COWD on prospects of stiff competition: ‘Not in our time’

By NITZ ARANCON with LITO RULONA
Correspondents .

IT would take more than words to make the Cagayan de Oro Water District feel the heat of a serious competition.

COWD’s chairman and general manager welcomed the city council’s green light this week for the Metro Cagayan de Oro Water Services Cooperative to invest and put in place an alternative facility and build a new water distribution infrastructure in the city. The two however doubt if this generation would see COWD facing stiff competition.

“Welcome to the club,” said a grinning COWD chairman Eduardo Montalvan yesterday. “But I do not think there will be a serious competition. Not in our time.”

Montalvan said the COWD would not object to any plan by any group to compete with the 45-year-old water district.

Legally, he said, the COWD cannot do that.

Engr. Bienvenido Batar, COWD general manager, said there is a Supreme Court ruling against water supply and distribution monopolies.

“If that (another water utility) is what the city council wants, then so be it,” said Batar.

He however doubts if the new cooperative would be able to seriously compete with COWD anytime soon.

In order to make the COWD cringe at the prospects of a decent competition, an investor would need at least P2 billion in assets, something that took the water district over four decades to accumulate, he said.

Batar gave some tips:

• A viable water utility should have at least five thousand connections with each connection costing P4 thousand or a total of P20 million.
• The distribution pipelines would cost some P100 million.
• The water source development would require at least P100 million.

For the five thousand connections alone, “the total is P220 million,” he said.

Batar said the P220 million would exclude working capital during the initial stage, and operating costs afterwards.

He said the COWD started by securing a loan of about P30 million in 1976. That, he said, should be the equivalent of at least P600 million today.

“Another aspect that must be addressed would be technical skills that would be needed,” he said.

Montalvan said what the cooperative needs to do first is secure a franchise or a certificate of public convenience from the National Water Resources Board (NWRB), and comply with the requirements of the Local Water Utilities Administration (Lwua).

“That,” according to Montalvan, “would take time.”

In a letter to Vice Mayor Raineir Joaquin Uy, Metro Cagayan de Oro president Neil Bryan Oraiz said his group would comply with all the requirements of the NWRB and even secure an environmental compliance certificate from the Department of Environment and Natural Resources.

Montalvan said the COWD is unfazed because it understands how much time, effort and money are needed in order for any group to put up a decent competition.

“The COWD has assets of almost P2 billion, unya ila, pilay ila? P120 million?” Montalvan asked rhetorically. “If I were in their shoes, I would think twice about what they’re getting into. But if they insist, go ahead. We welcome them.”

Montalvan said a new water utility in the city would mean laying down its own water distribution lines because it cannot use COWD’s infrastructure network.

“That means, it will have to start digging. Yes, diggings,” he said.

Batar said a new investor may want to consider supplying treated water to the COWD rather than attempt to compete with it head on.

“Kon mag-construct silag pipelines beside sa among pipelines, waste of resources gyud na. Mas maayo unta nga didto sila mag-install sa sa ilang  mga pipelines sa mga areas nga wala pay amo. Pero kon ang ilang intention is to compete with COWD, wala mi mahimo ana,” Batar said.

Green Light

On Monday, the city council gave the Metro Cagayan de Oro cooperative the go-ahead to construct its own water facilities so it could distribute treated water in the city.

City council members unanimously voted for the resolution authored by Councilor Teodulfo Lao Jr. to interpose no objection to the cooperative’s plan. Lao is the chairman of the city council’s committee on public utilities.

The Cooperative Development Authority has approved the registration of Metro Cagayan de Oro as a cooperative this July 20, according to Isagani Daba, the treasurer and spokesman of Metro Cagayan de Oro.

Metro Cagayan de Oro is a consortium of 14 other cooperatives: First Credit Community Cooperative, Oro Integrated Cooperative, Oro Savings and Sharing Multi-Purpose Cooperative, Del Monte Employees Community Credit Cooperative, Allied Savings Multi-Purpose Cooperative;

City Hall Employees Multi-Purpose Cooperative, Provincial Capitol Employees Multi-Purpose Cooperative, Xavier University Community Credit Cooperative, Mogchs Faculty Employees and Students Multi-Purpose Cooperative, PPSC Region-10 Employees Multi-Purpose Cooperative;

Cepalco Community Multi-Purpose Cooperative, Kyogojo Engineering Service Cooperative, Amansi Cooperative, and Havanna Construction and Engineering Cooperative.

Daba said Metro Cagayan de Oro would start complying with documentary requirements even as it starts the construction of its facilities.

He said the cooperative may be able to finish the construction of its water treatment plant in Barangay Baikingon in January next year.

Daba said it would source its raw water supply from the Iponan River.

By that month, he said, Metro Cagayan de Oro would also be able to finish installing its main water pipe from barangays Iponan to Bulua.

Iponan and Bulua would be the pilot areas and then Metro Pacific would expand to other barangays, he said.

Daba said the Metro Cagayan de Oro has raised a capital of P1 billion, and it would only spend an initial of P100 million to build its water treatment plant and for the Iponan-Bulua water line installation.

Cheaper

He said Metro Cagayan de Oro plans to sell treated water for P20 per cubic meter.

“Mas barato sa COWD nga P21.80 per cubic meter,” he said.

COWD’s minimum charge is P218.50/cu.m for the first 10/cu.m or P21.85/cu.m.

COWD’s charges are progressive. The rates become higher beyond the minimum 10 cu./m: P30.55/cu.m for the 11th cu.m up to the 20th cu.m; P31.85/cu.m from the 21st up to the 30th cu.m.; P33.65/cu.m from the 31st up to the 40th cu.m; and P36/cu.m from the 41st cu.m. The commercial rates are double.

Oraiz, in a letter to Vice Mayor Uy, said the cooperative plans to bill consumers a minimum of P200 for every 10 cu.m. The commercial and industrial rates would be doubled.