Technical Assistance Consultant’s Report · 2016-01-27 · Technical Assistance Consultant’s Report This consultant’s report does not necessarily reflect the views of ADB or

Technical Assistance Consultant’s Report

This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design.

Project Number: 44132 December 2015

Republic of the Philippines: Rural Community-Based Renewable Energy Development in Mindanao (Financed by the Asian Clean Energy Fund under the Clean Energy

Financing Partnership Facility)

Prepared by Holger Ludwig

Lahmeyer International GmbH

Bad Vilbel, Germany

For National Electrification Administration (NEA)

Asian Development Bank

FINAL REPORT

TA-7781 (PHI): Rural Community-Based

Renewable Energy Development in Mindanao

– 07 Consulting Firm (44132-012)

Micro hydropower plant Dalupan, Davao Del Sur, at inauguration day, 29 July 2015

Final Report Page ii

Country: Philippines

Client: Asian Development Bank (ADB) 6 ADB Avenue, Mandaluyong City

1550 Metro Manila, Philippines

Contact: Mr. Choon-Sik Jung

Energy Specialist, Energy Division

Southeast Asia Department (SEEN)

Consultant: Lahmeyer International GmbH

Friedberger Str. 173

61118 Bad Vilbel

Germany

Authors: Holger Ludwig

Renewable Energy Specialist / Team Leader

[email protected]

Contact: Dr. Alexis Bonneschky

Head, Economics and Energy Efficiency

Department, Lahmeyer International GmbH

[email protected]

+49 6101 55 1124

Date: 25 September 2015

Final Report Page iii

Table of Contents

EXECUTIVE SUMMARY .......................................................................................................................... 1

1 PROJECT OBJECTIVES AND OVERVIEW OF TASKS ........................................................ 7

1.1 Introduction ........................................................................................................................ 7

1.2 Background ......................................................................................................................... 8

1.3 Objective ............................................................................................................................. 8

1.4 Implementation................................................................................................................... 8

2 CONSTRUCTION AND INSTALLATION OF DEMONSTRATION RENEWABLE ENERGY

(MHPP) SYSTEMS ......................................................................................................... 9

2.1 Procurement ....................................................................................................................... 9

2.1.1 Procurement for the Installation Works of MHPPs ..................................................... 9

2.1.2 Dalupan MHPP Procurement ...................................................................................... 9

2.1.3 Getsemane and Sto. Nino MHPPs Procurement ....................................................... 10

2.2 Construction / Installation ................................................................................................ 11

2.2.1 Construction and Installation of Dalupan MHPP ....................................................... 11

2.2.2 Construction and Installation of Getsemane MHPP.................................................. 12

2.3 Technical Capacity Building of CBO's Members for O & M Services ................................. 12

2.4 Identification of Local Sources for the Supply of Spare Parts ........................................... 13

3 PROVISION OF LEGAL FRAMEWORK AND PERMITS FOR OPERATION OF MHPPS .... 14

3.1 Renewable Energy Service Contract Application .............................................................. 14

3.1.1 Application Process ................................................................................................... 14

3.1.2 Dalupan MHPP Project, Municipality of Don Marcelino ........................................... 16

3.1.3 Getsemane MHPP Project, City of Bayugan .............................................................. 17

3.1.4 Sto. Niño MHPP Project, City of Bayugan .................................................................. 19

3.1.5 Conversion of the Pre-Development RESC Application to Commercial RESC ........... 19

3.2 Water Permit Application (WPA) for Electric Power Generation ..................................... 20

3.2.1 Documentary Requirements ..................................................................................... 20

Final Report Page iv


3.2.3 Current Tasks and Activities ...................................................................................... 24

3.3 Net-Metering Contract ...................................................................................................... 25


3.3.2 Recent Tasks and Activities ....................................................................................... 32

3.4 Certificate of Non-Coverage .............................................................................................. 33

3.4.1 CNC Application Process and Screening .................................................................... 34

4 FINANCIAL AND ECONOMIC ANALYSES OF THE RENEWABLE ENERGY FACILITIES ... 35

4.1 MHPP Dalupan – Business Model ..................................................................................... 35

4.1.1 Financial Evaluation ................................................................................................... 35

4.1.2 Financial Evaluation Results ...................................................................................... 38

4.1.3 Sensitivity Evaluation Results .................................................................................... 39

4.1.4 Conclusion ................................................................................................................. 41

4.2 MHPP Getsemane – Business Model ................................................................................ 41

4.2.1 Financial Evaluation ................................................................................................... 41

4.2.2 Financial Evaluation Results ...................................................................................... 44

4.2.3 Sensitivity Evaluation Results .................................................................................... 46

4.2.4 Conclusion ................................................................................................................. 47

4.3 Multipurpose (Corn) Mill – Business Model for RE appliances ......................................... 47

5 ESTABLISHMENT OF COMMUNITY BASED ORGANIZATIONS (CBO) .......................... 48

5.1 Establishment of Community Based Organizations (CBO) ................................................ 48

5.2 Capacity Building for CBO ................................................................................................. 51

5.2.1 Training and advisory service for CBO management ................................................ 51

5.2.2 Financial Capacity Building of CBO members ............................................................ 52

5.2.3 Financial Capacity Building of CBO Members for Fund Management and Livelihood /

Enterprise Development .................................................................................... 52

Final Report Page v

5.2.4 Introduction of microfinance institutions or credit facilities to support the capital

requirements of the new technology ................................................................ 53

6 ESTABLISHMENT AND INITIAL OPERATION AND MANAGEMENT OF THE REVOLVING

FUNDS FOR LIVELIHOOD ENHANCEMENT ................................................................. 56

6.1 Background ....................................................................................................................... 56

6.2 Pilot Testing ....................................................................................................................... 56

6.2.1 Approach ................................................................................................................... 56

6.2.2 Implementation of Pilot-Testing of the Revolving Funds .......................................... 56

6.2.3 Profiling of Potential Beneficiaries and Livelihoods for Pilot-Testing ....................... 61

6.2.4 Community Discussions of Approved Policies for Revolving Fund Management ..... 62

6.2.5 Pilot Testing Results .................................................................................................. 63

6.3 Revolving Fund Forecast ................................................................................................... 65

6.4 Training and Advisory Service for Revolving Fund Management ..................................... 71

6.5 Operation of Revolving Fund after Project Implementation ............................................ 72

7 EMPHA“I“ ON WOMEN’“ ROLE AND PARTICIPATION IN THE PROJECT .................... 73

8 KNOWLEDGE DISSEMINATION AND PREPARATORY WORK FOR SIMILAR RE PROJECTS

REPLICATION AND SCALING UP ................................................................................. 75

8.1 Replicable RE Projects ....................................................................................................... 75

8.1.1 List of Replicable Projects .......................................................................................... 75

8.1.2 Pilot Implementation of Shortlisted Projects ............................................................ 75

8.1.3 Findings in Project Implementation .......................................................................... 76

8.1.4 Replication in Other Sites .......................................................................................... 77

8.1.5 Challenges in Future Replication ............................................................................... 79

8.1.6 Replication by a Private Proponent ........................................................................... 80

8.1.7 List of Replicable Projects .......................................................................................... 83

8.2 Lessons Learnt ................................................................................................................... 83

8.3 Knowledge Dissemination Plan ......................................................................................... 84

9 PROCUREMENT, CONTRACTS AWARD AND DISBURSEMENT ................................... 85

Final Report Page vi

9.1 Procurement ..................................................................................................................... 85

9.1.1 Procurement of Technical Survey Services ............................................................... 85

9.1.2 Procurement of Two MHPPs ..................................................................................... 85

9.1.3 Procurement of NGO / MFI ....................................................................................... 85

10 PROJECT MANAGEMENT ........................................................................................... 88

10.1 Coordination with Stakeholders ....................................................................................... 88

10.1.1 National Electrification Administration (NEA) ........................................................... 88

10.1.2 Local Government Units (LGU) .................................................................................. 88

10.1.3 Electric Cooperatives ................................................................................................. 94

10.1.4 Department of Energy (DOE) ..................................................................................... 94

10.1.5 National Commission on Indigenous People (NCIP) .................................................. 94

Lahmeyer International

TA-7781: Rural Community-Based Renewable Energy

Development in Mindanao

Final Report vii

List of Annexes

Annex 1 Dalupan MHPP – Business Model

Annex 1-A Dalupan MHPP - Comparison of Projected Investment Cost and Actual Investment Cost

Annex 1-B Dalupan MHPP – Financial Evaluation

Annex 1-C Dalupan MHPP – Cash Flow Projections for Reserves Scenario

Annex 2

Getsemane MHPP – Business Model

Annex 2-A Getsemane MHPP - Comparison of Projected Investment Cost and Actual Investment

Cost

Annex 2-B Getsemane MHPP – Financial Evaluation

Annex 2-C Getsemane MHPP – Cash Flow Projections for Reserves Scenario

Annex 3

Business Plans for the operation of the Multipurpose (Corn) Mill

Annex 3-A Multipurpose (Corn) Mill – Business Plan – GAWA

Annex 3-B Multipurpose (Corn) Mill – Business Plan - DARECDA

Annex 3-C Multipurpose (Corn) Mill – Business Plan - KASAFA

Annex 4

Pilot Testing Schemes on Revolving Fund

Annex 4-A Pilot Testing Scheme on Revolving Fund for GAWA and KASAFA

Annex 4-B Pilot Testing Scheme on Revolving Fund for DARECDA

Annex 5

List of challenges in replication of projects

Annex 6

List of replicable projects




Final Report viii

List of Tables

Table 1: Summary table of project achievements ................................................................................ 2

Table 2: Associated Fees for RESC application .................................................................................... 16

Table 3: Associated Costs for Water Permit ....................................................................................... 23

Table 4: Requirements for RESC application ....................................................................................... 24

Table 5: Total Project Cost and Financing Plan (Barangay Dalupan) .................................................. 36

Table 6: Total Project Operating Expenses (Barangay Dalupan) ......................................................... 36

Table 7: Initial Year of Operations, 2016 prices (Barangay Dalupan) ................................................. 38

Table 8: Resulting Financial Indicators (Barangay Dalupan) ............................................................... 39

Table 9: Summary of Findings (Barangay Dalupan) ............................................................................ 40

Table 10: Total Project Cost and Financing Plan (Barangay Getsemane) ........................................... 42

Table 11: Total Project Operating Expenses (Barangay Getsemane) ................................................. 43

Table 12: Initial Year of Operations, 2016 Prices (Barangay Getsemane) .......................................... 45

Table 13: Resulting Financial Indicators (Barangay Getsemane) ........................................................ 45

Table 14: Summary of Findings (Barangay Getsemane) ..................................................................... 46

Table 15: Established Community-Based Organizations (CBOs) for the Project, 2014 ...................... 48

Table 16: MHPP Operators per Project Site ........................................................................................ 50

Table 17: Training-Workshops provided to the CBOs in the Three Project Sites, 2014 ..................... 51

Table 18: Steps and Procedures in Loan Processing for RF Pilot-Testing Implementation ................ 57

Table 19: DARECDA RF pilot testing loan package for farming and electricity-based micro-enterprise

household beneficiaries, Barangay Dalupan, Don Marcelino ................................... 57

Table 20: GAWA RF Pilot Testing Loan Package for Farming and Electricity-Based Micro-Enterprise

Household Beneficiaries, Barangay Getsemane, Bayugan City ................................. 59

Table 21: KASAFA RF Pilot Testing Loan Package for Farming and Electricity-Based Micro-Enterprise

Household Beneficiaries, Barangay Sto. Nino, Bayugan City .................................... 60




Final Report ix

Table 22: Roles, Functions, and Responsibilities in the RF Pilot Testing Implementation .................. 61

Table 23: Criteria for Selection of Household Beneficiaries of RF Pilot Testing Implementation ...... 62

Table 26: DARECDA, Project Income Statement ................................................................................. 67

Table 27: DARECDA, Projected Cash Flow .......................................................................................... 67

Table 28: DARECDA, Projected Balance Sheet .................................................................................... 68

Table 30: GAWA, Projected Cash Flow................................................................................................ 69

Table 31: GAWA, Projected Balance Sheet ......................................................................................... 69

Table 32: KASAFA, Projected Income Statement ................................................................................ 70

Table 33: KASAFA, Projected Cash Flow .............................................................................................. 70

Table 34: KASAFA, Projected Balance Sheet ....................................................................................... 71

Ta le : Ge de i di ato s o o e a d e ’s pa ti ipatio i the p oje t CBO ................... 74

Table 36: Actual Costs and Resulting Cash Flow Profile of Pilot Projects ........................................... 77

Table 37: Original Investment Costs and Updated Cash Flow Profile of Pilot Projects ...................... 78

Table 38: Experience in Pilot Projects ................................................................................................. 79

Table 39: Financing Plan ...................................................................................................................... 81

Table 40: Operating Expenses ............................................................................................................. 81

Table 41: Other Assumptions .............................................................................................................. 82

Table 42: Discount Rate of 7% ............................................................................................................ 83

Table 43: Coordination with the Local Government Units, January 2014 to August 2015................. 89

Table 44: Timeline and Milestones of FPIC Activities / Processes by NCIP XI and XIII (Caraga), 2014-

2015 ..................................................................................................................... 10-96




Final Report x

List of Figures

Figure 1: Pre-Development RE Service Contract Application Process ................................................ 15

Figure 2: Net-Metering application scheme ....................................................................................... 31

Figure 3: CNC Application Process ...................................................................................................... 34

Figure 4: Organizational Structure of CBOs at Project Sites, 2014 ..................................................... 49




Final Report xi

List of Abbreviations

ADB Asian Development Bank

ALTERDEV Alterdev Services Foundation Inc.

ASELCO Agusan del Sur Electric Cooperative

BIR Bureau of Internal Revenue

BLGU barangay local government unit

BOD board of directors

CPDO City Planning and Development Office/Officer

CAPEX capital expenditure

CBO community based organization

CENRO Community Environmental and Natural Resources Office

CFEI certificate of final electrical inspection

CLGU city local government unit

CNC certificate of non-coverage

COC certificate of compliance

CPI consumer price index

CQS Consultant’s qualification selection

CT consultant team

DA Department of Agriculture

DAO department administrative order

DARECDA Dalupan Renewable Energy Community Development Association

DAS distribution asset study

DASURECO Davao del Sur Electric Cooperative

DENR Department of Environment and Natural Resources

DIS distribution impact study

DOE Department of Energy

DOE ITMS DOE Information Technology and Management Services

DOE REMB Department of Energy Renewable Energy Management Bureau

DoLE Department of Labor and Employment

DOST Department of Science and Technology

DPRDI Davao Provinces Rural Development Institute, Inc.

DPWH Department of Public Works and Highways

DSOAR distribution services and open access rules

DTI Department of Trade and Industry

DTL deputy team leader

DU distribution utility

EC electric cooperative

ECA environmentally critical areas

ECC environmental compliance certificate

ECP environmentally critical projects




Final Report xii

EDO Regional Executive Director's Office

EIS environmental impact statement

EOI expression of interest

ERC Energy Regulatory Commission

FBI field-based investigation

FIT feed-in tariff

FPIC free and prior informed consent

GA general assembly

GAWA Getsemane Agricultural Workers Association

IFMA Integrated Forest Management Agreement

IP indigenous peoples

IPRA indigenous people rights act

IRR internal rate of return

ITH income tax holiday

ITMS Information Technology Management Service

LAPS Land Analytics and Planning Solutions

LGU local government unit

MFI NGO micro-financing institution / non-government organization

MHPP micro hydropower plant

MLGU municipal local government unit

MOA memorandum of agreement

MOU memorandum of understanding

MPDO Municipal Planning and Development Office/ Officer

MRDP Mindanao Rural Development Program

NCIP National Commission on Indigenous Peoples

NEA National Electrification Administration

NIA National Irrigation Administration

NIPAS National Integrated Protected Areas System

NTP notice to proceed

NWRB National Water Resources Board

O&M operation and maintenance

OCT original certificate of title

OJT on the job training

OPEX operation expenses

PAMB Protected Area Management Board

PCA Philippine Coconut Authority

PEE professional electrical engineer

PHI Philippines

QE qualified end-users

RA republic act

RE renewable energy




Final Report xiii

RESC Renewable Energy Service Contract

RF revolving fund

RFQ request for quotations

RNF RNF Industries Inc.

SEC Securities and Exchange Commission

SSS Social Security System

TA technical assistance

TCT transfer certificate of title

TOR terms of reference

TWG technical working group

UDP upland development program

VAT value added tax

WD water district

WFP work and financial plan

WPA water permit application




Final Report 1

EXECUTIVE SUMMARY

The Asian Development Bank (ADB) has assigned the Joint Venture of Lahmeyer International GmbH

(as lead), Lahmeyer Hydroprojekt GmbH and Lahmeyer IDP Consult Inc. as Consultant for the Rural

Community-Based Renewable Energy Development in Mindanao Project, a technical assistance to

develop viable business models for sustainable livelihood development utilizing renewable energy in

the Caraga and Davao regions of Mindanao, Philippines and to support the National Electrification

Administration (NEA) in its efforts in providing electricity in the rural areas of the country.

The TA provided consultancy services in three Barangays ((i) Barangay Dalupan, Don Marcelino,

Davao del Sur, (ii) Barangay Getsemane in Bayugan City, Agusan Del Sur, and (iii) Barangay St. Nino

in Bayugan City, Agusan Del Sur) with the establishment and capacity building of community-based

organizations (CBOs) in all three project areas, the development of livelihood enterprises/activities,

the establishment and initial management of financial tools (revolving fund) and the procurement

and installation of two micro hydropower plants in Barangay Dalupan (25kW) and in Barangay

Getsemane (30kW). A third MHPP to supply Barangay St. Nino (15 kW) in Bayugan City, Agusan Del

Sur could not be realized due to the extremely high bids and loss of the hydraulic potential of the

site caused by a landslide in the area.

The MHPPs are to be operated under the Net-Metering Agreement which is herewith implemented

for the first time for micro hydropower plants in the Philippines. This allows the communities to use

their own low cost generated power for their business activities and to sell excess power from the

MHPPs to the Electric Cooperatives (ECs). For this reason the TA were closely working with the

concerned government agencies, the DOE and the ECs to process all necessary permits to allow the

communities to operate the MHPPs. The generated revenue will be used to cover the operation and

maintenance costs to ensure a sustainable setup of the installed equipment and for the support of

livelihood measures within the community.

The CBOs and their members were trained in the operation and management of the power plants

and revolving funds. Together with the CBOs the TA developed a number of sustainable business

activities and provided capacity building to improve the livelihood conditions and to expand the

livelihood options to benefit women, men and their households in the target communities. Special

focus was given on the involvement of woman. Two NGOs that specializes in revolving funds

operation, community organization, and livelihood development were engaged to establish and

initially manage the RF and to implement capacity building programs for the CBOs.

The Revolving Funds were introduced to the communities by implementing a Pilot Testing Scheme.

Under the monitoring and supervision of the NGOs, selected families learned to use the financial

possibilities of using small credit tools. The CBOs had the chance to implement for the first time a

one cycle of the revolving fund.




Final Report 2

Furthermore, the TA developed a Knowledge Dissemination Kit to widely spread the experiences and

lessons learnt under this project and to support future activities in the development of micro

hydropower schemes under the Net-Metering agreement towards the sustainable improvement of

living conditions in rural areas in the Philippines.

The following table gives an overview of the project’s detailed tasks and outputs and the status of

accomplishment for the desired results:

Table 1: Summary table of project achievements

OUTPUT 1 – Renewable energy resource and demand assessment Contents /

Pages / Annex

(i) assess energy resources

(on grid and off grid);

(ii) review available appro-

priate renewable energy

technologies and business

models;

(iii) review infrastructure

and private sector capacity,

e.g., manufacturing capaci-

ties/capabilities and

transport infrastructure;

(iv) develop service deliv-

ery mechanism;

(v) develop a socioeco-

nomic profile of beneficiar-

ies, identify indigenous

people, conduct gender

analysis, and prepare a

gender action plan;

(vi) assess end user needs

for various energy forms

for different uses, the tech-

nology and supply mecha-

nisms for the different end

Output 1 was done by a different Consultant in

2012.

The aim of this TA was to identify 10-20 sites in

Davao (Region XI) and Caraga (Region XIII) re-

gions in Mindanao where distributed local RE-

based rural electrification is viable.

The report can

be downloaded

from the ADB

website.




Final Report 3

user groups, and the asso-

ciated poverty and gender

implications; and

(vii) develop a model for fi-

nancing and innovative

payment schemes

OUTPUT 2 – Pilot Renewable energy projects Contents /

Pages / Annex

Sub-output 2.1:

Construct and install three

demonstration renewable

energy (MHPP) systems

Installation of two MHPPs (Getsemane and Da-

lupan), both are in operation

The procurement and installation of the pro-

posed Sto. Nino MHPP was put on hold due to

budget restrictions and destruction of the hy-

draulic potential by landslide.

Chapter 2.2

Pages:

11 – 12

Sub-output 2.2:

O ga ize people’s organi-

zations to operate and

manage these power plant

systems

Establishment of CBOs in all three project sites

Strengthening the CBO through several capacity

building activities

Chapter 5.1

Pages:

47 – 50

Sub-output 2.3:

Train technicians and oper-

ators, at least 20% of whom

should be women

Development of trainings concept

On the job training during installation and con-

struction works for candidates

Implementation of technical trainings for opera-

tor and management

4 of 15 (26 %) operators are women

Chapter 2.3

Page:

12 – 13




Final Report 4

Sub-output 2.4:

Conduct financial and eco-

nomic analyses of the re-

newable energy facilities

Financial and economic assessment of each of

the MHPPs

Assessment of the business environment

Development of business plans for Multipurpose

(Corn) Mill Operation

Chapter 4

Pages:

34 – 46

Sub-output 2.5:

Provide and facilitate the

legal framework and per-

mits to ensure the CBOs to

operate the MHP and sell

the electricity generated

from MHP to ECs with all

the local and national agen-

ies’ li e si g e ui e-ments

Facilitation of all necessary legal requirements

for the operation of the MHPPs including RESC

and Net-Metering Agreement.

Chapter 3

Pages:

14 – 33

Sub-output 2.6:

Identify local sources for

the supply of spare parts

Local sources for the supply of spare parts are

identified.

Chapter 2.4

Page: 13

OUTPUT 3 – Productive Use of Renewable Energy

Sub-output 3.1:

Build capacity of CBOs on

small enterprise develop-

ment;

Development of training program in cooperation

with NGO / MFI

Implementation of trainings program

Chapter 5.2

Pages:

50 – 54




Final Report 5

Sub-output 3.2:

Transfer technology on

productive uses of energy,

with inputs

Introduction of Multi-Purpose (Corn) Mill

Chapter 4.3

Page:

46

Sub-output 3.3:

Enhance productivity and

livelihoods through tech-

nology assistance, busi-

ness advice, value chain,

and market linkages

Introduction of Multi-Purpose (Corn) Mill

Chapter 4.3

Page:

46

Sub-output 3.4:

Provide links to micro-

finance institutions or

credit facilities to support

the capital requirements

of the new technology

and/or for value addition;

and

Three micro-finance institutions were identified

which provide financial services to communities in

the project regions.

Chapter 5.2.4

Page:

52 – 54

Sub-output 3.5:

Ensure that at least of half

of beneficiaries will be

women or households

headed by women.

Almost 50% of the CBO members and participants

of the capacity building measures are women.

The consideration of gender aspects was a contin-

uously process of the project work.

Chapter 7

Page:

72 – 73




Final Report 6

OUTPUT 4 – Establishment of CBOs and revolving fund for livelihood enhancement.

Sub-output 4.1:

Set up and train local com-

munity based organiza-

tions

Implementation of training programs for finan-

cial and administrative capacity building by

NGOs

Chapter 6.4

Page:

70

Sub-output 4.2:

Set up and operate revolv-

ing funds

Installation of a sustainable financing scheme

Start of revolving fund operation with pilot im-

plementation by selected households

Chapter 6

Pages:

55 – 71

OUTPUT 5 – Knowledge dissemination and ppreparatory work for similar RE projects replication

and scaling up.

