MWSS has yet to provide details about San Miguel dam deal

MANILA, Philippines - The Metropolitan Waterworks and Sewerage System (MWSS) has yet to provide information about its agreement with a San Miguel Corp. (SMC) unit that will construct a dam to secure water supplies for Metro Manila, a senior official said. As a result, Socioeconomic Planning Secretary Ralph G. Recto has instructed his staff to collate all pertinent documents about the project. That way, he can issue an intelligent recommendation regarding the unsolicited bid proposal of San Miguel Bulk Water Co. Inc. (SMBWCI) to construct the estimated P48-billion dam. The National Economic and Development Authority (NEDA), which is headed by Recto, belongs to the joint venture committee tasked to evaluate the private sector-public sector partnership. In the Laiban Dam case, the committee's members will be mostly made up of officials from MWSS. “We are studying our possible recommendations and maybe include those what need to be changed," Recto said. But he admitted that he has yet to get any information from MWSS about the preliminary joint venture agreement. Recto also stressed that the “transparency issue" should be addressed by MWSS, citing a “successful" JV partnership in the case of Manila Water and Philippine Tourism Authority for the water system and waste disposal in Boracay Island. “The difference between the two projects is transparency," said Recto. Since joint ventures are new to the government, the Philippines may require policy review and amendments to find a proper balance between attracting investors in government projects and protecting public interest. But Ramon S. Ang, San Miguel president, told GMANews.TV that there was “nothing secret" about SMBWCI's proposal to construct the Laiban Dam project. “We can't do anything without full disclosure. The noise about this is that other parties want to get a copy of our study and how we came up with our design and pricing, but we can't do that. If they want to participate in the bidding of the project, they should come up with their own," said Ang. He added that those who are really serious in investing in Laiban Dam should have submitted a simple one-page letter of intent, a “very easy" document to submit to the MWSS. 　 “Why should we give them our own study and let them copy it? They should have their own," Ang added. The draft agreement between SMBWCI and the MWSS contains a “take or pay" provision, which may either charge government and/or consumers for unused water. The said provision is the very same arrangement that allowed independent power plants (IPP) in the 1990s to charge consumers for electricity they didn’t use. Under its proposal filed in February, SMBWCI would construct the Laiban Dam in Tanay, Rizal through a joint venture with the MWSS. Besides addressing Metro Manila’s long-term water requirements, the P48 billion project also intends to “provide stability and security to the water supply source," San Miguel said in its proposal. The project, which will develop a raw water dam and other structures, is expected to produce 1,830 million liters daily, serving the needs of 5.5 million people. In his letter, Recto said the “take or pay" provision would be tantamount to a “government guarantee," in which market risks are expected to be absorbed by the country. Moreover, the joint venture agreement requires the endorsement of concessionaires Manila Water Co. Inc. and Maynilad Water Services Inc. – which serves Metro Manila’s east and west zones respectively – since both are expected to be the recipients of the project’s water offtake. The draft agreement also allows San Miguel to sell/transfer its interest to another party after a given period upon the MWSS’ written consent, Recto said. The transfer of interests should be to a qualified party that has, at the minimum, similar experience on the operation of water supply/dam projects, Recto added. In February, San Miguel has announced that its subsidiary is seeking to partner with the government for the development of a dam project seen to supply future water needs of Metro Manila. It added that its subsidiary's proposal is in line with San Miguel's strategy to invest in strategic industries such as power, oil and gas, and water. The company has been very aggressive in venturing out of its core food and beverage business. Besides acquiring 27 percent of Manila Electric Co. for P30 billion, it has also agreed to purchase majority stake in Petron Corp., the Philippines' largest oil refiner, for P32.2 billion. It is also planning to enter the telecommunications industry through a venture with Qatar Telecom. Cheryl M. Arcibal, GMANews.TV