MCWD defends finances amid bankruptcy fears, water rate uproar

Metropolitan Cebu Water District (MCWD) in Magallanes St., Cebu City / via Google Maps

CEBU CITY, Philippines — The Metropolitan Cebu Water District (MCWD) said on Wednesday that it remained “financially sound” despite mounting concerns over its pricing and performance.

This is after Mayor-elect Nestor Archival warned the water utility could collapse within two years under its current model.

In a statement released on June 4, MCWD addressed criticisms about its alleged financial instability and defended the recent tariff increase. It said that the agency continues to operate sustainably despite rising costs of operations, bulk water purchases, and infrastructure development.

READ: MCWD adjusts rates: Why water bill may be lower, higher this March

Archival, however, said that MCWD’s reliance on expensive bulk water procurement, while selling to consumers at a lower rate, is unsustainable and could drive the utility into “bankruptcy.”

He pointed out that MCWD reportedly buys water from suppliers like Cebu Manila Water Development Inc. (CMWDI) at P65 per cubic meter and sells it to households at P28.

The mayor-elect’s remarks came after rising complaints from consumers who say they’re paying more but still receiving unreliable water service.

Archival said the mismatch between cost and quality of service has left many residents frustrated.

READ: New desalination plant: 11 Cebu City barangays to benefit from it

In its statement, MCWD clarified that its water supply is not fully reliant on costly external providers. Instead, it operates on a “blended cost” model, producing part of its supply in-house at lower rates and purchasing the rest from bulk suppliers.

The agency reported that in 2024, its revenue per cubic meter sold exceeded its operating costs. For the first quarter of 2025, the effective rate consumers paid remained higher than the blended cost, allowing MCWD to remain financially afloat.

MCWD emphasized that the March 1, 2025, implementation of a 38 percent provisional tariff adjustment, approved by the Local Water Utilities Administration (LWUA), was critical to sustaining operations.

The utility had originally applied for a 60 percent rate increase in 2022 to support its 10-year strategic plan, but has yet to receive full approval.

The new rates raised the minimum charge for residential consumers (0–10 cubic meters) from P152 to P209.76.

However, MCWD said many households actually saw lower monthly bills because the Purchased Water Adjustment (PWA) and Power Cost Adjustment (PCA) were absorbed into the base rate and reset to zero.

Despite these reforms, MCWD acknowledged that escalating expenses, ranging from materials for water treatment to rehabilitation and expansion of its pipeline network, continue to strain its finances.

It emphasized that, as a government-owned and controlled corporation (GOCC), it cannot earn more than 12 percent per cubic meter and receives no subsidy from local or national government units.

Every peso collected, it said, is reinvested into operations and infrastructure. But without the full tariff adjustment and support from local governments to fast-track permits and projects, major improvements and new water sources remain difficult to implement.

Archival said he will coordinate with Governor-elect Pamela Baricuatro to look into the CMWDI joint venture contract and water sourcing projects, noting CMWDI’s reported rate hike from P24.59 to P65 per cubic meter and the lack of clarity on its current concessionaire after the Ayala group sold its stake.

The joint venture between the Cebu Provincial Government and the Manila Water Consortium collects and treats surface water from the Luyang River in Carmen, northern Cebu. The firm supplies 35 million liters per day to MCWD, covering six localities, including Cebu City and Mandaue City.

However, the contract was reportedly terminated in 2023, with CMWDI exiting due to tariff disagreements, further complicating water supply stability in Metro Cebu.

Archival said he will push for transparency in how contracts like these are awarded, especially amid allegations of overpriced rates and unresolved service issues.

He added that educating barangays on meter monitoring and consumption management is a short-term step to help residents better manage bills.

While he has no immediate plans to overhaul MCWD’s leadership, Archival said he wants current board members, chaired by Miguelito Pato, to be more open to public scrutiny.

The MCWD board has been marred by political conflict in recent years, with rival appointments and legal challenges clouding its leadership structure. /clorenciana