Owing to water consortium's violations: Capitol severs deal with firm

CEBU, Philippines — The Province of Cebu will terminate the Joint Investment Agreement it has entered into with Manila Waters Consortium, Inc. following the discovery of multiple violations.

In its December 9, 2019 session, the Provincial Board passed a resolution allowing the termination of the agreement Capitol entered into with Manila Waters on March 2012 for the development and operation of a bulk water supply facility at the Luyang River in Carmen town.

The resolution sponsored by Board Member Jimbo Borgonia, chairperson of the Board’s committee on provincial and municipal properties, was in response to the discovery of multiple violations Manila Waters committed.

The agreement stipulates that the party not at fault would buy the shares of the party at fault for 80 percent of the fair market value.

"As aptly provided in the said Reply of Gov. Gwendolyn F. Garcia, said violations or breaches, including the non-remittance to the Province of Cebu of its receivables and the plowing back of the earned revenues to the CAPEX of the JICO, are serious and material violations committed by MWCI, which are greatly prejudicial to the interests of the Province of Cebu and the Cebuanos," the resolution reads.

Governor Gwendolyn Garcia said the province is not open to negotiating with the water consortium.

"Not after the province was really… taken advantage of," Garcia said.

"I will have to ensure that the province must always be protected, that the interest of the Cebuanos must always be protected," she added.

In September this year, Garcia discovered a significant increase in the project cost from P702,000,000 to P1,003,000,000. Because of this increase, all revenues the province earned were channeled back into augmenting the increase in project cost.

Manila Waters also reportedly decreased the Province's Internal Rate of Return from 19.23 percent to 12.3 percent. They have also increased the tariff rate paid by the Metro Cebu Water District from the agreed P13.95 to P24.59 per cubic meters. This was done without a resolution passed in the Joint Investment Company (JICO).

Multiple meetings were held between the Province of Cebu and Manila Waters. This led to the governor setting a 90-day ultimatum to Manila Waters to explain the violations and to fix the same.

Prior to the three-month deadline, the water consortium reportedly sent in its reply but Garcia said she found no justifiable reason for the violations, thus, the province told Manila Waters that it would take steps to terminate the contract.

"In their lengthy explanation and justification, I could find neither acceptable justification nor legal basis in truth or in fact," Garcia said.

Meanwhile, the provincial government is yet to receive its dues from Manila Waters. Garcia said she will sit down with the chief executive of Manila Waters, as directed by the agreement, after the province serves the notice of termination. (FREEMAN)