Dam the Rivers, Damn the People: San Roque Dam, Philippines by MICHAEL A. BENGWAYAN, Probe International

Dam The River,  Damn the  People: The San Roque Dam, Philippines

By MICHAEL A. BENGWAYAN(michaelbengwayan@hotmail.com)

Echoing Green Foundation Fellow, New York, New York, USA. (www.echoinggreen.org)

Founder and Director, Cordillera Ecological Center (Project PINE TREE)  (www.cordilleraecologicalcenter.wordpress.com)

pinetreephill@gmail.com

INTRODUCTION

The San Roque Dam,  considered the biggest man-made dam in the Southeast Asia is  the tallest at 200 meters and largest, 1,000 meters wide,  private hydropower project  in Asia. It is ninety five per cent complete. It is also full of controversies.  Located in the municipality of San Roque,  San Manuel,  Pangasinan, it however affects the Itogon town of Benguet. The reservoir and dam sit right in between the boundary of Itogon, Benguet and the towns of San Manuel and San Nicolas, Pangasinan.  The dam , proponents say, will produce 345 MW of power and irrigate at least 87,000 hectares (214,900 acres) of ricefields. It will also help control flooding of the lower Agno River which  annually overflows its banks and inundates municipalities downstream.

 

The controversial dam is built on the Agno river whose waters  comes from the mossy forests of Buguias, Kabayan (particularly Mount Pulag), Bokod and Itogon of the province of Benguet and from the municipality of Bauko,  Mountain Province. It cuts  through the mountainous ranges finally exiting towards Pangasinan. It is the  expensive and the biggest flagship project ever engaged into by the Philippine  government.

 

The dam is being developed as a Build-Operate-Transfer project, awarded to the San Roque Power Corporation (SRPC), a 100% foreign owned consortium of Marubeni (Japan) Sithe Philippines (a subsidiary of NY-based Sithe Energies) and the Kansai Electric Company (Japan). Loans for the $1.19 billion project have come from the Japanese export credit agency Japanese Bank for International Cooperation (JBIC), and a consortium of Japanese private bank like the Japan Export and Import Bank (JEXIM).. The project started construction in May 1998 and is scheduled for commercial operation by the year 2004.

 

JEXIM has  provided $702 million toward the total $1-1.5 billion dollar cost of the San Roque Dam.  The initial fund released by JEXIM was  $302 million and the second release was  $400.

 

A review of the Power Purchase Agreement signed by the Philippine government’s national utility  National Power Corporation (NPC) and the SRPC revealed that the project is a high-cost provider of electricity, that NPC has agreed to pay SRPC over US$10 million a month in capacity fees regardless of whether or not the SRPC produces power, and that the Philippine government carries a large proportion of the project risk and liabilities.

 

 

Over 160 families have already been forcibly displaced and are living in desperate conditions at a temporary site.  NPC has not yet purchased, much less prepared, the fully-equipped resettlement site that it promised. JEXIM’s environmental guidelines state that people resettled by projects that it funds must have given their consent. Potential environmental impacts include erosion, siltation, disruption of fisheries, other biodiversity losses, reduced water quality and increased water-borne disease.

 

In October, 1998 a San Roque Power Vice-President publicly admitted that the Environmental Assessment prepared by NPC failed to address watershed management and did not adequately demarcate the anticipated reservoir level.

 

A. FINANCE AND CORPORATE ACTORS

 

San Roque Power Corporation is owned under a Build-Operate-Transfer (BOT) agreement by a Japanese trading company, Marubeni (42.45%); a US company, Sithe Energies (50.75%), which itself is 29% owned by Marubeni; and a Japanese utility company, Kansai Electric (7.5%).  In October 1998, JEXIM approved a $302 million loan to the private sector developers of this project.

 

The Philippines’ National Power Corporation (NPC)  or Napocor has signed a power purchase agreement to purchase electricity from the power station at fixed rates for 25 years, after which it will assume ownership of the dam. Napocor will contribute $400 million toward construction of the dam and spillway. Napocor’s financial commitments are being entirely supported by JEXIM, which will provide political risk cover of its buyout and termination payment obligations after year 10. Sithe received the government contract to build, operate and maintain the dam.  In April 1998, US-based Raytheon Co. won a $700 million subcontract to design and build the dam.  The US subsidiary of Japan’s Toshiba Corporation won the $51 million supply contract.

 

This funding was approved in apparent contradiction to its guidelines, despite strong local opposition to the project.  JEXIM is considering an additional $400 million loan to finance the Philippines’ National Power Corporation contribution to the project, but delayed approval of the funds pending endorsement of local governments.  Approval of the Itogon provincial government was obtained after the Philippine government offered P50 million (US$1.3 million) in regional development funds.

 

Local groups challenged the legality of this endorsement, based on the appearance of a payoff and new information regarding an increased number of families to be affected.

 

 

B. THE SRMP AND AFFECTED COMMUNITIES: Displacement and Social Disintegration

 

For dams to be constructed, large tracts of land are flooded. And it is inevitable that people who live there have to be resettled, either through deceit, voluntary evacuation or through the use of force. In the cases of the Binga and Ambuclao dams, also found in the province of Benguet and built in the early 1950s, it was largely through false and empty promises of the ruling government of that time.  Some 12,000 people were displaced in Binga and  Ambuclao, respectively. The exact figures for the numbers who had to abandon their lands, homes, farms, pasturelands, communal forests and burial grounds  are hard to come by.

 

 

Ambuclao and Binga Dams: A Record of Failure

 

If the past is anything to go by, the resettlement schemes of the San Roque Multipurpose Project (SRMP) will bring nothing but untold misery. Indeed, it already has. For there is scarcely a scheme in existence that has avoided the twin problems of cultural disruption and social alienation—a point that was not lost in the construction of the Ambuclao and Binga dams.

 

George Delmas, once a baranagy development officer of Tinongdan, Itogon, recounted how his forefathers were deceived fifty years ago when the Binga dam was constructed. “My grandparents were promised electricity, employment, compensation and rehabilitation. Nothing ever happened  for half a century. Our displacement was the most agonizing. We were plucked from a state of independence to a state of dependence”, he lamented.

 

Dr. Robert Goodland, former senior ecologist of the World Bank and a world authority on the effects of large dams has been critical about what dams have done to peoples’ lives. “In the past,” he wrote, people were often relocated or resettled without regard to their individual community or societal needs. Concern was often lacking for their future welfare: how or whether they would find employment, receive education and health care, retain their cultural and social identity and ensure their safety and social continuity. It was not uncommon for the displaced peoples to be placed in habitational settings foreign to their cultures or to be located in proximity to other peoples with whom they had no affinity or even longstanding enmity.”

 

Such was what happened to the Ibalois of Benguet who through deception was forced out from their Ambuclao and Binga homelands only to find themselves in the malarial mosquito-infested island of Palawan in the Visayas part of the Philippines, to the Conwap Valley of neighboring Nueva Vizcaya and in the fringes of Ifugao province.   In 1982 for instance, writing for a local Philippine newspaper, I  accompanied some 65 families  , numbering more or less 245 people  whose parents and grandparents were evicted from Ambulao in 1951 to  Conwap Valley Nueva Vizcaya.

 

I then wrote “In a well-orchestrated convoy prepared by government authorities, we traveled to Conwap, the people expectant of simple housing accommodations, lands to till, water to use and food rations till they are paid. There was nothing at Conwap when we arrived. The land was settled by another group of indigenous people and were hostile to the Ibalois who arrived. The place was hot and , humid, much unlike Benguet which was very cool. The Ibalois had no idea what crops would grow in the valley. There was cursing and gnashing of teeth, the women cried no end, the children unsure of what was going on. There was nowhere else to go.  Eventually, the government officials with us negotiated with the local leaders of the area to allow the families to stay temporarily. I found out later, many families went back to Benguet, a few stayed on to brave uncertain future because no home , except those flooded by Ambuclao dam, awaited them”.

 

The fate of the Ambuclao and Binga people has been aggravated by the absence (if ever there was one, it was perhaps on paper) of a resettlement scheme. There was no resettlement area at all.

 

But even if there are resettlement plans and locations, Professor William Ackerman, had this to say during the 1976 World Conference  on the Effects of Large-Scale Dams on peoples’ sufferings “ Resettlement inevitably imposes physiological, psychological and socio-cultural stress. Even where planning is effective, some (especially the aged ) will never come to terms with their new homes. For them, transition period ends only with death.”“From the human point of view, relocation has been one of the least satisfactory aspects of reservoir projects….resettlement schemes have a high failure rate around the world”.

