Cebu bulk water deal signed; Carmen town eyes big royalties

Posted on March 22, 2012

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Excess water from the Luyang river in Carmen, north Cebu just flows to the sea. A joint venture between the Cebu provincial government and Manila Water Consortium Inc. will tap the river to supply bulk water to northern Cebu towns. (CDN PHOTO/ TONEE DESPOJO)

A generous river, capable of supplying 35 million liters of water a day, also promises a gift for its host town of Carmen—P35 million at most.

The amount to be advanced as part of “royalties” for tapping Carmen’s Luyang River in north Cebu is one of the key points of a Joint Investment Agreement (JIA) signed yesterday by Gov. Gwendolyn Garcia and and Manila Water Consortium Inc. led bv chairman Gerardo Ablaza Jr.

The agreement to undertake the P700-million Carmen Bulk Water Project was signed at the Provincial Capitol in time for the celebration of World Water Day today.

While the project aims to supply affordable, plentiful water to meet demands of consumers in north and central Cebu province, the JIA also assures that Carmen municipality will be paid royalties “for the use of its natural resources.”

The exact amount will still be discussed by the Province and Consortium within 30 days from the incorporation of a Joint Investment Company (JICO) that will be formed.

An “advance” will be paid to Carmen for a maximum amount of P35 million by the Consortium. The agreement said the P35 million is “subject to refund which shall be claimed by the Consortium from JICO” through a letter request.

Fernando Zobel de Ayala, chairman of Manila Water Company Inc., a member of the consortium, hailed the project as a “milestone.”

In his speech after the signing, he thanked Cebu province leaders for supporting the project that took ten years to finalize.

Governor Garcia said the project, which aims to meet water demands in north and central Cebu province at affordable rates, was an answer to the problem of over-extraction of groundwater.

Luyang barangay Captain Teofilo Giangan said sharing the river with the rest of Cebu province would mean helping solve a bigger problem.

Also present to witness the signing were Carmen Mayor Gerardo Villamor, Provincial Board Member Peter John Calderon, Stateland Inc. president Reynaldo Cometa, Vicsal Development Corporation managing director Margaret Gaisano-Ang and Cebu Vice Gov. Agnes Magpale.

Gov. Gwen Garcia and consortium chairman Gerardo Ablaza Jr. sign the deal in the Capitol. Signing as witnesses are carmen Mayor Gerard Villamor (far left), PB Member Peter John Calderon, Fernando Zobel de Ayala and Vice Gov. Agnes Magpale. (CDN PHOTO/ JUNJIE MENDOZA)

Carmen Mayor Villamor hinted that he wasn’t too pleased with the way stakeholders in his town were involved.

He was asked in a forum if public consultations were made.

“Well, akong gusto unta nga dili mogunit aning microphone karong adlawa, pero nangutana man ka, ang public hearing nga gipahigayon sa Manila Water ug sa ilang partners was maybe made 10 years ago, not very recently,” he said.

(I didn’t want to hold the microphone today but since you asked, the public hearing conducted by Manila Water and their partners was maybe made 10 years ago, not very recently.)

“Hinoon ang mga lungsuranon sa Carmen makatagamtam man sila sa ayuda nga madawat namo gikan sa governor, gikan sa Manila Water, dili sila lisod pasabton nga ihikaw but to share our resources with other Cebuanos,” he added.

(Nevertheless, Carmen town residents have enjoyed assistance from the governor and Manila Water. It’s not difficult to explain to them the importance of sharing our resources with other Cebuanos.)

Villamor said he attended yesterday’s signing to show his support for the vision of having sustainable potable water for Cebu.

“It just so happens that the water source they identified is in Carmen town. I am here only to support the governor,” he said.

CARMEN’S ROYALTY PAYMENT

Cebu’s reliance on pumping to extract water from the underground aquifer has caused groundwater sources to deteriorate.

The bulk water project is expected to ease the pressure by tapping run-off water from the Luyang River in barangay Cantumog.

Cantumog barangay captain Jasmin Paden said residents support the province’s plan.

Asked during the forum what share the barangay would receive from royalties, she had no idea.

“Wala mi kahibaw if duna mi bahin ani pero kung naa amoang ipuno sa among 20 percent nga development fund,” she told reporters.

(We don’t know if we have any share from the project but if there is any, it can add to the barangay’s 20 percent development fund.)

Last month, the Capitol gave the notice of award to Manila Water Consortium after it matched the bid of the challenger, Cebu Water Co.

In a December 2011 public bidding, bids were submitted by Cebu Bulk Water Consortium, Metro-Maynilad Consortium and Manila Water Co.

Criteria for evaluating the financial proposal was who could provide the lowest water tariff for the highest project internal rate of return (PIRR).

Cebu Bulk Water Consortium topped the bid with a P13.95 per cubic meter tariff including value added tax (VAT) with a PIRR of 19.26 percent.

Metro- Maynilad came in second place with P18.71 tariff without the VAT and a PIRR of 14.51 percent.

The main proponent, Manila Water Consortium gave a tariff of P24.90 with a PIRR of 14.5 percent.

As part of the Swiss Challenge System used in the bidding, third parties were invited to make a better offer.

In January, Manila Water Consortium matched the bid of Cebu Bulk Water Consortium with P13.95 tariff inclusive of the VAT with also a PIRR of 19.26 percent.

The river can yield 35 million liters per day based on a study by water resource experts of the University of San Carlos.

Virgilio Rivera of Manila Water Consortium in a press conference said the hydrological study was made to find out the volume of Luyang River’s water.

Last Monday, the Provincial Board (PB) authorized the governor to sign the agreement.

As an extra precaution, the PB also agreed to enact an ordinance next week setting qualifications of those chosen to represent the Provincial Government in two of five board seats of the Joint Investment Company (JICO) that will be created.

In the JICO, Manila Water Consortium will control 51 percent and be entitled to two board seats.

The Provincial Government of Cebu will have 49 percent and two board seats as well. The fifth board seat will be occupied by someone agreed on by both groups.

A general manager will be appointed by the JICO for day to day operations. /Carmel Loise Matus, Correspondent

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