Cebu accepts Ayala bid for water supply

MANILA, Philippines - The Cebu provincial government has accepted the unsolicited proposal of the consortium led by Ayala-owned Manila Water Co. Inc. for the development of a treated bulk water supply pipeline in the province.

In a disclosure to the Philippine Stock Exchange, Manila Water said the acceptance of its offer would trigger the detailed negotiations between the Cebu provincial government and the consortium regarding the specific terms and conditions that will govern their joint investment.

The consortium is composed of Manila Water as majority share-holder, property firm Stateland Inc. and the Gaisano family’s Vicsal Inc.

The submission of the unsolicited proposal was made pursuant to the joint investment ordinance issued by the Cebu government which recognizes the authority of the province to enter into a joint venture or investment with the private sector.

Manila Water said the joint investment activity will still be subject to a “Swiss challenge” or competitive challenge from other interested parties.

The cost of the project, which aims to distribute water to be extracted from the Luyang River in Carmen town to Metro Cebu through the Metro Cebu Water District, is estimated to cost over P2 billion.

Under the proposal, the consortium shall supply 35 million liters per day of potable bulk water to meet the growing water supply requirements of several northern cities and municipalities of the province. Currently, only 50 percent of these areas are being served.

Salient features of the proposal include a no “take or pay” provision and turnover of all the joint investment company’s assets to the province once the initial 25-year cooperation period has lapsed, Manila Water said.

The joint investment proposal aims to replicate the improvements that Manila Water made in Metro Manila’s East Zone as a concessionaire of the Metropolitan Waterworks and Sewerage System and help alleviate the critical over-extraction of groundwater in Cebu Province.