Naga signs P200M deal to improve water system-A A +A
Monday, September 17, 2012
THE Naga City Government has signed a P200-million, 20-year joint venture agreement with Abejo Water Corp. to improve its water system so it can serve all its 110,000 residents.
The present water system owned and operated by the City Government is serving only four barangays and the water supply is “on and off”.
Naga City Mayor Valdemar “Val” Chiong said the joint venture agreement will be under the Naga City Water System (NCWS) under the concept of a public-private partnership (PPP).
The joint venture was signed three weeks ago by Chiong on behalf of the City Government and Gabino “Borgy” Abejo, the president of Abejo Water Corp. Abejo is tasked to register NCWS with the Securities and Exchange Commission (SEC).
Chiong said that in relation to the water system, the City Government hired consultants and experts who are now preparing a master plan, which will be completed in the next three months.
Once completed, the master plan will be forwarded to the City Council for review.
Once the city legislative body will find it to be in order, it will issue an authority to Chiong to sign the contract with Abejo Water to manage and operate NCWS.
NCWS will pay the City Government the cost of the master plan.
“Of course, there will be a protection clause in the contract such as any increase in water rates by NCWS shall be approved by the City Council. We are hopeful that NCWS can start the project by December this year,” Chiong said.
Of the P200 million investment in NCWS, P20 million or 10 percent of shares shall be owned by the Naga City Government.
The City Government’s share include the old water system equipment which was valued at P7 million.
During the 20-year joint venture contract, NCWS will pay the City Government a royalty fee in the amount of P0.25 per cubic meter of water plus monthly dividends of its P20 million shares based on profit.
Chiong said that before the signing of the joint venture agreement, they consulted with the 300 existing water consumers and the majority agreed and are happy because this will improve the water system.
Under the joint venture agreement, Abejo will invest P50 million in the first year, and P130 million in the second year or a total of P180 million.
Published in the Sun.Star Cebu newspaper on September 17, 2012.