binahaan RIS. 21 A water-saving technology that reduces water consumption without affecting yield and in the process, making water available to other farms. 22 The NIS with no improvement in yield or registered lower yield are Banurbur RIS, Pinacanauan RIS, THIRIS, West Apayao-Abulug RIS, and Upper Chico RIS.


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Figure A4.1. Average Productivity for Selected Years

Note: Average productivity was estimated based on the assumed attribution of project impacts and the weighted average of the subproject costs of the sample NIS evaluated to total costs.

13. Impact on Production. With increased irrigated area and improved productivity, average production improved by 21 percent and 33 percent for wet and dry cropping seasons, respectively, in 2017 compared to 2010.

Figure A4.2. Average Production for Selected Years

Note: Average production was estimated based on the assumed attribution of project impacts and the weighted average of the subproject costs of the sample NIS evaluated to total costs.

14. Investment Costs. Actual investment costs were lower by 33 percent on the average in Core A NIS compared with the PAD estimates due to either a reduced or revised scope of work. On the other hand, actual investment costs for the sample Core B NIS were higher by 24 percent largely because of additional funding provided to some NIS that were damaged by typhoons during project implementation and the

2010 2014 2015 2016 2017

Wet 3.08 3.18 3.09 2.79 3.26

Dry 3.04 3.29 3.47 3.42 3.70

-

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

Ton

s/H

a

Average Productivity (Yield)

2010 2014 2015 2016 2017

Wet 5,618 5,112 5,620 5,207 6,806

Dry 5,714 6,035 6,599 6,359 7,593

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Ton

s

Average Production


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use of savings from lower contract costs. Re-Estimated Economic Internal Rate of Return 15. Based on the 26 NIS reviewed, the re-estimated EIRR for the project is 32.9 percent with a net present value of PhP1,802 million, using 15 percent discount rate. The re-estimated EIRR is higher than 15 percent, the hurdle rate which was also used in the PAD. Benefit cost ratio is 2.6. The PAD estimate was 25 percent.

Table A4.3. Impact of No Project Extension and Implementation Delays on EIRR

Scenario Economic Rate of Return (%)

Economic Net Present Value (PhP million)

Base Case

Project 32.9 1,802.15

- Core A NIS 27.9 1,025.06

- Core B NIS 49.4 777.09

Scenario 1: No Project Extension1/

Project - (1,051.55)

- Core A NIS - (1,087.37)

- Core B NIS 19.8 35.82

Scenario 2: No Delay in Implementation2/

Project 33.0 1,809.81

- Core A NIS 28.1 1,032.73

- Core B NIS 49.4 777.09 1/ The analysis considered only costs and benefits as of the original project completion date of 2015. The project was extended to August 2018. 2/ Considered delays in four Core A systems with repeated extensions (Upper Chico RIS, West Apayao-Abulug RIS, THIRIS and Zinundugan RIS).

16. Net losses to the country if the project was not extended for three years is estimated at PhP1,052 million (US$20 million). The project extension allowed for some NIS (14 out of 26 NIS evaluated) to complete their civil works and to use savings from lower contracted costs to supplement project activities, thereby generating additional benefits. If some of the large NIS were not delayed, the economic internal rate of return would have been marginally higher at 33.0 percent. The analysis considered delays in only four Core A NIS where delays were largely due to contractor issues (Upper Chico RIS, West Apayao-Abulug RIS, THIRIS and Zinundugan RIS). The impact is marginal because completed works by original closing date in these NIS were more than 60 percent of actual costs23, except for Zinundungan RIS which completed only a third of the civil works by the original project closing date. The economic rate of return for Zinundungan RIS would have been higher at 23 percent from 21 percent had it completed works according to schedule.

23 The remaining works in Upper Chico RIS and West Apayao-Abulug RIS were not included as the funding will come from the government budget in 2019.


