In MWCI statement: Capitol points out inconsistencies

CEBU, Philippines — Capitol legal consultant Rory Jon Sepulveda yesterday pointed out supposed inconsistencies in the recent statement of Manila Waters Consortium Inc. (MWCI), which said that the Cebu Manila Waters Development Inc. (CMWD) was already earning by the time it called for a capital call for the “needed” increase in capital expenditures.

On December 15, MWCI released a statement explaining that the P300 million increase in project cost for the bulk water supply treatment facility was done to meet the requirements laid down by the Metropolitan Cebu Water District (MCWD) for a Water Purchase Agreement (WPA).

CMWD is the offshoot company in the Joint Venture Agreement entered into by the Province of Cebu and MWCI in March of 2012 for the development of a bulk water supply facility in Luyang River in the Municipality of Carmen.

While the initial plan was to construct a P702,000,000 bulk water project consisting of a treatment plant and 28 kilometers of water pipelines from Carmen to Liloan, MCWI said CMWD had yet to find any customer by September 2013 when the bulk water facility was 95 percent complete.

Later that year, CMWD, shifting from the initial plan stipulated in the JIA, accepted MCWD’s invitation to bid for a water supplier in Casili located in the Municipality of Consolacion.

In December 2013, CMWD won the WPA.

However, CMWD was required to extend its pipelines by seven kilometers to reach Consolacion from Liloan. CMWD also had to build three water reservoirs on the site. This, MWCI said, was worth about P300 million at that time.

To augment the additional cost, CMWD conducted a capital call on February 5, 2015, almost three years after it won the bid.

The province, due to lack of funds, waived its right for preemptive stocks through Provincial Board Resolution No. 1354-2015 sponsored by then Board Member Peter John Calderon, which was approved on June 3, 2015.

The province’s shares then decreased to 29 percent from 49 percent.

“Ngano man nga by January 2015, nikita na man ug P11 million? Sige na man ug kita… ngano pugson man nila ang province pa?” Sepulveda said.

By January of 2015, according to the monthly report, CMWD earned P11,529,734.19.00.

Sepulveda also pointed out that an initial investment of P256,500,000 had been put in for CMWD coupled with a bank loan of P800,000,000 to construct the facility.

This alone exceeded the initial capital cost of P702M.

“By the date and by the numbers, there appears to be no need for that money by 2015. Or kung naa’y technical nga need, naa puy technical nga rights nimo nga malalis,” Sepulveda said.

Governor Gwendolyn Garcia also questioned the waiving of the province’s right to preemptive shares at that time.

“Why did we waive – conveniently waive – and effectively watered down our share down to 29 percent?” Garcia said.

“I would have fought hand, tooth and nail to protect the interest of the province,” she added.

Morever, Sepulveda pointed out the drastic change in the business plan. In the JIA, the agreed tariff rate was P13.95 per cubic meter but this went up to P24.59 per cubic meter. Along with this, the Internal Rate of Return for the province went down to 12.3 percent from 19.23 percent. (FREEMAN)