Cagayan de Oro City

LWUA probes Cagayan de Oro water firm as consumers’ group calls for audit

Franck Dick Rosete

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LWUA probes Cagayan de Oro water firm as consumers’ group calls for audit

WATER UTILITY. The office of the Cagayan de Oro Water District on Corrales Avenue in Cagayan de Oro.

Franck Dick Rosete/Rappler

The Cagayan de Oro Water District is given until May 10 to submit its documents after a consumers' group filed a petition for a 'complete audit'

CAGAYAN DE ORO, Philippines – The Local Water Utilities Administration (LWUA) has directed the Cagayan de Oro Water District (COWD) to submit documents as the regulatory body looks into the utility’s current state.

A staff member at the office of LWUA Chairman Ronnie Ong, and COWD General Manager Antonio Young confirmed on separate occasions on Monday and Tuesday, May 6 and 7, that the water district received the LWUA instruction to submit relevant documents. LWUA gave the COWD until Friday, May 10, to submit the papers.

The LWUA directive came after a Manila-based group, United Filipino Consumers and Commuters (UFCC), expressed concerns about the threat of a water crisis in Cagayan de Oro as a result of a debt dispute between the COWD and its primary bulk supplier of treated water, Cagayan de Oro Bulk Water Incorporated (COBI).

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UFCC submitted copies of its petitions to the LWUA and the Office of the President on Monday, calling for a “complete audit” of the COWD.

Young said the COWD received communication from LWUA seeking documents pertaining to the water district’s capital expenditure and non-revenue water (NRW) reduction programs, among others. He said the COWD would comply with LWUA’s request.

In a statement, UFCC said its research showed there was an alleged negligence on the part of COWD, citing its constant high NRW, which refers to the lost and unaccounted water of the district, based on an annual audit report of the Commission on Audit (COA).

The group said state auditors have also called out the COWD for releasing honoraria to members of its board of directors without minutes of meetings.

“Inefficient operations, incompetent management, irresponsibility, and lack of accountability. Ito ay ilan sa mga maaaring mga dahilan kung bakit ang mga konsyumer sa Cagayan de Oro ay nalalagay sa peligrong mawalan ng tubig,” read a part of the statement released by UFCC President Rodolfo Javellana Jr.

(These are some of the possible reasons why consumers in Cagayan de Oro are in danger of losing water.)

The COA has yet to publish its 2023 audit report on COWD, but its high NRW and the observation on the board of directors’ honoraria can be seen in the COA’s 2022 annual report.

Young said the COWD has carried out an “effective” NRW reduction program, which reduced wasted water from 57.67% in 2019 to 49.08% in 2023, a reduction of over 8% within four years.

The NRW is almost equivalent to the volume of treated water purchased by COWD from COBI. COBI’s supply constitutes nearly half of Cagayan de Oro’s tap water supply.

“But we cannot reduce it instantly because it requires a huge investment,” he said.

Young said the COWD already responded to the COA and submitted copies of the minutes of meetings of the water district’s policy-making body.

He said the COWD had proposed water rate adjustments in the city for the next three years aimed to beef up its capital expenditure and improve its NRW reduction program since its revenues were only enough for its operating expenses. The proposal, however, was deferred after the city hall frowned upon it.

As an alternative, the COWD submitted a letter to Cagayan de Oro Mayor Rolando Uy in hopes of securing a loan from the city hall.

The COWD and COBI, a firm controlled by business tycoon Manny Pangilinan’s Metro Pacific Water, have yet to reach an agreement about the water district’s disputed debt of P479 million, which mostly represents the accumulated difference in price when the supplier implemented a water rate adjustment in 2021.

Up to this day, COWD has been paying COBI the unadjusted P16.60 per cubic meter water rate despite the latter’s adjustment, increasing the rate to P20.57 in 2021 and becoming P24.19 in 2024.

COWD refused to acknowledge COBI’s adjustment by invoking the force majeure clause in their contract in 2021 due to the COVID-19 pandemic.

April 30 was the deadline for the water district to settle with COBI, but negotiations failed, forcing COBI to direct its subcontractor to discontinue the water supply to COWD.

The situation prompted city hall to place the city under a state of emergency, and Mayor Uy sent the police to secure water facilities in the city as part of a contingency plan, a move decried by LWUA.

Apart from the disputed debt, COWD and COBI have yet to resolve their conflicting interpretations to determine the correct water rate adjustment based on the parametric formula stated in their contract.

According to COBI’s records, the water district owed it P479 million, which includes unpaid monthly billings in February and March 2024. However, the COWD’s computations indicate that the disputed debt should only be over P190 million.

Moreover, the COWD said it could potentially be further reduced to around P60 million if its force majeure invocation in 2021 is proven valid, as the adjustment would begin accordingly in July 2023 upon the lifting of the state of public health emergency status in the country due to the pandemic. –

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