News and UpdatesIn the NewsDCWD defends water pact

DCWD defends water pact

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The Dumaguete City Water District has defended its acceptance of a proposal by Metro Pacific Water Investment Corporation to invest P1 billion in the DCWD’s operations.

In a press conference Thursday, DCWD General Manager Esperato Dicen said that while the Board has accepted the MWIC’s proposal, it will now be subjected to a Swiss Challenge, which means other companies are invited to make a better offer.

The MWIC proposal is for a joint venture in financing, rehabilitation, upgrading, expansion, operation, management and maintenance of the water supply network and wastewater facilities of DCWD.

Dicen explained that at present, DCWD is short of 7,800 cubic meters of water everyday and is expected to reach 13,470 cubic meters after 10 years if no improvement is undertaken.

Dicen said that if the DCWD will not do anything to arrest the increasing gap between the supply and demand for water, the time will come when Dumagueteños will experience rationing of water.

Under the unsolicited proposal, the first ten years of concession MWIC will undertake water supply system rehabilitation, upgrading, expansion to the tune of PHP 684,176,024.00, non-revenue water reduction projects worth PHP 110 million which includes replacements of water meters in a three-year period at PHP 160 million; waste water management at PHP 111 million, permits at PHP 95,301,125.00 or a total of PHP 1,000,477,149.00.

The concession agreement grants the Joint Venture company exclusive right as concessionaire of DCWD to take possession of use, and upgrade the existing facilities; design, construct, install, and commission the new facilities; and distribute water to DCWD end-users and customers and bill and collect payments from such customers for water services.

According to Director Cleonico Fontelo, vice chairman of the board of directors, the supply situation right now is on a flat line, prompting the board and management to consider various options one of which is through a bank loan or a public private partnership.

Looking at the bank loan approach is difficult to consider especially that the amount needed is in the vicinity of PHP one billion while the DCWD’s assets is only PHP 288 million, according to Fontelo. The maturity of 20 to 25 years will result to high debt burden and as a consequence will result to high water rates.

And so the board has decided to go on a long-term agreement under the PPP (public-private partnership) scheme because the investment recovery would be extended for a long duration, which would result to a minimized water rates.

He further explained there will be no interest on the amount of investment because investment recovery is based on profit while bank loan amortization and so there is less pressure on the water district with respect to payment.

As to the first option, the BOD vice chairman disclosed banks will not commit interest rates longer than five years, it will be floating beyond five years so the water district cant have full control and cannot have a serious projection.

For his part, Dumaguete City Mayor Felipe Antonio Remollo has criticized what he describes as efforts of the Dumaguete City Water District (DCWD) to “blind” the public and the city on developments that may have great repercussion on the city’s water concessionaires by allegedly silently engaging in a joint venture agreement that would be prejudicial to the interest of end-users.

Remollo said Friday the DCWD only talked through a press conference after representatives from MWIC had shed light on the agreement during the regular session of the city council on Wednesday.

But prior to the appearance of MWIC personnel including city councilors of Cagayan de Oro City, the water distribution company in the city had allegedly snubbed several invitations for them to shed light on issues that is of public interest.

MWIC brought documents to show an agreement has been reached, such as the certification issued by board of directors that DCWD and MWIC have already partnered themselves in undertaking almost PHP one billion worth of projects and which was conformed by Atty. Laurence R. Rogero, president and authorized representative of MWIC.

The certification, however, specified the proposal will be submitted to a competitive challenge pursuant to pertinent provisions of guidelines from the National Economic Development Authority (NEDA). But Remollo said the same is only for formality sake.

The city mayor said DCWD has already surrendered its rights to the private company under an 80-20 agreement, granting the majority company MWIC exclusive right to take possession of, use, and upgrade the existing facilities of DCWD, design, construct, install and commission the new facilities, to distribute the water and to collect payments.

However, Dicen said the DCWD will remain a Government Owned and Controlled Corporation (GOCC) and denied rumors that it is going to be privatized. What will be privatized are the functions, management and operation of the water distribution company and all the employees will be absorbed by the Joint Venture company.

The city chief executive was so upset upon reading the documents after seeing that the management of the septage facility was included in the negotiation, when the city and DCWSD has an existing memorandum of agreement way back in June 25, 2009.

Pertinent provision states that the city shall manage the operation and maintenance of the Septage Treatment Plant and that it is responsible for the hiring, detail and or transfer of necessary personnel while the second party is responsible for the collection of septage from houses, business establishments and other sources, among others.

Remollo said, although the city and DCWD have an equal share in the expenses and net income of the operation of the septage treatment plant, it owns the 2.5 hectares lot where the facility is built, and these were not divulged to MWIC.

Meanwhile, DCWD has hired a new lawyer, Atty. Myles Bejar, to represent them in any forum that requires the presence of representatives from the water district.

Bejar made it clear he will deal only on legal matters and is not privy to the things that had happened in the past. He explained under the NEDA revised guidelines on joint venture agreements issued in 2013, privatization is not allowed.

He cited provisions of Presidential Decree 198 which states that water districts all over the country are autonomous from Local Government Units (LGUs) to allow them to operate without any political interference. However, while water districts may be autonomous, having quasi-judicial functions, it is subject to COA regulations and Civil Service Commission regulations.

It is the belief of the city water district that what they are doing is consistent with provisions of PD 198 and any concerns should be addressed with the board of DCWD, but it doesn’t mean that it will not listen to the city.

While it maybe true that the DCWD is a creation of the LGU, once it is created and registered, it becomes autonomous and the LGU that created it loses supervision and control of the same, Bejar quipped. (With reports from Juancho Gallarde/PNA)

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