Document of .. J , % The World Bank

FOR OFFICIAL USE ONLY FILE C0PY Public Disclosure Authorized

Report No. 1911-PH

PHILIPPINES Public Disclosure Authorized

MAGAT MULTIPURPOSE PROJECT: STAGE II

STAFF APPRAISAL REPORT Public Disclosure Authorized

April 28, 1978 Public Disclosure Authorized

Projects Department East Asia and Pacific Regional Office

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS

US$ 1.00 Pesos (P) 7.40 P 1.00 US$0.135

WEIGHTS AND MEASURES

1 hectare (ha) = 2.47 acres 1 kilometer (km) = 0.62 miles 1 square kilometer (sq km) = 0.386 square miles 1 meter (m) = 39.37 inches 1 square meter (sq m) = 10.76 square feet 1 cubic meter (cu m) = 35.31 cubic feet 1 million cubic meters (MCM) 810.7 acre feet 1 millimeter (mm) = 0.039 inches 1 kilogram (kg) = 2.2 pounds I cavan (paddy) = 50 kg 20 cavans = 1 metric ton 1 megawatt (MW) = 1,000 (kW) Kilowatts 1 gigawatt hour (GWh) = 1 million kilowatt hours (kWh) 1 kilo"volt (kV) = 1,000 volts (V) 1 megavolt amp (MVA) = 1,000 Kilovolt amp

ABBREVIATIONS

ADB - Asian Development Bank AMIADP - Angat Magat Integrated Agricultural Development Project El. - Elevation above sea level FSL - Full supply level MARIS - Irrigation System MCM - Million cubic meters of water MECO - Manila Electric Company MRMP - Magat River Multipurpose Project NBC - NIA Board of Consultants NEA - National Electrification Administration NIA - National Irrigation Administration NPC - National Power Corporation PDR - Project Design Report RRD - Resettlement and Reservoir Division SIFRIS - Siffu River Irrigation System SPO - Special Projects Organization UPRP - Upper Pampanga River Project USBR - United States Bureau of Reclamation

GOVERNMENT OF THE

Fiscal Year

January 1-December 31 FOR OFFICIAL USE ONLY

PHILIPPINES

MAGAT RIVER MULTIPURPOSE PROJECT: STAGE II

STAFF APPRAISAL REPORT

TABLE OF CONTENTS

Page No.

1. BACKGROUND...... 1

The Agricultural Sector...... 1. . . . . 1 The Power Sector ...... 3 Project Formulation ...... 7

2. THE PROJECT AREA ...... 9

General ...... 9 Climate...... 9 Hydrology...... 11 Sedimentation ...... 11 Geology ...... 12 Seismicity ...... 12 Irrigation Facilities ...... 13 Population,Farm Size and Land Tenure ...... 13 Reservoir Area ...... 13 Transportation ...... 14 Transmission Facilities ...... 14

3. THE PROJECT ...... 15

Project Works ...... 15 Engineering and Construction...... 16 Reservoir Resettlement ...... 21 Cost Estimates ...... 22 Financing ...... 23 Procurement ...... 26 Disbursements ...... 27 Accounts and Audit ...... 27 Environmental Effects ...... 28

4. ORGANIZATION AND MANAGEMENT ...... 29

The National Irrigation Administration ...... 29 National Power Corporation ...... 29 Project Management ...... 30 Consulting Services ...... 31 Safety of Dam ...... 31 Cost Recovery .. 32

This document has a restricteddistribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. - ii -

Page No.

5. BENEFITS, JUSTIFICATION AND RISKS ...... 33

6. AGREEMENTS REACHED AND RECOMMENDATION ...... 41

ANNEXES

1. Project Features, Detailed Cost Estimates, Equipment List, Price 42 Increases, Expenditures, Disbursements and Allocation of Loan Proceeds.

2. Farm Labor Costs, Input Prices, Rice Prices, Farm Budgets, and 54 Systems Development Program: Grid.

3. Schedule of Early Events. 59

4. Related Documents and Data Available in the Project File. 60

LIST OF TABLES IN THE MAIN TEXT

Table No.

2.1 Summary of Climatological Data 10 3.1 Project Cost Fstimate (Package 2) 24 3.2 Estimated Total Cost Stage II Development 25 5.1 Rice and Fertilizer Prices 34 5.2 Farm Incomes 35 5.3 Irrigation - Net Value of Production 36 5.4 Economic Costs and Benefits 38 5.5 Sensitivity Analysis 38 5.6 Least Cost Analysis of Stage II Investment 40

LIST OF FIGURES

Figure 1.1 - Stage II Development Implementation Schedule 61 Figure 3.1 - Philipines: Project Layout 62 Figure 3.2 - Philippines: Magat Dam - Sections through Dam and Spillway 63 Figure 3.3 - Stage II - Package 2 - Magat Dam Construction Schedule 64 Figure 4.1 - NIA Organization for Special Projects 65 Figure 4.2 - Proposed Organization for Project Construction 66

LIST OF M1APS

IBRD 13283 - Magat River Multipurpose Project IBRD 3562R4 - Luzon Grid Power Plant and 230 kV Transmission System PHILIPPINES

MAGAT RIVER MULTIPURPOSE PROJECT: STAGE II

STAFF APPRAISAL REPORT

1. BACKGROUND

General

1.01 The Government of the Philippines has requested Bank assistance in financing the second stage of development of the Magat River Multipurpose Project in Northern Luzon. The first stage of development consists of the provision of water distribution systems to irrigate a total of 75,000 ha of rice in the wet season and 29,000 ha in the dry season. The Asian Develop- ment Bank (ADB) extended a loan in 1973 to assist in the rehabilitation of 40,000 ha of existing irrigation systems under provision of the Angat-Magat Integrated Agricultural Development Project (AMIADP). The Bank provided financial assistance for the development of irrigation facilities in the remaining 35,000 ha of Stage I land in 1975 (Loan 1154-PH). The loan also provided for engineering studies to review and update the technical and economic feasibility of implementing the second stage of development of the Magat river consisting of the provision of reservoir storage for year round irrigation and for power generation.

1.02 A feasibility study for second stage development of the Magat river was prepared under the provisions of Loan 1154-PH by the National Irrigation Administration with assistance of the associated consulting firms Engineering Consultants Inc. of Denver, Colorado; Shawinigan Engineering Co. Ltd. of Montreal, Canada; Engineering and Development Corporation of the Philippines and DCCD Engineering Corporation of Manila. This report is based on that study and the findings of a Bank appraisal mission which visited the Philippines in October-November 1977, composed of Messrs. E. G. Giglioli, R. R. Morton and E. von Loehneysen; Messrs. R. L. P. Harris, V. Talvadkar and J. Cavallotti also assisted with the report.

The Agricultural Sector

1.03 Agriculture is the predominant sector in the Philippine economy, accounting for about one third of net domestic product, over one half of total employment, and nearly three quarters of export earnings. Over 70% of the 9 million ha of land under cultivation is used for the production of cereals, of which rice and corn are the most important. The remaining land is taken up by the major export crops: sugar, coconuts, abaca, pineapples, and tobacco.

1.04 The performance of the agricultural sector will be crucial in deter- mining whether the Philippines can increase incomes both rapidly and equitably. At present, the domestic market for industrial products is limited by relatively low rural incomes. Although in recent years there has been a substantial change in the terms of trade in favor of agriculture, the problems of poverty and income - 2 -

distribution continue to be particularly acute in rural areas; of the 15 million people in the lowest 40% of the income scale, 12 million live in rural areas. The Government is aware of these problems and has initiated a number of programs designed to assist the rural poor.

1.05 A major Government objective is to increase rice and corn produc- tion as a means of raising the incomes of small farmers and of attaining national self-sufficiency in food grains. After experiencing substantial deficits in the early 1970s, rice production grew by 5% p.a. during crop years 1974-77 and the Philippines was able to provide for consumption solely from domestic production during the crop years 1975-77. The good performance in the past three years has been due mainly to an increase in yields brought about by favorable weather, expansion of the irrigation systems and an increase in the area planted. With the continued growth of population and incomes, the demand for rice will rise by 3.5% annually. If rice production is to increase at a rate sufficient to maintain self-sufficiency on a sustained basis, further expansion of the irrigated area will be necessary. At present, only 0.9 million ha, or 28% of the 3.2 million ha devoted to rice production, are irrigated.

1.06 The Government recognizes that in order to increase production in both irrigated and nonirrigated areas substantial improvements in the quality of supporting services will be necessary. In 1973, the Government instituted a national program for supervised credit for rice production, Masagana 99, which greatly increased the provision of production credit, mainly to smaller farmers. However, the levels of arrears under the program have been very high in the last several years and as a result the coverage of the program has declined sharply. The Government is aware of this problem and the Technical Board for Agricultural Credit is undertaking a study of the causes of the high arrears under Loan 1399-PH which will be discussed with Bank staff in early 1978 with a view to reaching agreement on the steps necessary to reduce arrears and maintain the flow of production credit.

1.07 The Government is also considering the steps necessary to bring about needed improvements in the national extension service. A Bank technical assistance mission visited the Philippines in April 1977 and a report has been given to the Government which suggests a number of organizational improvements and better logistical support in the form of training, vehicles and other facilities. Missions were in the field in February-March of 1978 to appraise a national extension project for possible Bank financing and to help the Government prepare a comprehensive program for strengthening support services (provision of credit, extension, fertilizer, seeds, and crop protection).

1.08 Since 1969 the Bank Group has financed nine irrigation projects designed to increase rice production in the country. These projects - three in Central Luzon, two in the of Northern Luzon, one on Mindoro Island, one in the Visayas and two for smaller systems throughout Northern Luzon, the Visayas and Mindanao /1 - have set the pattern for the type of irrigation rehabilitation, new construction, and operations needed for increasing rice production. The projects are providing improved irrigation and drainage facilities, better road systems for efficiency of operations and maintenance and for the marketing of farm products, stronger supporting services to assist farmers in adopting the new irrigation techniques needed to increase production, and technical assistance and training to help the National Irrigation Administration (NIA) expand and improve its irrigation program. These projects would bring about substantial increases in rice production on about 370,000 ha and would benefit nearly 190,000 farmer families, most of whom are smallholders.

1.09 Work on the first Bank-assisted project, the Upper Pampanga River Project (Loan 637-PH) is substantially completed. Progress on all the irriga- tion projects has been generally satisfactory and the NIA has proved itself to be a well managed and technically competent organization. The total cost of the first two projects was about 70% over appraisal estimates in the case of the Pampanga project (Loan 637-PH) and 55% in the case of the Aurora- Penaranda Irrigation Project (Loan 984-PH and Credit 472-PH) largely as a result of rapid inflation following the oil price increase in 1973. However, as a result of considerable increases in the projected world market price of rice and earlier than anticipated irrigation benefits the rates of return on both projects have not changed significantly.

The Power Sector

1.10 The three major regions of the Philippines are in different stages of power development. Most of past power development has taken place on the island of Luzon, where about half of the population live and most industrialization has occurred. Some grid development has also taken place on the main southern island of Mindanao, particularly in the northern part where the availability of easily developed low cost hydropower has attracted substantial industrial investment. In the Visayas, which comprise all other major islands located in the central part of the Philippine Archipelago, grids are only now beginning to be constructed.

1.11 Historically, ownership of the power sector has been fragmented. The largest utility in the country has been the privately-owned Manila Elec- tric Company (MECO) which holds the franchise for the greater Manila area. The National Power Corporation (NPC), which is the second largest utility and

/1 The Upper Pampanga River Irrigation Project (Loan 637-PH), Aurora- Penaranda Irrigation Project (Loan 984-PH, Credit 472-PH), Tarlac Irri- gation Systems Improvement Project (Loan 1080-PH), Mindoro Rural Develop- ment Project (Loan 1102-PH), Magat River Multipurpose Project Stage I (Loan 1154-PH), Chico River Irrigation Project Stage I (Loan 1227-PH), Jalaur Irrigation Project (Loan 1367-PH), National Irrigation Systems Improvement Project I (Loan 1414-PH) and National Irrigation Systems Improvement Project II (Loan 1526-PH). - 4 -

totally Government-owned, generates and sells power in bulk to other utilities and large industrial consumers. In addition, there are a number of small utilities in the country, operating largely in isolation. In 1970, there were 336 privately-owned and 122 publicly-owned utilities, most of which were very small and were located in urban areas. Since then a number have been taken over by rural cooperatives and some have ceased operating. As of August 1977, about 85 utilities and 73 cooperatives were actually supplying consumers. Fragmented ownership has made integrated development of the sector slow and difficult. To overcome the problem, the Government has taken steps to consolidate ownership of the sector. In 1972 NPC was made responsible for constructing all future generation facilities and estab- lishing island grids. The Government is in the process of purchasing most of MECO's generating plants, which will be operated by NPC in the future. When this process is completed, MECO will become primarily a power distributor. The Government has also established the National Electrification Administra- tion (NEA) with responsibility for integrating small utilities and extending power service to rural areas. Both NPC and NEA are now responsible to the Department of Energy.

1.12 The electrification of the country has been progressing steadily. The per capita consumption of electricity in 1976 was estimated at 300 kWh, compared with 490 kWh in Korea, 184 kWh in Thailand and 120 kWh in India. Over 30% of the population is currently served with electricity compared with 23% in 1970. Although regional imbalances presently exist, with 46% of the households electrified in Luzon compared with 15% in Mindanao and 13% in the Visayas, NEA's rural electrification program is expected to improve the situation. The total electricity supply in 1976 was estimated at about 13.9 billion kWh; 50% was provided by MECO, 23% by NPC, 20% by self- generating industries, and 7% by small utilities. On the consumption side, industrial consumers represented about 55%; residential consumers, 20%; and commercial, agricultural and other users, 25%.

1.13 The Government is committed to a policy of rapid industrialization which is central to its objectives of fostering growth, employment and exports. It is also committed to a policy of dispersing industrial growth from the already congested Manila Metropolitan Area to other regions of the country. In order to meet these objectives and to realize the planned annual growth in Gross National Product of 7% during the next 10 years, it is estimated that electricity consumption in the Visayas and in Mindanao will need to grow at annual rates of about 16% and 13%, respectively, compared with about 10% in Luzon. This would result in an overall annual growth in consumption of 11.3%. Because NPC is the institution primarily responsible for power generation, it has a critical role to play in helping the Philippines realize its economic objectives.

1.14 About 80% of the power generation in the Philippines is currently dependent on imported oil and the remaining 20% on hydro resources. The Government has decided to diversify energy resources by developing indigenous hydro and geothermal power and by introducing nuclear energy. The construc- tion of the first geothermal power plant is underway in southern Luzon, while explorations for more geothermal energy are being undertaken in several parts of the country and have already shown promising results. Investigations - 5 -

are also progressing at several potential hydropower sites in addition to Magat. In addition, NPC has also started construction of its first nuclear power plant with financing from the United States Export-Import Bank and commercial banks.

1.15 The sector investment program required to meet the expected demand increase is huge. It will almost triple the country's generating capacity by expanding it from about 3,540 MW in 1976 to about 8,500 MW in 1985. Emphasis will be placed on the development of non-oil sources of generation. If imple- mented as planned, the program would reduce oil-fired generating capacity from 81% of the total in 1974 to 53% in 1985; hydropower would correspondingly increase from 19 to 31%; and geothermal and nuclear power would share the remaining 16%. Although the objective of diversifying energy sources is reasonable, the program is ambitious and involves certain risks. Financial constraints may hinder the timely development of capital-intensive hydropower projects and technical problems may arise in developing nuclear and geothermal sources of energy. The program therefore needs continuous review and, if difficulties do arise, it is possible that additional oil-fired thermal plants will be needed.

