Senate inquiry into Laiban Dam project sought

MANILA, Philippines – Senate Minority Leader Aquilino Pimentel Jr. has urged the Senate to inquire into the proposed joint venture agreement between the Manila Waterworks and Sewerage System (MWSS) and the San Miguel Group to implement the Laiban Dam project.

Pimentel made the call in view of allegations that certain terms and conditions are grossly disadvantageous to the government which may ultimately prejudice consumers.

The MWSS has entered into an agreement with the San Miguel Bulk Water Co., Inc. (SMBWCI) to build the Laiban Dam in Tanay, Rizal which has the potential to provide long-term water supply – estimated at l,900 million liters a day – to Metro Manila.

Pimentel said the inquiry will zero in on a “take-or-pay” provision of the joint venture contract which will require the MWSS to pay for the full amount of 1,900 million liters of water supplied daily by the Laiban Dam even if less than this amount is actually consumed.

He said such a lopsided arrangement should not be allowed because it may be construed as a direct government guarantee, the incremental cost of which will be passed on to water consumers.

“This is reminiscent of the onerous contracts entered into by the government with several independent power producers at the height of the power crisis in the early l990s that compelled residential and industrial consumers to shoulder the cost of the unused electricity generated by the IPPs,” Pimentel said.

“Notwithstanding the urgency of developing alternative sources of potable water for the expanding population of the metropolis, the government must ascertain that the joint venture agreement should fully conform with the Build-Operate-Transfer (BOT) Law and will be beneficial to consumers in terms of a steady supply of water at reasonable cost,” Pimentel said.

Pimentel called on the Senate committee on government corporations and public enterprises and the committee on public services to look into the issue.

Since more than 4,000 families are in danger of being displaced, Pimentel asked what measures have been drawn up to relocate them and compensate for the disruption of their lives in terms of loss of homes and means of livelihood.

The senior lawmaker said the Arroyo administration should explain why it opted to pursue the Laiban Dam project through a joint venture agreement wherein the MWSS becomes a partner of the private contractor.

Pimentel said critics have also pointed out that the deal will put the MWSS in a conflict of interest, which is prohibited by the Constitution – because its primary function as a regulatory body is to approve water rates.

“Since the MWSS is the business partner of the SMBWCI in the joint venture, how would the agency effectively exercise its regulatory duties in this respect?” he asked.

Pimentel questioned the lack of competitive public bidding for the waterworks project, which is required by the BOT Law to allow the entry of the best qualified contractors and to secure the most advantageous terms for the government.

“Was the joint venture agreement adopted for the Laiban Dam project to skirt legal procedures and to do away with public bidding?” he wondered.