Chico River Pump Irrigation Project loan agreement,
a sell-out of ancestral land and Philippine sovereignty

March 7, 2019

The Cordillera Peoples Alliance (CPA) strongly denounces the PhP 3.6 billion (US $ 62.09 million) loan agreement between the Philippine government and the Government of China for the Chico River Pump Irrigation Project (CRPIP), which is a debt trap for the Filipino people. Based from a leaked copy of the loan agreement, the CPA learned that the loan agreement is practically a sell-out of Cordillera land and resources and the country’s sovereignty, and only gives super profit to China at the expense of the Filipino masses. It is another manifestation of China’s imperialist aggression in the Philippines, which puts at risk the interests of the Filipino people under the guise of irrigation project.

CPA also questions the feasibility and sustainability of the project given the fact that the CRPIP did not take into account the overall “development plan” in the Chico River and the province of Kalinga, such as the building of many hydropower, geothermal and mining projects. The Chico River is CRPIP’s source of water to provide irrigation to around 8,700 hectares of agricultural land in Pinukpuk, Kalinga (1,170 has.) and Tuao and Piat, Cagayan (7,530 has.), benefiting 4,350 families.

The CRPIP is the first flagship infrastructure project of the Duterte regime under its Build-Build-Build program that is financed by the government of China. It commenced construction of facilities after the groundbreaking ceremonies on June 8, 2018 in Kalinga province. The loan from China covers 85% of the P4.37 billion total project cost. The project includes the construction of a pump house, transmission line, diversion canals, access road, and terminal facilities.

Violations of Free Prior and Informed Consent and right to self determination

The CRPIP is an outright violation of our right to Free Prior and Informed Consent (FPIC), right to our ancestral lands including the Chico River, and right to self determination. The project falls within the ancestral domain of the indigenous peoples in Kalinga but no FPIC from the communities was secured for the project before the loan agreement was signed on April 10, 2018. The indigenous communities affected by the project and the local government units (LGUs) in Kalinga have not been consulted and were totally unaware of the project until after the loan agreement was signed. LGUs were not provided with any documents pertaining to the project.

FPIC is a right of indigenous peoples as enshrined in the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). Indigenous peoples’ FPIC must be secured before projects are implemented in our territories. It is an important component of our right to self-determination, to freely determine our own political, economic, social and cultural development at our own pace. In the Chico River Pump Irrigation Project, the indigenous communities affected by the project in Kalinga province were denied of this right and their welfare was totally ignored in the onerous loan agreement.

Onerous, one-sided and anomalous loan agreement

The West Philippine Sea is being surrendered by the Duterte regime to China, and so is our sovereignty over the Chico River in the Cordillera. The 20-year loan agreement for the CRPIP is a back-stab to the Filipino people. It contains provisions that are burdensome to the Filipino people and highly favor the government of China. Under the onerous conditions, the CRPIP will not provide “free” irrigation since this will be paid back by the Filipino people in unfairly huge sums and costs.

• The loan is a debt trap that China used to rake in added super profits from the country. The Philippines will be made to pay the loan “in full without counterclaim or retention” and will also pay the exceedingly high annual interest rate of 2% (around PhP 72 million) and other annual fees such as the “Management Fee” amounting to $186,260 (more than 9.6 million pesos) and “Commitment Fee” which is 0.3% of the loan amount. The interest rate is very high compared to loans offered by other countries such as Japan which charges 0.25% to 0.75% per year.
  The loan agreement on the CRPIP and other projects under Duterte’s Build! Build! Build! Program are no doubt the reason why Duterte implemented the Tax Reform for Acceleration and Inclusion (TRAIN) Law and is pushing for more tax reforms. The burden of payment is put on the people, making the poor and marginalized including indigenous peoples dive deeper into poverty.
• China demanded that payment should be included in the General Appropriations Law, which practically usurped the constitutional power of Congress to solely decide the content of the country’s yearly budget. Another provision which can prohibit the Philippine Congress from questioning the constitutionality of the loan agreement is Annex 6 of the agreement, where China demanded the Philippine Department of Justice secretary to issue a certification that the agreement is legal and constitutional. The contract also stipulates that the loan would be governed by the laws of China and that any dispute concerning the loan would be handled by the China International Economic and Trade Arbitration Commission in Beijing.
• The Philippine laws require contractors to undergo a bidding process but in the CRPIP the project contract was awarded to China CAMC Engineering Corporation on March 8, 2018. In the ongoing construction of the project in Kalinga province, the local people have noticed the Chinese workers, including those that operate the equipment being used. Local residents who tried to apply for employment were not absorbed and were told that the project prioritizes Chinese workers. As of this writing, the construction of the bunkhouses for the Chinese workers has just been completed and ongoing activities include dredging in the Chico River.
• The loan agreement surrendered Philippine sovereignty. Article 8.1 of the loan agreement states that the Philippines “irrevocably waives any immunity” of its patrimonial assets located in the Philippines which are commercial in nature. This means that government’s patrimonial assets can be taken over by China if the Philippines fails to pay the loan. We must not forget that China already has a record of taking over a port in Sri Lanka due to the country’s inability to pay back its loan from China.
• The contract has a confidentiality provision (Article 8.8) that prevents the public from gaining access to the loan agreement. But this is no wonder since the contract only contains onerous, one-sided, anomalous conditionalities. Nevertheless, the CRPIP is a public infrastructure and the Filipino people will be the one to pay for the loan so the government must be transparent in order for the public to fully understand the loan.

