Cebu accepts proposal from Manila Water consortium
Posted on September 22nd, 2009
The Ayala-owned Manila Water Co. Inc. submitted an unsolicited proposal to the Cebu provincial government for the development of a treated bulk water supply pipeline in the province. Latest reports say that the government has accepted the proposal of the consortium.
The Manila Water, in its disclosure to the Philippine Stock Exchange, said the acceptance would trigger the detailed negotiations between the two parties (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, the majority share-holder, the property firm Stateland Inc. and the Gaisano family’s Vicsal Inc.
The unsolicited proposal was submitted 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.
The joint investment activity, however, is still subject to a “Swiss challenge†or competitive challenge from anyone interested on the project, according to Manila Water.
Total project is estimated to reach over P2 billion. It aims to distribute water to be extracted from the Luyang River in Carmen town to Metro Cebu through the Metro Cebu Water District.
In their submitted proposal, the consortium will supply 35 million liters of potable bulk water daily to meet the growing water supply requirement of several northern cities and municipalities of the province. At present, 50 percent of these are being served.
The proposal includes a no “take or pay†provision and once the initial 25-year cooperation period has lapsed, the consortium would turn over all the joint investment company’s assets to the provincial government.
The project helps to alleviate the critical over-extraction of ground water in Cebu Province, and it 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.
