Thursday, September 11, 2008 Coop bid for COWD kicks off By Cong B. Corrales
UPPING the ante, a consortium of local cooperatives, under the umbrella of the regional cooperative development council (RCDC-10), will officially offer a bid to take over the beleaguered Cagayan de Oro Water District (COWD) next week.
With an initial pot money of P106.8 million, the consortium of cooperatives are confident the city government will seriously consider their bid to take over the water facility.
In a close-door meeting of RCDC-10 Wednesday, the consortium of cooperatives, led by billionaire cooperative--First Community Cooperative (FICCO), sat down to assess their financial edge over other interested bidders of the cash-strapped water facility. This coop-investors meeting was slated last August 29 but was postponed to Wednesday.
Sweetening the pot, the consortium offers to reimburse, up front, the city government of its donated capital of P41.5 million.
Orlando Ravanera, RCDC vice chair, said that should the city government consider the offer, the water facility must release all their latest financial statements and other pertinent documents.
"Parallel to the passing of the official bid of the consortium, we will mass-up our cooperative members in city hall next week," Ravanera said in the meeting.
For his part, Proculo Sarmen, Chairman of FICCO and chair of RCDC's ways and means committee, assured that once taken over no personnel will be dislocated.
Ravanera scheduled another meeting with other stakeholders on October 1 this year in order to raise the viability of their bid even higher.
"I am not trying to intimidate others here but FICCO can raise the money kitty by ourselves but we want other cooperatives to join in taking over the facility," said Isagani Daba, vice chairman of FICCO and executive director of CLIMBS.
Daba added: "If the disbursements of COWD that was questioned by the Commission on Audit (COA) in 2005 are restored, the profitability rate of the facility would increase to 42 percent. By applying the cooperative values in the operation of the facility, we could even lower the water bill.
If the city government decides to let the consortium of cooperatives take over and pay capital per books, the consortium will undertake a capital build-up scheme based on the 70,000 concessionaires of the water facility.
Under the capital build-up scheme, customers belonging to bracket D and E which composes 60 percent of the total number of the customers with only P25 monthly contribution can generate an annual contribution of P12.6 million.
Those belonging to bracket C, composes 20 percent of the total number of the customers with monthly contributions of P50 can generate P8.4 million, while those belonging to bracket B which composes 12 percent with monthly contributions of P100 will generate an annual contribution of P10.08 million.
Customers belonging to bracket A, which composes 6 percent with a monthly contribution of P500 can generate P25.2 million yearly.
Institution-customers, comprising 2 percent of the total number of customers, with a monthly contribution of P2,500 can generate P42 million yearly.
In ten years, with a collective capital build-up of P884.520, the consortium is confident it can pay the water district's woes with the Bureau of Internal Revenue (BIR) tax assessments of P341 million.
On the legal aspect of the takeover, the consortium has taken cognizance the Presidential Decree PD 198 of May 25, 1973, declaring national policy for local operation and control of water systems; authorizing the formation of local water districts and providing for the government and administration of such water districts.
The decree also allows the national administration to facilitate in the improvement of local water utilities.
Under this law, Ravanera said the city mayor, with the support of the city council weld the power to decide on the takeover bid of the consortium of cooperatives.
The cooperatives that have pledged to invest in the money kitty are: COOP-NATCCO network of cooperatives, CRB-Misamis Oriental, Del Monte Philippines Inc.-group of cooperatives (DMPI), Nestl‚ Employees Cooperative, ORI Integrated, Xavier University-group of cooperatives, CISP, Masspecc, COA-PIMUPCO, Oro Savings PFCCO, CLIMBS and all government employees cooperatives.
FICCO who will lead the consortium has a standing asset of P2.7 billion. The rest of the investors are considered the most successful cooperatives whose combined assets also run to millions of pesos.
The COWD has been suffering financially prompting the Bureau of Internal Revenue to garnish its assets in the banks when it failed to pay its unpaid taxes for several years. The COWD has appealed the decision.
Dr. Anselmo Mercado, president of the Cooperative Business Institute and head of RCDC-X's technical working group on COWD, said they are confident they can turn around the financial condition of the water district.