1.16 The rapid expansion in generating capacity will need to be accom- panied by a vigorous program of extending the transmission network. In 1976, NPC had a total of 3,600 km of transmission lines and about 1,200 MVA of substation capacity to supply utility and non-utility consumers. About 3,300 km of the transmission network are located in Luzon, 200 km in Mindanao and 100 km in the Visayas. The grid system has been concentrated in the Central Luzon area, and the population in northern and southern Luzon and large parts of Mindanao and the Visayas either has no access to electricity or has to rely on unreliable and costly generation by small local utilities. NEA is vigorously promoting the rural electrification program throughout the country. The Bank Group has been assisting the generation and transmission expansion under the Loans for the Fifth, Sixth and Seventh Power projects (Loan No. 809-PH and Credit No. 296-PH, and Loans No. 1034-PH and 1460-PH), by financing about 2,460 km of transmission lines and 1,425 MVA of substation facilities in Luzon. The Overseas Economic Cooperation Fund of Japan has provided funds for the first stage of grid expansion in the Cagayan Valley in northern Luzon. NPC is also expanding the grids in Mindanao and the Visayas with assistance from the Asian Development Bank and Banque de Paris et des Pays-Bas.

1.17 Although NPC was originally chartered to develop hydropower re- sources in the country, its role and responsibilities have been dramatically expanded in the past few years following the Government's decision to make it the prime force in the development of power generation from all sources. This change in policy was so fundamental that NPC has not yet been able to adjust fully to the new situation. NPC has constructed five hydro- power stations and one thermal power station in its 40-year history, but it will need to construct and operate about 75 large power projects in the next 15 years. To carry out a program of the required magnitude successfully, NPC will need to greatly improve its capacity to construct and operate a much larger, more modern, and more complex power system. In particular, NPC needs - 6 -

to improve its capacity for system planning and financial managementand control, to streamlineand improve its internal organization,and to develop effective training programs for its personnel. The Government recognizes the difficult situationNPC faces and has taken a number of steps to improve its implementationcapability and to enable the staff to cope with the large developmentprogram. An acceptable financial manager has been appointed, salary scales and merit systems have been improved to make NPC more competi- tive with private industry and specializedengineers have been recruited from other government agencies for the newly organized nuclear and geothermal units.

1.18 Since 1957 the Bank Group has made eight loans and one IDA credit to NPC, NEA and the Government for eight projects in the power sector./1 Four projects have been fully completed. The Fifth Power Project included a second thermal unit at Bataan and transmissionfacilities in Luzon. Due to initial delays in the delivery of transformers and poor weather and soil conditions which affected the implementation of the transmission component, disbursements are somewhat behind schedule. However, the loan is expected to be fully disbursed before the closing date which has been postponed from June 30, 1976 to June 30, 1978. The Sixth Power Project includes the construction of the 100 MW Pantabangan hydropower plant and expansion of transmission systems in Luzon. The construction of the generating plant was completed in April 1977 and the plant has since been operating at full capacity. Work on transmission lines has been slow and completion will be delayed by one year. The loan for the Seventh Power Project which includes 1,360 km of transmission lines only became effective in January 1978. While some progress has been made in the context of past loans to improve NPC's institutional capacity its responsibilities are expected to grow rapidly in the years ahead and strong efforts will be necessary to build up NPC's capability further so that it can effectively implement a much larger power program. The Rural Electrification Project, which includes a two-year slice of the 1978-80 rural electrification program, was considered by the Executive Directors in April 1978.

1.19 The project performance audit report on the Fourth Power Project suggested that the Bank should agree with NPC on procedures for annual review and revision of tariffs and specific targets for transmission expansion. It also suggested that the Bank should assist in the development of management training programs. These comments have been taken into account in the design of subsequent projects. The report also recommended greater use of local management consultants to assist NPC. This suggestion was carefully consi- dered at the time of appraisal of the Seventh Power Project, but in view of NPC's very rapidly growing responsibilities in the power sector and the technical requirements of managing a much larger program, it was decided that

/L The First Power Project (Binga) (Loan 183-PH); Second Power Project (Angat) (Loan 297-PH); Third Power Project (Maria Christina) (Loan 325-PH); Fourth Power Project (Bataan No. 1) (Loan 491-PH); Fifth Power Project (Bataan No. 2 - Transmission) (Loan 809-PH, Credit 296-PH); Sixth Power Project (Pantabangan) (Loan 1034-PH); Seventh Power Project (Transmission) (Loan 1460-PH); and Rural Electrification Project (Loan __-PH). - 7 -

the need for technical assistance could only be provided by consultants from an experienced operating utility of a size equivalent to NPC which has confronted problems similar to those which will be faced in the power sector in the Philippines in the coming years. The project provides for training, management improvement and tariff studies.

1.20 An in-depth analysis of NPC's financial poL ition was conducted during the appraisal of the Seventh Power Project /1 in early 1976. It was based on an expansion program which included commissioning of the Tabu and San Roque hydroelectric dams in 1983, while acknowledging that these would probably be replaced by Magat. Tabu and San Roque, designed to provide a total of 340 MW installed capacity and 1,260 GWh energy, were estimated to cost US$800 million including price contingencies. Magat has an installed capacity of 360 MW and 1,200 GWh energy at an overall cost of US$495 million. In comparison, Magat would, therefore, cost NPC considerably less, even if the total cost of the dam was charged to NPC (para. 4.09). This would mean an improvement in NPC's financial position as compared to the projections in the Seventh Power Project appraisal report.

1.21 Under previous Loan Agreements, NPC is required to earn a rate of return of 8% on its revalued net fixed assets in operation. Failure to achieve the projected energy sales and higher than expected cost inflation have combined to prevent NPC from attaining this rate of return; in 1977, NPC is estimated to have earned a rate of return of approximately 5%; about the figure forecast during the Seventh Power Project appraisal and accepted by the Bank for Loan 1460-PH. However, a major tariff increase has now been intro- duced in Mindanao and further increases in the Visayas and Luzon are under consideration, which should enable NPC to increase its rate of return in 1978 and thereafter.

Project Formulation

1.22 Cagayan Basin. The basin in Northern Luzon is one of the largest of the nine major basins in the Philippines. It covers some 28,000 sq km and encompasses parts of eight provinces. The Magat river, lying in the southwestern portion of the basin, is the largest tributary in the Cagayan basin river system. It is about 150 km long and joins the Cagayan river in province. At the site of the proposed dam the average annual stream flow of the Magat river for the period 1948 to 1972 was 6,698 MCM, ranging from a minimum of 3,931 MCM to a maximum of 12,528 MCM.

1.23 Land is one of the major resources of the basin. Of the total area of 2.8 million ha about 1.0 million ha are cultivated, of which 40% is in Isabela, 30% in Cagayan and the balance equally divided between Nueva Viscaya and Mountain provinces. The Cagayan basin is an exporter of rice to Manila and Southern Luzon. The main problem of agriculture is the lack of dependable water for year round irrigation. Rainfall is usually sufficient to support wet season cropping but is not only erratic as to time and place of occurence, but also is deficient in the dry season. In the rainfed areas cropping

/1 The Seventh Power Project in the Philippines, Staff Project Report No. 1552-PH, May 27, 1977. - 8 -

is limited to the wet season and the land is unproductive during the dry months. Even on the irrigation systems in the basin only about 30 to 40% of the land is irrigated during the dry season. A 1966 report on the land and water resources of the basin, prepared by a survey team of the US Bureau of Reclamation (USBR), concluded that the Magat subbasin appeared to have good potential for water resource exploitation and should be given priority for development.

1.24 Magat River Development. In 1973 the National Irrigation Adminis- tration (NIA) with USBR assistance completed a feasibility study of the Magat river project. The study concluded that development of a multipurpose project on the river was technically feasible and economically viable. The project was envisaged to provide storage by building a high dam on the river to allow year round irrigation of 104,000 ha and installation of a hydro- electric plant with a 300 MW capacity. Because of the physical size, large estimated cost and long construction period NIA divided implementation of the project into two stages. Stage I consists of the rehabilitation and up- grading of the existing Magat River Irrigation System (MARIS) and Siffu River Irrigation System (SIFRIS) and construction of new facilities for a total of 75,000 ha that can be served by run of river diversion in the wet season. The Asian Development Bank (ADB) is assisting NIA to rehabilitate 40,000 ha of Stage I under the Angat-Magat Integrated Agricultural Development Project (AMIADP). The remaining 35,000 ha of Stage I are being developed with Bank assistance under Loan 1154-PH. The loan became effective in November 1975, and by the end of 1977 all design work was completed and construction contracts were awarded for the majority of works. Provision was also made under the loan for engineering studies (Part A) to evaluate the economic feasibility of Stage II development and, if justified, to prepare (Part B) final designs, specifications and bid documents for construction of the dam and appurtenant works. Part A of the study, completed in September 1976, confirmed the technical feasibility and economic viability of Stage II development, which was redefined to include construction of the storage dam and of additional irrigation facilities to increase the service area to 102,000 ha, together with construction of a power station with an installed capacity of 360 MW and the provision of generating and transmission equipment.

1.25 Stage II Development. In view of the large size of the development, the high cost, the lumpiness of the investment and the tight, 6-1/2 year con- struction schedule, the Government agreed in 1976 to a breakdown of Stage II development into the following sequence of manageable packages (Figure 1.1):

(a) Package I - consisting of preconstruction works (access roads, permanent camp, etc.), dam foundation grouting, drainage gallery tunneling and the river diversion tunnels, together with consulting services associated with these activities. NIA began work on this Package in 1976 with Government funding and is in the process of awarding a contract for construction of the tunnels to a Philippines firm. Implementation is expected to take 3-1/2 years (1976-79).

(b) Package II - consisting of all civil works for the main dam, and appurtenant structures, reservoir resettlement, installed mechanical -9 -

equipment and consulting services. This Package is the subject of the present report and the proposed Bank loan. Implementation is expected to take 4-1/2 years (1978-1982).

(c) Package III - consisting of the civil works for the power component,, together with the supply and installation of penstocks, turbines, generators, electrical and mechanical equipment and transmission lines. Foreign funding assistance would be required and implementa- tion is expected to take four years (1979-82).

(d) Package IV,- consisting of construction of the Baligatan diversion dam and the civil works for irrigation development of 27,000 ha of currently rainfed land. Foreign financial assistance would be sought-and implementation is expected to take four years (1979-82).

2. TIIE PROJECT AREA

General

2.01 The Magat river rises in the Cordillera Central mountains and joins the Cagayan near Gamu in Isabela province in Northern Luzon. The watershed and reservoir areas upstream of the proposed dam are in the relatively mountainous terrain, while the irrigation service area is in the broad Cagayan valley. The service area, about 350 km northeast of Manila, is almost entirely in Isabela province, with small portions in the adjoining Quirino province. The proposed reservoir area would be mainly in Isabela and provinces, with the head of the reservoir in Nueva Viscaya. (Map No. 13283).

2.02 The Magat dam would be built at a point some 6 km upstream of the existing MARIS diversion dam near the village of Planas across the gorge where the river emerges from the foothills into the plains. The service area is located on alluvial terraces in the flood plains of the Cagayan and Miagat and tributary streams. It is bounded on the north by the Mallig river, on the east by the Cagayan river and on the south and west by the foothills of the Caraballo mountains and the Cordillera Central respectively. The slope of the land is from west to northeast. The land is generally level, although some of the older terraces along the western edge of the service area have eroded significantly and show rolling topo- graphy. Drainage problems exist because of high rainfall intensities and flat relief. Low areas along the main rivers are subject to short periods of inundation from backwaters from overflowing streams, however water velo- cities are low and cause little damage to structures or land. Soils are predominantly dark grey or brown clays or clay loams, with angular blocky structures, medium to fine textures, slightly acidic reactions and slow internal drainage. The soils are well suited to rice which has been ex- tensively grown in the area for many years without problems.

Climate

2.03 The climate in the project area is tropical and monsoonal. Warm temperatures throughout the year, with minimum change from month-to- month, allow a 12-month growing season with irrigation. Mean monthly temperatures in the project service area range from 23.3 degrees centigrade Table 2.1: SUMMARY OF CLIMATOLOGICAL DATA

Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Total

Ilagan. Isabela Rainfall /a Average (mm) 65 41 44 63 123 160 184 191 222 309 356 188 1,946 Maximum (mm) 262 157 147 218 350 359 493 790 486 922 916 504 Minimum (mm) 3 0 0 0 8 34 21 41 55 58 52 43 No. of rainy days /b 11 7 .6 6 10 11 13 13 14 16 17 15 139 0

Tuguegarao, Cagavan Relative humidity (%) /c 80 76 72 68 69 75 77 79 81 81 84 84 Temperature /d Mean (OC) 23.8 24.7 26.6 27.7 29.3 29.1 28.5 28.1 27.7 27.3 25.4 24.1 Mean maximum (OC) 29.1 31.1 33.2 35.6 36.4 35.6 34.7 33.1 33.5 31.8 29.9 28.8 Mean minimum (OC) 19.4 19.7 21.0 22.9 23.8 24.2 23.7 23.0 23.6 22.7 21.8 20.5

Evaporation (mm) /e 138 152 198 222 221 188 174 168 164 162 133 133 2,053 Prevailing wind direction /f NNW NW N N S S S S NNW N NNW N Wind velocity (km/hr) 4 3 3 3 3 3 3 3 3 4 3 4 No. of typhoons /g (Cagayan and Ilocos) 0 0 0 2 2 5 14 13 18 10 11 3 78

/a Period of observation 1926-1975. /b Period of observation 1940-1965. /c Period of observation 1949-1974. /d Period of observation 1903-1939, 1947-1975 /e Period of observation 1957-1973. /f Period of observation 1958-1970. /g Period of observation 1948-1972. - 11 - in January to 29.3 degrees centigrade in May. The hottest months are April, May and June and the coldest months are December and January. About 75% of the average annual rainfall of 1,900 mm falls in the six-month period of July through December with the heaviest precipitation in November and the least rainfall in February. However, in the catchment area of the proposed dam some 77% of the average annual rainfall of about 2,140 mm occurs from May through October. The occurrence of typhoons is also centered within the July-December period with the highest frequency of occurrence in September. An average of about three typhoons per year have passed through the Cagayan basin since 1948. No typhoon has been recorded for the months January through March. The rainfall, together with river flows in the wet season, is generally adequate for a single rice crop. Dry-season cropping, however, entails considerably more risk and irrigation is essential for an assured crop.

Hydrology

2.04 The drainage area of the Magat river basin at the proposed damsite is 4,143 sq km. Rainfall and stream flow records in the drainage area and adjoining catchments are extensive and the hydrologic data derived are of high quality. Monthly streamflow records were made for the 25 year period from 1948 to 1972 and average monthly flows ranged from about 240 MCM in February and March to about 970 MCM in September and October. The minimum recorded monthly flow was 37.4 MCM in March 1967, and the maximum 2,785.2 MCM in October 1971. Annual totals varied from a minimum of 3,931 MCM in 1959 to a maximum of 12,528 MCM in 1971, with an average of 6,698 MCM. Peak flood flows ranged from 1,700 cu m/sec for the period January through March, 4,050 cu m/sec in April, 6,080 cu m/sec for May through August, to an esti- mated 20,000 cu m/sec in October 1971. A peak discharge of 3,900 cu m/sec has a 50% chance of occurring in any year. A maximum probable peak inflow of 34,543 cu m/sec has been used for spillway and dam safety design purposes (para 3.13).

Sedimentation

2.05 The watershed terrain above the proposed Magat dam site is mostly rugged grassland with scattered forests at higher elevations. The potential for erosion in the watershed is great due to the steep slopes and high rainfalls. However, the ground and canopy cover is adequate and current sediment yields are moderate. A sediment discharge rating curve for the river was derived from measurements of suspended sediment load at various locations and from computations of the bed load and the bed material load in suspension. It is estimated that sand and gravel comprise 51% of the average annual sediment load upstream of the damsite, while 37% is silt and 12% clay. The computed sediment load between 1971 and 1976 averaged 8.5 million ton/year and the projected rate of sedimentation in the reservoir is an estimated 5.5 million cu meters/year. Most of the sediment deposition would occur at elevations below the minimum supply level, although live storage in the proposed reservoir would decrease from 933 MCM to 832 MCM over a 50 year period. The sediment level at the face of the dam is not expected to reach the invert of the outlet works for at least 100 years. These projections assume no increase in erosion in the watershed and, while there is evidence of deteriorating conditions caused by man and by severe typhoons, the Govern- ment with Bank assistance is carrying out erosion control studies to ensure - 12 - controlled watershed management practices in the future. These could result in a decrease in sedimentation and larger annual water yields than assumed in the projects' reservoir operation studies (para. 3.10).

