BY GEROME DALIPE IV
ILOILO City – The City Council will turn down the request of Aboitiz InfraCapital Inc. to authorize Mayor Jerry Treñas to sign a letter of intent (LOI) allowing the city government to secure water rights from the Jalaur River Multi-Purpose Project II (JRMP II).
The firm’s proposal is “disadvantageous” to consumers due to the potential increase of water rates by up to P51 per cubic meter, explained Councilor Frances Grace Parcon, chairperson of the Committee on Rules, Styles, and Justice.
“Instead of benefiting consumers, this would burden them. We may have a large water supply, but it will be expensive,” she told reporters.
Parcon moved to defer action on the committee report relative to the letter of Vince Tan, Aboitiz InfraCapital Inc.’s vice president, who asked Treñas to sign the letter of intent allowing the city government to pursue the Bulk Water and Power Supply Project through the Jalaur River Multi-Purpose Project (JRMP-II).
In his letter, Tan cited the meeting of their president, Cosette Canilao, with Treñas and Gov. Arthur Defensor, Jr. relative to their company’s proposal to take over the bulk water project.
The meeting reportedly focused on NIA’s water rights with JRMP-II and the need to increase water supply to meet the demand of the growing customers in the city and province of Iloilo.
Aboitiz prepared the letter of intent for the mayor to sign so the company could start processing the project with NIA.
Hence, Tan asked the City Council to pass a resolution allowing the city to agree with the National Irrigation Authority (NIA), and authorize Treñas to sign the LOI.
The agreement with NIA is the initial step to secure water rights from JRMP-II, a critical component of Aboitiz’s unsolicited proposal for the Iloilo Bulk Water Supply Project through a Public-Private Partnership (PPP).
Should the city secure water rights through the National Water Resources Board (NWRB), these rights would be assigned to NIA, as JRMP-II is a NIA project.
However, Councilor Parcon expressed apprehension about Aboitiz’s request, particularly that it was the firm that prepared the LOI instead of the city government, the implementing agency of the water project as well as the provincial government.
“The LOI states that the province and city are requesting water rights, but it was drafted by Aboitiz, not the city government,” she pointed out.
Parcon also underscored the potential risks in Aboitiz’s proposal such as the contract termination and fee imposition on the city government if water rights are not secured.
Likewise, Aboitiz’s proposed rate of P51 per cubic meter is more than double the P22 per cubic meter currently charged by Metro Pacific Iloilo Water.
In his recent press briefing, Treñas said the Public-Private Partnership (PPP) proposal of Aboitiz InfraCapital Inc. to run the Iloilo Bulk Water Supply Project poses a challenge for the city government.
He said the proposed build-own-operate (BOO) and build-lease (BL) contractual arrangements seemed complicated as it would require the city to form a new body to oversee the water distribution.
“Aboitiz plans to partner with both the province and the city. The city would be responsible for distributing or selling to a distributor, which seems complicated because we’re not used to that setup,” the mayor stressed.
Aboitiz InfraCapital Inc. has proposed to build, operate, and maintain the bulk water project that will supply 80 million liters per day (MLD) of potable treated water to consumers in Iloilo. The proposed P8.45-billion unsolicited concession is for 33 years.
Under the BOO and BL scheme, Aboitiz would sell treated bulk water directly to the city and province of Iloilo at a suggested Php51 cubic per meter.
The rate is double compared to the current water price of P20 per cubic meter for the first 10 cubic meters consumed by customers.
Essentially, the local government units (LGUs) would act as “middlemen” since they would buy the treated water from Aboitiz and then resell it to distributors, water districts, or other buyers who provide water directly to consumers.
Likewise, Treñas admitted the city government is only familiar with the current setup of some bulk water suppliers like the Metro Iloilo Bulk Water Supply Corporation (MIB).
Metro Iloilo Bulk Water serves as the bulk water supplier for the Metro Iloilo Water District, which provides water supply to Iloilo City as well as the towns of Cabatuan, Leganes, Maasin, Oton, Pavia, San Miguel, and Santa Barbara.
The mayor also said that Aboitiz’s proposal may result in higher water rates since the city and province of Iloilo and another distributor will also add the price of water per cubic meter to earn profit.
Although he is open to the firm’s proposal, the mayor said he will let the city’s PPP committee conduct a thorough study of the proposal.
While the city needs an additional water supply, Treñas said he would not allow such a scheme at the expense of the water consumers.
The PPC Center reported the unsolicited proposal was endorsed to the Capitol and the city government, the proposed implementing agencies for the project, on Aug. 9, 2024.
On the same date, the PPP Center received a letter from the Iloilo City Government that it was rejecting the unsolicited proposal.
The PPP Center has not received a copy of the decision of the province on whether to proceed with the detailed evaluation of the project.
Gov. Arthur Defensor Jr., in his recent press briefing, said the province is currently evaluating the proposal, emphasizing that the evaluation is still ongoing and confidential./PN