 

Once Again, Deceit  But Now in San Roque

 

With the full construction of San Roque, over 925 families  are expected to be displaced, and the livelihoods of tens of thousands of downstream residents will be affected due to erosion and destruction of fisheries.  Preparation of the construction site began in early 1998, when 160 families were forced to dismantle their homes and leave the area before a relocation site had been obtained or prepared for them.

 

The Philippine government has not kept its promises to provide the affected people with land, housing and social services at a permanent resettlement site.  It has also failed to provide the promised compensation for the losses of affected peoples’ land, crops and homes. JEXIM’s environmental guidelines state that people resettled by projects it funds must give their consent. The displaced people never consented yet were displaced.  Given the strident opposition of the populations slated for resettlement, it appears that JEXIM’s support for this project violates its own guidelines.

 

To highlight a typical social fragmentation due to displacement, a visit to an affected area in San Roque, sitio Bolangit, San Nicolas, provided disturbing insight.

 

People of Bolangit bitterly recalled when they were dislocated inappropriately in December 2001. More than 56 families were told to pack their things and leave to give way to the construction of the 12.8 kilometer reservoir of San Roque dam.

Gone were years when the farmers cherished tilling their fertile soil. Gone were the forests which provided food, housing, water and firewood. It is now hundreds of feet below water.

Elmon Docuigon, 43, a proud Kankanaey, an Igorot tribe, related that his father was the one who cleared the heavily forested area where their house and ricefield are now located. Manong Elmon was born here, so were his nine children. “Life was easy here.”

 

Bolangit is part of Barangay San Felipe East. It is nestled between the vast range of the Caraballo Mountain that borders Pangasinan and Nueva Vizcaya. Inaccessible to vehicles and without electricity, this 50-hectare sitio was home to some 80 families, 80 percent of whom have Ilocano roots while the rest are composed of Ibaloy and Kankanaey clans.

Most of the residents survived by planting rice. According to Manong Elmon, a hectare of ricefield usually yielded from 80 to 120 sacks of palay per harvest, with three harvest seasons per year. Aside from this, Manong Elmon also took care of his mango and coffee trees, from which he earned up to P15,000 for a single mango tree each harvest season.

 

Gold panning was an equally attractive source of livelihood for many. According to Cesar Regonan, president of the Bolangit Community Association (BCA), gold panners in Bolangit used earn a minimum of P200 a day. This amount can shoot up to as much as P2,000 daily during rainy season, when water from the upstream flows more rapidly.

However, their imminent departure from Bolangit, their birthplace and source of livelihood, is not the only thing that distressed residents here. The anxiety and the helplessness drawn on their faces are brought about by the fact that many of the promises made by the National Power Corporation (NPC) to compensate them are yet to be delivered.

The NPC, the government agency in-charge of the dam project, is responsible for compensating the people for loss of lands, homes and crops through its Resettlement Action Plan (RAP). Likewise, the NPC has also been tasked to take care of the resettlement and land acquisition of the affected families.

“(The NPC) promised us that they would compensate us for our houses and crops before the dam construction. The dam is almost half complete, but they have only paid for our houses,” lamented  Manong Elmon.

The displaced families are also dissatisfied with the resettlement area in Lagpan, San Nicolas, which is reserved for Bolangit residents. Only five families have moved there so far. One family was even forced to build a nipa house beside another housing unit because the NPC would not let the family occupy any unit “until all houses are completed.”

A fact-finding team composed of non-government organizations involving members of the academe and media, visited the resettlement area and assessed the impact of the dam project on residents. The team that inspected Lagpan found out  that cracks are already visible in some of the still unoccupied units, indicating that the contractors used substandard materials. Adding  insult to injury, the NPC promised two cows for every family and it remains just that—a promise.

 

The concern of Bolangit residents is not without basis. In Camanggaan, another resettlement area, the scarcity of livelihood opportunities has forced many beneficiaries to either sell or rent their house-and-lot units. It is feared that Lagpan relocatees may also end up doing the same considering that most, if not all of Bolangit residents scheduled to be transferred there are only used to farming and gold panning.

 

 

 

 

Cases Of Forced Eviction

 

In June 23, scores of residents in a village of San Nicolas, Pangasinan  deplored how officials of two power firms in the province evacuated them from their respective homes. The evacuees,  natives of sitio Bolangit, Barangay San Felipe east claimed that they were driven away from their houses by authorities forcibly. The demolition operation was conducted to pave way for furthering the construction of the San Roque Multi-Purpose Dam (SRMDP) in the community. 

The Tignay Dagiti Mannalon a Mangwayawaya iti Agno (TIMMAWA), a peoples organization lobbying for the rights of the evacuees,  condemned the forced evacuation  TIMMAWA said  men from the  power firms,  with seven armed  men in military fatigue uniforms without nameplates,  harassed about 20 villagers. They forced the residents to leave their respective houses in the sitio.

TIMMAWA said  the forced evacuation again happened on July 22 amidst a backdrop of heavy rains. Among the evacuees, women and children were forced to board a chopper, leaving their animals and property in their respective homes.

The men among the evacuees, were ordered to walk away from their houses and pass through a dangerous terrain in leaving their community. The demolition team  dismantled the houses of the evacuees after  giving them  tents which they put up in an adjacent area to stay on  temporarily. 

The third incident of the forced evacuation happened  on July 28, TIMMAWA officials said, adding, that on that day, the demolition team resorted to burning the houses of the evacuees. These turn of events in the sitio, caused tremendous fear to the villagers including those living in adjacent communities.

 

Bureaucratic Run-Around

 

Bolangit residents are trying to endure the government’s bureaucratic run-around in attending to filed compensatory claims. BCA President Regonan adamantly lobbied for compensation for their loss of earnings from gold panning. But according to NPC, gold panning,  is not included in the NPC’s compensation package.

 

However, according to Joan Carling, secretary-general of the Cordillera People’s Alliance (CPA), which is spearheading the fight against the construction of the dam,  “compensation for gold panning has been recently included in the compensation package. But the residents do not know it yet because that piece of information is not being given to them by the authorities.”

 

Aside from withholding pertinent information, the NPC is also  resorting to deceitful tactics. According to Bolangit  residents, NPC Project Manager Mechor Pulanco and his assistant Rolando Jalos went to Bolangit on  March and pressured many residents to sign a document stating that the residents were waiving whatever claims they have on their properties. This allegation was corroborated by Regonan, who confronted Pulanco regarding the waiver.

 

“Pulanco told us we should sign the waiver because as soon as the dam is completed, the NPC would waste no time entertaining our claims. I refused to sign the waiver after he failed to give me an assurance that we would be compensated,” Regonan said. Nevertheless, many residents here are illiterate and they did sign the waiver, not knowing the consequences, Regonan disclosed. The waiver was signed by almost half of the families here and was only disregarded after the BCA confronted Pulanco.

 

Bolangit residents  also accused the NPC of employing dilatory tactics to avoid paying just compensations to  affected farmers. They said the NPC and the Department of Environment and Natural Resources (DENR) have yet to come up with official field notes indicating the number of trees and crops in Bolangit. Regonan explained that field notes are needed to determine how many trees each farmer has that have to be paid by NPC.

 

Bolangit farmers are  incensed by the “cheating” being done by the NPC in classifying their crops and trees. Manong Elmon, for instance, said that the NPC has classified his full-bearing mango trees as newly planted to lessen their value.

 

In San Felipe East proper, Salvador Serquina, a farmer, was so infuriated by the bureaucratic run-around that he burned all the documents supporting his compensation claims for his crops. Only after realizing that giving up would do him no good that he decided to proceed with fighting for his claims.

 

 

Long Wait?

 

As things stand now, Bolangit residents may be in for a long wait. In the latest congressional probe on the construction of the mega-dam conducted by the Philippine Congressional Committee on Ecology  on  October 9, Iloilo Rep. Rolex Suplico revealed that “the NPC is in a very bad financial status” and may have difficulty fulfilling its commitments to affected residents.

 

While the dam construction is being funded by a $1.2-billion loan from giant Japanese banks, including the Japan Bank for International Cooperation (JBIC) and Japan Export-Import Bank (JEXIM), compensating the affected families rests solely on the shoulders of the NPC. This is part of the memorandum of agreement signed by the latter with the SRPC.

 

If it is true that the NPC is indeed in a very bad financial status, as what Rep. Suplico contends, then it would take a very long time before all the claimants are given just compensations.

