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LESSONS:

Power Transmission Project

sector: Energy | country: Philippines

Although the project’s transmission components were generally implemented as conceived at appraisal, implementation delays became a major concern to ADB, and raised local costs significantly. The executing agency (National Power Corporation or NPC) could have mitigated many of the delays with forward planning and effective project management. NPC’s management style was generally reactive, with little anticipation of emerging problems. The project would also have benefited if more activities such as separate administration of supply and install contracts in Mindanao had been carriedout in parallel.

Parts C, D, and E of the project were not closely integrated with parts A and B. Part C was envisaged to be financed by the ADB loan, but ADB agreed to its cancellation. The Report and Recommendation of the President (RRP)did not detail the objectives and scope of parts D and E, nor their financing arrangements. ADB review missions did not monitor or supervise these two parts because the World Bank and USAID financed them, through different projects. Closer coordination with those agencies would have helped assure ADB that project objectives were met.

The project schedule at appraisal was unrealistic because it did not include adequate time (i) for the executing agency to comply with the covenants in the loan agreement, which were conditions for loan effectiveness, (ii) for arrangement of cofinancing, even though there were no firm cofinancing commitments when the ADB loan was approved, or (iii) for the evaluation and award of contracts, given the complexity of the executing agency’s internal contracting procedures and the need for ADB approval before contract award.

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