MWSS: Laiban deal with SMC
‘may or may not be best option’

by Roel Landingin

MWSS officials address the apparent haste in the tender of the Laiban dam project. Video by Ed Lingao.

MWSS officials talk about ‘take or pay’, and whether the company explored all possible options to secure the best deal for consumers. Video by Ed Lingao.

AN INFLATED estimate of future water demand and a supposed lack of viable options to boost supply – these factors drove the Metropolitan Waterworks and Sewerage System (MWSS) to firm up a deal with San Miguel Corporation to build the P52-billion Laiban dam, even without a study on what might be the least costly solution.

Finally facing the press after ignoring requests for interviews and comment for at least a couple of weeks, Diosdado Jose Allado, the MWSS Administrator, said San Miguel’s unsolicited proposal is the water agency’s one and only viable option to turn the 30-year-old Laiban dam project into reality.

“In regard to comparative study of the different modes, I have to say there is none,” Allado said when asked if the agency’s board of trustees has done an extensive analysis of the comparative costs and water rate implications of rolling out Laiban through various schemes.

The state water agency, he stressed, has already tried other options, including negotiating a loan from China and entertaining another proposal from an American energy company, but these initiatives did not prosper. Besides, he said, existing water dams in Angat and Umiray rivers in Bulacan, which supply 95 per cent of Metro Manila’s needs, could be facing geo-hazard risks because they sit on top of an earthquake fault.

Best option?

“It may or may not be the best. Arguably, we don’t know but it is the option being presented to us,” Allado said of the MWSS’s imminent deal with San Miguel. But then again, he added, “given the circumstances, the matter of the water security issue and all the other issues it became pressing for us to consider this (San Miguel) proposal.”

Whatever it is critics may say about the deal, Allado said the MWSS had made its call. there is an urgent need to undertake the project. Why should we turn our backs on it?”

Still, it also emerged during the press conference that the agency’s forecast for growth in water demand – a key premise of the project – could be overly optimistic, going by historical records.

Isaias Bongar Jr, the chairman of MWSS joint venture selection committee, said that water demand in Metro Manila will go up to 5,600 million liters per day by 2015, or 1,600 MLD more than the 4,000 MLD capacity of the Umiray and Angat dams that supply 95 per cent of the region’s water needs.

San Miguel is proposing to build Laiban dam to boost the metro’s water supply by 1,900 MLD in seven years.

MWSS PROJECTIONS

More modest forecast

In their long-term business plans, the two private water concessionaires, Manila Water Co. and Maynilad Water Services Inc., have enrolled a significantly modest forecast. They are projecting that their combined water production will reach only 4,450 MLD by 2015, or about 20 percent less than the MWSS forecast.

As well, latest data from the MWSS itself show that the water production of the two concessionaires was only 3,682 MLD in 2008.

The MWSS forecast implies that the average annual increase in water use in the national capital region and surrounding areas will go up almost five times to 274 million liters per day (MLD), between 2009 and 2015, compared to the 10-year average of only 59 MLD from 1997 to 2008.

If the MWSS’s forecast is correct, water demand in Metro Manila and surrounding areas should have breached the 5,000-MLD mark since 2005. In truth, it has not.

The actual numbers show a gradual rise from 3,035 MLD in 1997 to 3,682 in 2008 at the rate of only 2.6 per cent.

The MWSS forecast implies that the growth rate in water demand will surge, or more than double to 6.2 per cent from 2009 to 2015.

Old, outdated

In an earlier interview, an official of the National Economic and Development Authority (NEDA) expressed doubts if the MWSS’s water demand assumptions that were prepared several years ago are still valid.

Bongar, the Laiban dam project selection committee chair, affirmed as much. He said the MWSS’s water demand forecast was plucked from the government’s water master plan and validated by NEDA itself when it approved the project for funding in early 2007.

Problem is the old forecasts may just simply be old or worse, outdated. The NEDA official noted that the old forecasts may not have taken into account two new developments — recent cuts in water losses or non-revenue water, and plans of the two private water concessionaires to build their own water supply projects.

Manila Water Co. has substantially cut water losses to only about 20 percent as of end-2008, from 63 in 1997 percent. For its part, Maynilad Water Services Inc. aims to reduce its non-revenue water to 40 percent by 2012, from over 60 percent at present. Maynilad is also building a water treatment facility that will draw 150-300 MLD of water from the Laguna de Bay. Manila Water has similar plans.

The MWSS, an agency with a 131-year history, is too old and should know better by now. Many infrastructure projects have yielded poor returns or altogether failed on account of a strategic weakness from birth – excessively optimistic demand forecasts. – PCIJ, July 2009