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Friday, August 25, 2006
Tomas asks Neda: Reconsider deal
By Linette C. Ramos
Sun.Star Staff Reporter
For the second time in four days, Cebu City Mayor Tomas Osmeña will fly to Manila again today to ask the National Economic and Development Authority (Neda) to reconsider the contract for the Carmen Bulk Water Supply Project.
This time, the mayor will be meeting with the technical staff of the Neda central office tasked to review the contract.
He scheduled the meeting this morning despite the letter from Metropolitan Cebu Water District (MCWD) board chairman Juan Saul Montecillo, who answered all the complaints the mayor raised against the water project.
Osmeña said he wants to know how Neda will justify the provision requiring the winning bidder to refund the Ayala Corp.-Stateland Corp. consortium its P200-million project development cost.
The mayor objected to it, as well as other provisions of the contract.
But Montecillo said the project development cost of the consortium will amount to only P110 million, and not P200 million as stated by the mayor.
“I just want to know how they will defend this provision that Ayala will be refunded the project development cost incurred in an unsolicited proposal. They were not even asked to make that proposal,” Osmeña told reporters yesterday.
Although Montecillo was his former city administrator and his appointee to the MCWD board, Osmeña said the board chairman is not his puppet and can still work on the project he is opposing.
In an Aug. 22 letter addressed to Neda Secretary Romulo Neri and the mayor, Montecillo explained that the project development cost is based on the Ayala-Stateland Consortium’s right to receive compensation for the voluntary transfer of the water rights to the winning bidder.
“The original proponent has basis to seek compensation because it has been trying to develop the water source for the past 10 years and, as a result, has incurred legitimate expenses related to its development activities,” he said.
The activities include discovering the water source, determining the feasibility of the project, undertaking, economic, hydrology and environmental impact studies and coming up with technical designs.
Montecillo said the compensation to a water permit holder, in this case the Ayala-Stateland Consortium, is provided for in the Water Code of the Philippines.
He said, though, that the amount could be less than what was originally proposed.
“The P195 million figure was a ceiling signified by the original proponent (Ayala) during the negotiation. However, the actual amount will most likely be around P110 million. This will represent the development costs incurred by the original proponent up to the bid submission date,” Montecillo said in his letter.
He also answered Osmeña’s allegations that the water Ayala is proposing to supply is overpriced.
Ayala is proposing to sell water to MCWD at P25.55 per cubic meter, or P7 more than that of its other suppliers.
He said that unlike other MCWD suppliers like Foremost and Mactan Rock who rely on groundwater resources, the Consortium will source its water from the Luyang-Cantumog River in Carmen town.
“The development of surface water sources generally entails larger costs and investments. In the case of the Carmen project, the tariff that MCWD will pay the seller includes investments to maintain the river catchment area, ensuring any environmental impact is mitigated,” Montecillo explained.
Osmeña earlier asked Neda to reject the water deal because it will result to the bankruptcy of MCWD and will have the urban poor suffer because of increase in water prices.
MCWD and the Ayala-Stateland Consortium already concluded the negotiations and have signed the contract, which is now with the Investment Coordination Committee (ICC) of Neda for review.
The ICC is reviewing the details of the water supply project before approving both the contract and the project.
After the ICC approves it and issues the “second-pass, no objection clearance,” MCWD will then finalize the terms of reference of the project, including the approved contract.
MCWD will then publish for three consecutive weeks an invitation for competitive proposals then a pre-bidding conference will be conducted.
For Bisaya stories from Cebu. Click here. (August 25, 2006 issue)
Write letter to the editor.Click here.
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