NIA used to solely operate and maintain national irrigation systems (NIS). These are now operated and maintained jointly with Irrigators Associations. Operation and maintenance (O&M) activities comprise of, among others, operation of storage and diversion dams; running of pumps; operation of gates, turnouts and drainage ditches; preparation and implementation of cropping and irrigation schedules; maintenance of the physical facilities including service and access roads, and repairs on minor damages caused by floods and typhoons.
There are 217 NIS nationwide with total area of 793,638 hectares as of end 2012. Thirty percent (30%) of the areas are served by reservoir-backed systems, 65 percent by run-of-the river diversion systems, and five percent by pump systems. The dominant crop in these areas is rice comprising 95 percent. The remaining 5 percent are corn, sugarcane, bananas and some vegetables.
The irrigation service fee (ISF) is charged by NIA from the beneficiaries in national systems as payment for the services rendered in the delivery of water.
NIA is authorized to collect ISF pursuant to the following laws:
PD 1702, Section 1 paragraph b:
(b) Operating capital - All amounts collected by the National Irrigation Administration as irrigation fees, administration charges, drainage fees, equipment rentals, proceeds from the sale of unserviceable equipment and materials, sale of all reparation goods allocated to the defunct irrigation service unit and the National Irrigation Administration, all other income shall be added to its operating capital.
Factors considered in setting the ISF rates are the system's scheme of development (run-off-the-river, reservoir and pump), crops planted, and season. These are denominated in kind, in cavans of palay (paddy) (one cavan = 50 kilograms) per hectare. Rates for pump systems are higher as the cost of power for pump operation is included in the computation. These vary from system to system because power rates are location-specific.
Pursuant to National Economic and Development Authority Resolution No. 20, series of 1978, it is a national policy that the government shall bear the cost of interests on all indebtedness for the construction of irrigation projects in order not to discourage the participation of farmer-beneficiaries in the development and operation of irrigation facilities.
NIA has been authorized to impose charges to generate revenues sufficient to cover only O&M costs of such facilities and to recover within a period not longer than 50 years, the monies initially invested in such facilities; provided that such charges shall not impair the user's incentive to avail of the benefits from irrigation and provided further, that such charges are within the beneficiaries' capacity to pay.
- ISF rates are denominated in-kind but beneficiaries have the option to pay in-kind or cash. Payments in cash are based on the prevailing government support price for palay at the time of payment.
- ISF payments for other crops and annual crops are the cash equivalent of the rates for rice crop at the prevailing government support price for palay at the time of payment.
- Payments in cash are encouraged at all times. Prompt cash payment in full of ISF current account is entitled to 10 percent discount.
- ISF payments in kind must have net weight of 50 kilograms per cavan at 14 percent moisture content.
- Unpaid ISF accounts are subject to penalty of one percent per month. Back accounts paid in cash shall be based on the prevailing government support price for palay at the time of payment.
- "Unpaid irrigation fees or administration charges shall be preferred liens, first upon the land benefited, and then on the crops raised thereon, which liens shall have preference over all other liens except for taxes on the land. Such preferred liens shall not be removed until all fees or administration charges are paid or the property is levied upon and sold by NIA for the satisfaction thereof. Judicial actions for the collection of unpaid irrigation fees or charges, drainage fees or other charges which the NIA is authorized to impose and collect, shall henceforth be governed by the provisions of the Rules of Court of the Philippines;" (Presidential Decree 552)
- Farms with rice yield of 40 cavans per hectare or below are exempted from ISF payment.
The ISF is primarily used to fund the O&M of national systems.