 

Meanwhile, Regonan continues to dream of the things he would do with the money the NPC promised him. “I’ll buy land in San Felipe, then I’ll build fish cages. If possible, I still want to pan gold or buy them myself from the gold panners,” he said smiling. But no one in Bolangit knows how long they have to wait. For now, residents of sitio Bolangit will just have to contend with waking up every morning to the clanking of those giant construction machines that will soon alter their lives forever.

 

The limited livelihood in the resettlement area is another concern. The NPC’s promise of adequate livelihood development program is in fact insufficient, for the land tilled by Bolangit residents will be reduced to just frontyard lots.

 
Over in Itogon, Benguet, the municipal council revoked its endorsement of the controversial San Roque Multipurpose Dam Project (SRMDP)  and rebuked the national government for deceiving the indigenous Ibalois who would be affected. "We have given them (government) time to prove their worth but they are worthless," said Vice Mayor Aloysius Kato.

He said the council has established what he called the "patterns of deceit" by the government for its empty promises to Itogon. Some crucial aspects of the agreement that, he said, were not met are the non-issuance of instruments to legalize payment of ancestral lands affected by the project, the lack of funds for the P268.5-million integrated watershed management plan, and the payment of benefits to families to be relocated.

Kato said the trial has crippled the P20.2-billion SRMDP and placed agencies involved in the project in a "drifting state.The council voted to override the mayor's veto on Resolution No. 180, which revoked Itogon's endorsement of the project. 

The council castigated the National Power Corp., Department of Environment and Natural Resources, presidential committee of flagship programs and projects, San Roque Power Corp. and other agencies for their non-compliance with the 17 conditions that would allow the project.

B. ENVIRONMENTAL IMPACT STANDARDS

 

Based on environmentalists’ analysis, some of the more worrying potential environmental impacts due to the construction of the dam include erosion and siltation,  severe disruption of downstream fisheries and other loss of biodiversity, reduced water quality and increased water-borne diseases.

 In October 1998, the San Roque Power Corporation’s Vice President, Raymond Cunningham, admitted that the EIA prepared by Napocor was critically flawed.  He said it failed to address watershed management issues and adequately demarcate the anticipated reservoir level.  Napocor and local officials agreed to alter the EIA, and added 17 conditionalities to the Environmental Compliance Certificate (ECC).  

This was done without consultation with local people or approval by local government units, as is required by Philippine law.  JEXIM has been unwilling to provide information to affected peoples or NGOs in Japan regarding the project’s social and nation.

The impending construction of a US$1.9 billion hydroelectric dam is being challenged because its Environmental Impact Assessment is full of potentially fatal flaws..  Critics warn earthquakes and floods could cause the dam to be breached sending floods containing heavy metals and toxics cascading through the hapless communities downstream.

 

The dam construction is widely being protested because of its environmental and social impact. Critics claim it will endanger not only the lives of about 20,000 tribal Ibaloi people but also those of some 1.5 million residents in 78 towns of the provinces of Tarlac, Pangasinan and Nueva Ecija which are located below the dam.

 

According to Aviva Imhof, Southeast Asia coordinator of the California based International Rivers Network (IRN) which is active in lobbying against the dam, “the Environmmental Impact Assessment (EIA) of the dam is full of technical errors and serious deficiencies as discovered by an independent assessment panel made up of a seismologist, ecologist, geochemist, hydrologist and an engineer.”

 

In a report made public July 24, the IRN panel said, “Irresponsible releases of flood waters (under flood condition downstream of the dam) will result in a severe flooding of the whole Pangasinan and most of Tarlac plains. Inattention by operators on the rising reservoir water level could also result in the breaching of the dam, its eventual loss, and the consequent catastrophic flooding downstream.”

 

Northern Luzon is typhoon country; the dam site can expect one or two typhoons per year, on average. They can generate 480 mm of rainfall in a day.  Geochemist Dr. Sergio Feld, a panel member, warned that the “dam has the potential of becoming a tailings dam of silt and sedimentation laced with deadly dissolved chemical constituients like mercury, lead, selenium, cadmium, molybdenum, zinc, arsenic, copper, cyanide and even uranium which comes from several mines operating above the damsite.”

 

Poster protesting the San Roque Dam

The Philippines lies within the Pacific Ring of Fire, a geographical zone susceptible to earthquakes. The panel found out that the dam is prone to failure in case of earthquakes and flooding. Hyrologist Dr. Peter Wiling of the assessment team said that “either an earthquake or a flood could totally destroy the dam.” He went on to conclude that “for the Philippine government to continue building the dam is asking those below the dam to develop a false sense of security.” Dr. Wiling said the reservoir was designed to contain a only relatively small flood expected to occur every five years. “It cannot contain larger floods which are expected to be devastating,” he said.

 

The most chilling evaluation comes from seismologist Dr. Tizanio Grifoni who noted the absence of seismic hazard analysis. “The dam has not been designed to withstand earthquakes,” he said. “An earthquake could induce seiche waves that could erode the banks, induce landslides and cause the dam to break, leading to the loss of the dam altogether.” Reports of these technical errors have alarmed residents below the dam causing widespread demonstrations and protests.  The critics are not only anti-dam activists in the Philippines but also in Japan where a US$ 400 million loan from the Japanese Export-Import bank (JEXIM) was approved to partially finance the dam.

 

According to Ikuko Matsumoto, a Friends of the Earth (FOE) Japan representative who is jointly working with IRN to stop the release of the loan, nine members of the Japanese parliament (Diet) have urged JEXIM not to release the funding.

 

“For JEXIM to release the loans for San Roque dam, it will contradict its policy of withholding funds where environmental concerns are jeopardized,” she said. “JEXIM now is under pressure from the Japanese public to be more transparent in its use of funds paid by public taxes and is expected to bare more information regarding loans to San Roque,” she said.

 

The Philippines is relying heavily on external loans for the completion of the dam. The government has negotiated with the Dutch bank ABN AMRO for a US$200 million loan to help co-finance the dam. Already, the country is indebted about US$5 billion for dam-related projects.

 

 

Fear Raised That San Roque Dam Will Create Calamity

Environmentalists further  expressed fear over the structural capability of the San Roque multi-purpose hydroelectric dam project here in assuring protection against flood for residents in this town and in neighboring low-lying areas. The apprehension was intensified following an unofficial statement from the National Power Corporation which claimed that the SRMDP can only provide about 50 percent control over waters that flow along the Agno River.

"If the report is true, then the guarantee provided by our leaders that it will solve the perennial problem of flooding in Pangasinan and its neighbor province is no guarantee at all," an environmental researcher said. This adds to earlier worry among public officials and residents in the lowland that the San Roque dam, when completed, will bring about more disastrous floods that with the water releases from the existing small Ambuklao and Binga dams.

When completed, the dam project will have to provide not only flood control facility within the areas lying along the Agno River stretch but electricity and irrigation services as well. The dam is being built to stand a water volume of 815 million cubic feet.

Bolangit and other neighboring sitios comprise the main site of the 1,600- hectare San Roque Dam reservoir which extends to the southern foothills of Benguet province. When inundated by the dam’s operation, the villages along with their ricefields and gold-panning areas are expected to store some 850 million cubic meters for power generation, irrigation and flood control.  Some 530 million cubic meters are reserved for active storage and flood control purposes.  The dead storage volume totals 320 million cubic meters.  According to an SMPDP information kit, the total storage volume of the reservoir is nearly one billion cubic meters.

 

Among the municipalities most likely to be affected in Pangasinan include district two (Aguilar, Bugallon, Linayen, Labrador, Mangatarem, Urbiztondo and Basista); district three (Bayambang, Calasiao, San Carlos City, Malasiqui, Mapandan and Sta. Barbara); district four (San Jacinto, Manaoag, Dagupan City, San Fabian and Mangaldan); district five (Binalonan, Laoac, Sison, Alcala, Villasis, Sto. Tomas and Pozorrubio); and district six (Rosales, Balungao, Umingan, San Quintin, Natividad, San Nicolas, Sta. Maria, San Manuel, Asingan and Tayug).

 

 

 

C. REVIEW OF THE ALLEGED ONEROUS POWER PURCHASE AGREEMENT

I

In May  2000 Dr. Wayne C. White  of Foresight Associates, Massachussettes, USA  did a study on the alleged onerous Power Purchase Agreement between the government and the San Roque Project  BOT Executive Summary. The San Roque Power Purchase Agreement (PPA) is the primary document for assigning a concession to a consortium formed by three international companies, granting it specific duties and privileges concerning construction and operation, and throughout 25 years of concession life. The following is a summary of Dr. White’s evaluation.