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Other Benefits 17. Additional benefits from improved O&M capacity is better resilience of IAs to disasters from being more knowledgeable of O&M activities and being more organized to undertake repairs and in the process, regaining functionality of damaged systems more quickly. This was demonstrated particularly in Region 8 where farmers banded together to repair facilities damaged by typhoons even before external funding was made available for more permanent rehabilitation works. This also shows the vulnerability of farms to weather disturbances and points to the need for disaster-resilient infrastructures in the future as weather disturbances become more prevalent due to climate change. 18. Unintended benefits in the form of water saved or recovered from canal lining allowed further expansion, recovery, and rehabilitation of irrigated areas for rice farming and other crops. Financial Analysis of NIA 19. As discussed earlier, the premise in the PAD was that with assistance provided in implementing NIA’s Rationalization Plan (RP) and in instituting sector reform, it would bring about a more forward looking, self-sustaining institutional environment and operational framework. Among the goals was to raise NIA’s financial viability index from 0.78 in 2008 before the project to 1.42 by 201524 after the project, essentially transforming NIA into a self-sufficient organization, true to its mandate of being a government corporation. NIA was to support its operations mainly from increased revenues from ISF collections and reduced O&M expenditures due to implementation of the IMT policy. Changes in the policy environment during project implementation still allowed improvement in the financial viability targets although at lower levels due to a shift in government priorities. There was a change in government leadership (administration) in 2010 and 2016. Before the project the policy was on prioritizing rehabilitation and maintenance of existing irrigation systems. In 2012, the Government embarked on a large-scale food self-sufficiency program that saw a significant increase in NIA’s operations which required engaging project-based and short-term staff after just being downsized with the completion of the RP in 2012. This was followed by the current Government’s program for new capital development starting in 2016. 20. In 2017, the Government cancelled the collection of ISF, and instead allowed for free irrigation services. NIA’s expected income from ISF was replaced with an O&M subsidy from the national Government. While farmers had more disposable income for their families, the impact of the revised policy on IA finances has been mixed. Field consultations with the IAs in June 2018 and the findings of the Impact Assessment Study indicate that IAs who are in Models 2-3 and had received higher ISF collection share before received less O&M support from the government subsidy. An illustrative case is Patag-Corona IA in Roxas-Kuya RIS in Bukidnon in Region X which is receiving about 29 percent less than before25. Because of this, many IAs introduced cash contributions from members ranging from US$30 to US$50 per farmer per cropping season to supplement funds received from the Government. To address the possible negative impact of the revised policy on IAs, the standard formula for O&M subsidy is being reviewed by Government to take into consideration the nuances of irrigation systems in terms of their configuration and operations.

24 Estimated viability index excludes depreciation. 25 Source: Participatory Irrigation Development Project (IBRD Loan No. 7709-PH), Project Impact Assessment Study, Final Report, August 2018, PRIMEX.


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21. The financial viability index of NIA for the period 2011 up to 2016 before the Free Irrigation Service Law showed that NIA was performing beyond target in 2011 and 2012 but on a declining trend reaching 0.73 in 2016. In 2017 and 2018, with the Government providing O&M subsidy, the financial viability index improved to 0.88 and 0.98, respectively, but were still below the target of 1.2 to support sustainability. However, as mentioned in the main text, this index takes a narrow view of financial viability as NIA receives large additional funding that ensures that NIA is currently still financially viable. The reduction in the index can be attributed to the following:

a. Implementation of the Salary Standardization Law which increased personnel expenses.

b. Launch of the Staple Food Self Sufficiency Program (SFSSP) during the Aquino Administration in

2011-2016 that saw NIA increasing operational expenses for project-based and casual personnel as well as for maintenance and other operating expenses.

c. Announcement of a free irrigation service as early as 2015 which negatively affected ISF collection efficiency starting that year.


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ANNEX 5. BORROWER’s COMMENTS ON THE ICR


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ANNEX 6. CHANGES IN PDO OUTCOME INDICATORS PROJECT DEVELOPMENT OBJECTIVE (PDO) 1.. Loan Agreement PDO: “The project constitutes the first phase of a long-term program supporting irrigation reforms in the Philippines whose objective is to improve the irrigation service delivery of the Borrower so as to have it provided on a financially and technically sustainable basis in order to contribute to increased agricultural production and productivity among beneficiary farmers in irrigated areas.” 2. Project Appraisal Document (PAD) PDO: “The development objective of the overall PIDP APL Program (three phases) was to improve irrigation service delivery on a financially and technically sustainable basis that will contribute to increased agricultural production and productivity among beneficiary farmers in irrigated areas. The proposed first phase of the Adaptable Program Loan (APL) was aimed to contribute to this overall program objective through: (a) enhancing NIA's financial viability, and NIA’s institutional capacity to support improvements in irrigation service delivery; (b) transferring increased O&M responsibilities for 58 NISs to capable IAs; and (c) increasing irrigation efficiency and promoting reliable access to water among farmers in the selected 58 NISs.” 3. Revised PDO (approved during the February 2015 Restructuring): “To improve efficiency of irrigation service delivery on a technically and financially viable basis.” DETAILS OF CHANGES

