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Manila Water hopes for win-win solution on JIA termination: ‘We acted in good faith’

By: Rosalie O. Abatayo December 16,2019 - 07:00 AM

In this 2014 photo, officials of Manila Water Consortium Inc. inspect a new weir facility that taps river water in Carmen town.(CONTRIBUTED PHOTO)

CEBU CITY, Philippines — Manila Water Consortium Inc. (MWCI) continues to hope it is not yet game over for its joint investment project with the Capitol.

The company broke its silence Sunday, December 15, as it released its official statement after Governor Gwendolyn Garcia terminated Tuesday, December 10, the joint venture agreement between the Capitol and MWCI over alleged unauthorized changes in the terms of the contract. The notice was served on Wednesday, December 11, 2019.

“The current issue between [the provincial government of Cebu] and Manila Water Consortium is unfortunate. But we will reach out to PGC to arrive at a win-win solution, while [protecting] our rights under the JIA (Joint Investment Agreement),” MWCI president Virgilio Rivera said in a statement.

Read: Garcia ends Capitol’s joint investment deal with Manila Water

Read: Gwen: ‘No negotiation may salvage Manila Water JIA’

MWCI and the Capitol inked the JIA in 2012, during Garcia’s previous stint as governor, for the development of a bulk water supply facility tapping the surface water of Luyang River in Carmen town, northern Cebu, for P700 million.

MWCI and the province invested in the project in a 51 to 49 percent scheme, respectively.

Read: Garcia gives Manila Water 90 days to explain, cure ‘breaches’ in joint investment deal

Read: Cebu province to take action vs Manila Water over ‘uncured breaches’ in JIA with Capitol

Read: Capitol to terminate P1B bulk water JIA with Manila Water for ‘uncured’ breaches

Last August 29, Garcia issued a Notice of Breach against MWCI for the following alleged unauthorized changes in the project terms: 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.

Garcia gave MWCI until November 27, or 90 days, to cure the said breaches. However, Garcia said there was no solution presented by the company.

MWCI in their statement defended the changes and said that it was unanimously decided by the board of directors of Cebu Manila Water Development Inc. (CMWDI) – the joint investment company formed by the JIA of the Capitol and MWCI.

Rivera said it was in 2013 when the facility has become 95 percent complete and when the board decided to participate in the bidding  called by Metropolitan Cebu Water District (MCWD) for bulk water supply

“By then MCWD announced an invitation to bid for bulk water supply for delivery to Casili, Consolacion. The specifications were different from the initial plan under the JIA. Nonetheless, CMWD board with PGC directors and independent director decided to participate in MCWD’s invitation to bid. CMWD won the bid and sealed the Water Purchase Agreement (WPA) by December 2013,” Rivera said.

At present, the CMWDI facility supplies 35,000 cubic meters or 35 million liters of water to MCWD.

But the business that the JICO forged with MCWD, Rivera said, required an additional capital of P300 million.

Rivera said the provincial government has been notified of the increased Capex but opted not to participate in the putting up of the additional capital.

“PGC’s decision not to participate in the increase of capex is expressed in Sangguniaan Panlalawigan (SP) Resolution 1354-2015 sponsored by SP Member Peter John D. Calderon, who is also one of two PGC proxy in the CMWD Board. The provincial legislature approved unanimously that PGC would waive its right to subscribe to additional shares in CMWD “due to lack of disposable funds,” Rivera added.

Despite the termination of their JIA, Rivera maintained that MWCI has “stood by and continues to stand by its commitments in the JIA with tact and due diligence.”

“As we acted and continue to act in good faith, we trust that the difference in points of view will be resolved,” Rivera said.

“We continue to adhere to the rule of law in light of the challenging political environment. Our objective is to continue to serve the Cebuanos and further expand to provide more Cebuanos access to sustainable water supply,” he added./dbs

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