COA calls out DENR on foreign funded projects

MANILA, Philippines — The Commission on Audit (COA) has called out the Department of Environment and Natural Resources (DENR) over the delays in its implementation of two foreign-funded projects.

The COA said the delay resulted in the government’s paying P10.707 million in commitment fees.

In its 2018 annual audit report on the DENR, the COA said the agency posted “low physical accomplishment” for its Forest Management Project (FMP) and Integrated Natural Resources and Environmental Management Project (INREMP), funded by the Japan International Cooperation Agency (JICA) and Asian Development Bank (ADB), respectively.

The FMP is a 10-year project set to be implement from July 2, 2012 to July 3, 2022, seeking to rehabilitate degraded forestlands in three critical river basins – the Upper Magat and Cagayan basin, the Upper Pampanga basin and the Jalaur basin in Panay Island.

The project has the end-goal of improving the socio-economic conditions and mitigating disaster risks in the vulnerable communities near the river basins.

The INREMP, meanwhile, is a seven-year project set to be implemented from Aug. 9, 2013 to Dec. 31, 2020, aimed at improving the management of watersheds in four priority river basins – the Chico River Basin in Cordillera Administrative Region; the Wahig–Inabanga River Basin in Bohol Island; the Lake Lanao Basin in Mindanao; and the Upper Bukidnon River Basin in Bukidnon province with the end-goal of improving the socio-economic conditions of indigenous people and the other poor residents in the surrounding communities. 

The DENR’s Foreign-Assisted and Special Projects Services (FASPS) was tasked to lead the implementation of both projects.

“The FASPS of the DENR manages the implementation of FMP and INREMP, which are both way past their mid-term of implementation,” the COA said.

The audit body noted that as of Dec. 31, 2018, the physical progress of the FMP stood at 76.15 percent as against the 98.58 target percentage of accomplishment for the end of the year. 

The COA said physical accomplishment for INREMP stood at 38 percent as of year-end as against the target of 78 percent.

“The continual delay in the implementation defeats the project goal of inclusive growth and poverty reduction for the INREMP and integrating conservation and development-oriented activities with full participation and capacitation of local communities for the FMP,” the COA said.

“It may also affect the timely completion of the FMP and INREMP in years 2022 and 2020, respectively,” it added.

The audit body added that because of the delay in the implementation of the projects, the government was made to pay a total of P10.707 million in commitment fees – P6.927 million for INREMP and P3.78 million for FMP.

A commitment fee is paid by a borrower to a bank or lender in exchange for the agreement to grant the loan at a later date. It serves as compensation to the lender for setting aside the amount of loan instead of utilizing it for other purposes to earn interest.

The audit report did not provide details on the amount of funds that were already disbursed or utilized for the projects.

A detailed project description posted on the DENR website, however, said the FMP has a total project cost of P5.87-billion, of which, P4.708-billion shall be loaned from JICA, while P1.162 billion shall be shouldered by the government.

The INREMP, meanwhile, has a total cost of $154.13 million, of which $100 million shall be loaned from ADB, the DENR stated in a project manual posted on its website.

The COA noted the DENR has already agreed to the audit body’s recommendation to instruct its FASPS office to “conduct periodic reviews to ensure that bottlenecks and issues affecting the project implementation are immediately addressed.”

The COA said the DENR also agreed to develop a “catch-up plan” in order to fast track the implementation of various components of the projects to improve the physical progress.