Department of Finance (DoF) sources said the project would be bid out under the build-operate-transfer (BOT) scheme to a private contractor that would construct a water treatment plant and process water from Laguna Lake into drinking water.
The project has been approved by the Investment Coordinating Committee, the Cabinet-level committee headed by the National Economic and Development Authority (NEDA) that clears projects for funding and prioritization.
The new facility would be able to supply at least 400 million liters of potable water 24 hours a day to Metro Manila and adjoining areas.
The project would also include the construction and roll-out of a water pipeline that would transport the water into the main water pipeline already existing in the metropolis.
The plan would also include the construction of new pipelines to areas that are not currently serviced by the existing water franchises.
DOF officials expressed optimism that the Laguna Lake water project would be successful since it would start from the bottom-up, instead of taking over an existing and problematic franchise, as in the case of the failed franchise by Maynilad Water Services Inc.
The lake water project has been in the pipeline for years but the ICC said it was revived in anticipation of declining water levels in the existing water sources that serve Metro Manila.
Finance Undersecretary Nieves Osorio said the project is part of the preparations being made by the Manila Waterworks and Sewerage System (MWSS), which has to take over Maynilad’s operations.
"On top of the requirements of Maynilad, MWSS also has to work on preparations for a possible water shortage," Osorio said.
The government has been forced to cut back on its official development assistance (ODA) – funded projects but sources said the water project had to be prioritized since it is a major utility that could not be held back without having serious implications on basic services.
NEDA assistant director general Rolando G. Tungpalan said the project would involve the participation of the private sector, which would deliver a minimum 400 MLD (million liters per day) treated bulk water to the MWSS.
The MWSS, in turn, would sell the water to Maynilad and the other concenssionaire Manila Water, Inc. (MWCI).
Tungpalan said the project proponent, or winning bidder, shall be responsible for financing the entire project, such as the acquisition of right-of-ways (ROWs), required permits and environmental compliance certificate (ECC).
The proponent would also be responsible for constructing all the system components such as transmission mains, treatment plant, water reservoir, and others, including operating and maintaining the proposed treated bulk water supply system.
NEDA said the total cooperation period would be 28 years, where the development and construction period will take three years and the operating period, 25 years.
Based on a study on water resources development for Metro Manila conducted by the Japan International Cooperation Agency (JICA) in Feb. 2003, the most critical period would continue until 2013, where the demand-supply gap was estimated at 900 MLD.
The study also noted that based on projections made by MWSS, there is a need for an additional water demand of about 400 MLD by year 2007, with a projected increase of about 200 MLD annually for the period 2005 to 2010.
The project is consistent with the goals and objectives of the Medium-Term Philippine Development Plan (MTPDP), which promotes and supports the acceleration of water infrastructure development, under a regulatory framework that favors fair market competition while safeguarding the common good and environmental quality.