Geology

2.06 The geology of the Philippines is dominated by the Philippine Rift, a regional fault zone that cuts northwestwards through the archipelago from the southeast corner of Mindanao to the northwest corner of Luzon. This structure is a major branch of the deep-seated crustal fault system that separates the western edge of the Pacific Plate from the Austral-Asian Plates. The fault system is the principal focus for major earthquakes in the area. Midway across Luzon a major fault system branches from the Rift and splits into a number of regional faults that encompass the mountain ranges of Northern Luzon. The Cagayan basin is bounded by two of these uplifted mountain blocks, the Cordillera Central range to the west and the Sierra Madre range to the east. As the mountain blocks were formed in different geological ages and have different rock compositions, the project area is underlain by a complex array of metamorphic, igneous and sedimentary rocks. The proposed dam site is located at the transition zone of these rock for- mations close to faults which form the eastern edge of the Cordillera range and is consequently affected by major geologic structural action. The bedrock at the site is composed predominantly of massive volcanic tuffs and agglomerates intercalated with basalt flows. The foundation characteristics of the unweathered portion of this sequence of volcanic rocks range from good to excellent. The principal exceptions occur where the rocks are cut by faults, two of which have been identified near the proposed project structures. The significant fault, designated the Magat fault, was largely covered by weathered rocks and soils and was only discovered after extensive site exploration exposed bedrock. It is located about 500 m downstream of the proposed dam, where it crosses the river parallel to the dam axis and has a total width ranging from 150 to 200 m. Its shear zones consist of intensely sheared and brecciated rocks and vary in thickness from 20 cm to 40 m. Two other major faults have been identified downstream of the proposed dam site, the significant one being the Santiago fault which runs northward along the eastern side of the Cordillera range about 10 km from the site and along which seismic action is believed to occur. The Magat fault is probably a member of this fault system.

Seismicity

2.07 The international file of seismic events for Northern Luzon (January 1976) shows that in the past 79 years at least 146 seismic events larger than Richter Magnitude 5 have occurred within 320 km of Magat dam, although the actual number is probably greater because of inadequate report- ing and loss of data. Most of the events were in the ocean immediately offshore of the Pacific coastal areas of Northern Luzon, however some 30 appear to have had a location along an inferred northerly extension of the Santiago fault. The Magat fault also gives evidence of ground displacement due to seismic activity. While these earthquakes have undoubtedly transmitted ground motions to the dam site, no evidence of very recent seismic movement has been observed along any of the major geological structures identified at the site. The faults at the dam site are assessed to be more than 100,000 years old and recurrence of movement is thought to be unlikely. - 13 -

Irrigation Facilities

2.08 About 50,000 ha of land in the project area fall within the ex- isting MARIS and SIFRIS systems operated by NIA. The two national systems were completed in the 1960s. Although designed to serve an area of 50,000 ha, the two systems only irrigate 40,000 ha because of a lack of terminal facili- ties. The existing systems are being rehabilitated,upgraded and expanded to a total of 75,000 ha under Stage I of the Magat project with ADB and Bank assistance. Constructionwork on Stage I is expected to be completed by 1980, except for modifications of the MARIS diversion dam which will be finished in June 1982 to fit in with the closure of the proposed Magat dam.

2.09 The final phase of irrigation development in the Magat service area would amount to some 27,000 ha and would be dependent on construction of the Magat dam. About half of the area would be along the southeastern edge of the Stage I area and would obtain water from the proposed Magat reservoir through Baligatan creek, without passing through the power station turbines. Only about 5,700 ha of land are currently served by crude comm- unal and private irrigation facilities,while the remainder is cultivated under rainfed conditions.

Population, Farm Size and Land Tenure

2.10 Total population in the 102,000 ha service area of the proposed dam is estimated at about 282,000 people. The rural population of the Stage I project area consists of about 24,000 farm families and some 9,000 other families occupied principally or entirely in agriculturalproduction, while in the Stage II area there are 8,000 farm families and about 4,400 other rural families. The average size of farm in the service area is 3.2 ha and there is little divergence from the mean in the more densely populated and better developed Stage I area. In the more backward and largely rainfed Stage II area, farm size distributionis more skewed, with 10% of the farms covering 35% of the area. After completion of the land transfer process initiated under the Government'sprogram of agrarian reform some 21,500 owner operators, the equivalent of 67% of the farmers, would cultivate 74,000 ha or 73% of the project area. The remaining 10,500 farmers would be leaseholders.

Reservoir Area

2.11 The proposed dam would create a reservoirwith a surface area of 45 sq km at full supply level of 193 m. At minimum supply level the water surface elevationwould be 160 m and the surface area 15 sq km. The reservoir would be situated along a 30 km stretch of the Magat river where it passes through hilly terrain. Most of the area flooded would be restricted to relativelynarrow river bottoms. However, the downstream section of the reservoir would flood to a width of about 4 km. The reservoirwould be of this shape when full or nearly so, a conditionwhich would exist for about 60% of the time.

2.12 Present land use in the area that would be affected by the reservoir is as follows: - 14 -

Ranches 1,965 ha Rice land 1,335 " Corn land 75 " Fishponds 5 " Residential 70 "

Total 3,450 "

The remaining 1,050 ha in the reservoir area are taken up by rivers, creeks and scattered patches of cogon grassland. The dam would submerge seven small barrios in Ifugao province, one small barrio in Nueva Viscaya province and two barrios in Isabela province, one of which would be the relatively large barrio of Planas. A total of 300 families, or 1,500 people, would be affected by the reservoir and would need to be resettled under the project (para. 3.19).

Transportation

2.13 The Philippine-Japan Friendship Highway connecting Manila with the port of Aparri on the Babuyan channel, passes through Santiago and the southeastern part of the project area. The highway is concrete surfaced, but is susceptible to damage from washouts and landslides due to heavy rainfall during typhoons. The 20 km gravel surfaced road between Santiago and the MARIS diversion dam is in poor condition and would require upgrading and sustained maintenance to permit unimpeded construction of the Magat dam. NIA has built an all-weather, gravel road up the right side of the Magat river from the MARIS diversion dam for a distance of 10 km to the proposed dam site. The service area is well provided with national, provincial and local access roads. The network of local access and service roads is being upgraded and expanded by NIA under Stage I of the project, while three provincial roads are being improved under the Chico River Irrigation Project (Loan 1227-PH). Daily commercial air service to Manila is available at the Cauayan airport about 35 km northeast of the dam site. In addition NIA has built an airstrip with a 1,200 m long paved runway adjacent to the MARIS diversion dam.

Transmission Facilities

2.14 The National Power Corporation's (NPC) development plans for extension of the Central Luzon grid call for the construction of a double circuit 230 kV transmission line from Ambuklao to Santiago, and a single circuit 230 kV line from Santiago to Tuguegarao. At present NPC is construct- ing a double circuit 230 kV line with only one circuit strung between Ambuklao, Santiago and Tuguegarao, due for completion in 1979 with assistance from the Overseas Economic Cooperation Fund of Japan. The second circuit between Santiago and Ambuklao would be strung simultaneously with installation of the four generating units in the proposed Magat power station. By 1982 there would be two 230 kV circuits from Santiago via Ambuklao and Binga to San Manuel from which point south there would be three circuits. This transmission represents the system into which Magat would be feeding and over which Magat energy would be delivered to load areas primarily to the south. The other addition required by the Magat plant would be a 14 km 230 kV double circuit transmission line from Magat to Santiago plus the switchyard facilities at both stations (Map No. 3562R4). - 15 -

3. THE PROJECT

3.01 The project proposed for Bank financing (Package II) would include:

(a) construction of the main dam across the Magat river consisting of a concrete spillway, a power intake section and adjoining rockfill embankment sections;

(b) construction of the rockfill Baligatan dike running from the right abutment of the main dam to the left abutment of the Baligatan creek dam;

(c) construction of the rockfill Baligatan creek dam, together with an outlet conduit and control works;

(d) resettlement within the service area of the dam of about 500 families affected by construction of the dam; and

(e) provision of consulting services to assist NIA and NPC in design and construction supervision.

3.02 The Magat dam and Baligatan dike would provide 933 MCM of live reservoir storage for downstream year round irrigation of 89,700 ha of land via the existing MIARIS diversion dam and for power generation. The Baligatan creek dam would control additional water releases from the reservoir for year round irrigation of 12,300 ha of currently rainfed land via the planned Baligatan diversion dam.

Project Works

3.03 Main Dam and Spillway. The main dam would be 1,800 m long, made up of a concrete chute spillway and power intake section 450 m long, a left abutment rockfill embankment section 350 m long and a river closure and right abutment rockfill embankment section 1,000 m long. Mtaximum height of the spillway section would be 60 m and of the embankment section 114 m. Design of the main dam has evolved after two years of intensive site investigations and takes full account of the usual problems inherent in large dam construc- tion, as well as the particularly complex problems of geology, seismicity and hydrology found in north-eastern Luzon. Conservative design criteria have been adopted for the embankment sections, with heavy outer shells of random fill and rock surrounding a sloping impervious core. The proposed slope of the upstream face would be 2.65:1 and 2.0:1 for the downstream face. About 25% of the 12 million cubic meters of embankment materials is expected to come from required excavation and the balance from a quarry on the left bank of the river, borrow pits and the river bed. The proposed zoning of the fill is relatively complex, but it is designed to provide a structure capable of withstanding heavy seismic shaking and minor displacements. It also provides for optimum utilization of materials from excavation and from readily avail- able borrow areas. - 16 -

3.04 The spillway and power intake structure would be a concrete-gravity section situated on the left bank of the river. The location was determined by site geology and economic consideration of alternative dam designs. The spillway would have seven 16.5 m wide and 13.5 m high radial crest gates for flood water discharge and two 6.0 m wide and 12.5 m high low level orifice gates for irrigation or emergency draw-down water releases. Spillway discharge would be into a 450 m long reinforced concrete open chute with terminal flip-buckets and plunge pool. Detailed hydraulic model and simulation studies of the spillway outlet structures are in progress to ensure optimum energy dissipation. Recent experiences at the Tarbela dam in Pakistan are being given full consideration in development of the design.

3.05 The power intake structure would provide six gated conduits to connect with 5.5 m diameter steel penstocks to be constructed as part of the proposed power development. Trashracks, closure gates 5.0 m high and 6.0 m wide, and two emergency bulkhead gates would be installed. Only over-burden excavation for the penstock and powerhouse foundations would be included in the dam contract. As the interface between the concrete intake structure and the right embankment dam is over 60 m high, the possibilities of embankment cracking and hydraulic fracturing of the fill at the interface have been recognized and an appropriate embankment "wrap-around" concrete design developed. The lower interface between the spillway and the left abutment embankment would be constructed similarly.

3.06 Baligatan Dike and Baligatan Creek Dam. The Baligatan dike would be 1,450 m long and would have a maximum height of 35 m, but would only be about 20 m high for most of its length, with a volume of fill of about 1.9 million cu m. Construction of the dike would utilize material from required excavations in the external shells and transition zones. As the shell materials would not have as high a strength as the river gravels or rock fill to be used in the two dams, the slopes would be flattened to 2.75:1 on the upstream side and 2.50:1 on the downstream side. The Baligatan creek dam would be 700 m long with a maximum height of 50 m and a volume of fill of about 1.1 million cu m. The dam would have a slope of 2.65:1 on the upstream side and 2.0:1 on the downstream side, the same section as the main dam.

Engineering and Construction

3.07 Engineering Studies. The 1973 NIA/USBR Feasibility Study (para. 1.23) proposed a composite concrete/rockfill dam with a central gated overflow spillway. This concept was the starting point for detailed studies carried out under Stage I of the project with Bank assistance (Loan 1154-PH). Part A of these studies covered engineering and economic investigations to confirm the technical feasibility of the project and assess its economic justification. The consultants engaged by NIA for the studies commenced work in late 1975 and completed a Project Design Report (PDR) in September 1976.

3.08 The consultants reviewed and modified the 1973 design report proposals in the light of additional site investigations and studied alterna- tive design concepts. Two layouts, the original composite dam proposal and the embankment dam now proposed, were identified for detailed study of - 17 -

technical quality, implementationtime and constructioncost. The Baligatan dike and Baligatan creek dam and outlet works, would be common to both schemes, the required volumes of concrete and fill and the length of construc- tion time would constitute the main differences. While the composite scheme with a concrete gravity spillway centrally located in the river valley would have hydraulic advantages over the proposed embankment scheme with a chute spillway, the latter was selected for the following considerations:

(a) the base (June 1978) cost of the embankment scheme is estimated to be US$38 million less than the cost of the composite scheme;

(b) an accelerated constructionschedule would be practical for the embankment scheme, leading to completionby December 1982 instead of late 1984 as envisaged at Stage I appraisal;

(c) the composite scheme would require at least two years longer to design and construct,resulting in a delay in project benefits;

(d) foundationconditions favor an embankment scheme in view of possible regional seismic activity; the composite design would require 90 m high interfacesbetween concrete and fill which would be very suscepibleto any ground movement; and

(e) the composite scheme, with a concrete gravity section 650 m long and a maxium height of 114 m, would need an additional 2 million cu m of concrete and potential constraints in cement delivery to site would be a major risk factor in constructionscheduling.

3.09 Project Design. Following completionof Part A of the studies, NIA with Bank approval authorized the consultants to proceed with Part B, the finalizationof designs and preparation of contract documents. NIA also appointed a specialist internationalBoard of Consultants (NBC) to assist in review and approval of consultants'designs. The designs now proposed for constructionare thereforebased on very extensive and detailed engineering planning and analysis, reviewed and approved by a panel of specialistconsult- ants. The key factors governing the adopted project design features were: reservoir operation studies, site geology and seismology,design flood and river diversion during construction.

3.10 Reservoir Operation Studies. Reservoir operation studies were per- formed to determine (i) the optimum size of the reservoir,power plant, and irrigationarea to be served, (ii) the extent of irrigationwater shortages and (iii) power and energy generation. Simulated reservoir operationsfor a 15-year period were performed for over 20 different combinationsof reservoir sizes, irrigationareas, and power plant capacities. The results of these studies, which balanced projected irrigationand power benefits against projected costs, indicated that (i) reservoir size up to a full supply level of 193 m would be justified, (ii) installationof four 90 MW generatingunits would be justified initially,with provision of space for possible later installationof two additional 90 MW units a matter of long range policy, (iii) developmentof an additionalirrigation area up to 27,000 ha would be - 18 -

justified, (iv) irrigation water shortages once every five years on average could be expected, but would be nominal and overall would be in the range of 3% only. The installation of 360 MW generating capacity would result in an average annual energy production of 1,200 GWh and provide additional firm capacity for the Luzon grid varying between 172 and 360 MW. An assurance was obtained that the Government would satisfy the Bank of the economic and technical justification of any increase in installed generating capacity above 360 MW. The optimum reservoir operation simulation was based on the following design parameters:

(a) reservoir full supply level at elevation 193 m;

(b) reservoir minimum supply level at elevation 160 m;

(c) effective live storage of 832 MCM, allowing for 50 years of sedimentation;

(d) irrigation diversion requirements for a total area of 102,000 ha;

(e) an installed generating capacity of 360 MW rated at full supply level with a net head of 87 m;

(f) a minimum capacity of 172 MW at minimum supply level with a net head of 54 m;

(g) a priority rule that when irrigation water shortages occur they are first allocated to the Baligatan diversion dam since these releases do not produce energy generation; and

(h) a reservoir rule curve with controlled releases to hold the reservoir at or below elevation 185 m in June and July and eleva- tion 190 m in August and September.

