Cagayan de Oro leaks cost water district over P700 million in 2022 alone

CAGAYAN DE ORO, Philippines – Over half of the Cagayan de Oro Water District’s (COWD) water supply has been going to waste due to leaks, resulting in lost revenues that could have been more than enough for it to settle debt claims by its primary bulk water supplier.

In a March 13 letter sent by the Manny V. Pangilinan-controlled Cagayan de Oro Bulk Water Incorporated (COBI) to the COWD, the supplier pointed out that the water district incurred over P700 million in losses due to its high percentage of non-revenue water (NRW) in 2022 alone.

The wastage included millions of liters of treated water supplied to the COWD by COBI.

The lost revenues, COBI said, could have been used to pay COWD’s outstanding payables.

The letter, a copy of which was obtained by Rappler, showed that COWD’s wasted water due to leaks and illegal connections had reached 55.39% in 2021, and 50.05% in 2022.

Citing audited financial statements, COBI said the COWD’s receivables in 2022 amounted to over P500 million, with available cash totaling over P147 million and cash equivalents of over P227 million.

These funds, according to COBI, could have been used to partially pay its balance and finance COWD’s programs to address its NRW problem.

‘No excuse’

“It appears that COWD’s ability to improve its operations and financial standing is solely within its control. It has no excuse to skirt its legal obligations, including those to COBI,” a part of the COBI letter reads.

COBI had given COWD until the end of March to settle a disputed debt of over P400 million, but a March 15 letter sent to the city council by COBI President Christopher Andrew Pangilinan showed that the supplier expressed willingness to extend the deadline to April 12.

COWD and COBI executives are scheduled to sit down for a potential settlement this Wednesday, March 20, to avert a supply disconnection, said Engineer Antonio Young, the general manager of the water district.

COWD has refused to acknowledge the nearly P430-million debt being claimed by COBI, pointing out that the amount represented a 2021 rate increase, which the water district objected to because it took effect during the COVID-19 pandemic period.

Young maintained that COWD invoked a force majeure provision in their 2017 contract to stop COBI from implementing the increase in 2021.

He said COWD has been reiterating that they have no legal basis to pay the accumulated price difference, but COBI insisted on it.

COBI, however, maintained that COWD has not given an unacceptable explanation for invoking the force majeure clause.

Speaking before the city council last week, Young said COWD incurred substantial net losses in their 2021 and 2022 due to the pandemic’s impact.

COWD and COBI, however, could come to terms when its executives meet this Wednesday in an effort to avert a tap water supply crisis in Cagayan de Oro.

Extended deadline

Local officials have sounded the alarm, but COBI assured the public that a water supply disconnection has not been decided with finality, but that scenario would be the bulk water supplier’s last resort.

Pangilinan, in his letter to the city council, said COBI was giving COWD until 12 more days after March 31, to settle things with the bulk water supplier or else it “will exercise all its legal and contractual remedies.”

The letter was sent in response to Councilor Edgar Cabanlas’ request to extend the deadline given to COWD by two months.

In the March letter, Pangilinan asked that the COWD also settle its January and February 2024 invoices by March 22 and April 1, respectively.

As to the disputed debt that accumulated since 2021, COBI said it was looking forward to “an agreement or an acceptable plan” on or before April 5.

No-show

COBI said it had reached out to COWD several times in the past to discuss and resolve the disputed debt, but water district executives “repeatedly cited their unavailability.”

The firm said they scheduled a meeting in Cagayan de Oro on January 30, but representatives from COWD were allegedly a no-show despite their confirmation of attendance.

It said the meeting was rescheduled in Davao City on February 27, but COWD representatives allegedly canceled it at the last minute.

Young, however, claimed that COWD had also made attempts to reach out to COBI to resolve the matter.

He told Rappler on Saturday, March 15, that all issues and concerns would be tackled during their upcoming meeting this week. – Rappler.com