Table A6.1. Changes in PDO Outcome Indicators

Original PDO Outcome Indicators (PAD)

Approved Changes (through Formal Restructuring)

PDO Indicators Targets PDO Indicators Targets Achievements

“Fund 101 transfers from GOP to NIA” (Total in PhP million)

175.0 Dropped. Indicator dropped during February 2015 restructuring due to external factors outside the control of the project such as the infusion of significant funds for the implementation of the government’s flagship Staple Food Self Sufficiency Program (SFSSP) in 2011-2016. Accomplishment by end of the project was (1,508) percent of target.

175.0 2,639.0

“Irrigation service fee (ISF) collection efficiency – nationwide” (Percentage)

86 Revised. Target value revised during February 2015 restructuring. Revised. End target date revised to December 31, 2016 during February 2017 restructuring.

72

72

60


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“NIA financial viability index (excluding depreciation)” (Number)

1.44 Revised. Target value revised during the February 2015 restructuring. Revised. End target date revised to August 31, 2018 during the February 2017 restructuring.

1.20

1.20

0.98

“NIA financial viability index (including depreciation)” (Number)

1.27 Dropped. Indicator dropped during February 2015 restructuring as the asset value of facilities is influenced by external factors which were outside the control of the project. Accomplishment by end of the project was 76 percent of target.

1.27 0.97

“IAs’ ISF share paid within one month after

remittance” (Percentage)

60 Dropped. Indicator dropped during the February 2015 restructuring due to abolition of ISF. Accomplishment by end of the project was 118 percent of target.

60 71

“PIDP IAs performing acceptably (Models 2-4)” (Percentage)

85 Revised. End target date revised to March 31, 2017 during the February 2015 restructuring. Revised. End target date revised to August 31, 2018 during the February 2017 restructuring.

85

85

99

“IAs members expressing satisfactory rating for services received” (Percentage)

85 Dropped. Indicator dropped and downgraded to intermediate indicator during the February 2015 restructuring. Accomplishment by end of the project was 114 percent of target.

85 99

“ISF collection efficiency – PIDP systems” (Percentage)

85 Revised. End target date revised to March 31, 2017 during the February 2015 restructuring.

85


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Revised. End target date revised to December 31, 2016 during the February 2017 restructuring.

85

67

New. Added a core indicator on “direct project beneficiaries” with an end target date of March 31, 2017 during the February 2015 restructuring. (Number) Revised. End target date revised to August 31, 2018 during the February 2017 restructuring. (Number)

176,000

176,000

196,442

New. Added a core indicator on “female beneficiaries” with an end target date of March 31, 2017 during the February 2015 restructuring. (Percentage) Revised. End target date revised to August 31, 2018 during the February 2017 restructuring. (Percentage)

30

18

17

New. Added a core sector indicator on “area provided with irrigation and drainage services” during the February 2015 restructuring and with end target date of March 31, 2017. (Hectare) Revised. End target date revised to August 31, 2018 during the February 2017 restructuring. (Hectare)

118,950

118,950

126,184

New. Added a core sector indicator on “area provided with irrigation and drainage services - new” during the February 2015 restructuring and with end target date of March 31, 2017. (Hectare)

3,438


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Revised. End target date revised to August 31, 2018 during the February 2017 restructuring. (Hectare)

3,438 2,787

New. Added a core sector indicator on “area provided with irrigation and drainage services - improved” during the February 2015 restructuring and with end target date of March 31, 2017. (Hectare) Revised. End target date revised to August 31, 2018 during the February 2017 restructuring. (Hectare)

115,512

115,512

123,397

New. Added/upgraded the intermediate results indicator on “ratio of actual to desirable O&M costs in PIDP systems” with end target date of March 31, 2017 during the February 2015 restructuring. (Number) Revised. End target date revised to August 31, 2018 during the February 2017 restructuring. (Number)

0 .69

0 .69

0.70

New. Added/upgraded the intermediate results indicator on “cropping intensity in PIDP systems” during the February 2015 restructuring and with end target date of March 31, 2017. (Percentage) Revised. End target date revised to August 31, 2018 during the February 2017 restructuring. (Percentage)

170

170

171

New. Added a new indicator on “annual O&M budget received by PIDP systems compared to the

70 98


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average annual O&M budget received during the past three years” during the February 2017 restructuring. (Percentage)


