The Philippines’ China Dam Controversy

The Kaliwa Dam Project, a centerpiece of the BRI in the Philippines, faces
steep opposition from indigenous peoples.
Protesters, some of them Dumagats, raise their hands while shouting slogans during a rally outside
the Chinese Consulate in Makati city, east of Manila, to protest China's role in the construction of at
least two large dams in the country, March 14, 2018.

Millions of people in Metro Manila were left without water last week, raising pressure
on indigenous communities in the mountains above the Philippines capital as the
government seeks to tap their terrain for supply.

Residents were forced to queue at fire hydrants, and businesses reliant on water, not
least laundrettes, closed or suspended operations.

Public ire is being leveled at Manila Water, the private concessionary contracted in 1997
to manage water and wastewater services to the eastern area of Metro Manila on a 25-
year lease.

Enjoying this article? Click here to subscribe for full access. Just $5 a month.
Civil society groups have accused the company, which is majority owned by venerable
Philippines conglomerate Ayala Corp., and invested by the United Kingdom’s United
Utilities and Japan’s Mitsubishi Corp., of putting profits before its public service
obligations.

Manila Water’s failure to secure the city’s water supply has also sparked criticism from
legislators demanding that the Metropolitan Waterworks and Sewerage System
(MWSS), the agency charged with administering the privatization of the capital’s water
systems, penalize the company, and refund consumers.

Manila Water blamed the crisis on unexpected demand from the construction industry,
shortages in the primary water source, the Angat-Ipo-La Mesa system, and delays to
infrastructure projects designed to bring additional supply onstream.

The latter includes a series of dams in the nearby Sierra Madre mountains, known as the
New Centennial Water Source – Kaliwa Dam Project, which have been mooted as a
solution to Metro Manila’s water requirements since the reign of Ferdinand Marcos.

The project in its entirety comprises three dams that together will add 2,400 million
liters per day (MLD) to the existing 4,000 MLD supply that serves the 20 million or so
people in Manila and its surrounding regions.

According to the MWSS, the initial phase is slated to begin with a 60-meter concrete
dam at Kaliwa, which straddles the boundary of Rizal and Quezon provinces to the east
of Manila, as well as a 25-kilometer conveyance tunnel, and two water treatment plants.

If built, the Kaliwa dam would bring an additional 600 MLD per day onstream, in the
process securing Manila’s water supply for the next 10 to 15 years, MWSS official Byron
Carbon said.

The fact that the conveyance tunnel is earmarked for a water flow capacity four times
the size of the supply from Kaliwa’s first phase speaks to the project’s overall scope, and
the larger dams that will eventually be built. The conveyance tunnel, meant to serve the
Kaliwa and Laiban dams together, will have a capacity of 2,400 MLD. The third dam in
the series, at Kanan, will dwarf the first two with a potential capacity on its own of 3,720
MLD, according to a 2010 MWSS assessment.*
The dam falls under the Philippines’ involvement in China’s Belt and Road Initiative
(BRI), and is listed in provisions released following the state visit of Chinese President
Xi Jinping to Manila in November last year.

Government officials, including MWSS Administrator Reynaldo Velasco and Finance

Secretary Carlos Dominguez III, have come out in support of the Kaliwa project, with
the former calling it a “done deal” last week.

“The agency is working on the Environmental Impact Assessment (EIA) now, the road
right of way has been secured, and the Department of Public Works and Highways is
reviewing the design of the dam,” Carbon told The Diplomat, adding that the target date
for completion of the project is 2023.

China Energy Engineering Corp, the company responsible for building the Three Gorges
dam in China, has been contracted to construct the Kaliwa dams, but the contract
remain under wraps, despite ongoing attempts by activists to have details released to the
public.

Various nongovernmental organizations oppose Kaliwa on grounds it will lead to

environmental destruction and the displacement of indigenous peoples in more than
230 hectares of the REINA National Park, Wildlife Sanctuary, and Game Preserve, a
mountainous area of dipterocarp forests.

The land is owned by the Dumagats and Remontados indigenous peoples under a
Certificate of Ancestral Domain Title. Their communities have fire-fallow farmed the
region for generations, or “time immemorial” as specified by the Indigenous People’s
Rights Act of 1997, which supposedly guarantees their land rights.

A Japanese International Cooperation Agency EIA conducted for the project in the early
2000s identified rare species of flora and fauna in the area, including several species of
rattan, a valuable palm used in the manufacture of furniture and balls used in the kick
volleyball game Sepak takraw. White-winged flying fox, slender-tailed cloud rat, civet
cats, wild boar, and the Philippine eagle and Philippine deer are among the threatened
wildlife species in the area.