 

Private sector involvement in the San Roque Project’s development is not proof of economic viability. The BOT contract does not subject the project’s developers to market disciplines. Rather than earnings being from fees set by competitive markets, the earnings to the developers will come from a $ 400 million transfer from the National Power Corporation to the San Roque Power Corporation, and later fees that are set by contract, and include payment under payment under scenarios wherein no power is produced.

 

The project is not a low cost provider of electricity. Sample calculations of monthly billings included in the PPA are equivalent to 13 to 21 Pesos per kWh (US $ .32 to  .51 per kWh). A competitive project should provide electricity at approximately 2 Pesos (US $ .05) per kWh or less.

 

The Philippine government carries a large proportion of the project risk. It carries a far larger financial risk than the SRPC for successful completion of construction, and carries all of the hydrological risk.

 

The PPA does not ensure mitigation of social and environment effects. Social and environmental mitigation are detached from the mechanisms for project construction and operation, thus creating a situation where the project will go forward regardless of how affected persons or the environmental endowment are treated.

 

The PPA does not, and can not, ensure productive long term power production, but it does create an obligation under which the National Power Corporation may be liable for payments of  $ 10 million a month although no power is generated.

 

The PPA has provisions which come into effect if the NPC is ever privatized or sells any assets, and if these actions can be construed to impinges on the SRPC’s  privileges under the PPA in any way. Under these provisions, the SRPC can demand that NPC buy the project from them at a price dictated by a formula given in the PPA. This applies even before project completion, in which case the NPC would be compelled to pay for and take ownership of the unfinished project.

 

Dr. White said power purchase agreements (PPAs), as commonly understood, constitute a standard component of project finance arrangements for large generating installations. Typically a PPA is a simple assurance from a utility saying, in effect, “If you build the power plant, we will buy the electricity.” The PPA usually covers the rate to be paid, which may be at a rate established in an included schedule, or left to be determined by a market, with the PPA language merely citing the agreed upon market indicators. Typically the PPA does not close a project, but rather enables subsequent contracts to be signed. Since leaders want to be assured that the project will have a market for what it produces, signing of a PPA assures them, and allows the developers to then close on their finance. Agreements with a government concerning permits, taxation, and any concession of natural resources may come in a separate round.

 

The San Roque agreement is more than what is commonly understood to be within the scope of a PPA. It is a de facto BOT agreement , that is, it is the main contractual document governing the agreement between the SRPC, with its consortium owners, and the National Power Corporation, and by specific provisions and side agreements, multiple agencies and officers of the Philippine government.

 

The PPA establishes the following conditions:

  • Insulates the consortium companies, Marubeni Corporation, Sithe Philippines Holdings, and Italian-Thai Development (superceded by Kansai Electric), from liability, establishing non-resource finance, by defining their wholly owned subsidiary, the San Roque Power Corporation (SRPC) as the responsible party (see Fourth Schedule of the document);
  • Grants rights to construct and operate the dam and related facilities to the SRPC;
  • Guarantees land and water rights to the SRPC for the term of the agreement at no expense to them;
  • Grants the developer (SRPC) a payment of US $ 400 million during the construction period, in addition to guaranteeing purchase of all electricity produced; and
  • Guarantees “Capacity Fee” and “Operating Fee” payments, even if electricity is not generated for lack of water, at a minimum value in the first 12 years equivalent to US $ 10 million per month3.

 

On the issue that  private sector project development is  proof of the San Roque dam’s economic viability, Dr. White  remained critical/. As it is , one of the main motives for private sector involvement in the power sector worldwide is the hope that this will bring about spontaneous and on going economic rationality, resulting in least cost power production, and conservative use of resources. These benefits only come to pass, however, when the actors are subject to market disciplines, and are regulated with regard to social and environmental factors.

 

For San Roque, market discipline would have been the case if all the following conditions applied:

  • The developer takes the financial risk for the project (including internalized incidental effects),
  • Earnings accrue from fees earned by the project,
  • Those fees are determined by a competitive market, and
  • Cost recovery and any profit come as a result of earnings from market determined fees exceeding the costs of production.

 

The San Roque project, although a type of BOT arrangement, does not meet this prescription, and therefore is not subject to market forces which would attest to its economic viability. The developer is not taking the financial risk for this project (as will be further detailed later in this report). Earnings are not exclusively from fees earned from project performance, but rather funding for San Roque include the contribution by the government of US $ 400 million, 4 as well as electrical tariffs and capital recovery payments in amounts set in the contract. The rates established in the contract are not in keeping with competitive market rates, as described in the next section.

 

Despite private sector participation, the project is a public subsidized construction contract, which will also further compensate the developer during project life even in the event of low generation and/or absence of a market for the produced power. Not only does the private sector participation not demonstrate economic viability, the reliance on subsidy and the above market rates suggest that the project is not economically feasible in its own right.

 

 

False Hopes That Project Will be Low Cost Provider of Electricity

 

As an example of the market price of electricity, a power plant utilizing combined cycle gas turbines in Southeast Asia can provide electricity at US $ .05 per kWh or less. In 1998 the average NPC rate charged to end users was 2.38 Pesos/ kWh for the Philippines as a whole, 2.54 P/kWh for Luzon and 1.56 P/kWh for Mindanao.5

The PPA establishes a schedule of payments to the SRPC by NPC during the life of the project, that is the 25 year “cooperation period” following construction. The rates are highest in the first 12 years, then decrease somewhat. The components of the monthly charges include the “Capital Recovery Fee” (comprised of the “Capacity Fee” and the “Energy Fee”) and the “Operating Fee.” The SRPC can also recover a fee for testing the turbines, and the PPA creates the possibility of other charges.6

 

The Thirteenth Schedule of the PPA provides sample calculations of the monthly billings under three scenarios, all based within the initial 12 year period. This review reduces those charges to a unit basis in Appendix A. To summarize these examples rates:

 

Scenario 1, “Plant operation incurred no outages”
Total example monthly fee in Pesos per kWh 13.17
Total example monthly fee in US $ per kWh 0.32
Scenario 2, “Plant operation incurred outages within the allowable limits”
Total example monthly fee in Pesos per kWh 20.448
Total example monthly fee in US $ per kWh 0.50
Scenario 3, “Plant operation incurred outrages outside the allowable limits”
Total example monthly fee on Pesos per kWh 20.93
Total example monthly fee in US $ per kWh 0.51

 

These unit prices of US $ .32, $ .50, and $ .51 compare very unfavorably with a reference cost of $ .05, and from this comparison it is obvious that the project is not a least, or even low, cost provider of electricity.

 

 

Assignment of Risks and Responsibilities Between the Developer and the Philippine Government

 

Under this PPA, a substantial amount of risk is borne by the government, not the developer. The advance payment by the government to the SRPC of $ 400 million directly pays for a large portion of the construction cost. Overall, the developer does assume some direct responsibility for construction management, albeit at strictly limited liability, and for keeping the turbines operational during service life. Beyond those factors, the contractors has multiple assurances of positive revenue, and it is the Philippine government that is liable for paying the SRPC, even if the project is a high cost generator of electricity, its capacity is not needed, or it fails to produce electricity due to water not being available. Additionally, the Philippine  government has direct responsibilities for many features of this project, including obtaining title to and making available all specified land7 and constructing an access road8, many of which will require additional spending from the national treasury.

 

The provisions of paragraph 15.2.2 deal with the case of the project reaching a state where the NPC concludes that the Completion Date will not be reached, in other words, if the project work progress falls hopelessly behind schedule. In this event, the NPC may terminate the SRPC’s role, and the SRPC will receive payment for all work done, regardless of whether the project ever comes online. The SRPC’s liability is restricted to forfeit of the Construction Performance Bond. The amount of the Construction Performance Bond is US $ 7.7 million, later increasing to US $ 39 million; it will be made available until the construction completion date.

 

The provisions of paragraph 9.8, describe a scenario wherein “buyout” occurs prior to project completion, that is, the NPC is compelled to compensate the SRPC, after which the SRPC holds no rights nor responsibilities for the project. In that case, the NPC must pay the SRPC fully or all construction work done, amounts expended, and pay the SRPC interest for any capital invested in the project. In other words, if any of the provisions of paragraph 9.8 apply, the Philippine “buys” all of the project cost in return for an unfinished project, while the developer walks away with a profit.

