After Cebu gov’t cancels contract, water consortium denies it breached contract
CEBU CITY, Philippines – After the Cebu provincial government cancelled its contract with the Manila Water Consortium Incorporated (MCWI), the company denied they breached the deal.
Governor Gwendolyn Garcia said they had discovered alleged multiple violations, and that the consortium failed to pay the provincial government's share, citing project cost increase as justification not to remit. (READ: Water consortium allegedly violated contract terms – Gwen Garcia)
MCWI denied these violations. "We continue to adhere to the rule of law in light of the challenging political environment," they said in a statement sent to Rappler.
MCWI consists of Manila Water, Vicsal Corporation, Metro Pacific Investments Corporation. and the province of Cebu.
They explained that the consortium formed a joint investment company with the provincial government to pursue the projects in Cebu in 2012. Cebu Manila Water Development Inc. (CMWD) was the joint investment company created as an offshoot of the joint investment agreement (JIA), the statement said.
MCWI said the joint investment commpany "acted with due diligence."
They said the provincial government was involved in the company's decision-making as Cebu had two of 5 seats in the CMWD board.
In September, Garcia alleged there was a significant increase in the bulk water project cost from P702,000,000 to P1,003,000,000.
The joint investment agreement was entered into 2012 to operate the bulk water supply at the Luyang River in Carmen town, northern Cebu.
But the consortium explained that CMWD had no costumer until 2013, when it got a contract to supply water to Casili in Mandaue City.
This meant they needed an additional 7-kilometer pipeline, increasing their capital expenditure to P300 million at the time.
“Today, the CMWD facility in Carmen through Consolacion is the first,” the consortium said in its statement.
They said that its surface water supply for Metro Cebu helped address a “water crisis” and had since delivered 35 million liters of water per day, or about 300,000 customers.
Cebu province was placed under a state of calamity earlier in 2019 due to drought brought about by El Niño.
But even into the rainy season, dozens of Metro Cebu neighborhoods continued to see rotational outages of water supply.
Despite the provincial board's approval of the cancellation, the consortium’s president Virgilio Rivera said they would continue to try to work out an agreement on the matter.
“The current issue between PGC (provincial government of Cebu) and Manila Water Consortium is unfortunate. But we will reach out to PGC to arrive at a win-win solution,” he said.
Rivera added, “We will stilll work to protect our rights under the JIA.”
The contract cancellation follows controversies involving Cebu Water’s parent company Manila Water in water concession agreements in Metro Manila. (READ: Risky business: Why gov’t made sure Manila Water, Maynilad would earn)
Rivera said the consortium would continue operations in Cebu and "further expand to provide more Cebuanos access to sustainable water supply." – Rappler.com