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Consumers paying for aqueduct repair

Water concessionaires pass on MWSS tab for P5.3-B loan
/ 08:35 PM July 15, 2013

ANGAT River, fed by Sierra Madre watersheds, including Umiray River in the boundaries of Aurora and Quezon provinces, is the source of electricity and water for Metro Manila through a series of dams. TONETTE T. OREJAS/INQUIRER CENTRAL LUZON

CITY OF SAN FERNANDO—The Metropolitan Waterworks and Sewerage System (MWSS) shouldered the cost of fixing a major aqueduct that conveys water from Angat Dam in Bulacan to La Mesa Dam in Quezon City on behalf of two private water concessionaires.

The state-run MWSS took out a P5.3-billion loan in 2009 from China to provide enough water to 10 million people in Metro Manila and nearby areas, but the agency incurred P507 million in cost overruns, documents showed.

Napoleon Quiñones, vice president of the MWSS Employees Union, said the MWSS guaranteed the loan and charged it to Maynilad Water Services


Inc. and Manila Water Co. Inc.

“In turn, the two concessionaires are charging the capital expenses to the consumers,” Quiñones said by telephone on Saturday.

The MWSS website announced the early completion of the aqueduct project but had not reported the cost overrun and other adverse financial aspects of the project.

Gerardo Esquivel, MWSS administrator, said the project cost of P5.3 billion was passed on to the two concessioners, which are now charging consumers for the amount.

“It will amount to just a few centavos, to be paid until 2037,” Esquivel said when reached by telephone on Saturday.

Consumer groups have criticized Maynilad and Manila Water for passing on to consumers their income taxes and a host of other expenses, including those for entertainment, travel and flowers.

The documents showed that the MWSS obtained the loan for the aqueduct project in the last year of the administration of then President and now Pampanga Rep. Gloria Macapagal-Arroyo.

The MWSS finished the Angat Water Utilization and Aqueduct Improvement Project 10 months ahead of the May 2013 schedule, but the cost for undertaking the project’s Phase 2 had ballooned to P5.805 billion, as it incurred P506.6 million in cost overruns.


Under the Aquino administration, the overseers of the project kept P22 million in unused loan proceeds and generated P2.9 million in interest on undrawn balances between July 2012 and July 2013.

The first loan payment was made in January this year and the second on July 21, Quiñones said.


Neda review

Maynilad and Manila Water, referred to as “Common Purpose Facilities,” or CPF, were among those that reviewed the P506.6 million worth Variation Order No. 2 (VO2) that the contractor, China International Water and Electric Corp., submitted in January, Esquivel said in a letter in May.

The letter was addressed to Socioeconomic Planning Secretary Arsenio Balisacan, director general of the National Economic and Development Authority (Neda).

Esquivel asked the Neda to do a third-party review of VO2, which was 9.56 percent of the original cost of P5.3 billion for the construction of a tunnel and aqueduct, rehabilitation of Aqueduct No. 5 and interconnection of these structures to save 394 million liters daily.

In a footnote in his letter to Balisacan, Esquivel said the CPF was “an agreement between the MWSS concessionaires… to jointly manage and operate the MWSS facilities upstream of Angat Dam.”

These include the “facilities downstream of the auxiliary hydropower plant in Norzagaray, Bulacan, including the Ipo reservoir facilities, Ipo-Bicti tunnels, Bicti basin and Bicti-Novaliches aqueducts up to and including the Novaliches portal interconnection facilities.”

Esquivel on Saturday said the request to approve VO2 was pending with the Neda.

“I am sad that the MWSS union has been filing graft charges against me for small things that are without truth when there were big corruption issues during the past MWSS administration,” he said.

“I think they’ve lost their soul for public service,” he added.

Additional costs

A third-party review by the Bureau of Construction of the Department of Public Works and Highways (DPWH), also done at the request of Esquivel, showed that adjustments in the quantities of items of work in the original contract resulted in an extra cost of P184.2 million.

Another extra cost, reaching P322.4 million, was due to “new items of work based on design requirements on the need to provide additional length of steel aqueduct and additional Class 5 support (steel ribs), and various steel pipes for tunneling works.”

Walter Ocampo, director of the DPWH unit, said the new unit costs “were found to be reasonable.”

However, Ocampo asked Esquivel to “revisit” the general requirement items for “office laboratory, consumables, operations and maintenance of vehicles,” whose approved variation order increased to P55.4 million from P47.3 million.

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TAGS: corporate abuse, Manila Water Co. Inc., Maynilad Water Services Inc., Metropolitan Waterworks and Sewerage System, News, Regions
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