WB extends $72-M aid for energy, agri projects

The World Bank (WB) has extended some $72 million (roughly P4-billion) in financial assistance to the Philippines for projects in the energy and agricultural sectors.

The bulk of the total financial package is a $60-million loan for the country’s diversified farm income and market development project. The project aims to assist the government in strengthening the ability of the Department of Agriculture (DA) to provide market-oriented services to increase agricultural competitiveness and rural incomes.

The remaining $12 million is a funding grant for two global environment facility (GEF) that will support the electric cooperative system loss reduction project, which will bring affordable and reliable electricity services to rural communities.

The agriculture-based project will benefit the poor rural communities, especially people making their living off fishing and small-scale farming across the country by helping improve the market for their produce, increase their income, and create job opportunities in rural areas.

WB project task team leader Carolina Figueroa-Geron said that the project would also support the much-needed institutional changes in the DA necessary for it to become more service- and market-oriented, in order to support better conditions for diversifying

agribusiness, and encourage investments by the private sector to enhance productivity.

Initially, the four focus areas for the project are Region 10 (Northern Mindanao), Region 7 (Central Visayas), Region 6 (Western Visayas), and the Cordillera Administrative Region.

The project is expected to commence on Oct. 1, 2004 and completed by June 2009. The loan will be in US dollars and has a maturity of 20 years, including an eight-year grace period. The indicative interest rate for such loans is 1.485 percent per annum.

The electricity project, on the other hand, will reduce carbon dioxide emissions and other pollutants through commercial lending and private investment in electric cooperatives to implement economic power distribution system upgrades.

The project should be completed by June 30, 2011 but the services are expected to continue even after the completion date.

It consists of two components: the partial credit guarantee program and the capacity building and implementation support program.

The credit guarantee program will be implemented through the establishment of a guarantee reserve account for commercial loans to investors, including investment management contractors in selected electric cooperatives, for the financing of economic power

distribution system upgrades; and guarantee commercial loans to selected electric cooperatives for the financing of economic power distribution system upgrades.

Capacity building includes technical assistance and training in the preparation of sub-projects, technical operation, and management aspects; stakeholder consultation workshops for project implementation, monitoring and evaluation; and assessment of energy efficiency enhancements of electric cooperatives from improved access to commercial lending.

The government agencies involved in the electrification project are the Department of Finance, Department of Energy, Energy Regulatory Commission, and the LGU Guarantee Corp.