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Saturday, September 27, 2003
Deal ‘benefits’ MCWD
By Elias O. Baquero
Sun.Star Staff Reporter
THE top man at the Metropolitan Cebu Water District (MCWD) defended yesterday its bulk water supply contracts with three companies, saying these will save MCWD a lot of money.
In his letter to the MCWD Employees Union (MEU), MCWD Chairman Ruben D. Almendras said the contracts were awarded to Foremost, Abejo Builders and Mactan Rock through a public bidding whose details were published in newspapers.
If it got the water from Minglanilla itself, MCWD would spend P25.03 per cubic meter (also known as the computed avoided cost), an amount that was purposely not disclosed to the bidders.
“This is equivalent to the agency estimate for construction projects. So, buying water from Minglanilla at P19 per cubic meter is advantageous to MCWD, especially due to the shortage of supply, which we estimate presently at 35,000 cubic meter a day,” Almendras said.
He assured that the contracts will not lead to a rate increase that consumers would have to bear.
Besides, the bulk water supply contracts are supported by a legal opinion of the Office of the Government Corporate Counsel (OGCC), Almendras added.
The OGCC earlier answered an inquiry of General Manager Dulce Abanilla on whether MCWD can enter into another contract with Mactan Rock Industries Inc.
Mactan Rock has an existing contract to supply water to MCWD for Mactan Island at P19 per cubic meter. But it failed to get a contract in the South Water Supply Project in Minglanilla town, where they offered to sell at P13.85 per cubic meter.
Here’s why: the Minglanilla Municipal Council refused to grant Mactan Rock a permit to drill, as it had given such a permit to Foremost. (See related story)
Cost savings
MEU president Victor Chiong wrote Abanilla last Sept. 10 to demand the withdrawal of the Foremost contract, which the union described as “grossly disadvantageous” to the government and Cebuano consumers.
Some MCWD employees, who visited Sun.Star, said it is true that MCWD will spend P25.03 per cubic meter if it gets the water itself, but that the cost is good only for the first year of operation.
They said that since MCWD will buy equipment and install it only once, the production cost of P25.03 per cubic meter in Minglanilla will go down every year until it drops to P9.90, MCWD’s present production cost.
MCWD’s 2002 annual report listed a total of P511,952,997 in operating and maintenance expenses and a total water production of 51.699 million cubic meters.
Almendras said a cost of P19 per cubic meter of Minglanilla’s water—paid to a private supplier—is advantageous to MCWD, which would have to spend a lot more if it had to deal directly with the local government itself.
Given the additional volume from these sources, about seven percent of MCWD’s present volume, the increase in the average cost of MCWD’s water is negligible, and is more than covered by the additional revenues from service connections, Almendras added.
No increase
On an “incremental revenue versus incremental cost” basis, these contracts will be favorable and profitable for MCWD.
“This will not require a water rate increase for MCWD, while the goodwill it will generate from MCWD consumers is not quantifiable,” Almendras said.
Almendras, speaking at the Cebu City Development Council last Sept. 12, said that MCWD will conduct a series of public hearings next month to tackle water rates.
Meanwhile, former MCWD assistant general manager Adoracion Rodil denied that she is working with Helpmate Inc., a partner of Foremost.
Rodil said she can only remember that she was offered by Talisay City Mayor Eduardo Gullas to be the city’s consultant, at P1 a year, shortly before she retired from the service last January.
“I am busy with my business of subcontracting to exporters. But the Talisay City Government can avail itself of my services if they want, for the good of the service,” Rodil said.
(September 27, 2003 issue)
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