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Thursday, May 18, 2006
After 3 years, MCWD, Ayala sign P2B deal
By Elias O. Baquero
Sun.Star Staff Reporter
The Metropolitan Cebu Water District (MCWD) and the consortium composed of Ayala Corp., Manila Water Company Inc. and Stateland Inc. signed a P2-billion bulk water supply agreement (BWSA) for the delivery of 46,000 cubic meters of potable water to Metro Cebu.
The deal is under a 40-year build-own-operate-transfer arrangement.
However, water will only begin flowing from Carmen town in northern Cebu to MCWD pipes in 2009.
MCWD general manager Armando Paredes said the price of water between 28,000 and 39,000 cubic meters would be P25.55 per cubic meter, at 2007 prices. Water supply above 39,000 up to 46,000 cubic meters would be fixed at P12 per cubic meter.
Therefore, the expected average tariff for treated water is P24.49, subject to adjustment for inflation.
MCWD has yet to peg the rates for its consumers.
Sherisa Nueza of Manila Water said they will make sure that the water they will sell to MCWD will be much lower than the one supplied by other sources.
26 percent
The project is expected to raise MCWD’s current production capacity by about 26 percent.
Paredes said the successful negotiation of the terms of BWSA opens the way for MCWD’s submission of the draft contract to the Investment Coordination Committee of the National Economic and Development Authority (Neda-ICC) for approval.
Afterwards, the project will be subjected to a Swiss challenge or price test to allow other interested investors to bid for the project, ensuring that MCWD gets the most advantageous prices and conditions for the supply arrangement, Paredes said.
Nueza said Neda has listed the project as one of the six priority infrastructure projects of the government.
“We are thankful to be part of project,” Nueza said, adding that the support of Cebu City Mayor Tomas Osmeña and Carmen Mayor Viginio Villamor has helped in the MCWD-Ayala consortium water deal.
The negotiations started in 2003 and it took all parties more than three years to sign the agreement because of several issues, including the cost of the project and how much MCWD will sell the water to the consumers, after buying supply from the Ayala consortium.
MCWD chairman Juan Saul Montecillo said they could not yet peg the rates for consumers because they have yet to lay the water pipeline from Liloan, Cebu to consumers in Metro Cebu.
Up to Liloan
Under the deal, the Ayala consortium will bring the water to the MCWD facility in Liloan.
The Ayala consortium will bring the water from Luyang-Cantumog River in Carmen to Liloan, where a water meter will be installed to determine the amount of supply.
Montecillo said that while the price is subject to adjustment due to some circumstances, it should work both ways.
With the effort to conserve Cebu’s ground water resources, raw water for the project will be primarily sourced from surface water, particularly the Luyang-Cantumog River.
Nueza, for her part, said the consortium promised that they will be conscious of environmental concerns such as the protection of the watershed.
Paredes said the contract between MCWD and Ayala conortium officials will be submitted to Neda for a second pass approval.
After that, the Carmen project will be subjected to the price challenge in which other proponents can contest the price to develop the project by offering a lower price.
Antonino T. Aquino, president of Manila Water, said the Carmen project will have tremendous benefits for Cebu, such as an increase in water connections to around 175,000 Cebuanos. The project will also ease pressure on Cebu’s aquifers and prevent saltwater seepage into the groundwater source.
For Bisaya stories from Cebu. Click here. (May 18, 2006 issue)
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