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ANNEX 7. SUMMARY OF BORROWER’S PROJECT COMPLETION REPORT BACKGROUND AND RATIONALE

1. The Participatory Irrigation Development Project (PIDP) was a World Bank (WB) - assisted project

funded through the International Bank for Reconstruction and Development (IBRD; Ln. 7709-PH). The

project was intended to address key issues relative to the performance of NIA’s irrigation systems and its

corporate financial viability. The project was also undertaken to contribute to the Government’s Medium-

Term Philippine Development Plan (MTPDP) objective of increasing productivity and enhance food

security by providing efficient irrigation service to the farmers through rehabilitation/modernization of

irrigation systems and to assist the National Irrigation Administration (NIA) in its institutional reforms

through Irrigation Management Transfer (IMT) and Rationalization Plan (RP) implementation.

2. The project which had a US$70.36 million loan, was approved by the World Bank on June 21, 2009.

The Loan Agreement was signed between the Government of the Philippines and the World Bank on

August 7, 2009 and became effective on November 3, 2009. The total project cost was PhP5,111.45 million

of which Loan Proceeds amounted to PhP3,166.04 million and Government Counterpart PhP1,945.40

million. The project covered rehabilitation of 58 national irrigation systems (NIS) nationwide which

comprised of 15 Core A NIS (originally 14 NIS) and 43 Core B NIS (originally 44 NIS).

3. The overall Project Development Objective (PDO) was “to improve irrigation service delivery on a

financially and technically sustainable basis that will contribute to increased agricultural production and

productivity among farmer-beneficiaries in the irrigated area”. The objective was modified and approved

by the World Bank Board in February 2015 as follows: “to improve efficiency of irrigation service delivery

on a technically and financially viable basis”. To support the PDO, the project was designed with three-

phases through Adaptable Program Loan (APL). The first phase (APL1) was implemented with three (3)

project components through harmonized activities on institutional strengthening and reforms via IMT and

RP, and modernization and rehabilitation of irrigation systems to provide efficient irrigation service to the

farmers.

IMPLEMENTATION

4. Start of Project Implementation. Prior to loan effectiveness, the project started its initial activities on detailed engineering and start-up workshops and training using fund advances charged against NIA’s corporate operating budget. The activities mainly focused on the implementation of RP, series of IMT orientation workshops, and preparation of detailed engineering and design for civil works. 5. One of the factors that affected the project implementation was the unsynchronized implementation of RP, IMT and civil works. RP implementation started in 2008 while O&M responsibilities were not yet transferred to the Irrigators Associations (IAs). The Project Management Office (PMO) serving as the management and coordination unit which carried out numerous tasks was understaffed as the Department of Budget and Management (DBM) approved initially only 32 out of the 59 proposed required positions.


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6. Major Revisions. The project’s original loan closing date was March 31, 2015. However, due to

typhoon damages and delays in the procurement of civil works, the project was restructured. It took a

long time for the Government to process the restructuring request, which required the closing date to be

extended further. The loan restructuring plan was approved on February 14, 2017 and with a new closing

date of August 31, 2018 to allow remaining works in the at four (4) NIS to be continued and additional

works at four (4) NIS to be implemented. The restructuring plan also included reallocation of “unallocated

amount” (originally allocated for civil works’ physical and financial contingencies) to civil works

investments and consulting services loan categories, revision of the Results Framework and updating of

outcome indicators.

