Canlas: Bulk supply via surface water (Part 3) | SunStar

Canlas: Bulk supply via surface water (Part 3)

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Canlas: Bulk supply via surface water (Part 3)

Friday, September 15, 2017

THE first two parts of this essay dwells on the salutary effects of tapping Pampanga’s abundant surface water, particularly on the environment, land stability and the long-term sustainability of satisfying the increasing water requirements of its domestic users, e.g., household, industry and agriculture. Of course, in complementation with the current dependence on groundwater. Also briefly mentioned are the needed infrastructural components and the envisaged Public-Private Partnership investment initiative to establish and operate a Bulk Water Supply (Project) in Pampanga.

Already, it is heartening that the Provincial Government of Pampanga (PGP) have received unsolicited proposals from two leading conglomerates, namely: Metro Pacific Water Investments Corporation (Metropac) and Manila Water Philippines Venture (Manila Water) signifying interest to undertake the Project. Let us take a look at the salient points of these proposals.

At the outset, Metropac offers to: (1) solely provide the Php.15.8 Billion estimated total cost of the Project; (2) design, finance, build and operate the entirety of the Project; (3) remit to PGP an annual concession fee equivalent to 1 percent of the Concessionaire’s gross water sales; (4) procure off-take contracts with individual off-takers, e.g., water districts and private operators; (5) submit to regulation by PGP and other concerned government agencies; (6) transfer all assets established/acquired under the Agreement to PGP-after the end of the concession; and (7) deliver 286 million liters per day (MLD) of processed/treated surface water for 2017 to 2026 and 489 MLD for 2027 to 2041.

Thus, under the Metropac proposal, it can be clearly seen that PGP stands to earn much-needed revenue by way of concession fee not to mention the employment opportunities it will generate. Above all, PGP acquires ultimate ownership of the Project and all related assets at the expiration of the concession period. Such favorable terms will redound to the benefit of PGP without risk of any financial exposure in the Project. Metropac’s proposal requires the execution of a Concession Agreement between PGP and the Proponent.

In the case of Manila Water, of its estimated total project cost of P15 billion, it proposes to provide 90 percent thereof or P13.5 billion with PGP supplying the remaining 10 percent or Php.1.5 Billion. Thus, making the Project a Joint Venture enterprise between PGP and Manila Water.

Under this arrangement, PGP stands to earn a maximum annual revenue share of 0.5 percent as Contract Manager of the Joint Venture. Which means that the participation of Manila Water in the Joint Venture is principally focused in providing technical expertise in the construction and operation of the Project and its avowed capital contribution equivalent to 90 percent of the Project’s estimated cost.

As to the main purpose of the Project, Manila Water proposes to deliver 236 MLD for 2018-2027 and 2028 onwards, 467 MLD. This proposal presupposes the execution of a Joint Venture Agreement between PGP and the Proponent, including the organization of the requisite Joint Venture Company. Moreover, a Memorandum of Agreement between PGP and Pampanga’s Water Districts is required. It is noteworthy that at the end of the contract period, all assets will still be owned by the Joint Venture Company not by the Public Partner Provincial Government of Pampanga.

On the other hand, PGP as Public Partner is basically obligated to; secure water rights allocation over the Pampanga River from the National Water and Resources Board; assist in the procurement of right-of-way and other government permits; and monitor and regulate the accredited Concessionaire in carrying out its obligations. Such concerns do not constitute financial obligations except the 10 percent share of PGP in the total estimated cost of the Project as envisioned by Metro Water.

In closing, it is fair to concede the financial and technical competence of the Proponents to undertake the Project. This is indisputable in view of their prestige as corporate giants not to cite their proven track record as Bulk Water Supply Concessionaires in Cebu, Cagayan de Oro and Laguna, to name a few.

The judgment as to which proposal best serve the paramount social and economic well-being of the people of Pampanga rests on the wise discretion of the Provincial Leadership.

Published in the SunStar Pampanga newspaper on September 16, 2017.

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