PWRI seeks to amend deal with city gov’t

CEBU, Philippines - To recoup its revenue losses, Pilipinas Water Resources Inc. has to amend its joint venture agreement with the Cebu City government to be allowed to sell potable water to other water distributors in the city.

In a report, the City Council Committee on Energy, Transportation, Communication and Other Utilities said the agreement’s provisions have to be revised for PWRI to negotiate with other water companies like Metropolitan Cebu Water District.

The committee further stressed that the necessary amendments must be done accordingly prior to any negotiations or actions to refrain from legal liabilities.

“…in order to effect PWRI’s request, the existing Joint Venture  Agreement will undergo major amendments, therefore  it is but prudent to defer action prior to the outcome of PWRI and MCWD negotiation,” the report read.

PWRI has signed an agreement with the City Hall last May 28, 2010 for the former to supply potable water and to collect and process waste water from all locators of SRP.

However, due to the delay in operation of SM Seaside City, PWRI has asked the Cebu City government to grant it authority to sell processed water to the Metro Cebu Water District to recoup lost revenues.

PWRI and SM Prime Holdings have signed an agreement for the former to supply potable water processed via reverse osmosis for an initial volume of 1,000 cubic meters a day, expandable to 10,000 cubic meters a day.

But SM reportedly installed its own water facility, leaving the PWRI at a “disadvantage.”

SM Prime Holdings has referred PWRI’s concern to their legal head office in Manila.

The losses further ballooned after PWRI prioritized the needs of SRP locators in terms of sufficient water supply, which caused PWRI “to cash out a little over P500 million during the period of May 2011 to June 2013.”

The committee, nonetheless, noted that the firm’s request is “reasonable considering they’re incurring losses.”

At present, PWRI is supplying desalinated potable water to some of MCWD’s consumers, like those in Mactan Island; Barangay Labangon, Cebu City; SM City Cebu; Parkmall; hotels and other institutions.

Earlier, MCWD General Manager Ernie Delco said they are willing to acquire PWRI’s facilities rather than purchasing water from the latter.

PWRI Vice President Edgar Sibonga said selling potable water to MCWD would not be easy financially for PWRI since an additional infrastructure amounting to P40 million is needed to connect PWRI’s pipelines from the South Road Properties to the Cebu Port Authority at the North Reclamation Area for MCWD to establish an “injection point.”

Once the city will accede to PWRI’s request, the transaction would add to the city’s coffers approximately P35.2 million that would represent revenue from the DPW, waste water and non-potable water totaling 10,000 cubic meters a day it would supply to MCWD.

The firm would also be obliged to provide an initial volume of 10,000 cubic meters a day, which can be escalated to 20,000 cubic meters a day.

At present, PWRI has the capacity to generate up to 22,500 cubic meters a day, which can be expanded to 35,000 cubic meters a day. — (FREEMAN)