ADB calls for new talks on $280-M Mindanao projects

The Arroyo administration will have to renegotiate some $280 million worth of pipeline projects for Mindanao that are funded by the Asian Development Bank (ADB).

The projects had been negotiated by the Estrada government but they have to be discussed anew with the new administration, ADB officials said.

"We have set up pipeline projects focused on Mindanao but these will naturally be discussed with the new government. But I understand the new government puts a lot of emphasis on the Mindanao situation, so possibly that will not create changes," Dr. Gunter Hecker, ADB country director for the Philippines, said.

There are a number of projects in the pipeline for Mindanao. These are: the Mindanao Basic Education project ($50 million), Mindanao Basic Urban Services Sector project (($45 million) and Mindanao Communities Resource Management project ($40 million).

There is also the $650-million Leyte-Mindanao Interconnection project which will link Mindano with the national grid. The project will be funded through a $100-million official development assistance (ODA) loan from ADB, another $100 million direct loan from the Japan Bank for International Cooperation (JBIC) and either a bond float or a $350-million syndicated loan to be guaranteed by the ADB.

The approval and release of funds for Mindanao projects, however, is dependent on certain conditionalities designed to ensure the desired long-term effect on the economy. Among these conditions are the passage of the power reform bill and the proper implementation of the Clean Air Act of 1999.

"Our overall tendency is such because of the absorptive capacity performance of the country. Thus, we have reduced our national allocation to the Philippines to $300-$400 million, or $100 million less than the previous year’s allocation," the ADB official said.

Between now and 2003, ADB funding for Philippine projects is estimated to average $300 to $350 million annually.

In recent years, ADB has shifted its focus from so-called program loans to project loans. "Program loans seem to be easy money for the government just filling up the budget deficit," Hecker said.