On these assumptions annual average water use would be as follows:

Percentage of Volume (MCM) Annual Inflow

Evaporation loss 37 0.5 Reservoir spill 415 5.9 Irrigation only (Baligatan) 285 4.1 Irrigation and power (Magat) 1,682 24.1 Power only 4,562 65.4

Total 6,981 100.0

3.11 Geology and Seismicity. The complex geological and seismic char- acteristics of the area (para. 2.06 and 2.07) necessitated unusually exten- sive site exploration. Over 3,800 ha of geological mapping, 18,300 m of exploratory drilling, 13,400 m of excavated surface trenches and 360 m of exploratory tunneling were carried out. Findings have been under continuous - 19 -

review by the project consultants supported by specialists in the fields of geology, geotechnology and seismology. The foundation rock at the site is relatively weak with the numerous shear zones and faults and deep weathering responsible for large variations in its bearing capacity. Exposure of the major Magat fault during site exploration (para. 2.05) and extensive study of its implications by the project consultants and the NBC led to revision of the layout of dam structures adopted on completion of Part A of the consultants' studies. The original layout located the diversion tunnels, the spillway and the powerhouse on the right bank of the river. The spillway crest section was founded on excellent agglomerate bedrock, but the proposed spillway chute would have crossed the Magat fault zone for a distance of 200 to 500 m downstream of the crest. While the in situ rock within the fault zone was found to have enough bearing strength to provide an acceptable foundation for the spillway, the NBC recommended development of alternative layouts because of the possibility of seismic related movement in the intensely sheared rock and because of the negligible resistance of the material to erosion by surface water. Consideration was given to either shortening the spillway chute or lengthening it to bridge the fault zone, however both layouts significantly increased the probability of major erosion at the spillway plunge pool. The NBC recommended relocation of the spillway. Intensive additional exploration was carried out on the left bank of the river and rock conditions were found to be generally favorable. A thrust fault, named the Korokan fault, was exposed but the NBC considered it to be much less significant than the Magat fault and stated that present day earthquake induced displacement was not a probability. However, as a precaution, as few concrete structures as possible would be founded on the trace of the Korokan fault. As a result of the additional geological information the axis of the main dam was re- aligned and the spillway and powerhouse were relocated on the left bank of the river. The proposed project layout takes full account of the extensive data now available. The concrete structures, the powerhouse and the outfall of the chute spillway would be sited clear of all major shear zones and faults, the spillway plunge pool being located in sound rock just upstream of the Magat fault. Provision has been made in the bid documents and cost estimates for concrete lining of the plunge pool (Figures 3.1 and 3.2).

3.12 Design parameters for the dam take full account of potential loads due to seismic activity and possible small ground movement. Parameters are based on estimates of the effects of earthquake occurrence along a nearby (10 km) relatively small active fault (6.0 on Richter scale) and along a major, but more distant (40 km) active fault (8.0 on Richter scale). The latter is the controlling design earthquake and a maximum ground acceleration of 0.4 g has been adopted for basic design. Final designs will be checked by sophisticated dynamic loading analyses techniques. Instrumentation is being installed in the vicinity of the site for long-term study of seismic activity and correlation with data from the normal large dam instrumentation that would be installed during construction.

3.13 Design Floods. A high standard of safety has been adopted in selecting design flood values. Detailed analyses of streamflow and rainfall data from the Cagayan and adjoining basins were made and regional and river peak discharge, frequency and drainage area relationships derived. The average annual peak discharge at the dam site is 4,500 cu m/sec. Peak flood - 20 -

discharges for 100-year, 1,000-year, 10,000-year frequencies are about 13,900, 21,500 and 30,600 cu m/sec respectively. The reservoir inflow design flood hydrograph was derived by estimating maximum storm rainfall over the Magat watershed and basin lag time. Design storm values were based on maximum point rainfall records at Baguio, located close to the Magat basin and having the highest recorded rainfall in the Philippines. An inflow design peak flow of 34,453 cu m/sec and a ten day volume of 8,420 MCM was used in flood routing for the proposed spillway configuration.

3.14 Proposed full supply level (FSL) for the reservoir is elevation 193 m with the spillway crest elevation 174 m. Design flood routing assumed a full reservoir when flood inflow commences with subsequent gate openings maintaining the FSL until all gates are fully raised. Spillway discharge at this stage would be about 22,000 cu m/sec. As flood inflow continues with uncontrolled spillway discharge the maximum reservoir level would reach elevation 196.3 m with a peak spillway discharge of about 31,000 cu m/sec. Proposed dam crest level is elevation 199 m to allow freeboard for wave action. Hydraulic model studies for the proposed spillway chute are in progress to assist in design of the chute and flip buckets for flood dis- charges.

3.15 River Diversion During Construction. Due to the magnitude of floods and the restricted space in the valley at the proposed damsite, diversion of the Magat river during dam construction has a significant influence on design layout and construction scheduling. The 25-year return period seasonal flows used in developing the diversion scheme are 9,500 cu m/sec annual, 6,120 cu m/sec May through August, and 1,750 cu m/sec January through April. With adoption of an embankment dam, provision of diver- sions tunnels around the dam site is essential. However, conventional tunnels of the capacity required for full river control would not be economically practical and construction planning has been based on use of two 12 m diameter concrete lined tunnels with a maximum discharge capacity of 5,400 cu m/sec plus cofferdam overspill in the early stages of construction. To allow for this, excavation of riverbed to foundation rock and replacement by concrete is scheduled following completion of tunnels and cofferdams. Subsequent wet-season overspill would be carried by the excavated spillway channel and by the spillway structure during construction. To minimize erosion damage cofferdam protection would include heavy riprap on the crest and armoring of the downstream toe. The proposed diversion scheme will require precise scheduling of excavation, cofferdam and embankment fill and concrete placement together with availability of the diversion tunnels on schedule, necessitating a high level of contracting capability and construction supervision.

3.16 Construction Schedule. NIA has an ongoing program of force account foundation grouting along the alignment of the Baligatan dike and is currently finalizing negotiations with a contractor for construction of the diversion tunnels. These works are included in the ongoing Package I of the Magat deve- lopment being financed entirely from Government sources (para. 1.24). NIA proposes to award the Magat dam contract by June 15, 1978 (para. 3.25). Con- struction of the main dam, Baligatan dike and Baligatan creek dam would form - 21 -

part of a single contract. The contractor would also be responsible for installation of the spillway, power intake and Baligatan creek gates which would be supplied under a separately financed contract (para. 3.23).

3.17 Construction of the dam is scheduled over four construction seasons with completion by December 1982. The staging of construction to safely pass the large wet season river flows and timely completion of the diversion tunnels would be critical factors in meeting the planned timetable. Availa- bility of materials on the site, particularly cement, will be of paramount importance. The average concrete placement over a 32 month period between May 1979 and December 1981 is estimated at 31,000 cu meters per month, with a peak rate of 1,500 cu meters per day. The average daily cement requirement would be about 250 tons with a peak demand of 350 tons. There are no cement factories in the Cagayan valley and all cement would have to be delivered to site from Central Luzon factories by road haulage over the Philippine - Japan Friendship Highway. This would impose a considerable risk factor in view of the susceptibility of the highway to damage during heavy rainfall (para. 2.13). To minimize the risk the dam contractor would be required to ensure provision of cement storage facilities near the site. A storage capacity of 10,000 tons would be needed. The excavation and embankment fill requirements would also be demanding, with a peak material movement of 900,000 cu meters per month. The planned construction schedule is shown in Figure 3.1 and detailed construction quantities are given in Annex 1.

Reservoir Resettlement

3.18 NIA has created within the Magat River Multipurpose Project (MRMP) organization a Resettlement and Reservoir Division (RRD) with responsibility for resettling the families affected by the reservoir in three resettlement sites. The San Marcos site is situated in the Stage I service area and the San Miguel and San Antonio sites are in the proposed Stage II area. All resettlement sites would be provided with year round irrigation. NIA would purchase the land and provide each family from the reservoir area with a 3 ha farm plot, the limit for irrigated holdings under agrarian reform legislation, together with a 600 sq m house plot in a newly established barrio site. As the total buy-out of owner-operators and the ejection of tenant farmers on rice and corn lands is forbidden, some 200 existing owner operators and tenant farmers in the resettlement areas would also be provided with a 3 ha farm plot and a house plot. NIA would pay compensation for land, houses, fruit and shade trees and all improvements to land submerged by the dam.

3.19 Some 500 families, 300 from the reservoir and 200 from the resettle- ment area, would be involved in the program. Each family would be provided with an NIA-built house and each of the three new barrio sites would have water, electricity, a school, church and community center built as part of the project. The resettled families would have to repay for their new homes and land in 15 equal annual installments at an interest rate of 6% per annum, in the same way as land reform beneficiaries. Provision would be made under the project for financial assistance to the resettled families in the way of crop production inputs and subsistence until they have harvested the first - 22 -

crop in their new areas. A Resettlement Committee has been established, consisting of all concerned central and provincial government agencies, the mayors of the affected municipalities and the barrio captains from the reservoir area communities. The Committee is responsible for reviewing all plans and proposals for the reservoir area to ensure that resettlement takes place smoothly and with the minimum amount of dislocation. An assurance was obtained that NIA would keep the Bank informed of the arrangements to be made for resettlement of the affected population and that the Bank would have an opportunity to comment before they were implemented.

Cost Estimates

3.20 The total project cost is estimated at US$346.0 million, of which US$178.0 million or 51% is foreign exchange. The direct foreign exchange requirement is estimated at US$146.0 million and the indirect foreign exchange at US$30.0 million. Construction costs are based on a detailed contractor- type estimate assuming a bid from a joint venture company consisting of one local and one foreign contracting firm. Unit prices are based on equipment use (purchase, operation and depreciation), labor, materials and contractors' overhead and profit in accordance with the anticipated construction schedule. Prices include about 6% for taxes and are based on costs for similar works in the Philippines in January 1977, and suppliers estimates for materials and equipment in April 1977. NIA's costs for construction supervision and administration are included under engineering./I The base cost estimate is expressed in June 1978 prices, and was obtained by increasing January 1977 civil works estimates by 14% and April 1977 equipment estimates by 9% to allow for inflation. A physical contingency factor based on the degree of investigations completed to date was applied. A factor of 7% was used for the spillway gates and 9% for civil works and reservoir clearing and resettle- ment. Costs due to expected price increases over the implementation period amount to about 16% of base cost plus physical contingencies and assume the following annual rates of price inflation for local and foreign costs:

Annual Inflation Rate (%) 1978 1979 1980-82

Civil works and services 8 7.5 7 Equipment 7 6.5 6

3.21 Details of project cost estimates are presented in Table 3.1 and summarized below, while the overall estimated costs of Stage II development of the MRIT are given in Table 3.2.

/1 Up to January 1978, NIA was exempt from the payment of duty on equipment, whether imported for its own use or on behalf of a contractor. The Department of Finance has terminated NIA's exemption and instructed the agency to make budgetary provisions for duties. The mechanics of imple- mentation are not clear and are currently under discussion, as the Government is the sole source of NIA's funds. In view of the uncer- tainty, the estimated duties on equipment of about US$4.0 million have not been included in the project costs. - 23 -

Local Foreign Total Local Foreign Total Foreign exchange ---- (P million) --- -- (US$ million) -- (%)

Reservoir clearanceand resettlement 52.5 1.5 54.0 7.1 0.2 7.3 3 Civil works 787.4 907.2 1,694.6 106.4 122.6 229.0 53 Gate supply - 97.7 97.7 - 1 13.2 100 Consulting services 12.6 38.5 51.1 1.7 , - 6- 75 Engineering,supervision and administration 145.0 3.0 148.0 19.6 0.4 20.0 2 Base cost estimate 997.5 1,047.9 2.045.4 134.8 141.6 276.4 51 Physical contin- gencies 76.2 88.8 165.0 10.3 12.0 22.3 54 Expected price increases 169.5 180.5 350.0 22.9 24.4 47.3 52

Total project cost 1,243.2 1,317.2 2,560.4 168.0 178.0 346.0 51

Financing

3.22 The total estimated cost of developmentof the Magat river including the dam, hydro-electricworks and irrigation facilities is estimated at US$556.0 million, with a foreign exchange cost of US$286.0 million. The summarized costs and proposed sources of foreign financial assistance for the four packages into which the Magat developmenthas been subdivided are as follows:

Costs Local Foreign Total Package --- (US$ million) --- Sources of foreign assistance

I. (Diversionworks) 44.2 15.8 60.0 None

II. (Main dam) 168.0 178.0 346.0 Current Bank loan and supplier credit

III. (Power) 20.5 68.5 89.0 Supplier credit

IV. (Irrigation) 37.3 23.7 61.0 Bank

Total 270.0 286.0 556.0 - 24 -

Table 3.1: PROJECT COST ESTIMATE (Package II)

Foreign Local Foreign Total Local Foreign Total exchange ----- (Pesos million) ------(US$ million) ----- (%)

Reservoir Clearance and Resettlement 52.5 1.5 54.0 7.1 0.2 7.3 3 Civil Works Mobilization, temporary works 83.6 45.1 128.7 11.3 6.1 17.4 35 Diversion works 14.1 20.7 34.8 1.9 2.8 4.7 60 Embankments: Main dam 165.0 307.1 472.1 22.3 41.5 63.8 65 Baligatan dike 40.0 73.2 113.2 5.4 9.9 15.3 65 Baligatan creek dam 22.2 41.4 63.6 3.0 5.6 8.6 65 Concrete structures: Excavation 80.6 149.5 230.1 10.9 20.2 31.1 65 Concrete works 374.5 259.8 634.3 50.6 35.1 85.7 41

Gate installation 7.4 10.4 17.8 1.0 1.4 2.4 60

Subtotal 787.4 907.2 1,694.6 106.4 122.6 229.0 53 Gate Supply - 97.7 97.7 - 13.2 13.2 100

Consulting Services 12.6 38.5 51.1 1.7 5.2 6.9 75

Engineering. Supervision and 145.0 3.0 148.0 19.6 0.4 20.0 2 Administration

Base Cost Estimate 997.5 1,047.9 2,045.4 134.8 141.6 276.4 51

Physical Contingencies 76.2 88.8 165.0 10.3 12.0 22.3 54

Expected Price Increases 169.5 180.5 350.0 22.9 24.4 47.3 52

Total project cost 1.243.2 1,317.2 2,560.4 168.0 178.0 346.0 51 - 25 -

Table 3.2: ESTIMATED TOTAL COST STAGE II DEVELOPMENT

Foreign Local Foreign Total Local Foreign Total exchange - --- (Pesos million) ------(US$ million) ----- (%)

Package I: Preconstruction Activities, Force Account Grouting. Drainage Gallery,Diversion Tunnels

Site preparation 70.3 3.7 74.0 9.5 0.5 10.0 5

Damsite grouting 30.3 13.3 43.6 4.1 1.8 5.9 30

Drainage gallery 7.4 7.4 14.8 1.0 1.0 2.0 50

Diversion tunnels 148.0 57.0 205.0 20.0 7.7 27.7 28

Communication system 1.5 12.6 14.1 0.2 1.7 1.9 90

Consulting services 2.9 8.9 11.8 0.4 1.2 1.6 75

Engineering, supervision, and administration 29.6 - 29.6 4.0 - 4.0 -

Base cost estimate 290.0 102.9 392.9 39.2 13.9 53.1 26

Physical contingencies 22.9 9.6 32.5 3.1 1.3 4.4 30

Expected price increases 14.1 4.4 18.5 1.9 0.6 2.5 24

Total cost 327.0 116.9 443.9 44.2 15.8 60.0 26

Package II: Magat Dam. Spillwav. Power Intake; Resettlement /a

Total cost 1,243.2 1,317.2 2,560.4 168.0 178.0 346.0 51

Package III: Powerhouse, Generating Units (360 MW). Transmission

Powerhouse civil works 65.1 96.9 162.0 8.8 13.1 21.9 60

Generating units 7.4 222.0 229.4 1.0 30.0 31.0 97

Mechanical/electrical equipment 3.7 37.0 40.7 0.5 5.0 5.5 90

Transmission facilities 10.4 25.1 35.5 1.4 3.4 4.8 70

Engineering, supervision, and administration 28.1 - 28.1 3.8 - 3.8 -

Base cost estimate 114.7 381.0 495.7 15.5 51.5 67.0 77

Physical contingencies 8.9 31.8 40.7 1.2 4.3 5.5 77

Expected price increases 28.1 94.0 122.1 3.8 12.7 16.5 77

Total cost 151.7 506.8 658.5 20.5 68.5 89.0 77

Package IV: Irrigation

Baligatan diversion dam 6.7 7.4 14.1 0.9 1.0 1.9 53

Irrigation works 159.1 114.7 273.8 21.5 15.5 37.0 42

Engineering, supervision, and administration 29.6 - 29.6 4.0 - 4.0 -

Base cost estimate 195.4 122.1 317.5 26.4 16.5 42.9 38

Physical contingencies 26.6 18.5 45.1 3.6 2.5 6.1 41

Expected price increases 54.0 34.8 88.8 7.3 4.7 12.0 39

Total cost 276.0 175.4 451.4 37.3 23.7 61.0 39

Total Stage II cost 1,997.9 2,116.3 4,114.2 270.0 286.0 556.0 51

/a For details see Table 3.1. - 26 -

Force account work on Package I, consisting of foundation grouting and tunneling of a drainage gallery along the damsite axis, has already started and NIA has awarded a US$27.0 million contract for the river diversion tunnels (para. 3.16). The works in Package I are an essential prerequisite for construction of the Magat dam under the project proposed for Bank assis- tance. Construction of the dam would not be justified unless the power and irrigation phases of the development are implemented in a timely manner so as to be ready for operation by January 1, 1983, assurances to this effect were obtained from the Government. The National Power Corporation (NPC) would undertake the construction of the power component (Package III) by calling for international bids on a turnkey basis. The Government has already received a number of offers of financial assistance for the power component. NPC proposes to call for bids for the component by mid-1978 and to proceed with award of the contract by the end of the year. Assurances were obtained that any contractual and financial arrangements proposed to the Government and/or NPC for the power component would be subject to review by the Bank prior to conclusion of such agreements.

