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LESSONS:

Philippine Energy Efficiency Project: Completion Report

sector: Energy | country: Philippines

Stakeholder analysis and detailed consultation are very important for pioneering projects like this one. Ownership by stakeholders is at risk if project implementation requirements are insufficiently analyzed, and if the institutional environment and human resource capacity is inadequate. This was the first ADB loan to be implemented by DOE (Department of Energy), and it became apparent early on that it was not familiar with ADB procedures, especially on procurement matters and engagement of consultants, which led to project delays.

Projects implemented in a period when a change in government is foreseeable will undergo reevaluation and review by the new administration. If the core PMU (project management unit) team has a strong foundation and capacity to implement the project, and is seen to be politically impartial, the risk of changes to leadership and possibly even decisions can be mitigated. To have an efficient PMU, project monitoring needs to be programmed and reviewed regularly during implementation to ensure that the executing agency has sufficient staff and counterpart budget.

Project cost estimates need to factor in all duties and taxes, not only on machinery and equipment but also on service providers. Assessments of banking rules and the government’s budget implementation process are also needed.

Market development of efficient lighting was very fast. Midway through the distribution of CFLs (compact fluorescent lamp) (subcomponent 1.2) the scale had to be pared back because market penetration of the technology had greatly improved.

In projects of this kind, the technical complexities of the equipment and the specialized nature of the works or services to be procured need to be considered when estimating the procurement period.

The time provided to establish and operationalize the Super ESCO (energy service company) was not sufficient. The existing policy environment, particularly for government budgeting and accounting, does not support the ESCO concept of an energy performance contract (EPC). The environment needs to be adjusted first to enable implementation of ESCO projects in the public sector.

Lessons from Validation

Philippines: Philippine Energy Efficiency Project

The project completion report (PCR) identified six lessons. The first was related to stakeholder analysis and detailed consultation, which are very important for pioneering projects, such as in the case of this project. The second lesson identified the need for an efficient project management unit with an ability to monitor the project. Implementation also has to be regularly reviewed to ensure that the executing agency has sufficient staff and counterpart budget. The third lesson was related to project cost estimates that needed to factor in all duties and taxes, not only on machinery and equipment, but also on service providers. Assessments of banking rules and the government’s budget implementation process are also needed. The fourth lesson stated that, midway through the distribution of compact fluorescent lights (CFLs), the scale had to be pared down because market penetration of the technology had greatly improved. It was not clear what this meant or why it was a lesson. The fifth lesson stated that technical complexities of the equipment and the specialized nature of the works or services to be procured need to be considered when estimating the procurement period. The last lesson was related to a need for an appropriate policy environment to enable implementation of energy service company (ESCO) projects in the public sector. This validation is of the view that the project design was too complex based on inadequate due diligence. Likewise, monitoring arrangements and supervision were inadequate, resulting in slow response to changing circumstances.

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