Socioeconomic Planning Secretary Romulo Neri, head of NEDA and co-chairman of the ICC (Investment Coordination Committee) has blocked further fund releases for the huge (originally approved) P2.3 billion Bohol Irrigation Project Stage II (BHIP 2) since the "cost increase is too big for the national government to bear."
The NIA (National Irrigation Authority), project sponsor, had asked the NEDA for an increase of the costs by P1.246 billion and for a two-year extension of the project.
The ICC noted that such increase would increase the development cost per hectare of the project from P499,889 to P613,383 making it "the most expensive irrigation project to be implemented by the NIA."
An ICC document noted: "The two major contracts which suffered almost two-year procurement delays incurred an average cost over-run of P725.317 million."
A visibly irked Neri and earlier said "To make matters worse, the irrigation agency proceeded to implement the higher cost without first seeking approval from the Investment Coordination Committee (ICC) which is required of all official development assistance-funded projects being implemented in the country."
The Cabinet secretary Neri, (who is an important member of the Arroyo Economic Team headed by Finance Secretary Margarito Teves) made strong statements regarding the project. "We want a proper breakdown of the cost increase and proper analysis of the variance. The problem with them (irrigation officials) is that they were supposed to go back to the NEDA (to seek clearance) but they waited for two years to do that. By that time, the project was almost fully implemented, but at a very high cost."
"Some heads must roll, someone has to be made accountable", Neri tersely declared.
As a result of the stand-off, the Korean project contractor Hanjin Heavy Industries Construction Co. has not allegedly been paid a total estimated billing of P600-Million, according to Business Mirror, one of the country's only two daily business papers.
PROJECT BACKGROUND
The Project was meant to improve the farm areas of Ubay, San Miguel and Trinidad and included the irrigation works, water reservoir and farm to market roads. The project was scheduled to service partially 500 hectares this month of June.
The financial package signed on December 28 1999 (when Gov. Rico Aumentado was still 2nd district representative) is funded by the Japan Bank for International Cooperation with a loan tenor of 20 years and interest rate of 1.80 percent per annum.
The upward cost adjustment will "translate into a net deterioration of the Consolidated Public Sector Deficit amounting to P1.2 billion for 2005 to 2009," a source at the Department of Finance said.
LEGAL CONFLICTS
Neri who described the over-runs as "excessive and illegal" found legal basis to question the project through Section 5.4 of Republic Act 8182 or the ODA of 1996 which states that "donor-funded projects with cost over-runs regardless of cause must seek ICC reappraisal and clearance, which the irrigation body belatedly did."
Governor Aumentado denied the NEDA's findings stating that "such over-runs were reported to NEDA in December 2004" but there was allegedly delays in the reaction of the economic body.
The NEDA Head said the three options left are (1) continue the project (2) halt the project whichwill make it a huge "white elephant" or (3) continue the project but impose penalties on the erring parties, especially the contractors.
The NEDA Legal staff also opined that NIA's contract prices were against public policy differing as they do from those approved by the ICC and the contracts that were bid. PIATCO's case was cited as jurisprudence.
GOVERNOR AUMENTADO REPLIES
In his May 2 letter to Secretaray Neri, the Bohol Governor countered that the PIATCO case was governed by domestic law while BHIP2 is by international law on contracts and obligations as supposedly stipulated by the ODA Law and International Competitive Bidding. The Piatco Doctrine cannot apply."
He argued that the cost over-run was due to several factors:" foreign exchange, escalation of prices and impositions under NIA's charter." He said at the contract signing the exchange rate was at P40 to a dollar and P54 to a dollar when audited. The peso exchange rate recently rose to P45 to a dollar.
The former 2nd district congressman took time to explain that although Hanjin's bid was slightly higher, it still fell within the agency budget criteria and that the original estimates shot up by 27% almost immediately upon implementation.
It was gathered in Manila that the NEDA Legal Department had solicited the opinion of the Department of Justice regarding the matter.
Gov. Aumentado countered there is an existing legal precedent regarding similar case (Supreme Court ruling on the case of former Congressman Plaridel Abaya Et al. versus China State Et al) where the highest judicial body ruled that ODA projects are governed by international law and guidelines of the lending institution.
PUBLIC AWARENESS HIGH
Public awareness of the project is high since the Irrigation Project is one of the flagship projects of the Bohol administration to include the Bohol Circumferential Road, The Leyte Geothermal Interconnection and the much-publicized Panglao International Airport.
It is also recognized by the public as a controversial project initially because of the complaints (initiated by whistle-blower Nilo Sarigumba) filed against officers involved in the project discrepancies which reached the COA and the Visayas Ombudsman who earlier issued the existence of "prima facie" evidence.
But according to civic leader Bobby Cericos he was informed by sources in Ombudsman Manila that they have not been "updated or upgraded:" on the developments regarding the Irrigation case by the Ombudsman Visayas.
During the course of the investigation, Governor Aumentado distanced himself from the case to preserve "separation of the executive and judiciary". PGMA issue the same statement to the Chronicle when queried regarding this matter in one of her provincial trips to Bohol.
The public is eager to see the final resolution of the various controversies surrounding the rather laudable pro-farmer project.
At press time, Gov. Aumentado told the Chronicle he was checking the level of water in the dam if it can be partially used to irrigate some hectares and whether Hanjin, Industries (contractor) already saddled with P600-Million in receivables is continuing the project for the moment.
(The Bohol Chronicle, 6/10/2007)
Note: I had exposed more than 20 fictitious (ghost) dam projects, excluding the historical P200-million imaginary dam project in Talibon, in Bohol. And the officials who are behind of this unprecedented rape of public funds are now so rich, enjoying a happy life. Linkback:
https://tubagbohol.mikeligalig.com/index.php?topic=940.0