The EIA also outlines a full resettlement plan for the displaced communities within the
affected barangays. It notes impacts including the inundation of Dumagat livelihood
areas and sacred places of worship, many of which lie adjacent to the river, as well as
disruption to the use of the river for transport.

Exactly how many indigenous people stand to be flooded, displaced, or otherwise

adversely affected is subject to several estimates, ranging from the 42 families identified
in a 2017 MWSS feasibility study to the 20,000 people labelled as at risk by a local NGO,
the Center for Environmental Concerns–Philippines.

In theory, the Kaliwa project still requires free, informed, and prior consent (FICP)
approvals from the National Council of Indigenous Peoples (NCIP), the body charged
with representing the plethora of indigenous groups in the Philippines.

Last week, I travelled with the National Council of Churches in the Philippines (NCCP)
to visit the Dumagat community that will be flooded if the second of the Kaliwa project’s
three dams is ever built.

The NCCP group was conducting outreach work as an initial step to forming a
community-based health program that might prevent a repeat of a devastating outbreak
of measles in July last year that left 20 people dead.

In a hall that doubles as a school for elementary children, about 40 members of the
Dumagat community settled to listen to talks on the systemic causes of their exclusion
from the Philippines healthcare system, and what they could do to identify and prevent
diseases like tuberculosis.

Wilma Quierrez Valiente, from the Dumagat community of Quezon, is a member of the
Protect Sierra Madre group that works to strengthen the bonds of the community
against the threat to their way of life the dam poses.

“Since I was born in 1986, I have struggled against the Kaliwa dam,” she said. “Our
objective is to protect our ancestral lands and to press the national government to
provide social services, not in return for us permitting Kaliwa, but because it is a right.”

Many Dumagat communities lie several hours away from the nearest health station or
school in the barangay centers, travel to which becomes impossible when a family falls
sick or children grow into familial responsibilities.

“The construction of the dam means death for indigenous people. The environment, the
forest and rivers, serve as our hospital because of the herbal plants, and as our
marketplace and source of food; the land is our cultural heritage,” Valiente said. “If we
are displaced, it will mean death because we do not know any other way of life.”

The community is braced for attempts to have them sign away their right to the land
under the FIPC rules. Elsewhere, communities had reportedly been duped into signing
an FICP under the guise of registering attendance at a food distribution program.

With the aid of a translator from the Integrated Development Program for Indigenous
People, an NGO, I spoke with three tribal elders who collectively represent almost 200
families set to be affected by the dam, both upstream and downstream of the proposed
construction area. They said the fencing off of the dam site will tear a hole through their
community as the river itself is their primary roadway.

They remain uninformed about the project proposal, in part because the NCIP has
stalled on accepting their proposed council representative, Germino Mendoza. As a
result, they have collectively decided to boycott meetings with the MWSS until further
notice, and said categorically that they will not accept another NCIP candidate.

While the Dumagats appear united, an elder from Bagong Nayon in Rizal told the
audience in the community hall that attempts are being made to split the community
with cash incentives. The elder then warned of the perils of city life and declared he
would rather die than give up his land.

As dusk fell outside the hall, four soldiers from the Philippine Army stopped by to rest
their rifles. Their presence clearly made the Dumagats uneasy. The elders said that the
military regularly patrolled their lands, ostensibly in a bid to counter the National
People’s Army (NPA), the outlawed armed wing of the Communist insurgency.

In February, an NPA-affiliated group did claim responsibility for the destruction of

three excavators and a digger in protest at unauthorized construction work related to
the dam project on Dumagat land.

Father Alex Bercasio, a Redemptorist priest who chairs the Protect Sierra Madre group,
said Dumagat elders feared a repeat of intimidation tactics that they claim led to the
death by heart attack of elder Alan Buenodicio on May 2, 2016. A rotating cast of
military personnel had allegedly forced him to drink whisky every morning because he
refused to yield his community’s claim to the land.

Meanwhile, construction on the access roads from the Marcos Highway to the dam site
is well under way. Diggers and cement mixers are slowly moving in, laying the
foundation for construction vehicles and trucks should the dam get the go ahead.
The darkness of the situation is deepened by the fact that there are several viable
alternatives to Kaliwa on offer.

Sonny Africa, executive director of the IBON Foundation, an NGO providing research,
information and education services to people’s movements in the Philippines, said that
the rehabilitation of the Angat dam, coupled with the potential of a revitalization project
on the Wawa River, and the opening of new supplies from Laguna Lake, the Philippines’
largest body of fresh water, could negate the need for construction at Kaliwa.

Moreover, Osaka-based Global Utility Development Corp. last week let it be known that
they had made an unsolicited bid to finance and build a far less environmentally
impactful seven-meter dam at Kaliwa, only to have their proposal rebuffed.

