Muddling the water shortage issue

In May last year, a Japanese contractor who lost its original proponent status for the Kaliwa Dam of the Metropolitan Waterworks and Sewerage System (MWSS) revived anew his company’s bid for the project. Toshikazu Nomura, chief executive officer and director of Global Utility Development Co. Ltd. flew back to Manila again last week to reclaim the right to do the Kaliwa Dam project at a time the MWSS has been under fire for the water supply shortage that gripped the Manila Water Co.

The Japanese contractor returned to renew their company’s bid on the proposed P13.43-billion New Centennial Water Source-Kaliwa Water Dam project in Quezon Province. The Kaliwa Dam – once operational – will provide an additional 650 million liters of water a day (mld) to augment the 4,000 mld from Angat Dam in Bulacan that provides much of potable drinking water and for other uses.

The Kaliwa Water Dam project is among the 75 flagship projects under the “Build, Build, Build” Infrastructure Program of President Rodrigo Duterte. More than half of these administration’s infrastructure projects are funded by various official development assistance (ODA), the bulk of which come from China and Japan. Although these ODAs carry highly concessional rates, these are still loans contracted by the Philippine government and paid by us, Filipino taxpayers.

According to Nomura, they first submitted to the MWSS Board as early as in 2008 to undertake the Kaliwa Intake Weir project under a Build, Operate, Transfer (BOT) scheme under a memorandum of understanding. They submitted an unsolicited proposal to undertake the project through Private Finance Initiative (PFI) for funding by the Japan International Cooperation Agency (JICA). At no cost to the MWSS, the Global Utility will partner with the Development Bank of the Philippines (DBP) to meet requirements of the country’s laws.

However, their Kaliwa dam project got stalled after subsequent changes in the MWSS Board of Directors. The project was put back on the table upon the instructions of former President Benigno Simeon “P-Noy” Aquino III to MWSS to renegotiate the unsolicited proposal with Global Utility.

In its renegotiated BOT proposal, Global Utility will build a seven-feet high low dam with a 16-kilometer-long tunnel that has a diameter of 3.3 meters. It would also construct a water treatment facility. A civil engineer by profession, Nomura described the project as most environmentally compliant, with least displacement of communities and residents along the path where the dam will be built.

But when the administration of President Duterte came into office, Nomura found out to his dismay the new MWSS officials led by the latter’s appointees ignored for no reasons the existing unsolicited BOT offer of Global Utility.

During our Kapihan sa Manila Bay held on May 16 last year, MWSS administrator Reynaldo Velasco announced the MWSS is on track with its timetable on the Kaliwa water dam project which is projected to be completed by 2023. But that the Kaliwa dam project, according to Velasco, will be undertaken through ODA from China.

Velasco disclosed the Chinese government committed P10.2 billion to fund the Kaliwa dam project as included in the ODA package signed during the state visit of President Duterte to Beijing in October last year. The balance of the total project cost will be shouldered by the MWSS out of the fees collected from its two concessionaires, the Manila Water Co. and the Maynilad Water Services Inc.

Velasco pointed to an inter-agency body, directly under the supervision of the Office of the President, that has been making sure the dam project does not suffer further delays. He noted that it took nearly 30 years for this project to finally take off now under the Duterte administration.

Nomura revived his bid for Kaliwa project after President Duterte declared in May last year also that he wants all government projects to go through ”Swiss challenge” to reduce, if not totally prevent corruption in public biddings. A “Swiss challenge” process in government procurement happens when an agency, which has received an unsolicited bid for a project, publishes details of the bid and invites third parties to match or exceed it. 

But since this is a “tied” loan, only contractors from China could bid to this project.

Thus, Nomura’s renewed bid is for naught as the ODA award to a Chinese company was already a done deal. The project was awarded to China Energy Engineering Co. Ltd.

From its official website, the Department of Finance (DOF) confirmed the Philippine government’s $211.21-million loan agreement for the Kaliwa Dam Project. DOF’s website released online the copy of the Preferential Buyer’s Credit Loan Agreement on the Kaliwa Dam Project between the MWSS, as borrower, and the Export-Import Bank of China, as lender, signed in Nov. 20, 2018. As stated in the ODA agreement, the concessional loan from China carries an interest rate of 2 percent per annum, payable in 20 years, including a grace period of seven years. It also carries a management fee of 0.3%, as well as a commitment fee of 0.3% per annum.

Finance assistant secretary Antonio Lambino clarified the copy of the ODA contract was posted online about four days before groups, represented by human rights lawyer and opposition senatorial candidate Chel Diokno invoked the Freedom of Information (FOI) Law for the public release of the contract. 

The contract, however, provides a clause on the waiver of immunity, a provision that another senatorial bet, Bayan Muna Rep. Neri Colmenares earlier warned about. However, Lambino cited this provision is “standard” in any loan agreement and that there are no assets involved as collateral in case the country fails to pay the loan.

The construction of the long overdue Kaliwa Dam may hit further delays as the approval of its environmental compliance certificate still hangs and militant indigenous people’s groups want a say on it.

Whether wittingly or unwittingly, there have been a lot of issues that muddy the water. Sadly, these are not helpful at all.