 

The developer does not shoulder the hydrological risk, but rather the PPA places it on the NPC. Article 8.5 of the agreement provides that “NPC will be required to pay the full amount of the capacity fees…. whether or not any energy is dispatched” if the reason for the downtime is “insufficiency of water.” Appendix B of this review calculates the fees due per month even if no power is generated, under the terms and formulas given in the Eight Schedule of the PPA. The result is a payment equivalent to US $ 10 million, over $ 400 million Pesos, per month.

 

The PPA frees the SRPC from responsibility for social and environment risks and costs.

 

 

The Philippine Government’s Responsibilities

 

  • Make the Site available to the Operator by the Effective Date (Feb. 23, 1998). It is tasked to obtain registered legal title to all parcels comprising the Site, all necessary governmental permits and rights to use in order that the SRPC shall have peaceful and exclusive possession of the site from Feb. 23, 1998 to the time the project is transferred to NPC or the government. (Art. 2.9.1)
  • The construction, maintenance and repair of the access roads from the Effective Date to the time it is transferred to the government (Transfer Date). (Art. 2.9.2)
  • Install, connect and maintain the transmission lines… [Art. 2.8.2 (ii)]
  • Obtain and maintain all Water Rights necessary for the construction, testing, commissioning and operation of the Power Station for the period from the Effective Date to the Transfer Date. [Art. 2.8.2 (ii)]
  • Ensure community livelihood and development activities (Art. 6.8)
  • Watershed management

 

 

The  Agreement’s Implications for Social  and Environmental  Impacts

 

The PPA mentions watershed management, saying “Management and maintenance of the watershed shall  be the sole responsibility of thr NPC”, while project construction and operation  is  wholly in  the hands of the SRPC. Since watershed management is detached from the operational  requirements of the project,  this contract creates a situation where project construction and operation will  proceed regardless of whether the watershed is protected. This,  and the lack  of any  funding for watershed  protections from project revenues, are conditions that  have led to watershed deterioration  in similar projects internationally.

 

Mitigating measures are not specified in the agreement for environmentally sensitive operations  such  as deposit or disposal of excavated rock  and soil. So apart from environmental  impacts inherent in  the project’s design which  will be manifest through  its operation, the contract does not ensure best practices  for  environmental protection during the  construction  phase.

 

The SRPC will  have obtained  an Environmental Compliance Certificate prior to  the contract’s effective date. An Environmental Impact Statement is a prerequisite  for obtaining this  certificate. Since the  effective date has been passed, even this one nominal environmentally related provision to  be found in PPA exerts  no meaningful  force on activities.

 

The PPA requires the NPC to  obtain  a certificate from  the Environmental  Management Bureau approving plans for   a Resettlement Program. Issues such  as consultation with, notification of, and, in the event of relocation, proper compensation-in-kind to  persons living in the project area, are not mentioned in  the contract. The PPA states that  the NPC’s responsibility  to  “obtain and maintain  all  Water Rights  necessary for  the construction…and operation of the power station” and that  “NPC, at no cost to   the Operator…” This contract, therefore, also  creates a situation  where the project will  proceed regardless  of conditionality  has been the case in international, particularly SE Asian, experience, due process and fair compensation have not occurred for affected people.

 

Furthermore, the contract (para 5.4) creates a financial penalty  for the NPC if the project does not  go  forward for  reasons of NPC’s failure to  obtain land rights, creating a further incentive for carrying through with  the project in spite of unresolved land rights issues.

 

The PPA grants  the SRPC (Article 7) unqualified rights to  draw water for  operation  of the turbines. As such, no meaningful  mechanism was preserved for tempering  water discharge to avoid environmental  damage  of preserve downstream  aquatic  life.

 

In side agreements, the National Irrigation Administration is tasked to  work with  the SRPC in shaping its “rule curve” to reflect the discharge priorities for  irrigation, and similarly the Department of Public Works and Highways  are to  help  incorporate the imperatives  of flood  control. There are no firm  targets in  the  PPA, however, for  the SRPC to  attain these “multipurpose” goals, and the role of the NIA  and DPWH seems to  be at best an advisory one with  respect to  discharges.

 

 

No Assurance of Responsible and Productive Long Term Operation

 

Under favorable conditions the SRPC has an incentive to maintain  the facility and optimize  its operation  for maximum power production so as to  earn the largest possible fee income. This management will   largely be at its own discretion as the PPA contains (5.1 (ix)) expressly exempting the project from regulating as utility  in the Philippines.

 

The SRPC, however, has several other options than long term productive operation  of  the facility.

 

The PPA does not preclude the SRPC’s ability  to  sell  the project after completion, or even before the end   of construction. This could be done  in differing  ways: the San Roque Power Corporation could sell  the project, which  would require  written, prior permission  by  the NPC (para 18.2). It is likelier that the more subtle mechanisms would be used  of the SRPC parties selling their shares in the San Roque Power Corporation to  a different group.

 

Another option  for the SRPC  is early transfer of the project to  the NPC. The PPA (see para 8.16)  has provisions which  come into  effect if the NP is  ever privatized, or in fact if it ever sells any  assets, and if these actions can be construed to impinge on the SRPC’s privileges  under the PPA (see articles 5.4, 8.15, 8.16,. 10.4, 14.4, 14.5). Under these provisions, the SRPC can demand that the NPC buy  the project from  them  immediately, at a price for  which  is  given  the PPA.

 

Another possibility, real and profitable  for  the San  Roque Power Company, is  to  continue  to hold and operate the project throughout  the “Cooperation Period”  even if it suffers  diminishing or near  zero  productivity. Even at a low level  of production, the SRPC would be assured  of a market for all  the power it  did produce. Moreover, it would be paid “Capacity Feesd” regardless of whether  it produced power, if insufficient water or certain other reasons (para 8.5) were  held  causal. For  example, if the reservoir experiences significant sedimentation, and the storage capacity of the reservoir is  compromised,  the generation shortfall could be determined  to  be caused by  insufficient water, and the SRPC  would continue to  receive  capacity fees (discussed above as hydrological  risk). As calculated in Appendix B of this review, even  if electrivity is not generated for  lack  of water, in  the first 12 years the fee is  equivalent to US$ million  per month.11

 

 

Appendix A. Example Fee Calculations Expressed as Unit Rates

 

Exchange  rate of the Philippine Peso, in foreign currency  per peso,

as of March  24, 2000

Source: Central  Bank of the Philippines

US Dollar 0.0244696
Japanese Yen 2.625310

 

 

PhP=Philippine Peso

US$=US Dollar

JPY=Japanese Yen

 

 

 

 

 

 

The following three examples are taken from the THIRTEENTH  SCHEDULE, SAMPLE COMPUTATION OF MONTHLY BILLINGS AND INCENTIVES.

Example 1, “Plant operation incurred no outages”

 

    (Philippine Peso)
Capacity fee, yen portion JPY 764, 550,000 291, 217, 093.57
Capacity fee, US$ portion US$ 8,949,000 365, 719, 096.35
Energy fee US$ 458, 001 18, 717, 142.90
Operating fee PhP 37,500,000 37, 500,000.00
Total example monthly fee in Pesos 713, 153, 332. 83
Peak energy delivered in month 43,330,400 kwh  
Off-peak energy delivered 10,832,600 kwh  
Total  energy delivered in example month  in kWh 54, 163,000.00
Total example monthly fee in Pesos per kwh 13.17
Total example monthly fee  per US$ per kwh .32

 

 

Example 2, “Plant operation incurred outages within the allowable limits”

 

 

    (Philippine Peso)
Capacity fee, yen portion JPY 764, 550,000 291, 217, 093.57
Capacity fee, US$ portion US$ 8,949,000 365, 719, 096.35
Energy fee US$ 282, 609 11, 549, 391.90
Operating fee PhP 37,500,000 37, 500,000.00
Total example monthly fee in Pesos 705, 985, 581.82
Peak energy delivered in month 27,573,600 kwh  
Off-peak energy delivered 6,893,400 kwh  
Total  energy delivered in example month  in kWh 34, 467,000.00
Total example monthly fee in Pesos per kwh 20.48
Total example monthly fee  per US$ per kwh .50

 

 

Example 3, “Plant operation incurred outages outside the allowable limits”

 

    (Philippine Peso)
Capacity fee, yen portion JPY 692,227,211 263,669,343.38
Capacity fee, US$ portion US$ 8,949,000 331,123,802.60
Energy fee US$ 282, 609 6,736,767.25
Operating fee PhP 37,500,000 37, 500,000.00
Total example monthly fee in Pesos 639,029,913.23
Peak energy delivered in month 27,573,600 kwh  
Off-peak energy delivered 6,893,400 kwh  
Total  energy delivered in example month  in kWh 30,527,000.00
Total example monthly fee in Pesos per kwh 20.93
Total example monthly fee  per US$ per kwh .51
   

 

 

 

Appendix B. Fee Calculation for Zero  Monthly Output

 

Exchange rate of the Philippine peso, in foreign  currency per peso, as of  24  March 2000

Source: Central Bank of the Philippines

US Dollar 0.0244696
Japanese Yen 2.6253610

 

The following computation is based on the formulas in the EIGHTH SCHEDULE for the case of zero monthly power production due to  insufficient water.

