AN ABOITIZ-LED consortium is now in the “advanced stages” of negotiations with the Metropolitan Cebu Water District (MCWD) to supply desalinated bulk water for Metro Cebu’s growing water needs.
The per cubic meter offer price is expected to be disclosed once the proposal of the Metro Pacific Investments Corp.-Aboitiz InfraCapital Inc. (AIC) consortium reaches the competitive challenge stage.
“The project is still in the advanced stages of negotiation with the water district,” Jay Fernandez, assistant vice president for business development at AIC’s parent firm Aboitiz Equity Ventures, told SunStar Cebu after a company briefing Tuesday, Sept. 24, 2019. “Once our proposal reaches the competitive challenge stage, pertinent project details will be disclosed to allow other bidders to participate and submit a competing offer.”
“Rest assured, our offer price will be competitively set; tariff rates to the consumer will be determined by the water district based, in all likelihood, on a combination of both current and future water sources,” the official said.
The consortium submitted an unsolicited proposal to supply the MCWD with 100 million liters per day (MLD) of bulk water from a desalination plant it plans to build in Lapu-Lapu City, Cebu.
Cosette Canilao, chief operating officer of the Aboitiz Group’s infrastructure arm, said the project will be up for a Swiss challenge to allow other potential bidders to contest the consortium’s proposal.
“There will be other tenders that will challenge our price. That will be good for MCWD,” Canilao said, commenting on the latest call of Cebu City Mayor Edgardo Labella to MCWD to stop proceeding any further with the transaction after learning that the consortium reportedly offered a price triple the current price per cubic meter of the MCWD.
The MCWD currently buys water for P32 per cubic meter from a private water supplier.
“We have a framework already,” Canilao said of the pricing, adding that she already discussed their proposal with the mayor.
The mayor has also asked the MCWD for an update on the negotiations, particularly on the proposed price per cubic meter, as well as the status of the proposal.
“This proposed large-scale desalination project is a welcome initiative and will substantially augment Metro Cebu’s limited bulk water supply options,” Canilao said.
A desalination plant converts seawater to potable water.
The company estimates that Cebu’s water supply deficit could reach 178 MLD by 2020.
Last June, MCWD declared that demand for water in Metro Cebu had already outstripped supply by nearly half.
The combined effects of deteriorating groundwater sources, limited surface water availability and the adverse effects of global climate change continue to exacerbate Cebu’s water supply situation. Also adding to the pressure are the expanding population and growing economic activity in Cebu.
The consortium’s proposal, expected to benefit around 88,000 households or roughly 440,000 individuals, will substantially narrow down Metro Cebu’s forecast 2025 supply-demand gap from 294 MLD to 194 MLD.
“Our proposal will directly address the current and growing requirements of MCWD’s customers by providing an innovative, timely and sustainable solution to the massive water needs of present and future Cebuanos,” Canilao said.
Labella has already directed the joint venture selection committee to evaluate the consortium’s proposal and to submit a recommendation.
Meanwhile, MCWD Board chairman Joel Mari Yu said they have no problem with Labella’s order to stop talks with the consortium because the board has found four unacceptable provisions in the proposal, including the P80 plus VAT (value-added tax) price per cubic meter.
The MCWD Board, through a statement, also expressed its apologies to the affected consumers in Cebu City but thanked the City Council for bringing the public’s attention to the water supply issue.
“Our politicians are the best communicators in our society because when they speak, everybody listens. They are MCWD’s worthy partners in solving this water supply shortage,” it said.
It said the water supply shortage in Metro Cebu has been going on for 20 years due to population growth and the fast economic development and the MCWD had been working nonstop to close the supply-demand gap but was faced with depletion and the saltwater and nitrate contamination of water sources.
It said it lost over 20,000 cubic meters per day in the last 45 days due to saltwater intrusion, the lowering of groundwater levels and the lingering effects of the El Niño phenomenon at this time of the year when Cebuanos already expected “normal” water supply conditions.
The times have changed so much. Even the Cebu City Government has not yet lifted the state of calamity declaration due to the dry spell and it is already almost October, the MCWD Board pointed out.
As the policy-making body of the water district for the last two years, the MCWD Board has pursued the development of two major sources—the Mananga Dam and desalinated water for Mactan—which has not been done before.
Efforts to increase supply were spent on desalinated water initiatives from several proponents and finalizing the Terms of Reference for the Mananga Dam. But these projects will each take three and six years approximately.
Short-term solutions were focused on increasing supply from private partners in Carmen, Lapu-Lapu City and Mambaling. The MCWD Board also pushed for the survey of available government-owned lots for well drilling. It holds meetings outside the boardroom to check on projects, like the Danao Bulk Supply Project, to monitor its status.
MCWD already presented to the City Council last Sept. 3 its plans and programs and proposed joint efforts in regulating groundwater extraction. It also asked the City Government to support its short- and long-term solutions to the supply shortage and a public information campaign on water conservation. PR, With reports from JJL, MVI