3.23 The proposed Bank loan for Package II of US$150 million would finance 84% of the foreign exchange cost of the project and would cover 43% of total project costs. The Government would provide the remaining P 1,450 million (US$196.0 million) from annual budget appropriations. Of this amount about P 207.2 million (US$28.0 million) is foreign exchange. NIA intends to procure the supply of the spillway, power intake and Baligatan creek gates (US$16.0 million) by supplier financing. With assistance of the consultants, NIA has prequalified potential suppliers and expects to call for bids for the supply of the gates by the middle of 1978 and to proceed with award of the contract by the end of the year. While the provision of the gates would not be included in the Bank financed project, they are essential for the functioning of the dam and assurances were obtained that NIA would make arrangements satisfactory to the Bank with a qualified supplier for their timely provision. To ensure a timely and continuous flow of funds, assurances were obtained that the Government would cause NIA to set up a special fund to service the project which would be replenished by the Government at monthly intervals to a level equivalent to the estimated requirement for the next two months. Establishment of the fund would be a condition of effectiveness of the loan.

Procurement

3.24 Materials testing equipment and vehicles, costing about US$0.4 mil- lion, would be procured after international bidding in accordance with Bank Group Guidelines. A preference limited to 15% of the c.i.f. price of imported goods, or the custom duty, whichever is lower, would be extended to local manufacturers in the evaluation of bids. Local shopping is appropriate for off-the-shelf items costing less than US$10,000 each because the advan- tages of international competitive bidding would be clearly outweighed by the administrative costs involved. The total cost of such items would not exceed US$300,000. Bank staff have reviewed the local procedures and they are acceptable. There is adequate competition and foreign firms can participate. A list of equipment requirements is given in Annex 1. - 27 -

3.25 Civil works on the Magat dam and appurtenant structures (US$229.0mil- lion) were widely advertised internationallyand prequalificationof prospective bidders has been completed according to Bank Group Guidelines. Prequalifi- cation forms were issued in June 1977 to 47 interested companies and joint ventures (24 foreign and 23 local) and submissionswere received in September 1977 from 16 firms. Following technical and financial evaluation,nine companieswere prequalified. Bidding documents were issued to the nine prospectivebidders in January 1978 and bids are due on April 27, 1978. Work associated with clearing of the reservoir and resettlementof the affected population (US$2.4million) would be carried out mainly by local contractors. Bank staff have reviewed the local procedures for competitivebidding and they are acceptable. There is potentially adequate competition and foreign firms can participate.

Disbursements

3.26 Disbursementswould be made at the rate of 100% of the foreign exchange cost of directly imported equipment, and 100% of the ex-factory price of locally manufacturedequipment and 65% for imported equipment procured locally. Disbursements for civil works would be 40% of certified monthly progress payments or expenditures. Disbursement for force account works would be made against certificatesof expenditure,the documentation for which would not be submitted to the Bank for review, but would be retained by the borrower and made available for inspectionby the Bank's supervision missions. For civil works contractors'mobilization and equipment, disburse- ments would be at the rate of 100% of foreign exchan&e cqp)t. -=liatRU)bEDFi7~IsSEYE~fitrXiKUf;e of of toaItote>

3.27 Disbursementof the Bank loan would be against import documentation, contracts and certified records of payment or expenditure. It is expected that disbursementswould be completed by December 31, 1983, approximatelyone year after the end of construction. In consultationwith the Bank, savings under the project would be used to cover remaining foreign exchange costs of the project. An estimated schedule of expenditures,a semi-annualdisburse- ment schedule and a proposed allocation of loan proceeds are given in Annex 1.

Accounts and Audit

3.28 The NIA is a Government agency and its accounts are audited annually by the Governments'Commission on Audit. Assurances were obtained that NIA would maintain separate accounts for the project and that after audit by the Commission on Audit, the project accounts, together with the auditor's comments and opinion on the certificationof expenditurefor force account work, would be sent to the Bank within six months of the close of each financial year.

EnvironmentalEffects

3.29 Constructionof the dam would have a significant impact on the downstream hydrology of the river. The short (6 km) stretch down to the MARIS diversion dam would become a reregulatingreservoir with wide surface -28 -

fluctuations. Flows below the diversion dam would be noticeably altered, particularlyduring the dry season, because of irrigation abstractions. As the reservoir is lowered every year the shoreline is expected to shift laterallyby as much as 3 km in the vicinity of Planas. Such widely fluctuat- ing reservoir levels would preclude the developmentof vegetation below the full supply level and would lead to the creation of mud flats. As the river enters the reservoir there would be a decrease in the flow velocity, followed by deposition of the larger particles of sediment to form a delta in the upper reaches of the reservoir,with a consequent raising of the river bed and water surfaces in the river reach immediatelyabove the reservoir. Studies indicate that flooding of additionalareas upstream of the reservoir might occur at some point in the future as a result of back water and aggrada- tion caused by the reservoir. It was agreed at negotiationsthat NIA would include observationson riverbed aggradationas part of a wider reservoir sedimentationmonitoring program, in order to allow adequate lead time for remedial measures. Constructionof the dam and formation of the reservoir would have no effects on existing health conditions in the area or on fisheries. - 29 -

4. ORGANIZATION AND MANAGEMENT

The National Irrigation Administration

4.01 NIA was created in 1964 and given responsibilities for developing, operating and maintaining all national irrigation systems in the Philippines. The Government finances NIA through the sale of bonds or from appropriations. A board of directors is responsible for the agency and the Administrator, who is appointed by the President of the Philippines, handles management. NIA has recently been reorganized to better deal with the requirements of the Government's policy of irrigation development. The integration of the major foreign-assisted projects under a Special Projects Organization (SPO) headed by an Assistant Administrator was one of the first results of the reorgani- zation (Figure 4.1). The SPO is currently responsible for twelve major projects and has built-up a structure and staff which, with specialist consultant input where necessary, is competent to implement large-scale projects and manage the operations and maintenance of irrigation works. The Presidential Decree authorizing construction of MRMP designated NIA as the lead agency and directed other agencies, that might be involved in the implementation and operation of the project other than its irrigation phase, to cooperate with NIA as necessary. In view of the planned power generation component (Package III) of the project, the other principal agency is the National Power Corporation (NPC).

National Power Corporation

4.02 NPC, originally a public utility responsible for hydroelectric power generation, is a stock corporation fully owned by the Government. In 1972 a Presidential Decree made NPC responsible for the construction of national power grids, the development of all future generation supplying the grids and, ultimately for owning and operating all generating facilities. Its corporate powers are vested in a Board of seven members including the General Manager who is Vice-Chairman. The Secretary of the Department of Energy, established in October 1977 to formulate policies and programs and coordinate all activities connected with electric power, is chairman of the NPC Board. Power generation for the Luzon grid in 1976 was 9,350 GWh with a peak of about 1,600 MW. The average annual rate of growth is forecast at about 10% with energy demand of 17,780 GWh and capacity demand of 3,220 MW by 1983. The current Luzon system development program (Annex 2) plans to meet the load growth by construction of 457 MW thermal power, 300 MW pumped storage hydro, 364 MW (7 x 52 MW units) geothermal power and the assumed availability of 360 MW hydro power from Magat by 1983. A 620 MW nuclear plant is currently under construction and is expected to be in full commission in 1984. An ongoing review of the NPC generation expansion program for the Luzon mainland by international consultants (Lahmayer International, Germany) has estimated the power demand growth rate at 11.5% through the 1977-85 period. Their forecast is based on a correlation between economic and population growth but is believed to be an over-estimate of potential demand. However, the probability of delays in NPC commissioning the geothermal power units and the load growth rate currently assumed, makes the availability of power from Magat in 1983 a vital component in the power development program in order to avoid power shortages since the reserve of the interconnected system would only be 13.5% without the Magat power component. - 30 -

Project Management

4.03 NIA. Responsibility for implementing Stage I of the MRMP (Loan 1154-PH) was placed under the SP0. A Project Manager was appointed, with an Assistant Project Manager directly in charge of three construction divisions, dealing respectively with the ADB-assisted rehabilitation of MARlS and the Bank-assisted MARIS extension and SIFRIS rehabilitation and expansion. The MRMP Project Manager subsequently assumed overall responsibility for the construction of the nearby Chico River Irrigation Project (Loan 1227-PH) and for the Cagayan Integrated Area Development Project, with day to day respon- sibility for MRMP in the hands of an Assistant Project Manager. The MRMP Project Manager has thus become Regional Manager for SPO projects in the Cagayan Valley. In view of the scope and engineering complexity of the Magat dam construction, NIA, after consultation with the Bank, has transferred to the MRMP senior engineering staff with expertise acquired on the recently completed (Loan 637-PH). Management of construction of the Magat dam would be the responsibility of the senior staff engineer from this group who has been designated Project Manager, MRMP Dam. He liaises with the Regional Project Manager on overall MRMP policy, but has full powers in all matters concerning the dam and has direct access to the SPO Assistant Adminis- trator and the Administrator (Figure 4.2). Assurances were obtained that NIA would periodically review with the Bank the effectiveness of the proposed project management organization.

4.04 Under a ruling of the Water Resources Council, the competent authority in the Philippines, the reservoir would be operated primarily for irrigation with a firm energy rule of 25 MW continuous monthly power produc- tion (para. 3.10). Consequently, NIA would be responsible for operation of the dam. After completion of construction of the dam it would become an integral part of the MRMP for operation and maintenance purposes. A Dam Division would be established which would be responsible for O&M of the main dam and would absorb the smaller existing unit looking after operation and maintenance of the MARIS diversion dam and main canal.

4.05 NPC. Responsibility for construction of the planned power component (Package III) lies with NPC. As design of the power component is fixed by the dam, spillway and power intake physical layout, the critical factors will be scheduling of contract awards, equipment delivery and installation and commissioning of the generating units and transmission lines. A joint NIA/NPC Technical Committee has been established to coordinate implementation of the dam and power facility. No problems are anticipated, subject to availability of financing. An assurance was obtained that the Government would cause NPC to establish an effective staff organization to implement the power component in consultation with the Bank, and that it would periodically review the effectiveness of the organization with the Bank. - 31 -

Consulting Services

4.06 While NIA has acquired valuable experience of large dam construc- tion on the Pantabangan dam, the particular design and construction problems associated with the proposed Magat dam are sufficiently complex to warrant substantial consultant assistance to NIA. The project would provide for con- sultant services to cover the expected period of construction from July 1978 to December 1982. NIA proposes to use the same joint venture of expatriate and local consulting firms that has been involved in the pre-construction phase of the project. Negotiations for provision of consulting services have been completed. It is estimated that about 1,130 man-months of consul- tant services would be required. The expatriate firms would provide 540 man- months at an average cost of US$7,900/man-month, exclusive of transportation, equipment and price escalation. The local associates would provide 590 man- months at an average cost of US$2,500/man-month. The provision for consul- tants also covers the requirements of the power component (Package III), as it would be impractical to make separate arrangements. Direct NIA coun- terpart and support services to the consultants would total some 1,640 man- months. The consultant contract would provide for special on-the-job training, together with 90-day periods of overseas training in Canada and the U.S.A. for 14 of NIA's engineers. NIA has engaged consultants satisfactory to the Bank under terms of reference and conditions approved by the Bank to assist in final design and supervision of construction.

4.07 The NIA Board of Consultants (NBC), an international specialist technical review panel established in May 1977 in accordance with Bank requirements, has met four times during the preconstruction phase of the project, and has made most valuable contributions. The project would provide for continuance of the NBC during the construction phase. The NBC is expected to meet at least twice a year and more frequently, if necessary. The Board currently consists of a geological/geotechnical specialist, a dam hydraulics specialist and an experienced dam design and construction engineer. Composi- tion of the Board would be subject to addition and/or amendment by NIA as particular areas requiring attention develop. An assurance was obtained that NIA would maintain the Board of Consultants for the duration of construc- tion of the dam and that NBC would be consulted prior to implementation of all significant changes in the design and construction plans for Magat dam as detailed in the contract drawings and specifications.

Safety of Dam

4.08 An assurance was obtained that NIA would make arrangements to have a suitable maintenance and inspection program for the dam and to advise the Bank in writing not later than December 31, 1981 as to how it proposes to meet this obligation. The NIA proposal would include a description and scheduling of the maintenance program and inspections to be made, the designation of the experts, if any, to be employed, and, if applicable, a copy of their terms of reference. The Bank would have an opportunity to comment on the proposals before they were adopted. - 32 -

Cost Recovery

4.09 The cost recovery index was examined for the combination of MRMP Stages I and II since part of the irrigation benefits of Stage II accrue to areas under Stage I. Based on financial projections of NPC,/1 it would have to sell energy in 1983 at US$0.0317 kWh (mid '78 price level) to obtain an 8% rate of return on revalued net fixed assets. At this tariff level, NPC could carry on its account the cost of the power house, power equipment, and about 73% of the cost of the dam and still obtain an 8% rate of return on its assets./2 Allocation of assets between NIA and NPC would not be made at present; however, an assurancewas obtained from the Government that, within three years of loan signature, a proposal for allocation of the costs of the dam between the two agencies would be presented to the Bank for review. In view of NPC's need for funds, and in order to maintain its creditworthiness, it would be desirable that the cost of Magat dam allocated to power would be assumed by the Government in the form of equity contributions to NPC. However, a final decision on the issue would be taken by the Government as part of the cost allocation determination. Since the project would provide a more reliable supply of water than other Bank-assisted irrigation projects and since the average farm size in the project area is somewhat larger, an increase in the water charges is justified. Based on the capacity of the farmers to pay, an increase equivalent to 1 cavan of paddy/ha in each season over the present charges on Bank-assistedprojects of 3.5 cavans/ha in the wet season and 4.4 cavans/ha in the dry season would be appropriate. An assurance was obtained from the Government that, within a period of five years after full development,water charges would be gradually increased to these levels and that NIA and the Bank would review annually the adequacy and collection rate of water charges. Based on the above water charges and power tariff levels, the overall cost recovery index at discount rates of 8%, 10%, and 12%, is 62%, 47%, and 37% respectively. Assuming that the powerhouse, power equipment and 73% of the dam were allocated to NPC, the cost recovery index of the irrigation component would be 17% at a discount rate of 10%.

/1 The Seventh Power Project in the Philippines,Staff Project Report No. 1552-PH, May 27, 1977.

