Another player offers direct water supply to Cagayan de Oro amid debt dispute standoff

CAGAYAN DE ORO, Philippines – The company processing water and selling it to the city’s primary bulk water supplier has offered to directly supply the Cagayan de Oro Water District (COWD), even if it means setting aside its 25-year contract with the supplier.

Rio Verde Water Consortium Incorporated said on Tuesday, March 12, it was prepared to take the place of the Manny V. Pangilinan-controlled Cagayan de Oro Bulk Water Incorporated (COBI) if the bulk water supplier and COWD fail to come to terms by the end of March.

COBI has given the COWD until March 31 to settle a disputed P426-million debt or face disconnection.

Engineer Joffrey Hapitan, Rio Verde’s president, said they could begin directly supplying treated water to the COWD in as little as 30 minutes if COBI made good on its threat to stop supplying to the COWD.

Hapitan said his company felt “morally bound” to directly supply COWD through an emergency purchase agreement to ensure that city residents do not go without water.

COBI, a firm controlled by Pangilinan’s Metro Pacific group, sends about 80,000 cubic meters to COWD daily, constituting about 40% of the city’s water needs.

Hapitan also said Rio Verde was willing to take the place of COBI permanently if the bulk water supply contract between COBI and COWD is terminated.

Cagayan de Oro Mayor Rolando Uy created a special task force on March 6 to look into the dispute between COWD and COBI, as well as scrutinize their contract to see if provisions in it were disadvantageous to the city’s water consumers.

Hapitan said he assured Uy in a meeting about their willingness to step in. On January 4, he said, his company submitted a letter of intent, detailing the firm’s plan to lay distribution pipes so it can directly supply tap water to consumers.

He said this would make up for a possible termination of Rio Verde’s 25-year bulk water supply agreement with COBI.

Rio Verde has made the agreement with COBI from 2022 till 2047, which can be extended if both parties so decide.

COBI’s senior legal counsel, Roberto Rodrigo, said Rio Verde can take steps to cancel their 25-year agreement as long as the proper legal steps are taken by the latter.

However, Rodrigo said the termination of the COBI-Rio Verde contract was unlikely, and that the company he represents was still looking forward to settling its dispute with COWD.

Earlier, Rodrigo called on the COWD to address the “ongoing challenges in their partnership,” which, he said, negatively impacted COBI’s financial standing.

In a statement, Rodrigo said that aside from the non-payment of the P426 million, delays of COWD in settling monthly invoices, exceeding the contractual time frame by around 30 to 45 days, has affected COBI’s ability to fulfill its financial obligations to banks and suppliers.

The COWD has refused to acknowledge the debt, asserting that much of the amount consists of rate adjustments implemented without their consent.

The 2017 contract of COWD and COBI provides automatic adjustments to bulk water rates effective from January 2021 through December 2023 and subsequently from January 2024.

The COWD management said they had appealed to COBI not to implement the 2021 rate increase due to the impact of the COVID-19 pandemic at that time.

Rodrigo, however, said that it was only last year that they came to know that COWD was invoking the force majeure clause in their contract.

He said COWD had only asked that collection of the rate adjustment be collected at a later date because of the pandemic. – Rappler.com

JB Deveza, a communications teacher at Xavier University and former editor-in-chief of the now defunct SunStar-Cagayan de Oro, is an Aries Rufo Journalism fellow for 20223-2024.