Cagayan de Oro councilor dares Pangilinan group to cut off supply to water district

CAGAYAN DE ORO, Philippines – “Cut it off if you want to!”

These were the words furiously uttered by Cagayan de Oro Councilor Cabanlas during an exploratory discussion on the notice of disconnection sent by a bulk water supplier to the Cagayan de Oro Water District (COWD), conducted by a city hall ad hoc committee on Thursday, March 7.

Cabanlas told a representative of the supplier, the Manny V. Pangilinan-controlled Cagayan de Oro Bulk Water Incorporated (COBI), “It’s not good to always be threatening the people of Cagayan de Oro.”

COBI has sent notices of disconnection to the COWD to pressure it to pay more than P430 million, representing the increase in its rates since 2020. 

The COWD has refused to acknowledge the rate increase and the debt, saying it was implemented despite them invoking a force majeure clause in their contract because of the COVID-19 pandemic situation in 2020.

Engineer Antonio Young, COWD general manager, confirmed that the water district received the 4th demand letter from COBI on March 1.

City ready

Cabanlas, the chairman of the ad hoc committee, said Cagayan de Oro was prepared in the event that COBI, a company formed after the government-run COWD and the Pangilinan group’s Metro Pacific Water signed a joint venture agreement in 2017, stopped supplying bulk water to the water district.

Roberto Rodrigo, a lawyer who represented COBI, said COWD did not invoke the force majeure clause until 2023, about three years after the rate adjustments took effect. He said what COBI granted COWD was its request to defer collections due to the impact of the COVID-19 pandemic.

“We are always open to negotiations, to settle this amicably,” Rodrigo said.

Rodrigo said neither did the COWD provide an explanation on why the rates should not be increased based on their contract.

Young, however, maintained that they requested COBI not to increase its rates in 2021. He said the COWD’s book of accounts and audited financial report showed that they incurred a -P32 million in net income in 2021 and 2022, respectively.

“What proof do they really want?” Young asked.

Approved by OGCC

When councilors questioned a provision in the COWD-COBI contract which allows rate adjustments every three years, Rodrigo said the agreement was reviewed and approved by the Office of the Government Corporate Counsel (OGCC).

COWD is a government-owned and controlled corporation.

“The mere fact that they cleared the draft of the agreement and the agreement itself implies that there’s nothing disadvantageous,” Rodrigo said.

He said the loan applied for by COBI was granted because there were guaranteed automatic increases in the tariff.

Rodrigo was about to respond to Cabanlas, but he was unable to do so as the councilor turned to an executive of another company, Rio Verde Water Consortium Incorporated, to ask if they could take the place of COBI.

Rio Verde President Joffrey Hapitan confidently said they can immediately supply treated water to the COWD provided they have a water supply agreement which is compliant with the Government Procurement Reform Act.

“We just wanted to avoid our previous experience wherein our contract was questioned by the COA (Commission on Audit),” Hapitan said.

Turning to an old supplier

Rio Verde was the first COWD supplier of bulk water, starting in 2007, until after a court voided their contract and COA called them out because their transactions “were held without legal basis.”

The supplier, state auditors noted in 2012, was “a non-responsive disqualified bidder” based on a COWD Bids and Awards Committee resolution on December 1, 2004.

The situation led to the signing of a new contract between the COWD and Pangilinan’s Metro Pacific group, and the formation of a new company, COBI. The company is controlled by Metro Pacific, with the COWD given a 5% share.

Young said only Rio Verde has the capability to surpass what COBI has been supplying to the COWD. He said Rio Verde can supply 100,000 cubic meters per day, higher than the daily supply COBI at 80,000 cubic meters.

Rio Verde said it can also sell treated water in the city at P16.60 per cubic meter, the agreed rate of COBI and COWD during pre-pandemic times, provided that the city government raises no objection to its plan to directly supply to the households and establishments.

Hapitan also disclosed that COBI has been buying treated water from them all along, at a rate of P13 per cubic meter. The water is then sold to the COWD at a much higher price. – Rappler.com