World Bank approves first phase of program to improve irrigation services, enhance food security in Philippines

June 25, 2009
MANILA, Philippines, June 25, 2009 -- The World Bank has approved the first phase of a fifteen-year adaptable program loan (APL) to help finance the country's Participatory Irrigation Development Project (PIDP)...

MANILA, Philippines, June 25, 2009 -- The World Bank approved yesterday the first phase of a fifteen-year adaptable program loan (APL) to help finance the country's Participatory Irrigation Development Project (PIDP) designed to improve irrigation service delivery, boost agricultural productivity, improve governance within the irrigation sector, and enhance food security in the country.

The first phase of the APL, worth US$70.36 million, is designed to enhance the National Irrigation Administration's (NIA) financial viability and its institutional capacity to support improvements in irrigation service delivery. NIA will also gradually transfer the operation and maintenance (O&M) responsibilities in about 58 selected national irrigation systems (NISs) to capable Irrigators' Associations (composed of farmer-water users) as well as raise irrigation efficiency and promote reliable access to irrigation water among farmers in the selected NISs.

In the first phase, the government will put up a counterpart fund of US$43.23 for a total project cost of US$113.59 million.

The entire fifteen-year APL indicative financing plan amounts to US$413.59 million, out of which US$290.36 million will come from the World Bank in three phases and US$123.23 from the Philippine Government as counterpart.

The World Bank's APL provides phased support for a country's long-term development program of reforms and investments within a priority sector. It involves a series of loans that builds on implementation successes and lessons learned from the previous loan in the series.

Agriculture Secretary Arthur C. Yap, who also serves as NIA Board of Directors Chairman, lauded the World Bank's Board of Executive Directors for approving PIDP, saying that the project is consistent with the Department of Agriculture's programs to modernize the farming sector.

The Government, he said, has outlined its policy of pursuing agricultural productivity in the Agriculture and Fisheries Modernization Act (AFMA) enacted in 1997. AFMA promotes rehabilitation of irrigation systems and irrigation management transfer of secondary canals and on-farm facilities to Irrigators' Associations while NIA continues to maintain and operate the head works and main canal systems of NISs.

"PIDP will contribute significantly to the government's priority objective of increasing agricultural productivity and enhancing food security," said Secretary Yap. "PIDP over the long term will support our efforts to modernize our irrigation systems by introducing and sustaining institutional reforms and better water usage policies and technologies to improve irrigation service."

NIA Administrator Carlos S. Salazar said that the project has three components, namely:

• Irrigation Sector Restructuring and Reform, to support the implementation of a rationalization plan for NIA and the strengthening of its institutional capacity to deliver efficient irrigation services;
• Irrigation Infrastructure Development, to improve the delivery of irrigation services in at least 58 selected NISs through rehabilitation with modernization ; and
• Project Management and Coordination, to provide support for an efficient coordination, implementation and management of the project, including strengthening the financial management and procurement functions and the establishment and operation of the monitoring and evaluation system for the project.

NIA Administrator Salazar said PIDP will help the government in introducing policy and institutional reforms to improve the corporate viability of NIA in line with priority measures for reforming the bureaucracy in the irrigation sector.

"PIDP will allow an orderly and phased transfer of O&M responsibilities to capable Irrigators' Associations (IAs), while at the same time, allowing for a phased right-sizing of the NIA bureaucracy," explained Administrator Salazar. "We see PIDP as helping us in the medium term to address the vicious cycle of inefficient irrigation service delivery brought about by poor maintenance of NISs due to systemic inadequacy of resources for proper O&M."

"I commend the Department of Agriculture, NIA and the World Bank for making this project possible," said Finance Secretary Margarito Teves, stressing that rationalizing the bureaucracy and making it more efficient and effective in delivering public services has been one of the major thrusts of the Government. "The implementation of the NIA rationalization plan will result in reduced reliance of NIA on Government subsidies to sustain irrigation operations. Savings generated from this reform effort will provide more resources for rural development."

World Bank Country Director Bert Hofman said PIDP is aligned with the Bank's Country Assistance Strategy (CAS) for Fiscal Year 2010-2012. The project, he said, will contribute to the CAS strategic objectives of improving the investment climate through supporting agricultural productivity and infrastructure investments, as well as instituting better governance in the irrigation sector.

"This project fits well into our strategy of making growth work for the poor, a majority of whom are farmers who will directly benefit from this project," stressed Mr. Hofman. "I am also excited about the transfer of irrigation systems to user associations. International experience suggests that getting users involved in managing those systems is the key to better results."

The entire 15-year APL comprises three phases. The first phase, the project approved yesterday, focuses on institutional reform, modernization of national irrigation systems, and transfer of operations and management (O&M) responsibilities to capable IAs.

The second phase will focus on deepening of institutional and policy reforms in the sector, as well as expanding the modernization of the national irrigation systems, including piloting the arrangements for the devolution of the Communal Irrigation Systems (CIS) to the Local Government Units (LGUs).

Third phase will consolidate the reforms in the first two phases as well as NIA's role in the sector, help ensure sustainability of the impacts, and complete the modernization of all the NIS and the transfer of O&M responsibilities to Irrigators' Associations.

>> More information on World Bank-assisted projects and programs in the Philippines