 

Assuming that:

Actual energy generated=0

And

Contracted  Capacity for the year is 150,000kW per the examples   in Schedule Thirteen.

 

Since actual  energy (Ep) is 0, then calculation  of Equivalent Capacity (EC) goes to 0. Then   Contracted Capacity (CC)>CE, and CE< Dependable Capacity of 85,000 kW (DC), so  F, the Factor in calculating capacity fee goes to zero, and the capacity fee is simply the Capacity Fee multiplied by  the value set as Dependable Capacity.

 

    (Philippine Peso)
Capacity, yen portion JPY 433,245,000 165,023,019.69
Capacity fee, US$ portion US$ 5,071,100 207,240,821.26
Energy fee US$0 0.00
Operating fee PhP 37,500,000 37,500,000
Total example monthly fee in Pesos 409,763,840.96
Total example monthly fee per in US$ 10,026,757.28
Peak  energy delivered in month 0kWh  
Off-peak energy delivered 0kWh  
Total  energy delivered in example in month in kWh 0.00

 

 

 

In summary, Dr. White’s review of the Power Purchase Agreement signed by  the national utility NPC and the SRPC  revealed that  the project is a high-cost provider of electricity. The NPC has agreed to  pay SRPC over US$ 10 million a month in capacity fees regardless of whether or not the SRPC produces power, and that  the Philippine government carries a large proportion of the risk and liabilities.

 

The World Commission on Dams (WCD) recommended  an “open and participatory review of ongoing and planned projects to  ascertain  the extent to  which  project formulation can be adapted to  accommodate the principles outlined in this report.” San Roque Dam does not comply with most of the principles in the WCD report. Communities are demanding that JBIC and the Philippine government immediately cancel  the project and restore livelihoods of those who have already been displaced.

 

 

E.  EVALUATING SAN ROQUE AGAINST WCD GUIDELIENES

 

In 1999, the World Commission on dams came out with official pronouncements on its assessment of the San Roque Dam construction. Some of the findings  were in contrast  to the realities that exist.

 

WCD Statement

“Provisions were made for resolving outstanding social and environmental impacts of existing dams…Outstanding social  issues were assessed; processes and mechanisms were  developed with  affected communities to redress them…”

Reality on  the Ground

 

San Roque Dam  is  the third dam to  be constructed along the Agno  River. After nearly 40  years, some 1,800 Ibalois displaced by  the upstream  Ambuklao and Binga dams have not received compensation. Many  have witnesses their lands being consumed by increasing sediment loads backed up behind the dams.  They  fear the same will  happen if  the San Roque Dam  is  built.

 

INDIGENOUS PEOPLES

 

 

 

WCD Statement

“Indigenous peoples and tribal peoples gave their free, prior and informed consent to  the project as designed.”

 

Reality on  the Ground

The Ibaloi, Kankanaey and Kalanguya people living upstream of the dam have not given their prior and informed consent to   the project.

RESETTLEMENT AND COMPENSATION

 

 

 

 

 

WCD Statement

 

The report stated, “Stakeholders negotiated agreements  for compensation, mitigation, resettlement, development, and monitoring measures affecting them including draft contracts, where necessary”; and “A clear agreement with  the affected people on the sequence and stages of resettlement will  be required before construction on any  project preparatory work begins…The negotiated agreements need to  be translated contracts between the developer and affected communities  and individuals, with  clear targets  for assessing compliance.”

 

Reality on  the Ground

Three fact-finding missions to  the project’s resettlement site have revealed widespread despair and dissatisfaction amongst resettled communities. From the beginning, people were lied to  and shut out of the planning process. People were coerced into  signing documents agreeing to  resettlement  and offers of compensation. Many  could not understand the contracts since they were written  in English, a language they  do  not understand. Most have not   even received the pitiful compensation they  were promised, and the amounts received are insufficient to  sustain their families at the resettlement site. NPC promised to  give the relocated families priority employment at the construction site, yet only around 10 percent have received jobs. Promises of livelilhood-restoration projects have not been honored. People feel  they were better off in their former communities.

 

PRECAUTINARY APPROACH

 

 

 

 

WCD  Statement

 

“Impact Assessment should be guided by the precautionary approach. This  requires States and water development  proponents to  exercise caution when information is uncertain, unreliable, or inadequate and when the negative impacts of actions on the environment, human livelihoods, or health are potentially irreversible.”

 

Reality on  the Ground

An independent panel of experts found serious deficiencies in the quality and scope of the project’s environmental  impact assessment (EIA). They found that  the reservoir could fill with sediment much  faster than  the EIA predicts, thus shortening the lifespan  of the project. The accumulation of toxic sediments could poison the water  in the reservoir and downstream. The dam could be more prone to  failure from  earthquakes than  the EIA predicts, and could exacerbate-rather than alleviate- flooding. While project proponents commissioned additional  studies on sedimentation and seismicity in response to  these reviews, these studies were performed after construction had commenced and the project’s design finalized, calling into  question their relevance.

 

RISK

 

 

 

 

 

WCD Statement

 

Risk must be fairly analyzed and publicly discussed. “[Risks] must be identified, articulated and addressed explicitly. Most important, involuntary risk bearers must be provided with  the legal  right to  engage  with  risk  takers in  a transparent process to  ensure that  risks  and benefits are negotiated on  a more equitable basis.” It goes  on, “Determining what  is  an  acceptable level  of  risk  should be undertaken through  a collective political process.”

 

Reality on  the Ground

 

The NPC has agreed to pay  US$10 million per month to  the SRPC regardless of whether there  is sufficient water available    to  generate power. The Power Purchase Agreement forces NPC to  buy  the dam’s power even if it doesn’t need it. Under this  arrangement, the Philippine government and people carry a large proportion of  the project risk and liabilities, including hydrological  risk (such  as drought-induced power shortages)  and market risk, by  guaranteeing power purchases  even if   capacity is not needed. The PPA also  frees the developer from responsibility for  social  and environmental risks  and costs. Yet the PPA remains a confidential  document that  was not subject to   public scrutiny at any stage during the negotiation  process. The Philippine Senate currently conducting an  investigation  into  the legality of the PPA.

 

 

E.  NPC APPEALS FOR PEOPLES’ TRUST, RELEASES PARTIAL PAYMENTS

Amid growing opposition to the dam, the National Power Corporation has appealed to all affected, particularly those in Benguet for  "utmost patience, understanding and trust in our process (of fulfilling the conditionalities) in connection with the construction of the San Roque Multipurpose Project.

The appeal was contained in a letter of SRMP project manager M. F. Pulanco to Itogon vice mayor Aloysious Kato. The letter was in reaction to  statement of the  Project Affected People (PAP) that they are giving the NPC up to the end of March this year to fulfill their promises to them otherwise, they will request the council to forward to all SRMP-concerned agencies an approved resolution withdrawing support and endorsement of the project.

"From the outset, NPC has been aggressive in its efforts to acquire the lands affected by the project within bounds of the government bureaucratic procedures anchored on the principle that all claimants must be duly compensated," Pulanco pointed out.

"The case of Itogon is obviously peculiar because all the affected lands are considered ancestral lands and are governed by the Indigenous Peoples Right Act, hence, all transactions regarding the sale and use of these lands need to be governed by the said law and administered by the NCIP as the  responsible agency," he added.

Pulanco stressed that even with this peculiarity, NPC has "since embarked on compensating all claimants of the Itogon area (affected by the San Roque dam)." He revealed that all 61 original houses and structure owners were already fully paid in the amount of P7.458 million and that of the 135 new structure owners identified after the original cut-off date, 84 had been paid in the amount of P5.4 million. More over, NPC has requested the NCIP and PAC to come up with an acceptable amount of compensation in connection with the transfer of remains of persons buried in areas that will be inundated by the dam.

He also said payment for improvement is also an on-going and that three claims had already been paid. In addition, 12 other claims that had been certified by the DENR are now being processed.

