Garcia ends Capitol’s joint investment deal with Manila Water
CEBU CITY, Philippines — The joint investment agreement (JIA) between the Capitol and Manila Water Consortium, Inc. is officially revoked.
Manila Water received this morning, December 11, the notice of termination of the JIA two days after the Sangguniang Panlalawigan gave Governor Gwendolyn Garcia the authority to end the agreement which the province entered into with the firm in 2012.
The termination of the JIA stemmed from alleged breaches committed by Manila Water in the implementation of the project.
Last August 29, Garcia issued a Notice of Breach to Manila Water as her consultants pointed out five alleged “unauthorized changes” in the terms of the JIA. She gave the firm 90 days, or until November 27, to cure the breaches.
Read more: Garcia gives Manila Water 90 days to explain, cure ‘breaches’ in joint investment deal
“Despite the Notice of Breach/Default itemizing the serious and material breaches committed, Manila Water Consortium Inc. has failed to cure the same to the satisfaction of the Province of Cebu,” Garcia said in the notice of breach dated December 10, 2019.
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 JIA was made for the development of a bulk water supply facility from the surface water of Luyang River in Carmen town, northern Cebu. The agreement also gave birth to Cebu Manila Water Development, Inc. (CMWDI) which manages the bulk water supply project.
The project now supplies 35 million liters of water to the Metro Cebu Water District (MCWD) daily pursuant to a 25-year contract entered into in 2015.
Despite the termination of the JIA, Garcia said she saw no reason that the bulk water supply project would stop its operation.
“Ang giterminate karon is just the agreement but the joint investment corporation continues to exist unless we decide to dissolve it,” Garcia said.
Garcia said she had yet to sit down with the chief executive of Manila Water to discuss the ways to move forward.
Among the province’s goals, Garcia said, would be to collect its 19 percent share of the revenues of the project.
Garcia said Manila Water had never remitted any profit share to the Capitol since the firm plowed back the supposed revenues of the province to the increased Capex./dbs
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