/2 Assuming a 5% transmissionloss, an incrementalinvestment of US$38.0 million in transmissionfacilities, and an annual incremental O&M of US$0.4 million for these transmissionfacilities. - 33 -

5. BENEFITS, JUSTIFICATIONAND RISKS

5.01 The second stage of development of the Magat River Multipurpose Project would consist of constructionof the Magat dam, establishmentof a generating station with a 360 MW installed capacity and new irrigation facilities for an additional 27,000 ha of rainfed land. The proposed Bank loan would assist in financing constructionof the dam. The Government plans to obtain supplier credit for the power component of the Stage II development and intends to approach the Bank for assistance with the irri- gation component. While Stage II development of MRMP has been subdivided into a number of convenient packages for implementationand financing, for purposes of economic evaluation the development is indivisible. For example, the investment in the dam cannot be justified without assuming further investments in irrigation and power and the resulting benefits. The Stage II development is therefore evaluated as a single entity. The following analysis will show that the investment in Stage II development has an acceptable overall economic rate of return. It will also show that this investment is the least cost method of meeting the proposed irrigation and power objectives.

5.02 Foreign Exchange. The numeraire used for this analysis is present real income at constant prices, measured in terms of foreign exchange and expressed in U.S. dollars. All local costs and benefits denominatedin pesos have been multiplied by the standard conversion factor (SCF) of 0.9 and divided by the official exchange rate of P 7.40 = US$1.00 to convert them to the numeraire.

5.03 Investment Costs. The total shadow-pricedcapital cost of the Stage II investment, expressed in mid-1978 prices, is US$443.5 million. This total cost includes US$52.9 million for the diversion works, US$273.6 million for the dam, US$70.9 million for the power related civil works and equipment, and US$46.1 million for the irrigationworks. All capital costs include physical contingenciesbut exclude costs due to expected price increasesas well as duties and taxes on imported equipment. The annual operationand maintenance costs, estimated at US$2.8 million, consist of US$0.76 million for the irrigation at US$28/ha, US$0.54 million for the dam and US$1.5 million for the power facilites based on the PDR.

5.04 Irrigation Benefits. Completion of Stage II MRMP developmentwould provide an additional 27,000 ha of rice land with year round irrigation. At present, in the wet season a rainfed rice crop is grown on 21,200 ha of this land, while 5,800 ha are irrigatedby small run-of-riverand pump irrigation systems. In the dry season only 2,100 ha are cropped to irrigatedrice. Constructionof the Magat dam would also provide irrigationwater to a further 46,000 ha in the dry season. This area, equipped with irrigation facilities under Stage I of MRMP, presently remains uncultivatedin the dry season due to lack of water. On completion of Stage II development,approxi- mately 8,000 farm families and 4,400 landless laborers' families would benefit from increasedproduction and additional employmentwithin the Stage II area, together with about 15,000 farm families and 5,500 landless families in the Stage I area. The incrementalannual demand for farm labor would be of about 7.2 million man-days equivalent to some 36,000 full time jobs. - 34 -

5.05 Present paddy yields in the project area are 1.5 ton/ha for rainfed rice, 2.0 ton/ha for wet season irrigated rice, and 2.1 ton/ha for dry-season irrigated rice. Without the project, paddy yields are expected to increase to 1.8 ton/ha, 2.5 ton/ha and 2.6 ton/ha respectively. With the project, these yields are expected to increase to 4.0 ton/ha for wet season irrigated rice and 4.2 ton/ha for dry season irrigated rice. Present cropping intensity is 107% which is expected to remain unchanged without the project. With the project, cropping intensity is expected to reach 200%. Paddy production at full Stage II developmentwould increase by about 356,500 tons annually resulting in a yearly import saving of about US$69.0 million. After deducting the cost of imported fertilizer and chemicals, the net foreign exchange saving would amount to about US$62.0 million.

5.06 Since the Cagayan valley is a rice surplus area, the incremental rice production from MRMP is expected to be sold for consumptionin Manila. According to the Bank's commodity price forecasts, the world market price of Thai 25-35% broken rice is expected to rise (in constant 1978 prices) from US$230/ton f.o.b. Bangkok in 1978 to US$290/ton in 1985. These prices were used to estimate present and future farm-gate prices for the economic analysis and for estimating farm incomes. A summary of economic and financial farm- gate prices for rice and fertilizers is shown in Table 5.1. Detailed calcu- lations of prices, production costs, labor demand, and farm budgets are shown in Annex 2.

Table 5.1. RICE AND FERTILIZER PRICES (P/ton)

1978 1985 Farm-gate Prices Economic Financial Economic Financial

Rice 1,225 1,100 1,535 1,375 Nitrogen /a 3,900 4,700 4,900 4,500 Phosphoricacid /a 3,100 4,600 4,200 3,800

/a Fertilizerprices expressed per ton nutrient, based on urea and triple-superphosphate,respectively. - 35 -

Table 5.2. FARM INCOMES

Present Farm family income /a Per capita income Tenure status Present Future Present Future P-esent Future ___ (P) …__------(US$) (USs$) …---

Owner operator Rainfed 4,745 21,730 640 2,935 105 475 Irrigated 6,220 21,730 840 2,935 135 475

Leaseholder Rainfed 3,650 14,000 495 1,890 80 305 Irrigated 4,275 14,000 580 1,890 95 305

/a Includes off-farm income.

5.07 Farm incomes, calculated for the average farm size of 3.0 ha and for two different types of tenure are summarized in Table 5.2. The present per capita incomes for the 3.0 ha farm model ranging from US$80 for a leaseholder to US$135 for an owner operator are below the estimated per capita absolute poverty level of US$193 (at 1978 prices), and vary from 16% to 27% of the estimated 1978 per capita GNP of US$507 for the Philippines. With the project, the per capita incomes of these farms would increase to about US$475 for an owner operator and US$305 for a leaseholder. Thus, average incomes in the project area would rise above the 1978 poverty income level by the time of full development,and would range between 41% and 64% of the 1987 projected per capita GNP of US$745. The comparison indicates that the project would increase incomes in the project area considerablyand would help narrow the income gap between the project area and other parts of the country, and between urban and rural areas.

5.08 As a result of Stage II development,the demand for labor would increase from 2.77 million man-days annually without the project to 10.0 mil- lion man-days with the project. In order to value the incremental cost of labor, shadow wage rates were calculated by examining the impact of Stage I and Stage II development together on the total project area. This analysis showed that the shadow wage rate would be P 2.67/man-daywithout the project and P 3.06/man-daywith the project, resulting in an incrementallabor cost of P 23.2 million due to the project (Annex 2). Using the above assumptions, the incrementalbenefits due to irrigation would amount to US$47.4 million annually at full development,as shown in Table 5.3.

5.09 Power Benefits. With an installed capacity of 360 MW, the project would generate about 1,200 GWh annually. In quantifying power benefits, ideally both the capacity and energy contributionwould have to be given economic values. As a simplification,these benefits have been expressed in terms of the price per kWh consumerswould be willing to pay for the energy. Since it was not possible to measure willingness to pay directly, the retail tariff was taken as a minimum measure of the consumers'willing- ness to pay ignoring consumers' surplus and the possibilitythat the market clearing rate might be higher than the actual tariff. In Luzon, the retail Table 5.3: IRRIGATION - NET VALUE OF PRODUCTION

Gross value Net value Net value of Paddy Farm-gate of Production of production in Area yield price production costs production project area (ha) (ton/ha) (P/ton) …______…P/ha ---- …------(P million)

Wet season _ Irrigated rice W 5,800 2.5 1,535 3,840 645 3,195 18.5 W 27,000 4.0 1,535 6,140 1,465 4,675 126.2

Rainfed rice W 21,200 1.8 1,535 2,765 435 2,330 49.4

W - - _

Dry season _ Irrigated rice W 2,100 2.6 1,535 3,990 770 3,220 6.8 W 73,000 4.2 1,535 6,445 1,495 4,950 361.4

Total W 29,100 W 100,000

W W (P million)

Total net value of production before costing labor 74.7 487.6 Less imputed labor cost 7.4 30.6 Total net value of production 67.3 457.0 Net incremental value of production at full project development 389.7

W - Future without project W = Future with project - 37 -

prices charged by cooperatives, some of whom buy power from NPC, range from P 0.24/kWh to P 0.94/kWh, averaging around P 0.33 per kWh./1 Retail tariffs charged by cooperatives /2 which buy cheap power from the NPC grid are generally lower than the retail tariffs charged by cooperatives which generate their own powe-. Based on these data, electricity consumers are willing to pay at least P 0.33/kWh for energy. At P 0.33/kWh, the value of MRMP's output, after accounting for a 9% loss due to transmission and distribution, would be US$43.8 million.

5.10 Since MRMP's energy output has been valued at the retail level, an incremental investment of about US$60.0 million, for transmission and distribution facilities, was deducted from this value. The annual cost of operation and maintenance of the transmission and distribution facilities has been estimated at US$1.35 million. /3

5.11 Development Period. According to the Stage II implementation schedule, all works would be completed by December 31, 1982. The already developed 46,000 ha Stage I area is assumed to reach full development three years after completion of the dam. Farmers on the 27,000 ha of newly irrigated land are assumed to begin growing their crops under improved conditions from 1983 onward and to achieve the projected full development yield levels over five years in equal installments by 1987. The power benefits are assumed to accrue the year after completion of construction of the dam.

5.12 Economic Rate of Return. Using the foregoing assumptions and discounting investment costs and irrigation and power benefits over a 50 year evaluation period, the economic rate of return of the project is 12% (Table 5.4). At a discount rate of 10%, the estimated opportunity cost of capital in the Philippines, the net present value of the project in 1978 is US$109.0 million.

/1 Staff Appraisal Report, Rural Electrification Project, Philippines, # 1848-PH, December 29, 1977.

/2 Since updated information on retail tariffs charged by small utilities is unavailable, only retail tariffs charged by cooperatives have been considered.

/3 The incremental transmission investment required is the cost of the second circuit between Santiago and Ambuklao and related substations totalling US$11.0 million. The cost of the 14 km transmission line from Magat to Santiago is included in the Magat power component (Package III) cost estimates. The incremental distribution investment has been estimated at US$49.0 million. The annual cost of operation and maintenance of the transmission facilities was estimated at 1.0% of capital cost, and for the distribution facilities at USiO.11/kWh supplied at the retail level. - 38 -

Table 5.4: ECONOMIC COSTS AND BENEFITS (US$ million)

Costs Benefits MRMP Stage II Irrigation Power Year Capital O&M Retail Value Less T&D Investment Capital O&M

1 2.7 2 9.0 3 60.4 4 99.1 5 102.8 6 99.1 7 55.1 (30.0) 8 15.3 1.3 12.7 (30.0) 9 2.8 25.4 43.8 (1.35) 10 2.8 38.1 43.8 (1.35) 11 2.8 42.6 43.8 (1.35) 12-50 2.8 47.4 43.8 (1.35)

Economic Rate of Return = 12%

Table 5.5: SENSITIVITYANALYSIS

Alternative Rates of return (%)

Base line 12 20% increase in total constructioncosts 10 One-year delay in dam construction 11 Two-year delay in reaching full benefits due to a two-year dam constructiondelay and a 20% increase in costs of dam and diversion works (Packages I and II) 9 Two-year delay in implementationof power component 11 Two-year delay in implementationof irrigation component 11 20% increase in world market price of rice 13 20% decrease in projected rice yields 11 Energy valued at P 0.24/kWh 10 Energy valued at P 0.94/kWh 19 40% increase in estimated incremental transmission and distributioncosts 11 - 39 -

Sensitivity of the rate of return was tested to cost overruns, delays in implementationof the power and irrigation components,delay in both irri- gation and power benefits as a result of delays in dam constructionaccom- panied by a 20% increase in costs, variations in the price and yields of rice, variations in the estimated willingness to pay for energy and an increase in incrementalenergy transmissionand distributioncosts (Table 5.5). The rate of return was most sensitive to a combinationof cost over- runs and delays in benefits.

5.13 Least Cost Analysis. To see whether the Stage II investment is the least costly way of providing the expected irrigation and power benefits, it has been compared to alternative irrigation and power projects. The only feasible method of obtaining equivalent irrigationbenefits would consist of the present Stage II investmentminus the power generation faci- lities. There would be no change in the main dam height or in the appurte- nant works, other than the absence of the power intake facilities. This alternativewould have a capital cost of US$372.6 million and an annual operation and maintenance cost of US$1.3 million. Because the long-range developmentprogram beyond about 1987 is not yet well defined, the comparison of alternativepower developmentsto meet energy requirementsin the Luzon grid in 1983 has been confined to comparing the power output of Magat with a thermal alternative. There are no other indigenous substitutesas none of the potential hydroplants,presently in the feasibility stage, could come on the line before 1985. To maintain in the system the same reliabilityas is the case with Magat, a thermal plant with an installed capacity of 300 MW would be required. Studies indicate that the best solution would comprise a combinationof a 100 MW steam power plant supported by a 200 MW gas turbine plant using the gas turbines to cover peaking operation with a 5% plant factor. The capital cost for the steam plant, with an economic life of 25 years, has been estimated at US$450/kW and for the gas turbine plant, with a life of 15 years, at US$250/kW. Since the alternative thermal plants would be built near Manila, the associated incremental transmissioninvestment would be negligible. Annual operating costs for these plants have been estimated at US$29.2 million which include fuel costs for generating 1,200 GWh at an average cost of P 0.18/kWh. For the analysis, capital costs have been shadow-pricedfor a foreign exchange content of 75% for the steam plant and 85% for the gas turbine. Comparison of the Stage II investment to these alternativeseries of investments (Table 5.6) shows that the net present value of the MRMP investment is lower for all discount rates below 43%, which is the equalizing discount rate. At a discount rate of 10%, the estimated opportunity cost of capital in the Philippines,the net present value of the Stage II investment in 1978 is lower than that of the alternative by US$181 million. - 40 -

Table 5.6: LEAST COST ANALYSIS OF STAGE II INVESTMENT

MRMP Stage II Development Costs Alternative Project Costs Stage II Transmission Irrigation Power Year Capital O&M Capital O&M Capital O&M Capital O&M ------US$ million ------

1 (1976) 2.7 2.3 2 9.0 8.4 3 60.4 58.6 4 99.1 89.5 5 102.8 85.8 10.9 6 99.1 73.6 10.9 7 55.1 5.5 42.3 35.5 8 15.3 1.3 5.5 12.1 1.3 35.5 9-21 2.8 0.11 1.3 29.6 22-23 2.8 0.11 1.3 24.6 29.6 24-29 2.8 0.11 1.3 29.6 30-33 2.8 0.11 1.3 10.9 29.6 34-36 2.8 0.11 1.3 29.6 37-38 2.8 0.11 1.3 24.6 29.6 39-50 2.8 0.11 1.3 29.6

Equalizing Discount Rate = 43%

Present Value of Costs in 1978 (US$ million)

Discount Rate (Z) MRMP Stage II Alternative Project

6 440 791 10 397 578 12 381 517 15 360 452

5.14 Risks. NIA has successfully completed the construction of a large multipurpose dam at Pantabangan in Central Luzon (Loan 637-PH) and all the experienced senior personnel from that job are now assigned to the proposed Magat dam (para. 4.03). In addition, despite the fact that a remarkable amount of exploratory work has already been carried out at the site (para. 3.11), adequate provision has been made in the estimates for unexpected contingencies. Thus, while no major problems are anticipated in construction of the Magat dam and appurtenant works, a delay in completion of the diversion tunnels or the occurrence of abnormally high wet-season floods at the early stages of dam construction would constitute the principal risk factor. Such events could result in the loss of one construction season. - 41 -

6. AGREEMENTS REACHED AND RECOMMENDATION

6.01 During negotiationsagreement with the Government was reached on the following principal points:

(a) it would satisfy the Bank of the economic and technical justi- fication of any increase in installed generating capacity above 360 MW (para. 3.10);

(b) NIA would keep the Bank informed of the arrangementsto be made for resettlementof the affected population and the Bank would have an opportunity to comment before they were implemented (para. 3.19);

(c) it would undertake to construct the power and irrigationphases of Stage II development in a timely manner so as to be ready for operation by January 1, 1983 (para 3.22);

(d) any contractualand financial arrangementsproposed for implementationof the power component of Stage II development would be subject to review by the Bank prior to conclusion of such agreements (para. 3.22);

(e) NIA would make arrangementssatisfactory to the Bank with a qualified supplier for the timely provision of the spillway, power intake and Baligatan creek gates (para 3.23);

(f) it would submit for review by the Bank within three years of loan signature a plan for allocation of costs of the dam between NIA and NPC (para. 4.09); and

(g) NIA would gradually raise the water rates payable by the benefi- ciaries in the service area by the equivalent of 1 cavan of paddy/ha in each crop season above the 3.5 and 4.4 cavans/ha levels pre- vailing in Stage I of the project. The incrementalrate would begin to be applied five years after completion of Stage II and would be fully applied over five years (para. 4.09);

6.02 A condition of effectivenessof the loan would be that NIA would establish a special fund to service the project which would be replenishedby the Government at monthly intervals to a level equivalent to the estimated requirement for the next two months (para 3.23).