Sub-output 5.1:

Develop knowledge kit

(business models) and

knowledge dissemination

plan through work-

shops, training, and web-

site

The knowledge kit is to be produced in a hard copy

and a digital soft copy version.

Chapter 8.3

Pages:

83

Sub-output 5.2:

Prepare a list of similar

project sites with invest-

ment plan for replication

and scaling up RE develop-

ment in other locations

Completed

Chapter 8.1

Pages:

74 – 82




Final Report 7

1 PROJECT OBJECTIVES AND OVERVIEW OF TASKS

1.1 Introduction

The Asian Development Bank (ADB) is currently at the last stage of implementing the Technical

Assistance (TA) 7781: Community-Based Renewable Energy Development in Mindanao Project (with

the National Electrification Administration (NEA) as Executing Agency. The purpose of this TA Project

is to support the Philippine Government to increase access to energy in rural areas in Mindanao. The

expected outcome of the Project is viable business models for livelihood development using

renewable energy in the Caraga and Davao regions of Mindanao.

The TA is to install renewable energy pilot system (micro hydropower) and establish a community-

based organization (CBO) such as a cooperative in each of the three proposed project barangays to

help implement the project and ensure the long-term sustainability of the micro hydropower system

and its benefit. The TA has also created a revolving fund for livelihood enhancement that will be

initially operated by a microfinance organization but turned over eventually to local CBOs in each of

the three barangay communities identified in the pilot project area. The fund is to provide financial

assistance to help the project beneficiaries using the energy productively to generate income, which

will pay for the energy service and the maintenance of the pilot facilities.

Aside from NEA, the other national and regional government agencies involved in the project are the

Department of Energy (DOE), the National Commission on Indigenous Peoples (NCIP), the Energy

Regulation Commission (ERC), the Department of Environment and Natural Resources (DENR), and

the Mindanao Development Authority (MinDA).

The Consultant engaged by the ADB is the Joint Venture of Lahmeyer International GmbH, Lahmeyer

Hydroprojekt GmbH, and Lahmeyer IDP Consult Inc., in association with SIBAT Inc. (Wellspring of

Science and Technology), which is one of the pioneers in community-based Renewable Energy

particularly in the development of microhydro power plants (MHPPs). The TA project is to be

implemented over a 20-month period, from January 27, 2014 to September 30, 2015.

A participatory approach was adopted, involving close consultation with key stakeholders and target

communities, since it is important that facilities developed during the implementation of the Project

are within the management capabilities of the implementing agencies and community organizations

responsible for sustainable operation and maintenance. The Project was prepared in accordance

with relevant national legal requirements and standards, and ADB requirements, policies, and

guidelines.




Final Report 8

1.2 Background

The harnessing and utilization of renewable energy comprises a critical component of the

go e e t’s st ateg to p o ide e e g suppl fo the ou t . With the e a t e t of the Renewable Energy Act (RA 9513) in 2008, the DOE has been formulating program and projects to

promote RE technologies as competitive energy options and maximize the use of RE potentials.

In Year 2010, a TA Project from the ADB namely TA-7781 (PHI): Rural Community-Based Renewable

Energy Development in Mindanao was developed in collaboration with the DOE and NEA.

Preliminary activities for this TA are the site validation and a stakeholder workshop and detailed

technical evaluation of the MHPP and socio-economic livelihood assessment in the proposed project

sites in Bayugan City in Agusan del Sur and Don Marcelino in Davao del Sur.

1.3 Objective

The general objective is to develop viable business models for livelihood development using

renewable energy in Mindanao.

1.4 Implementation

Based on the objective, the Consultant identified project activities and sub-activities, which were

implemented in various packages and those, are as follows:

1. Pilot Renewable Energy Projects. This package entailed the acquisition and installation of

two micro-hydro systems and eventually their operation and maintenance (O&M); the

identification and establishment of the legal entities that will operate and manage the RE

systems; and carrying-out analyses of the renewable energy facilities.

2. Productive Use of Renewable Energy. This package pertains to the institutional component

of the project including the engagement of MFIs or NGOs and ensuring an active role from

the o e populatio of the o u ities.

3. Establishment of CBOs and Revolving Fund for Livelihood Enhancement. This package covers

the capacity building in the CBOs.

4. Knowledge Dissemination and Preparatory Work for RE Projects Replication and Scaling-Up.

This package addresses the general objective of the TA by documenting the entire process

and coming up with a tool that will be adopted and replicated.




Final Report 9

2 CONSTRUCTION AND INSTALLATION OF DEMONSTRATION

RENEWABLE ENERGY (MHPP) SYSTEMS

2.1 Procurement

2.1.1 Procurement for the Installation Works of MHPPs

Three sites were recommended for installation of MHPPs, namely, Barangay (Brgy.) Dalupan in Don

Marcelino, Davao del Sur and Barangay Getsemane and Barangay Sto. Nino in Bayugan City, Agusan

del Sur. However, due to budget constraint, the sites were reduced to two, namely Brgy. Dalupan

and Brgy. Getsemane. The installed subprojects are referred to as Dalupan MHPP and Getsemane

MHPP.

Procurement commenced about the middle of 2014, May 28, 2014 to be exact. Requests for

Quotations were sent to potential contractors with deadline of submission set on June 27, 2014. It

was also required that contractors inspect the sites and attend a pre bid conference held to inform

them of the project bid requirements and to gather clarificatory questions on the projects. The pre-

bid conference was held in Bayugan City attended by representatives of interested contractors.

Participation of LGU officials in the sites was noted. Various concerns were raised by the contractors.

Some issues were clarified during the meeting while others had to be resolved at a later time.

Bid submission period had to be extended upon the requests of interested contractors who had yet

to inspect the site. Inspecting the sites was stalled due to the occurrence of armed encounters near

the two barangay sites in Bayugan City between the Philippine Army and Communist armed rebels.

Contractors were accordingly notified of the extensions thus, giving them sufficient time to prepare

respective quotations.

2.1.2 Dalupan MHPP Procurement

Three bidders namely, Triple V Industrial Services (Triple V), RNF Industries Inc. (RNF), and Petco

Renergy Corp. (Petco), submitted their respective quotations. However, quotations were incomplete

or non-compliant. Of the three bidders, Triple V Industrial Services Inc. was the least incomplete as

it still needed to send detailed technical information and staff requirements. Although bid amounts

were submitted, the other bids were substantially non-compliant for failure to provide vital bid

documents. All the quotations exceeded the budget for the Brgy. Dalupan MHPP subproject.

Evaluation of the technical aspects of the Triple V and RNF bid proposals and documents was

commenced in July 2014. Bid evaluation results showed that Triple V was the only contractor that

complied with the requirements by submitting price quotation and filled up forms and documents.




Final Report 10

During the month of August 2014, negotiations with Triple V were conducted by the Consultant.

After the submission by Triple V of revised bid documents and a series of reviews and revisions, the

Dalupan MHPP Installation Project Contract was signed on September 15, 2014, with the following

salient features.

1) Contract period – Five months or 150 calendar days

2) Contract amount – PHP 9,483,003.15

3) Advance payment guarantee equivalent to 15% of contract amount.

4) Performance security equivalent to 50% of contract amount.

Notice to proceed was sent on September 26, 2014 to Triple V giving it five months to complete the

project or until February 28, 2015. Triple V commenced mobilization works immediately. Triple V

complied with the contract requirement on the submission of an advance payment guarantee,

Pe fo a e Bo d a d Co t a to ’s All Risk I su a e. Triple V sent its Billing Statements during the

progress of the works. Towards late February 2015, it was agreed that the design of the powerhouse

will be revised. Accordingly, an Amendment to the Contract was prepared and agreed upon.

In the middle of March 2015, the imported MHPP equipment arrived from Indonesia and was

brought on March 30, 2015 at the Brgy. Dalupan site. Triple requested for extension of one month

from February 28, 2015 which was granted. Additional extension was also requested and granted

considering that the equipment was already being installed. The project has been completed and

ready for turnover to the community based organization set up in the area.

2.1.3 Getsemane and Sto. Nino MHPPs Procurement

As mentioned above in 2.1.1, the submission of quotations for the two sites of Brgy. Getsemane and

Sto. Nino, was extended to July 17, 2014. After receiving and evaluating all quotations from

contractors and for purposes of expediency, it was decided that the contractor to be engaged will be

the same contractor (Triple V) for the Dalupan MHPP Installation Project. It was also concluded that

the budget allocated for the two sites of Getsemane and Sto Nino would not be sufficient to pay for

the MHPP subprojects. Accordingly, only the Getsemane MHPP subproject was pursued instead of

the two subprojects.

In November 2014, the Consultant gathered and determined from Triple V its final bill of quantities,

data and attachments to the MHPP contract. Triple V was concerned about the delay due to the

possible late delivery by foreign supplier of the imported equipment and a delay in completion of

civil works due to the very difficult physical/terrain conditions in Brgy. Getsemane as well as the

inaccessibility of the construction site due to the unavailability of roads in much of the barangay. The

Consultant considered the concerns of the contractor and accordingly incorporated in Section 3 of




Final Report 11

the MHPP Contract a provision on an extension of the completion time by thirty days from end of

the original period.

On November 24, 2014, the Getsemane MHPP Installation Project Contract was signed. The Notice

to Proceed (NTP) was also issued with the start date set on November 24, 2014 and with a completion

period of four months or up to March 24, 2015. On December 13, 2014, having complied with

documentary requirements for the advance payment and performance guarantee, the advance

payment was released to Triple V on January 22, 2015, after Triple V was not able to mobilize due to

consecutive typhoons (Hagupit and Seniang) that hit the southern Philippines and caused destruction

and landslide to the vicinity of the MHPP site. Triple V reported that as per information from Brgy.

Getsemane, landslides occurred on some areas leading to their barangay due to Tropical Storm

Seniang. The road was not passable even for motorcycle & carabaos. Three areas in the vicinity of

the site were greatly damaged. Clearing operations of the affected areas had to be conducted before

installation works can be commenced.

While the completion of the MHPP project was supposed to be on March 24, 2015 with an allowed

extension of one month, the unexpected damage and destruction caused by the two typhoons

resulted in considerable delay in the installation works necessitating further extension of

completion. The imported equipment finally arrived on July 15, 2015. The project is close to

completion.

2.2 Construction / Installation

The Consultant managed to install two MHPPs at (i) Brgy. Dalupan, Don Marcelino, Davao del Sur

(MHP 25kW) and (ii) in Barangay Getsemane (MHP 30kW) in Bayugan City, Agusan Del Sur. The

installation was supervised by the Electro-Mechanical expert and the Team Leader.

2.2.1 Construction and Installation of Dalupan MHPP

The installation of the Dalupan MHPP started in October 2014 and was scheduled to be finalized

after five months in January 2015. The Contractor was in the position to execute the construction

works of intake, waterway and power house almost according to the agreed timetable. The civil work

has been completed by the end of February 2015.However the installation of the equipment was

delayed due to the late shipment to the Philippines by the supplier. Finally the system is running on

single phase mode and is supplying some areas of Barangay Dalupan (particularly Sitio Cunalom) as

Single Standing Grid since April 2015 due to the three-phase line connection cannot be finalized

before the end of the project implementation time end of September 2015 by DASURECO. The

official inauguration of the Dalupan MHPP was on 29 August 2015 under participation of the

stakeholders including NEA, ADB, LGU Don Marcelino and the Consultant.




Final Report 12

2.2.2 Construction and Installation of Getsemane MHPP

The Consultant and its Contractor were facing different challenges during the construction of the

Getsemane MHPP. Especially the very difficult road condition and as a result the limited accessibility

to the site were having a big influence on the construction process. The transportation of material

required more time and effort and is one of the reasons why there was only limited response to that

tender. It resulted in a long procurement process and the installation works started not before end

of November 2014. Short after the start of the construction the work was interrupted in December

2015 due to high water level of the River Jordan and the very difficult transport condition as a result

of the heavy rain events the last two months. The access road to the Barangay was partially not

passable, materials could only be transported by the use of Carabao.

Finally the construction and installation of Getsemane MHPP will be finished in September 2015.

That time, ASELCO will also have extended the one-phase grid connection for the MHPP and the

system will be in operation before end of the project. The inauguration is planned end of September

2015.

2.3 Technical Capacity Building of CBO's Members for O & M Services

The identified operators and technicians, 25% of them are women actively participated in the

construction and installation of the MHPP. In the construction of every component of the MHPP

system, they were required to join the workforce as part of their on the job training (OJT). Every

week, two operators were on duty for the actual construction and they are being taught on every

aspect and component of the MHPP system.

Trainings for the operators of the Dalupan MHPP were conducted last April 20, 2015 and August 9,

2015. It was attended by 17 participants, four women and 13 men. Out of the 17 participants, eight

of them are already identified as operators by the CBO. Nine of them are new and considered as

second liner operators. The trainer discussed every component of the MHPP system and its function.

From the weir site up to every household connected to the system. They were also taught on the

operation and proper maintenance of every component. It was also discussed on what to do in case

trouble will occur during operation. They were taught on what to check for every situation that will

occur. They were also taught safety procedures.

After the lecture, actual operation of the MHPP plant by the operators conducted. They were given

the task to start up and to shut down the plant. They were also instructed to monitor the output on

the panel board and to record every hour the different parameters such as voltage, current and

frequency of the system. This will help them to locate possible causes of trouble when there is a

difference on the normal output during operation.




Final Report 13

Trainings on the operators of Getsemane MHPP were conducted last May 12, 2015. It was attended

by 17 participants, five women and 12 men. These were composed of eight operators and nine CBO

officers.

The trainer discussed every component of the MHPP system and its function. From the weir site up

to every household connected to the system. They were also taught on the operation and proper

maintenance of every component. It was also discussed on what to do in case trouble will occur

during operation. They were taught on what to check for every situation will occur. They were also

taught safety procedures. Actual operation of the MHPP plant by the operators not yet done and

was scheduled within this month when the plant will operate.

2.4 Identification of Local Sources for the Supply of Spare Parts

Spare parts of the MHPP are available locally. In Davao City, The Davao Diamond and Industrial

Services are already supplying most of the spare parts of other MHPP projects in Mindanao. The

contractor, Triple V Industrial Services also has the capacity to troubleshoot the components of the

electro-mechanical equipment and has link to supplier abroad for the special parts such as the

mother board of the electronic load controller. They can also fabricate cross-flow turbines.




Final Report 14

3 PROVISION OF LEGAL FRAMEWORK AND PERMITS FOR OPERATION

OF MHPPS

3.1 Renewable Energy Service Contract Application

3.1.1 Application Process

The application process to secure Renewable Energy Service Contracts (RESC) for the Bayugan and

Don Marcelino project areas was initiated during the first week of August 2014, through the

submission of documentary requirements to the DOE. The application process for the pre-

development stage of the RESC has been presented in Error! Reference source not found.. Complete

sets of the RESC applications for each project area were collated, prepared, and packaged by the

Project Team containing the following pertinent forms and supporting documents:

a. Letter of Intent;

b. Blocking Map (Illustrating the proposed location of the project site as indicated by GPS

coordinates using the PRS92 datum);

c. RESC Application Form;

d. Authorization/Certification from Municipal/City LGUs allowing Lahmeyer International

to negotiate and apply for a RESC in behalf of the Municipal/City LGUs as project

proponents;

e. Profile of Bayugan and Don Marcelino, including a listing of all elected LGU officials;

f. Profile of Lahmeyer International, including the following documents:

List of Technical Consultants;

List of Equipment; and

List of On-going and Completed Energy-Related Projects.

g. Work Program with Financial Commitments;

h. Certification from the Asian Development Bank (ADB) attesting to the provision of

financial support through a policy and advisory technical assistance grant;

i. Projected Cash Flow Statements during the Pre-Development Stage;

j. Feasibility Study and Preliminary Engineering Design; and

k. MOU and/or LGU Endorsement of the Proposed Renewable Energy Project.




Final Report 15

After submission of the RESC applications, the Project Team constantly facilitated the processing of

each application and coordinating with the DOE to expedite the approval and release of the RESC.

The DOE Information Technology Management Service (ITMS) verified and validated that none of

the proposed RESC applications associated with the three project areas overlapped with other

energy resource applications or contracted areas and may proceed to the next stage of the

application process pending the following: (i) payment of application and processing fees for the

Dalupan MHPP Project; (ii) address issues in relation with geopolitical jurisdiction and the coverage

of the proposed site for Getsemane MHPP Project within an area prescribed in the Integrated Forest

Management Agreement (IFMA); and (iii) address issues in relation with the coverage of the

proposed site for the Sto. Niño MHPP Project as part of the National Integrated Protected Areas

System (NIPAS).

Figure 1: Pre-Development RE Service Contract Application Process

Renewable Energy Service Contract (RESC) Application Submitted to the Office of the

DOE Secretary (OSEC)

OSEC endorses RESC application to DOE Renewable Energy Review and

Evaluation Committee

DOE Renewable Energy Review and Evaluation Committee transmits to the Information Technology Management Services (ITMS) for verification and

validation of proposed project site for overlaps with other energy resource

applications or contracted areas

OSEC issues order of payment (Application Fee + Processing Fee)

Proposed project

area valid?

Paid?

OSEC Legal Division and DOE Renewable Energy Review and Evaluation Committee evaluates compliance to legal requirements

Legal requirements

complied?

DOE Renewable Energy Review and Evaluation Committee evaluates

compliance to technical and financial requirements

Compliant to all

requirements?

DOE Renewable Energy Review and Evaluation Committee recommends

approval and awarding of RESC to OSEC

DOE Renewable Energy Review and Evaluation Committee and OSEC

advises schedule for signing RESC

OSEC and Project Proponent signs RESC

Issuance of RESC

NO

YES

YES

YES

YES

DOE Issues Notice

of Disqualification

NO

NO NO

Conversion of RESC (Pre-Development Stage) to RESC (Commercialization Stage)




Final Report 16

The subsequent sections outline the activities, tasks, issues, associated fees, and steps taken by the

Project Team in order to facilitate the processing of the RESC applications for the three (later on two)

project sites and resolve problems and issues arising from the application process.

Table 2: Associated Fees for RESC application

FINANCIAL COMMITMENT FOR RE SERVICE CONTRACTS

Resource

Application

Fee

(One Time

Fee)

Processing Fee

(One Time Fee)

Development

Assistance

(One Time Fee)

Training Fund

(Annual)

Signature Bonus

(One Time Fee)

Hydropower PHP1,000.00 Pre-

Development:

PHP23,850.00

Development:

PHP23,850.00

New Certificate

of Registration

(Transfer):

PHP4,350.00

Pre-

development

and

Development

Stages:

PHP50,000.00

(10MW and

below)

PHP100,000.00

(10MW –

50MW)

PHP500,000.00

(50MW and

impounding

hydro)

Pre-

development

and

Development

Stages:

PHP50,000.00

(10MW and

below)

PHP100,000.00

(10MW –

50MW)

PHP500,000.00

(50MW and

impounding

hydro)

Pre-

development

and

Development

Stages:

PHP50,000.00

(10MW and

below)

PHP100,000.00

(10MW –

50MW)

PHP500,000.00

(50MW and

impounding

hydro)

3.1.2 Dalupan MHPP Project, Municipality of Don Marcelino

The DOE issued an Order of Payment for the Dalupan MHPP project during the last quarter of 2014,

containing the assessed amount necessary to cover the cost of RESC application and processing fees.

The Municipality of Don Marcelino agreed to assume the payment of fees, associated with the RESC

application amounting to PHP 24,850.00. The LGU finalized the request for fund disbursement and

initially anticipated the release of funds in December 2014. However, the funding was eventually

released early January 2015 due to delays encountered in processing fund disbursements during the

onset of the holiday season. Further issues arose when the Municipality of Don Marcelino attempted

to pay the application and processing fees to the DOE Mindanao Regional Office in February 2015.

The DOE Mindanao Regional Office did not receive the payment recommended that the Municipality




Final Report 17

of Don Marcelino verify and confirm the need to pay for the RESC application and processing fees

with the DOE in Manila due to the possibility that the payment of fees may be waived considering

the relatively small size and nature of the project.

The Project Team coordinated and confirmed with the DOE that the Municipality of Don Marcelino

must pay for the RESC application and processing fees due to the possibility that the MHPP generated

electric power may be sold commercially to the local electric cooperative after the close of the

project through Power Supply Agreements. The DOE-OSEC assured coordination and arranged with

the DOE Mindanao Regional Office to receive the payment from the Municipality of Don Marcelino.

The payment of processing and application fees for the RESC was finalized during the last week of

March 2015.

Due to miscommunication with the DOE Mindanao Regional Office and the Municipality of Don

Marcelino regarding the forwarding of the RESC payment details, the official receipt was forwarded

to the DOE in Manila in May 2015. Actual RESC processing and evaluation started during the last

week of May 2015 and has been expected to be finalized within 45 days.

As of July 2015, the RESC for the Dalupan MHPP Project has completed legal evaluation conducted

by the DOE Legal Office, except for a request for additional documentation showing Sangguniang

Bayan approval for the LGU to exercise corporate powers. In compliance to the request of the DOE

Legal Office, the Project Team provided a copy of the Sangguniang Bayan resolution allowing the

LGU to sign a Memorandum of Understanding (MOU) with the ADB, NEA, and the Davao del Sur

Electric Cooperative (DASURECO) as evidence of Sangguniang Bayan approval for the LGU to exercise

corporate powers.

The DOE Legal Office has forwarded the RESC Application to the DOE RE Management Bureau (DOE-

REMB) for technical evaluation during the last week of July 2015. The technical evaluation has been

on-going and now delayed by the need for the REMB to verify that no conflict exists in the use of

water resource for the MHPP project and has not provided any timeline for the completion of the

technical evaluation.

3.1.3 Getsemane MHPP Project, City of Bayugan

In addition to verifying and validating any potential overlap of proposed project areas with other

RESC applications or existing contracted areas for the development and utilization of energy

resources, the DOE-ITMS has determined the possible coverage of the proposed Getsemane MHPP

project site within a specified area stipulated by an Integrated Forest Management Agreement

(IFMA). The DOE recommended further coordination with the DENR and requested additional

documentary requirements to ascertain compliance with Executive Order No. 23, Series of 2011. In

addition to issues regarding the IFMA coverage, the DOE-ITMS further requested additional




Final Report 18

documents certifying that the proposed project site falls within the political and geographical

boundaries of the City of Bayugan. Records and data of the DOE-ITMS show the proposed location

of the project site falling within the political and geographic boundaries of the Municipality of

Prosperidad, Agusan del Sur.

The Project Team and the City Planning Office initiated coordination and consultation with the DENR

Community Environment and Natural Resources Office (DENR-CENRO) in October 2014 in order to

resolve issues asserted by the DOE. Based on data provided by the DENR-CENRO through written

correspondence in November 2014, the proposed location of the Getsemane MHPP project falls

within the political and geographical boundary of the City of Bayugan and reveals no record of any

IFMA covering the area.

The Project Team has submitted the additional documents and data provided by DENR-CENRO for

further evaluation and assessment by the DOE. The DOE-ITMS has finalized the verification and

validation based on the submitted documents and transmitted the official correspondence from DOE

Office of the Secretary (OSEC) during the last week of February 2015 allowing continuation of the

application process as well as the notification for payment for application and processing fees.

The City of Bayugan agreed to assume the payment of fees associated with the RESC application

amounting to PHP 24,850.00 and finalized the request for fund disbursement in April 2015. Payment

was made by the LGU during the first week of June 2015. Actual RESC processing and evaluation has

been expected to be finalized within 45 days.

