Wednesday, June 21, 2017

ODA ‘appropriate’ for long-term projects like Kaliwa Dam -- Pangilinan

Posted on May 31, 2017

KALIWA DAM, the proposed new water source for Metro Manila, is an appropriate project for funding through an official development assistance (ODA) because of the project’s size, which might be too big for a private entity, the chairman of Metro Pacific Investments Corp. (MPIC) said.

“Most likely that’s an appropriate project for ODA because it’s a long-term project. It takes years to build a dam,” MPIC Chairman Manuel V. Pangilinan told reporters on Tuesday on the sidelines of the annual stockholders meeting of Manila Electric Co. (Meralco), which he also chairs.

MPIC operates its water business through subsidiaries including Maynilad Water Services, Inc., which holds the exclusive concession granted by the Metropolitan Waterworks and Sewerage System (MWSS), on behalf of the government, to provide water and sewerage services in the west service area of Metro Manila. MPIC’s effective ownership in Maynilad was 52.8% as of Dec. 31, 2016.

Maynilad earlier expressed fears that the delay in the project’s construction could leave the Philippine capital facing a water crisis by 2022 or 2023.

“It’s a good project. The Kaliwa dam has got to be built,” Mr. Pangilinan said.

“We’ve always struggled -- if you build a dam whether it’s Kaliwa or any other [dam] -- how do you price the bulk water,” he said. “Obviously you’ve got to price it in a way that pays for the dam in X years.”

“The longer the tenor and the lower the cost, the lower (the price) is. But does the private sector have that capacity? Probably not. It’s only a government that has a capacity to procure the right financing for this particular project,” he added.

Ramoncito S. Fernandez, Maynilad president and chief executive officer, earlier said that he was informed by state agencies MWSS and the National Economic and Development Authority (NEDA) that funding for Kaliwa dam will be sourced from Chinese ODA.

MWSS previously said the P18.72-billion dam is expected to deliver 600 million liters per day (MLD), adding to the existing supply of 4,132 MLD and enough to meet demand of a little less than 4,000 MLD by 2020.

The project -- located in General Nakar and Infanta, Quezon province -- used to be a public-private partnership (PPP) under the previous administration, but the change in political leadership saw the inclusion of the Department of Public Works and Highways (DPWH) as co-implementor along with MWSS.

Mr. Pangilinan said that the administration might have taken the view that planned infrastructure projects, “which are quite numerous, could be better handled if they were done (by the government) using ODA.”

“In a way government-to-government financing is cheaper in the longer term than private sector [funding],” he said.

However, he said the ODA process might take time since the funding is subject to certain procurement procedure and protocol.

“Since the funding will come mainly from abroad or another government -- say, Japan or China -- then disbursement of the funds is subject to their review,” he said. “That might take time.” -- Victor V. Saulon

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