Brian Eyler, director of the Stimson Center’s Southeast Asia program, said that China’s
deepening of BRI is resulting in an increase of policy projects designed to meet political
goals.

“What’s striking is a viable alternative is being offered,” Eyler said. “Japan and its
companies are known to produce high-quality infrastructure at a time when the region’s
countries are saying that’s what they need, and many countries have realized they have
been burned by poor quality Chinese projects.”

Other deals included in the Philippines’ commitment to the BRI include the completion
of the Chico River Pump Irrigation Project, the first initiative under President Rodrigo
Duterte’s flagship “Build Build Build” infrastructure program to be funded by China.

While the majority of Overseas Development Aid (ODA) to the Philippines is supplied by
Japan, China is viewed as critical to the success of Duterte’s Build program, in part
because of a massive projected shortfall in the number of Filipino construction workers
required to complete its 75 projects, not to mention their combined price tag of 9 trillion
Philippine pesos ($171 billion).

As is the norm with the BRI, construction of the projects, including the Kaliwa dam, will
primarily be undertaken by Chinese workers, and funded by soft policy bank loans.

The joint statement following the Duterte-Xi summit promised “complete transparency”
as regards both sides’ involvement in BRI projects, yet neither the terms of the loan nor
the construction contract for Kaliwa have yet been made public.

Under a November 20, 2018, loan finance agreement between the Export-Import Bank
of China and the MWSS seen by The Diplomat, the Chinese policy bank will make
available a loan facility of up to $211.2 million, equivalent to 85 percent of the
contracted cost of the dams, at an interest rate of 2 percent, provided key provisions are
met.

Among them is a clause that states the lender should only disburse the funds once it has
received: “Copies of the implementation plan for land acquisition and resettlement … all
requisite approvals for such plan [sic], and written confirmation issued by the Chinese
Contractor stating that the actual status of the land acquisition and resettlement could
satisfy the commencement of the project.”

It remains to be seen whether and how the FIPC approvals from the Dumagat
community, whose land the project will scar, will be secured.
BUSINESS
Kaliwa Dam deal 'as
onerous' as Chico River
project
(UPDATED) 'The choice of law and the venue for disputes is once again surrendered by
the Philippines in favor of China,' senatorial bet Neri Colmenares tells Rappler

CONTROVERSIAL. The Kaliwa Dam project is up for construction in the 3rd quarter of 2019, yet it still
faces heavy opposition from various groups. Photo from MWSS

MANILA, Philippines (UPDATED) – The Kaliwa Dam project, which the Duterte
administration said would prevent another water crisis in Metro Manila, is a magnet for
controversy.

Already hounded by environmental and social concerns for decades, another issue
surrounding the dam is a loan contract with China, which senatorial bet Neri
Colmenares said was contentious.

"It is as onerous [as the Chico River irrigation project]," Colmenares told Rappler on
Sunday, March 24.

The public can now go over the deal, as well as 8 other big-ticket infrastructure projects,
after the Department of Finance (DOF) recently made public all loan agreements.

The Kaliwa Dam's loan contract had articles pertaining to "waiver of immunity," similar
to the controversial Chico River irrigation project.

Colmenares said these were telltale signs of Beijing's debt-trap diplomacy.

In a text message, Finance Assistant Secretary Antonio Lambino however said that the
questioned provision in the agreement was "standard," and just means that China has
recourse in case of non-payment.

Moreover, he said that there are no assets involved as collateral in case of a default.

The DOF earlier expressed confidence that the government is "handling debt
responsibly."

Lambino said in previous interviews that all loan agreements underwent a tedious
vetting process by the Department of Justice, the Bangko Sentral ng Pilipinas, and the
DOF.

What is the project about? Located in Quezon province, the Kaliwa Dam is
expected to supply some 600 million liters of water per day to Metro Manila.
(READ: Manila Water on the hunt for new water sources)

The dam will be constructed by Beijing-run China Energy Engineering Corporation.

Several news reports stated that construction is targeted to start during the 3rd quarter
of the year, and is expected to be completed by 2023.

How much is the loan? Export-Import Bank of China agreed to lend the Philippine
government $211,214,646.54 for the project.

The amount is 85% of the total needed funds for the project, where the remaining 15%
will be shouldered by the Philippines.

It bears an interest rate of 2%, as well as a management fee of 0.3% and commitment
fee of 0.3% per annum.

It is payable in 20 years, including a grace period of 7 years.

The Philippine government will pay up by 26 equal installments within the repayment
period.

In case of a default or when the Philippine government cannot pay off the debt, China
can suspend or terminate any further disbursements. All delinquencies are also deemed
to be due immediately without any need for legal formalities.