"In so far as land payment is concerned, all activities leading to satisfaction of documentary requirements are vigorously being undertaken," he said, adding that NPC has already submitted the survey returns of two blocks (of the 15 blocks) to NCIP for publication in a local paper. He also said more survey returns are underway.

After this process, the San Roque Power Corporation will advance the amount of P500,000 to each claim. "NPC will make full payment as soon as the transfer of the Certificate of Ancestral Land Title (CALT) to NPC is effected.""And just to prove the NPC's clamor for expediency in the process, it assumed responsibility in the preparation of the survey returns otherwise due from the NCIP," he emphasized.

Earlier as mentioned, Itogon mayor Crescensio Pacalso vetoed the resolution of the Itogon municipal council withdrawing its endorsement for the San Roque project late last year. The council overrode the veto last month and would have forwarded the override resolution to concerned agencies. However, the residents of Itogon who are affected by the project requested that the forwarding of the resolution be held in abeyance as they gave the National Power Corporation up to March 31 to make its words to them.

It will also be recalled that only recently, the Department of Budget and Management released an initial P137.79 million to the Department of Environment and Natural Resources for use in the implementation of the Itogon Watershed Management Program (IWMP ).

DBM Releases  P137.79M for SRMP Watershed Management
 
Even as critics have not stopped criticizing the soon to be completed dam, the government through its  Department of Budget and Management released P137.79 million to implement the Integrated Watershed Management Plan(IWMP) of the San Roque Multipurpose Dam project. DBM secretary Emilia T. Boncodin said that funding requirements for the succeeding years of the IWMP  implementation will be "included (in) the annual budget of the DENR subject to congressional allocations".

The environment department earlier submitted a P745 million request for funding to implement the Lower Agno IWMP following a "bottoms-up" approach to benefit the affected residents of concerned communities in Itogon with the construction of the $1.15 billion dam project.

The needed money will be used to finance the putting up of measures for forest protection; siltation control; land tenure; biodiversity  conservation; air and water quality and solid waste management; livelihood; the conduct of research and development; manpower requirements and; policy review and recommendation, among others.

But concerns have been raised as to the "capability of the DENR and the national government to source out the needed funds". This despite the letter of (then) executive director Manuel Gaite of the Presidential Committee on Flagship Programs and Projects dated September 12, 2000 addressed to Itogon vice-mayor Aloysious Kato, saying that the funding requirement for the IWMP "will be taken from the Foreign Assisted Funds, a lump sum appropriations in the GAA".
.

 

F. THE STRUGGLE CONTINUES

 

The call to stop the SRMPDP continues and the immediate measures being asked of government and of its private contractors is to stop the water impounding this month. The latest was a rally against the dam by  of 4,00 people of San Manuel , Pangasinan who are expected to be adversely affected by the dam. But government has made sure all plans won’t meet any more resistance by deploying a battalion of troops in the area.

 

The dam project, said CPA chair Joan Carling recently, will lead to the loss of livelihood not just of the gold panners of Bolangit but of thousands of other peasants and other people who are bound to lose their land and other property with the “destructive environmental effects foreseen in the technical studies conducted in the past.”

 

Once the San Roque dam reservoir starts to be filled up with more silt than water, Carling warned, its gates will have to be opened every time torrential rains occur. Citing technical studies, probable maximum flood rate is 12,800 cubic meters per second, she said.

 

“At least 1,250 square kilometers of land in Central Luzon will be inundated,” the CPA chair added. “More than a million people will suffer.”

 

Instead of flood control, the dam will heighten the risk of “catastrophic flood events,” Carling said. Mismanagement of the dam’s gates during emergency, seismic activities and a major breach in the dam’s structure may result in the flooding of the entire Agno drainage area. The area includes more than half of Pangasinan as well as parts of Tarlac and Nueva Ecija.

 

In the upstream, the threat of siltation and flooding also looms. The technical studies also reveal that waters of the dam reservoir will engulf not only gold panning and fishing sites, pastures, orchards and ricefields but also the lands and other livelihood resources of about 2,000 Ibaloy peasant families when sediment-control check dams begin operating at several points along the Agno and its tributaries.

 

Issues of  food security and debt payment have also been raised.  Food security will be brought to dangerous levels in Central Luzon due to the land loss and floods.  Debt payment, on the other hand, will further burden the people due to the reportedly onerous Power Purchase Agreement (PPA) between the NPC and SRPC signed last 1997. In a statement, the Alyansa Dagiti Pesante iti taeng-Kordilyera  (Apit-Tako or Alliance of Peasants in the Cordillera Homeland), said  the agreement will increase electricity rates once the San Roque Dam is commissioned.

 

In the political front, even the opposition are stepping up the tempo and urging the government to abandon the project.  Senator Edgardo Angara  asked the Arroyo administration to stop building giant and multi-billion dollar clams such as Casecnan and San Roque and shift to cost-efficient and easy to maintain medium sized irrigation systems.

"The giant, multi-purpose dams often turn out to be disastrous experiments that cannot supply adequate irrigation water and power. It is a policy ofgreat failure," Angara said. It was Angara's policy to shift the country's irrigation program from giant multi-purpose dams to small and medium-sized systems during his term as agriculture secretary. Angara also stepped up research and development work at the National Irrigation Administration (NIA) to develop cost-efficient irrigation technologies.

Meanwhile,  overseas, Japanese opposition  against the dam are mounting efforts to force the government to reconsider opening the dam by raising human rights issues. The Japanese parliament said it will study if there were contract and human-rights violations committed by a foreign contractor and the Philippine government over the US$2.3-billion San Roque Dam project in Northern Luzon.

Tomiko Okazaki, a member of the Democratic Party at the House of Councilors, said she was surprised about the reported August 8 water impounding in sitio Bolangit in Pangasinan that could have endangered thousands of farmers and gold panners in the area.

Okazaki  noted that Renato Diaz, presidential consultant for Northern Luzon,  has assured her that no action on the project will be taken unless issues on safety and human rights of the affected communities are resolved. "Diaz said the people will be better off when they are relocated. They broke their promise to me because those relocated have been forced., " she said.

Left leaning groups also are quick to denounce the project. Party-list Bayan Muna Rep. Satur Ocampo said Congress will hold an inquiry into the project, which, he said, has been proven to be "onerous." The inquiry will deal on the obligations of the Philippine government to the people of Pangasinan and Benguet, the environment and the high cost of electricity that will be charged the public.

Joan Carling, chairman of the Cordillera People's Alliance, said the group will file charges before the Supreme Court against Napocor and the SRFC for the human-rights violation and the environment destruction brought by the dam construction.

Carling said the government turned a deaf ear on the controversies surrounding the project despite admission by Finance Secretary Jose Isidro Camacho that it has serious legal and financial deficiencies and is considered as one of the five Napocor contracts with onerous terms.

Her group, including other people's organizations allied with Bayan Muna, have been calling for the withdrawal of the project. Thousands of people ,who are farmer and gold panners, were evicted from their communities when the dam was built.

G. RENEWED CALL TO PURSUE STRUGGLE AGAINST THE DAM

Meanwhile, with many  unresolved issues and repeated suggestions from opposing sectors and from the  Japanese government to postpone the impounding of the dam reservoir, the Philippine government allowed the San Roque Power Corporation to start impounding last August 8, clearly revealing their adherence to the interest of a few foreign capital groups before the welfare of the affected communities and the Filipino people.

The   statement below addressees both the Philippine and Japanese governments urging them to halt the ongoing impounding, to nullify the contract with the San Roque Power Corporation and to halt remaining funding releases to the project. From our observations during the past months, we learned that mainly the Japanese authorities are more and more discomforted with this project.

ABORT IMPOUNDMENT AT THE SAN ROQUE RESERVOIR!

STOP THE OPERATION OF THE SAN ROQUE DAM!

A Petition

12 August 2002

On the 8th of August, at 1:00 in the afternoon, the impounding of water in the San Roque reservoir began. Unless the impoundment is aborted, the eight small villages located within the 1,600-hectare reservoir area will be submerged  within the next several months.
 
Before the water impoundment, hardly anyone lives in those villages anymore as they were promised "better life" when they relocate. But because no sustainable livelihood sources were provided to them, some  still continue to do gold-panning, even if this is already prohibited by the San Roque Power Corporation. In July, more than 20 goldpanners at the reservoir area were forcibly pulled out from their huts by members of the Philippine National Police, local officials and NPC personnel. They were forced to leave the area, while their huts were burned. So water impoundment can already be started.
 
