Consortium lowers water rate

While conceding to higher penalties for under-delivery, the proponent of the Carmen bulk water supply project has agreed to lower the price of water.

The consortium of Manila Water, Stateland Inc. and Vicsal Development Corp. had originally proposed to sell the water to MCWD at P29.14 per cubic meter, a document presented by the Metropolitan Cebu Water District (MCWD) in a recent meeting with Cebu mayors, revealed.

But the consortium agreed to lower the price to P25.55 per cubic meter — the amount stated in the contract between the proponent and MCWD that is now being reviewed by the National Economic and Development Authority’s Investment Coordinating Council (ICC). The consortium is the proponent of the Carmen Water Supply Project.

Sherissa Nuesa, Manila Water chief finance officer, earlier said the price of water from Carmen will mean an additional cost for MCWD consumers of only P3 a day.

The price of Carmen water as stated in the contract submitted to Neda ICC already includes such factors as inflation and cost of operation and maintenance of facilities. Nuesa said the consortium has “shaved off” its initial expected earnings.

The MCWD document showed that the consortium had also agreed to raise its penalty payment to 35 percent, from 28 percent of the price of water, if its delivery falls below the agreed 28,000 to 46,000 cubic meters a day.

Another highlight in the presentation made by MCWD General Manager Armando Paredes was that originally, the Carmen water project was to be implemented under a 30-year build-own-operate (BOO) arrangement.

This means the entity that will implement the project—whether it is the consortium led by Manila Water or another company, depending on the result of the price challenge—will remain the owner of all facilities in Carmen, even after recovering its capital investment at the end of 30 years.

But after negotiations with MCWD and its consultants, the consortium agreed that the project will be implemented under a 40-year build-operate-transfer (BOT) scheme. This means that at the end of its 40-year bulk water supply agreement, the consortium or the winner of the price challenge will have to turn over all facilities in Carmen to MCWD.

Apart from paying penalties for under-delivery, the Manila Water-led consortium also conceded to remove a provision in its proposed contract that allows it (the consortium) to “step into” MCWD’s operations if the water district defaults on its payments (PN)