'P1.8-billion MWSS Angat project overpriced'

MANILA, Philippines - Local manufacturers of large steel pipes yesterday claimed that the P1.855-billion Angat Aqueduct Improvement Project (Package 2) of the Metropolitan Waterworks and Sewerage System (MWSS) was “grossly overpriced.”

The Philippine Large Diameter Pressure Pipe Manufacturers Association (PLDPPMA) alleged that the P1.855-billion contract for the project that the MWSS awarded to China International Water and Electric Corp. (CWE) was overvalued by at least 30 percent and must be rescinded by the government.

Ramon Pastor, PLDPPMA president, said the group has already sent letters to MWSS officials several times to inform them of the alleged irregularities in the project’s bid process, pipe design, specifications and price.

However, Pastor said up to now, it appears that the state-owned agency is still bent on pursuing the contract.

“Viewed with trepidation is MWSS’s continuing indifference to the issues surrounding the awarding to a Chinese contractor of the Angat Aqueduct Improvement Project Package 2. If we are to consider the claim of Filipino contractors that they can do project at 30 percent less, the net savings of taxpayers’ money amounts to P556.691 million,” Pastor said.

The project has been in the pipeline since 2006 and entails the replacement of the existing defective concrete pipeline that transports raw water from Angat Dam in Bulacan to the La Mesa reservoir in Quezon City.

Phase 1 of the project was done by three Filipino pipe-laying contractors from the middle of 2004 to 2005 with funding provided by the Japanese government through loans.

But since the Chinese government through the China Export Import Bank offered financing for Phase 2 at a lower rate of one percent than what the Asian Development Bank (ADB) and World Bank (WB) have to offer, the previous administration decided to utilize Chinese funding this time, the group said.

Several alleged irregularities were noted, however, according to PLDPPMA.

First, the group alleged that despite the announcement of MWSS that bidding rules would follow the International Competitive Bidding, only three handpicked Chinese firms were made to participate: CWE, China Harbour Engineering Co. Ltd., and China CAMC Engineering Co. Ltd.

“Though it was bidded out, participants were shortlisted to the three owned and controlled by the Chinese government. This in itself smacks of outright violation of the bidding regulations. Reliable sources also showed the bids with extraordinary unit price discrepancies.

“Notably, the winning price per pipe linear meter is approximately 25 percent higher than the Package 1 prices undertaken by Filipino contractors in 2005,” Pastor said.

Aside from this, Pastor said the exchange rate in 2005 was P55: $1, and this dropped to P46: $1 when the Phase 2 contract was awarded in 2009, or a 15 percent decrease in cost on account of the foreign exchange.

Also, the cost of steel materials in 2005 was $650 per ton, and this dropped to $550 in 2009, translating to another 20 percent cost difference.

“While it would seem that China Eximbank would be on our side by charging only one percent interest per annum for the loan, the prohibitive price they are taking for this project far outweighs their cost of money.

“With this consideration, it would be prudent on the part of the Philippine government to look for other sources of funding, from either ADB or WB, not only to allow local contractors to participate but more so to make sure that the cost will be reasonable,” Pastor said.