As of July 2015, the RESC for the Getsemane MHPP Project has completed legal evaluation conducted

by the DOE Legal Office, except for a request for additional documentation showing Sangguniang

Panglungsod approval for the LGU to exercise corporate powers. In compliance to the request of the

DOE Legal Office, the Project Team provided a copy of the Sangguniang Panglungsod resolution

allowing the LGU to sign a Memorandum of Understanding (MOU with the ADB, National

Electrification Administration (NEA, and the Agusan del Sur Electric Cooperative (ASELCO) as

evidence of Sangguniang Panglungsod approval for the LGU to exercise corporate powers.

As with the Dalupan MHPP Project, the DOE Legal Office has forwarded the RESC Application to the

DOE RE Management Bureau (DOE-REMB) for technical evaluation during the last week of July 2015.

The technical evaluation has been on-going and now delayed by the need for the REMB to verify that

no conflict exists in the use of water resource for the MHPP project and has not provided any timeline

for the completion of the technical evaluation.




Final Report 19

3.1.4 Sto. Niño MHPP Project, City of Bayugan

As with the issues facing the Getsemane MHPP Project, the DOE-ITMS has determined the coverage

of the proposed Sto. Niño MHPP project site within an area stipulated under the National Integrated

Protected Areas System (NIPAS). The DOE recommended further coordination with the DENR and

requested additional documentary requirements to ascertain compliance with Republic Act No.

7586.

Consultation and coordination with the DENR-CENRO in October 2014 confirmed the coverage and

inclusion of the Sto. Niño MHPP project site in the Andanan Watershed Forest Reserve, created

under Presidential Proclamation No. 734 dated 29 May 1991 and serves as one of the initial

components of NIPAS. Management of the watershed area has been assigned to the Protected Area

Management Board (PAMB) pursuant to DAO No. 2008-26, Rule No. 12. Pursuant to existing

guidelines of the DENR, the DENR-CENRO recommended that the Project Team submit a project

proposal to PAMB, containing a request for a resolution allowing the implementation of the Sto. Niño

MHPP project within the proclaimed watershed reserve, in addition to the required Certificate of

Non-Coverage.

NOTE: The deployment of the Sto. Niño MHPP has been deferred. Coordination with concerned

stakeholders, particularly with the DOE, NWRB, and the DENR has been initiated by the Project Team

during the last week of February 2015 to communicate the deferment of the project.

3.1.5 Conversion of the Pre-Development RESC Application to Commercial RESC

Based on the Implementing Rules and Regulations of Republic Act No. 9513 (Renewable Energy Act),

the development or commercial stage RESC involves the production or utilization of RE resources,

including the construction and installation of relevant facilities up to the operation phase of any RE

facility. In the case of the Dalupan and Getsemane MHPP Projects, wherein the MHPP facility has

already been constructed, the pre-development RESC must be converted into a development or

commercial RESC to be compliant with the regulations prescribed by the Renewable Energy Act.

In order to convert the pre-development RESC, the project proponents must declare commerciality,

achieve milestones and benchmarks provided under Department Order No. DO2013-08-0011, and

apply for a conversion of the RESC prior to expiration. The Declaration of Commerciality shall be

based on the feasibility studies and/or exploration activities conducted by the project.

The project proponent will be expected to secure permits, clearances or certificates such as, but not

limited to Certificate of Non-Coverage (CNC), Free and Prior Informed Consent (FPIC), Water Rights

Permit, Certificate of Non-Overlap, LGU (Barangay and Municipal/City Level) Endorsement of the

project, and all other regulatory requirements from government agencies applicable to the operation

of the deployed MHPP facilities.




Final Report 20

3.2 Water Permit Application (WPA) for Electric Power Generation

3.2.1 Documentary Requirements

All applications shall be filed in the prescribed form, sworn to by the applicants and supported by

the following documents:

a. Proof of land ownership of, legal title to, or right to use, the property where the water

source is situated;

b. Vicinity Map/Location Plan with scale 1:10,000 or 1:50,000 showing the exact location

of the point of diversion;

c. Brief Description of the project stating among others: (i) How water will be used; (ii)

Amount of water required; (iii) Amount of electric power to be generated; and (iv) Other

necessary information;

d. Environmental Compliance Certificate (ECC) (for projects considered as Environmentally

Critical Projects or projects located in Environmentally Critical Areas) or CNC from DENR-

Regional Office;

e. Certificate of Registration from DOE and Certificate of Endorsement; and

f. Other documents that may be required by the Board.


Step 1: Screening

a. WPA form and Notices completely accomplished and notarized;

b. Compliance with prescribed basic requirements;

c. Coordinates (Latitude and Longitude) of water source shall be determined by the

National Water Resources Board (NWRB) Evaluation Section Staff; and

d. WPA Number / Reference Number assigned by the NWRB Permits Section.

Step 2. Cashier

Payment of processing and application fees (PHP 5,000.00) for Electric Power Generation

Projects).

Step 3. Filing

a. Applicant submits the accomplished WPA form along with Notices and

documentary requirements to the NWRB Records Section; and




Final Report 21

b. Routing of the WPA to NWRB Water Rights Division.

Step 4. Application Endorsement and Posting of Notices

a. NWRB Permits Section prepares endorsement letter;

b. WPA endorsed to the nearest Department of Public Works and Highways (DPWH)

Engineering District Office or the National Irrigation Administration (NIA)

Provincial Irrigation Office covering the location of water source point of

diversion; and

c. Endorsement Letter along with the Notices for WPA shall be sent to the

following offices/agencies for posting (the prescribed period of posting shall be

30 days upon receipt of the WPA Notices):

Barangay Chairman covering location of water source point of diversion;

City/Municipal Secretary covering location of water source point of

diversion;

Secretary, Sangguniang Panlalawigan (Provincial Council) covering location

of water source point of diversion;

Department of Public Works and Highways (DPWH) District Engineer

National Irrigation Administration (NIA) Provincial Irrigation Office

Regional Office – DPWH

Regional Office - NIA

National Power Corporation

Regional Office – DENR

Local Water District (WD)

NWRB

Step 5. Mailing of Endorsement and Notices

The Administrative and Financial Division Record Unit mails the endorsement letter and

request letter for posting of the notices to the abovementioned offices/agencies.

Step 6. Field Investigation

Water Rights Investigator of DPWH Engineering District or NIA Provincial Office

conducts ocular inspection at proposed site, prepares and submits report to NWRB (In

cases where the DPWH or NIA does not have the capability to conduct field inspections and/or

investigations, the NWRB Staff shall assume the conduct of field inspections and/or

investigations).




Final Report 22

Step 7. Protests/Opposition

a. Additional 30 days shall be allotted for the filing of formal protests/opposition on

the WPA by any affected party after the prescribed posting period;

b. Affected parties shall submit a Letter of Protest/Opposition to NWRB. Processing

fee amounting to PHP3,000.00 shall be paid during the submission of the Letter of

Protest/Opposition;

c. Cases of protests/opposition shall be docketed by NWRB Water Rights Division

Staff;

d. The Chief of the NWRB Water Rights Division shall assign the case to a Hearing Officer

who shall conduct a formal hearing on the protest or opposition; and

e. Resolution of cases shall be recommended to the NWRB Executive Director.

Step 8. Evaluation

a. Determine water source whether surface water, spring or deep well source;

b. WPA shall be evaluated by considering (i) Water requirement of the Applicant;

(ii) Water availability within the area; (iii) Capacity of the water source; and (iv)

Effect of the water usage of the applicant to other users; and

c. Recommendation to the NWRB Board for the amount of water to be granted to

the Applicant.

Step 9. Recommendation and Approval

a. WPAs evaluated and recommended to the NWRB Board shall be submitted to

the Director, National Hydraulic Research Center for review, comment, and

recommendation;

b. All WPAs with a recommended amount of water of 100 liters per second and below

shall be approved/deferred/denied by the NWRB Executive Director;

c. All WPAs with a recommended amount of water of more than 100 liters per second

shall be deliberated and approved/deferred/denied by the NWRB Board; and

d. The NWRB Board Secretary shall prepare a Board Resolution containing the

approved WPs. The Board Resolution shall be signed by all the members of the

NWRB Board.

Step 10. Conditional Water Permit

a. The NWRB Water Rights Division assigns a conditional water permit number to

approved water permit applicants;

b. Billing Section computes the Annual Water Charge for payment by approved

water permit applicants;




Final Report 23

c. NWRB Water Rights Division Staff prepares the Conditional Water Permit;

d. Conditional Water Permit shall be signed by the NWRB Executive Director

after appropriate clearances;

e. Approved water permit applicants shall be notified by mail. Order of Payment

shall be prepared by the Regional Executive Director's Office (EDO);

f. Approved water permit applicants pay the corresponding Annual Water Charge

to the Cashier; and

g. Conditional Water Permit shall be released upon presenting to the EDO, the Official

Receipt issued by the Cashier for the payment of the Annual Water Charge.

Step 11. Releasing of Water Permit

a. As soon as Conditional Water Permit holders comply with the conditions imposed

in the Conditional Water Permit, the NWRB Water Rights Division Staff reviews and

ascertains compliance and prepares a recommendation for issuance of Water

Permit to be approved by the NWRB Executive Director;

b. Water Permit shall be prepared by NWRB Water Rights Division Staff and signed by

the NWRB Executive Director; and

c. Water Permit shall be released upon payment of appropriate fees and charges.

Table 3: Associated Costs for Water Permit

ONE TIME CHARGES

Approved Rates

Processing and Application Fees PHP5,000.00

Transfer of Water Permit PHP5,000.00

Certificate of Water Availability PHP1,500.00




Final Report 24

ANNUAL WATER CHARGES

Base Cost Not more than 10

LPS

More than 10 LPS but

not exceeding 50 LPS

More than 50

LPS

Withdrawal

Cost

PHP5,000.00

/LPS PHP2.75 /LPS PHP4.25 /LPS PHP5.50 /LPS

3.2.3 Current Tasks and Activities

The Project Team has initiated the preparation of documentation for the application of water

permits for the Getsemane and Dalupan MHPP projects. Main impediment in the actual filing of the

application lies with the need for a DOE endorsement that will be released after the approval of the

pre-development RESC.

Table 4: Requirements for RESC application

Requirements Status

1. WPA (Duly accomplished WPA Form)

Note the following requirements:

The PMMO or NWRB Official Receipt Number, the date

and amount paid shall be indicated

The official name or (local name) of the river, creek, brook,

lake, etc. or the words spring or groundwater, whichever is

appropriate, shall be indicated

The location of the diversion point indicating the

sitio/barrio and the municipality where the diversion point

is located

Indicate method of diverting water whether by dam,

pump, etc.

Indicate the months during the year when the flow of the

stream is considered low flow (say, for example, from

January to April)

Indicate the amount of water applied for, expressed in

liters per second

Indicate the purpose for the Water Permit application

(e.g., power generation, irrigation, and others)

For hydraulic water based electric power development,

indicate the power plant rated capacity in kilowatts

Specify other uses for the Water Permit application

Completed




Final Report 25

Indicate the names of appropriators holding or claiming

rights to the use of water including the amount in liters

per second and nature of use, both downstream and

upstream of the proposed point of diversion

2. Proof of land ownership on the site -- Certificate from LGU to

utilize the water source

Completed. Coordinated with the

Municipality of Don Marcelino and

City of Bayugan to seek assistance

in securing a

certificate/authorization from the

Getsemane and Dalupan Barangay

Governments to utilize the water

source.

3. Location plan and vicinity map of water source (use scale of

1:50,000) showing: (i) Point of diversion of source of water

(Longitude and Latitude), and (ii) Nature of diversion works whether

temporary or permanent

Done. Utilized the blocking map

submitted for the RESC Application.

4. Certificate of Non-Coverage from DENR Done.

5. Brief description of project which includes:

(i) How water will be used

(ii) Amount of water needed

(iii) Power expected to be generated

(iv) Amount of water to be discharged back to source

(v) Measures to be taken to avoid water pollution

(vi) Scheme of development

Completed

6. Certificate of Registration and Certificate of Endorsement from

the DOE

Will be provided by the DOE after

the approval of the RESC.

7. Other requirements as deemed necessary by the NWRB Securance is based on DOE approval

of RESCs.

3.3 Net-Metering Contract

Based on discussions with stakeholders, the method preferred to interconnect the MHPPs to the

local distribution grid is net-metering. Net-Metering serves as a consumer-based RE market

development mechanism to encourage the participation of qualified end-users (QEs), within the

captive market of local distribution utilities (DUs), to generate electric power from eligible grid

connected RE facilities. Excess generated electricity will be exported directly into the local




Final Report 26

distribution grid and given corresponding peso credits based on the blended generation cost of the

DU, excluding generation adjustments. Peso credits earned by QEs within an agreed time period will

be offset from the electricity bill of the QE.

The implementation of a Net-Metering Program has been provided under Section 10 of Republic Act

No. 9513 (Renewable Energy Act) and regulated based on the Net-Metering Program Rules approved

by the Energy Regulatory Commission (ERC) under ERC Resolution No. 9, Series of 2013.


Application for Net-Metering Services with the DU

QEs seeking to participate in the Philippine Net-Metering Program must file a written request or

inquiry with the local DU to initiate the net-metering service application process. Upon receipt of

such request or inquiry, the DU will provide the following information and documents: (i) Net-

Metering Application Form; (ii) Identification Document; (iii) Standard and/or detailed planning data

as specified in Section 6.4 and Section 6.5 of the Philippine Distribution Code1 and other data as

required by the DU; (iv) List of Certified Equipment; (v) Electric Power Plant Parameters Form; (vi)

Application Fee Information; and (vii) Interconnection and Metering Requirements.2

As soon as the accomplished Net-Metering Application Form and all supporting documents have

been submitted, the DU will proceed to verify the accuracy and completeness of the application

documents. The DU must issue an acknowledgement receipt with feedback on whether or not the

application documents are complete and the application process can proceed to the next phase

within 10 business days from the receipt of the application, as prescribed in the Net-Metering Rules.3

Technical Evaluation

With the acknowledgement and acceptance of the application by the DU as complete, the DU

proceeds towards the conduct of a technical evaluation by performing an initial assessment to

determine the necessity of undertaking a specific distribution impact study (DIS) in accordance with

1 Section 6.4 of the Philippine Distribution Code (ERC Resolution No. 115, Series of 2001) specifies the standard planning data requirements

(i.e., Energy and demand forecast, Embedded generating unit data, and User system data) while Section 6.5 specifies the detailed plan-

ning data requirements (Detailed embedded generating unit data and embedded generating plant data) needed by a DU in planning the

development and reinforcement of the distribution system. 2 Energy Regulatory Commission Resolution No. 9, Series of 2013, Rules Enabling the Net-Metering Program for Renewable Energy, Annex

A-1 (Net-Metering Interconnection Standards), Section 5.1 to Section 5.3 (2013). 3 Ibid. Section 5.4




Final Report 27

the DSOAR.4 The conduct of a DIS may be necessary in order to evaluate the ability of the distribution

system to safely and reliably accommodate the proposed interconnection of a new electric power

generation source and determine the need to upgrade distribution system assets.

In the event that the conduct of a DIS may be required, the DU informs the applicant accordingly and

issues an Offer of Service for DIS containing the following: (i) Scope of the DIS, including the

identification of distribution constraints and the need for additional dedicated connection assets or

distribution system upgrades required to provide the requested service; (ii) Estimated time frame

needed to complete the DIS; (iii) Applicable fees associated with the conduct of the DIS; and (iv)

Additional information required by the DU from the applicant. The applicant must respond to the

offer of service from the DU whether or not to proceed with the conduct of the DIS within 30 days

from the receipt of any such offer. Should the applicant agree to the offer of service from the DU,

the applicant must pay all applicable fees and provide the required information needed by the DU

to perform the DIS. The DU will have 60 days to complete the conduct of the DIS. Following the

completion of the DIS, the DU will provide the applicant with the completed DIS results and related

work papers within 5 working days, including any additional interim agreements, technical

modifications, and/or the further necessity of conducting a distribution asset study (DAS) to

complete the net-metering interconnection.5

In case a DAS becomes necessary, the DU may issue an Offer of Service for DAS within 30 days after

the completion of the DIS. The applicant must respond to the offer of service from the DU whether

or not to proceed with the conduct of the DAS within 15 days from the receipt of any such offer. In

responding to the offer of service provided by the DU, the applicant has the following options: (i)

Undertake the DAS and advise the DU accordingly; (ii) Contract the conduct of the DAS with a third

party, accredited pursuant to ERC guidelines and advise the DU accordingly; or (iii) Agree to the offer

of service for DAS from the DU. The DU shall be bound by the decision of the applicant. The period

of time to complete the conduct of the DAS will be specified in the offer of service whether

performed by the applicant, a contracted third party, or the DU. Following the completion of the

DAS, the party undertaking the DAS will provide the other parties involved with a copy of the

completed DAS results and related work papers within 5 working days.6

4 The Distribution Services and Open Access Rules (DSOAR) refer to the rules promulgated by the Energy Regulatory Commission under

ERC Resolution No. 2, Series of 2010 covering the terms and conditions for the connection of generating facilities to a local distribution

system. 5 Energy Regulatory Commission Resolution No. 2, Series of 2010, Amended Distribution Services and Open Access Rules (DSOAR), Section 2.9.4

(2010). 6 Ibid. Section 2.9.5




Final Report 28




Final Report 29

Construction of Interconnection Facilities

With the conclusion of the technical evaluation, the DU will then finalize the design of

interconnection facilities based on the results of the DIS and/or DAS, along with the applicable

project costs. Prior to the execution of the Net-Metering Agreement and commissioning, the RE

based electric power generating facility will be physically inspected and checked by the LGU for

electrical safety and conformance to the provisions of the Philippine Electrical Code and the National

Building Code before the installation of electric power meters by the DU.7 The LGU will issue a

Certificate of Final Electrical Inspection (CFEI) once the facility has been found to be compliant to the

Philippine Electrical Code and the National Building Code. Upon the issuance of a CFEI, the DU will

conduct an initial inspection and check electro-mechanical components of the facility for

conformance to the technical requirements, and system parameters Net-Metering Rules, and the

Philippine Distribution Code. The construction of interconnection facilities may then proceed

following the completion of the initial inspection by the DU.

Commissioning, Interconnection, and Project Agreements

As soon as the construction of the generating and interconnection facilities has been completed and

ready for operation, the installed system and system components must undergo

functional/performance testing and commissioning, closely monitored and witnessed by the DU.

Testing and commissioning include among others: (i) Verification and inspections; (ii) Production

Tests to check response to abnormal voltage, abnormal frequency, and synchronization; (iii)

Unintentional Islanding Functionality Test; (iv) Cease-to-Energize Functionality Test; and (v) Other

tests which ensure compliance to the parameters prescribed in Section 6 and Section 7 of the Net-

Metering Interconnection Standards.8

Upon ensuring the compliance of the generating facility, project agreements (such as the Net-

Metering Agreement and Fixed Asset Boundary Document) may then be finalized and signed along

with the payment of all applicable fees by the applicant.9

7 Substantial completion of electro-mechanical installation has been assumed in this case.

8 Energy Regulatory Commission Resolution No. 9, Series of 2013, Rules Enabling the Net-Metering Program for Renewable

Energy, Annex A-1 (Net-Metering Interconnection Standards), Section 10 (2013). 9 Ibid. Section 5.7.




Final Report 30




Final Report 31

Figure 2: Net-Metering application scheme




Final Report 32

Application for Certificate of Final Electrical Inspection from LGUs

The Office of the City or Municipal Engineer through the Electrical Section conducts and supervises

electrical safety inspection, testing, and verification of electrical wirings for residential, institutional,

commercial, and industrial structures before the installation of electric power meters by DUs to

ensure the conformance of such to the provisions of the Philippine Electrical Code, National Building

Code, and pertinent ordinances and issuances of the concerned LGU.

To initiate the application process, the applicant must submit the following documents: (i) Electrical

Permit Form (DPWH Form No. 96-001E), accomplished, signed, and sealed by a Professional Electrical

Engineer (PEE); (ii) 5 sets of the proposed electrical plans, signed, and sealed by a PEE; (iii) Scope of

Work; and (iv) Other supporting documents as may be required by the LGU. The Electrical Section

receives the documents and evaluates the accuracy and completeness of the submitted forms and

documents. Upon verifying and acknowledging the completeness of the documents, the applicant

will be requested to pay the applicable fees.

The Electrical Section will then proceed to review and evaluate the proposed electrical plans for conformance to provisions of the Philippine Electrical Code and National Building Code. As soon as

the plans have been found to be compliant, the Electrical Section proceeds to approve the submitted

electrical plans, process the application, and issues an electrical and/or building permit to allow the

applicant to start construction of the proposed facility.

When a substantial part of the electro-mechanical systems have been installed, the applicant may

submit a request for inspection. The LGU will then conduct a physical inspection and check the

compliance of the installation with respect to the approved electrical plans. Once satisfied with the

conduct of installation, the Electrical Section issues a Certificate of Final Electrical Inspection (CFEI).

3.3.2 Recent Tasks and Activities

The Project Team initiated the processing and negotiation for the Getsemane and Dalupan MHPPs’ net-metering contracts in January 2015 through written request to ASELCO and DASURECO, stating

the intent of the Project Team to apply for a net-metering agreement and interconnection in behalf

of the Bayugan City and Municipality of Don Marcelino LGUs. Without receiving a reply from the ECs,

the Consultant Team coordinated with NEA in order to assist in facilitating the application process

with the ECs in April 2015. NEA proceeded to send letters of endorsement to the ECs and templates

of the application form and the possible documentary requirements which may be needed by the

ECs in evaluating the application for net-metering and interconnection to the Project Team.

Upon receiving the template of the application from for net-metering and interconnection

agreement from NEA, the Project Team commenced gathering the required technical data and

finalizing required documentation. The Project Team submitted during the first week of June 2015,




Final Report 33

the net-metering and interconnection application forms, single-line diagrams, and application for

Certificate of Compliance (COC) as QEs for the Dalupan and Getsemane MHPP systems to DASURECO

and ASELCO respectively. In addition, NEA conducted the DIS for the DASURECO and ASELCO

Distribution Grid as a counterpart contribution towards the implementation of the project.

The Don Marcelino and Bayugan LGUs were listed as project proponents in behalf of the CBOs which

are being currently organized with the assistance of the Project Team. As soon as the CBOs have

been organized, the MHPPs and all operational, legal, financial, and managerial functions will be

completely handed over to the community and CBOs. However, upon completing the initial

evaluation during the last week of July 2015, DASURECO, ASELCO, and NEA recommended to the

Consultant Team that the CBOs be listed directly as the project proponents in the application for net-

metering and interconnection and COCs as the actual QE for net-metering agreement. The

Consultant Team has secured the LGUs consent for the CBOs to replace them as proponents for net-

metering agreement and amend all documentation for re-submission to DASURECO and ASELCO

pursuant to the recommendation of NEA.

3.4 Certificate of Non-Coverage

Based on the DENR Administrative Order No. 30 Series of 2003 (DAO 30-03), all agencies and

instrumentalities of the national government including government owned and controlled

corporations as well as private corporate firms and other entities must prepare an Environmental

Impact Statement (EIS) for every action, project or undertaking, which significantly affects the quality

of the environment. Section 4 of Presidential Decree No. 1586 (Establishing the EIS System) thereof

provides that no person, partnership or corporation shall undertake or operate in any part such

declared environmentally critical projects (ECPs) and within environmentally critical areas (ECAs)

without first securing an Environmental Compliance Certificate (ECC.

The following are the categories of projects/undertakings under EIS system:

Category A. Environmentally Critical Projects (ECPs) with significant potential to cause negative

environmental impacts;

Category B. Projects that are not categorized as ECPs, but which may cause negative

environmental impacts because they are located in Environmentally Critical Areas (ECAs);

Category C. Projects intended to directly enhance environmental quality or address existing

environmental problems not falling under Category A or B; and

Category D. Projects unlikely to cause adverse environmental impacts.

All other activities not covered by the EIS system must secure a Certificate of Non-Coverage (CNC) as

provided for in DAO 03-30.




