CAGAYAN de Oro City Mayor Constantino Jaraula is bent on pursuing the Indahag reservoir project even if this means huge debts for the local water district.

Questions were raised in the awarding of the bulk water project to the same company that will undertake the newly-proposed water deal.

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In several media interviews in the past two weeks, Jaraula criticized the wanting performance of the Cagayan de Oro Water District, pointing out that most of the highly-elevated parts of the city have remained unserviceable. This, he said, has hindered several development projects in upland areas, particularly in Barangay Indahag which is being eyed by Ayala Corporation as a site of its planned business complex.

Last week, the mayor poked fun at the beleaguered water utility by comparing the water supply at City Hall as “murag ihi sa unggoy (that of monkey’s urine).”

Over the weekend, however, Jaruala was evasive when confronted with the P200 million cost involved to make the Indahag reservoir viable. Engineer Bienvenido Batar, COWD acting general manager, said this was the estimated cost involved of the network of pipes that would connect the reservoir to Indahag and other eastern parts of the city.

“Have you asked them how much they’ve been losing because of the efficiency of their operations?” the mayor shot back when asked by dxCC-RMN Saturday if the mayor was aware that the cost involved was P200 million.

Jaraula said City Hall was not concerned of the cost, only on the upland and eastside residents who are still deprived of access to potable water.
“Ila na kanang problema (That’s their problem),” Jaraula said in the interview.

In a press conference last Friday, Batar said COWD could not afford the cost involved, as the water utility has standing loans with the Local Water Utilities Administration (LWUA).

On top of this, the COWD official insisted that the standing bulk water supply contract with Rio Verde Water Consortium Inc. (RVWCI) is still besieged with legal questions.

Batar said he found the reservoir project in Barangay Indahag “laudable” but said this must be pursued only after addressing its legal and financial implications.

First, Batar said the cost of the project would bleed the water utility dry.

Not only does the contract require the COWD to cough up P6 million a month for the additional water supply from Rio Verde Water Consortium Inc. (RVWCI), it would also entail the construction of a multi-million piping system, said the COWD official.

Under the proposed tripartite contract among City Hall, RVWCI and COWD, the local government will undertake the construction of the reservoir; RVWCI will supply water equivalent to 10,000 cubic meters daily.

For COWD, however, Batar said this would mean footing the bill not only of the additional water supply, but also of another 10,000 cubic meter supply “allowance,” as stipulated in the proposed agreement.

COWD is also expected to pay for the amortization cost of the pipelines and the reservoir. The proposed agreement says City Hall will construct the reservoir using COWD”s annual financial aid to the local government amounting to P6 million, and the additional cost will be liquidated against the letter’s water bill.

But the biggest stumbling block to the reservoir project is the questioned status of RVWCI in the bulk water project, whose contract was signed in 2004 and implemented in 2007. The contract was awarded by COWD’s board of directors despite the fact that RVWCI failed to meet certain requirements in the Procurement Act.

This was discovered by the Commission on Audit, which last year declared the contract as having been awarded without basis. Consequently, state auditors disallowed the water utility’s payment of P144 million to Rio Verde in 2007.

The disallowance is under appeal, Batar said.

The 2004 signed contract, meanwhile, is being investigated by the Ombudsman because of serious discrepancies in the original draft.
Among the major discrepancies:

* The insertion of a provision in the signed contract prohibiting the COWD to procure bulk water from suppliers other than Rio Verde

* Diametrically opposed to the model contract, a provision in the signed contract allows RVWCI to sell its water to a third party

* The signed contract allows rate hike retroactive to the date the request was first made

“Let’s address the discrepancies in the bulk water supply contract first before going into another agreement. This I think is the most prudent thing to do now,” said Batar in a press conference Saturday with the division chiefs of the water utility.

City Hall cites the unavailability of water supply in Barangay Indahag in pursuing the project.

Batar said COWD is expected to implement its expansion program in the next two years, which means upland villages like Barangay Indahag will finally have water connections by 2011.

COWD pays around P12 million to P13 million every month to RVWCI for the bulk water supply alone; P5 million is set aside monthly for its loans with the Local Water Utilities Administration. DVAIII