Amid problems hounding the agriculture sector due to soaring rice prices, the National Irrigation Authority (NIA) continues to post cost increases for two more ongoing foreign-assisted projects, according to documents from the National Economic and Development Authority (Neda).

To date, four out of the six ongoing official development assistance (ODA)-funded irrigation projects of the NIA have proposed cost increases worth a total of P4.28 billion. These four projects are the irrigation component of the Casecnan Multipurpose Irrigation and Power Projects, stage II of the Bohol Irrigation Project, Banaoang Pump Irrigation Project and the first phase of the Help forCatubig Agricultural Advancement Project.

While the Casenan and Bohol projects have already been approved and “noted” by the Neda Investment Coordination Committee (ICC) Cabinet Committee (Cabcom), the Banaoang and Catubig projects still need to go through the ICC Cabcom.

Neda documents showed that the cost increases of these projects even go as high as almost 100 percent of its original project cost, which is the case of the Banaoang Pump Irrigation project.

The Neda ICC has yet to approve the NIA’s proposal to increase the Banaoang project cost by 92.53 percent, or P1.24 billion from the original cost of P1.34 billion.

The approval has not yet been given by the ICC due to a pending legal issue on NIA’s approval of the additional contract cost without seeking ICC approval. The ICC will soon be meeting to discuss the advice being sought from the Department of Budget and Management (DBM) on the issue.

However, if the questions surrounding the project are resolved and the proposal of the NIA is granted, the Banaoang project will amount to P2.58 billion.

The Banaoang project will be funded by an eight-year, $35 million worth of loan from the Chinese government with a 3- percent annual interest rate. The loan with a grace period of two years, is set to expire on June 27, 2008

Meanwhile, the project with a cost increase of less than 20 percent, the lowest among the four projects, is the Catubig project which is also set to be discussed in the next ICC Cabcom meeting.

The NIA proposed to increase its project cost by 19.75 percent, or P490 million. The original cost approved by the ICC was P2.48 billion, but if the cost increase is granted the project will now be worth P2.97 billion.

The ICC Technical Board (TB) endorsed the project for approval by the ICC Cabcom on April 4 but subject to certain conditions.

The ICC TB mandated NIA to submit a detailed information on the timeline of the completion of specific project activities within its proposed extension period. The TB also asked that the additional funding for the project be covered by the NIA budget.

The TB also said the NIA should secure a certificate from the DBM for its proposed funding strategy to finance the cost increase and the NIA’s inclusion of the proposed changes in the updating of the Medium-Term Philippine Investment Plan.

The project is also funded by a P221 million worth of loan from the Japan Bank for International Cooperation (JBIC). The loan has a maturity period of 30 years and a grace period of 10 years.

The loan with an interest rate of 2.2 percent per annum, is set to close on January 23, 2011. Neda documents did not, however, disclose when the NIA’s revised closing date for the loan will be.

Meanwhile, the Casecnan project, which is also a JBIC-funded project, has already been approved by the Neda ICC Cabcom.

The project incurred cost overruns due to currency exchange-rate movements, modification in the scope of work and increase in right-of-way (ROW) acquisition cost.

With that, the Neda ICC-Cabcom granted the project increase to P7.455 billion from the originally approved P5.832 billion. The P1.623 billion cost increase is 27.83 percent of the project cost.

Further, the project implementation schedule, which was supposed to be only until 2005 was extended to 2008. The loan extension, which was earlier granted by the Neda ICC, was until January 2009 from January 2007.

On the other hand, the ICC Cabcom placed a “notation” for the cost increase requested by the NIA for the Bohol project on  August 30, 2007, which the Neda Board approved on October 9, 2007.

The NIA requested for a 51.23-percent cost increase for the project, or P1.22 billion worth of additional funding. This has increased its total project cost to P3.61 billion from the originally approved P2.38 billion.

While the Neda believes that the project cost increase was too high for the national government to bear, the Department of Justice (DOJ) in a legal opinion deemed the contract for the Bohol project valid and legal.

The DOJ cited that the project is not covered by the Implementing Rules and Regulations (IRRA) Part A of Republic Act (RA) 9184, or the Government Procurement Reform Act, since the invitation for the bidding for the project was made prior to the effectivity of IRR-A of RA 9184

The DOJ said the IRR-A covers all fully domestically funded procurement activities from procurement planning up to contract implementation and termination. The IRR-B for foreign-funded procurement activities shall be subject of a subsequent issuance.

Based on Section 77 of RA 9184, if the advertisement or invitation for bids were issued prior to the effectivity of the Act, the provisions set in Executive Order 40 and its IRR, Presidential Decree 1594 and RA 7160 will be followed.

ATTUNED to its thrust of bidding out its interests in several utilities and companies, the government is currently contemplating whether it will sell out Philippine National Oil Co.’s (PNOC) 40-percent interest in local refiner Petron Corp.

THE ailing garments industry, now facing tougher times with the economic slowdown in the US, its main market, has asked the government to put up a unit similar to the defunct Garments and Textile Export Board (GTEB) that will help in the marketing efforts abroad and in the gathering of industry data globally.

ALFONSO, Cavite—Government-run Power Sector Assets and Liabilities Management Corp. (Psalm) is looking at prepaying some $300 million worth of yen-denominated loans of the National Power Corp. (Napocor) within the year.

SPEAKER Prospero Nograles has expressed support for a new wage increase even as he urged the regional tripartite wage boards to meet immediately to come up with regional rates calibrated to enable both the employees and the employers to cope with the existing economic situation.

Amid problems hounding the agriculture sector due to soaring rice prices, the National Irrigation Authority (NIA) continues to post cost increases for two more ongoing foreign-assisted projects, according to documents from the National Economic and Development Authority (Neda).

OIL companies have again adjusted the price of diesel, gasoline and kerosene by 50 centavos a liter to further reflect the continuous surge of world oil prices.