RURAL ELECTRIFICATION PROGRAM/PHILIPPINES; MEMORANDUM AUDIT REPORT NO. 2-492-81-2

Evaluation covers the period 2/77-8/80 and is based on an audit review of documents, site visits, and interviews with project staff. Project objectives have been substantially achieved and A.I.D."s participation is nearly complete. To date, the National Electrification Administration (NEA) has supplied equipment and materials -- the primary focus of A.I.D. funding -- to 103 cooperatives in 67 of 75 provinces to construct or renovate electrical transmission/distribution lines. NEA has also organized still unenergized cooperatives (for a total of 119) in three other provinces. Cooperatives are delivering electricity to 1.224 million households in 9,400 barrios and to 2,780 schools under a special school electrification project. There is ample evidence that the GOP will, if need be, subsidize cooperatives to enable them to provide low-cost electricity. There are several areas requiring USAID/P action before the project is terminated. Due to a lack of proper warehouse receiving and disbursing procedures, irregular NEA shipping reports, and late NEA billing, accurate inventories of materials are not available. USAID/P should request NEA to devise plans to correct these deficiences. NEA has provided neither quarterly reports (since the end of 1978) nor audits of the cooperatives (during the program"s entire 6 years). Although site visits showed cases of ineffective or untimely use of AID-funded equipment, USAID/P has not requested these reports which should now be obtained and analyzed to ensure proper use of project materials. USAID/P should also encourage NEA to share its project experiences, including those with suppliers, with its counterpart in Indonesia, where the project is being replicated, and with other countries involved in RE projects. NEA should also explain the $465,615 in differences between shipping reports and disbursements and dispose of excess property at Sangley Point. Despite its shortfalls, the RE program in the Philippines is one of A.I.D."s most successful.