Espinoza: The confused MCWD incurs huge losses

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Espinoza Free Zone
Espinoza Free Zone

The Local Water Utilities Administration (LWUA) has intervened and taken over the Metropolitan Cebu Water District (MCWD) Board on Friday, March 15, 2024, based on Resolution 35, Series of 2023 in accordance with Presidential Decree 198, as amended, that the Board of Trustees of LWUA approved last Sept. 28, 2023 the “partial intervention,” but it was not implemented by the previous board.

Jose Moises Salonga, the new LWUA administrator appointed by President Ferdinand Marcos Jr. in place of then administrator Homer Revil, sent the letter of takeover to MCWD Board chairman Joey Daluz and general manager Edgar Donoso.

Administrator Salonga signed the March 15 order directing the incumbent MCWD directors, including the appointees of Cebu City Mayor Michael Rama, to “cease and desist” from their functions to give way to the interim directors Maria Rosan Perez and engineers Noel Samonte and Annabelle Gravador.

While LWUA’s “partial intervention” of removing the chairman and the other members of the board from their respective posts looks like the answer to the clamor of Mayor Rama to remove the Daluz-led board, the mayor was unhappy because his appointees were also booted out.

And while Daluz said he would abide by the order of LWUA for the best interest of MCWD, general manager Donoso wrote Administrator Salonga on Monday, March 18, 2024, in a way asking him not to take over the MCWD board until the Office of the Government Corporate Counsel (OGCC) shall have given its opinion to their letter questioning Salonga’s appointment of the interim board to take over the policy-making body for the next six months.

Donoso’s letter, supported by the different employees’ associations of MCWD, was a sly way of delaying the implementation of Resolution 35 for the interim board to take over MCWD’s policy-making body. Could the letter hold water? Your answer is as good as mine.

Donoso said pending the OGCC’s response, they would recognize the board led by Daluz to ensure a “continuous and unhampered delivery of public service.”

Donoso’s letter to Salonga in part states: “In view of this, and for the time being, we therefore cannot yet acknowledge LWUA’s authority on this intervention/takeover and appointment of an interim board of directors.”

In his “Explainer,” lawyer Pachico Seares analyzed and explained that Resolution 35 was not the quarrel over the firing and hiring of members of the MCWD board as the very reason for LWUA’s “partial intervention.”

What prompted the LWUA’s intervention was the state of “default” declared against borrower MCWD. On Aug. 11, 2015, MCWD signed a “financial assistance contract” with LWUA over a P33 million loan-grant. Fifty percent or P16.5 million is a loan while the other half, also P16.5 million, is a grant.

The financial assistance contract (FAC) covers not only the failure to pay the amortization to constitute default. It also includes “failure to perform, or its violation of any term, covenant, promise or condition of the FAC, or any rule, regulation, or standard promulgated by LWUA.” Amid its high non-revenue water, MCWD incurred an annual loss of revenue by an average of P117.759 million a year, steadily increasing: from 25.26 percent in 2020; 29.04 percent in 2021; to 32.67 percent in 2022.

And, who was it who said that MCWD is making millions or billions in income? Someone must have been confused with the right figure.


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