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Thursday, October 05, 2006
Cebu Council assails foreign consultancy's role
By Linette C. Ramos
CEBU CITY -- Despite fears of offending the World Bank Group, one of the country's largest financing partners, the Cebu City Council approved a resolution questioning the consultancy services the International Finance Corp. (IFC) is providing Metropolitan Cebu Water District (MCWD).
On mass motion Wednesday, the City Council pushed for MCWD to correct the situation by holding an open bidding on water supply instead of a Swiss challenge on the P2-billion Carmen Bulk Water Supply Project proposed by the Ayala Corp.-led consortium.
They also asked the MCWD Board to exercise transparency in the project and to inform the council of any resolution it will pass relating to the issue.
The council said they are bothered by allegations of a conflict of interest on the part of the project consultants. It asked the National Economic and Development Authority (Neda) Board to consider its opinion on the matter.
In a privilege motion Wednesday, Councilor Sylvan Jakosalem expressed the council's "disappointment and dismay" that even with the issue of a possible conflict of interest, the IFC continues to advise the MCWD on the project.
IFC, the private sector arm of the World Bank, was hired by the Build-Operate-Transfer (BOT) Center to provide consultancy services to MCWD on the negotiations with Ayala Corp.
IFC also has an eight percent stake with the Ayala-owned Manila Water Company Inc. (MWCI), which will run the water project based in Carmen town in northern Cebu.
Jakosalem pointed out that before contracts for the consultancy were signed, MCWD, MWCI and IFC's country manager were already concerned with the possibility of the issue of conflict of interest.
"So now we can only ask ourselves, them knowing so, why did they let it start and even continue? How can anybody, regardless of their IQ level, entertain the idea that there is no conflict of interest knowing all these facts we have mentioned?" Jakosalem said.
The council said the issue on the perceived conflict of interest has to be settled, as it is relevant to the integrity and fairness of the unsolicited proposal of the Ayala consortium.
During the session, some councilors also asked to be briefed on the roles of the IFC, the Ayala Consortium, MWCI and MCWD in the project.
Councilor Gerardo Carillo said that during the public hearing on the issue last Monday, the IFC consultants seemed to have been speaking for Ayala, and not MCWD.
"Why is IFC acting as if it was defending the project? This creates some kind of a bias of the consultants towards a project being endorsed," he said.
Although the resolutions were approved on mass motion, Councilor Gabriel Leyson expressed his apprehension that the IFC and the World Bank might be offended by the council's statements.
"I'm just worried that IFC being a part of the World Bank, we're making a resolution that we will send to IFC and later on we might offend one of the Philippines' two major financing partners. We may be giving them the wrong signals when in fact, only MCWD knows the real score of the issue," he said.
Leyson said the council's concerns should be addressed primarily to MCWD since it will be the one to approve and implement the project.
But for Vice Mayor Michael Rama, the council is not fighting the World Bank.
"We are only being very clear on our pronouncements. We have no intention to hit the World Bank or quarrel with them... We are just saying that it is important for MCWD to clarify which side they are in? Should MCWD be defending Ayala? That should be settled," he said.
Rama wondered why MCWD Chairman Juan Saul Montecillo and representatives of MWCI defended the IFC on the issue on a possible conflict of interest.
MWCI project director Ben Velasco said the IFC's investment in the water company amounting to P750 million and the P1.5 billion in loans will fund MCWI's East concession services, and not the Carmen water project.
But Jakosalem refuted this yesterday, quoting MWCI President Antonio Aquino's statement in a report posted on the IFC website sometime in 2004.
"IFC's equity infusion supports our strategic thrust towards business expansion, not only within our original concession area, but also beyond. The company is presently looking at potential water and wastewater investments in other areas of the Philippines," he quoted Aquino as saying in the report.
In the resolution approved Wednesday, the council asked the Neda-Investments Coordination Committee (ICC) to consider the facts and opinion raised during the public hearing.
Copies of the resolutions, the minutes and transcript of the hearing will be submitted to President Arroyo, Neda ICC and the MCWD Board. (Sun.Star Cebu)
(October 5, 2006 issue)
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