Capitol to cut ties with water firm

CEBU, Philippines — The Cebu provincial government is looking into the possible termination of its Joint Investment Agreement (JIA) with the Manila Water Consortium, Inc. after discovering violations allegedly made by the private company.

In March 2012, the Province of Cebu has entered into a JIA with Manila Water for the construction and development of water supply facilities sourced from Luyang, River in the Municipality of Carmen.

This JIA led to the creation of the Cebu Manila Water Development, Inc.

Prior to the forging of the JIA, the Manila Water Consortium submitted an unsolicited offer to the province which was then subjected into a Swiss bidding challenge.

The best bid was given by Rio Verde Water Consortium which offered P13.95 tariff rate per cubic meter and a project internal rate of return of 19.23 percent to the province.

Manila Water, being the bearer of the initial offer, had the right to match the best bid, to which, it did.

Now, six years into the operation of the JIA, the provincial government has just discovered a drastic increase in the project cost from P702 million to P1.003 billion.

Among the parameters of the JIA is the province shouldering 49 percent of the cost, while Manila Water will take care of the 51 percent.

Since there was an escalation in the overall cost, earned revenues by the provincial government from the project was channeled to augmenting the increase.

This also meant the non-remittance of the Province of Cebu’s receivables.

Also during a report previously given by Manila Water during one of their meetings with Governor Gwendolyn Garcia, it was found out that during their present operations, they have increased the tariff rate paid by the Metro Cebu Water District from the agreed P13.95 to P24.59 per cubic meter.

Currently MCWD supplies 35 million liters of water a day to Metro Cebu.

“Ang tariff rate ubos ra unta kay social responsibility na sa province, MCWD is a government-owned corporation baya… nadaot ang standing sa province sa social responsibility aspect,” Cebu Provincial Legal Management Consultant Marino Martinquilla said.

Apart from that, the Manila Water has also decreased the Internal Rate of Return for the province from the agreed 19.23 to 12.3 percent.

All these were made without a resolution in the JIA board.

Part of the JIA was also the agreement to provide free water for the municipality of Carmen since the water is being sourced from the area.

“It was also agreed nga tabangan ang Municipality of Carmen nga libre ang tubig nila. Ang nahitabo ani karon wa naman nuoy tubig ang Carmen,” Martinquilla said, referring to the water crisis in Carmen.

Because of the discrepancies in the JIA on the part of Manila Water, the Province of Cebu has deemed it better to fix the broken piping system in Carmen without the help of Manila Water.

In light of these recently discovered violations made by the other party in the JIA, the Province of Cebu has given Manila Water 90 days since the receipt of the letter of termination to come up with an acceptable explanation and to cure their breach for their multiple violations committed.

The letter was received last August 29.

“Ang initial demand is to cure the breach. Sila ma’y nihimo ug unsolicited proposal,” lawyer Roy Jon Sepulveda, Cebu Provincial Legal Management Consultant, said.

A possible repercussion for Manila Water in case of their failure is the termination of their JIA with the Province of Cebu. (FREEMAN)