CEBU, Philippines - The Freedom from Debt Coalition (FDC) - Cebu seeks an assessment and serious evaluation of the impact of the previous loans of the Metropolitan Cebu Water District (MCWD) on its delivery of services.
Jose Aaron Pedrosa, Jr., FDC-Cebu secretary-general, said that MCWD was able to access funding from the Asian Development Bank (ADB) under the Local Water Utilities Administration (LWUA) referred to as Loan No. 251-PHI: Provincial Cities Water Supply for US$16.8 million in 1975 and Loan No. 545-PHI: Water Supply Sector for US$46 million in 1981.
He added that in 1990, ADB extended a US$16M-loan to MCWD intended to “improve and rehabilitate piped water supply system in the urban area.”
“As a case in point, the 1981 loan intended to benefit the urban poor did not produce the desired result,” Pedrosa said in a press statement sent to The FREEMAN.
FDC-Cebu seeks such assessment and evaluation following the revelation made by the MCWD Employees Union that MCWD plans to apply for a US$400-million loan with the said bank.
Such issue was denied by MCWD but FDC-Cebu said a memorandum of understanding was already inked between MCWD and ADB.
FDC-Cebu said that under the MOU, a Multi-Tranche Financing Facility (MFF) with a total value of US$200 million will be made available for MCWD. The first tranche amounts to US$70 million. The same amount is reflected in the ADB website, www.adb.org, but denominated as a loan application.
The loan will be paid applying full cost recovery tariffs. Under the MOU, the full cost principle will be maintained over the project period. The Urban Water Supply and Sanitation Project (UWSSP) has a project period of ten years, from 2012-2022.
“Essentially, this means that the entire project cost will be passed on to consumers through increased water rates. Consumers will thus be made to pay US$200 million for a period of ten years,” Pedrosa added. - (THE FREEMAN)