Final Report 34

3.4.1 CNC Application Process and Screening

Based on the existing procedural manual for DAO 03-30, the application for a CNC only requires the

completion of an application form to be processed in the DENR Automated Processing System. CNC

applications no longer require submission of a Project Description Report. Supporting documentary

requirements may include, but not limited to location map, proof of land/site ownership (Tax

Declaration, TCT, OCT, Lease Contract and Others), and SEC or DTI Registration.

The CNCs for the Dalupan and Getsemane MHPP Projects were issued on May 2014.

Figure 3: CNC Application Process

Project Proponent

Screening Officer(Application Form + Documentary

Requirements)

Records (Receiving)

Documents

Complete?

NO

YES

EIAM Division, EMB

Office of the Regional Director, EMB

(Approval/Disapproval)

Records (Releasing)




Final Report 35

4 FINANCIAL AND ECONOMIC ANALYSES OF THE RENEWABLE ENERGY

FACILITIES

4.1 MHPP Dalupan – Business Model

The micro hydro power subproject in Sto. Cunalom, Brgy. Dalupan, Don Marcelino was identified to

be one of the recipients of the TA establishing the MHPP from among four sites identified in Don

Marcelino. As stated in the Final Report for the TA 7781 – Rural Community Based Renewable Energy

Development in Mindanao, the Project was chosen because the site is at the center of population,

the hydro potential can still cover the energy demand and the investment cost is within the available

ADB Budget.

The original proposal is a mini-grid in Dalupan which will be distributed to the consumers in the area.

The mini-grid was projected to serve the households nearest to the power house in the areas of

Mandala, Sitio Cunalom, Sitio Banag and Sitio Miago.

The construction of a micro hydro power plant in Sitio Cunalom, Brgy. Dalupan referred to as the

Project will directly serve (on-grid) the Community Based Organization registered under the name of

Dalupan Renewable Energy Community Development Association (DARECDA). An initial 114

households near the MHPP that are still not energized will be served with the remaining generated

energy exported to the Electric Cooperative grid. The capacity of the MHPP is s projected at 25 kW

or 219,400 kWh per year.

4.1.1 Financial Evaluation

As Projected

The evaluation of the viability of the MHPP in Brgy. Dalupan in 2013 was based on a Project Cost of

PHP7.209 Million. ADB will finance the full cost of the project except for the cost of land of PHP0.022

Million which will be the LGU equity to the Project. It was also projected that the initial annual

operating expense (OPEX for 2014) would amount to PHP0.168 Million or representing a ratio of

2.3% of Project Cost. In terms of the ratio of OPEX (before depreciation), the projected expenses

equate to 19% of projected revenues. The revenues were based on FIT rates which are higher than

the blended generation cost, the rate used in this update of financial projections.

Initial Investment

The review of the financial viability of the investment in the MHPP in Sitio Cunalom, Barangay

Dalupan used the actual Project Cost for the construction of the MHPP. The total initial investment

for the Project is PHP9.483 Million. The actual Investment Cost of PHP9.483 Million represents an

increase of 31.5% over the estimates made in the Feasibility Study only two years earlier (2012).




Final Report 36

The details of the Project Cost are presented in Annex 1-A. Adding the estimated amount of P0.554M

for licenses and construction supervision will bring the total investment to PHP10.037 Million. The

licensing and land were financed by LGU as their counterpart to the Project.

The capital per kW installed capacity of the Project is PHP401,483 (USD9,125), increasing by

PHP113,127 from the projected cost of PHP288,356 in 2013.

Table 5: Total Project Cost and Financing Plan (Barangay Dalupan)

Capital I est e t Peso 000 Amount Funding

Electro-Mechanical 2,854.21 ADB

Civil Works 6628.79 ADB

Construction Supervision 462.00 ADB

Permits and Licenses 92.07 LGU

Operating and Maintenance Expenses

The annual Operating and Maintenance expenses are estimated for a) salaries and benefits of

employees manning the MHPP; b) the maintenance expenses equivalent to 0.5% of Civil Works and

Electro-Mechanical Equipment/works component of Project Cost; c) other administrative expenses

which include transportation, communication, supplies and audit expenses. Table 6 presents the

initial year estimates (2015 prices):

Table 6: Total Project Operating Expenses (Barangay Dalupan)

Operating Expense Amount

Salaries of Operators/Supervisors 363,893

Maintenance 47,415

Administrative & Miscellaneous 26,000

Total 437,308




Final Report 37

Compared to the projections in 2013, there is an increase of almost 259% of the OPEX forecast in the

feasibility study.

MHPP Revenues

(i) The rated capacity of the plant is 25 kW or 219,000 kWh per year. With the assumed total

losses (transmission and other losses) there will be a maximum energy sale of

175,200 kWh/year.

(ii) Under the proposal for the MHPP in Barangay Dalupan, the Project will energize the

remaining sitios of 184 households. In the actual project implementation, the revenues will

be computed under a Net Metering Arrangement. This is an arrangement where the MHPP

will be registered as a consumer of the Electric Cooperative (EC) as provided under the

Renewable Energy Law for renewable energy (RE) systems of less than 100 kW. The export

energy of the MHPP (net of DARECDA livelihood) under the Net Metering Arrangement will

be valued at the blended generation cost of DASURECO (EC).

(iii) In order to account for the revenues of the MHPP accruing from the total kWh sold, the

projected cash flow will include the CBO livelihood energy consumption priced at the EC

retail rate. This means that the MHPP Cash Flow will reflect sales from the usage of CBO,

simulating the sales of the EC to the CBO as if the former were providing the energy instead

of the MHPP.

(iv) Revenue computation assumes that the energy exported to DASURECO (EC) will be paid

monthly. The volume of sold energy will be net of the consumption of the CBO for its

livelihood operations.

Cash Flow Projections Assumptions

In evaluating the feasibility of the Project undertaken, the cash flow projections used the following

assumptions:

(i) On the basis of the provision of the grant from ADB to finance the MHPP, the ideal or target

rate of return will be 12%.

(ii) The base scenario will compute for revenues assuming that the energy exported to the EC

will be net of the consumption for the livelihood operations of the CBO based on its the

Business Plan. The blended generation cost is assumed to increase at 3.0% per annum.

(iii) In projecting the operating and maintenance costs for the computation of the rate of return,

the number of staff considered a 24-hour operation with a supervisor and helpers overseeing

operations working on two shifts. The staff are also assumed to receive the minimum daily

wage including the mandated insurance (SSS), housing contribution (Pag-ibig) and medical

coverage (PhilHealth).




Final Report 38

(iv) The salaries and wages for the administrative component of operations, i.e., cashier,

bookkeeper and Business Manager are assumed to be taken care of by the CBO Operations.

All operating expenses are assumed to increase at 3.3% per annum (CPI).

(v) The MHPP operations is assumed to be VAT-exempt and entitled to a seven-year income tax

holiday (ITH) and thereafter subject to a 10% income tax. This is based on Republic Act No.

9513 as part of the incentives provided to duly-registered RE developers.

(vi) The taxes paid computed the income net of the 25-year depreciation for the total

asset/investment of the MHPP.

4.1.2 Financial Evaluation Results

a) Evaluating the cash flow from the MHPP in the next 25 years shows the operation will be

able to recover the total investment in 18 years given the base scenario assumptions as

discussed above.

b) Aside from generating positive cash flow, the MHPP should be able to pay an assumed 10%

income tax after the seven-year income tax holiday (ITH). The annual cash flow will start at

PHP0.295 Million and will continue to increase reaching PHP0.831 Million by the end of the

25-year projected operations.

c) However, the cash flows will not be sufficient to bring in the ideal rate of return of 12% (as

projected). First and foremost, the actual investment cost increased by 40%. In addition, the

OPEX projections in this update is 258% higher than the original feasibility study as shown

below:

Table 7: Initial Year of Operations, 2016 prices (Barangay Dalupan)

Salaries Maintenance Administrative Total

Feasibility Study 175,394

2015 Update 375,901 48,980 26,858 451,739

d) Taking the ratio of annual operating expenses to total investment cost would show that the

projections in the feasibility study reflected a 2.4% annual OPEX (PHP0.175 Million) to

investment cost (PHP7.209 Million). On the other hand, with the updated initial OPEX

computed at PHP0.452M, the ratio to the total investment cost of PHP10.037 Million is

equivalent to 4.5 percent.




Final Report 39

e) In this update, revenues were derived using the blended generation cost and the EC retail

rate. The average rate/ kWh in the initial year is PHP4.26 Million. This is lower than the FIT

rate of PHP5.90 Million in the feasibility study.

f) The resulting financial indicators of viability indicate a much lower rate of return (IRR)

compared to the desired 12% as projected in the feasibility study. The IRR is at 3% (base

scenario) and the payback period will be 18 years. This is compared to the original study in

the table below:

Table 8: Resulting Financial Indicators (Barangay Dalupan)

4.1.3 Sensitivity Evaluation Results

a) The sensitivity analysis undertaken in this update considered scenarios involving the (1) %

usage of energy by the CBO, and (2) lower energy sold (60%).

b) Under the first sensitivity scenario, it is projected that the CBO will diversify their livelihood

activities that will require the usage of more electricity in their operations. If they were able

to do this, then the value of revenues generated by the MHPP will be higher compared to

exporting the energy to the EC. This would impact on the computed internal rate of return

Base Scenario Original FS

Net Present Value Peso (5,464,136) 1,000

Internal Rate of Return % 3% 12%

Payback Period years 18 8

Annual Generation kWh 219,000 168,803

Maximum Energy Sold kWh/year 175,200 153,948

Hydro capital cost per kW installed capacity Peso/kW 401,483 288,356

USD/kW 9,125 6,706

USD: Peso 44 43




Final Report 40

(IRR) of the MHPP. This will also be more beneficial to the CBO members and the community

because more economic activities result from having the MHPP in the Barangay.

c) From a 3% rate of return in the base scenario, a 69% maximum usage of energy by the CBO

by year six (2021) will result to an IRR of 8%, an increase of PHP2.43 Million to the net present

value and shortened payback period from 18 years to 12 years.

d) The second sensitivity scenario assumed that the maximum energy sold will only be at 60%

on the basis of less generated energy. This scenario tests the impact on the IRR and to the

cash flow of the reduced energy sales. The forecast shows the annual cash flows are still

adequate to cover the operating and maintenance costs. Under this more conservative

assumption, the net present value of the cash inflows are lower and the resulting IRR is (1%).

e) Table 9 presents a summary of the findings: (presented in detail in Annex 1-B)

Table 9: Summary of Findings (Barangay Dalupan)

Base Scenario Maximized Energy

Usage 60% Energy Sales

Net Present Value Peso (5,464,136) (3,036,289) (7,009,053)

Internal Rate of Return % 3% 8% (-1)%

Payback Period years 18 12 >25

Discount Rate % 12

f) In view of the absence of funds required for servicing of loans or return of capital, a scenario

considering the deposit of reserves is included in this update. This is targeted to enable the

CBO to finance the future major capital expenditure (CAPEX) or replacement of the

mechanical component (Asset Replacement Reserves) of the facility.

This scenario is shown as Reserves Scenario in Annex 1-C.

g) The Reserves Scenario shows CBO Reserves (dividends, minor repairs, etc.) will accumulate

to about PHP5.02 Million in twenty-five years. For the Asset Replacement Reserves, this will

amount to PHP9.67 M under the base scenario. But under the low generation scenario, the

amount will be 39% lower or about PHP5.93 Million.




Final Report 41

4.1.4 Conclusion

a) From the foregoing, it is deemed that the 25 kW plant at Sitio Sto. Cunalom, Brgy. Dalupan

is sustainable in terms of cash flow. Attaining the desired rate of return of 12% (as projected)

is however critically dependent on 1) usage of electricity by the livelihood activities of the

CBO; 2) O&M costs forecast 3) % energy exported to the EC.

b) The evaluation is premised on the basic assumption that the Plant will operate continuously

and is very critical in esta lishi g the P oje t’s feasi ilit .

c) All projections consider a collection efficiency of not less than 99% in projecting cash flows.

No additional CAPEX are provided in the forecast. The monthly maintenance provision

however may be set aside in a fund to ensure that cash are available for repairs and CAPEX

in the future.

d) The tables from the Financial Model developed for this Study are all presented in Annex 1

including the projected financial statements for MHPP operations.

4.2 MHPP Getsemane – Business Model

The micro hydro power project in Brgy. Getsemane, Bayugan City (Agusan del Sur) was identified to

be one of the recipients of the Technical Assistance establishing the MHPP that will serve the

households nearest to the powerhouse as a standalone off-grid micro system.

The construction of a MHPP in Brgy. Getsemane, Bayugan City, referred to as the Project will operate

on-grid. The MHPP will directly serve the Community Based Organization registered under the name

of Getsemane Agricultural Workers Association (GAWA). There is an initial 97 households near the

powerhouse that are still unenergized to be served and the remaining generated energy exported to

the Electric Cooperative grid. The capacity of the MHPP is as projected at 30 kW or 262,800 kWh per

year.

4.2.1 Financial Evaluation

As Projected

The evaluation of the viability of the MHPP in Brgy. Getsemane in 2013 was based on a Project Cost

of PHP7.953 Million. ADB will finance the full cost of the project except for the cost of land of

PHP0.021 Million which will be the LGU equity to the Project. It was also projected that the initial

annual operating expense (OPEX for 2014) would amount to PHP0.182 Million or representing a ratio

of 2.3% of Project Cost. In terms of the ratio of OPEX (before depreciation), the projected expenses

equate to 17% of projected revenues. The revenues were based on FIT rates which are higher than

the blended generation cost, the rate used in this update of financial projections.




Final Report 42

Initial Investment

The review of the financial viability of the investment in the MHPP in Barangay Getsemane used the

actual Project Cost for the construction of the MHPP. The total initial investment for the Project is

PHP13.306 Million represents an increase of 67.3% over the estimates made in the Feasibility Study

only two years earlier (2012).

The details of the Project Cost are presented in Annex 2-A. Adding the estimated amount of

PHP0.574M for licenses and construction supervision will bring the total investment to

PHP10.880 Million. The licensing and land were financed by LGU as their counterpart to the Project.

The capital per kW installed capacity of the Project is PHP462,654 (USD10,515), increasing by

PHP197,558 from the projected cost of PHP265,096 in 2012.

Table 10: Total Project Cost and Financing Plan (Barangay Getsemane)

Capital I est e t Peso 000 Amount Funding

Electro-Mechanical 3,612.34 ADB

Civil Works 9,693.72 ADB

Construction Supervision 462.00 ADB

Permits and Licenses 111.57 LGU

Operating and Maintenance Expenses

The annual Operating and Maintenance expenses are estimated for a) salaries and benefits of

employees manning the MHPP; b) the maintenance expenses equivalent to 0.5% of Civil Works and

Electro-Mechanical Equipment/works component of Project Cost; c) other administrative expenses

which include transportation, communication, supplies and audit expenses. Table 11 presents the

initial year estimates (2015 prices):




Final Report 43

Table 11: Total Project Operating Expenses (Barangay Getsemane)

Operating Expense Amount

Salaries of Operators/Supervisors 432,241

Maintenance 66,530

Administrative & Miscellaneous 26,000

Total 524,771

Compared to the projections in 2013, there is an increase of almost 300% of the OPEX forecast in the

feasibility study.

MHPP Revenues

(i) The rated capacity of the plant is 30 kW or 262,800 kWh per year. With the assumed total

losses (transmission and other losses) there will be a maximum energy sale of

210,240 kWh/year.

(ii) Under the proposal for the MHPP in Brgy. Getsemane, the Project will sell all the generated

energy to the servicing electric cooperative, the ASELCO. In the actual project

implementation, the revenues will be computed under a Net Metering Arrangement. This is

an arrangement where the MHPP will be registered as a consumer of the Electric

Cooperative (EC) as provided under the Renewable Energy Law for RE systems of less than

100 kW. The export energy of the MHPP (net of GAWA livelihood) under the Net Metering

Arrangement will be valued at the blended generation cost of ASELCO (EC).

(iii) In order to account for the revenues of the MHPP accruing from the total kWh sold, the

projected cash flow will include the CBO livelihood energy consumption priced at the EC

retail rate. This means that the MHPP Cash Flow will reflect sales from the usage of CBO,

simulating the sales of the EC to the CBO as if the former were providing the energy instead

of the MHPP.

(iv) Revenue computation assumes that the energy exported to ASELCO (EC) will be paid

monthly. The volume of sold energy will be net of the consumption of the CBO for its

livelihood operations.




Final Report 44

Cash Flow Projections Assumptions

In evaluating the feasibility of the Project undertaken, the cash flow projections used the following

assumptions:

(i) On the basis of the provision of the grant from ADB to finance the MHPP, the ideal or target

rate of return will be 12%.

(ii) The base scenario will compute for revenues assuming that the energy exported to the EC

will be net of the consumption for the livelihood operations of the CBO based on its the

Business Plan. The blended generation cost is assumed to increase at 3.0% per annum.

(iii) In projecting the operating and maintenance costs for the computation of the rate of return,

the number of staff considered a 24-hour operation with a supervisor and helpers overseeing

operations working on 2 shifts. The staff are also assumed to receive the minimum daily

wage including the mandated insurance (SSS), housing contribution (Pag-ibig Fund) and

medical coverage (PhilHealth).

(iv) The salaries and wages for the administrative component of operations, i.e., cashier,

bookkeeper and Business Manager are assumed to be taken care of by the CBO Operations.

All operating expenses are assumed to increase at 3.3% per annum (CPI).

(v) The MHPP operations is assumed to be VAT-exempt and entitled to a seven-year income tax

holiday (ITH) and thereafter subject to a 10% income tax. This is based on Republic Act No.

9513 as part of the incentives provided to duly-registered RE developers.

(vi) The taxes paid computed the income net of the 25-year depreciation for the total

asset/investment of the MHPP.

4.2.2 Financial Evaluation Results

a) Evaluating the cash flow from the MHPP in the next 25 years shows the operation will be

able to recover the total investment in 20 years given the base scenario assumptions as

discussed above.

b) Aside from generating positive cash flow, the MHPP should be able to pay an assumed 10%

income tax after the seven-year ITH. The annual cash flow will start at PHP0.469 M and will

continue to increase reaching PHP0.969 million by the end of the 25-year projected

operations.

c) However, the cash flows will not be sufficient to bring in the ideal rate of return of 12% (as

projected). First and foremost, the actual investment cost increased by 67%. In addition, the

OPEX projections in this update is 300% higher than the original feasibility study as shown

below:




Final Report 45

Table 12: Initial Year of Operations, 2016 Prices (Barangay Getsemane)

Salaries Maintenance Administrative Total

Feasibility Study 175,116

2015 Update 446,505 68,726 26,858 542,089

d) Taking the ratio of annual operating expenses to total investment cost would show that the

projections in the feasibility study reflected a 2.2% annual OPEX (PHP0.175 Million) to

investment cost (PHP7.953 Million). On the other hand, with the updated initial OPEX

computed at PHP0.542 Million, the ratio to the total investment cost of PHP13.880 M is

equivalent to 3.9 %.

e) In this update, revenues were derived using the blended generation cost and the EC retail

rate. The average rate/ kWh in the initial year is PHP4.81. This is lower than the FIT rate of

PHP5.90 in the feasibility study.

f) The resulting financial indicators of viability indicate a much lower rate of return (IRR)

compared to the desired 12% as projected in the feasibility study. The IRR is at 2% (base

scenario) and the payback period will be 20 years. This is compared to the original study in

the table below:

Table 13: Resulting Financial Indicators (Barangay Getsemane)

Base Scenario Original FS

Net Present Value

Peso (7,979,942)

1,000


Payback Period

years 20

8

Annual Generation kWh 262,800

188,730

Maximum Energy Sold kWh/year 210,240

172,122

Hydro capital cost per kW installed capacity

Peso/kW 462,654

265,096

USD/kW 10,515

6,165

USD: Peso 44 43




Final Report 46

4.2.3 Sensitivity Evaluation Results

a) The sensitivity analysis undertaken in this update considered scenarios involving the (1) %

usage of energy by the CBO, and (2) lower energy sold (60%).

b) Under the first sensitivity scenario, it is projected that the CBO will diversify their livelihood

activities that will require the usage of more electricity in their operations. If they were able

to do this, then the value of revenues generated by the MHPP will be higher compared to

exporting the energy to the EC. This would impact on the computed IRR of the MHPP. This

will also be more beneficial to the CBO members and the community because more

economic activities result from having the MHPP in the Barangay.

c) From a 2% rate of return in the base scenario, a 74% maximum usage of energy by the CBO

by year six (2021) will result to an IRR of 6%, an increase of PHP2.05 M to the net present

value and shortened payback period from 20 years to 14 years.

d) The second sensitivity scenario assumed that the maximum energy sold will only be at 60%

on the basis of less generated energy. This scenario tests the impact on the IRR and to the

cash flow of the reduced energy sales. The forecast shows the annual cash flows are still

adequate to cover the operating and maintenance costs. Under this more conservative

assumption, the net present value of the cash inflows are lower and the resulting IRR is (2%).

e) Table 14 below presents a summary of the findings: (presented in detail in Annex 2-B)

Table 14: Summary of Findings (Barangay Getsemane)

Base Scenario Maximized

Energy Usage 60% Energy Sales

Net Present Value Peso (7,979,942)

(5,933,692) (10,100,795)

Internal Rate of Return % 2% 6% (-2)%

Payback Period years 20 14 >25

Discount Rate % 12

f) In view of the absence of funds required for servicing of loans or return of capital, a scenario

considering the deposit of reserves in included in this update. This is targeted to enable the

CBO to finance the future major capital expenditure (CAPEX) or replacement of the

mechanical component (Asset Replacement Reserves) of the facility.

This scenario is shown as Reserves Scenario in Annex 2-C.

g) The Reserves Scenario shows CBO Reserves (dividends, minor repairs, etc) will accumulate

to about PHP5.10 Million in twenty-five years. For the Asset Replacement Reserves, this will

amount to PHP12.23 M under the base scenario. But under the low generation scenario, the

mount will be 50% lower or about PHP6.12 Million.




Final Report 47

4.2.4 Conclusion

a) From the foregoing, it is deemed that the 30 kW plant at Brgy. Getsemane, Bayugan City is

sustainable in terms of cash flow. Attaining the desired rate of return of 12% (as projected)

is however critically dependent on 1) usage of electricity by the livelihood activities of the

CBO; 2) O & M costs forecast 3) % energy exported to the EC.

b) The evaluation is premised on the basic assumption that the Plant will operate continuously

and is very critical in esta lishi g the P oje t’s feasi ilit .

c) All projections consider a collection efficiency of not less than 99% in projecting cash flows.

No additional CAPEX are provided in the forecast. The monthly maintenance provision

however may be set aside in a fund to ensure that cash are available for repairs and CAPEX

in the future.

d) The tables from the Financial Model developed for this Study are all presented in Annex 2

including the projected financial statements for MHPP operations.

4.3 Multipurpose (Corn) Mill – Business Model for RE appliances

The production of corn was identified as the main income and livelihood component in all three

beneficiary areas. The development and improvement of the production process accompanied by a

possible generation of higher income would most likely have a strongest and positive impact on the

living conditions of the community members. Thus in cooperation with the new established CBOs

the NGOs developed a business plan for the installation and operation of a Multipurpose (Corn) Mill.

The Multipurpose (Corn) Mill is foreseen to be installed in the Multi-Purpose Room and will be

operated by the CBO by using own consumption from the MHPP.

The Business Plans for the operation of the Multipurpose (Corn) Mills for the GAWA, KASAFA and

DARECDA CBO are shown in Annex 3.