7. Project Cost and Expenditures. At appraisal, the project’s cost was estimated at US$113.41 million. Out of the total project cost, US$70.36 million was funded by the World Bank and US$43.23 million by the Government. The project cost was eventually updated to US$114.01 million which included additional Government counterpart of US$0.600 million for operational expenses and personnel services. 8. Procurement. A total of 206 civil works packages (4 ICB, 49 NCB, 79 Shopping and 74 Community Participation) were procured for the 58 NIS. In the early years of project implementation, procurement delays were experienced due to the multiple procurement activities by NIA’s Bids and Awards Committee which handled not only the project’s but also the rest of NIA’s regular-funded and other foreign-assisted projects. Bid failures were also encountered especially for civil works procured through International Competitive Bidding (ICB) and a few National Competitive Bidding (NCB) due to limited bidders’ participation. Nevertheless, about 71 percent of contracts under NCB, Shopping and Community participation were completed on time or ahead of schedule. 9. Performance of the Contractors. The delayed completion of the project was partly due to the poor performance of some contractors who were not able to finish their works on time as scheduled due to limited resources. The slow contractors’ submission of required supporting documents to billings added to delayed processing of payments. Some ICB contracts were terminated. To complete the remaining works in terminated contracts, the procurement of civil works was done in small packages where more regional or local contractors participated in the bidding process. 10. Procurement of all civil works under minor rehabilitation (Core B NIS) was completed on time. The reason for a good progress was attributed to capable local contractors in the area and nearby places with good track record in irrigation contracts. 11. Performance of the Consultants. Consultants engaged for the policy studies and other consultancy services performed satisfactorily. Constant coordination of the consultants with the PMO facilitated a smooth conduct of the studies. Final reports were submitted to PMO and were distributed to the NIA management. The engagement of third-party monitors (individuals) to conduct construction supervision and quality assurance for civil works ensured better quality of works. 12. Thirteen (13) consultancy studies were conducted under the project of which 11 were completed. The study on National Irrigation Management Plan Fund (NIMF) was terminated as this was no longer relevant because of the Free Irrigation Service Law. The consultancy services on the preparation of Project


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Completion Report (PCR) did not push through due to bid failure. Given the limited time to undertake rebidding, the PMO assumed the preparation of the PCR. 13. Performance of the Suppliers. Performance of suppliers for various goods, services and operation and maintenance (O&M) of equipment was generally satisfactory. All contracts were subjected to prior or post review procedures and in compliance with the provisions of the Loan Agreement. 14. Performance of the Borrower and the Executing/Oversight Agencies. The NIA was the lead agency for project implementation and the PMO was established for coordination and management of the project. The PMO, despite of being understaffed, carried out multiple tasks all throughout the project implementation. Regular monitoring activities were undertaken by the PMO which provided technical support to the field offices from the start of the project. The PMO was also responsible in the preparation and submission of monthly progress reports, and participation in various monitoring and evaluation activities such as ODA (official development assistance) Portfolio Review, WB Missions and Quarterly Reviews by the National Economic and Development Authority (NEDA). 15. Performance of the World Bank. During the project implementation, the World Bank conducted seventeen (17) implementation review missions including the mid-term review and ex-post reviews. The Bank assessed the project’s overall management and implementation progress as well as the status of achievement of the PDO and outcome indicators. The implementation reviews were relevant and contributory in resolving implementation issues and concerns by giving guidance and valuable recommendations. IRRIGATION INFRASTRUCTURE DEVELOPMENT

16. Civil Works. The project has constructed two (2) new diversion dams and rehabilitated 15 dams, installed 1,785 canal structures including turnouts and drainage structures, improved 648.22 km. canal network, 181.09 km. concrete canal lining, 333.75 km road systems, and 42.38 km. drainage with newly generated area of 2,787 hectares and improved area of 123,397 hectares. 17. Final inventory was done in NIS with completed works to evaluate and assess the works done and status of the IAs prior to turn-over and acceptance of the IAs for operation and maintenance of the systems. 18. Environmental and Social Safeguards. Implementation of environmental and social safeguards has been satisfactory achieved with all environmental requirements and Resettlement Action Plans (RAPs) complied by the project. There were no identified long term critical environmental impacts due to rehabilitation works, however, there were existing environmental health and safety issues which were mitigated through Environmental and Social Management Plan (ESMP) and Contractors Management Plan. RAPs were prepared in accordance with PIDP Resettlement Policy Framework for the ten (10) NIS where involuntary resettlement are triggered. Project affected persons (PAPs) who voluntarily donated their lands for the project right-of-way were properly documented through a Deed of Donation. 19. Social safeguards are efficiently complied with all the PAPs paid of their compensation and were relocated to the resettlement sites provided. However, the project encountered delays in releasing compensation payment to some PAPs due to their late compliance/submission of required documents.


