Water crisis fans calls for transparency in dam, other China-funded projects

The water crisis in Metro Manila is raising calls for transparency in the Duterte administration’s deals with China, including the Kaliwa Dam project that has been touted as the solution to the perennial water shortage in the capital.

In a letter to the National Economic and Development Authority (Neda), Bayan Muna chair Neri Colmenares asked for official copies of several agreements with China, including that of the P18.7-billion Kaliwa Dam project that would supposedly be an alternative to Angat Dam, Metro Manila’s main water source.

Finance Secretary Carlos Dominguez III this week said Kaliwa Dam would “absolutely” help solve the water shortage in the metropolis and it would have greatly eased the current crisis had it been built in the past.

Aside from Kaliwa Dam, the other loan agreements that Colmenares sought from Neda chief Ernesto Pernia include those for the Chico River Irrigation Pump Project in Kalinga province; the Philippine National Railway South Long Haul project; and the Davao-Samal Bridge project.

Consultancy fees

Citing leaked documents, Colmenares, a senatorial candidate, said the four Chinese-funded projects totaled P205.4 billion and supposedly included the payment of P44.1 billion in consultancy fees.

“They need to explain why the consultancy fees are so huge they exceed 20 percent of the total amount of the loans. They also have to disclose who the consultants are, and if they are the Chinese,” Colmenares said.

Getting a loan from China and then paying Chinese consultants would be a “double whammy for the Filipino people,” he added.

“If government is not hiding anything, they should release the documents to the public. Transparency, not official secrecy, should be the rule since these contracts and loan agreements will tie our people down for 20 to 25 years,” Colmenares said.

Better terms

Commenting on Kaliwa Dam, Dominguez on Friday said the terms obtained by the Duterte administration for the project were “at least 30 percent better” than the loan secured by the Arroyo administration, also from China, for an Angat aqueduct project.

The Arroyo administration signed the loan agreement for the Angat aqueduct in January 2010, while the financing for Kaliwa Dam was sealed when Chinese President Xi Jinping visited the Philippines in November last year.

Both projects led by the Metropolitan Waterworks and Sewerage System were aimed at improving Metro Manila’s water supply.

But Dominguez said the $211.2-million, US dollar-denominated loan for Kaliwa had a lower interest rate of 2 percent per annum, compared to the 3 percent slapped on the $116.6-million borrowing by former President Gloria Macapagal-Arroyo.

Both the Kaliwa and Angat projects have a 20-year maturity period, but Kaliwa has a longer grace period of seven years against Angat’s five years, he said.

Also, China charged a higher commitment fee equivalent to 0.4 percent of the undisbursed amount on the Angat aqueduct, while the government obtained just 0.3 percent on Kaliwa Dam, the finance chief said.

One of PPP projects

Kaliwa’s management fee equal to 0.3 percent of loan amount was also below Angat aqueduct’s 0.4 percent, he said.

“The Duterte administration made sure that the government would not pay a prepayment penalty fee for the Kaliwa Dam project. In contrast, the loan obtained by the former Arroyo administration for the Angat aqueduct included a prepayment indemnity of 1 percent per annum accrued on the prepaid loan, from and including the date of prepayment, up to and excluding the original repayment date, for such prepaid part of the loan,” according to Dominguez.

The Kaliwa Dam was planned long before the Duterte administration. It was among the original public-private partnership (PPP) deals launched by Duterte’s predecessor, Benigno Aquino III.

Previously known as the New Centennial Water Source-Kaliwa Dam Project, the build-transfer project had a 30-year concession period, according to documents obtained by the Inquirer.

The private sector winner would be based on who offered the lowest annual payments from the government.

Little progress

Development of the PPP project began in 2012. It was approved two years later and the first prequalification round was launched in October 2014.

The prequalification was meant to determine which private companies would be allowed to submit bids for the project. However, none qualified at this stage.

Following project tweaks, another prequalification round was held in September 2015, yielding two prequalified groups: San Miguel Corp. with South Korea’s K-Water and the Datem-Abeima Consortium.

The project made little progress after that, and by 2016 it had stalled. Knowledgeable sources cited the approaching May 2016 polls and the historical practice of new administrations to review projects of their predecessors for the waning enthusiasm.