Contacts:
In Manila: Leonora Aquino-Gonzales (632) 917-3003
E-mail: lgonzales@worldbank.org
Anissa Tria (632) 917-3013
E-mail: atria2@worldbank.org
In Washington: Elisabeth Mealey (1-202) 458-4475
Email: emealey@worldbank.org MANILA, May 14, 2008 — The World Bank’s Board of Executive Directors yesterday approved the Second National Roads Improvement and Management Project (NRIMP2). The US$232 million loan is the second part of a three-phase Adaptable Program Loan (APL) from the World Bank designed to build, maintain, and improve national roads in the Philippines through stronger business processes and reforms for financing and managing roads. Specifically, NRIMP2 will support the improvement of 450 kilometers of national arterial roads and bridges and a comprehensive road maintenance program through long-term performance-based contracts and expansion of the national preventive maintenance program. The project includes reforms in the organization and the service delivery processes that will improve the effectiveness and the integrity of the Department of Public Works and Highways in managing the road system. Furthermore, NRIMP2 will strengthen the operation of the special road funds and a framework for restructuring the roads sector. The Project aims to upgrade and maintain an extensive network that will enhance local competitiveness, help promote economic growth, and provide adequate all-year reliable and safe access throughout the country. A significant number of those roads being improved are in the poorer provinces as well as conflict-affected areas of the Visayas and Mindanao. Finance Secretary Margarito Teves welcomed the approval of NRIMP2: “The World Bank Board approval of this project is a reflection of their confidence in the Philippine Government’s commitment to carry out road sector reforms. We believe that greater accountability and transparency in government infrastructure projects which are strengthened in NRIMP2 are necessary to ensure the efficient use of public resources and bring greater benefits to our people.” Bert Hofman, World Bank Philippines Country Director, said: “Beyond building roads, this project will support long-term measures to help the government increase efficiency and address corruption in the roads sector.” He added: “Improving the quality of roads will reduce transportation costs, which is important in attracting investments and creating jobs. Better roads also increase the price farmers receive for their produce.” Total project costs are US$576 million, with US$333.5 million financed by the Government of the Philippines and US$10.5 million by a grant from the Australian Agency for International Development (AusAid). Australia’s grant will strengthen financial management and internal control systems of DPWH. It will support independent procurement evaluations and technical audits. Furthermore, it will support the coalition of civil society groups (Bantay Lansangan or RoadWatch), which will provide independent oversight of the road sector. Public Works and Highways Secretary Hermogenes Ebdane Jr. noted: “Through this project, the Bank will support the upgrading of key national roads identified in President Arroyo’s State of the Nation address. It will finance long-term maintenance contracts for a substantial portion of the Strong Republic Nautical Highway, and provide a substantial increase in the road maintenance program funded by road users through the Motor Vehicle User Charge (MVUC) funds. The project will also support Government’s measures to strengthen procurement, financial management, auditing and project monitoring. In this respect, we look forward to working with Bantay Lansangan.” Bantay Lansangan Executive Director Vince Lazatin emphasized, “The Bantay Lansangan road sector partnership hopes to act as signaling devise for the DPWH, monitoring the way it does its job. Bantay Lansangan will check how effectively funds are being spent to address needs, check that value for money is being achieved, and report on the actual results of improvement in road conditions. Hopefully, with the support of DPWH, we can work to minimize, if not eliminate corruption and waste at the Department.” Leading anti-corruption NGO Transparency and Accountability Network (TAN), of which Lazatin is also executive director, acts as the secretariat of Bantay Lansangan. The value of the participation of civil society groups in ensuring the integrity of the procurement process of Government was emphasized by Budget Secretary Rolando Andaya. Recently, the Procurement Transparency Group was formed to evaluate, comment on, record and monitor procurement activities of all government agencies and offices. “Aside from government agencies, like the Presidential Anti-Graft Commission, National Economic Development Agency (NEDA), Department of Justice, Department of Budget and Management and the Department of Interior and Local Government, civil society groups are very much part of this group,” he noted. Secretary Andaya expressed hope that the experience of RoadWatch would soon be replicated in other government projects. During the first phase of the NRIMP (2000-2007), the Government made major progress toward putting in place a modern, transparent and accountable national road management system. Some 90 percent of the project goals were achieved: 382 kilometers of roads were built or upgraded in provinces across the Philippines and a further 975 kilometers of existing roads were resurfaced and maintained. As a result, many Filipinos have benefited from a more efficient and transparent road system, lower transport costs, and reduced travel time. The first phase of the project encountered governance challenges, too. Between 2003 and 2006, the World Bank rejected two large road contracts in three successive rounds of bidding because of strong signs of collusion and excessive pricing, and in the end neither the Government nor the World Bank financed the contracts. The rejected contracts were worth about US$33 million, but bid prices were about US$10 million higher. The alleged bid-rigging and manipulation was investigated by the World Bank’s independent investigation unit, and is being investigated by the Ombudsman. In light of this experience, NRIMP2 contains a more comprehensive set of anti-corruption measures. When NRIMP2 was considered by the World Bank’s Board last November, the executive directors wanted more time to assess whether the lessons from the first phase were indeed applied, and to be able to review the results of the investigation of the independent investigative unit. The Bank’s Board has now completed this review and approved the project yesterday.
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