Manila Water slapped with P1.13-B fine over supply woes

Manila Water slapped with P1.13-B fine over supply woes

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Metro Manila residents stock up on water to get them through the crisis. Photo from GMA News.
By Ben Cal, PNA

MANILA – The Metropolitan Waterworks and Sewerage System (MWSS) Board has sanctioned Manila Water Company, Inc. with a total of PHP1.134 billion – PHP534,050 million in fine and an additional PHP600 million as fund for development of new water supply source – in connection with the water shortage suffered by its customers last March.

This was jointly announced Wednesday by MWSS Chairman Franklin J. Demonteverde and Administrator Reynaldo V. Velasco, following the approval by the MWSS board – unanimously approving the recommendation of MWSS Regulatory Office on the imposition of penalties on Manila Water for its failure to comply with Article 10.4 of the concession agreement.

The resolution was signed by Demonteverde, Velasco, and board members Melchior I. Acosta Jr, Mariano C. Alegarbes, Merly M. Cruz, Jose R. Hernandez, Valeriano F. Pasquil, Melanie Sia-Lambino and Elpidio J. Vega.

The additional penalty of PHP600 million will be used for the funding for a new water source.

In a statement, Manila Water President Ferdinand M. dela Cruz said he will abide by the decision of the MWSS to pay the penalty, as provided for under Section 10.4 of the Concession Agreement for the inability of the concessionaires to meet its service obligations to provide 24/7 water supply to its consumers.

Last March 26, Resolution No. 2019-052 was unanimously adopted by the MWSS Board, which directed the MWSS-RO to study the appropriate penalties for the East Zone concessionaire.

The penalties are besides Manila Water’s self-imposed penalty amounting to P500 million that provided financial relief to its customers affected by the water shortage.

The water crisis that proved costly to Manila Water highlighted the lack of strategic preparedness, notably on the realistic allocation of water supply to Manila Water, the development of new water supply sources and the much improvement of the Angat-Ipo-La Mesa tunnel and conveyance system.

“The water shortage was an eye-opener, and sad to say, the new MWSS Board inherited this lingering problem having assumed office only in February 2017. We are on a catch up mode and it’s only this administration under President Rodrigo Duterte that we have seriously put on track a realistic and doable water security roadmap to ensure adequate water supply,” said Velasco.

Manila Water’s unapproved proposals during Aquino administation

As part of its official report to the President on the water crisis, the MWSS has zeroed in on the root cause of the water supply problem that led to the water shortage last March.

Based on Manila Water’s comprehensive report submitted to MWSS, as early as March 31, 2012, Manila Water proposed to MWSS, under then Administrator Gerardo Esquivel, a water system facility for the East Zone that in 2019 would have a raw water supply of 2,222 MLD to address a demand of 1705 MLD plus a buffer of 23 percent for peak demand. However, Administrator Esquivel rejected the proposal and approved a water system facility for the East Zone that in 2019 would have a raw water supply of 1636 MLD for a demand of 1,408 MLD, assuming a 12 percent NRW, with zero buffer for peak demand.

The previous MWSS administration under President Benigno Aquino III insisted that the non-inclusion of a buffer on water demand will be a “more tariff sensible decision” considering its expectation of a new water source within five to six years.

There were also proposals from Manila Water for two projects that will add extra raw water supply of around 275 MLD, the 100-MLD Rizal Province Water Supply Improvement Project (RPWSIP) and the Tayabasan River Water Supply Project. But these were also rejected by the past MWSS administrator through a letter dated 13 August 2013.

Esquivel insisted that “even without these two proposed projects, raw water supply of both concessionaires will be sufficient up to 2019 considering the expected operation of the Kaliwa Dam.”

It is noteworthy that through efficient efforts of the Duterte administration, the Kaliwa Dam Project was only signed last November 2018.

Manila Water then issued a statement addressed to former administrator Esquivel that it is “cutting away significant programs for building and maintaining the water systems in the East Zone.” Manila Water also warned the former administrator that “Because of this, our ability to fulfill our service obligations to our customers will be severely compromised and impaired.”

Then, on May 19, 2016, barely two months before Aquino stepped down from office, Esquivel reversed his disapproval of the 100 MLD RPWSIP and authorized Manila Water “to undertake the procurement for RPWSIP’s additional 50 MLD through direct negotiation,” considering the delay in the implementation and expected completion” of the Kaliwa Dam project. The RPWSIP involves the use of water from Laguna Lake and includes the Cardona Water Treatment Plant. The delayed approval by MWSS of the 100-MLD RPWSIP gave Manila Water no margin of error in the implementation stage, which became a necessity because of the delay in the implementation and completion of the Kaliwa Dam project. The Cardona Water Treatment Plant is now operating at 50 MLD, which will increase to 100 MLD by August this year.

MWSS during the Duterte administration

Velasco, a retired ranking official of the Philippine National Police, was appointed Administrator of the MWSS on Feb. 20, 2017 replacing Gerardo Esquivel who also held the post of Chairman of the Board. The present Chairman is lawyer Franklin Demonteverde, with lawyer Patrick Ty serving as MWSS Chief Regulator.

Administrator Velasco began his stewardship of MWSS under heavy constraint because of impending water supply problems.

A study by UP-NEC in 2011, which was the basis of the MWSS Water Security Infrastructure Roadmap 2016-2037, showed that existing water supply would be insufficient to meet the projected demand. Without buffer, the supply-demand projection showed that by 2021, supply would be unable to meet demand.

As the only way to solve the water supply problem, MWSS under the new administration found it imperative to break away from the very cautious posture of the past leadership in not undertaking identified infrastructure projects. The MWSS management recognizes that water problems will persist and they underscored the necessity of pursuing vigorously water infrastructure projects.

The road ahead for water security plan

In a related development, Velasco said that he will recommend the issuance of an Executive Order by President Duterte, as he has initiated the drafting to fast-track the water security roadmap of the Duterte Administration for Metro Manila and its serviced areas.

With the concurrence of the MWSS Board, the water agency has crafted a short-, medium- and long-term water security roadmap that will provide potable and sustainable water supply in the next 5, 10 and even 50 years with at an increase of at least 1,518 MLD by 2022.

Being fast-tracked under the new water security roadmap are the following projects: 150 MLD Putatan (2019); 100 MLD Cardona (2019); 188 MLD Sumag (2020); 50 MLD Rizal Wellfield (2020); 80 MLD Calawis Wawa (2021); 100 MLD Putatan 3 (2022); and 250 MLD Lower Ipo. These, aside from the 600 MLD Kaliwa Dam projects whose implementation was began in 2017 and is expected to be completed in 2023.

According to Velasco, to complement the New Water Security Roadmap (2019-2022), there is an urgent need to fast track the completion of Aqueduct 6 and Tunnel 4, both started during the Duterte Administration by the present MWSS Board and Management. The two projects are expected to be operationalized by January 2020.

MWSS also expects to complete by June 2022, Aqueduct 7 and Tunnel 5 which are now on stream to provide another 1,600 MLD to flow towards La Mesa. The completion of these aqueducts and tunnel system will optimize the flow of excess water from Angat to La Mesa Dam. (PNA)




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