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