PB authorizes Gwen to sue water supplier

CEBU, Philippines (Corrected 11:52 a.m.)—  Cebu Governor Gwendolyn Garcia can now proceed in filing cases against those who are involved in an "anomalous and grossly disadvantageous transaction" in the implementation of the agreement for the bulk water supply from Carmen town to Metro Cebu.

This after the Cebu Provincial Board has authorized the governor to "file in behalf of the Province of Cebu appropriate criminal, administrative, and civil cases against any and all persons or entities responsible in the anomalous and grossly disadvantageous transactions involving the implementation of the joint investment agreement (JIA) entered into by and between the Province of Cebu and Manila Water Consortium, Inc." for a bulk water supply in Metro Cebu.

The authorization was granted through a resolution authored by Third District Board Member John Ismael Borgonia.

Borgonia said that after the legal audit ordered by the Office of the Governor on Cebu Manila Water Development, Inc., it was observed that there were changes on the terms and references of the agreement.

These includes the increase of project cost or capital expenditure (CAPEX) from P702 million to over P1 billion; increase on the tariff rate from P13.95 per cubic meter to P24.29 per cubic meter; decrease of project internal rate of return (PIRR) from 19.29% to 12.30%; non-remittance to the Province of its receivables and plowing back of the earned revenues to the CAPEX and JICO (Joint Investment Company).

It was in March 2012 when the Cebu Capitol and Manila Water Consortium (MWC) signed the Joint Investment Agreement for a joint investment through JICO named as Cebu Manila Water Development, Inc. (CMWDI).

The agreement was for the construction and development of bulk water by tapping surface water from Luyang River in Carmen town, Northern Cebu to supply to Metro Cebu.

Borgonia said the changes on the tariff rate and the PIRR "are clearly anomalous and deceptive in that MWC was able to revert to the terms and references in its original bid in the Swiss Challenge, thereby disregarding discarding that of the winning bid of CWC (Cebu Water Consortium)" as the changes were not "approved by authorized" by the JICO Board of Directors, Cebu Province and MWC through the Cebu provincial board and board of directors.

He further said that even from the start of operation of the CMWDI, the Capitol has not received its share up to the present pursuant to the terms and conditions of the JIA.

August last year, the Capitol sent a notice of breach on the JIA to MWC.

October of the same year, the MWC sent a letter to the governor claiming that the aforementioned of the change on some specifications on the agreement "were authorized by the JICO's BOD (board of directors) on October 17, 2013, in view of its participation in the September 2013 invitation to bid by MCWD for a bulk water supply project."

However, the Capitol said the said changes, including the business plan, were done just a few months after the previous administration's assumption to office without authority from the legislative body.

The Capitol said the MWC failed to cure the "breaches and violations" prompting the governor to serve a notice of termination of the contract as authorized by the PB.

"In the meantime, in order to protect the interests of the Province of Cebu and to hold any and all persons criminally, civilly, and administratively responsible for the aforementioned grossly disadvantageous transactions as against it, the Province of Cebu, through Gov. Gwendolyn F. Garcia need to file the appropriate cases against said person," Borgonia’s resolution read.  — KQD (FREEMAN)