TO AVERT a water crisis next month, Cebu Gov. Gwendolyn Garcia has intervened by signing an emergency water supply agreement with the Metropolitan Cebu Water District (MCWD), after the Cebu Manila Water Development Inc. (CMWD) decided to stop selling water to MCWD, potentially affecting thousands of the water district’s consumers in Metro Cebu.

By Dec. 1, 2023, CMWD will cut off the bulk water supply from its treatment facility at the Luyang River in Carmen town connecting to the pipes of MCWD going to the latter’s drop-off point in Casili, Mandaue City, as its continued operation has been unfavorable for the firm due to high operational, maintenance and personnel costs.

The termination and disconnection will result in low supply to no water supply to all consumers of MCWD in the towns of Compostela, Liloan, Consolacion and the cities of Mandaue, Cebu, and even Lapu-Lapu City, which will also affect the operations of the locators at the Mactan Economic Zone.

CMWD is a joint investment firm formed through a Joint Investment Agreement ( JIA) between the Manila Water Consortium Inc. (MWCI) and the Province of Cebu back on March 12, 2012, to provide bulk water to Metro Cebu. The JIA involves the construction of a bulk water facility that would deliver 35 million liters of water per day from surface water extracted from the Luyang River in the northeastern Cebu town of Carmen.

The province has a 49 percent stake in CMWD, while MWCI has a 51 percent stake. The projected Project Investment Rate of Return (PIRR) was 19.29 percent.

CMWD supplies 35 million liters per day (MLD) of water to MCWD under its 20-year Bulk Water Supply Agreement forged back in December 2013.

The CMWD water treatment facility connects to the Carmen Water Treatment Program.

Cut off supply

In a press conference on Wednesday, Nov. 29, Garcia, protecting the interests of her constituents, invoked Section 16 of the Local Government Code or the general welfare clause in solving the problem.

Garcia said the disconnection on Dec. 1 will still proceed; however, after the cutoff, the provincial government will then intervene by entering into a separate agreement with CMWD and MCWD.

Under the agreement, the Cebu Provincial Government will buy the bulk water supply from CMWD and then sell it to MCWD at the same tariff rate of P24.59 per cubic meter of water.

It will continue until MCWD finds a new bulk water supplier after a thorough bidding process or if it can forge a new contract with CMWD, Garcia said.

The governor added that due to the necessity of the situation, she believes with the counsel of her legal team that there is no need for a bidding or any other process to take place for the Province to enter into such an agreement.

She had also asked the Provincial Board (PB) to pass a resolution allowing the governor to enter into an agreement to buy and sell water between CMWD and MCWD.

In a separate interview, Provincial Board Member Glenn Anthony Soco (6th District) said the resolution had already been approved unanimously by the PB, as the need for a continuous supply of water to constituents must be prioritized.

“If the water supply stops this Dec. 1, many, especially in my district in Mandaue, Consolacion, Liloan, Compostela will really be affected, so this is appropriate and judicious,” Soco said.

Agreement

Hours after the press conference on Wednesday, the MCWD board of directors (BOD) represented by chairman Jose Daluz III signed an agreement with Garcia at the Capitol Building for an emergency supply of water once the contract has been terminated on Friday.

Amid the tension as to the rightful members of MCWD’s BOD, Garcia recognized the position of the Local Water Utilities Administration (LWUA) acknowledging Daluz as the chairman, and Miguelito Pato and Jodelyn May Seno as board members.

Pato and Seno, as well as MCWD General Manager Edgar Donoso, were present at the signing of the agreement with Cebu Province.

Garcia said she did not want to get involved in the problems over the rightful BOD, and that rather it was a matter of upholding the rule of law.

“This has nothing to do with the position of (Cebu City Mayor) Mike Rama. Maybe he has own reasons, but we cannot be put in limbo because we have our own priorities as far as CMWD is concerned,” Garcia said

She added that MCWD as a water district and a government-owned and -controlled corporation, is subject to the oversight of LWUA.

Last Oct. 31, Rama had appointed Melquiades Feliciano, Aristotle Batuhan and Nelson Yuvallos to replace Daluz, Pato and Seno in the BOD, but the three have refused to step down from their posts.

Bleeding

The governor said that under the agreement with MCWD, CMWD was operating at a loss, as one of the provisions of the contract in 2013 was that the water district would pay the water consortium the tariff rate of P24.59 per cubic meter for 20 years or until 2034 without escalation or increase.

It was only on her return to the governor’s office in 2019 that CMWD started negotiations for a reasonable price increase and contract amendment in consideration of the inflation, labor rate, and prices of fuel and materials.

Data presented by the Capitol showed the price comparison from 2014 to 2023, where the tariff rate from CMWD remained unaltered since 2013, while other bulk water suppliers increased their rates to P35.75 in 2019 and further, to P73.86 in 2023.

Garcia argued that the current tariff rate was no longer enough to sustain CMWD’s operations.

“Because we cannot survive. The joint venture, as you could see, continued to spend for now escalated prices on water treatment, on wages, on electricity, fuel and all of these other factors which affect the price of water... CMWD is hemorrhaging,” Garcia said.

However, due to unfruitful negotiations, CMWD issued a Notice of Termination of its contract with MCWD on Oct. 3, to be implemented last Nov. 3, but deferred to Nov. 18 for a possible amicable resolution.

The Provincial Government has invested more than P300 million for the development of the bulk water facility, while CMWD spent a total of P1.3 billion since the start of the project in 2013.