Small water suppliers set price challenge vs. Ayala

A consortium composed of smaller water suppliers will soon be formed to participate in the "price challenge" against the Ayala water project.

"Everybody is talking to everybody, because everybody is interested to offer lower than what Ayala project is proposing," said Mactan Rock Industries Inc. president and chief executive officer (CEO) Antonio Tompar.

However, Tompar refused to divulge the identity of other interested parties and companies that wanted to participate in the consortium saying "it is still in the negotiation, and we don't want to pre-empt the plan."

The consortium between Ayala Corporation and the Central Equity Ventures, Inc., (CEVI) is set to have the required the "swiss challenge" for its P1.7 billion proposed water project in Cebu to supply bulk water to the Metro Cebu Water District (MCWD).

The Ayala-led project proposed to offer P25 per cubic meter to Metro Cebu Water District (MCWD), other companies are reportedly willing to offer as low as P18.00 per cubic meter.

Recently, the MCWD board led by board chairman Juancho Montecillo has approved the terms and conditions of the agreement with the Ayala-Stateland consortium for the Carmen Bulk Water Supply Project, which will source primarily surface water.

If this project were to be approved by the National Economic and Development Authority (NEDA), the consortium will supply an additional of 45,000 cubic meters a day to MCWD on 2008.

Tompar said the price of water in Cebu is already high. He hopes that through the price challenge the Ayala-group will be able to peg their price at an affordable level.

Based on a study, conducted by Dutch government funded group called Water Remind, most of Metro Cebu water consumers are now paying high water rate per cubic at an average of P30 (plus).

Water Remind economist David Williams, in his presentation on economic and financial aspect on Water Resources Management Action Plan for Central Cebu, he said the current best price for water per cubic meter should be at the P12 level.

Large water consumers are even paying as high as P43 pesos per cubic meter. He mentioned that one of the reasons of the expensive water in Cebu, is lack of supply, although there are a number of possible resources for water that has not been tapped.

He mentioned that there are 67 possible ways of addressing water shortage this include among others, sourcing from ground water, surface water, and desalination process.

Metro Cebu's total water demand is estimated at 250,000 cubic meters to 300,000 cubic meters a day. Currently, MCWD is only capable of supplying 50 percent of this demand the rest is supplied by private deep well operators.