With all of these, there is no doubt that China will be the only one to benefit from the project. Clearly, the CRPIP was primarily meant for China’s profit-making and not the welfare and benefits of the Filipino people.

CRPIP is not feasible and sustainable under the overall “development” plan in the Chico River

Several factors can make the CRPIP fail in its purpose of supplying irrigation to 2 barangays in Pinukpuk, Kalinga and 19 barangays in Cagayan province. The project did not take into account the overall “development plan” in the Chico River and the province of Kalinga, such as the building of many hydropower, geothermal and mining projects. Thus, there is no assurance that the irrigation project will work, especially in the long run.

The Chico River is the most extensive river in the Cordillera region, which traverses the provinces of Mountain Province, Kalinga and Cagayan. Many communities that are situated near the Chico River banks depend on the water in the river for irrigation of farmlands and for domestic use.
The Chico River’s high potential for generating electric power has made it a target of numerous hydropower projects starting with the World Bank funded Chico Dams Project in the 1970s-1980s and succeeding projects until the present.
At present, there are 10 hydropower projects along the Chico River in Kalinga province that were awarded by the Department of Energy. These include the Karayan Dam, Chico Hydroelectric Power Project, Upper Tabuk Hydro Power Project, Tinglayan Hydro-Electric Project, Bulanao Hydropower Project, 1 hydropower project in Balbalan and 4 hydropower projects in Pasil. On top of these are 5 pending hydropower projects. These dam projects will disturb the natural flow of the Chico River and, during the dry season, most of the water will be stored in the dam reservoirs, which in turn will worsen the scarcity of water supply in the downstream area including where the CRPIP will operate.

Natural occurences such as tikag or drought drastically decreases the volume of water in the Chico River. At present, Kalinga farmers suffer from agricultural damages due to lack of water for irrigation during drought and summer. This is mainly due to the decreased volume of water in the Chico River. The project’s pump system will also deprive some of the downstream communities of water supply. In this case, it is doubtful that the CRPIP will be able to supply its target beneficiaries during summer and drought.

 The CPA also learned that the CRPIP plans to divert 50% of water from the Chico River to its irrigation areas during summer. This will further aggravate the scarcity of water in the Chico River during summer, depriving the communities situated downstream of the CRPIP diversion area.

 Kalinga hosts several large-scale mining applications, including the exploration projects of the Makilala Mining Company in Pasil municipality and the Cordillera Exploration Co, Inc. (CEXCI), a subsidiary of Nickel Asia, covering parts of Balbalan municipality.
Further, the Kalinga Geothermal Project of Chevron was given a two years extension of its exploration permit covering 260 square kilometers in Pasil, Lubuagan and Tinglayan municipalities.
Both the mining project and geothermal power plant, if these operate, will require huge amount of water that will be drawn from tributaries of the Chico River. Large-scale mining and dams also cause river siltation.

In Mountain Province where the Chico River traces its headwaters, there are several hydropower projects that are being planned to be built. The CEXCI mining company also has a mining application that covers 43,000 hectares in 7 municipalities.

Our Calls and Demands

Agriculture remains a main source of livelihood in Kalinga province, the Cordillera region and the rest of the country. We continue to demand free irrigation and appropriate irrigation systems from the government for our peasants. These are government support services that are necessary to genuinely develop our agriculture sector and foster rural development instead of liberalizing it as in the Rice Tariffication Law. However, these should not be given at the expense of debt traps, violation of rights to FPIC and self-determination, and sell out of our national sovereignty.

We demand government transparency on the CRPIP and other China-funded projects. Release to the public copies of the CRPIP contract and related documents. The government must immediately suspend the project construction, which is onerous and with questionable feasibility and sustainability for not taking into account the development projects along the Chico River and Kalinga province.

Scrap the CRPIP loan agreement!
Hold the government officials who signed the document and the Duterte regime accountable for the onerous loan agreement.

No to China’s imperialist aggression in the Philippines!

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Reference:

Windel Bolinget
Chairperson, CPA

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