21 ODA PROJECTS OVER-BUDGETTED BY 33B PESOS - CHIZ

A total of P33.5 billion pesos has racked up in cost overruns for twenty one (21) foreign assisted projects, prompting opposition Senator Chiz Escudero to call for tight and transparent review and approval of over the budget payments for projects funded by loans.

The amount, however, could just be the tip of the iceberg, Escudero said, as it does not yet include overruns incurred by locally-funded projects.

Worse, total cost overruns of official development aid (ODA) bankrolled projects are expected to increase this year as five big-ticket infrastructure projects are showing signs of breaching their budget ceiling.

"This practice should be curbed and loopholes should be plugged because it is becoming a lucrative industry in construction business. Instead of the approved project costs serving as the unbreakable ceiling, which is what the law requires, these have been reduced into mere suggested contract prices".

Escudero, who formerly chaired the Joint Congressional Oversight Committee on ODA said it is immoral to saddle Filipinos with higher debt, more so at a time when other things they need can't be met.

"To view it from another perspective, P33.5 billion is almost 14 times of what we will spend for new textbooks this year. It is P8 billion higher than the annual budget of the Department of Health".

Of the P33.5 billion ODA-funded projects cost overrun in 2007, Department of Public Works and Highways (DPWH) accounted for the bulk of the increase. It posted a P13.3 billion cost overrun in five roads, one bridge and four flood control projects.

The Department of Transportation and Communications (DOTC) followed with P6.8 billion for three airports and one feeder port project while Bases Conversion Development Authority (BCDA) was third with its P6.5 billion overrun for the Subic-Clark Tarlac Expressway.

Other agencies which posted overruns, based on National Economic Development Authority (NEDA) documents submitted to the Senate, were National Irrigation Administration (NIA), in the amount of P4.2 billion for four irrigation projects; Philippine Ports Authority (PPA), P1.6 billion for the Batangas port project; and the Light Rail Transit Authority (LRTA) whose "Capacity Expansion Project" was P1.1 billion above the approved contract.

Major reasons cited for cost adjustment were acceptance of higher bids which amounted to P7.2 billion; increase in the prices of labor and materials (P9.7 billion) and design; and design and project scope changes (P8.2 billion).

Foreign exchange movement, on the other hand, accounted for P2 billion in budget overruns while the increases in consulting services and administrative supervision jacked up cost by P1.5 billion and P1.2 billion respectively.

While admitting that there are cost overruns justified and needed to complete the project, these must be vetted properly.

"Cost overruns should be reckoned against the detailed engineering plan of a project and against its feasibility study. Any request must not be processed until it is reviewed by the COA, by the various procurement transparency groups, and covered by a budget strategy paper that will address the fiscal impact of new obligation".

Escudero said any application for cost overrun should also be subjected to public hearings by agencies approving it.