MCWD: PrimeWater sought total takeover

MCWD: PrimeWater sought total takeover

THE Metropolitan Cebu Water District (MCWD) has insisted that the Manny Villar-owned PrimeWater Infrastructure Corp. wanted to take over its management and day-to-day operations.

MCWD refutes PrimeWater’s claim that it did not aim to privatize the government-owned and -controlled corporation, stating the private company seeks joint-venture partnerships with local government units and water districts to enhance water distribution and supply systems.

“The proposal they presented to MCWD involved a complete transfer of management, operation, billing, and collection of water services, which are the core functions of the water district,” MCWD said in a statement on Tuesday, June 27, 2023.

“During the presentation before the Board of Directors (BOD), their representative specified that the water district would only have five powers/functions: strategic planning, business policy setting, asset management supervision, tariff setting, performance review and monitoring, and customer relations,” it added.

The presentation took place on Feb.17, a day after the meeting held at Mayor Michael Rama’s residence in Barangay Guadalupe.

MCWD said the board expressed concerns to PrimeWater over the legality of its proposal, as most joint ventures do not involve the transfer of management or daily operation and maintenance of the water district.

When asked about the job security of the staff, the PrimeWater representative responded that it was up to the employees to decide whether to stay with the utility firm.

PrimeWater also discussed retirement packages for employees who cannot be absorbed and the potential transfer of employees from the government to the private sector.

On Feb. 22, the BOD and management of MCWD sent a formal rejection letter to PrimeWater, declining their offer for a joint venture.

Based on their findings, MCWD stated that PrimeWater has a poor track record.

“It is important to note that the Commission on Audit has raised concerns about several joint venture agreements entered into by various local water districts with PrimeWater Infrastructure Corp.,” MCWD said

State auditors highlighted the significant revenue loss of the San Jose del Monte City Water District (SJDMCWD) after entering into a joint venture with PrimeWater in 2018.

In 2017, SJDMCWD reported an income of P126.477 million.

However, by the end of 2018, or seven months into the joint venture agreement, the income of the water district dropped by 58 percent to only P53.6 million.

In 2019, it further decreased to P2.265 million, representing a 98 percent decrease compared to the income in 2017, while PrimeWater earned P180 million annually.

In the case of Marilao Water District in Bulacan, the COA’s 2019 report highlighted how PrimeWater incurred a P50.55 million water loss in the district’s first year of operation.

MCWD also added that PrimeWater failed to remit collections and pay franchise tax.

In 2021, the COA questioned the 38 joint ventures signed by various local water districts with PrimeWater, from Aparri, Cagayan in northern Luzon to Zamboanga City in Mindanao.

Government auditors found that these deals did not follow the procedures set by the National Economic and Development Authority for joint venture agreements.

MCWD BOD Chairman Jose Daluz III has cited the board’s refusal to privatize the public utility firm as the reason behind the rift with Rama. The mayor has denied endorsing the conversion of MCWD into a private entity.

City Legal Officer Jerone Castillo recommended on June 15 the removal of Daluz and BOD members Miguelito Pato and Jodelyn May Seno from MCWD.

Castillo pointed to the Sept. 21, 2022 petition for their removal filed by the MCWD Employees Union and its Executive Board before the Office of the Ombudsman, citing the deteriorating income of MCWD and their failure to meet the water needs of the utility’s customers, among other reasons.

He also cited the Feb. 27, 2023 opinion of Government Corporate Counsel Rogelio Quevedo, stating that the MCWD board’s approval of three bulk water supply projects in Mactan, Cebu was “irregular,” detrimental to the government and a violation of the Anti-Graft and Corrupt Practices Act.

Daluz, Pato, and Seno were appointees of the late mayor Edgardo Labella, Rama’s predecessor. (PAC / TPT / PR)

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