Bulk water project: New company challenges Ayala project in Carmen

More than a week after a memorandum of agreement was signed between Metro Cebu Water District and the Ayala consortium for the Carmen Bulk Water Supply project, a private water company expressed interest to challenge the terms and conditions proposed by Ayala.

Rio Verde Water Corporation is confident that its proposal on the construction, financing, maintenance, management and operation of the Carmen Bulk Water Supply project will be competitive in terms of pricing, technology, volume and sustainability.

It targets to produce as much as 150,000 cubic meters of potable bulk water per day from an integrated system that will harness surface and underground water sourced from four other neighboring towns in the north -Danao City, Carmen, Catmon and Compostela.

Jose Alvarez, Rio Verde owner, told The Freeman that their proposed price for the project is about P3 billion with volume from 80,000 cubic meters to 150,000 cubic meters of potable water a day.

"We already have experience on bulk water supply. We have bigger volume of water to be delivered to MCWD and we have modern technology," he said. He added that price challenge is in accordance with the Republic Act 7718 or the Build-Operate-Transfer Law.

He said they will reveal their proposed price per cubic meter and other details of their proposal once the National Economic Development Authority publishes the project for price challenge. The challenger may submit its proposal within 60 days after the publication.

Last May 17, MCWD and Ayala consortium ended their three-year negotiation on the Carmen Bulk Water Supply project by signing a memorandum of agreement.

Under the MOA, Ayala will deliver up to 46,000 cubic meters of potable water to MCWD under a 40-year Build-Own-Operate-Transfer arrangement. The project is expected to increase the water district's current production capacity by about 26 percent, addressing the severe water shortage in Metro Cebu.

The price of water between 28,000 and 39,000 cubic meters would be P25.55 per cubic meter at 2007 prices, and excess water up to 46,000 cubic meters will be fixed at P12 per cubic meter. With this, the expected average tariff for treated water is P24.49, subject to adjustment for inflation.

The Ayala consortium is expected to start with the construction of the project in 2007, and it is expected to be operational by 2009.

MCWD has endorsed to NEDA-Investment Coordination Committee the Water Supply Agreement for the project, which will be formally submitted to the NEDA office by the end of the month.

Rio Verde, an affiliate of US Water LLC, a Florida-based water company, is not new in the water business as it is soon to finish the first ever bulk water supply project in Cagayan de Oro City.

Alvarez is also the same man behind Philippine Phosphate Fertilizer Corporation, the largest phosphate fertilizer manufacturer in Asia, and also constructed and operated the Leyte Industrial Development Estate Water Supply System in Isabel, Leyte.

In February this year, Rio Verde has also signed a memorandum of understanding with MCWD for the conduct of a feasibility study for the financing, design, construction and operation and maintenance of a bulk water supply project that would provide MCWD with up to 400,000 cubic meters of potable water.

Under the agreement Rio Verde will conduct the feasibility study at no cost to MCWD and the former will submit results of the study for evaluation before the year ends. -Wenna A. Berondo