This was the response of Cebu City Mayor Michael Rama to the allegations by some members of the board of directors of Metropolitan Cebu Water District (MCWD) that he was endorsing a Villar-owned company to privatize the water district.
“With respect to Villar’s proposal, there is no privatization,” Rama told SunStar Cebu on Tuesday, June 20, 2023.
Cebu City Legal Officer Jerone Castillo, in a separate interview, said the board members should just answer the allegations raised in the petition filed by the MCWD Employees Union before the Visayas Ombudsman last September which stated corruption issues instead of talking about privatization.
The conflict between Cebu City Hall and the MCWD board members, led by chairman Jose Daluz III, has begun to affect the water district’s operations, Daluz claimed on Tuesday as he scored City Hall for using “water terrorism” in its bid to remove him from the government-owned and –controlled water utility.
The petitioners from the MCWD Employees Union asked for the removal of three board members—chairman Daluz and directors Miguelito Pato and Jodelyn May Seno—alleging that their actions had been detrimental to government and public service.
Among the union’s allegations were the board members’ failure to address the water demand of consumers, interference in the personnel selection process and irregularities in some joint venture deals.
“They are trying to shift to something that is not the focus. On the part of the investigating body, we stick to issues at hand,” said Castillo.
Daluz said the City Government is not just trying to find ways to remove him as MCWD chair, but the goal of Mayor Rama is the privatization of MCWD, which he had refused.
Daluz said he was against the wholesale privatization of any basic utility because there is a risk that the private owners may prioritize profit over ensuring universal access to clean and affordable water, and there is a lack of accountability and loss of public control as a result of privatization.
Daluz said the conflict with Cebu City Hall had already raised concern among some water suppliers of the water district and will eventually result in the delay in the implementation of some projects.
He cited as an example a project to supply water to Barangay Mambaling that is targeted to be completed in October, which has been hampered after City Hall revoked the extraction permit it previously issued to MCWD.
In an interview with SunStar Cebu Tuesday, Daluz described Rama’s moves as “water terrorism.”
Daluz said since the issue broke out in May, some of the water district’s partners providing bulk water supply had “slowed down.” One of its private partners, which he did not name, has been postponing the meetings it was supposed to conduct for a water project.
“Mura’g nag-wait and see sila. They are worried because they will be investing billions... We’ve been explaining to our investors, partners that all is well, we are operating (as is),” said Daluz.
Another private partner, Pilipinas Water Resources Inc., which is expected to deliver 10,000 cubic meters of water to Barangay Mambaling starting October, has been following up with MCWD on when it can start the laying of pipes, said Daluz.
Daluz was not able to give the list of all the documentary requirements MCWD has to comply with in setting up a new water source, but he said it needs an extraction permit, which needs approval by the concerned local government unit.
An extraction permit is needed before an excavation for pipe-laying starts.
After the extraction permit was revoked in May, he claimed the City started talking about leasing and rental fees for pipes which pass through the City.
It was in May that Rama said he had lost confidence in Daluz’s leadership and moved to replace him with Pato.
SunStar Cebu tried to reach City Administrator Collin Rosell to verify this information, but to no avail.
MCWD is currently dealing with multiple partners for water source projects in Canjulao, Marigondon, Cordova and Mambaling, among others.
On Feb. 17, executives of billionaire Manuel Villar Jr.’s firm PrimeWater Infrastructure Corp. made a presentation before the MCWD board members and executives on its joint venture proposal, which Daluz saw as a “total takeover” of MCWD’s operations.
The meeting was held a day after a breakfast meeting at Rama’s residence on Feb. 16, which board member Seno had attended.
Based on the presentation of PrimeWater, which Daluz provided to SunStar Cebu, PrimeWater, which will act as a contractor, will perform the following functions: manage and operate; improve, repair, refurbish, decommission facilities; and bill and collect water services.
PrimeWater also included in the presentation the organization composition should MCWD agree with a joint venture agreement, which showed that some of the employees would be absorbed.
But Daluz is not confident about PrimeWater absorbing the MCWD employees, emphasizing that this gives an opportunity for the private company to fire the MCWD employees since they would now be under the private company which has different policies and retirement schemes.
Clueless on endorsement?
Responding to Rama’s defense that there was no discussion on privatization, Daluz accused Rama of not reviewing the proposal of the private company he is endorsing to MCWD.
“I don’t know if kahibawo ba siya sa iyang gi-endorse. Pero ang proposal nga iyang gi-endorse nga company is a total takeover,” said Daluz.
(I don’t know if he knows what he endorsed. But the proposal of the company he endorsed is a total takeover.)
In its presentation, PrimeWater showed that it had joint ventures with 75 water districts all over the country, including the Pinamungajan water district in Cebu.
Regulation and profit
Daluz explained that the Cebu City Government has the power to appoint the members of the Board; however, the regulatory agency of the water district is the Local Water Utilities Administration (LWUA).
He also explained that the concerned local government units where the water district’s facilities are located, get an annual share from its profit of one percent.
Sought for comment, Mandaue Chamber of Commerce and Industry president Kelie Ko said whether the water district will be publicly or privately run, Cebu needs a water provider that is able to meet its increasing demand vis-a-vis the fast-growing economy.
“Water is a vital resource needed both domestically and commercially. The important issue is not whether to privatize or not but rather on the level of service (rendered),” said Ko.
He noted that privatization can be good, similar to success stories like the Mactan-Cebu International Airport, but it is no guarantee.
“When you privatize, you give the company control of water resources, and they can improve infrastructure and efficiency. But they can also ignore social costs. Water rates can go up,” said Ko, adding that the capacity of the private entity is also critical.
“Cebu is continually growing. Whether it is government or a private utility, we need the providers to be able to upgrade in sync with or better yet, ahead of this growth,” Ko said.