MCWD: Carmen Water project legally acceptable, technically sound

Metropolitan Cebu Water District chairman Juan Saul Montecillo wrote the National Economic Development Authority anew to explain the side of the water district on the new issues raised by Cebu City Mayor Tomas Osmeña and the provincial government during the Investment Coordination Committee-Technical Working Group contract review meeting held last August 25.

Montecillo said that the issues raised by Osmeña like the payment of P200 million development cost, the take or pay provisions, lack of thorough study on the project and structure of Swiss challenge process, among others, have already been adequately considered by the MCWD and were discussed as part of the negotiations between the water district and project developer.

He also ensured that the project proposal is complete and compliant with the terms and requirements of the build-operate-transfer law and the BOT law government review and approval processes and procedures have been and will be strictly followed.

In his letter, Montecillo also emphasized that the proposal is legally acceptable, technically sound, and financially and economically viable. The pass-on rates to consumers are reasonable and made more competitive through the Swiss challenge.

He added that the contract negotiations were conducted in accordance with the parameters approved and provided by the ICC of the NEDA and the Swiss challenge process would be conducted in a manner that would maximize competition and transparency.

"For this purpose, MCWD has engaged in the International Finance Corporation, the private sector arm of the World Bank, to act as the water district's transaction advisor to ensure that fairness, transparency and international best practices are fully incorporated in the project design and the Swiss challenge process," Montecillo explained.

During the ICC-TWG contract review held at the Department of Finance in Manila, Osmeña, Capitol representatives and some possible challengers/proponents were given the chance to discuss their objections to the proposed Carmen Bulk Water Supply project.

With regards to the question of having the priority project implemented under the unsolicited mode, given the provisions of the BOT law and its implementing rules and regulations, Montecillo said the project had been developed and was given ICC first pass approval in August 2005 pursuant to the provisions of the BOT Law.

"The Carmen project had not been approved by the NEDA board or the ICC when it was first submitted to MCWD as an unsolicited proposal in August 2002 and it did not form part of the list of priority projects and was therefore eligible to be developed under unsolicited mode," the MCWD official explained.

Since the early stages of the project, he added that MCWD had been coordinating closely with the National Water Resource Board regarding the water permit. There are issues that the original water permit of the original proponent has expired.

The water district official also explained that MCWD had not failed to act on other proposals to develop other sources of water to solve the water problem of Metro Cebu.

Despite the new project, he added that existing bulk water supply contracts of MCWD would not be terminated as they have contractual commitment to continue their obligations under these contracts. - Wenna A. Berondo