PB okays signing of interim protocol in managing Cebu Manila Water amid contract dispute
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 — The Cebu provincial government may soon take over the operations and finances of the Cebu Manila Water Development Corp. (CMWD), the 35 million liter producer of bulk water supply in Carmen town, northern Cebu.
The CMWD is a joint venture project of the province and the Manila Water Consortium Inc. in 2012.
The Provincial Board, on Monday, February 3, authorized Governor Gwendolyn Garcia to sign the terms of reference for the interim protocol in managing the CMWD pending the finality of the dissolution of the investment contract between the province and the MWCI.
Under the terms of reference, the Capitol will be taking over the supervision over CMWD, including its finances.
The province will appoint the incumbent Provincial Treasurer, or his authorized representative, “to exercise supervision over the financial operations of the CMWD, with access to financial documents for monitoring purposes.”
The Provincial Engineer, or his representative, will supervise the technical operations of the CMWD.
Garcia, in previous interviews, said the province’s taking over of the supervision over CMWD is a condition imposed by Carmen Mayor Carlo Villamor in renewing the mayor’s permit of the CMWD.
Read: Garcia ends Capitol’s joint investment deal with Manila Water
Read: Manila Water hopes for win-win solution on JIA termination: ‘We acted in good faith’
The province, in December 2019, terminated its Joint Investment Agreement (JIA) with MWCI due to the latter’s alleged breaches in the terms of the 2012 contract.
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 Capitol first called out the MWCI in August 2019 through a notice of breach. It gave the company 90 days, or until Nov. 27, 2019, to settle alleged breaches.
MWCI, in a letter in October 2019, has already explained the circumstances behind the changes that they implemented.
MWCI then said the changes were 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.
While waiting for the finality of the termination of the JIA, Cebu third district Board Member Borgonia said the interim protocol in governing CMWD will ensure that the operations of the CMWD shall continue. /rcg
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