NIA got ADB loan, not Maynilad

This is in reference to the article written by Mr. Paolo Romero titled “ADB query bares water deal mess”, which came out on Dec. 14, 2010 in the Philippine STAR.

We noted a number of inaccuracies in the referenced report, and would like to issue the following clarifications:

• The government was not duped into entering an anomalous P1 billion water deal with Maynilad Water Services Inc. (Maynilad). The $20 million loan from the Asian Development Bank (ADB) was entered into by the National Irrigation Administration (NIA) in 1991.

Maynilad was never involved in securing this loan and was not even in existence at that time. It was only on Jan. 22, 1997 when our company was formally incorporated.

Under a memorandum of agreement (MOA) between NIA and MWSS, the former granted the latter usufructuary right over the property in Putatan, Muntinlupa. Subsequently, MWSS and Maynilad signed a separate MOA granting the latter gratuitous and exclusive right to occupy and use the property for the remaining period of the Concession Agreement and any extension or renewal thereof. As such, NIA retained ownership of the property.

Both MOAs also did not include any reference to NIA’s ADB loan, or of MWSS’ assumption of its payment. Neither was this issue ever brought up in the course of the discussions with NIA on the grant of usufructuary rights to MWSS. Consequently, NIA retained the obligation to pay the ADB loan.

• The Laguna Lake pumping project is not the same as our water treatment plant in Putatan, Muntinlupa. Practically all the equipment and structures in the old NIA Pumping Station are unusable to us because the technical specifications and requirements of the two projects are entirely different.

The parcel of land that was turned over by NIA to the Metropolitan Waterworks and Sewerage System (MWSS) and eventually to Maynilad is also but a small portion of the entire land area that our facility is occupying. We, in fact, had to acquire over 9,500 sq.m. of land from another entity to meet the project site requirements of our water treatment facility.

We would also like to point out that ownership of all the improvements, facilities and equipment we installed in the Putatan property (except those that can be removed without causing damage to the premises) will automatically revert to the MWSS at the termination of our Concession Agreement. In effect, the government stands to benefit from our billion-peso investment in Putatan.

• Maynilad neither operates nor derives any benefit from the NIA pumping station that was built for irrigating agricultural lands in Muntinlupa and Cavite. Since the capacity of this facility does not meet our operational requirements, we had to construct, in addition to the water treatment facility, a new pumping station using corporate loans and internally generated funds.

Aside from creating employment opportunities for thousands of Filipinos through our investment in Putatan, we were also able to turn an idle government asset into a state-of-the-art facility that could provide potable water to thousands of families and establishments in Muntinlupa, Las Piñas and Cavite.

In the interest of accuracy and fair reporting, we hope that the Philippine STAR would take the necessary steps to correct the inaccurate information that appeared in your publication.