On Iligan’s water woes (2)

Arnold Garbanzos

ILIGAN City–The city must consider its options as early as now since we have a growing population and we have new infrastructures coming like Robinson’s and possibly SM or Ayala, and how do we expect them to all come when we cannot even solve a very basic problem like water?

PPP or a JV arrangement with the Private sector has many advantages for the city:

For one, we save P60 million to P70 million a year, money which the city can use for more important things.

Two, it takes away the politics from water and the perceived corruption.

Three, collection efficiency could be addressed professionally.

Four, we can go for the enhancements or improvements to our water system without the city spending a single centavo and with no loans to burden our local government.

Fifth, we can avail of the professional services of experts through the private sector especially when it comes to NRW reduction, an expertise which the city does not have.

Sixth, national and local government do not spend a single centavo in a PPP arrangement since it is the money of the Private partner that is being use. This means no public funds are used for a PPP arrangement except for the periodic collections made which is normally locked in for a number of years per agreement––normally, 20 years to 30 years.

And seventh, best of all our LGU does not need to make a loan thereby saving for us a lot of money as a city.

Many people ask me why the city did not go for the P1.4-billion loan in order to settle all our water woes back then. Why go for P400+- million only? Well, there are two answers to that:

One, based on evaluation made by the lending banks during that time, the city can only afford that amount considering our current financial position. Any amount beyond P400 million would “disturb” our financial condition as a city. In short, we cannot afford to make a loan beyond P400 million.

Two, any loan made beyond P500 million would have to go through the Neda and that would take years for processing and final approval (minimum of three to five years before release).

Thus, the city settled for the P400-million+ loan and availed of it during that time.

Many of us must understand also that PPP has two modes––one, solicited and the other, unsolicited. When you say solicited, it is the city that is looking for a private partner. When it is unsolicited, it is the private partner that approach the city and offer a solution since the private sector has seen a need and is offering a solution. In the case of the British company Biwater, it is unsolicited. Meaning, it is the firm that came to us and provided a solution. The city was not looking for them. And the city agreed to listen to their proposal. That is why the city created a PPP Search Committee and a public consultation was held.

Under the solicited mode, you can say that the private partner is a supplier or a contractor since it is the city that sought their presence.

Under the unsolicited mode, the private partner is an investor since they are willing to spend out of their own funds or money, availing of the option of getting it back through periodic collections from the public. Thus, Biwater came as an investor, and not as a contractor or supplier.

We must learn to distinguish between the two or else we muddle the issue. Most of all, Iligan must not quarrel with an investor.

It is for this reason that Biwater and the LGU (especially the committee of Councilor Areola) cannot just share the data they have in their possession despite the pleas of many quarters. Since this is an unsolicited proposal, then it is therefore subject to a “Swiss Challenge” coming from other providers or sectors. Meaning, the proposal of Biwater is not final and is therefore subject to public scrutiny during the public biddings where other providers or investors would like to “challenge” the proposal of Biwater.

The proposal of Biwater therefore is not the final option for Iligan. It is still subject to adjustments and further negotiations which is contrary to the claim of many detractors to the PPP.

All of these can be found in the PPP or BOT Law of our country which is RA 7718, and PPP Ordinance 14-6250.

There are two major variations of the PPP one is the BOT or the Build-Operate-Transfer scheme and the other is the ROT or the Rehabilitate-Operate-Transfer scheme.

A classic example of the BOT is the construction of the Mactan Bridge connecting Cebu and Mactan and which was built by the Japanese Government. Cebu nor Mactan did not spend a single centavo for that bridge and Japan got back their expenses through daily tolls which they made with the public. Today that bridge is fully paid and Government did not spend a single centavo.

What is being offered to Iligan by the Investor is a Rehabilitate-Operate-Transfer scheme with a locked in period of 30 years.

Many might ask why the PPP option was not considered by the previous administration, and which only they are in the best position to answer.

Again fellow Iliganons, I say, we in Iligan cannot afford of talking of bigger things for our city if we cannot solve the most basic of all–water. Kung dili nato masulbad ang pinakasimple nga problema sama sa tubig, unsaon nato paghisgut ug mga dinagkung butang?” (to be continued)