Bomb threat sa Talisay

The Ayala-led consortium is still keen in pursuing the proposed Carmen Bulk Water Project despite the recent rejection by Metro Cebu Water District of the multibillion project.

However, lawyer Jewel Austria, legal and investment officer of the Manila Water, an Ayala subsidiary, said that the company would not drop its demand for P200-million development cost, which MCWD is opposed to. The proponent seeks to be reimbursed for the P200 million it has spent for the preparation of the project.

In a telephone interview with The FREEMAN, Austria said that they already sent their explanation to the water district’s management last week and it is now up for MCWD to decide on.

“We thanked the MCWD for giving us reconsideration and also to explain our side,” she said. She refused to give details on their letter to MCWD.

Austria said that the water district first rejected the proposed project last March 21 but they answered it already.

On March 21, MCWD general manager Armando Paredes wrote Sherisa Nuesa, chief finance officer of the Manila Water, the biggest investor in the consortium, saying the project failed to secure a notice of acceptance, therefore “it is now deemed rejected by the Metro Cebu Water District.”

Under the agreement, Carmen Bulk Water will deliver up to 46,000 cubic meters of potable water to MCWD under a 40-year build-operate-transfer (BOT) 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.

In his letter, Paredes cited the provisions of the BOT Law that said the receiving entity (MCWD) has the right to reject the proposed project due to failure of the project proponent to submit a notice of acceptance within 45 calendar days after it received the notice of approval of the terms and conditions of their contract.

 “Pursuant to Section 10.9 of the implementing rules and regulations of the BOT Law, we regret to inform you that due to the failure of the original proponent to submit in writing as acceptance of all terms and conditions of the approval by the approving body within 45 calendar days from receipt of the notice of approval, the unsolicited proposal is now deemed rejected by the Metro Cebu Water District,” Paredes said in his letter.

But on April 10, Nuesa, wrote a letter to Finance Secretary Margarito Teves and NEDA Secretary Romulo Neri, seeking for reconsideration.

In a letter to Paredes, Nuesa explained that the project was endorsed to NEDA on August 24, 2006 or before the effectivity of the 2006 BOT Law new IRR, thus it is still covered by the old IRR.

Nuesa also said that under the IRR of the 1999 BOT Law, there is no requirement for a time period for the original proponent to make a formal acceptance of the terms and conditions.

But on May 10, Paredes again wrote a letter to Ayala “terminating the negotiations on the proposal.” However, the proponent has asked for reconsideration, prompting MCWD to give it 30 days to resolve the issue on the development cost and the terms and conditions that the National Economic Development Authority wants to be included in the contract.

Paredes said that the water district’s management is against the P200-million development cost. Many sectors, including Mayor Tomas Osmeña has expressed opposition to the P200-million development cost, which Ayala seeks to be reimbursed in the event it loses the bidding for the project because it could discourage other bidders.

 The mayor also said that the P25.55 per cubic meter price of water the proponent wants to sell to MCWD is too expensive compared to the price of the other suppliers of the water district.

Osmeña said that the take or pay provision under the contract is also disadvantageous on the part of MCWD because it could lead to its bankruptcy.  — Wenna A. Berondo/MEEV