Final Report 48

5 Establishment of Community Based Organizations (CBO)

5.1 Establishment of Community Based Organizations (CBO)

Three CBOs were organized for the management and operation of MHPPs at the project sites. With

the exception of Brgy. Sto. Nino wherein the construction of MHPP did not materialize during the

duration of the project due to the destruction of typhoon Seniang to the water source, the Dalupan

MHPP in Don Marcelino and Brgy. Getsemane MHPP in Bayugan City were successfully implemented

in accordance with the plan. The following CBOs were all registered with DOLE Provincial Offices in

Davao del Sur and Agusan del Sur as Associations confirming their legal identities and also registered

with the Bureau of Internal Revenue (BIR) in order for them to be able to transact livelihood activities

with the issuance of official receipts. The three CBOs were also able to open bank accounts in their

respective areas utilizing the Rural Bank of Malita for the Dalupan CBO (DARECDA) and One Network

Bank for the Getsemane and Sto. Nino CBOs (GAWA and KASAFA respectively). Table 15 describes

the CBOs as legitimate organizations duly registered by government agency.

Concerted efforts between the Consultan Team, the NGOs (DPRDI and ALTERDEV), and the LGUs

facilitated the organizing of the three CBOs for the identified project sites.

Table 15: Established Community-Based Organizations (CBOs) for the Project, 2014

Name of organization DoLE registration No. Date registered Remarks

Dalupan Renewable

Energy Community

Development

Association (DARECDA)

ROXI-DSPO-WA-09-2014-

547

03 September

2014

- 167 members Members

(38 women; 129 men)

-Registered with BIR on 10

September 2014; Bank

Account with Rural Bank of

Malita

Getsemane Agricultural

Workers Association

(GAWA)

CARAGA-ADS-2014-12-

WA-146

02 December

2014

- 94 Members (36 women;

58 men)

-Registered with BIR on 20

April 2015; Bank Account

with One Network Bank

Kapines-Awaan Sto.

Nino Agriculture

Farmers Association

(KASAFA)

CARAGA-ADS-2014-12-

WA-149

15 December

2014

- 72 Members (40 women;

32 men)

Note: DoLE – Department of Labor and Employment; BIR- Bureau of Internal Revenue




Final Report 49

CBO Structure

The three CBOs have almost similar organizational structure as Association (Figure 4). The General

Assembly (GA) is the highest governing body in the structure as this is composed of all the members

and officers of the CBOs. The members of the CBO duly elects the Board of Directors that are

comprised by the officers of each community-based organization.

Guiding Principles

Accountability &

Responsibility

Figure 4: Organizational Structure of CBOs at Project Sites, 2014

Du i g the CBOs’ t ai i g o O ga izatio al De elop e t, it as e phasized the NGO fa ilitato s that principles of accountability and responsibility be adopted by the CBOs in the selection of officers

and personnel for the organization. While the GA is responsible in looking at the performance of the

BOD and subsequently down the line, the different committees are accountable to the BOD, which

is then held responsible to the GA. The CBOs differ in the number of committees that they formed

depending on their focus of tasks within the organization. For DARECDA, they have created four

committees, namely: MHPP, Public Information, Education, and Livelihood/Credit. For Getsemane

and Sto. Nino sites, they have committees on Power Tender, Education, and Credit. Primarily, the

specific committees were set up to divide the tasks and focus on major activities by the organization.

General Assembly

BOD

President

Vice-President

Secretary

Treasurer

Auditor

Business Manager

Livelihood

Committee/Credit

Committee

Education Committee

Public Information

Committee

MHPP/Power Tender

Committee




Final Report 50

MHPP Operators/power tenders at the project sites

Table 16: MHPP Operators per Project Site

Project site Men Women

Barangay Dalupan Abuzayer Aradani

Richard Sumbo

Allan Kiyo

Aurelio Dalucan

Ernesto Guintolon

Honasan Tale

Jovena Tusan

Priscilia Mante

Barangay Getsemane Samuel Bolondros

Joseph Marsada

Jessie Castillon

Elwin Anding

Junie Ardiente

Armando Quinte Jr.

Jonathan Momo Jr.

Ermilda Momo

Rosa Lastima

Only few women were interested to be part of the MHPP operation/maintenance team/ committee.

In each of the project areas, CBOs were established purposely to operate, manage and maintain the

MHPP and livelihood activities. Once set-up and organized, CBOs were provided with several

training-workshops to equip them to do the identified required tasks.

Establishment of Community-Based Organizations (CBO)

The organizing of CBO started in June to August 2014 in Barangay Dalupan through meetings by the

CT with the community and with the active participation of LGU of Don Marcelino. The months of

October to November 2014 were mostly focused in the conduct of training-workshops of CBOs by

NGOs and with the guidance of the CT. Coaching sessions were conducted as a follow through




Final Report 51

activities in order for the CBOs to understand better and apply what they have learned from the

training-workshops through hands-on activities.

It is important to note that in the establishment of CBOs, it entails series of and constant

networking/coordination work with various groups such as: LGUs at the municipal and barangay

levels, NGOs, ECs, communities (including tribal councils/leaders/elders), and NCIP FBI/FPIC Teams

and their Regional and Provincial Offices. Specific organization of CBOs is reflected in Table 14.

5.2 Capacity Building for CBO

5.2.1 Training and advisory service for CBO management

The following training-workshop topics and sessions were provided to the three CBOs, all-necessary

for the implementation of the project (Table 17). All training sessions were conducted in the

o u it e e s’ lo al la guage Ce ua o e e ith the IP o u ities, as this as the common language that can be understood and used by the community members. In cases where

some of the words/phrases were not understood by some members, then somebody from the CBO

who can translate in IP language usually assist the facilitators during the conduct of training just to

make sure that everyone understood the basic concepts in each topics that were given.

Table 17: Training-Workshops provided to the CBOs in the Three Project Sites, 2014

Schedule of Training Topic No. of participants Location

Oct. 2-4. 2014 Organization & Project

Management

15 (9W; 6M) Bgy. Sto. Nino

Oct. 9-11, 2014 Organization & Project

Management

15 (8W; 8M) Bgy. Getsemane

Oct. 21-22, 2014 Policies, Systems &

Procedures


Oct. 27-28, 2014 Policies, Systems &

Procedures


Oct. 28-30, 2014 Organizational

Development and

Policies, Systems, and

Procedures

16 (5W; 11M) Bgy. Dalupan

Nov. 12-14, 2014 Simple Business

Planning



Planning


Nov. 26-28, 2014 Basic Accounting and

Financial Management



Planning


Jan. 28-30, 2015 Financial Management

and Simplified

Bookkeeping

13 (7W; 6M) Combined participants

from Bgy. Getsemane




Final Report 52

and Sto. Nino; held in

Bayugan City

For the participants of the training-workshop, all officers and some members of the three CBOs were

required to attend and participate. DARECDA CBO had 16 participants (with five women and 11 men).

Getsemane CBO GAWA had 15 participants (with eight women, seven men) while Sto. Nino also had

15 participants (with nine women, six men).

Members of the CT were able to sit down with the NGOs to review their modules prior to the conduct

of each training activity. Suggestions to simplify the modules and the need to translate these in the

local language (Cebuano) were made. In each training workshop activity, introductory messages was

provided by the Social Development & Gender Specialist to set the tone with emphasis on the

importance of such undertaking in relation to the goals and objectives of the TA Project. Other tasks

provided by the Consultants were specific inputs, coaching during the workshop sessions, and

advises during the activity proper to the NGO Team and CBOs.

5.2.2 Financial Capacity Building of CBO members

Training-workshops on financial capacity of CBOs were included in the roster of topics (Table 17)

given to them that include Basic Accounting and Financial Management, Simplified Bookkeeping and

Simple Business Planning. Series of coaching sessions were also provided to the CBOs related to each

training-workshop that they get and during practice/hands-on of specific task especially by Officers

or BODs. This way, they get the feel of the responsibilities assigned to them and understand their

roles better.

It was however observed that the CBOs’ level of understanding, as well as absorption of the topics

varied. For example, for Dalupan Community which has undergone previous engagements with other

development agencies such as the Upland Development Program (UDP), Mindanao Rural

Development Program of the World Bank (MRDP), have relatively better understanding of the topics.

For communities like the Barangay Getsemane and Barangay Sto. Nino in Bayugan City with relatively

previous limited or no exposure with development agencies, it takes time for them to understand

simplified versions of the topics especially on Financial Management and Bookkeeping. It is therefore

very significant to provide them a series of coaching sessions given the limited time frame of the

project.

5.2.3 Financial Capacity Building of CBO Members for Fund Management and

Livelihood / Enterprise Development

In line with overall tasks to build the capabilities of CBOs in managing the RF, the DPRDI Project Team

coordinated with DARECDA in providing the necessary intervention among participant-beneficiaries

in the pilot-testing phase. Considering that half of these beneficiaries were agricultural producers




Final Report 53

engaged in corn production, the seminar on Sustainable Agriculture conducted in May 2015 focused

on sustainable agricultural practices and the many benefits derived they provide to farmers. As part

of their outputs, participants were asked by DPRDI to come up with their production plan that

determines the necessary budget allocation for each activity. This would also serve as part of the

individual monitoring of farming beneficiaries on their revolving fund utilization.

For the electricity-based household beneficiary-participants of the three CBOs, the seminar focused

on proper and appropriate financial recording that would allow them to monitor expenses in their

micro-enterprises. By training them to do proper recording of their expenses, beneficiaries are

trained along the process to strictly monitor and observe the inflow and outflow of money in their

economic activity.

Insights gathered from the experiences of both set of beneficiaries shall be collected by the NGOs

through its own monitoring and documentation activities. In a similar manner, the CBOs will be

trained in this kind of monitoring as part of their hands-on training and learning in managing their

revolving funds in the future.

5.2.4 Introduction of microfinance institutions or credit facilities to support the capital

requirements of the new technology

The Consultant Team in cooperation with the NGOs Alterdev for the Bayugan City, Agusan Del Sur

subproject and DPRDI for the Municipality of Don Marcelino, Davao Del Sur subproject region

identified all together three institutions which are providing micro finance services to cooperatives

and business organizations in Mindanao. Those services can be used from the CBOs for a future

support of their business activities including the introduction of new technologies. However, at the

current stage the CBOs in the three project sites are not yet in the position and required to handle

with additional financial sources. The management of the CBOs first has to ensure and experience

the correct execution of the Revolving Fund before new financial sources need to be used.

The following institutions will provide micro-financial services:

Baug CARP Beneficiaries Multi-Purpose Cooperative (BCBMPC)

BCBMPC started as an association called Magallanes Aqua Culture Developers Association (MACDA).

It was registered into cooperative last February 8, 1995 under CDA Registry Number CGY-1883 and

re-registered on November 9, 2009 under the new registration number 9520-1300-1993. It was

composed of Agrarian Reform Beneficiaries (ARB) involved in extensive or primitive culture of bangus

and sugpo with limited stocking per hectare. The Board of Directors and Management shift its

operations to savings and credit in February 23, 2004. The cooperative expand its services to the

community to the whole province of Agusan del Norte, Cabadbaran City, Butuan City, Surigao City

and Bayugan City.




Final Report 54

The cooperative has an existing 102 employees for the 3 operations. The BCBMPC is one of the CUES

– Philippines partner in CARAGA Region which is a program of USAID tie up with the World Council

of Credit Union (WOCCU). The cooperative adheres to the financial disciplined introduced by CUES-

Philippines that adopts the MCUB Methodology in order to become a Model Credit Cooperative that

assures the safety of the investments of cooperative members, to become stable and sustained its

operations for a couple of years.

The cooperative promote trainings for all its staff and officers to develop their skills and capabilities

to become competent in the delivery of quality service to all its members.

Alterdev has already many years of successful cooperation with BCBMPC.

BCBMPC Contact Details:

Tel. No. : Butuan Branch- (085) 342-8816

Email: [email protected]

CDA- Registration Number 9520-13001993

San Francisco Growth Enhancement Multi-Purpose Cooperative (SAFRAGEMC)

SAFRAGEMC provides Financial, Economic and Social Services for the Welfare and Development of

its members and to Communities in the region and calls itself an alternative to commercial banking.

It supports and strengthens the core values, e.g. Self-help, Self-responsibility, Democracy, Solidarity,

Equity, Equality, Honesty, Caring for Others, Openness and Social Responsibility.

The Cooperative provides loans on Salary, Commercial, Agricultural Production, Emergency, Pension

and Micro-Finance and savings in terms of Regular Savings, Time Deposit, Kiddie Savings and Youth

Savings.

Alterdev has already many years of successful cooperation SAFRAGEMC

SAFRAGEMC Contact Details:

Head Office : National Highway, Brgy. 5, San Francisco, Agusan del Sur

Tel. No. : (085) 839-5110

C. E. O. : Frederico A. Blanco

Website : www.safragemcommunity.com

CDA- Registration Number 9520-13011486

http://www.safragemcommunity.com/




Final Report 55

Peoples Bank of Caraga, Inc. (PBC)

The Peoples Ba k of Ca aga, I . PBC e isio s so ial uplift i the ou t side ought a out widespread, worthwhile and sustainable economic activities, generated from appropriate

te h ologies a d effe ti e edit fa ilities. Its issio is to effi ie tl deli e desi a le fi a ial services to the countryside, supplemented by capacity building for enterprise development, and

utilization of suitable technologies, towards sustainable livelihood and improved quality of life

among the less-privileged sectors of society.

Founded in 1972 as the Rural Bank of Talacogon, Inc., PBC acquired its current name in 2001. Today,

it has branches in Bayugan, Cabadbaran, Prosperidad, Sibagat, Digos, Lupon, San Francisco, Sta.

Josefa, Compostela, Oroquieta, Talacogon, and Kapalong.

The Head office is at San Francisco, Agusan del Sur and it has 12 branches across Mindanao (1 branch

in Digos, Davao del Sur).

It provides the following services:

Time and premium saving deposit

Agricultural loan

Commercial loan

SME loan

Micro Finance Loan with Micro Insurance package, such as:

- Micro Agricultural loan

- Farm inputs financing loan

- Small business loan




Final Report 56

6 ESTABLISHMENT AND INITIAL OPERATION AND MANAGEMENT OF

THE REVOLVING FUNDS FOR LIVELIHOOD ENHANCEMENT

6.1 Background

Part of the tasks in assisting the community subjects of the grant to develop and pilot viable business

models for livelihood development is the establishment and operation of revolving funds.

Specifically, one of the livelihood activities that will utilize the revolving funds is the establishment

of a CBO micro-credit facility catering the financing needs for the electricity-based household micro

enterprises and farm production inputs of the members of the CBOs.

The revolving fund / micro-credit facility is part of the total Revolving Fund Grant that is provided

under the Technical Assistance Grant of the ADB.

6.2 Pilot Testing

6.2.1 Approach

To ensure that the communities are prepared for the operation of the micro-credit facility, the pilot

testing of the operation and management of the revolving funds was facilitated by the Consultant

Team early this year. The objectives of the Revolving Fund (RF) pilot-testing are as follows:

i. To determine and enhance the capability of the CBO in the operation and management

of the RF.

ii. To determine the effectiveness of the RF in addressing the livelihood and micro-

enterprise needs and potentials of the community households, and

iii. To capture and provide the lessons and references for the subsequent regular operation

and management of the revolving funds.

The actual conduct of the pilot testing on the operation and management of the Revolving Fund

(micro-credit facility) started in May 2015 and was completed by August 2015. The details of the

activities, roles and responsibilities of CBOs, member-recipients of Pilot testing loans and Consultant

Team members who are monitoring the process; and the procedures and policies to be tested are

contained in the proposals submitted by the NGOs (Annex 4).

6.2.2 Implementation of Pilot-Testing of the Revolving Funds

The months of May to August 2015 marked the pilot testing of the RF scheme in the three project

sites.




Final Report 57

With the selected beneficiaries fulfilling all requirements for the pilot testing of the operation and

management of the revolving funds coming from the Project, the NGOs DPRDI and ALTERDEV

facilitated efforts for the immediate release of budget coming from ADB and its subsequent

downloading from Lahmeyer International. With this, the funds were downloaded to NGOs and

subsequently deposited to the account of the CBOs DARECDA, GAWA, and KASAFA, which in turn

released them to its intended household beneficiaries. The official receipt of funds by beneficiaries

from each CBOs marked the start of the pilot-testing phase in the RF management and utilization

(see also Table 18 for details).

O e all, the CBOs’ C edit/Li elihood Co ittees as ell as NGOs have closely monitored the pilot

household beneficiaries on the utilization of abovementioned funds. Other pertinent undertaking in

the RF pilot-testing scheme involves the crafting of specific steps and procedures in loan processing

of household beneficiaries (Table 18).

Table 18: Steps and Procedures in Loan Processing for RF Pilot-Testing Implementation

Steps in Loan Processing for CBOs

Filling-up of loan application form by the CBO member beneficiaries

Processing of loan application by the Credit Committee

Conduct orientation/seminar to the loan applicants/household beneficiaries

CBO will validate, approve and submit request for fund release to NGO based on the budget allocation

NGO will validate, approve, and release the requested funds to the bank account of the CBO

CBO will release loan amount to the member borrowers/household beneficiaries

NGO and CBO will monitor and evaluate the individual household beneficiaries of the RF pilot testing

implementation

Collection of loan repayment of household beneficiaries

Safekeeping of funds through proper financial recording

For DARECDA CBO, the RF pilot testing loan package is provided below (Table 19) highlighting five

farming household beneficiaries and five electricity-based (micro-enterprise) household

beneficiaries. The data shows amount of loan package by individual household beneficiaries, interest

and service charges, loan duration, and repayment mode.

Table 19: DARECDA RF pilot testing loan package for farming and electricity-based micro-enter-

prise household beneficiaries, Barangay Dalupan, Don Marcelino

Loan Categories

Principal

loan

amount

Interest

rate

Service

charges

Duration

of loan

Repayment

mode

A. Electricity-based household microenterprise beneficiaries

1. Fish Vending

Emeriza Aradani

2,000.00

3 months Weekly

Payment




Final Report 58

Loan Categories

Principal

loan

amount

Interest

rate

Service

charges

Duration

of loan

Repayment

mode

2. Ice Candy Production

Delyn Masayao

1,000.00

1%/mo.

or 3% for

the entire

3 months

duration

of the

loan

1%

3 months Weekly

payment

3. Softdrinks retail

Sherra Mae Esmael

2,260.00 3 months Weekly

Payment

4. Ice production

Randy Pandamon

1,000.00 3 months Weekly

Payment

5. Furniture tool (electric planer)

Ricolito Campaan

3,000.00

3 months Weekly

Payment

Sub-total 9,260.00

B. Farming household beneficiaries*

6. Corn Production – 1 ha.

Sebio Tali

6,820.00

1%/mo.

or 3% for

the entire

3 months

duration

of the

loan

1%

3 months Lump-sum


Jerry Dalucan

6,820.00 3 months Lump-sum


Ernesto Guintolon



Nomerson Limburan



Lisa Tanway

6,820.00

3 months Lump-sum




Final Report 59

Loan Categories

Principal

loan

amount

Interest

rate

Service

charges

Duration

of loan

Repayment

mode

Sub-total 34,100.00

Total 43,360.00

* Includes seedlings and farm inputs only

For GAWA CBO in Getsemane project site, the loan package of RF pilot testing implementation is

reflected in details in Table 20.

Table 20: GAWA RF Pilot Testing Loan Package for Farming and Electricity-Based Micro-Enterprise

Household Beneficiaries, Barangay Getsemane, Bayugan City

Loan Categories

Principal

loan

amount

Interest

rate

Service

charges

Duration of

loan

Repayment

mode

A. Electric-based household microenterprise

1 Frozen foods marketing

3,000.00 3% per

month

2 % 3 months Payment

2 Chicks growing/raising

5,000.00 3% per

month

2 % 3 months Weekly

payment

3 Waffles & hot cake making

3,000.00 3% per

month

2 % 3 months Weekly

Payment

B. Farming household beneficiaries

4 Pechay and baguio beans

farming

3,000.00 3% per

month

2 % 2.5 months Lump-sum




Final Report 60

Loan Categories

Principal

loan

amount

Interest

rate

Service

charges

Duration of

loan

Repayment

mode

5 Pipino/cucumber and baguio

beans farming

3,000.00 3% per

month

2 % 2.5 months Lump-sum

6 Corn farming

4,000.00 3% per

month

2% 3 months Lump-sum

7 Corn farming

4,000.00 3% per

month


Total 25,000.00

Table 21: KASAFA RF Pilot Testing Loan Package for Farming and Electricity-Based Micro-Enterprise

Household Beneficiaries, Barangay Sto. Nino, Bayugan City

Loan Categories

Principal

loan

amount

Interest

rate

Service

charge

Duration of

loan

Repayment

mode

A. Electricity-based household micro-enterprise

1. Frozen Foods marketing 3,000.00 3% per

month

2% 3 months Weekly

Payment

2. Coffee vending and fruit

salad marketing

3,000.00 3% per

month

2% 3 months Weekly

payment

3. Waffles & hot cake making 3,000.00 3% per

month

2% 3 months Weekly

Payment

B. Farming household beneficiaries

4. Pechay and baguio beans

farming

3,000.00 3% per

month

2% 2.5 months Lump-sum

5. Pipino/cucumber and baguio beans

farming

3,000.00 3% per

month

2% 2.5 months Lump-sum

6. Corn farming 4,000.00 3% per

month


7. Corn farming 4,000.00 3% per

month


Total 23,000.00

Interest charges and service fees were included in the loan package of the three CBOs to cover

operating expenses of the organization in administering the loan programs. The collected interest




Final Report 61

and service fees will go to the institutional fund of the CBO. This fund will cover related operational

and other miscellaneous expenses.

6.2.3 Profiling of Potential Beneficiaries and Livelihoods for Pilot-Testing

An initial but very important aspect of pilot-testing the operation and management of the revolving

fund in the Project is the proper screening and selection of beneficiaries and their preferred

livelihood. Both NGOs – DPRDI and ALTERDEV Project Teams had conducted the profiling of

household-based livelihood activities, focusing on those involved in micro-enterprises and

agricultural production. Specific roles, functions, and responsibilities in the RF pilot testing

implementation are provided in Table 22.

Table 22: Roles, Functions, and Responsibilities in the RF Pilot Testing Implementation

NGOs CBOs Household Beneficiaries

Conduct orientation

relative to the pilot testing

scheme

Assist/coach in selection

of household

beneficiaries

Assist/coach in the

processing of loan

application

Validate, approve and

release of funds to the

CBO’s a k a ou t; Assist/coach the

household beneficiaries

in implementation of

livelihood options

Assist/coach in the

collection of accounts

Assist/coach in the

financial control and

recording of all financial

transactions;

Provide capability-

building activities to

enhance and develop

the managerial skills of

the CBOs.

Evaluate and monitor

the livelihood projects

Document individual

experiences of


Select household

beneficiaries for pilot testing

based on criteria

Process loan application of

the household beneficiaries

Approve and release loans to


Conduct monitoring and

evaluation of beneficiaries

Collection of loan accounts

Financial control and

recording of all the financial

transactions

Manage the designated

personnel involved in the

operation of revolving funds

Access funds through loan

application

Manage revolving fund /loan

according to its purpose

Pay loan following the terms

and conditions (policies,

systems and procedures of

RF)

Participate in all activities

called for and conducted by

the CBOs (e.g., seminars and

meetings)




Final Report 62

After careful screening of potential candidates for the pilot testing of revolving funds were

undertaken, the list of beneficiaries was finalized in each project sites.

6.2.4 Community Discussions of Approved Policies for Revolving Fund Management

In accordance with the efforts to further clarify and harness the cooperation of the community for

the e ol i g fu ds a aila le i the P oje t, the NGOs ith the CT’s assista e o du ted o u it consultations as regards the utilization and process of accessing the available resources. Community

discussions with the three CBOs (DARECDA, GAWA, and KASAFA) largely focused on the objectives

and methodology to be applied in the revolving fund.

