by ROEL R. LANDINGIN

Part 1 looks at how the National Economic and Development Authority (NEDA) and its project evaluation process have been weakened and violated by pressure from lobbyists and political sponsors of some projects.

FOREIGN AID inflows to the Philippines are soaring to their highest levels in about six years, but the availability of more money for government projects has not made life any easier for President Gloria Macapagal Arroyo and Filipino taxpayers.

	Resigned Comelec chair Benjamin Abalos and former NEDA chief Romulo Neri testify before the Senate Blue Ribbon Committee on the scrapped multibillion-peso NBN project in September 2007. [photo courtesy of Senate website]

Indeed, the latest controversy to rock her seven-year reign stems from the sharp surge in official development assistance (ODA) from China, an emerging economic behemoth, and the Philippines’s growing inability to impose its procurement policies and procedures on ODA projects.

A six-month study of project documents by the Philippine Center for Investigative Journalism (PCIJ) also showed that seven of 10 projects reviewed fall short of economic benefits promised, even after completion and roll-out.

	NEXT PART 2 delves into how the absence of caps on bids, tied loans and conditionalities of lenders have favored foreign contractors and triggered cost overruns and project delays.

Serious flaws in the identification, design, evaluation, and implementation of government projects have resulted in failed or bad projects. Too often, lenders tie up ODA outlays to contractors of their choice. Worst of all, kickbacks exacted by political sponsors in some cases have yielded overpriced projects.

The $329-million National Broadband Network (NBN) project, which was to be funded by the Export-Import Bank of China, was cancelled following reports of alleged commissions demanded by a close political ally of the president, Commission on Elections (Comelec) Chairman Benjamin Abalos Sr. The President’s husband was accused of meddling in favor of ZTE Corp., the Chinese telecommunications supplier. Abalos was also forced to resign last September despite his and the First Gentleman’s denials of irregular participation in the deal.

But revelations of alleged anomalies in the project continue, even as the scandal sparked the ouster of Speaker Jose de Venecia Jr. — father of whistleblower Jose de Venecia III — in a Congress coup last week.

NEDA A CASUALTY
Perhaps the most serious casualty in the NBN scandal, however, is the National Economic and Development Authority (NEDA), the economic planning agency tasked to weed out the bad from the good among proposed large-scale government projects funded by foreign loans and private investors.

One of the most bizarre twists to the NBN saga involves a contractless consultant tapped by then NEDA Director General Romulo Neri to look into the deal: electronics and communications engineer Rodolfo Lozada Jr., president of the state-owned Philippine Forest Corporation (Philforest) at the time.

Last week, unidentified men spirited Lozada away from the airport after he arrived from an overseas trip. The police later said Lozada had requested security, but furious senators said authorities were trying to keep him from testifying about NBN at the Senate. Lozada has resigned from Philforest. Last Friday at the Senate, he corroborated Jose de Venecia III’s testimonies on multimillion-dollar kickbacks demanded from the project.

	Table 1: New ODA Loans (US$ Million) Source: NEDA * PCIJ estimates YEAR NEW ODA LOANS 2000 1,300 2001 1,300 2002 1,000 2003 763 2004 733 2005 727 2006 1,291 2007 1,256*

Yet even before that, NEDA’s public standing had already been hit hard. Last August at the Senate, Neri had failed miserably to explain how he and NEDA’s staff exercised due diligence in evaluating the NBN project. This, even as the Arroyo administration continues to attempt to scale down NEDA’s central role and authority to evaluate major government projects, especially those funded by ODA loans or carried out by private investors under build-operate-transfer (BOT) or similar arrangements.

In part, this explains why in some policy advocacy circles, the surge in aid money in the last two years has been met with unease rather than optimism.

From an average of only $741 million between 2003 and 2005, new ODA loan commitments to the Philippine almost doubled to $1.3 billion in 2006. Last year, new loan approvals reached at least $1.26 billion, according to data from the government and the foreign lenders compiled by PCIJ.

ODA loans are long-term money lent by foreign governments or multilateral bodies at easy repayment terms to fund development projects.