Commission on Audit

COA asks San Fernando Water District to penalize Primewater
COA asks San Fernando Water District to penalize Primewater
The Commission on Audit finds that Primewater spent 28.9% less than the capex it was required to invest in the project in 2022

PAMPANGA, Philippines – The Commission on Audit (COA) urged the San Fernando Water District (SFWD) in Pampanga to penalize Primewater for failing to fulfill its commitment for the first five years.

A total amount of P743.8 million in capex has put SFWD in a stumbling block that could result in breaking the joint venture agreement (JVA).

“Non-compliance of Primewater with its capital investment or contribution requirement may not only place the district at a disadvantage but may also be considered a breach of contract, which can be a serious ground for the termination of the JVA,” said COA.

SFWD entered into a partnership with Primewater on December 16, 2016, for the financing, development, rehabilitation, expansion, improvement, operation, and maintenance of the water supply.

COA stressed that Primewater’s primary contribution is to meet the financial and technical components in line with the JVA and added that the government agency is getting the short end of the deal since its partner has not fully complied with its obligation.

Based on COA’s 2022 audit report released on March 2, the actual capex as of the fifth year only amounted to P347.5 million or 46.72% of the target.

COA said an analysis of its calendar year 2022 capex, using the estimated cost of accomplishment, revealed that the accomplishments and spendings of Primewater were significantly less by P34,124,200 or 28.9%.

COA also reminded SFWD that it should impose a 12% performance bond as penalty to Primewater for its non-performance of its obligation to put up a septage management system, which was supposed to have been operational by November 2022. 

The penalty is in accordance with its JVA under Section 4.7.3 within 60 days of written notice to Primewater about its deficiency.

“Based on the timetable for the implementation of the SMP (Septage Management Program), the septage treatment facility should have been completed in November 2022. However, as of audit date, the construction of the septage treatment facility reached only 56.2%,” the audit team said.

SFWD’s general manager and its board of directors agreed to forfeit Primewater’s performance bond or demand penalties for the unimplemented projects, commitments, and service obligations.

Primewater is owned by former senator Manny Villar. It currently operates in two other cities and four municipalities in Pampanga, namely Angeles City, Mabalacat City, Floridablanca, Guagua, Lubao, and Porac. – Joann Manabat/

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