For the methodology, this focused on the following items: a) project management; b) pilot test

duration; c) roles, functions and responsibilities of parties; d) criteria for selection of beneficiaries;

e) loan procedure; f) loan package, interest and other charges, and; g) bases for loan allocation per

enterprise. Subsequent discussions as regards monitoring and evaluation and budgetary

requirements were likewise discussed with the CBOs. This was to ensure that the project remains

transparent in dealing with its beneficiaries in the community.

To make sure that all stakeholders are properly informed on the project, additional discussions were

o du ted ith the a a ga , u i ipal, a d it LGU offi ials th ough the p oje t’s o ta t pe so s at the planning offices of both project areas as well as ECs. These discussions emphasized the co-

management scheme in the revolving funds of the CBOs. Through these efforts, stakeholders in the

ADB-funded project remained committed in their perceived roles and functions in project

implementation.

As a result of the coordinated efforts, beneficiaries were carefully selected for the RF implementation

based on the set criteria by the CBOs (Table 23). It also clarified and enhanced the objectives,

methodology, and policies, system and procedures on RF utilization and management through the

active participation and involvement of various stakeholders in the whole process.

Table 23: Criteria for Selection of Household Beneficiaries of RF Pilot Testing Implementation

Farming household beneficiaries Electricity-based household beneficiaries

CBO member in good standing/active

Corn/vegetable farmer

Participated in the orientation of RF policies,

systems and procedures

CBO member in good standing/active

Business knowledge/experience in micro

enterprise




Final Report 63

Good credit standing/record in loan repayment Participated in the orientation of RF policies,

systems and procedures

Good credit standing/record in loan repayment

6.2.5 Pilot Testing Results

Initial assessments of the CBOs and NGOs on the status of RF implementation repayment showed

positive results such that all electricity-based microenterprise household beneficiaries in the three

project sites were able to pay their loans according to the set schedules. Farming household benefi-

ciaries in Dalupan, Don Marcelino have already paid either in full or partial their loans in mid-August

2015 and expected to have been fully paid at the end of the cropping cycle of their farm production

activities, which will be until end of August 2015 (Table 24 and Table 25). For KASAFA CBO benefi-

ciaries in Barangay Sto. Nino, Bayugan City, the NGO reported that all household beneficiaries have

already fully paid their loans from the revolving fund last August 9, 2015 while for GAWA CBO bene-

ficiaries, it is expected that all will full pay their loans end of August 2015.

Table 24: Repayment of DARECDA Farming Household Beneficiaries for the Revolving Fund Pilot

Testing as of August 11, 2015

Name of

Beneficiaries

Livelihood

Activities

Date of

loan

release

Amount

Loan

Service

Fee (1%)

collected

last May

29, 2015

Interest

for 3

months

(3%)

collected

last May

29, 2015

Date of

Payment

Amount Paid

by the

Beneficiaries

Balance

1.Sebio Tali Farming-

Corn

Production

May

29,

2015

6,820.00 68.20 204.20 August

10, 2015

3,000.00 3,820.00

2.Ricardo

Tamway

Farming-

Corn

Production

May

29,

2015

6,820.00 68.20 204.20 Aug. 11.

2015

500.00 6,320.00

3.Ernesto

Guintolon

Farming-

Corn

Production

May

29,

2015

6,820.00 68.20 204.20 August

11, 2015

5,000.00 1,820.00

4.Romerson

Limburan

Farming-

Corn

Production

May

29,

2015

6,820.00 68.20 204.20 August

11, 2015

6,820.00 0

5,Jerry

Dalucan

Farming-

Corn

Production

May

29,

2015

6,820.00 68.20 204.20 August

9, 2015

800.00 6,020.00

Total 34,100 341.00 1,021.00 16,120.00 17,980.00




Final Report 64

Table 25: Repayment of DARECDA Non-Farming Household Beneficiaries of the Revolving Fund

Pilot Testing as of August 11, 2015

Name of

Beneficiaries

Livelihood

Activities

Date of

loan

release

Amount

Loan

Service

Fee (1%)

collected

last May

29, 2015

Interest

for 3

months

(3%)

collected

last May

29, 2015

Date of

Payment

Amount Paid

by the

Beneficiaries

Balance

1. Loreto

Aradani

Fish

Vending

May 29,

2015

2,000.00 20.00 60.00 August

8, 2015

500.00 1,500.00

2.Bocarie

Esmail

Soft drinks

Retailing May 29,

2015

2,260.00 22.60 67.80 August

9, 2015

500.00 1,760.00

3.Ricolito

Campaan

Furniture

May 29,

2015

3,000.00 30.00 90.00 August

8, 2015

3,000.00 0

4.Geniars

Masayao

Ice Candy

Production May 29,

2015

1,000.00 10.00 30.00 August

8, 2015

500.00 500.00

5.Antara

Ismail

Ice Candy

Production May

29,2015

1,000.00 10.00 30.00 August8,

2015

300.00 800.00

TOTAL

9,260.00 92.00 277.80 4,800.00 4,460.00

a) Getsemane Agricultural Workers Association (GAWA)

i. As p ese ted du i g the Thi d “takeholde s’ Wo kshop o du ted o Jul 30, 2015, the

CBO made progress in managing the loans extended to its members totaling PHP25,000.

ii. Both the Credit and Education Committee functioned effectively enabling the release of

the loans before the end of May 2015.

iii. As of mid-July, the loans for electricity-based household micro enterprises amounting to

PHP11,000 (three member families) have settled 35% of the loans (one loan falling short

of the total amount due).

iv. In addition, two of the four loans totaling PHP14,000 household farm loans have settled

89% of the principal amount borrowed. The rest (two loans) are due by harvest time or

not earlier than July 31, 2015.




Final Report 65

b) Kapines-Awaan Sto Nino Agricultural Farmers Association (KASAFA)

i. As p ese ted i the Thi d “takeholde s’ Wo kshop o du ted o Jul 30, 2015, the CBO

made progress in managing the loans extended to its members totaling PHP23,000.

ii. Both the Credit and Education Committee functioned effectively enabling the release of

the loans before the end of May 2015.

iii. As of mid-July, the loans for electricity-based household micro enterprises amounting to

PHP9,000 (three member families) have a 96% collection efficiency on the principal

amount.

iv. In addition, one loan amounting to PHP3,000 out of the total PHP14,000 household farm

loan is fully paid. The rest (three loans) are due by harvest time or not earlier than July

31, 2015.

c) Dalupan Renewable Energy Development Association (DARECDA)

i. As p ese ted i the Thi d “takeholde s’ Wo kshop o du ted o Jul 30, 2015, the CBO

made progress in managing the loans extended to its members totaling PHP43,360.

ii. Both the Credit and Education Committee functioned effectively enabling the release

of the loans before the end of May 2015.

iii. As of mid-July, the loans for electricity-based household micro enterprises amounting

to PHP9.260 (five member families) have an outstanding principal loan of 48%.

iv. In addition, one loan amounting to PHP6,820 for household farm production is fully

paid. The rest (four loans) are due by harvest time or not earlier than July 31, 2015. By

August 11, 2015, the outstanding principal loan is 53% of PHP34,100 or equivalent to

PHP17,980.

6.3 Revolving Fund Forecast

With the grant of a Revolving Fund which will provide the initial capital for the micro-financing facility

for the CBO, the forecast of the resulting financial position of the loan operations was made. The

following general assumptions are the bases for projecting the operations:




Final Report 66

a) Capital

The assumed capital is based on the total number of potential members of the CBO. The

initial RF capital will allow 20% of the members to borrow an average of PHP10,000 loan.

These loans shall be used by the recipients for electricity-based household micro-

enterprises and household farm production inputs. Considering the low revenue base,

the CBO will not be able to immediately cover its operating expenses. Thus, the capital

provision will include a working capital to defray the initial year expenses.

b) Revenues & Collection Efficiency

A 2% service fee will be deducted from the total loan amount with interest rates of 3%

per month payable in four months. The CBO shall lend out whatever is collected every

month minus the salaries and administrative expenses of the CBO. The CBO should

ensure a 97% collection efficiency (PHP97 collected out of every PHP100 loan

amortization due from members) to attain the forecast cash position.

c) Expenses

The CBO shall hire a loan officer who shall be responsible for bookkeeping and reporting

to the CBO Board and Management. The other staff (collector) is assumed already hired

in the other livelihood activities of the CBO, not chargeable to the micro-credit RF facility.

d) Profitability

A three-year forecast of the operations of the micro-financing facility of the CBO shows

modest profitability. All three CBOs should also be able to maintain a positive asset

growth rate during the three-year operations. This means that the CBOs can sustain their

operations and not erode its loan capital and cash provided to them through the grant

of Revolving Fund.

e) DARECDA Financial Forecast

i. In its initial 3 years operation, the PHP400,000 loan capital should be able to make

available a total of 130 loans a year (or equivalent to more than three turnovers for

the year). This is also on account of the initial working capital for operating expenses

which enabled more loan repayment collection to be available for new loans to

members.




Final Report 67

ii. The CBO will earn an average of PHP761 total interests on one loan. On the other

hand, the average salary that the CBO can manage to pay is only around PHP7,000 a

month . This is on the assumption that the employees work for 20 days a month.

Table 24: DARECDA, Project Income Statement

Year 1 Year 2 Year 3

Revenue

Service fee 26,000 25,397 32,187

Interest income 92,223 93,700 114,432

Total Revenue 118,223 119,097 146,620

Less Operating Expenses

Salaries 75,292 77,777 80,343

Office Maintenance & Supplies 1,200 1,240 1,281

Transportation 3,000 3,099 3,201

Communication 1,800 1,859 1,921

Total Operating Expenses 81,292 83,975 86,746

Net Income 36,931 35,122 59,874

iii. Assuming the 97% collection efficiency target is attained, the operations will result

to an over-all asset growth rate of 8.8% in the next three years. Their collection

performance will be the critical factor in ensuring that there are cash available for

members to borrow.

Table 25: DARECDA, Projected Cash Flow


Collection Efficiency 97% 97% 97%

Collection – Interest 82,958 100,155 113,810

Collection - Principal 1,044,373 1,193,653 1,436,013

Membership Capital - - -

Total Collection from Loans & Capital 1,127,331 1,293,808 1,549,823

ADB Revolving Fund Grant 400,000

Total Receipts 1,527,331 1,293,808 1,549,823

Less: Loan Releases 1,274,000 1,244,439 1,577,175

Less: Operating Expenses 81,292 83,975 86,746

Total Disbursements 1,355,292 1,328,414 1,663,921

Cash Inflow from Lending Activities 172,039 (34,606) (114,097)

Beginning Balance, Petty Cash 81,292 253,331 218,725

Ending Cash Balance 253,331 218,725 104,627

iv. By the end of the third year of operations, the CBO which had an PHP81,292 petty

cash from the RF Grant funds at the start of operations would have raised this to

almost PHP105 thousand with Loans Receivable of P505 thousand. The projected

financial statements are shown below:




Final Report 68

Table 26: DARECDA, Projected Balance Sheet


Asset:

Current Assets 508,958 550,535 609,787

Cash 253,331 218,725 104,627

Loans Receivable 255,627 331,810 505,159

Interest Receivable 9,266 2,811 3,433

Total Assets: 518,223 553,346 613,220

Liabilities and Equity:

Grant from ADB 481,292 481,292 481,292

Member Capital Contribution - - -

Retained Earnings 36,931 72,054 131,928

Total Equity 518,223 553,346 613,220

Total Liabilities and Equity 518,223 553,346 613,220

f. GAWA Financial Forecast

i. In its initial three years operation, the PHP300,000 loan capital should be able to

make available a total of 90 loans a year (or equivalent to three turnovers for

the year). This is also on account of the initial working capital for operating

expenses which enabled more loan repayment collection to be available for new

loans to members.


hand, the average salary that the CBO can manage to pay is only around

PHP5,600 a month . This is on the assumption that the employee work for 20

days a month.

Table 29: GAWA, Projected Income Statement


Revenue

Service fee 17,000 18,354 21,164

Interest income 61,064 64,039 80,107

Total Revenue 78,064 82,393 101,271


Salaries 72,500 74,893 77,364





Net Income 564 2,335 18,571




Final Report 69

iii. Assuming the 97% collection efficiency target is attained, the operations will

result to an over-all asset growth rate of almost 2.7% in the next 3 years. Their

collection performance will be the critical factor in ensuring that there are cash

available for members to borrow.

Table 27: GAWA, Projected Cash Flow



Collection – Interest 55,686 67,495 79,625

Collection - Principal 706,306 804,506 1,019,532


Total Collection from Loans & Capital 761,992 872,002 1,099,157


Total Receipts 1,061,992 872,002 1,099,157

Less: Loan Releases 833,000 899,343 1,037,047


Total Disbursements 910,500 979,400 1,119,746




iv. By the end of the third year of operations, the CBO which had an PHP81,292 petty cash

from the RF Grant funds at the start of operations would have raised this to almost

PHP101,004 with Loans Receivable of PHP295,563. The projected balance sheet is shown

below:

Table 28: GAWA, Projected Balance Sheet


Asset:

Current Assets 372,686 378,477 396,567

Cash 228,992 121,594 101,004



Total Assets: 378,064 380,399 398,970


Grant from ADB 377,500 377,500 377,500


Retained Earnings 564 2,899 21,470

Total Equity 378,064 380,399 398,970





Final Report 70

g. KASAFA Financial Forecast

i. In its initial three years operation, the PHP250,000 loan capital will enable a total of

73 loans a year (or equivalent to almost three turnovers for the year). This is also on

account of the initial working capital for operating expenses which enabled more

loan repayment collection to be available for new loans to members.


hand, the average salary that the CBO has to pay amounts to PHP4,500 a month.

This is on the assumption that the employees reports for only 20 days a month.

Table 29: KASAFA, Projected Income Statement


Revenue

Service fee 14,600 14,726 18,298

Interest income 51,931 52,122 68,922

Total Revenue 66,531 66,848 87,220


Salaries 58,540 60,472 62,467





Net Income 2,991 1,211 19,418

iii. Assuming the 97% collection efficiency target is attained, the operations will result

to an over-all asset growth rate of almost 3.2% in the next 3 years. Their collection

performance will be the critical factor in ensuring that there are cash available for

members to borrow.

Table 30: KASAFA, Projected Cash Flow



Collection - Interest 46,903 55,586 68,418

Collection - Principal 592,440 659,117 873,366


Total Collection from Loans & Capital 639,343 714,703 941,785


Total Receipts 889,343 714,703 941,785




Final Report 71

Less: Loan Releases 715,400 721,566 896,613


Total Disbursements 778,940 787,202 964,416




iv. By the end of the third year of operations, the CBO which had an PHP63,540 petty

cash from the RF Grant funds at the start of operations would have raised this to

almost PHP78,812 with Loans Receivable of PHP256,280. The projected balance

sheet is shown below:

Table 31: KASAFA, Projected Balance Sheet


Asset:

Current Assets 311,503 316,178 335,092

Cash 173,943 101,443 78,812



Total Assets: 316,531 317,742 337,159


Grant from ADB 313,540 313,540 313,540


Retained Earnings 2,991 4,202 23,619

Total Equity 316,531 317,742 337,159


6.4 Training and Advisory Service for Revolving Fund Management

The first and second quarter of 2015 (with the extended time frame of the project) were focused on

the piloting of Revolving Fund (RF) at the household level in the three project sites. The piloting

involved selected households with farming as major livelihood activity as well as households that

utilize electricity-based microenterprise. The NGOs ALTERDEV and DPRDI with close guidance and

consultation with the CT, assisted the CBOs in the implementation of the RF.

Specifically, the months of March to April 2015 generally involves the proper screening and

identification of pilot-beneficiaries, determination of their livelihood options. This also includes the

implementation of initial system, policies and procedures governing revolving fund management and

utilization.




Final Report 72

6.5 Operation of Revolving Fund after Project Implementation

The rules and regulations for the operation of the Revolving Fund after project implementation will

be defined in the hand over agreement at the end of the project between ADB, NEA, LGU, CBO.

The chapter will be part of the Final Report.




Final Report 73

7 EMPHASIS ON WOMEN S ‘OLE AND PA‘TICIPATION IN THE P‘OJECT

Concerns on gender particularly the role of women and men in the project as a whole were

emphasized and integrated during the SDGS preliminary meetings/consultations where project was

presented, during training and workshops by NGOs, and informal coaching sessions with the CBO

members and officers. During the scanning period of the project, it was found out that the three

project sites ha e i fo al g oups of o e . These e e o ga ized i to Wo e ’s Asso iatio s the LGU purposely for livelihood activities in each village or Barangays. Awareness raising on their

specific roles and functions when the project was introduced did not start from zero due to this

existing structure.

With the p oje t i ple e tatio , e phasis o o e ’s ole a d pa ti ipatio i the p oje t as given due attention. However, there were cultural considerations especially in indigenous people-

dominated commu ities like Ba a ga Dalupa ith ostl B’laa t i es i Do Ma eli o a d Barangay Sto. Nino dominated by Manobo tribe in Bayugan City. Just like in all other IP areas in the

country, men are regarded as household heads and also those who sit in tribal council are composed

ostl of elde s ho a e e . Gi e the du atio of the p oje t, i di ato s of o e ’s pa ti ipatio can be seen in four major aspects: 1) CBO membership, 2) organizational structure, 3) MHPP

operation, and 4) revolving fund pilot testing (Table 35).

Ge e all , it a e glea ed that i all fou aspe ts, o e ’s pa ti ipatio is sig ifi a t a d the e is huge room for improvement as the project will go on with proper guidance from the NGOs and LGUs

which will be working closely with the CBOs.

CBO Membership

O e all, o e ’s pa ti ipatio i CBO e e ship i ol ed o e thi d of the total populatio covering the three project sites. This ranges from 36% to 56%, which is good enough for a starting

project particularly in IP areas. Of the three groups, KASAFA membership is being dominated by

women with 56%. During meetings however, men head of households usually send their wives to

attend meetings as they tend to attend to their farm activities.

The project should take note that organizing an IP community takes longer period of time considering

cultural implications especially gender issues.

CBO Officers/Board of Directors

Wo e ’s pa ti ipatio i de isio -making process within the CBO was expressed through their

involvement as officers of the Board of Directors of the organization. They occupied the so-called

positions as Secretary, Treasurer, Auditor, while men occupy the position as Chair of the Board, Vice




Final Report 74

Chair. DARECDA and GAWA averaged 31% and 53% participation of women, respectively while

KASAFA rated a high of 60%. In terms of the committees, these are headed and participated in by

mostly women particularly in Credit/Livelihood, and Education Committees.

MHPP Operators

For the MHPP operation, there were two women who are involved in the maintenance and operation

of MHPP in both DARECDA and GAWA. However, men dominated this aspect of the project based

on the given criteria for selection by the project engineer. As the project continues, it is expected

that more women will participate.

Revolving Fund Piloting

I e ol i g fu d piloti g, o e ’s oles e e e p o isi g a d sig ifi a t as the o sist al ost half of the beneficiaries who participated. Their involvement was mostly in electricity-based

household enterprise and some in farm household enterprise. With the continuation of the RF

implementation as part of livelihood activities, more women signified their interest to participate.

Table 32: Ge der i di ators o o e a d e s parti ipatio i the proje t y CBO

CBO/Indicator Women Men Total

1

Membership

DARECDA 38 (23%) 129 (77%) 167

GAWA 36 (38%) 58 (62%) 94

KASAFA 40 (56%) 32 (44%) 72

2

BOD/Officers

DARECDA 5 (31%) 11 (53%) 16

GAWA 8 (53%) 7 (47%) 15

KASAFA 9 (60%) 6 (40%) 15

3

MHPP Operators

DARECDA 2 (33%) 6 (67%) 8

GAWA 2 (29%) 7 (71%) 9

4

Revolving Fund Piloting

DARECDA 4 (40%) 6 (60%) 10

GAWA 3 (43%) 4 (57%) 7

KASAFA 3 (43%) 4 (57%) 7




Final Report 75

8 KNOWLEDGE DISSEMINATION AND PREPARATORY WORK FOR

SIMILAR RE PROJECTS REPLICATION AND SCALING UP

8.1 Replicable RE Projects

8.1.1 List of Replicable Projects

In a study for ADB, 20 sites in Davao were identified to be suitable for distributed RE-based rural

electrification. The final shortlist was arrived at using the following criteria:10

a. Number of unenergized households that can be served by the proposed renewable energy

power plant;

b. Distance from the last tapping point of the grid

c. Compactness of the unenergized households

d. Accessibility to the proposed project site location

e. Existing and/or potential income generating equipment using electricity which can enhance

the income of the local community

f. Support from the Municipal and Barangay Local Government Units (LGUs)

g. Availability of sufficient renewable energy resource

h. Potential to connect the mini-grid to the main Electric Coop grid

8.1.2 Pilot Implementation of Shortlisted Projects

The sites were identified as the best off-grid or on-grid in Davao and Caraga regions of Mindanao. In

2014, three Pilot Projects were implemented using grant funds from ADB. Two of these projects were

included in the list, i.e. Brgy. Dalupan, Municipality of Don Marcelino (Davao del Sur) and Brgy.

Getsemane, Bayugan City (Agusan del Sur). The Pilot Projects were both unenergized at the time of

study and recommended to be owned and managed by the Community. The project profile of the

Projects are shown below:

1) Barangay Dalupan, Municipality of Don Marcelino, Davao del Sur

a) The technical study conducted for Barangay Dalupan recommended a 25 kW installed

capacity, operating at 95% grid availability at near 90% load factor with 4% transmission

losses to attain viability. The required investment was forecast at PHP7.209 Million;

10 Fi al Co sulta t’s Repo t, TA-7781-PHI Rural Community-based Renewable Energy Development in Minda-

nao, 2012




Final Report 76

b) The energy produced will be sold at the FIT rate of PHP 5.90, subject to digression after two

years on 60% of the rate;

c) The actual construction required a Project Cost of PHP9.483 Million (civil works and

mechanical equipment) resulting to an equivalent cost of PHP397,800 per kW installed

capacity or an increase of 45% to the projected cost.

d) The MHPP facility will be owned and operated by a CBO registered with the DoLE as

Dalupan Renewable Energy Community Development Association (DARECDA), operating

on-grid.

e) A Net Metering Agreement will be entered into between the CBO and DASURECO (Electric

Cooperative/EC) for the sale of exported energy to the EC at the blended generation cost

of the EC.

2) Barangay Getsemane, Municipality of Don Marcelino, Davao Sur

a) The technical study conducted for Barangay Dalupan recommended a 30 kW installed

capacity, operating at 95% grid availability at 74% load factor with 4% transmission losses

to attain viability. The required investment was forecast at PHP7.953 Million;

b) The energy produced will be sold at the FIT rate of PHP5.90, subject to digression after two

years on 60% of the rate;

c) The actual construction required a Project Cost of PHP13.306 Million (civil works and

mechanical equipment) resulting to an equivalent cost of PHP397,800 per kW installed

capacity equivalent to an increase of 67% to the projected cost.

d) The MHPP facility will be owned and operated by a CBO registered with the DoLE as

Getsemane Agricultural Workers Association (GAWA), operating on-grid.

8.1.3 Findings in Project Implementation

1) On-Grid MHPP Operation

Contrary to the projected sale of electricity using FIT rate, the CBO will only realize revenues

equivalent to the blended generation cost of the ECs. This will impact on the resulting rate of return

but the Project will generate adequate cash flows to sustain operations. However, if the CBO will be

able to use more energy than exported which would mean more livelihood activities generated, then

the return will be higher for the MHPP.

2) Operating Expenses

The Operating and Maintenance Costs will include the salaries of two operators and two supervisors

working on two-shifts per day, 0.50% of the Civil Works and Cost of Power Plant maintenance

expenses, subject to 3.3 annual inflation.




Final Report 77

3) Financing of Project

The Project, being funded by grants will not require servicing of loans which significantly affects cash

flows. Per the Business Plan prepared, the operating requirement of the MHPP operation will only

include: salaries, maintenance costs and administrative costs for transportation, communication,

and supplies.

