Capitol to terminate P1B bulk water JIA with Manila Water for ‘uncured’ breaches
CEBU CITY, Philippines — The Cebu Provincial Capitol is set to terminate its Joint Investment Agreement (JIA) with the Manila Water Consortium Inc. after the latter “failed to cure the breaches” in the agreement within their 90-day ultimatum.
The Sangguniang Panlalawigan, in their session on Monday afternoon, December 9, 2019, is expected to pass a resolution authorizing Garcia to terminate the 2012 JIA for the development of the bulk water supply project in Carmen town.
The project, now yielding 35 million liters of water daily, is one of the water sources that Metro Cebu Water District (MCWD) uses to supply its service areas.
Last August 29, 2019, Garcia issued a Notice of Breach to the Consortium as her consultants pointed out five alleged “unauthorized changes” in the terms of the JIA.
These breaches include the increase in the Capital Expenditure (Capex) from P702 million to P1.003 billion; increase of tariff rate from P13.95 per cubic meter to P24.59 per cubic meter; decrease of the projected internal rate of return from 19.23 percent to 12.30 percent; non-remittance of the province’s receivables; and the plowing back of the Capitol’s earned revenues to the Capex of the project.
The 90-day ultimatum for the MWCI to solve the said “breaches” lapsed November 27, 2019.
In earlier interviews, Garcia said the consortium did not present any resolution to the breaches and instead defended the moves that were in question.
In an October 4, 2019 letter, MWCI President Virgilio Rivera Jr. said increasing the Capex was a “unanimous decision” of the board of directors of the Company. He said the move was made in order for them to participate in the MCWD invitation to bid for a bulk water supply project in 2013.
Rivera added it was MCWD that determined the P24.59 new tariff rate.
Garcia, however, did not accept Rivera’s explanation and insisted that the consortium’s reply “has not squarely addressed” the issues pointed out in the Notice of Breach. /bmjo
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