MWSS eyes forcible takeover of BF water systems

The Metropolitan Waterworks and Sewerage System (MWSS) is set to issue an order to take over the water systems of BF Homes in Parañaque after talks between Maynilad Water Services Inc. and BF Homes Inc., the subdivision developer, broke down.

Residents have long been asking the national government to help them solve the lack of water supply in the area.

With Maynilad and DM Consunji Inc. on one side and BF Homes Inc. and its water supply operator Philippine Waterworks and Construction Corp. (PWCC), on the other, the four firms had been holding meetings to discuss and resolve problems and concerns but talks have led them to a deadlock.

Negotiations broke down during their second meeting held Wednesday at the office of Parañaque Mayor Florencio Bernabe Jr.

PWCC warned that if the MWSS issues the order, they have no recourse but to go to court and seek a temporary restraining order (TRO) to stop, or at best delay, its execution.

MWSS deputy administrator Nestor Borromeo, however, responded by saying that they will invoke Executive Order 688 signed by President Arroyo late last year. EO 688 laid the groundwork for the agency to take over the water systems of private subdivisions whose developers have failed to provide affordable and ample water supply to the homeowners or have abandoned existing water systems for years.

He said the EO strengthens and expands the implementation of Presidential Decree 1345 or the law that empowers the MWSS to resort to takeovers for the benefit of end-consumers.

Borromeo said they will also implement a resolution of the Housing and Land Use Regulatory Board (HLURB) ordering the MWSS to effect the takeover after granting the petition of 14 homeowners associations of BF Homes-Parañaque.

Bernabe is calling on the presidents of the other homeowners associations in BF Homes who have not submitted their petitions to his office for transmittal to MWSS to manifest their grievances against PWCC.

“These additional petitions are needed to dramatize the homeowners clamor for a quick solution to their water supply problem and also to buttress MWSS’ rejoinder if and when the case is brought to court by PWCC,” he stressed.

‘Unreasonable’ selling price

The issues include PWCC’s selling price to the end-consumers and its valuation of its assets, both of which DMCI and Maynilad rejected as unreasonable.

In their first meeting last Feb. 8, Maynilad offered to sell in bulk to PWCC at the transfer price of P23 per cubic meter and suggested that the water system operator sell to the homeowners at the cost of P31 per cubic meter, which would allow PWCC a profit margin of P8.

Engineer Henry Marcaida, head of PWCC’s distribution and customer service, said they are standing pat on their previous position that a selling price of P55 per cubic meter to end-consumers is the most viable to them.

He said they find the profit margin of P32 reasonable, given the fact that their systems loss of about 25 percent is due to leakages and other technical problems.

Maynilad president Rogelio Singson commented that P55 is difficult to justify and may not be acceptable to BF homeowners since Maynilad’s prevailing retail price in subdivisions close to BF Homes is P35 per cubic meter on the average.

“On the other hand, it is doubtful if the MWSS and the National Water Regulatory Board (NWRB), which set the water tariff, would agree to such pricing. They might allow adoption of P55 in the interim by special arrangement, but PWCC must indicate and commit to a definite time frame for how long the price shall be in effect after which the price should be reduced to prevailing price levels,” he said.

Marcaida was non-committal about time frames, saying his instructions did not include the matter – an act that made the MWSS, DMCI, and Maynilad believe that PWCC was stalling and that what it wanted to do was to stick with the P55 retail price indefinitely.

On the matter of PWCC’s asset valuation, which Maynilad previously offered to pay upfront provided that it is reasonable, Marcaida said that based on their preliminary audit the value of their investment is about P60 million. Maynilad described the valuation as unrealistic and rejected it outright.

Herbert Consunji, chief executive officer of DMCI, said the majority stakeholder of Maynilad, said the cost of PWCC’s infrastructure had been factored in the cost of the houses and lots that the buyer-homeowners had paid for.

“Add to that the infrastructure’s depreciation,” Consunji added.

Borromeo agreed with the position of Maynilad, pointing out that his office has a copy of PWCC’s application for renewal of its franchise to operate its water system with NWRB in l995. He said that in its application, PWCC placed the value of its assets at P11 million.

“The latest valuation, while not yet complete, could not have grown by almost six-fold since the water shortage problem in the subdivision began much earlier than the ‘90s when some of its deep wells started drying up,” Borromeo said.