4) Ownership & Capacity Building

The CBO which will own the MHPP facility was organized also during the construction period of the

MHPP and given initial training on organizational and financial management. These aim to arm the

CBO with skills both in MHPP operation and the livelihood program chosen by the CBOs.

8.1.4 Replication in Other Sites

1) Actual Project Cost & Operating Profile

a) The update of the costs and feasibility for the two Pilot Projects as summarized in Table 33

could be used as benchmarks if the Project can be replicated in other sites under similar

conditions with the Pilot sites. Note that the cash flow forecast indicate that cash inflows

will sustain operation and maintenance and provide for a payback of less than the twenty-

five year projected operations.

Table 33: Actual Costs and Resulting Cash Flow Profile of Pilot Projects

b) Given the conditions above, financing of the Project by grants would still be feasible on the

basis of financial sustainability of the facility. There are other social considerations needed

Dalupan Getsemane

Installed Capacity 25 30

Total Construction Cost Peso '000 9,483 13,306

Average Cost per kW Installed Capacity Peso '000 379.32 443.54

Maximum Energy Sold kW 175,200 210,240

% Usage by CBO 19% 12%

% Exported to EC 81% 88%

Average 25 -yr Blended Generation Cost Peso/ kWh 7.52 7.49

Initial Five Years of Operation

Blended Generation Cost Peso/ kWh 4.93 4.81

Annual Average Revenue Peso '000 864 1,121

Annual Average Cost 483 579

Annual Average Cash Inflow Peso '000 381 542






Final Report 78

to be evaluated including the support of the local government units. The strong support

from both the Barangay and Local government units were found very beneficial and

advantageous in the Pilot Projects. This included financial support for the counterpart

funding (licensing, contribution of MHPP site, etc.).

c) However, at the resulting actual construction cost and IRR, the replication of the Project by

private proponents will only be desirable if the realized savings from using the generated

e e g a o e the ost of fi a i g a d etu o the P opo e t’s apital.

2) Feasibility Scenario at Original Investment Cost

a) It was earlier stated that the construction cost of the Projects undertaken departed

significantly from the projected costs. In Barangay Dalupan, the cost is at PHP379,320

(USD8,621) per kW installed capacity or equivalent to an increase of 45% over the

PHP261,200 (USD5,932) projected construction cost.

b) To compare the updated projections if the actual construction costs were within the

projections in the original technical study done for the Pilot Projects, the 12% desired rate

of return could still be attainable as shown in Table 34.

Table 34: Original Investment Costs and Updated Cash Flow Profile of Pilot Projects

Dalupan Getsemane

Installed Capacity 25 30

Total Construction Cost Peso '000 6,526 7,214

Average Cost per kW Installed Capacity Peso '000 261.02 240.46

Maximum Energy Sold kW 175,200 210,240

% Usage by CBO 64% 63%

% Exported to EC 36% 37%

Average 25 -yr Blended Generation Cost Peso/ kWh 10.73 9.75

Initial Five Years of Operation

Blended Generation Cost Peso/ kWh 5.61 5.79

Annual Average Revenue Peso '000 983 1,218

Annual Average Cost Peso '000 466 545

Annual Average Cash Inflow Peso '000 517 673

Internal Rate of Return (IRR) 12% 12%


c) Given that the Pilot Projects are operating under the Net Metering Arrangement with

e po ted e e g p i ed at the EC’s le ded ge e atio ost, the attai e t of the desired rate of return and payback period hinge on the realized savings by the Operator

from operating the MHPP. In Table 34, a 64% usage by the CBO would result to the 12%

IRR.




Final Report 79

8.1.5 Challenges in Future Replication

Using the parameters in the previous study shortlisting the unenergized communities in the Caraga

and Davao regions, the highlights of the actual experience are presented in Annex 5. The highlights

of the actual experience are shown in Table 35.

Table 35: Experience in Pilot Projects

Parameter

Location of communities The difficulty of transporting materials and bad weather

affected the timeliness of construction. It was not

established whether the increase of actual costs (bid

price) was primarily due to the situation of the access

road. It was part of the recommendation that the

improvement of access road will happen before the

implementation of the project.

Local demography and population size Since the MHPPs will be operating on-grid, the actual

sale of energy is not affected by the demography and

population size. The critical factor would be the

willingness and capacity of the EC to agree on the Net

Metering Arrangement for the MHPPs.

Latent demand for electricity The demand for electricity would be critical to areas that

will operate on an off-grid scheme.

On the other hand, for the Pilot Projects owned and

operated by CBOs that are under their formative period,

the demand for electricity is not yet established.

Whether or not the CBOs will maximize the benefits of

the MHPP will be the challenge. Under the Net Metering

Arrangement, the CBO as a registered user of electricity

has to engage in electricity-based livelihood activities.

Availability of renewable energy

sources

There should be a reliable Feasibility Study and Design

for the Project The provision of grant funds for the

technical and feasibility study will affect actual

investment cost for any Proponent of MHPP projects.




Final Report 80

Existing or potential local income

generating power consumers

The sustainability of the MHPPs will also be affected by

the operation of the livelihood program of the CBO. The

higher usage of energy by the Cooperative in the future

will bear on the rate of return for the Projects.

Locally available community

development or financing

organizations

Grant funding for the development, organization and

training of the CBO will be a critical advantage for future

implementation in the potential sites.

Without regulatory barriers The support of all stakeholders which include the LGUs,

Regulatory and permitting agencies is important to the

operational arrangement that will be made in the other

sites.

The dissemination of the actual experience in the Pilot

Projects (Knowledge Kit) will be helpful for future

proponents of MHPP Projects.

With policy enablers Under a Net Metering Agreement where the EC will be

paying the CBO / Proponent the blended generation cost

spells the difference in the sustainability of MHPP (cash

flow). This is in contrast to the earlier idea that the

MHPP owner would be credited (future use) for the

energy exported to the EC.

8.1.6 Replication by a Private Proponent

Using as bases the results of the update of feasibility study and Business Plan done for the Pilot

Projects, a scenario where a Private Proponent is assumed to undertake the Pilot Project is made.

The results of the sensitivity could give an indication of how future Projects could be replicated using

the actual experience in the Pilot Projects in Brgys. Dalupan and Getsemane.

1) Assumptions

The following assumptions shown below were applied to test the sustainability of the Project

assuming a private proponent will take on a Project resembling the conditions existing in Barangay

Dalupan:

a) The construction cost of the MHPP is at the actual cost incurred in installing the MHPP in

Barangay Dalupan;




Final Report 81

b) The cost of training on MHPP operation, permits and licenses, and other incidental

expenses shall be financed by the Private Proponent;

c) The Proponent must have a business enterprise or unit that will require the electricity

generated by the MHPP and where the Proponent can derive the returns for his/her

investment. Otherwise,

d) The financing terms as shown in the Financing Plan below were adopted from the

Development Bank of the Philippines (DBP) loan for RE projects. A new financing scheme

was recently made available in Land Bank of the Philippines but has a shorter repayment

period.

Table 36: Financing Plan

The operating expenses and other assumptions for the operation are shown below:

Table 37: Operating Expenses

Financing

Bank Loans % interest rate repayment yrs grace period

Regular Loan 40% 5% 15 -

Soft Loan 40% 5% 15 5

Equity Capital 20% 15%

Cost of Capital Amount (P'000) % Cost of Capital

Regular Loan 4,015 5% 2%

Soft Loan (with longer grace period) 4,015 5% 2%

Equity Capital 2,007 15% 3%

ADB Grant 10,037 7%

Operating & Maintenance

Salaries Number Daily WagePhilhealth,

MHDF/Mont SSS Annual (Base)

Supervisors 2 275 225 8% 186,972

Crew 2 260 225 8% 176,921

363,893

Maintenance % Equipment Cost ('000) Annual

Electro-Mechanical 0.5% 2,854 14,271

Civil Works 0.5% 6,629 33,144

Other Expenses Monthly Annual

- Transportation 500 6,000

- Communications 500 6,000

- Office/Other Supplies 250 3,000

- Business Permit / Audit Fee 417 5,000

- Miscellaneous 500 6,000

26,000

Total 437,308




Final Report 82

Table 38: Other Assumptions

2) Results of Model for Private Proponent

a) The cash flows will have debt servicing which will be an additional operating /cash

requirement on the day-to-day operations.

b) The discount rate taken is the cost of capital computed at 7%. Per financing plan above,

8 % of the p oje t ill e fi a ed a loa a d % ill e the o e ’s apital ith a 15% required rate of return.

c) Under the base scenario, only 20% of the generated energy will be used by the Proponent

and the balance is exported to the EC. The Project will not be desirable considering the IRR

of 3%.

d) At the base scenario, only 75% of total debt service (maximum) can be covered by the

revenues (80% export at blended generation cost).Thus, the Project will not be desirable

to a Private Proponent whose usage of electricity (Business Unit) is not at the optimum

level.

e) If the Proponent were able to use 70% of the energy for its Business Unit, then the Project

will give a return of 9%, higher than the discount rate of 7% (cost of capital). The Project

has a 19 year payback period due to the payment of the loan:

Year of Evaluation 2015

2016

Revenues

Blended Generation Rate 4.14

Retail Rate 9.00

Annual Increase 3%

CPI Index 3.3%

O & M Costs

% of Capital Investment 4.5%

Depreciation of Power Plant

% of Capital Investment 4.0%

"yes" (1) or "no" (0) year to start

VAT-Exempt/ Special Privilege 1 0.0% 1

"yes" (1) or "no" (0) End year of Holiday

Income Tax Holiday 1 10.0% 8

Initial Year of Operations

Cash Flow Inputs




Final Report 83

Table 39: Discount Rate of 7%

8.1.7 List of Replicable Projects

On the basis of the foregoing, Annex 6 shows the list of Municipalities where it is deemed that the

Projects in Barangay Dalupan and Barangay Getsemane may be replicated.

The Municipalities were earlier listed as viable for implementation. The recommended

Implementation Models considered the four existing off or on-grid Models. However, the

Community-Based implementation particularly under grant financing is not discounted. The

undertaking by a Private Proponent denotes the site as feasible due to the high commercial or

income generating demand for electricity and/or large number of unenergized households.

8.2 Lessons Learnt

On NCIP FPIC Process

The implementation of community-based renewable energy projects in Bayugan City and Don

Marcelino tends to demonstrate that FPIC processes in indigenous communities take considerable

time and effort in ensuring that necessary and appropriate consent is generated from target project

beneficiaries. The experiences in both sites revealed that NCIP as a project stakeholder takes a crucial

role in the prevailing policy environment that governs projects situated in indigenous communities.

Thus, it becomes imperative for future community-based renewable energy projects with indigenous

peoples to seriously consider community processes under existing rules in the Indigenous Peoples

Rights Act (IPRA).

Discount Rate % 7%

Base Scenario70% Proponent's

Energy Usage

Net Present Value Peso (3,265,389) 2,518,888


Payback Period Years >25 19

Annual Generation kW 219,000

Maximum Energy Sold kW/year 175,200

Hydro capital cost per kW installed capacityPeso/kW 401,483

USD/kW 9,125

Accumulated Cash Balances at Year-end

(after OPEX and debt service payments

Year 1 Peso (105,043) 58,334

Year 2 Peso (300,430) 166,801

Year 3 Peso (487,023) 374,350

lupan Year 4 Peso (639,663) 401,761

Year 5 Peso (756,468) 429,946




Final Report 84

Prior to the start of the study, lessons tend to demonstrate that the Technical Study should have

considered the role of NCIP as part of project implementing agencies on the side of government. As

a major stakeholder, it appea s that NCIP’s fu tio ust fo pa t of the p oje t i ple e tatio plan, more specifically in the conduct of FPIC among indigenous communities covered by the project.

Related to this, project implementation time frame must take serious consideration of the tedious

FPIC process as well as the many and various constraints of NCIP that include limited personnel and

budget. This came out as a suggestion by NCIP Region XI in one of the earlier stakeholder

consultations in Davao. Getting them involved as project implementer or stakeholder at the onset of

the p oje t a pa e the a fo the age to gi e p io it to the p oje t’s u de taki gs as pa t of their institutional plan.

On Community Organizing Process

As per project experience, community-organizing process must involve NGOs that are based locally

and have a grasp of the situation (culture, language, terrain) of the local communities selected in the

project sites. Indigenous peoples and communities are not easy to organize; hence, it usually takes

longer period of time to get their approval and establishment of rapport with organizers especially

those who are not familiar with their culture and language. Selection of committed groups/NGOs to

assist in the organizing component of the project proved to be crucial.

On Coordination with LGUs and other Stakeholders

LGUs role in the project implementation is very significant being the initial proponent of the pilot

project. Their roles/tasks are fundamental and essential in the overall project implementation such

as processing of permits, certifications, clearance (security), NCIP related processes that are needed

in carrying out the project. It is therefore imperative to work closely with the LGUs at the City,

Municipal, and Barangay levels to ensure that all aspects of project are in place including the turnover

of the project to the community-based beneficiaries.

8.3 Knowledge Dissemination Plan

The Consultant is to develop a knowledge kit on basis of the outputs and results of the project. This

knowledge kit is to be produced in a hard copy and a digital soft copy version. The hard copy version

is to be printed and made directly available for distribution to LGU and communities. NEA, ECs and

ADB will present it during workshops. The soft copy version should be published for download from

the NEA’s a d ADB’s e site. This ill ake su e that i te ested pa ties ha e a ess to the esults and accumulated knowledge in order to successful implement future projects.

It is recommended also to publish an edition of the knowledge kit in local languages so that the

beneficiaries have also access and might initiate a development of projects from their interest.




Final Report 85

9 PROCUREMENT, CONTRACTS AWARD AND DISBURSEMENT

9.1 Procurement

The Consultant conducted procurement of Technical Survey Services, MHPP Installation Projects and

Engagement of NGOs using methods under ADB procurement guidelines (March 2013).

9.1.1 Procurement of Technical Survey Services

Using the ADB guidelines on Shopping Method, Requests for Quotations (RFQ) were sent to several

contractors for providing technical survey services in the three sites of Brgy. Dalupan, Don Marcelino,

Davao del Sur, Brgys. Getsemane and Sto. Nino both in Bayugan City, Agusan del Sur. Of the 17

invited contractors, only two contractors submitted quotations and documents namely, a) LAPS Land

Analytics and Planning Solutions and b) S.C. Serrano Surveying and Engineering Services

The evaluation of the submissions of the two contractors showed that LAPS has superior

qualifications and capability to undertake the survey project and the offer of LAPS was considered

the lowest substantially responsive quotation. After the negotiations and issuance of the Letter of

Acceptance, the Contract for the Conduct of Technical Survey in the three sites was entered into and

signed. The contractor was advised to start survey works on May 5, 2014 for Brgys. Getsemane and

Sto. Nino sites and on May 9, 2014 for Brgy. Dalupan site.

The contractor, LAPS Company, was able to submit by end of July 2014 the final survey reports (soft

copy and hard copy) as well as maps pertaining to the surveying works it conducted in Barangay

Dalupan, Don Marcelino, Davao del Sur, and in Brgys. Getsemane and Sto. Nino, Bayugan City,

Agusan del Sur. All reports have been accepted by Consultant.

9.1.2 Procurement of Two MHPPs

The procurement process of the two MHPPs in Brgys Dalupan, Don Marcelino, Davao del Sur, and

Brgys , Bayugan City, Agusan del Sur is discussed in detail in 4.1 Sub-output 2.1. Procurement of Sto

Nino MHPP was not conducted due to budget constraints.

9.1.3 Procurement of NGO / MFI

The method used for selecting MFIs/NGOs as provided for in the Terms of Reference (TOR) is the

Consultants Qualification Selection (CQS) of the ADB Guidelines on the use of Consultants (March

2013).

The Guideli es p o ides that The o o e o ADB shall i p epa e the TOR, ii e uest a plified E p essio s of I te est EOls a d i fo atio o the o sulta ts’ e pe ie e a d o pete e

relevant to the assignment, (iii) establish a shortlist of at least three firms, and (iv) select the firm




Final Report 86

with the most appropriate qualifications and references based on the EOls. The selected firm shall

be asked to submit a combined technical-financial proposal and then be invited to negotiate the

contract. Should negotiations fail, the borrower or ADB shall start negotiations with the next ranked

fi u til a ag ee e t is ea hed.

On May 8, 2014, Requests for Expression of Interest (R-EOI) were sent to six micro-financing

institutions/non-government organizations (MFI/NGO). Of the six MFI/NGOs invited, four submitted

their respective EOI namely, Alterdev Services Foundation Inc. (ALTERDEV), Planet Finance Technical

Assistance, Inc., Davao Provinces Rural Development Institute, Inc. (DPRDI) and Propegemus

Foundation Inc.

After evaluation of the expressions of interest and submissions, one MFI/NGO was selected for the

two projects sites in Bayugan City, Agusan del Sur and one MFI/NGO was selected for the project site

in Brgy. Dalupan, Don Marcelino, Davao del Sur. For the Bayugan City project sites, Alterdev got the

highest score. For Brgy. Dalupan, Don Marcelino project site, DPRDI got the highest score.

Following the procedure for CQS, Alterdev submitted its Biodata-Technical and Financial Proposals

for the subprojects in Bayugan City while DPRDI submitted its proposal for Dalupan, Don Marcelino,

Davao del Sur. They were later invited for negotiations on their Technical Proposal/Personnel and

Financial Proposals.

As a result of the negotiations, Alterdev submitted a Revised Work Plan for a six-month period of

operation and a Revised Technical and Financial Proposal. Likewise, DPRDI also submitted its revised

Financial Technical Proposal. Accordingly, the proposals of Alterdev for Bayugan City Barangay sites

and DPRDI for the Brgy. Dalupan, were endorsed and recommended to ADB.

Following the no-objection from ADB to both contracts, the Contract for Consultancy Services with

DPRDI was signed on August 30, 2014 to commence on September 1, 2014 ending on February 28,

2015. The contract amount agreed upon is PHP918,336.00. Later, In November 2014, DPRDI

requested for an amendment of its Consultancy Services Contract for the removal of the requirement

for advance payment guarantee required under the contract. Accordingly, Consultant agreed to the

non-submission of the advance payment guarantee provided that every billing payment shall be

subject to 10% retention. The Amendment of the Consultancy Services Contract was signed by

Consultant and DPRDI dated November 2014.

The Alterdev Contract for Consultancy Services was signed on 29 August 2014 with effectivity date

set on September 1, 2014. The agreed contract period is six months commencing on September 1,

2014 up to February 27, 2015.




Final Report 87

The two NGOs assisted the residents in the vicinity of the sites by forming the workers’ association

registered under Presidential Decree No. 442 as the Community Based Organizations in the sites and

training them on the handling of community livelihood projects. The CBOs would soon be ready to

take over the operation and maintenance of the MHPP as well as developing their own livelihood

projects.




Final Report 88

10 PROJECT MANAGEMENT

10.1 Coordination with Stakeholders

10.1.1 National Electrification Administration (NEA)

NEA as the Executing Agency of the project played an active role in the project implementation. The

experts from Lahmeyer International had several meetings with the Project Implementation Unit of

NEA to coordinate the project implementation and technical aspects of the installation of the MHPPs.

During regular meetings with NEA the Consultant informed about the status of the project

implementation and discussed relevant issues and strategies to successful achieve the expected

results.

10.1.2 Local Government Units (LGU)

At the onset of project implementation, the Consulting Team had coordinated with the respective

local government units (LGUs) at the project areas, namely, Bayugan City and Don Marcelino. The

first quarter (January to March 2014) of project implementation focused mostly on the following: 1)

close coordination work with the LGUs during the first Field Mission visits to the three project areas

– Brgy. Sto. Nino and Getsemane both located in Bayugan City and Brgy. Dalupan of Don Marcelino;

2) validation of the information provided by the Technical Study done by the first team; 3)

presentation and introducing the project to the communities including discussion of the role of

communities for the project; 4) second stakeholders consultation that was held in Davao City that

highlighted signing of the MOU by the stakeholders as basis of implementing the different tasks,

roles, and responsibilities during the implementation phase. In all these undertakings, the LGUs (City

LGU, Municipal LGU, and Brgy. LGU) being the initial proponent of the project have full support and

pla ed ke oles i the i ple e tatio of the pilot p oje t of ADB’s TA-7781 in the Philippines with

the mentioned focus areas in Mindanao.

During the first quarter period, coordination with LGUs were mostly done with the office of the

Mayor through the Mayors and Administrators and designating the office of the City/Municipal

Planning and Development Offices (CPDO/MPDO) as focal office for the project. Both Planning and

Development Officers and their staff became the constant contacts by the Project/Consulting Team

during the duration of the implementation phase of the project.

During the second quarter (covering the months of April to June 2014) of project implementation,

coordination work by the Project/Consulting Team revolved around processing of required permits,

certifications, NCIP requirements for the FPIC processes, community assembly and initial CBO

organizing in Dalupan, Don Marcelino, survey team field visits to project sites, and pre-bidding

conference held in Bayugan City.




Final Report 89

For the third quarter period (July to September 2014), the Consulting Team had closely monitored

through the LGU of Bayugan City the peace and order/security issues affecting the field visits in the

project sites. Other requirements like certification from LGUs needed by NEA as well as by ECs and

additional document such as geographical map of Bayugan required by NCIP were closely

coordinated. Field Mission visit by ADB and Consulting Team and validation session of the draft NCIP

MOA in Don Marcelino were likewise undertaken with the LGUs. This quarter also highlighted the

NGO procurement process and introduction of NGOs by the Consulting Team to the LGUs and

communities regarding their roles and tasks to provide capability building activities and organizing

of CBOs.

Linkaging with LGUs during the fourth quarter period covering the months of October to December

2014 were focused on the following: 1) second review and validation of NCIP draft MOA at the

Sangguniang Bayan Hall of Don Marcelino; 2) securing of RESC application and payments as required

by NEA/DOE for the MHPPs from the LGUs; 3) provided project updates by Consultant Team during

field visits; and, 4) coordination with other government agencies like DA, DoLE, DTI, DOST for possible

support to livelihood of the CBO beneficiaries of the project.

In the extended period of project implementation January to August 2015, most of the coordination

works involved Field Mission Visits by ADB and Consultant Team who provided project updates to

LGUs i.e., NCIP processes, halting of Sto. Nino MHPP due to destruction brought about by Typhoon

Seniang last December 2014, revolving fund pilot testing in three project sites, electrical and water

permits processing, inauguration of the Dalupan MHPP in Don Marcelino, 3rd stakeholde s’ consultation, and turn over discussion of the project to LGU and CBO as ultimate beneficiaries.