And beyond the eight villages, the indigenous communities of more than 20,000 people in the upstream of the dam will be victimized by siltation and upstream flooding over the coming years. This is a direct violation on the right  of the affected indigenous communities over their land, resources and cultural heritage. The national government's own finding that the dam project does not have  the "free, informed and prior consent" of 
affected indigenous communities, is being dismissed on technical grounds, as if the lives of these people are not put in danger with the operation of the dam.
 
In June, the Philippine national government and its National Power Corporation indicated that they would comply with requests for them to defer impoundment until they had satisfactorily addressed all the issues raised by the people who stood to be adversely affected by it.  One issue was economic displacement and the lack of livelihood alternatives for gold panners  operating in the San Roque reservoir area. Another was the various forms of displacement that would be suffered by the indigenous communities 
of the lower Agno river basin.
 
It is treachery on the part of the Philippine government and the NPC to have allowed the San Roque Power Corporation to start impoundment at this point, when the afore cited issues have yet to be resolved.  It only proves the  insincerity  of  the national government and the NPC to the plight of affected communities. On the other hand,  SRPC have pushed through with impoundment regardless of those issues, as it wants to immediately start 
with the dam operation to recoup its investment and make superprofits, in spite of the peoples legitimate demands.
 
Under the Power Purchase Agreement (PPA) of the San Roque Dam,  SRPC is guaranteed return of investment and superprofits within 12 years of  operation, even with zero electric output of the power station. Based on the capacity fee and operating fee, NPC has to pay SRPC the amount of US$ 9 million per month for 12 years in addition to an energy fee based on the electricity generated by the power station with a price ranging from 200%-300% higher than the prevailing price of electricity. In total, NPC will have to pay a minimum of US $ 1.2 Billion in 12 years, on top of paying a range of US$ 3 million per year or 5 million per month for the energy output. With this financial obligation of NPC to SRPC which will be passed on to the Filipino people, it is even cheaper not to operate the dam and pay back the capital expense of SRPC, including interest payment if NPC will have to abide by the terms of canceling the agreement. This will save the Filipino people from paying a higher electricity from SRPC, which will just add up to existing electricity surplus at a tremendous financial, environmental, economic and social cost to the affected communities and the Filipino people.
 
The Philippine government’s present leadership has itself found the SRPC’s contract as an Independent Power Producer (IPP) to be fraught with financial and legal issues.  It should have put on hold all preparations for power production at San Roque while it was seeking a resolution to those issues, including the adverse impacts of the dam operation like serous siltation problems, potential massive flooding of both the upstream and downstream, and providing solutions to the livelihood problems of relocated farmers and goldpanners. The Philippine government’s leadership has apparently been less concerned with the welfare of Filipinos than with the losses its foreign friends in the SRPC would sustain from any delay in dam operation.
 
The Philippine government has recently used irrigation development to justify the San Roque project. It has ignored concerns raised about the quality of irrigation the San Roque reservoir would provide given the toxic levels at which pollutants would be concentrated in this  reservoir. The construction of big canals for the irrigation component of the dam will also cause the destruction of more than 10,000 hectares of ricefields and will potentially cause flooding. Further, the irrigation component of San Roque Dam is again another loan that will only bleed further the poor farmers and the Filipino people. The Philippine government has glossed over the admission made by the National Irrigation Administration’s own engineers that the operation of the San Roque dam was neither the only nor the best means for solving the problem of erratic water supply to farms located on the floodplains of the Agno River.  The San Roque dam is not the solution to the irrigation needs of Pangasinan as this dam has more adverse impacts. There are other ways for irrigation which is more appropriate to meet the needs of farmers in Pangasinan, without causing serious environmental impacts, debt payment and the violation of rights of others, including their right to their livelihood sources.
 
The Philippine government and the NPC could have aborted the project early in implementation, once it had reassessed this in the light of the issues raised by affected citizens. Now their only option would be to work out means for cutting these citizens’ losses.
 
The Philippine government should come to terms with and admit the fact that, in embarking upon and pursuing the San Roque project, it has made a gigantic error in judgment and is causing serious social injustice and outright violation to the rights of affected communities, rather than providing development for the people. This foreign funded and foreign investors' project is clearly for superprofit rather than development for the people. It is then morally and just to stop a project which will only aggravate the inequality of rich and poor countries, as well as to stop the irreversible damage to the environment and the people.
 
We then call upon the Philippine Government, the National Power Corporation, and  the San Roque Power Corporation to:
 
1. Abort the water impoundment of the San Roque Dam;
 
2. Cancel the Power Purchase Agreement;
 
3. Respect the rights of affected indigenous peoples;
 
4. Provide sustainable livelihood sources to the relocated farmers;
 
5. Compensate the loss of income of goldpanners and provide them with 
sustainable livelihood sources.
 
  We also appeal to the Japan Minister of Finance and the Japan Bank for International Cooperation to immediately cancel the remaining loan to this unjust project.
 
 
Signed:
 
 
Shalupirip Santahnay Indigenous People’s Movement
Itogon Inter-Barangay Alliance
Tignay dagiti Mannalon a Mangwayawaya iti Agno (Peasant Movement to Free 
the Agno)
Alyánsa dagiti Pesánte iti Taëng-Kordilyéra (Alliance of Peasants in the 
Cordillera Homeland)
Cordillera Peoples’ Alliance
Friends of the Earth  Japan
International Rivers Network, USA
 
 

Gov't Hears Public Concerns
 
In response to some of the issues being raised by dam critics,  the government has formed a team composed of officials from the Department of Energy (DoE) and National Power Corporation (NPC) to  look into the concerns raised by groups that are seen to be indirectly affected by the operation of the $1.2 billion San Roque multi-purpose power project.

Energy Undersecretary Jocot de Dios and presidential adviser for Northern Luzon Rene Diaz have opened dialogues with the leaders of indigenous people's groups.. "We have listened to the issues they wanted to present to us and we have given them assurances that we will look into how we can address their concerns in the same way that we have addressed the concerns of the directly affected families," De Dios said.

Meanwhile, NPC vice president for Generation Company (Genco) 2 FroilanTampinco has divulged that the power firm already settled the claims of the communities which will be directly hit by the impoundment of water from the dam. De Dios, on the other hand, explained that if there are some families that have not been paid, it is because there are conflicting claims by other members of the families on the same land.

For his part, Diaz noted that it is important to make a distinction between the concerns of those who will be directly affected and those who will be affected only indirectly. "The project is already on its fifth year and quite a number of dialogues have been held. There are many concerns we have to deal with but the National Government's focus is to balance the interests of the affected sectors with the long-term benefits of the project," he said.

About 4,968 hectares of land were acquired for the project affecting some1,700 landowners and tenants.

According to NPC, the construction of the dam affected only some 481 households in San Manuel,Pangasinan; 233 in San Nicolas, Pangasinan; and 61 in Itogon, Benguet, far from the larger estimates given by opposing groups. 

 
Gov't  Eyes Buyout of San Roque Dam Project

As the dam is expected to be operational next year and impounding has already started, the government is allaying public fears that the citizenry will be shouldering the bulk of the costs in the construction of the dam It is  considering a buyout of the $1.2-billion San Roque hydropower complex project in Pangasinan, because this is seen to be a cheaper option than let the consumers pay for its inflated electricity rates.

Based on the recommendations of the interagency committee headed by the Department of Finance (DoF), the cost would be lower if the facility would be bought out by government before its scheduled completion in 2004; than the cost of keeping it operational.

The other option being eyed by government is for the Power Sector Assets and Liabilities Management Corporation (PSALM) to "negotiate for a lower fee with San Roque, taking into consideration the risks the government has shouldered." The buyout price is something that the National Power Corporation (NPC) and PSALM would have to work on, if the project proponents would agree.

As it is, non-government organizations blew the whistle early on that the San Roque project is a very expensive undertaking, "because it binds government to shoulder interest payments of the project, which would run up to P8.7billion over the prescribed 17-year stretch. NPC officials earlier admitted that interest payments would mean additionalP512 million in its debt service allotment annually.

The purchasing cost of the San Roque plant's output was also perceived to be too high at US$0.32 per kilowatt hour to $0.51 per kwh, (P16 to P25.5 perkwh at current peso-dollar rate), rates that are seen to be unfavorable compared to a reference cost of P0.05 per kwh (P2.50 per kwh) for low-cos telectricity providers in the Asian region.

The government has opened new round of talks with the independent power producers (IPPs) with the ultimate goal of bringing down electricity costs.

11 see calculation in  Appendix B  of this  review

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