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The project also installed safety structures such as railings, fences and dikes in the different NIS. 20. None of the rehabilitation works overlapped with any ancestral domain however the Bank required a confirmation through a certification from the IA President that no Indigenous Peoples (IPs) will be affected in the rehabilitation works. The construction of perimeter fence along the settling basin in Pinacanauan River Irrigation System (RIS) and diversion dam in Lupon RIS were completed as safety measures for the nearby IP community. 21. Training and starter kits on livelihood activities were developed and provided to PAPs (mostly women) and extended even to those who were not physically displaced. The PMO kept track of livelihood activities and documented stories of successes as well as challenges encountered. IRRIGATION SECTOR RESTRUCTURING AND REFORM

22. Rationalization Plan (RP). The RP was implemented through a transition plan with a 5-year time frame. It supported and financed the corresponding payments to enable the gradual reduction of NIA staff parallel to the gradual transfer of the O&M responsibilities to IAs under the IMT Program. The implementation of RP commenced in 2008 and completed in 2012. The RP was managed by the Change Management Team (CMT) at the Central Office and sub-CMTs at the Regional Irrigation Offices. Of the reconciled list of RP-affected personnel, 2,523 were paid with a corresponding cost of PhP1.455 billion. At project completion, NIA had 3,429 filled-up positions compared to 3,870 authorized permanent positions. 23. The implementation of the Salary Standardization Law (SSL) led to salary increase in each grade level and an overall increase in the average personnel cost from the pre-RP period. It led to a funding gap that NIA and DBM covered from the regular funds. 24. Institutional Strengthening and Irrigation Management Transfer (IMT). The IMT Program is a “software” which covers the organizational development of the IAs, IMT Contracts entered by the IAs, and the capacity development program for IAs and NIA staff. The implementation of IMT Program was anchored and based on a Unified IMT Policy Implementing Guidelines under Memorandum Circular (MC) No. 47 series of 2008 which was updated and superseded by MC No. 27 series of 2011. 25. With extensive training and series of workshops provided by the project to the IAs and improved irrigation structures and facilities, 924 IAs were organized and registered. Of these, 923 IAs have IMT contract with NIA and assuming O&M responsibilities. 26. NIA-IA O&M Contracts. The implementation of IMT was guided by the IMT Implementing Guidelines where old IMT contracts were translated into Models 1, 2, 3 and 4 contracts. With Model contracts, most of the IAs became functional and viable from the remuneration and ISF share they received in performing their respective O&M responsibilities. However, the IMT spectrum changed in 2017, when the free irrigation service policy was enforced. A “Modified IMT contract” was introduced under MC 13 series of 2017. There were different reactions from the farmers on the modified contracts including the possible decrease in O&M funds due to absence of ISF. In view of this, the IAs started to collect a “sustainability fee” to augment the O&M subsidy from the government in lieu of the free irrigation service.


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27. Staff and IA Capability Development Program. The project provided 4,433 batches of training to 172,402 IA participants. NIA staff at different organizational levels were also provided with capability training to enhance their skills and knowledge. A total of 1,932 training (exceeding the target of 1,751) of institutional, technical, O&M and organizational training were conducted for NIA staff. 28. Gender and Development (GAD). Women participation in the irrigation development was being advocated by the project. The project recorded an increased trend in women membership from 10 percent at project appraisal to 15 percent at completion. 29. Establishment of Alternate Wetting and Drying (AWD) Demonstration Farms. In collaboration with the Philippine Rice Research Institute (PhilRice), the project established 289 demonstration farms covering 10,403 hectares in the 53 NIS which implemented AWD. The up-scaling strategy introduced by PhilRice has widened the adoption of AWD technology in the project-covered NIS. Reports showed that generally, AWD is more effective in pump irrigation systems. Significant impacts of AWD include: (a) reduction of power cost; (b) improve water delivery and distribution; (c) synchronous planting and better implementation of cropping calendar; (d) more areas irrigated even during water crisis; and (e) reduced water conflict among farmers.

EVALUATION AND PROJECT PERFORMANCE

30. Relevance. The project was highly relevant as its objectives and achievements were consistent with the government policies especially on NIA’s mandate to support the country’s food self-sufficiency program and improve the life of the farmers. The PDO was revised to simplify and better reflect intended outcomes as well as the key performance indicators to align them with the revised PDO and NIA’s targets. The farmers were generally happy with the improved irrigation facilities, increased irrigated areas and increased income.

31. Effectiveness in Achieving Outcomes. There was continued progress in the achievement of the outcome indicators. Most of the PDO outcome indicators and intermediate results indicators were achieved at project completion. Eight (8) out of 12 PDO outcome indicators were achieved and even exceeded targets. The interventions on institutional, policy and reforms have contributed to sound O&M. Overall, the project developed or improved a total area of 126, 184 hectares, which is above the target. This resulted to an increase in cropping intensity from 151 percent before the project to 171 percent at the end of the project. Overall, the effectiveness was assessed as substantial. 32. Efficiency in Achieving Outcomes and Outputs. The project was assessed efficient despite not attaining some indicators relating to financial viability. Though economic analysis showed a positive result, the efficiency of the project is affected by the delays in the implementation of civil works. The recalculated overall project Economic Internal Rate of Return (EIRR) of 33 percent is higher than the computed project EIRR of 25 percent before project implementation. The recalculated EIRR of the Core A NIS where major rehabilitations were made was 27 percent and was above the computed project EIRR of 23 percent at project appraisal. For Core B NIS where minor rehabilitations were provided, the recalculated EIRR remained the same at 49 percent.


