CAMC provides $34.9 million supplier credit for Banaoang Pump Irrigation Project (Linked to Record ID#34701)

Project narrative

In October 2001, China National Construction & Agricultural Machinery Import & Export Corporation (CAMC) and the Department of Finance of the Government of the Philippines signed a $34,980,616 supplier credit agreement for the Banaoang Pump Irrigation Project (BPIP). This project was financed under the $100 million line of credit for local farm project and hybrid rice growth (captured via Record ID#34701) and all subsidiary loans issued under this line of credit carried the following terms: a 3% interest rate, an 8 year maturity, and a 2 year grace period. This project involved the construction of a pumping station, irrigation channels, a bridge, a tunnel, and power supply and electrical transmission lines — as well as the improvement of farm-to-market roads and drainage infrastructure — in the barangay of Banaoang I within Ilocos Sur district. It sought to tap water from Abra River that flows from the mountains in the north going west to the West Philippine Sea (South China Sea), and its tributary that flows south was to be the main source of irrigation water. A pumping station with seven units of electric-powered pumps was to be constructed on the right bank of the river about 150 meters upstream of the Banaoang Bridge. A 15 km, 67 kilovolt transmission line was to be installed from the National Power Corporation sub-station in Bantay to the project site in order to supply the necessary electricity. A 600 meter tunnel was also to be constructed to connect the pump station to the main canal. The total length of the main canal was to be about 20.60 km and it was expected to distribute water through a network of lateral and sub-lateral canals (measuring 32 km in length). Additionally, 90 km of main farm ditches, 176 km of supplementary farm ditches, 50 km O&M roads, and 30 km of drainage canals were to be constructed. The project was judged, at appraisal, to be economically viable with an economic internal rate of return (EIRR) of 20.0% (above the 15% hurdle rate used by the Government of the Philippines). Upon completion, it was expected that the project would irrigate 6,312 hectares of land and benefit 5,334 farm households in six municipalities (Vigan, Bantay, San Vicente, San Ildefonso, Sto. Domingo, and Magsingal). CAMC was the contractor responsible for implementation. Its work was overseen by the National Irrigation Administration (NIA) of the Government of the Philippines. The project commenced in March 2003 and it was originally expected to reach completion in 2006. However, the project experienced a number of delays. Chief among these was the unforeseen occurrence of salt water in the lateral irrigation channels. The discovery of brackish water in the irrigation channels necessitated an extending of the channels four kilometers more inland to tap sweet water, which was not anticipated when the original project design plans were drawn. The project was officially inaugurated on July 25, 2011. However, due to unexpected salt water intrusions and associated the cost increases, additional project work continued in 2012 and 2013.