BY GLENDA SOLOGASTOA
ILOILO City – The Local Water Utilities Administration (LWUA) has offered to lend cash-strapped Metro Iloilo Water District (MIWD) as much as P77 million to help improve its operation.
But the city’s lone water distributor, saddled with water supply and distribution problems, appeared unenthusiastic.
According to Dr. Danilo Encarnacion, MIWD Board chairman, they currently have negotiations with banks to secure loans.
Encarnacion admitted last week that MIWD “no longer have a hundred million pesos in the bank.”
He said this is the reason why the water district would have to borrow money to pay its P15-million debt to water supplier Flo Water Resources Iloilo, Inc.
No less than LWUA administrator Andres Ibarra offered the loan to MIWD during a visit here on Friday. He met water district officials.
Encarnacion said the Board has not decided on the offer –whether to accept or reject it.
But he indicated that the “high interest” of the LWUA loan would likely be one reason for their not accepting the offer.
Encarnacion said securing a loan with high interest may not be to MIWD’s advantage. It could further sink the water district into financial trouble, he explained.
LWUA can exercise the option of taking over the management of water districts that have outstanding loans with it, if these water districts continue to be saddled with financial, operational or management problems. One case in point was the Metro Roxas Water District in Capiz that it took over in 2006.
During their meeting, Encarnacion assured Ibarra that the MIWD has immediate and long-term plans to make the water district operationally sound.
But he admitted that MIWD currently does not have the financial wherewithal to finance them.
“What is lacking is funding. That is what we are trying to find a solution,” Encarnacion said.
In its website, LWUA describes itself as “the only lending institution – whether in the public or private sector — with the financial, technical and institutional development competence to enable a water district’s water supply project to generate return-on-investments.”
“LWUA treats countryside water supply development not simply as a financial venture, nor as a mere waterworks construction project, but as a comprehensive development endeavor that factors in the community’s economic and cultural nuances, among other things, to assure residents of a water supply service that is both reliable and lasting,” the website further read.
Encarnacion traced the present financial woes to MIWD’s interim board.
The interim board and the previous management, Encarnacion said, spent the P100 million-plus that the water district used to have in bank deposits.
MIWD had that much money during the time of the old, now reinstated, board.
Encarnacion said that while part of the P100 million could have been spent by the interim board for replacing pipes, digging deep wells and re-categorizing employees, the interim board had not been frugal with the district funds.
“Kadamu sang activities ang board nga ato. Kon diin-diin lang sila ga-meeting. Madamu in such a way nga wala ma-program maayo. Gasto lang sila nga gasto,” he said.
To recall, Encarnacion and the other members of the reinstated board had been replaced with an interim board by then LWUA chairman Rene Villa in 2010 despite their protestation that the latter had no authority to replace them with another set of MIWD board of directors.
In December 2013, Iloilo’s Gov. Arthur Defensor Sr. reinstated the Encarnacion board by operation of Presidential Decree 198, the law governing the creation and operation of local water districts, which names primarily the city mayor, or secondarily the provincial governor, as the appointing authority.
The reinstated board suspended and eventually terminated the appointment of the general manager, Le Jayme Jalbuena, and is now scouting for a successor.
The present OIC-general manager is Amarylis Castro.
“As of now, we are talking to other water suppliers that could enhance our water supply,” said Encarnacion.
While here, LWUA’s Ibarra also checked MIWD’s readiness for Iloilo City’s hosting of ministerial meetings of the 2015 Asia-Pacific Economic Cooperation Summit.
LWUA offers four loan windows to water districts.
- Loan Window 1 is open to Level III (individual household connection) and Level II (communal faucet) projects intended for the comprehensive development, repair or rehabilitation of new or existing water supply systems with interest rates ranging from 9.2 percent to 10.2 percent per annum and a 10- to 40-year repayment scheme.
- Loan Window 2 is open to projects intended to generate new service connections or for watershed management, and to special loans intended for emergency purposes.
Available loan is from 50 percent to 100 percent of the project cost and interest rates are based on prevailing applicable rates. - Loan Window 3 is open to projects intended to enhance water supply facilities or commercial operations. Maximum loan available is set to 100 percent of project cost while the repayment period is either the equivalent to the life of asset acquired or repayment period contracted with the fund source.
- Loan Window 4, also called the Project Development and Efficiency Improvement Fund (PDEIF), is intended for project development and for efficiency improvement activities such as non-revenue water reduction. The former is available to all water districts and is offered at 6.56 percent annual interest, the latter only to “semi-creditworthy” and “pre-creditworthy” water districts at interest rates of 8.2 percent to 8.7 percent per annum.
- Special Loan Window is the latest lending facility of LWUA. It is intended for water district expansion projects, well drilling and development of water sources.
Maximum loan amount is P10 million and carries a 7.5 percent per annum interest rate for a 10-year loan and nine percent per annum for a 15 to 20-year loan./PN