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33. Preliminary Assessment of Sustainability. Calamities and climate change put the outcomes at certain risk. Typhoons and climatic conditions can cause damages to irrigation structures and facilities. Modernization and retrofitting technology were introduced in some NIS to mitigate the effects of these force majeure events. NIA will continue to increase the resilience of its irrigation systems against worsening climatic conditions. 34. Impact. The rehabilitation/improvement of the 58 NIS under the project impacted positively on the lives of the farmers. In the conducted Impact Assessment Study, it was reported that the project led to an improvement in household income, mainly due to increased yields and increased cropping intensities. The NIS were able to produce paddy rice to as high as 6.48 tons per hectare during Wet Season and 5.71 tons per hectare during Dry Season at project completion. 35. The repair and rehabilitation of major civil works improved the efficiency of the irrigation systems which enhanced effective operation and maintenance and water distribution in the irrigation area. The civil works implementation restored and rehabilitated 123,397 hectares with additional new area of 2,787 hectares nationwide. 36. The implementation of IMT was generally successful. The non-synchronization of NIA’s staff downsizing or separation, with the completion of the transfer of IMT responsibilities from NIA to IAs temporarily delayed the full achievement of the IMT program. Nonetheless, IMT made a remarkable impact to the IAs and farmers. Participatory O&M under IMT changed the mindset of the farmers leading to improved IA functionality and viability of most IAs. 37. There were 960 PAPs whose properties and livelihood opportunities were affected by project construction. Thirty-five (35) families, including 13 IPs, were relocated to the resettlement sites provided by the Local Government Units (LGUs) in Region 5 and Region 11. At project completion, a total land area of 197,767 square meters or approximately 19.7 hectares of affected right-of-way were donated by 299 PAPs. Generally, the PAPs’ living condition improved in terms of better housing especially those who were relocated at the resettlement sites. The attribution of the improved living condition of the PAPs was because of the specific assistance and mitigation measures specified in the RAP. Furthermore, the compensation received from the affected properties were used as capital for livelihood to augment their household income while the livelihood assistance program provided opportunity for income generation for the PAPs including the IPs.

PROJECT DEVELOPMENT OBJECTIVE (PDO)

38. Technical Viability Indicators. The investments in the 58 NIS were designed to improve the quality of the systems so that they become more functional and viable. The success of the investment was measured by the area of improved irrigation and drainage as well as new area generated and increased cropping intensity. At the same time, IAs were strengthened to take a stronger role in O&M through IMT Program. 39. The target area provided with new and improved irrigation and drainage services was attained at 106 percent exceeding the target of 118,950 hectares. The project irrigated new area of 2,787 hectares or 81 percent of the revised target of 3,438 hectares. The cancellation and termination of some works in


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two NIS affected the non-attainment of the targeted new area. Restored and rehabilitated area reached up to 123,397 hectares exceeding the target. 40. The new and improved area has resulted to an average cropping intensity of 171 percent towards the end of the project when benefits started to be felt after 2 or 3 years ago when most infrastructure works were completed. This was above the revised target of 170 percent. The original target of 190 percent for project-assisted NIS was realigned with NIA’s target. 41. Financial Viability Indicators. The ISF collection efficiency had a direct effect on NIA’s viability index given that NIA receives roughly 40 percent of its revenues from ISF. However, ISF collection efficiency was no longer relevant as a project indicator after CY 2016 when the Free ISF Law was signed and implemented. The indicator “annual O&M budget compared to average three-year O&M budget was added to continuously monitor NIA’s financial viability. 42. The viability of NIA was also influenced by the number of IAs performing acceptably under Models 2-4. The number of IAs under Models 2-4 with acceptable performance consistently exceeded the target of 85 percent and reached a level of 99 percent in 2017 from a baseline of 74 percent. This was a result of the extensive capability development programs that the project provided to the IAs. The IAs were reactivated and reorganized leading to signing and renewal of their IMT contracts with NIA. In addition, the ISF share (financial incentives) given to IAs contributed and motivated them to participate and cooperate in the operation and maintenance of the irrigation systems thereby increasing the performance level of the IAs. 43. The IMT Model contracts were however replaced by a single variant of IMT Model, the “Modified IMT Contract” upon the issuance of MC 13 s. 2017 in February 2017. Despite the implementation of the Free ISF Law, the number of IAs with acceptable performance was sustained at 99 percent.

