Saturday, October 07, 2006 Supplier assures cheaper water By Linette C. Ramos Sun.Star Staff Reporter
WITHOUT the project development cost reimbursement for the Carmen water project, local water suppliers will now be able to sell water to Cebuanos at a lesser cost, “a price that Ayala Corp. will not be able to match.”
Mactan Rock Industries Inc. president Antonio Tompar said they don’t have to pay the Ayala-led consortium some P150 million in project development cost since they don’t intend to use any of the studies conducted by the consortium.
“Definitely, the price will really be competitive because the P200 million that we have to add to our price is no longer there. This would mean cheaper water for the Cebuanos,” he told Sun.Star Cebu yesterday.
Tompar declined from disclosing the bid he will submit during the Swiss challenge on the P2-billion Carmen Bulk Water Supply Project, but he said it will be much lower than the consortium’s P25.55 price per cubic meter of water.
“I will not disclose that yet but it’s an amount the Cebuanos can afford. Something that Ayala cannot really match,” he said.
Instead of Ayala’s technical, economic, environmental impact and hydrology studies, Tompar’s group will use those of the Department of Environment and Natural Resources and the University of San Carlos Water Resource Center.
Aside from a lower price, Mactan Rock and its financing partner the Lhuillier Group will also implement the project several months ahead of the Ayala consortium, if Tompar’s group wins in the bidding.
In their unsolicited proposal, the Ayala consortium is proposing to sell 40,000 cubic meters of water a day to Metropolitan Cebu Water District (MCWD) by July 2009.
Sun.Star Cebu called up Ayala consortium representatives yesterday but they said they will refrain from commenting on the developments on the project until the consortium is able to discuss them.
Challenge
Under the contract for the project, the proposal of the consortium will be subject to a Swiss challenge where other water suppliers will compete with the consortium’s price.
The consortium, however, can still get the project if it loses in the bidding, provided that it matches the lowest bid submitted.
The proponent is seeking a project development cost refund from the winning challenger amounting to P146 million to P156 million if they (the consortium) decide not to match it.
But MCWD officials already said they will not agree to it and will not include it in the terms of reference of the project.
In a phone interview yesterday, MCWD Board Chairman Juan Saul Montecillo clarified that challengers of the project will also not be required to reimburse the original proponent any consultancy services fee.
Success fee
He said the bulk of the consultancy fee of the International Finance Corp. (IFC) amounting to US$800,000 or P40 million will be shouldered by the Build-Operate-Transfer (BOT) Center through a grant.
Of the amount, only P2 million will be shouldered by MCWD.
“That success fee was also proposed to be reimbursed by the winning challenger but we also did not include that in the contract because we said we will assume the cost. That’s a standard in advisory fees when the project is successful,” Montecillo explained.
As of yesterday, it was not clear yet how the exclusion of the project development cost reimbursement will affect the unsolicited proposal of the consortium.
But if Ayala decides to withdraw their proposal, Montecillo said there will be a shift in the procurement mode, from unsolicited proposal to a solicited proposal.
MCWD will apply for water rights over a portion of the Luyang-Cantumog River in Carmen town and conduct an open bidding on the water supply.
Control
In this case, he added, MCWD will be the party that will decide on the terms of reference and other contract provisions.
In an interview yesterday, Tompar thanked Cebu City Mayor Tomas Osmeña and the City Council for making public their objections to certain components of Ayala’s unsolicited proposal.
At City Hall, Osmeña said he does not care if the IFC and the World Bank are offended by the statements he and the council made against the international consultancy and funding agencies.
His concern, he said, is that Cebuanos get the cheapest water available.
For their part, Capitol officials hope that the deletion of Ayala Corp.’s claim for a P150-million project development refund from the terms of reference for the project “will be the end of this whole fiasco.”
Capitol consultant Pablo John Garcia said he is confident that the MCWD will “live up to its word” and delete the controversial provision.
With the recent development, more firms will be interested to join in the price challenge, he said. (LCR/With MBG)
