DESPITE the governor’s statement that negotiations with Manila Water Consortium Inc. (MWCI) are off the table, the firm said it will reach out to Capitol to resolve differences over the Carmen Bulk Water Supply agreement.
MWCI stood pat on its claim that it had performed with “tact and due diligence” while under contract with the Cebu Provincial Government.
In a press statement dated Dec. 15, 2019, MWCI president and chairman of the Board Virgilio Rivera said that while the termination of the JIA between MCWI and the Capitol had been “unfortunate” they will reach out to the latter to arrive at a win-win solution.
“We acted and continue to act in good faith. We trust that the difference in points of view will be resolved... We continue to adhere to the rule of law in light of the challenging political environment. Our objective is to continue to serve the Cebuanos and further expand to provide more Cebuanos access to sustainable water supply,” he said.
The pronouncement came after the Province issued a notice of termination to MWCI on Wednesday, Dec. 11, 2019, for failing to cure its alleged breach of contract in the joint investment agreement (JIA).
On March 21, 2012, during Garcia’s earlier stint as governor, the Capitol entered into a JIA with Manila Water to manage the bulk water supply.
It had a 49-51 percent profit-sharing scheme in favor of the private partner.
The JIA led to the creation of Cebu Manila Water Development, Inc. (CMWD), a joint investment company that handled the construction and development of water supply facilities that would deliver treated bulk water.
The JIA provided an option to engage in retail supply in certain areas and to some areas in the province by tapping the surface water of the Luyang River in Carmen town.
Rivera said under Section 2.4 of the JIA, the CMWD Board made a capital call to meet the needed additional capital expenditure (capex) and properly notified all investors, including the Province.
“PGC (Provincial Government of Cebu) opted out along with venture partner Metro Pacific Investment Corp. Manila Water Company and the other venture partner VicSal Development Corp. put in the needed funds,” the statement read.
Rivera said the Capitol’s decision not to participate in the increase of capex was expressed in Provincial Board (PB) Resolution 1354-2015.
The resolution, which was approved on June 1, 2015, was filed by then PB member Peter John Calderon.
Rivera pointed out that Calderon was also one of two representatives of the Province in the CMWD Board at that time.
“The provincial legislature approved unanimously that PGC would waive its right to subscribe to additional shares in CMWD ‘due to lack of disposable funds’,” he said.
Aside from reportedly not remitting receivables to the Province, MWCI also allegedly increased the approved tariff rate of P13.95 per cubic meter (cu. m.) to P24.59 per cu. m.
The other three violations include allegations over the increase in the project cost or capex from P702 million to P1,003,000,000, and the decrease in project internal rate of return from 19.23 percent to 12.30 percent.
The earned revenues were also reportedly plowed back to the capex of the joint investment company.
These alleged serious and material breaches, which involved the essence of the project, were reportedly not approved and authorized by the JIA parties.
Likewise, the board of directors reportedly did not pass any resolution approving and authorizing the same. (RTF)