6.03 The proposed project would be suitable for a Bank loan of US$150.0 million for a period of 20 years including 5 years of grace. The borrower would be the Republic of the Philippines. - 42 - ANNEX 1 Table 1 Page 1

PHILIPPINES

MAGAT RIVER MULTIPURPOSE PROJECT: STAGE II

Project Features

1. Magat Dam (3,950 m long)

Main fill dam - 1,350 m long, maximum height 114 m, volume 12.0 mil- lion cu m. Concrete section - 450 m long (wing dams, power inlets and spillway) Baligatan Dike - 1,450 m long, maximum height 35 m, volume 1.9 mil- lion cu m. Baligatan Creek Dam - 700 m long, maximum height 50 m, volume 1.1 mil- lion cu m. Dam crest level - 200 m Full supply reservoir level - 193 m Minimum supply level - 160 m Normal maximum flood level - 196.3

Spillways

a. Overflow

Type-gated, open chute with flip buckets Overall dimensions - 155 m wide, 400 m long Crest elevation - 174 m Gates - 7 radial crest gates 16.5 m wide by 19.5 m high Spillway chute length 300 m Chute divided by training walls into three bays - 42 m, 67.5 m and 46 m wide - for overflow spill, with fourth bay for orifice discharge Discharge capacity - 31,600 cu m/sec

b. Orifice

Two low-level outlets to spillway chute Capacity - 475 cu m/sec Intake elevation - 150 m at center line Outlet releases controlled by 6.0 m wide by 12.5 m high radial orifice gates with discharge into 21 m wide bay in spillway chute - 43 - ANNEX 1 Table 1 Page 2

c. Baligatan Creek Dam outlet - 3.0 m diameter gated concrete conduit

Power Intakes

84 m long concrete gravity section adjacent to spillway with six intake openings Control structureextends from invert El. 145 m to FSL 193 m Equipment features include steel trashracks,six 5.0 m wide by 6.0 m high fixed wheel gates with hydraulic hoists, one 5.0 m wide by 7.13 m high bulkhead gate with gantry crane Penstocks - 5.5 m diameter

Reservoir

Extends from Magat Dam 29.5 km river upstream to a point 14 km downstream of Bagabag.

Gross Live storage storage Elevation Area volume volume (m) (sq m) (MCM) (MCM)

Maximum flood level 196.3 49.0 1,400 1,083 Full supply level (FSL) 193.0 45.0 1,250 933 /a Minimum supply level (MSL) 160.0 15.5 317 -

/a Reduces to 886 MCM after 25 years and 832 MCM after 50 years due to sedimentation.

2. Power Facilities (PackageIII)

Installation- four 90 MW units with provision for future installation of two 90 MW units.

Powerhouse Type - surfacewith unit bay spacing of 16 m Massive concrete bulkhead walls at elevation 109.5 m protect against floods. 8 power plant transformersat rear of powerhouse. Serviced by 200 ton overhead traveling crane.

Turbines Vertical shaft Francis type Synchronous speed - 189.5 rpm Throat diameter - 3.5 m Centerline setting - 98 m (3 m below expected minimum tailwater) - 44 - ANNEX 1 Table 1 Page 3

Efficiencies

Net head Power Discharge Efficiency (m) (hp) (cu m/sec) (X)

87 (maximum) 125,000 119.4 91.0 (fullgate) 87 106,500 98.5 94.0 (best) 78 (best efficiency) 107,000 112.7 92.0 (fullgate) 78 95,000 97.4 94.5 (best) 54 (minimum) 60,000 93.3 90.0 (both)

Generators Umbrella type, 100 MVA, 13.8 kV, 60 Hz, 0.9 lagging factor Rating - 125,000 hp at full head (matches full turbine output) Connected to main step-up transformersvia 5,000 amp isolated phase bus duct

Transmission

230 kV double circuit line from Magat to Santiago (14 km) plus switchyard facilities at both stations

3. Irrigation Works (Package IV)

Baligatan Diversion Dam - 275 m long earthfill dam with 23 m bridged concrete overflow center structure, maximum height 16 m.

Main canals and pumping plants:

Net Length irrigablearea (km) (ha)

Oscariz Canal 5 1,300 South High Canal 57 11,600 Extension of Cagayan East Canal 22 5,200 Extension of Luna Canal 16 3,000 Extension of Siffu East Canal (two relift pumping plants on extended Siffu East Canal) 31 6,600

Total 131 27,000 ANNEX 1 Table 1 Page 4

Irrigationservice design criteria:

20 m of canals and laterals or sublateralsper ha of service area 60 m of main and supplementaryfarm ditches per ha of service area 20 m of project drains per ha of service area 40 m of farm drains per ha of service area One turnout for each 10 ha of service area 20 m of all-weathergravel roads per ha of service area Vehicle crossings - one vehicle equipment crossing for every 200-300m of canal or lateral/sublateralin residentialareas and every 400-500 m in nonresidentialareas ANNEX 1 - 46 - Table 2 Page 1

PHILIPPINES

MAGAT RIVER MULTIPURPOSE PROJECT: STAGE II

Magat Dam Contract: Cost Estimate /a

Unit Item Description Unit Quantity price Amount no. (us$) (US$'000)

1.0 General 1.1 Mobilization and demobilization L.S. 2,400 1.2 Temporary facilities L.S. 7,400 1.3 Construction power L.S. 3,800 1.4 Construction roads and maintenance km 55 62,000 3,400 1.5 Land transportation for supply contracts t 3,370 119 400

Subtotal 17,400

2.0 Diversion Works 2.10 Furnish and install cut-offs L.S. 500 2.20 Stage 1 - cofferdams - excavation and fill cu m 427,000 4.45 1,900 2.30 Stage 2 - remove cofferdams and blanket dam fill cu m 167,000 4.20 700 2.40 Stage 3 - Restore and dewater cu m 33,300 6.00 200 2.50 Stage 4 - restore and remove cu m 66,000 7.50 500 2.51 Stage 4 - place and grout tunnel plug cu m 6,700 6.00 50 2.52 Stage 4 - cement supply t 2,200 100 200 2.53 Baligatan creek diversion cu m 55,000 5.50 300 2.60 Miscellaneous L.S. 350

Subtotal 4,700

3.0 Embankment - Main Dam 3.1 Foundation works: 3.10 Stripping cu m 1,220,000 2.60 3,150 3.11 Core trench excavation cu m 180,000 7.00 1,250 3.12 Surface cleanup sq m 62,500 1.60 100 3.13 Foundation treatment - core cu m 18,400 57 1,050 3.14 Miscellaneous L.S. 950 3.2 Fill works: 3.21 Impervious core cu m 2,239,000 4.45 9,950 3.22 River sand and gravel cu m 3,509,000 7.75 27,200 3.23 Rockfill - inner zones cu m 4,708,000 2.55 12,000 3.24 Rockfill - outer zones cu m 1,228,000 5.30 6,500 3.25 Rip rap cu m 216,000 6.25 1,350 3.26 Instrumentation L.S. 300

Subtotal 63,800 ANNEX I - 47- Table 2 Page 2

Unit Item Description Unit Quantity price Amount no. (US$) (US$'000)

4.0 Embankment - Baligatan Dyke 4.1 Foundation works: 4.10 Stripping cu m 935,000 2.55 2,400 4.11 Core trench excavation cu m 29,000 8.60 250 4.12 Foundation treatment L.S. 300 4.13 Miscellaneous L.S. 100 4.2 Fill works: 4.21 Impervious core cu m 358,000 4.75 1,700 4.22 River sand and gravel cu m 613,000 9.50 5,800 4.23 Rockfill cu m 1,075,000 3.35 3,600 4.24 Rip rap cu m 140,000 7.50 1,050 4.25 Instrumentation L.S. 100

Subtotal 15.300

5.0 Embankment - Baligatan Creek Dam 5.1 Foundation works: 5.10 Stripping cu m 330,000 2.6 850 5.11 Core trench excavation cu m 10,000 10 100 5.12 Foundation treatment L.S. 200 5.13 Miscellaneous L.S. 50 5.2 Fill works: 5.21 Impervious core cu m 223,000 5.15 1,150 5.22 River sand and gravel cu m 395,000 10.0 3,950 5.23 Rockfill cu m 444,000 4.15 1,850 5.24 Rip rap cu m 49,000 8.15 400 5.25 Instrumentation L.S. 50

Subtotal 8,600

6.0 Concrete Structures - Spillway and Intakes 6.1 Foundation works: 6.10 Overburden excavation cu m 2,746,000 2.60 7,150 6.11 Rock excavation - mass cu m 4,726,000 4.20 19,850 6.12 Rock excavation - structural cu m 180,000 10 1,800 6.13 Slope protection sq m 36,000 21 750 6.14 Foundation cleanup and grouting sq m 94,000 8.0 750 6.15 Drainage and seepage control lin m 76,500 9.15 700 6.16 Baligatan outlet excavation cu m 18,500 5.40 100

Subtotal 31,100 - 48 - ANNEX 1 Table 2 Page 3

Unit Item Description Unit Quantity price Amount no. (US$) (US$'000)

6.2 Concrete: 6.21 Spillway - gate structure cu m 295,000 38.50 11,350 6.22 - chute cu m 201,000 35.50 7,150 6.23 - plunge pool cu m 240,000 35.80 8,600 6.24 - wraparound wall cu m 82,000 36.50 3,000 6.25 Power intake - gate structure cu m 155,000 39.00 6,050 6.26 - wraparound wall cu m 275,000 33.50 9,200 6,27 Baligatan outlet works cu m 3,000 200 600 6.28 Cement supply t 300,000 100 30,000 6.29 Reinforcing steel kg 12,000,000 0.80 9,600 6.30 Miscellaneous L.S. 150

Subtotal 85,700

7.0 Equipment 7.10 Gate installation t 3,350 567 1,900 7.20 Supply and install penstock liners t 400 1,250 500

Subtotal 2,400

Total 229,000

/a Estimate is summary of detailed "contractor type" estimate prepared by ESED. Similar work items are combined and unit prices averaged from total item cost amounts and quantities. Amounts are rounded to nearest $50,000. - 49 - ANNEX 1 Table 3

PHILIPPINES

MAGAT RIVER MULTIPURPOSE PROJECT: STAGE II

Equipment List

Costs Item Quantity Unit Total -- US$'000 --

Passenger bus 1 30 30

Minibus 2 15 30

Laboratory testing equipment /a L.S. 340

Total 400

/a Itemized list to be reviewed by the Bank. - 50 - ANNEX 1 Table 4

PHILIPPINES

MAGAT RIVER MULTIPURPOSE PROJECT: STAGE II

Expected Price Increase Estimate

Calendar Year 1978 1979 1980 1981 1982 1983 Total … ------US$ '000…

1. Civil Works /a 31,300 73,000 69,100 63,200 33,700 13,800 284,100 Annual inflation rate (%) 8.0 7.5 7.0 7.0 7.0 Expected price increase 600 5,800 11,100 15,200 11,100 1,700 45,500

2. Equipment 1,700 4,400 4,500 2,600 1,400 14,600 Annual inflation rate (x) 7.0 6.5 6.0 6.0 6.0 Expected price increase - 300 600 500 400 1,800

Total without price increases 33,000 77,400 73,600 65,800 35,100 13,800 298,700

Expected price increases 600 6,100 11,700 15,700 11,500 1,700 47,300

Total with price increases 33,600 83,500 85,300 81,500 46,600 15,500 346,000

/a Includes consulting services. - 51 - ANNEX I Table 5

PHILIPPINES

MAGAT RIVER MULTIPURPOSEPROJECT: STAGE II

Estimated Schedule of Expenditures

Total Item cost FY79 FY80 FY81 FY82 FY83 ------US$'000 ------______

Reservoir clearing& resettlement 8,000 3,000 2,000 1,800 1,000 200

Civil works: Mobilization,temporary facilities,demobilization 19,000 7,650 5,400 1,900 2,050 2,000

Diversionworks 5,100 1,500 1,800 1,000 350 450

Embankments 95,600 22,000 21,400 21,300 19,150 11,750

Spillway & power intakes 129,900 27,550 36,800 35,200 22,650 7,700

Subtotal 249,600 58,700 65,400 59,400 44,200 21,900

Spillway & intake gates 14,200 3,300 4,450 3,750 2,000 700

Consulting services 6,900 2,100 1,500 1,400 1,200 700

Vehicles & equipment 400 400 - - - -

Supervision& administration 19,600 6,150 4,850 3,200 2,850 2,550

Subtotal 298,700 73,650 78,200 69,550 51,250 26,050

Expected price increases 47,300 4,000 9,450 14,500 12,850 6,500

Total proiect cost 346,000 77,650 87,650 84,050 64,100 32,550 -52 - ANNEX 1 Table 6

PHILIPPINES

MAGAT RIVER MULTIPURPOSEPROJECT: STAGE II

Estimated Schedule of Disbursements

IBRD fiscal year Accumulated disbursements and semester ---(US$ million equiv.)--

FY79 1st 18.0 2nd 34.4

FY80 Ist 65.2 2nd 81.5

FY81 Ist 94.8 2nd 109.1

FY82 1st 121.0 2nd 132.9

FY83 1st 138.7 2nd 145.0

FY84 1st 150.0 ANNEX 1 _ 53 Table 7

PHILIPPINES

MIAGATRIVER MULTIPURPOSE PROJECT: STAGE II

Proposed Allocation of Proceeds of Loan

Category Costs Proposed Total Foreign loan ------(US$ million) ------

I. Civil Works Reservoir & resettlement 7.3 0.2 Dam & appurtenant works 229.0 122.6 131.5 * Expected price increases 40.5 20.7

Subtotal 276.8 143.5

* Of which (a) US$38.0 million for mobilization and contractor's equip- ment and (b) US$93.5 million for other civil works. Disbursements for (a) will be 100% of foreign exchange and (b) 40% of total expenditure.

II. Equipment and Supplies Vehicles and equipment /a 0.3 0.3 0.4 Expected price increases 0.1 0.1

Subtotal 0.4 0.4

Disbursement will be 100% of foreign expenditure for directly imported equipment, 100% of expenditure (ex-factory)for locally manufactured equipment and 65% of total expenditure for imported equipment procured locally.

III. Technical Assistance Consulting services 6.9 5.2 8.1 Expected price increases 1.2 0.9

Subtotal 8.1 6.1

Disbursement will be 100% of total expenditure.

IV. Unallocated Physical contingencies 22.3 12.0 10.0 (Administration& engineering) (22.4) - (Spillway gates) /b (16.0) (16.0)

Total 346.0 -178.0

/a See Annex 1, Table 3.

/b Consisting of: base cost of gates, US$13.2 million; physical contingencies, US$1.0 million; price escalation, US$1.8 million. This item is being obtained by NIA through supplier finance. PHILIPPINES

MAGAT RIVER MULTIPURPOSE PROJECT: STAGE II

Economic Cost of Farm Labor /a /b

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Total

Labor requirement W 1.63 0.82 0.41 2.55 2.96 1.22 1.94 1.84 1.33 2.35 2.14 1.22 20.41 (million man-days) /b W 0.94 0.94 0.73 0.24 0.22 - 0.78 1.57 1.59 1.35 1.66 1.78 11.8

Marginal opportunity W 3.63 2.82 2.41 5.65 6.88 3.22 3.94 3.84 3.33 5.05 4.42 3.22 1 cost (P--/man-day) W 2.94 2.94 2.73 2.24 2.22 - 2.78 3.57 3.59 3.35 3.66 3.78 L

Average economic cost W 2.82 2.41 2.20 3.39 3.79 2.61 2.97 2.92 2.66 3.23 3.08 2.61 3.06 of farm labor W 2.47 2.47 2.37 2.12 2.11 - 2.39 2.79 2.80 2.68 2.83 2.89 2.67 (P--/man-day)

/a W = Future with project. W = Future without project.

