Capitol eyes March groundbreaking for joint water venture with private firms

Wednesday, February 8, 2012

ONCE it gets the Provincial Board’s (PB) authority, Capitol and its private partner can break ground for the Cebu bulk water supply project.

The groundbreaking can take part as early as March, said Capitol spokesperson Rory Jon Sepulveda in a press conference yesterday, where the Provincial Government announced that it had awarded the Cebu Bulk Water Supply Project to the Manila Water Consortium.

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The project, which will tap the Luyang River in Carmen to supply 35 million or 35,000 cubic meters of water to northern and central Cebu, is expected to be completed in the last quarter of 2013.

Forty-nine percent of the investment for the P702-million project comes from the Capitol, which will use its savings.

Cebu Gov. Gwendolyn Garcia said the project will provide “cheap water” to Cebu and make the province more attractive to investors.

The Capitol will is set to sign a joint investment agreement with the consortium—composed of Ayala led-Manila Water, Vicsal Development Corp. of the Metro Gaisano Group and Stateland Inc.—next month.

Investment

The joint venture is hinged on a 30-year contract with a 19.26-percent return of investment.

Sepulveda said Capitol would be able to recover its investment in five years and the returns of its investment can be used to fund more projects and services.
Capitol officials did not say if there are already buyers of the water from Carmen.

In a separate interview, Metropolitan Cebu Water District (MCWD) Assistant General Manager Ernie Delco said MCWD has not yet committed to buy water from Carmen but it is “keeping its options open.”

Delco said MCWD is concerned about improving its supply but it still has to consider affordability.

The Manila Water Consortium, the original proponent of bulk water supply project, initially proposed a water rate of P24.90 per cubic meter but decided to match its challenger, which offered the water at P13.95 per cubic meter.

The bulk water supply project was first proposed by the Ayala-led consortium to MCWD in 2002 but the negotiations bogged down when the water district did not agree to reimburse the project development costs incurred by the original proponent if it (consortium) was defeated in a price challenge.

Garcia said the Manila Water's unsolicited proposal to the Capitol follows a “transparent” public-private partnership procurement process.