Capitol board OKs P700M Carmen bulk water joint venture
Who doesn’t want low-cost, plentiful water?
The Cebu Provincial Board (PB) yesterday authorized Gov. Gwen Garcia to sign a joint investment agreement with Manila Water Consortium to roll out the P700-million Carmen Bulk Water project.
But members paused to ask who would sit in the new company that would be formed to operate the project and other details.
Since the province would pay P124 million as its initial investment, PB Member Arleigh Sitoy said those who sit in the joint investment company (JICO) that will be formed must be “qualified and accountable.”
How and when will payments be paid, asked PB Member Ribomapil Holganza Jr.
At the end of a two-hour discussion, the board agreed to authorize Governor Garcia to push ahead with the deal.
Article continues after this advertisementThey also agreed to let Sitoy draft a supplemental ordinance to spell out who would sit in the five-member board of the company.
Article continues after this advertisementAs agreed, the Manila Water Consortium would own 51 percent and name two board members.
The Cebu provincial government would own 49 percent and name two board members as well. The choice of the fifth member will be mutually agreed by both parties.
Sitoy said his draft ordinance will spell out the qualifications of those who will represent the province in the JICO and “include the requirement that the representatives of the province will report quarterly to the PB and to the governor.”
The PB yesterday invited representatives of Manila Water Consortium and the Joint Investment, Evaluation and Selection Committee to brief them on the water project.
The Province of Cebu has set aside P300 million in its Annual Investment Plan (AIP) for the water project, said engineer Adolfo Quiroga, head of the Capitol’s provincial planning and development department.
Manila Water representatives said the bulk water project, which is expected to cost P700 million, does not comprise more than 10 percent of the company’s total assets.
The initial investment of the province of P124 million will be paid during the incorporation.
Virgilio Rivera of the Manila Water Consortium said this is the “first long-term bulk water supply” in Cebu.
The sum of P255 million that represents 30 percent of the total project cost will be paid immediately upon the creation of the joint company.
As Manila Water’s equity, the remaining 70 percent will be loaned from a bank.
“Right now we need to take advantage of the liquidity of the bank system,” he said, adding that they have good standing in availing of a long-term loan.
Last January, Manila Water challenged the top bidder, Cebu Bulk Water Consortium, at the same tariff of P13.95 and with an income return rate of 19.26 percent.
Manila Water Consortium includes Vicsal Development Corp. and Stateland Inc. It plans to start commissioning the water supply in the last quarter of 2013.
The project aims to supply 35 million liters of potable water per day from the Luyang River in Carmen, partly meeting water demands of north and central parts of Cebu province.
It is also expected to improve the groundwater status of the province, which suffers from overextraction.
Last month, three bidders—Cebu Bulk Water Consortium, Metro-Maynilad Consortium and Manila Water Co.—joined in the submission and opening of the technical and financial proposals for the project.
Cebu Bulk Water emerged the top bidder. Manila Water, as the original proponent of the project, was given until Jan. 15 to match Cebu Bulk Water’s bid. /Carmel Loise Matus, Correspondent