/b The average economic cost of labor has been calculated on the basis of full development of Stages I and II.

o-zB - 55 - ANNEX 2 Table 2

PHILIPPINES

MAGAT RIVER MULTIPURPOSE PROJECT: STAGE II

Rice Crop Production Costs: Physical Inputs and Unit Prices /a

Physical inputs Wet season Dry season Unit prices /b Present Unit Rainfed Irrigated Irrigated Unit Price

Cultivation mechanical (% area) 15 25 25 P/ha 265 (265) manual (% area) 85 75 75 P/ha 120 (120) Seed transplanted (kg/ha) 55 55 55 P/kg 1.4 (1.3) Fertilizer N (nutrient 15 20 25 P/kg 3.9 (4.7) P kg/ha) 5 5 10 P/kg 3.1 (4.6) Threshing mechanical /c (X pro- 15 30 45 - - manual duction) 85 70 55 - -

Future without project Cultivation mechanical (% area) 15 30 30 P/ha 265 (265) manual (% area) 85 70 70 P/ha 120 (120) Seed transplanted (kg/ha) 55 55 55 P/kg 1.4 (1.3) Fertilizer N (nutrient 15 30 35 P/kg 4.9 (4.5) P kg/ha) 5 5 10 P/kg 4.2 (3.8) Threshing mechanical (% pro- 15 40 60 - - manual duction) 85 60 40 - -

Future with project Cultivation mechanical (% area) 90 90 P/ha 265 (265) manual (% area) 10 10 P/ha 120 (120) Seed transplanted (kg/ha) 50 50 P/kg 1.8 (1.6) Fertilizer N (nutrient 60 60 P/kg 4.9 (4.5) P kg/ha) 30 30 P/kg 4.2 (3.8) Threshing mechanical (7 pro- 90 90 - - manual duction) 10 10 - -

/a Agrochemical costs have been provided as a lump sum.

/b Figures in parenthesis are financial unit prices.

/c Cost of mechanical threshing is estimated to be 7% of yield. - 56 - ANNEX 2 Table 3

PHILIPPINES

MAGAT RIVER MULTIPURPOSE PROJECT: STAGE II

Rice Price Structure 1978 and 1985 /a

1978 P ton US$/ton

Export price of Thai, 25-35% brokens, f.o.b. Bangkok 1,890 230 Ocean freight & insurance to Manila 140 17 Import price, c.i.f. Manila 2,030 247 Port handling charges 60 7 Less average cost of transportation Isabela to Manila -130 -16 Rice price, ex-mill project area 1,960 238 Paddy equivalent price (63% recovery) 1,235 150 Less average cost of transport farm to mill - 10 - I Farm-gate paddy price 1,225 149 (Financial farm-gate price) /b (1,100)

1985 P ton US$/ton

Export price of Thai, 25-35% brokens, f.o.b. Bangkok 2,385 290 Ocean freight & insurance to Manila 140 17 Import price, c.i.f. Manila 2,525 307 Port handling charges 60 7 Less average cost of transportation mill to Manila -130 -16 Rice price, ex-mill project area 2,455 299 Paddy equivalent price (63% recovery) 1,545 188 Less average cost of transport farm to mill - 10 - 1 Farm-gate paddy price 1,535 187 (Financial farm-gate price) /c (1,375)

/a P/ton and US$/ton values at constant mid-1978 prices. Peso shadow priced at exchange rate of US$1.00 = P 8.22. P/ton figures rounded to nearest 5 pesos.

/b 1978 financial price is actual.

/c 1985 financial price is calculated by using the official exchange rate of US$1.00 = P 7.4. 57- ANNEX 2 Table 4

PHILIPPINES

MAGAT RIVER MULTIPURPOSE PROJECT: STAGE II

Farm Budgets (3.0 ha Farm)

PRESENT FUTURE WITH PROJECT Rainfed Irrigated Irrigated Farm type: /a A B A B

Arable area of farm (ha) 3.0 3.0 3.0 3.0 Transplanted rice (ha) 3.0 3.9 6.0 6.0 Cropping intensity (%) 100 130 200 200 Total paddy production (ton) 4.5 7.89 24.6 24.6

Gross value of production (P) 4,950 8,680 33,825 33,825 Production costs, excluding labor (P) 1,170 1,970 9,345 9,345 Cost of hired labor /b 35 715 1,210 1,210 Net value of production before water charges (P) 3,745 5,995 23,270 23,270 Water charges (P) /c 0 475 1,980 1,980 Net value of production (P) 3,745 5,520 21,290 21,290

(a) Owner-Operator Net crop income (P) 3,745 5,520 21,290 21,290

(b) Amortizing Owner Annual payment for land (F) /d 1,275 2,235 1,275 2,235 Net crop income (P) 2,470 3,285 20,015 19,055

(c) Leaseholder Annual payment for land (P) le 1,095 1,945 7,730 7,730 Net crop income (P) 2,650 3,575 13,560 13,560

/a Farm types: A = presently rainfed; B = presently irrigated.

/b Based on a maximum of 40 days/month and a total of 480 man-days/year of family labor; hired labor prices at a wage of P 7.0/man-day.

/c Based on present charges of P 110/ha (2 cavans/ha) in the wet season and P 160/ha (3 cavans/ha) in the dry season and on future with project charges of P300/ha (4.5 cavans/ha) in the wet season and P360/ha (5.4 cavans/ha) in the dry season.

/d Based on amortizing owner with annual payments over 15 years at 6' of unpaid balance; based on price of land at 2.5 times present gross value of production.

/e Based on 25% of gross value of production minus seed, harvesting and threshing costs. PHILIPPINES

MAGAT RIVER MULTIPURPOSE PROJECT: STAGE II

National Power Corporation - System Development Program - Luzon Grid

Actual F O R E C A S T 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985

I. System Requirements Generation (GWh) 9,353 10,415 11,440 12,621 13,782 14,964 16,310 17,779 19,276 20,795 Peak demand (MW) 1,591 1,774 1,972 2,153 2,420 2,669 2,955 3,221 3,478 3,709

II. System Capability Available energy (GWh) 10,565 11,399 13,194 15,794 16,514 16,839 19,189 22,394 22,520 24,259 Dependable capacity (MW) 1,915 2,195 2,250 2,660 2,715 3,046 3,549 4,018 3,893 4,233 Reserve (MW) 424 421 278 507 295 377 594 797 415 524

III. Tentative Generating Expansion Program Existing hydro (MW) 435 435 535 535 535 535 847 847 1,207 1,207 1 Existing thermal (MW) 1,730 1,730 1,880 1,935 2,355 2,410 2,410 3,195 3,250 3,125 n New facilities (MW) Bataan (S) Tiwi 1-(G) Malaya 2(S) Mak-Ban Kalayaan Tiwi 3-4 Mak-Ban Retire Abulog 1-4 00 150 MW 55 MW 310 HW (G) (P) 300 MW (G) 11OMW 4(G) Rockwell (H) 200 MW Pantabangan (H) Tiwi 2(G) 55 MW Masiway (H) Mak-Ban 3 55 MW 5(S) Tiwi 5(G) 1&2-100 MW 55 MW 12 MW 55 MW Magat 1-4 (-125 MW) 55 MW Mak-Banl(G) PNPP1 (N) (H)360 MW Mak-Ban 5 55 MW 620 MW (G) 55 MW

Rated capacity (MW) 2,165 2,415 2,470 2,890 2,945 3,257 4,042 4,457 4,332 4,642 Dependable capacity (MW) 1,915 2,195 2,250 2,660 2,715 3,046 3,549 4,018 3,893 4,233 Hydro energy (GWh) 1,787 1,909 1,909 1,909 2,234 2,234 3,022 3,225 4,013 Thermal energy (GWh) 9,612 11,105 13,165 13,165 13,165 13,165 13,165 12,885 12,885 Geothermal energy (GWh) - 180 720 1,440 1,440 2,160 2,880 2,880 3,600 Nuclear energy (GWh) - - - - - 1,630 3,327 3,530 3,761 Total available energy (GWh) 11,399 13,194 15,794 16,514 16,839 19,189 22,394 22,520 24,259

Notes: Type of generation shown in parentheses means: (11)Hydro (S) Steam (G) Geothermal -3 (P) Pumped storage hydro 1 2 (N) Nuclear (D ANNEX 3

PHILIPPINES

MAGAT RIVER MULTIPURPOSEPROJECT: STAGE II

Schedule of Early Events

Activity Target date

Magat Dam - Civil Works Receipt of bids April 27, 1978 Contract award June 15, 1978 Notice to proceed July 1, 1978 CompleteMagat river bridge (Loan 1154-PH) July 1978 Commence excavation October 1978 Commence embankment fill January 1979 Complee cofferdam cut-off walls May 1979 Commence concreting (intake structure) May 1979 Complete excavation for penstocks and powerhouse September 1979 Complete diversion tunnels (Package I) October 1979 Install and test tunnel gates December 1979 Constructriver closure dykes December 1979 Divert Magat river through tunnels January 1980

Magat Dam - Gate Supply Contract award (for delivery October 1980) December 1978

Powerhouse Contract award for supply of generatingequipment December 1978 Contract award for civil works June 1979

IrrigationFacilities Contract awards January 1979 - 60 - ANNEX 4

PHILIPPINES

MAGAT RIVER MULTIPURPOSE PROJECT: STAGE II

Related Documents and Data Available in the Project File

A. General reports and studies on the agriculture and power sectors.

Al World Bank, "The Philippines Priorities and Prospects for Development, Basic Economic Report," Report No. 1095a-PH, May 5, 1976.

A2 World Bank, "Agricultural Sector Survey," Philippines, 4 volumes. Report No. 39a-PH, May 2, 1973.

B. General reports and studies relating to the project.

BI USBR/USAID, "A Report on the Cagayan River Basin," December, 1966.

B2 NIA/USBR, "Magat River Project Feasibility Report," 5 volumes, June 1973.

B3 World Bank, "Appraisal of the Magat River Multipurpose Project: Stage I" Report No. 727a-PH, June 5, 1975.

B4 NIA/ESED, "Magat River Multipurpose Project Stage II, Project Design Report," 4 volumes, September, 1976.

B5 ESED, "Magat River Multipurpose Project NBC-ERB Project Review, June 14-18, 1977."

B6-9 NIA/NBC, "Review of Proposed Magat and Baligatan Dams," Report No. 1, March 30, 1977; Report No. 2, June 18, 1977; Report No. 3, September 9, 1977; Report No. 4, October 25, 1977.

B1O NIA/ESED, "Magat River Multipurpose Project, Project Summary Cost Estimate for Project Layout A," October 31, 1977.

Bll NIA, Memo No. 77-7424 of December 8, 1977, "Redesignation of Personnel for MRMP Project."

B12 World Bank, "Staff Appraisal Report - Seventh Power Project in the Philippines" - Report No. 1552-PH, May 27, 1977.

B13 World Bank "Staff Appraisal Report - Rural Electrification Project" - Report No. 1848-PH, December 29, 1977. PHILIPPINES MAGAT RIVER MULTIPURPOSE PROJECT: STAGE 1I, DEVELOPMENT IMPLEMENTATION SCHEDULE

Year ~1977 1978 1979 18 9118 WORK ITEM Year2 3 4 1 2 4 1 2 3 4

Package1 - Preparatory Site Investigation AccessRoads- NIA Camp Foundation Grouting umuu Diversion Tunnels*

Package2 - Dam ~~~~~~~~~~~~~StartDiversion Begin Storage River Diversionr 11111 Excavation- Embankments Fill ______Concrete Structures-- Gates (intake & spillway) * iuumSuppIy less u..umummumlol N Relocation-

Package3 - Power Powerhouse nit onli- Penstocks IluI 1 2 3 4 Generating Equipment muuUIIILpyIIUIIEII Transformers,SwitchgearI Transmission Line *I*11mmu***11

Package4 - IrrigationI Baligatan Diversion Dam *1 Irrigation Facilities * n u logom m. Wet Wet Wet Wet Season Season Season Season *-Major contract awvarddates.

World Bank - 18512

- 62 - Figure 3.1

PHILIPPINES:MAGAT DAM -PROJECT LAYOUT

I , Z 3 4 5~~~~~~~N,I 6ov

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PHILIPPINES: MAGAT DAM-SECTIONS THROUGH DAM AND SPILLWAY

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EMBANKMENT DAM PHILIPPINES MAGAT RIVER MULTIPURPOSEPROJECT: STAGE II, PACKAGE 2 MAGAT DAM CONSTRUCTIONSCHEDULE

Year 1978 1979 1980 1981 1982 1983 WORK ITEM Quarter71-2374 ------IW I LI- --- ]IWI

Bidding, Evaluation, Contract award

Mobilization.Camp Roads. ~~~~~~~~StartDieersion Begin Storage

River Diversion I**h lIIlIh *EIhIIE E II I

Main Dam Excavation Foundation Preparation Fill (1 1,900,000Ocu.m)

Baligatan Dyke Excavation Foundation Preparation Fill (2,188,000 cu.m)

Baligatan Creek Dam Excavation- Foundation Preparation -0 Fill (1,111,000 cu.m) Outlet Structure -Concrete - Gates-

Spillway Excavatio n Foundation Preparation Concrete (560,0O0Ocu.m) 11111 ntl Gates InstallllSppyIIlIhIlhhIhh

Power IntakesI Excavation Foundation PreParation Concrete (430,000cu in) Iinstall Gates lIIhIlISupply Illh

Penstockt and Powerhouse (Main works by others - Package 3) Excavation (first stage only)I

Relocation

VVorld Bunk -1851 1 - 65 - Figure 4. 1 PHILIPPINES MAGAT RIVER MULTIPURPOSEPROJECT: STAGE II DEVELOPMENT NIA ORGANIZATION FORSPECIAL PROJECTS

NIA Board

Administrator

Assistant Administrator Special Projects

CENTRAL OFFICE STAFF

Engineering Department Agriculture Department

and Design ~~~~~~WaterManagement # Planningand Design l -| and Land Use

I l Farmers Assistance Construction Management j and Training

Evaluation and Operation and Maintenance Statistics

Equipment Business Management

l Central Luzon Projects Iriato Proec

Angat - Magat Integrated Chico River Agricultural Devt. Project MuIrrigation Project (AMIADP) (CR IP)

Davao Del Norte Philippines Rural * ~~~~~~~~~~~~~~~~IntegratedIrrigation Project _ _Development Project (DNIIP) (PRDP)

Laguna De Bay Pulangui River Development Project _ _Irrigation Project I LBDP) (PR IP)

| Cagayan Integrated Magat River Area Development Project _ _Multipurpose Project (CIADP) (MRP

1 Include IJoper Pampanga, Aurora - Penaranda and Tarlac Projects

World Bank - 18509 PHILIPPINES MAGAT RIVER MULTIPURPOSEPROJECT: STAGE 11,PACKAGE 2 PROPOSEDORGANIZATION FOR PROJECTCONSTRUCTION

| Admnitrator

Assistant Administrator Special Projects

| Joint NlA/NPC _ _ _ NIA Board of

| Technical Committee -r - - Conltants

| Regional Projects _ | Poecto Ma.ae Ma.ager!J Magat Dam

A~~ _L

- | - - I Asst. Project Manager IEngineeing CRIP CIADP | MRMP - Stage I Consultants

FmarisDanm | Irrigation Development Chief Engmneer MaL_ s_ Dam_ _Divisions visDamoivisons- DaDivisi

ConstructionEgnern eo.W MaterialsqW,nn Contracts Superviin EgneigGetcncttstn qimn Administration

Embankment Spillway DiversionTunnels Dm n nae Darns ad Intakes

I/ Magat River Multipurpose Project (MRMP) Chico River Irrigation Project (CRIP) Cagayan Integrated Area DevelopmentProject (CIADP)

World Bank -18510 i 526' Srcb,ay Clk,-e 12

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