Table 40: Coordination with the Local Government Units, January 2014 to August 2015

LGUs at project sites Date of coordination work Purpose

Bayugan City LGUs February 4-7, 2014 P oje t tea ’s fi st field isit to Bayugan sites to validate TA

documents and coordinated

with City LGU/BLGUs/ECs re

project implementation

Don Marcelino LGUs February 8-9, 2014 P oje t tea ’s fi st field isit to Don Marcelino and Dalupan

project site to validate TA

documents and coordinated

with City LGU/BLGUs/ECs re

project implementation




Final Report 90


Bayugan City LGU February 26-28, 2014 Meeting with City

Administrator and

identification of point person

for the project; confirmed

participants for the 2nd

stakeholders meeting; SD & GS

introduced/presented the

project to the communities in

oo di atio ith CLGU’s CPDO; explained the role of

communities to the project

Don Marcelino LGU March 4-6, 2014 Met with Mayor and MPDO;

confirmed participants for the

2nd stakeholders meeting;

followed up CNC; SD & GS

introduced the project to

Dalupan community in

oo di atio ith MLGU’s MPDO

Both LGUs (Bayugan and Don

Marcelino)

March 13, 2014 2nd Stakeholders Consultation,

Davao City

Both LGUs March 27-28, 2014 Coordination with both LGUs re

CNC application

Bayugan LGU April 7-8, 2014 Coordination with LGU re NCIP

requirements for FPIC (profiles,

resolutions); CNC follow-up

work

Don Marcelino LGU April 10-11, 2014 Coordination with LGU re NCIP

requirements for FPIC (profiles,

resolutions); CNC follow-up

work

Bayugan City LGU April 22-24, 2014 Met with CLGU and BLGUs at

project sites re completion of

NCIP related documents;

followed up signed MOUs; met

also line agencies re possible

livelihood assistance to project




Final Report 91


(DTI, PCA, DOST, DoLE in

Agusan del Sur)

Don Marcelino LGU April 28-29, 2014 Coordinated with LGU re NCIP

Work and Financial Plan

meeting; Met with LGU re LGU

and Tribal Council resolutions

for NCIP FPIC process; followed

up signed MOA; met with other

agencies (DA, DTI, DOST) in Don

Marcelino for possible

livelihood support

Don Marcelino LGU May 2-3, 8-10, 2014 Coordinated with LGU re visit of

survey team; visited LGU Don

Marcelino and Dalupan with

survey team/project team

Don Marcelino LGU May 14-16 and 23-26, 2014 MOU related and NCIP required

endorsements, minutes of WFP

meeting with NCIP were

coordinated with LGU

Bayugan City LGU May 29-31, 2014 MOU, NCIP, CNC related

matters

Don Marcelino LGU June 2-5, 16-20, 26-29,2014 Pre-bidding conference,

project presentation in

Dalupan, NCIP process –community assembly,

organizing of CBO

Bayugan City LGU June 6-10, 2014 Pre-bidding conference, WFP

NCIP process and schedule,

visit of surveying companies,

MOU, organizing of community

Don Marcelino LGU July 3, 7-9, and 12-13, 2014 TA Executive Summary copy for

Don Marcelino LGU; CBO

organizing discussions,

registration with DoLE

Bayugan City LGU July 4, 7, 10-12, 16-19, 23-24,

and 27-31, 2014

Peace and order situation,

police clearance /security in

visiting project sites; Met with




Final Report 92


Mayor re security issues and

NCIP work order/pre-FBI

process

Don Marcelino LGU August 4-7, 20-26, 2014 Dalupan Certification for NEA

and EC; field visits and NGO

visit

Bayugan and Don Marcelino

LGUs

August 8-9, 11,13-16, 18-19,

2014

EC requirements and NCIP

requirements

Bayugan City LGU August 27-31, 2014 Met with LGU re NGO

engagement; NGO field visits to

project sites; introduced NGOs

to BLGUs

Bayugan City LGU Sept. 1-2, 9-13, 18-23, 25-27,

2014

ADB Field Mission Visit; NCIP

FBI process

Don Marcelino LGU Sept. 3-4, 11, 14-16, and 29-

30, 2014

ADB Field Mission Visit; NCIP

updates; NCIP

validation/review, ceremonial

MOA signing (3-page MOA);

draft NCIP MOA review

Don Marcelino LGU Oct. 1, 7-10, 15-17, 27-30,

2014

Project Team Field Visit;

Second NCIP MOA

validation/review at Don

Marcelino SB Hall, NGO training

updates to LGU

Bayugan City LGU Oct. 13-14, 20-23, 2014 Provided project updates, NGO

training updates, NCIP FBI

updates

Don Marcelino LGU Nov. 3-5, 11-14, and 25-27,

2014

Visit to site; project updates,

RESC certification

Bayugan City LGU Nov. 10, 18, 21, and 27-29,

2014

Visit to sites NCIP FBI, RESC

certification

Bayugan City LGU Dec. 1-3, 17-18, 2014 Followed up RESC application;

DoLE Certification to CBOs,

linkaging to DA of potential

livelihood for CBOs, FBI Report

Don Marcelino LGU Dec. 9-10, 2014 RESC application status, NCIP

draft MOA




Final Report 93


Bayugan City LGU Jan. 24, 26-28, 2015 Field Mission Visit; project

updates

Don Marcelino LGU Jan. 29-30, 2015 Field Mission Visit; project

updates

Bayugan City LGU Feb. 2-5, 8, 12, 16,2015 Field visit, NCIP FBI Report,

Don Marcelino LGU Feb. 9-10, 21, 23-25, 2015 Collation of NCIP MOA 2nd draft

comments by parties for

submission to NCIP Province,

field visit, NWRB documents

Bayugan City LGU and Don

Marcelino LGU

March 13-14, 16,18, and 23-

25, 2015

Field mission visits schedules,

project updates, RESC

payments by LGUs, invitation

by Don Marcelino to its

anniversary day

Bayugan City and Don

Marcelino LGU

April 15, 25,30 NCIP meeting with LGU re draft

MOA comments for Don

Marcelino; Field mission visit

schedules by Team and ADB

Consultant

Don Marcelino LGU May 5-7, 23, 28, 2015 Field Mission Visit and ADB

Co sulta t’s field isit confirmation of schedules;

NCIP updates; electrical permit;

MOU copy to LGU reiterating

their role; RF implementation

Bayugan City LGU June 2-4, 13-14, 16, 2015 NCIP process updates; project

updates specifically RF

implementation

Don Marcelino LGU June 8-9, 12, 18, 2015 ADB Field Mission schedule

confirmation, project updates,

NCIP updates

Don Marcelino LGU July 1, 3, 6, 9, 11, 13-14, 24,27-

31, 2015

Don Marcelino MHPP

Resolution, DTL Field visit

itinerary; confirmation;; MOA

signing during MHPP

inauguration; 3rd stakeholders




Final Report 94


Consultation in Davao City;

linked Dasureco to MPDO

Bayugan City LGU July 18, 27, 29-31, 2015 NCIP updates from LGU;

Stakeholders consultation;

confirmation of participants

from Bayugan

Don Marcelino LGU Aug. 11, 17, 2015 Letter of request from LGU re

project services extension to

ADB through LIDP as requested

by DTL; followed up update re

NCIP CP after the MOA was

signed

Bayugan City LGU Aug. 17, 2015 Update from LGU re NCIP

Provincial Office meeting (pre-

FPIC)

10.1.3 Electric Cooperatives

The Electric Cooperatives, ASELCO and DASURECO have supported and promoted the project from

the outset. They were involved and consulted in the main technical and legal developments of the

installation and connection of the MHPP, since they will be the partner in supplying and purchasing

power from the CBOs.

10.1.4 Department of Energy (DOE)

The DOE was informed about the project during the Stakeholders consultations.

10.1.5 National Commission on Indigenous People (NCIP)

The issuance of Certificate of Pre-Condition (CP) by NCIP is the ultimate output of FPIC processes for

the ADB TA-7781: PHI MHPP project sites. Specifically, the CP is to be issued to the respective local

government units (municipal LGU for Don Marcelino and City LGU for Bayugan City). Prior to the

issuance of CP, several activities processes have to be complied by the project, with LGUs of Don

Marcelino and Bayugan City taking the lead roles being the project proponents (i.e. providing

financial support during the processes as well as coordination work and technical support). Other

stakeholders such as the community/Brgy. LGUs, CBOs, Tribal Groups/Councils, and Electric

Coope ati es ECs also pla ed sig ifi a t oles i the NCIP’s FPIC p o esses.




Final Report 95

The Consulting Team has been in constant coordination with all the stakeholders and in providing

the overall guidance and assistance needed in implementing the specific undertakings required by

NCIP for the two project areas.




Final Report 10-96

Table 41: Timeline and Milestones of FPIC Activities / Processes by NCIP XI and XIII (Caraga), 2014-2015

FPIC Activities/Processes by Project Area Time Frame Actual Conduct Remarks

DON MARCELINO

Initial Meeting with NCIP Region XI through FPIC

Focal Person

March 13, 2014 2nd Stakeholders Meeting, Davao

City

SD &GS met with Ms. Djoanna Lyn Demonterverde, FPIC Focal

Person, Reg XI

First NCIP scheduled meeting with Consulting

Team, LGU Representative of Don Marcelino

April 28, 2014 Digos City, Davao del Sur Discussed schedules, FPIC process; SD&GS submitted documents

minus NEA Endorsement

Pre-FBI Conference (Work and Financial Plan

presentation and discussion)

May 12-13, 2014 Digos City, Davao del Sur Attended by LGU Don Marcelino Rep, SD&GS, NCIP Prov'l

Officer, NCIP FPIC Focal Person, NCIP FBI Team Province, IP Rep;

submssion of Project Team Leader of NEA Endorsement and

other documents to NCIP Region XI on May 12

Conduct of FBI by NCIP FBI Team May 23-25, 2014 Barangay Dalupan Conducted by NCIP with the Community

Community assembly and consensus building June 4-5, 2014 June 5, Barangay Dalupan Facilitated by NCIP; participated in by MLGU, BLGU, Community,

Consulting Team, NCIP Team; Consulting Team presented the

project

Drafting of Memorandum of Agreement with

Community

June 10-11, 2014

June 20, Bgy. Dalupan

Continuation of consensus building with community members

and parties to the MOA was done to discuss terms of MOA;

Attended by MLGU, BLGU, LI, NCIP, community, IP Council,

DASURECO; Output: Resolution of Consent giving the project a

nod to organize CBO; NCIP notified SD&GS the need to include

in MOA drafting, validation, & signing CBO Chair, thus another

adjustment in schedule was needed

MOA validation and signing June 19-20, 2014 Barangay Dalupan Not done yet (see above information)

Community Organizing of CBO Last week of June-mid

Sept, 2014

Barangay Dalupan Done by CT with NGO DPRDI in coordination with of MLGU and

BLGU

Draft NCIP MOA submitted to parties 1st week September

2014

September 17, 2014 NCIP emailed the draft MOA to parties - MLGU, DASURECO

including Consulting Team was copied for comments,

suggestions

MOA validation and signing schedule September 19, 2014 Barangay Dalupan Parties not yet ready with comments/suggestions to the MOA;

Consulting Team prepared a 3-page MOA specifically for MHPP

Construction anchored on the original MOA of the Project; 3-

page MOA were presented, agreed upon in consensus and

signed by all parties including NCIP; Remedial measure so as not

to delay MHPP construction

NCIP MOA validation/review with parties (1st mtg) October 8, 2014 Don Marcelino SB Hall Facilitated by NCIP; First presentation of NCIP Draft MOA to

Parties involved - IP Council, CBO, MLGU, BLGU with Consulting

Team and NGO DPRDI as observers and participants; DASURECO

was not around due to an organizational activitiy, thus another

schedule of meeting was set with all parties including

DASURECO.




Final Report 10-97


NCIP MOA validation/signing (2nd meeting) October 17, 2014 Don Marcelino SB Hall DASURECO and all parties were present except for NCIP Team

who's supposed to facilitate; Facilitated by Don Marcelino LGU

(Mayor Johnson and assisted by Engr. Delute); suggested a

Technical Working Group to work (TWG) on MOA

comments/suggestions to be submitted to NCIP

Meeting by TWG led by Don Marcelino LGU February 23, 2015 Don Marcelino Mun. Hall Discussion of comments re draft NCIP MOA;

Submisison of TWG to NCIP comments/suggestions

to NCIP Draft MOA

February 24, 2015 Done by email by MPDO Submission of comments/suggestions via email to NCIP

Provincial Team and FPIC Focal Person, Reg XI; LGU Don

Marcelino also sent letter to NCIP to fast tract the process and

did series of follow up with NCIP March-June 2015

ADB sent a letter to NCIP Region XI and LGU Don

Marcelino calling for resolution on NCIP FPIC

processes

July 9, 2015 Sent by Fax by ADB/Email Drafting of summary of status of FPIC Process and Confirmation

of receipt by NCIP Region and LGU was done by Consulting Team

LGU Don Marcelino did a Municipal Resolution

addressed to NCIP as response to ADB letter

July 14, 2015 Sent by MPDO to NCIP Province MPDO Don Marcelino copy furnished Project Team

NCIP MOA signing (facilitated by MPDO Don

Marcelino and assisted by the Project Team)

July 29, 2015 Done during the MHPP

Inauguration Programme in

Dalupan, Don Marcelino

All parties were able to sign the MOA

BAYUGAN CITY PROJECT AREAS

Initial Meeting with NCIP XIII through NCIP

Provincial Officer

March 13, 2014 2nd Stakeholders Meeting, Davao

City

SD &GS met with Mr. Randy Rosas, Prov'l Officer NCIP Agusan

del Sur

NCIP Agusan del Sur First Meeting April 23, 2014 Patin-ay Agusan del Sur Coordinated with Mr. Randy Rosas and met with Engr. Shiela

Padillo at NCIP Office; submitted hard copies of required

documents minus NEA Endorsement

Submission of NEA Endorsement and required

documents by Project Team Leader to NCIP

CARAGA

May 12, 2014 NCIP CARAGA Office Submitted by Holger Ludwig via Email; all documents were

gathered and compiled by Atty. Calibo and SD & GS

Series of follow up with NCIP Province by SD & GS

re FBI and FPIC schedules

May-July 2014 NCIP Provincial Office and CARAGA SD & GS Coordinated directly with the new Regional Director in

CARAGA re FBI process; No response was received from the

Province; resulted to issuance of Memo re FBI Team for 2 sites

by NCIP RD

Pre-FBI Conference July 30, 2014 NCIP Provincial Office Facilitated by NCIP FBI Team Leader; attended by Engr. Alimpoos

of Bayugan LGU, NCIP FBI Team, Consulting Team (DTL, SD & GS,

Mech Engr)

Conduct of FBI at project sites August 1st wk 2014 November 10, 2014 for

Getsemane; November 17, 2014

for Sto. Nino

Reasons for delay by NCIP was due to other activities lined up in

other areas; peace and order condition (military-NPA

encounters in June-July 2014)

Submission of FBI Reports to Bayugan LGU and

NCIP CARAGA

End of November 2014 Feburary 2015 Reasons for delay was due to other priority activities




Final Report 10-98


Meeting with NCIP by Consulting Team February 13, 2015;

March 18, 2015

Butuan Regional Office and Patin-

ay Provincial Office

Feb 8 meeting done by SD&GS; 2nd meeting done by DTL, SD

GS; provided updates of project especialy Sto. Nino case,

extended period; follow up of FPIC process

LGU Bayugan City sent letter to NCIP re FBI Report February 13, 2015 Sent to NCIP Regional Director LGU Bayugan sent letter addressed to RD Pinky Grace Pabelic

requesting for a simplified FPIC process and certifying that

Getsemane has no IP residents; fast tracking of FPIC process

NCIP Regional Office issuance of Work Order for

Provincial NCIP

February 25, 2015 Sent to NCIP Provincial Officer FPIC Team for the conduct of FPIC for the project sites in

Bayugan City

Visit to NCIP Agusan del Sur by SD & GS June 3, 2015 San Francisco, Agusan Sur Followed up FPIC process with Mr. Duetes, assigned staff by Mr.

Rosas as contact person for project sites

NCIP Province to issue notice to LGU Bayugan for

pre-FPIC Conference

After June 19, 2015 Pending No update from NCIP/LGU Bayugan if done

ADB sent a letter to NCIP Region XI and LGU Don

Marcelino calling for resolution on NCIP FPIC

processes

July 9, 2015 Sent by fax/email by ADB Drafting of summary of status of FPIC Process and Confirmation

of receipt by NCIP Region and LGU was done by Consulting Team




Final Report 99

Overall, the following major steps/activities/processes provide a summary of the FPIC processes

undertaken by the project following NCIP requirements, such as:

1) Consultations and initial discussions with NCIP Offices at the Provincial and Regional levels

by CT and LGU Representatives (Municipal/City Planning and Development

2) Officers or CPDO and MPDO) during the first and second quarter of 2014;

3) Submission of needed requirements/documents by the project to NCIP by CT in April-

May 2014;

a) Project profile covering the two project areas of Bayugan and Don Marcelino;

b) Project feasibility study

c) Profile of Don Marcelino and Bayugan City

d) Endorsement of the project from the National Electrification Administration

e) Endorsements of the project by Barangay LGUs of the three project sites (Bgy.

Dalupan, Don Marcelino, and Barangays Getsemane and Sto.Nino, Bayugan ity)

f) Endorsements from the Municipal and City LGUs of Don Marcelino and Bayugan City

g) Endorsements from the Tribal Councils of the three project sites

4) Pre Field-Based Investigation Conference (with LGU Representative, LI, CT, NCIP Team);

5) Conduct of FBI proper by NCIP (with community consultations and general assembly);

6) Pre FPIC Conference with NCIP (with LGU Representative, LI Consultant, NCIP Team);

7) Conduct of FPIC (with community consultations and general assembly);

8) MOA review/validation and signing (facilitated by NCIP and LGU);

9) Issuance of CP by NCIP to LGUs

Don Marcelino

As of July 2015, the municipality of Don Marcelino has complied Steps 1 to 8 including the MOA

signing activity that was undertaken last July 29, 2015 in Dalupan. The signed MOA is the last

e ui e e t p io to the NCIP’s issua e of a Ce tifi ation Precondition which refers to the

Ce tifi ate issued the NCIP attesting to the grant of FPIC by the concerned ICCs/IPs after




Final Report 100

app op iate o plia e ith the e ui e e ts p o ided fo i this Guideli es. The NCIP MOA

signing ceremony was done in time of the MHPP Inauguration Program where all parties except for

NCIP (who already signed the MOA ahead of time) were present. The MOA signing was facilitated by

Don Marcelino Municipal LGU and assisted by the Project Team. The issuance of the CP by NCIP is

the last stage of the process. Supposedly, an NCIP validation/signing for Brgy. Dalupan MHPP was

scheduled in June 19-20, 2014. However, there were delays and draft MOA was not yet prepared by

NCIP. For one, NCIP required the presence of the CBO President/Chair as one of the signatories of

MOA. The project has to undertake CBO organizing with the permission of NCIP through the issuance

of Resolution of Consent (as a result of the series of community consultations/assemblies).

Organizing of CBOs took place in July to September in Brgy. Dalupan. This includes constant

coordination work by CT with MLGU, BLGU, and in September by NGO through the DPRDI. With the

CBO’s egist atio o “epte e ith the DoLE as a Asso iatio – DARECDA and with the

formation of set of officers, the NCIP was properly informed. The NCIP Provincial Office in Davao del

Sur provided then a schedule dated September 19, 2014 as final date for MOA validation and signing.

However, the said activities on the set date did not materialize as draft MOA was only provided to

parties/stakeholders a day before the activity. Comments/suggestions coming from various parties

to the MOA were not yet available. To remedy the signing activity (where all parties were already

present in Dalupan), a three-page MOA specifically for MHPP construction was signed by all parties.

The CT prepared the said MOA. After this event took place, NCIP called for a meeting with different

parties to the MOA (BLGU, MLGU, CBO, Tribal Council, DASURECO and attended by the SD & GS,

NGO, and other members of the Consulting Team) for another MOA validation/signing event (NCIP

MOA) on October 8, 2014 at Don Marcelino SB Hall.

A second validation session again took place on October 17, 2014 (with the presence of DASURECO

since the Representative was not around during the first session) but this time it was facilitated by

the Municipal LGU as NCIP was absent. Comments/suggestions to the MOA from the parties involved

were raised and discussed. A technical working group (TWG) was also assigned to work on the

finalization of comments/suggestions to the NCIP MOA. The TWG led by the MLGU of Don Marcelino

was able to compile and submit it to NCIP in February 2015.

The LGU also reiterated to NCIP in a letter the need to fast tract the process of issuance of CP as the

project is about to end, emphasizing also that the project was a government initiated, non-extractive

in nature, and small-scale for the benefit of Dalupan community. The LGU did follow-ups with NCIP

P o i ial Offi e o the updates of the MOA, hi h is aiti g fo NCIP’s espo se o o ete a tio . In one of the follow up with NCIP XI (Regional Office) by the CT, there were changes in the assigned

staff handling FPIC as well as the OIC at Provincial Office of Davao del Sur. It was also known in the




Final Report 101

second week of July 2015 that the change of personnel also includes that of the Regional Director

position. The changes were immediately relayed to Don Marcelino LGU for proper coordination.

During the ADB Field Mission Visit last June 18, 2015, the Municipal Mayor had committed to do

another follow-up (call and visit) NCIP.

In June 9, 2015, the ADB Project Officer in coordination with the CT of Lahmeyer International sent

a fax and email letter to NCIP Region XI and Provincial Office as well as Municipal LGU of Don

Marcelino stating that both government bodies need to resolve FPIC matters of the MHPP project

a eas efo e it ill e d soo . As e ou se of the ADB’s all to esol e FPIC-related processes, the LGU

of Do Ma eli o afted a Resolutio alli g fo NCIP’s issua e of CP fo the p oje t. As a esult of the call, the MOA signing took place in time for the MHPP Inauguration in Dalupan.

Bayugan City

For Bayugan project sites (Barangays Getsemane and Sto. Nino), it had only completed Steps 1 to 4

to date. The FBI processes only commenced in November 10, 2014 for Getsemane and November

17, 2014 for Sto. Nino. For both project sites, FBI was originally scheduled by NCIP FBI Team to be

undertaken in first week of August 2014. The FBI Report for the two sites was provided to LGU

through the City Planning and Development Office (CPDO) only in February 2015.

A“ Ba uga Cit LGU’s espo se to the FBI Repo t NCIP P o i ial Offi e, it se t a lette to NCIP Regional Office (with copy to Provincial Office) requesting for the issuance of CP for the following

reasons: a) that Barangay Getsemane as certified by BLGU and MLGU has no IP residents (based also

o the FBI Repo t NCIP ; a d that Ba a ga “to. Ni o’s MHPP ill o lo ge e o st u ted due to the damaged brought about by Typhoon Seniang in December 2014 (deforming the MHPP site

with the huge landslides).

With the LGU’s e uest fo a tio f o NCIP, the Regio al NCIP Offi e i CARAGA has o de ed through a Work Order the creation of FPIC Team and implementation of an FPIC to include in the

coverage Barangay Getsemane (and excluding Barangay Sto. Nino) will still undergo FPIC process.

This was due to the fact that based on history according to NCIP; Getsemane has become a hunting

g ou d the IPs. With the Co sulti g Tea ’s eeti g ith NCIP P o i e last Fe ua , it as explained that the FPIC process will entail two consultations and it should not be the full-blown FPIC

process considering the scale, non-extractive nature, and a community-based MHPP. Several

meetings and official communication with the NCIP Province and LGU Bayugan City was held by the

Consulting Team to follow up the process but seemed to be too dependent on the schedule and

availability of NCIP FPIC Team.




Final Report 102

During the ADB Field Mission last July 16, 2015, the Consulting Team provided updates regarding the

status of FPIC processes in the project sites, the CPDO said that they will bring this issue to the Mayor

a d o u i ate di e tl ith Regio al NCIP Offi e to esol e issues ith NCIP’s issua e of CP.

Similar to Don Marcelino, the ADB also sent fax and email letters to NCIP CARAGA/Provincial Office

of Agusan del Sur and to Bayugan City LGU for both agencies to resolve the FPIC related processes.

Constraints in the Implementation of FPIC Processes

Overall, the FPIC processes in both project areas of Don Marcelino and Bayugan City were

constrained by the following: a) foremost is the availability of time by NCIP that it can devote to the

project for reasons that there are other projects that were lined up such as CADTs or Certificate of

Ancestral Domain Title applications and thus need some adjustments in the schedule of activities for

the project; Both NCIP Offices in Davao del Sur and Agusan del Sur Provinces had somehow

acknowledged delays in implementing FPIC given their other schedules; b) changes in team

composition in handling the project sites e.g. FBI Team is different from FPIC Team for Bayugan sites;

and, c) changes in personnel of NCIP where CT and LGUs/project proponents also need to adjust in

ho to oo di ate ith; d to so e e te t the a aila ilit of LGU’s s hedule during meetings with

NCIP (as in the case of Bayugan City where there were some delays in the processing/releasing of

budget to NCIP Provincial FBI Team who implemented the FBI process).


TA-7781: Rural Community-Based Renewable Energy De-

velopment in Mindanao

Final Report