Arnold Garbanzos ILIGAN City--The city needs to raise at least P1 billion to solve its current water problems. This is on top of the P400-million+ loan that the city made from the WB and the LBP during the term of the previous administration. The P400-million+ loan was made in order to take care of new primary lines (the “giant” blue pipes which you saw being laid underground during the previous City Administration) but it did not include the following enhancements or improvements:
  1. secondary lines to connect it to the homes of Iliganon residents -- remember we can never tap new lines to old ones or else we will be bursting all over the city;
  2. reduction of our NRW or our nonevenue water or losses which is 65% per ICWS figures which pertains mostly to leakages and illegal tappers;
  3. construction of new water reservoirs since you do not build new lines without considering the needed reservoirs especially in the Pala-o and Tipanoy area;
  4. construction of an STP or a sewerage treatment plant which is a requirement for highly urbanized cities like Iligan City by the DPWH -- this alone would cost no less than a billion to construct and can only be materialized when the City makes a loan (again!);
  5. and the construction of water filtration systems to assure that the quality of water we are drinking is safe and potable-quantity is not enough we must also make sure our water quality is world class.
This is a comprehensive plan to upgrade and rehabilitate our ICWS. Question is how do we raise the money and achieve this enhancements? Well there are 4 viable options: One, we can continue to subsidize our ICWS and spend P60 million to 70 million a year out of our own city coffers (our collection last year was only P50 million) and earn negative. This definitely cannot raise for us the needed P 1 billion in order to solve our water woes. Two, we can let of go of the ICWS and have it converted into a Water District under the supervision of the Lwua effectively having the city relinquish control of its water assets and at the same time make a loan from the Lwua at rates higher than the bank. Lwua is mandated by law but raising our P1 billion through this option would burden us more. Three, we can go for a cooperative, making all Iliganons own the water system. Question is how much contribution should each Iliganon make to raise a billion? And how professionally efficient would it be? Also to put up the needed infrastructures we still need to make a loan. Or four, we can all agree for a PPP arrangement-enter into a Joint Venture (JV) with the private sector under an ROT or Rehabilitate Operate and Transfer scheme where the city continues to own the assets of the ICWS, avail of the professional expertise of the private sector, remove politics from the ICWS and save the city P60 million to P70 million a year for operational expenses and avail of our P1 billion with no loan on the part of the city. Of the four options presented, the first three require the city to loan while PPP does not since financing is handled by the Private Partner and our equity as a City are our water assets which will be lease out to the Private Partner for a number of years. Please take note that cost per cubic meter today in Iligan is only P2 but in order to break even on operations we need to collect P6 per cubic meter (figure provided by ICWS) since the P2 does not take into consideration the cost of power of bringing these waters into your house plus the payment of the loan which we made in Land Bank and the World Bank and the attendant hassle of sleepless nights, quarrel with your neighbors etc. Effectively therefore the city government is subsidizing P4 per cubic meter per household and we simply cannot afford to do that under a growing population! In short, our ICWS is operating at a loss and how long it will last and its attendant problems is a question we must all answer in three to five years time down the road. Take note that under the four options under consideration, whatever and however we look at it, there is a need to increase water rates to a level of not less than P6 per cubic meter. So whether we continue to self subsidize, go for a PPP, Lwua or go for a cooperative arrangement, Iligan must still increase its water rates if it means to be a profit generating venture in order to enhance and improve our water system in the city. Why do we need to profit? Simple, we have a growing population, our communities are expanding, we need new lines, we need new reservoirs, an STP, new filtration plants, and how do you think the city will spend for all of these? As a city, we cannot afford to take it out of our annual budget which is only around P1.4 billion to P1.7 billion. Consider too that if we continue to government subsidize everything, every P6 per cubic meter we collect from the public goes through the General Appropriations fund of the city--meaning, all water revenues generated will be divided among the two or more dozen departments of our local government--not all will go to the ICWS! If we go for a PPP on the other hand the P6 per cubic meter we collect is wholly used for our water system and its improvement--meaning, everything is used for the ICWS and its operations--it is entirely for the ICWS, will not go to the General Appropriations Fund of the city and will not be divided among the various departments of our local government. By the way, whatever option we choose among the four, the price range would still be between P7 to P 10 per cubic meter since water tariff is regulated and monitored by the NWRB and no one can go beyond that. It is therefore wrong to surmise that since the one offering a solution to our water system is a foreign company they would be charging more. Nothing can be further from the truth. Filipino or not, the price range is regulated by government since all of this is regulated by the Water Code of the Philippines. (to be continued)