Friday, October 06, 2006 It won’t be in contract on Carmen water project: MCWD By Linette C. Ramos Sun.Star Staff Reporter
AYALA Corp.’s claim for a P150-million project development cost refund will not be included in the contract and terms of reference for the Carmen Bulk Water Supply Project, MCWD officials assured.
The Metropolitan Cebu Water District (MCWD) Board told the National Economic and Development Authority (Neda) yesterday that they never agreed to the refund of the project development cost since negotiations for the project started.
What they will agree to, they said, is a refund of the expenses the Ayala-led consortium incurred in securing the water permit and the cost of transferring it to the winning challenger, if there is any.
In a phone interview, MCWD General Manager Armando Paredes said he and a board member clarified with the Investments Coordination Committee (ICC) of Neda the coverage of the reimbursement.
During their meeting with the Neda ICC technical working group yesterday, they also clarified that the Swiss challenge will not be done on the specific area in the Luyang-Cantumog River in Carmen town in northern Cebu covered by the water permit of Ayala.
Open source
This means that the challengers can bid for water supply sourced from any area of the river, and not specifically on the area that Ayala has exclusive rights to.
“Ayala was proposing to include the refund in the terms of reference but there was no commitment on our part on that. It was never included in the terms of reference because the documents still has to be prepared,” Paredes said.
Sun.Star Cebu called representatives of Ayala Corp. but they declined from commenting on MCWD’s statements during the ICC meeting yesterday.
Last Monday, consortium officials said they will be asking for a refund of the P146 million to P156 million they have spent developing the river in the past 10 years.
Capitol consultant Pablo John Garcia said they were surprised by MCWD’s pronouncement, but they welcomed it just the same.
“We were surprised by the turnaround of MCWD but it’s a very positive development. It’s short of saying that it’s a victory for the MCWD consumers.
The consumers will benefit from this because the challengers can be assured of a level playing field, then we will be able to get the best price of water,” he said in a phone interview.
Pressure
He further said that MCWD may have found their legal position to be weak, or has yielded to public pressure to review the unsolicited proposal on the Carmen water project.
Garcia, Cebu City Mayor Tomas Osmeńa, MCWD officials and International Finance Corp. (IFC) representatives also attended the meeting yesterday.
Paredes said they did not clarify matters until yesterday because they were still waiting for the National Water Regulatory Board (NWRB) to come up with a position on the validity of Ayala’s permit.
They were also waiting for possible challengers to come out to say they will use the technical, environmental impact and hydrology studies conducted by the consortium.
Besides, the project development cost was “not accurately and clearly defined” by the Ayala consortium during the negotiation with MCWD and IFC, Paredes said.
“We decided we will not include the provision on the project development cost refund in the terms of reference because NWRB is said to have stated that they will revoke Ayala’s water permit if it loses in the bidding,” he said.
‘Comedy’
“Now we are assuming that none of the challengers will use Ayala’s studies so on those two assumptions, I don’t think there’s any basis to collect the development cost,” Paredes continued.
In another interview, MCWD board member Joy Augustus Young said they never agreed to the proviso on the project development cost reimbursement.
When asked why they are clarifying the issues raised only at this time, he said the MCWD still had to review all resolutions and minutes of the board meetings to make sure they did not endorse the proviso being questioned.
“I think what happened is we mixed up the water permit fee and project development cost because what we meant by the refund is the expenses for the water permit... All these is a comedy of errors but we cannot avoid it, mistakes can happen,” he said.
IFC consultant Lulu Baclagon said they have always made it clear that the reimbursement that will be included in the terms of reference is that of the water permit cost.
She added that Ayala has proposed it, but the IFC, as consultant to MCWD, did not agree to it.
Condition
In an interview yesterday, NWRB Executive Director Ramon Alikpala said they will pass today a board resolution stating that Ayala consortium’s water permit will be revoked if it fails to supply water to MCWD.
He added that in the event that Ayala fails to strike a deal with MCWD, either because they cannot agree on the contract or Ayala loses in the bidding, “then we will be compelled to revoke the permit because the original intent for which the permit was issued is no longer there.”
The consortium applied for a water permit for a specific area in the Luyang-Cantumog River where it proposes to source the water it will supply to MCWD.