44. NIA has been viable since the project started in 2009 until in 2016 when the Free ISF Law was implemented and caused the viability index of NIA to go down below 1.0. Collections on ISF were affected as most farmers stopped paying their ISF dues after the pronouncement. Even with the presence of subsidy of PhP2.0 billion, the viability index was still below 1.0 in 2017. In September 2018, NIA recovered with a viability index of 1.31 and was above the target of 1.20. With ISF subsidy amounted to PhP2.6 billion for 2018, it could be said that the O&M budget for this year is more than enough to cover expenses. An annual budget subsidy from the government to replace the equivalent amount of ISF was allocated starting in 2017. LESSONS AND RECOMMENDATIONS

45. The RP, IMT and civil works in support to NIA’s institutional reforms should have been implemented in a synchronous manner. The early retirement and separation of some NIA staff affected the smooth transfer of O&M responsibilities to the IAs. Some technical staff who had the expertise in the procurement process, survey and engineering availed of the RP and it took some time for the replacement staff to be on board to swiftly continue the work.


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46. Proper planning and coordination among the stakeholders of the project at the early stage of implementation should be done to avoid conflicts and delays during construction. Further, a thorough review and evaluation of updated plans, designs, program of works should be collaboratively done among RIOs, IMOs and PMO to come up with doable targets and accomplishments. 47. The support of LGUs, NGOs and partner agencies greatly helped NIA, IAs and PAPs. The provision of support services from the LGUs such as access roads and relocation sites for the PAPs contributed to the smooth implementation of the project. The close partnership should be sustained even beyond project period. 48. The procurement of civil works using ICB contributed to the delayed completion of civil works. It is suggested to allow repackaging of big contracts into smaller packages to encourage more eligible regional/local bidders to join the bidding process. 49. Restoration of livelihood for the PAPs thru provision of livelihood training and livelihood starter kits were implemented. However, this program could be a challenge if there is no sustained financial support or replacement in cases of failure. Continuous monitoring of the livelihood development beyond the project and provision of necessary financial and technical assistance should be done to sustain income opportunity for the PAPs.


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ANNEX 8. LIST OF SUPPORTING DOCUMENTS

1. Loan Agreement between Republic of the Philippines and International Bank for Reconstruction

and Development, Participatory Irrigation Development Project (Loan 7709-PH), August 7, 2009.

2. The World Bank, Project Appraisal Document for the Participatory Irrigation Development Project,

May 27, 2009.

3. The World Bank, Aide Memoires and Implementation Status Reports for the Participatory

Irrigation Development Project (Loan 7709-PH) 2009 – 2018.

4. Republic of the Philippines, Food Staples Self-Sufficiency Program 2011-2016: Enhancing

Agricultural Productivity and Global Competitiveness, Department of Agriculture, June 2012.

5. National Irrigation Administration, Corporate Plan 2012-2015, January 2013.

6. National Irrigation Administration, Review of National Irrigation Service Fee Policy, Final Report,

July 2014.

7. The World Bank, Restructuring Papers for the Participatory Irrigation Development Project (Loan

7709-PH) 2015 and 2017.

8. National Irrigation Administration, Final Irrigation Development Master Plan 2017-2026, Republic

of the Philippines, 2017.

9. National Irrigation Administration, External Evaluation of Resettlement Action Plan under PIDP,

Draft Final Report, August 2018.

10. National Irrigation Administration, Participatory Irrigation Development Project (IBRD Loan No.

7709-PH): Project Impact Assessment Study, Final Report, August 2018.

11. Republic of the Philippines, The Philippine Rice Industry Roadmap 2030, Department of

Agriculture, September 2018.

12. National Irrigation Administration, Participatory Irrigation Development Project (IBRD Loan No.

7709-PH): Pictorial Documentation of Civil Works Activities in the 58 NIS, December 2018.


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ANNEX 9. MAPS

Figure A9.1. Map of Core A National Irrigation Systems (NIS)


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Figure A9.2. Map of Core B National Irrigation Systems (NIS)

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