CEBU CITY, Philippines — Negotiations to salvage the joint investment agreement for the bulk water supply project between the Cebu Provincial Capitol and Manila Water Consortium Inc. is already “off the table.”
If Cebu Governor Gwendolyn Garcia would sit down with the chief executive of Manila Water, she said it would only be to discus how the province will collect its dues and the way to move forward for the project.
Garcia said Manila Water has taken advantage of the province “not only with our JIA in so far as water is concerned, but also with our valuable pieces of land.”
On Monday, December 9, 2019, the 15th Sangguniang Panlalawigan (SP) authorized Garcia to terminate its P700 million JIA with Manila Water which the parties inked in 2012.
Read: Capitol to terminate P1B bulk water JIA with Manila Water for ‘uncured’ breaches
Read: Cebu province to take action vs Manila Water over ‘uncured breaches’ in JIA with Capitol
The bulk water supply project in Carmen town that bore from the JIA, 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.
The termination stemmed from the five “breaches” that Capitol legal consultants saw in the implementation of the JIA.
“I met with the members of the Provincial Board and we outlined step by step how Manila Water in the past six years that I have not been around had violated several provisions in the joint investment agreement,” Garcia said.
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 (PIRR) 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.
Read: Garcia gives Manila Water 90 days to explain, cure ‘breaches’ in joint investment deal
In a letter dated October 4, 2019, 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.
But Rivera’s explanation did not suit Garcia as she said that she could “find neither acceptable justification nor any legal basis in truth and in fact.”
With the authorization to terminate the contract now approved, Garcia said they will soon send the notice of termination to MWCI.
Garcia said that as stated in the JIA, she will have to sit down with the chief executive of Manila Water to discuss how they would go with the shares of the province in the project.
“It is also in the agreement, both chief executive will sit down and discuss the way to move forward. I shall sit down with their chief executive and not their emissaries,” Garcia said.
“We are weighing our options but certainly, negotiations with Manila Water is off the table,” she added.
While the JIA may be terminated soon, Garcia said this will not cut the province’s collection of its dues from the project.
She said even after the termination, the province will collect the 19 percent PIRR of the province from the revenue of the bulk water supply project.
Garcia said the Manila Water has not remitted any revenue to the province because the supposed revenues had been plowed back to the increase in the Capex.
The governor maintained that the increase in the Capex is not valid since it did not pass through approval of the PB. /bmjo