CAGAYAN DE ORO, Philippines – The city council wants to open the market for other players for the Cagayan de Oro City Water District’s (COWD) bulk water supply, amid issues with one of its current suppliers.
Currently, the COWD sources 25% of its water from the Rio Verde Water Consortium, Inc. (RVWCI) for 100 million liters per day (100 MLD), based on a contract signed in 2004. The company started supplying water in 2007.
But the Commission on Audit already issued a notice of disallowance for the contract with Rio Verde in 2008, a year after the water supply started.
A copy of COA reports in 2014 showed that COWD paid Rio Verde P143 million from January to December 2014 “without valid basis as the said entry was declared as non-responsive bidder by the district’s bids and awards committee and despite standing Notices of Disallowance of prior years for similar transactions with the same entity,”
COWD General Manager Rachel Beja said that Rio Verde continues to supply COWD 40 MLD for the city’s west district, home to 30,000 consumers.
“If the bulk water supply stops (for 40 MLD), immediately there will be at least 2,000 consumers that will be left waterless,” Beja said.
COWD supplies water to 75% of its consumers from its 29 wells spread out across the city.
It is on this bulk water supply issue that the city government wants other players to enter the fray of supplying water to its residents.
Beja said that the COWD has no other course of action but to file a case against Rio Verde to annul the already illegal contract.
He said that the contract of the Rio Verde was supposed to last for 30 years, but right from the start, the contract which the company did not win – but awarded to them anyway – was illegal.
Rio Verde will stop supplying on midnight of January 1, 2018. MetroPac Water Investments will take on the role of supplying the bulk water for the city’s western district.
MetroPac and COWD entered into a Joint Venture Agreement to create Cagayan de Oro Bulkwater Inc, (COBI) in which the COWD will have a 5% share.
COBI will be MetroPac’s corporate entity for bulk water supply for COWD.
Beja said that in 2015, they got an unsolicited proposal from MetroPac which they took, as they were looking for an alternative for the bulk water supply.
But here’s the catch: a year earlier, MetroPac and Rio Verde entered into an Operations and Maintenance (O&M) contract in which MetroPac will operate the physical plant.
MetroPac will be using Rio Verde’s facilities to supply water to COWD at a much higher price.
When Beja was asked if she knows about the O&M contract between MetroPac and Rio Verde came earlier that the Unsolicited Proposal to the COWD, he said that they were asking Rio Verde if it indeed it was true, “We got no answer,” he said.
Under the unsolicited proposal from MetroPac, Beja said that they proposed to “rent out plant, source water from elsewhere or make a new plant,”
Under the COBI bulk water supply, COBI will be charging P16/cubic meter, P6 higher than the current rate from Rio Verde.
The city council now wants to make sure that the new contract is not bogus and will not affect consumers.
“We fear that this will lead to price increase of water here,” said Councilor Eric Salcedo, Chairman of Public Utilities Committee.
According to James Judith, who filed a complaint against the MetroPac-Rio Verde O&M at the Philippine Competition Commission on behalf of the city council, they they are looking after the interests of the people.
Last Monday, November 27, the city council approved 3 resolutions on the developments on the COWD bulk water supply.
Salcedo said the city is requesting the COWD to provide them with the contracts, for the COA to release an audit report on Rio Verde, and to review the new COWD-MetroPac contract.
The city council also wants that the bulk water supply for the city be opened up to other players to promote competition, which will be beneficial to the water consumers in the city.
Beja said that the contract with MetroPac is non-exclusive and that there will be no increase in water rates as their scheduled rate hike will be on 2019.
He also said that the P16-per-cubic-meter contract is between MetroPac and COWD and not for consumers.
He added that the COWD can still carry the load of the increase bulk water supply “without raising additional charges for the consumers.”
“We want to make sure that consumer’s rights are protected from this bulk water agreement and we want to make sure that the cost from P16 per cubic meter contract between COWD and MetroPac will not be passed on to consumers,” Salcedo said.
COWD is a government owned-and-controlled corporation serving 95,000 water consumers in the city, and in neighboring Opol town in Misamis Oriental. – Rappler.com