Tuesday, July 18, 2006
Supplier warns it may cut off water for Lapu-Lapu
By Liberty A. Pinili & Rianne C. Tecson
CEBU CITY -- Residents, resorts and other business establishments in Mactan Island will likely lose their water supply by next month if a supplier of the Metropolitan Cebu Water District (MCWD) makes good its threat to shut down operations.
Mactan Rock Industries Inc. (MRII) president and chief executive officer Antonio Tompar said the firm will stop operating if MCWD makes it pay penalties amounting to over P14 million.
Tompar said if the firm will shut down, almost the entire town of Cordova will have no water while "about 40 percent" of Lapu-Lapu City will also suffer.
"I've already informed Mayor (Arturo) Radaza (Lapu-Lapu City), Mayor (Arleigh) Sitoy (Cordova) and Mayor (Tomas) Osmeña," Tompar told Sun.Star Cebu early afternoon Monday.
"If I will not inform the public (of what I am planning to do), it will have a very big impact. We don't want the public to be caught unprepared," he said, explaining the press conference he set last night at the City Sports Club.
Tompar said MRII will close if MCWD pays it (Mactan Rock) only half of what it is supposed to get from the water district for supplying at least 5,400 cubic meters (cu.m.) of water everyday.
In an interview prior to the press conference, Tompar said he is still open to negotiations with MCWD.
At the press conference, though, he said if the issue is not resolved, MRII will shut down operations between August 7 and 10.
In a separate interview, MCWD general manager Armando Paredes said there is no reason for MRII to cease operations as the water district does not intend, "at this time," to impose penalties for alleged short deliveries by the private water supplier.
"As of now, there is no reason for Mactan Rock to shut down because we have no intention of imposing the penalties," he said, citing a Supreme Court order imposing a status quo on the situation.
MCWD had filed with the Supreme Court a petition asking for a temporary restraining order against the implementation of an order by the Construction Industry Arbitration Commission (CIAC) that directed the water district to pay Mactan Rock foreign exchange recovery costs.
"If they (Mactan Rock) are concerned with public service they should not do that," Paredes said, adding that the effect of cutting off 5,000 cubic meters of water to the daily supply "is no joke."
"It will definitely have an effect. It would (mean) 100 percent (water loss) for Cordova and loss to areas in the vicinity," he said.
To cope, Paredes said MCWD may have to divert supply for its consumers in mainland Cebu to partly serve the needs of those in Mactan Island.
"We will try to minimize the effect," he said.
He said if Mactan pushes ahead with the plan to shut down, even though MCWD will not impose the P14.497-million penalty, the private firm can be cited in default of their supply agreement and the water district can confiscate the company's performance bond.
Those that may be greatly affected are the different hotels and resorts in Mactan.
Vital installations and establishments like the Mactan-Cebu International Airport, Mactan Economic Zones (MEZ) 1 and 2, and Waterfront Airport Hotel and Casino Mactan, however, won't be affected as they have their respective desalination plants.
But in the case of MEZ 2, while it has its own desalination plant, 10 percent of its water supply comes from MCWD.
MCWD produces about 140,000 cu.m. of water a day. Aside from Mactan Rock, it gets a total of 10,000 cu.m. divided equally between two other private suppliers, Foremost and Abejo.
Even with additional supply from all its three suppliers, MCWD's total daily yield still falls short of the projected demand in Metro Cebu, which is around 250,000 a day as estimated by the water district.
Last June 5, the Supreme Court First Division issued a status quo order, which "enjoined" the CIAC, its "officers, agents, representatives, and/or persons acting upon your orders, or in your place or stead" from "implementing the assailed decision" of the arbitration commission dated April 14, 2005.
The Supreme Court states the status quo order is effective "until further orders from this court."
The case stemmed from MCWD's demand in 2001 for Mactan Rock to pay the penalties of alleged delivery shortfall.
According to a fact sheet furnished to the press by Mactan Rock during the press conference, it asked MCWD for a waiver of the penalties alleging then that its failure to the meet the agreed volume had been caused by poor power supply.
On April 15, 2002, Mactan Rock requested MCWD for an increase in the price of water due to the devaluation of the peso and additional power cost adjustment.
On March 15, 2004, Mactan Rock filed a complaint against MCWD with the CIAC. A month later, CIAC issued an order, which was brought by MCWD to the Court of Appeals (CA).
When the CA upheld the CIAC order, MCWD went to the Supreme Court.
Tompar said his plan to shut down came after receiving last June 21 a letter from Paredes. The letter stated that starting this month's billing, MCWD will deduct 50 percent from what it is supposed to pay to Mactan, to pay for short delivery penalties, pegged at P9 per cu.m.
MCWD pays Mactan Rock between an average of P2.7 million and P3 million every month, he said.
The deduction will be imposed until Mactan Rock fully pays the P14.39 million in accumulated penalty from the time it started supplying MCWD in 1999 until the present. Mactan Rock's contract with MCWD ends in 2009.
Tompar said the letter surprised him because he claimed to have come up with an oral compromise agreement with Paredes regarding the matter about a month ago.
"I'm forced to do this (shut down) because it's almost the end of the month," he said.
Permission
Tompar also said he already spoke with Mayors Arturo Radaza of Lapu-Lapu City, Arleigh Sitoy of Cordova town, and Tomas Osmeña of Cebu City regarding his plan.
"I sought their permission as a matter of courtesy," Tompar said, adding that the three local officials assured him they will talk to MCWD officials not to withhold half of the payment due to MRII.
Sitoy told Sun.Star Cebu that he will go to MCWD today and talk with its officials to determine what prompted Tompar to come up with such decision.
Tompar said he will reconsider if MCWD will not push through with the deduction, even without telling him that they did so.
He also said he spoke with MCWD board chairman Juan Saul Montecillo but the latter reportedly told him they can't dip their fingers into the issue because it is the management's responsibility.
He said Montecillo told him that the board recommended paying them but the MCWD management allegedly refused.
Tompar said Monday he is trying to communicate with MCWD officials because he feels the 50 percent deduction is tantamount to termination of contract.
"They're doing it arbitrarily," he told reporters in a press conference. (Sun.Star Cebu)
(July 18, 2006 issue)
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